Exhibit 10.6
EXECUTION COPY
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
among
QUICKSILVER RESOURCES INC.,
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent,
and
The Financial Institutions Listed on Schedule 1 Hereto,
as Banks
$250,000,000
dated as of
May 13, 0000
XXXX XX XXXXXXX SECURITIES LLC,
as Sole Lead Arranger and Book Manager
FORTIS CAPITAL CORP.
and
BNP PARIBAS,
as Co-Syndication Agents
CIBC INC.
and
THE BANK OF NOVA SCOTIA,
as Co-Documentation Agents
TABLE OF CONTENTS
Page No.
ARTICLE I AMENDMENT AND RESTATEMENT..................................................................1
ARTICLE II TERMS DEFINED..............................................................................2
SECTION 2.1. Definitions........................................................................2
SECTION 2.2. Accounting Terms and Determinations...............................................26
SECTION 2.3. Petroleum Terms...................................................................26
SECTION 2.4. Money.............................................................................26
ARTICLE III THE CREDIT................................................................................27
SECTION 3.1. Commitments.......................................................................27
SECTION 3.2. Notes.............................................................................31
SECTION 3.3. Interest Rates; Payments..........................................................31
SECTION 3.4. Mandatory Prepayments Resulting From Borrowing Base
Deficiency........................................................................33
SECTION 3.5. Voluntary Prepayments.............................................................33
SECTION 3.6. Voluntary Reduction of Commitments................................................34
SECTION 3.7. Termination of Commitments; Final Maturity of Loan................................34
SECTION 3.8. Unused Commitment Fee.............................................................34
SECTION 3.9. Agency and other Fees.............................................................34
ARTICLE IV GENERAL PROVISIONS........................................................................34
SECTION 4.1. Delivery and Endorsement of Notes.................................................34
SECTION 4.2. General Provisions as to Payments.................................................35
ARTICLE V CHANGE IN CIRCUMSTANCES...................................................................36
SECTION 5.1. Increased Cost and Reduced Return.................................................36
SECTION 5.2. Limitation on Types of Loans......................................................37
SECTION 5.3. Illegality........................................................................37
SECTION 5.4. Treatment of Affected Loans.......................................................38
SECTION 5.5. Compensation......................................................................38
SECTION 5.6. Taxes.............................................................................39
SECTION 5.7. Discretion of Banks as to Manner of Funding.......................................40
ARTICLE VI BORROWING BASE............................................................................40
SECTION 6.1. Reserve Report; Proposed Borrowing Base...........................................40
SECTION 6.2. Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards..........................................................41
SECTION 6.3. Special Redetermination...........................................................41
SECTION 6.4. Borrowing Base Deficiency.........................................................42
SECTION 6.5. Initial Borrowing Base............................................................42
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ARTICLE VII COLLATERAL AND GUARANTEES.................................................................42
SECTION 7.1. Security..........................................................................42
SECTION 7.2. Guarantees........................................................................43
ARTICLE VIII CONDITIONS PRECEDENT......................................................................44
SECTION 8.1. Conditions to Amendment and Restatement and Initial Borrowing
and Participation in Letter of Credit Exposure....................................44
SECTION 8.2. Conditions to Each Borrowing and each Letter of Credit............................47
SECTION 8.3. Materiality of Conditions.........................................................48
ARTICLE IX REPRESENTATIONS AND WARRANTIES............................................................48
SECTION 9.1. Existence and Power...............................................................48
SECTION 9.2. Credit Party and Governmental Authorization; Contravention........................48
SECTION 9.3. Binding Effect....................................................................49
SECTION 9.4. Financial Information.............................................................49
SECTION 9.5. Litigation........................................................................49
SECTION 9.6. ERISA.............................................................................49
SECTION 9.7. Taxes and Filing of Tax Returns...................................................50
SECTION 9.8. Ownership of Properties Generally.................................................50
SECTION 9.9. Mineral Interests.................................................................51
SECTION 9.10. Licenses, Permits, Etc............................................................51
SECTION 9.11. Compliance with Law...............................................................51
SECTION 9.12. Full Disclosure...................................................................51
SECTION 9.13. Organizational Structure; Nature of Business......................................52
SECTION 9.14. Environmental Matters.............................................................52
SECTION 9.15. Burdensome Obligations............................................................53
SECTION 9.16. Fiscal Year.......................................................................53
SECTION 9.17. No Default........................................................................53
SECTION 9.18. Government Regulation.............................................................53
SECTION 9.19. Insider...........................................................................53
SECTION 9.20. Gas Balancing Agreements and Advance Payment Contracts............................53
SECTION 9.21. Cinnabar..........................................................................53
SECTION 9.22. Commodity Price Risk Policy.......................................................53
SECTION 9.23. Subordinate Debt, Mercury Subordinate Debt, and Falcon Seaboard
Settlement Agreement..............................................................54
ARTICLE X AFFIRMATIVE COVENANTS.....................................................................54
SECTION 10.1. Information.......................................................................54
SECTION 10.2. Business of Borrower and Subsidiaries.............................................56
SECTION 10.3. Maintenance of Existence..........................................................56
SECTION 10.4. Title Data........................................................................56
SECTION 10.5. Right of Inspection...............................................................57
SECTION 10.6. Maintenance of Insurance..........................................................57
SECTION 10.7. Payment of Taxes and Claims.......................................................57
SECTION 10.8. Compliance with Laws and Documents................................................57
SECTION 10.9. Operation of Properties and Equipment.............................................58
SECTION 10.10. Environmental Law Compliance......................................................58
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SECTION 10.11. ERISA Reporting Requirements......................................................58
SECTION 10.12. Additional Documents..............................................................59
SECTION 10.13. Environmental Review..............................................................59
ARTICLE XI NEGATIVE COVENANTS........................................................................59
SECTION 11.1. Incurrence of Debt................................................................60
SECTION 11.2. Restricted Payments...............................................................60
SECTION 11.3. Negative Pledge...................................................................60
SECTION 11.4. Consolidations and Mergers........................................................61
SECTION 11.5. Asset Dispositions................................................................61
SECTION 11.6. Amendments to Organizational Documents; Other Material
Agreements........................................................................62
SECTION 11.7. Use of Proceeds...................................................................62
SECTION 11.8. Investments.......................................................................62
SECTION 11.9. Transactions with Affiliates......................................................62
SECTION 11.10. ERISA.............................................................................62
SECTION 11.11. Hedge Transactions................................................................63
SECTION 11.12. Fiscal Year.......................................................................63
SECTION 11.13. Change in Business................................................................63
SECTION 11.14. Subordinate Debt, Mercury Subordinate Debt, and Falcon
Seaboard Settlement Agreement.....................................................63
ARTICLE XII FINANCIAL COVENANTS.......................................................................63
ARTICLE XIII DEFAULTS..................................................................................64
SECTION 13.1. Events of Default.................................................................64
ARTICLE XIV AGENTS....................................................................................66
SECTION 14.1. Appointment, Powers, and Immunities...............................................66
SECTION 14.2. Reliance by Agents................................................................67
SECTION 14.3. Defaults..........................................................................67
SECTION 14.4. Rights as Bank....................................................................67
SECTION 14.5. Indemnification...................................................................67
SECTION 14.6. Non-Reliance on Agents and Other Banks............................................68
SECTION 14.7. Resignation of Agents.............................................................68
SECTION 14.8. Foreign Banks.....................................................................69
ARTICLE XV MISCELLANEOUS.............................................................................69
SECTION 15.1. Notices...........................................................................69
SECTION 15.2. No Waivers........................................................................70
SECTION 15.3. Expenses; Indemnification.........................................................70
SECTION 15.4. Right of Set-off; Adjustments.....................................................71
SECTION 15.5. Amendments and Waivers............................................................71
SECTION 15.6. Survival..........................................................................72
SECTION 15.7. Limitation on Interest............................................................72
SECTION 15.8. Invalid Provisions................................................................72
SECTION 15.9. Waiver of Consumer Credit Laws....................................................72
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SECTION 15.10. Assignments and Participations....................................................73
SECTION 15.11. TEXAS LAW.........................................................................75
SECTION 15.12. Consent to Jurisdiction; Waiver of Immunities.....................................75
SECTION 15.13. Counterparts; Effectiveness.......................................................75
SECTION 15.14. No Third Party Beneficiaries......................................................76
SECTION 15.15. COMPLETE AGREEMENT................................................................76
SECTION 15.16. WAIVER OF JURY TRIAL..............................................................76
SECTION 15.17. Confidentiality...................................................................76
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EXHIBITS
--------
EXHIBIT A FORM OF PLEDGE AGREEMENT
EXHIBIT B FORM OF NOTE
EXHIBIT C FORM OF GUARANTY
EXHIBIT D FORM OF REQUEST FOR BORROWING
EXHIBIT E FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT G FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT H FORM OF CERTIFICATE OF FINANCIAL OFFICER
EXHIBIT I FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT J FORM OF CERTIFICATE OF EFFECTIVENESS
EXHIBIT K COMMODITY PRICE RISK POLICY
SCHEDULES
---------
SCHEDULE 1 FINANCIAL INSTITUTIONS
SCHEDULE 2 INVESTMENTS
SCHEDULE 3 LITIGATION
SCHEDULE 4 CAPITALIZATION
SCHEDULE 5 ENVIRONMENTAL DISCLOSURE
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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
---------
entered into as of the 13th day of May, 2002, among QUICKSILVER RESOURCES INC.,
a Delaware corporation ("Borrower"), BANK OF AMERICA, N.A., as Administrative
--------
Agent ("Administrative Agent"), and the financial institutions listed on
--------------------
Schedule 1 hereto, as Banks (individually, a "Bank," and collectively, the
---------- ----
"Banks").
-----
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower, Administrative Agent and the other financial
institutions named and defined therein as Banks (collectively, the "Existing
--------
Banks") and Agents are parties to that certain Third Amended and Restated Credit
-----
Agreement dated as of March 31, 2000, pursuant to which Existing Banks provided
certain loans and other extensions of credit to Borrower (as renewed, extended,
amended or restated from time to time, the "Existing Credit Agreement"); and
-------------------------
WHEREAS, after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the terms hereof, the Commitment
Percentage (as herein defined) of each Bank (including each Existing Bank)
hereunder will be as set forth on Schedule 1 hereto; and
----------
WHEREAS, the parties hereto desire to amend and restate the Existing
Credit Agreement in the form of this Agreement and Borrower desires to obtain
Borrowings (as herein defined) (a) to refinance the indebtedness under the
Existing Credit Agreement, (b) to increase from $225,000,000 to $250,000,000 the
aggregate Commitments of Banks, and (c) for other purposes permitted herein; and
WHEREAS, subject to and upon the terms and conditions herein contained,
Banks are willing to provide the credit facility described.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent, and Banks agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
Subject to the satisfaction of each condition precedent contained in
Section 8.1 hereof, the satisfaction of which shall be evidenced by the
-----------
execution by Borrower and Administrative Agent of the Certificate of
Effectiveness (as hereinafter defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date (as hereinafter defined) in the form
of this Agreement.
ARTICLE II
TERMS DEFINED
SECTION 2.1. Definitions. The following terms, as used
-----------
herein, have the following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
------------------------
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Administrative Agent" means Bank of America, N.A., in its capacity as
--------------------
administrative agent for Banks hereunder, and any successor thereto.
"Administrative Questionnaire" means an Administrative Questionnaire,
----------------------------
an Administrative Details Reply Form or similar form provided by Administrative
Agent to each Bank.
"Advance Payment Contract" means any contract whereby any Credit Party
------------------------
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (each, an "Advance Payment") to be applied toward
---------------
payment of the purchase price of Hydrocarbons produced or to be produced from
Mineral Interests owned by any Credit Party and which Advance Payment is, or is
to be, paid in advance of actual delivery of such production to or for the
account of the purchaser regardless of such production, or (b) grants an option
or right of refusal to the purchaser to take delivery of such production in lieu
of payment, and, in either of the foregoing instances, the Advance Payment is,
or is to be, applied as payment in full for such production when sold and
delivered or is, or is to be, applied as payment for a portion only of the
purchase price thereof or of a percentage or share of such production; provided,
--------
that inclusion of the standard "take or pay" provision in any gas sales or
----
purchase contract or any other similar contract shall not, in and of itself,
constitute such contract as an Advance Payment Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
---------
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person and, with respect to any Credit Party,
means, any director, executive officer, general partner or manager of such
Credit Party and any Person who holds five percent (5%) or more of the voting
stock, partnership interests, membership interests or other ownership interests
of such Credit Party. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
membership interests or partnership interests, or by contract or otherwise.
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"Agent" means Administrative Agent, Sole Lead Arranger or Book Manager,
-----
and "Agents" means Administrative Agent, Sole Lead Arranger and Book Manager,
------
collectively.
"Agreement" means this Fourth Amended and Restated Credit Agreement, as
---------
the same may hereafter be modified, amended or supplemented from time to time.
"Applicable Environmental Law" means any international, foreign,
----------------------------
federal, state or local law, common law, ordinance, regulation or policy, as
well as order, decree, permit, judgment or injunction issued, promulgated,
approved, or entered thereunder, relating to the environment, health and safety,
or Hazardous Substances (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof) or to
industrial hygiene or the environmental conditions on, under, or about any real
property owned, leased or operated at any time by any Credit Party or any real
property owned, leased or operated by any other party including, without
limitation, soil, groundwater, and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of
-------------------------
Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank)
designated for such Type of Loan on the signature pages hereof or such other
office of such Bank (or an affiliate of such Bank) as such Bank may from time to
time specify to Administrative Agent and Borrower by written notice in
accordance with the terms hereof as the office by which Loans of such Type are
to be made and maintained.
"Applicable Margin" means, on any date, with respect to each Eurodollar
-----------------
Loan, an amount determined by reference to the ratio of Outstanding Credit to
the Borrowing Base on such date in accordance with the table below:
======================================= =====================================
Ratio of Outstanding Applicable Margin for
Credit to Borrowing Base Eurodollar Tranches
--------------------------------------- -------------------------------------
# .50 to 1 1.250%
--------------------------------------- -------------------------------------
>.50 to 1 # .75 to 1 1.500%
--------------------------------------- -------------------------------------
> .75 to 1 # .90 to 1 1.875%
--------------------------------------- -------------------------------------
> .90 to 1 2.250%
======================================= =====================================
"Approved Fund" means any Fund that is administered or managed by (a) a
-------------
Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity
that administers or manages a Bank.
"Approved Petroleum Engineer" means Schlumberger Holditch-Reservoir
---------------------------
Technologies Consulting Services, or any other reputable firm of independent
petroleum engineers as shall be selected by Borrower and approved by Required
Banks, such approval not to be unreasonably withheld.
"Assignment and Assumption Agreement" means an assignment and
-----------------------------------
assumption agreement entered into by a Bank and an Eligible Assignee and
accepted by Administrative
- 3 -
Agent, in substantially the form of Exhibit I or any other form approved by the
Administrative Agent.
"Authorized Officer" means, as to any Person, its Chief Executive
-----------------
Officer, its President, its Chief Financial Officer, any of its Vice Presidents,
its Treasurer or its corporate Secretary.
"Availability" means, as of any date, the remainder of (a) the
------------
Borrowing Base in effect on such date, minus (b) the Outstanding Credit on such
date.
"Bank" means any financial institution reflected on Schedule 1 hereto
---- ----------
as having a Commitment and its successors and permitted Assignees, and "Banks"
-----
shall mean all Banks.
"Bank of America" means Bank of America, N.A., a national banking
---------------
association, in its capacity as a Bank.
"Base Rate" means, for any day, the rate per annum equal to the higher
---------
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective automatically and
without notice to Borrower or any Bank on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means the portion of the principal of the Loan bearing
--------------
interest with reference to the Base Rate.
"Book Manager" means Banc of America Securities LLC in its capacity as
------------
book manager for the credit facility hereunder or any successor thereto.
"Borrower" means Quicksilver Resources Inc., a Delaware corporation.
--------
"Borrower Pledge Agreement" means an Amended and Restated Pledge
-------------------------
Agreement substantially in the form of Exhibit A hereto (with applicable
---------
conforming changes), to be executed by Borrower pursuant to which Borrower shall
pledge to Administrative Agent, for the ratable benefit of Banks, all of the
issued and outstanding Equity owned by Borrower of each existing or hereafter
acquired Subsidiary of Borrower to secure the Obligations.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
---------
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
--------------
"Base Rate Borrowing," and any Borrowing which will constitute a Eurodollar Loan
-------------------
is referred to herein as a "Eurodollar Borrowing."
--------------------
"Borrowing Base" means the loan value attributable to certain of
--------------
Borrower's and its Subsidiaries' Mineral Interests as determined in accordance
with Article VI hereof.
----------
"Borrowing Base Deficiency" means, as of any date, the amount, if any,
-------------------------
by which the Outstanding Credit on such date exceeds the Borrowing Base in
effect on such date; provided, that, for purposes of determining the existence
-------- ----
and amount of any Borrowing Base Deficiency,
- 4 -
Letter of Credit Exposure will not be deemed to be outstanding to the extent it
is secured by cash in the manner contemplated by Section 3.1(b).
--------------
"Borrowing Base Properties" means all Mineral Interests evaluated by
-------------------------
Banks for purposes of establishing the Borrowing Base.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
--------------
Business Day, as the case may be, upon which the proceeds of any Borrowing are
made available to Borrower or to satisfy any obligation of any Credit Party.
"Certificate of Effectiveness" means a Certificate of Effectiveness in
----------------------------
the form of Exhibit J attached hereto to be executed by Borrower and
---------
Administrative Agent upon the satisfaction of each of the conditions precedent
contained in Section 8.1 hereof.
-----------
"Certificate of Ownership Interests" means a Certificate of Ownership
----------------------------------
Interests in the form of Exhibit G attached hereto to be executed and delivered
---------
by an Authorized Officer of Borrower pursuant to Section 8.1(a)(xvii) hereof.
--------------------
"Change of Control" means that, for any reason, any Person or group (as
-----------------
defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than the
Xxxxxx Group shall become the legal and beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of greater than thirty percent (30%) of the
outstanding voting power of all classes of capital stock then outstanding of
Borrower entitled (without regard to the occurrence of any contingency) to vote
in elections of directors of Borrower.
"Cinnabar" means Cinnabar Energy Services and Trading, L.L.C., a
--------
Michigan limited liability company.
"Cinnabar Marketing Obligations" means obligations of Cinnabar to pay
------------------------------
(a) to third party producers or marketers of Hydrocarbons the purchase price of
any Hydrocarbons purchased by Cinnabar from such third parties and then
aggregated for resale with Hydrocarbons produced by Borrower and its
Subsidiaries, and (b) to third party providers the costs of storage, pipeline
and processing services with respect to such aggregated Hydrocarbons.
"Closing Date" means the date upon which all of the conditions
------------
precedent set forth in Section 8.1 have been satisfied or waived, and Borrower
-----------
and Administrative Agent have executed and delivered the Certificate of
Effectiveness.
"Co-Documentation Agents" means, collectively, CIBC Inc. and The Bank
-----------------------
of Nova Scotia.
"Co-Syndication Agents" means, collectively, Fortis Capital Corp. and
---------------------
BNP Paribas.
"Code" means the Internal Revenue Code of 1986, as amended.
----
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"Collateral Assignment" means, collectively, that certain (i) Fourth
---------------------
Amended and Restated Collateral Assignment of Promissory Notes and Contract
Rights dated as of the Closing Date, executed by Borrower in favor of
Administrative Agent, pursuant to which Borrower assigns to Administrative Agent
and grants Administrative Agent a security interest in certain of the Existing
Section 29 Documents, (ii) Third Amended and Restated Collateral Assignment of
Promissory Notes and Contract Rights dated as of the Closing Date, executed by
Borrower in favor of Administrative Agent, pursuant to which Borrower assigns to
Administrative Agent and grants Administrative Agent a security interest in
certain of the Existing Section 29 Documents, and (iii) Amended and Restated
Collateral Assignment of Promissory Notes and Contract Rights dated as of the
Closing Date, executed by Borrower in favor of Administrative Agent, pursuant to
which Borrower assigns to Administrative Agent and grants Administrative Agent a
security interest in certain of the Mariner Section 29 Documents.
"Commitment" means, with respect to any Bank, the commitment of such
----------
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to Section 3.1 hereof, as such Commitment may be terminated and reduced
-----------
from time to time in accordance with the provisions hereof. On the Closing Date
the amount of each Bank's Commitment is the amount set forth opposite such
Bank's name on Schedule 1 hereto; provided, that after giving effect to any
---------- -------- ----
Assignment and Assumption Agreement, the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative Agent pursuant to
Section 15.10(b).
----------------
"Commitment Percentage" means, with respect to each Bank, the
---------------------
Commitment Percentage for such Bank set forth on Schedule 1 hereto; provided,
---------- --------
that after giving effect to any Assignment and Assumption Agreement, the
----
Commitment of each Bank shall be the amount set forth in the Register maintained
by Administrative Agent pursuant to Section 15.10(c).
----------------
"Commodity Price Risk Policy" has the meaning set forth in Section
--------------------------- -------
9.22.
----
"Consolidated Current Assets" means, for any Person at any time, the
---------------------------
current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time.
"Consolidated Current Liabilities" means, for any Person at any time,
--------------------------------
the current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of Borrower, excluding current maturities of Long Term
Debt of Borrower and its Consolidated Subsidiaries outstanding at such time.
"Consolidated EBITDAX" means, for any Person for any period, the
--------------------
Consolidated Net Income of such Person for such period, plus each of the
following determined for such Person and its Consolidated Subsidiaries on a
consolidated basis for such period: (a) any provision for (or less any benefit
from) income or franchise Taxes included in determining Consolidated Net Income;
(b) Consolidated Net Interest Expense deducted in determining Consolidated Net
Income; (c) depreciation, depletion and amortization expense deducted in
determining Consolidated Net Income; (d) other non-cash charges deducted in
determining Consolidated Net Income to the extent not already included in
clauses (b) and (c) of this definition; and (e) costs
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and expenses associated with seismic, geological and geophysical services
performed in connection with, and attributable to, oil and gas exploration, to
the extent deducted in determining Consolidated Net Income.
"Consolidated Net Income" means, for any Person as of any period, the
-----------------------
net income (or loss) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with GAAP, but excluding: (a) the income of any
other Person (other than its Consolidated Subsidiaries) in which such Person or
any of its Subsidiaries has an ownership interest, unless received by such
Person or its Consolidated Subsidiaries in a cash distribution; (b) any
after-tax gains attributable to asset dispositions; (c) any non-cash gains,
losses or charges on any Hedging Agreement resulting from the requirements of
SFAS 133 for that period; and (d) to the extent not included in clauses (a), (b)
and (c) above, any after-tax (i) extraordinary gains (net of extraordinary
losses) or (ii) non-cash nonrecurring gains.
"Consolidated Net Interest Expense" means, for any Person for any
---------------------------------
period, the remainder of the following for such Person and its Consolidated
Subsidiaries for such period: (a) interest expense, minus (b) interest income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
----------------------- -------------------------
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
"Continue," "Continuation," and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 3.3(c) and/or Article V hereof of a Eurodollar
-------------- ---------
Loan from one Interest Period to the next Interest Period.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, contract, instrument or
other undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert," "Conversion," and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 3.3(c) and/or Article V hereof of one Type of Loan into
-------------- ---------
another Type of Loan.
"Credit Parties" means, collectively, Borrower and each Subsidiary of
--------------
Borrower, and "Credit Party" means any one of the foregoing.
------------
"Xxxxxx Group" means, collectively, Mercury, QELC, the estate of Xxxxx
------------
Xxxxxx, Xxxx Xxxxxx, Xxxx Xxxxxx Self, Xxxxx Xxxxxx and Xxxxxx Xxxxxx, and their
respective designees, heirs, trusts and estates.
"Debt" means, for any Person at any time, without duplication, (a) all
----
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued for the account
of such Person, (f) any amount
- 7 -
owed by such Person representing the deferred purchase price of property or
services other than accounts payable incurred in the ordinary course of
business and in accordance with customary trade terms and which have not been
outstanding for more than ninety (90) days past the invoice date, (g) all
obligations of such Person secured by a Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that
Person, and (h) all liability of such Person as a general partner of a
partnership for obligations of such partnership of the nature described in (a)
through (g) preceding.
"Default" means any condition or event which constitutes an Event of
-------
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Default Rate" means, in respect of any principal of the Loan or any
------------
other amount payable by Borrower under any Loan Paper (whether at stated
maturity, by acceleration, or otherwise), a rate per annum during the period
commencing on the due date until such amount is paid in full equal to the sum of
(i) three percent (3%), plus (ii) the Base Rate as in effect from time to time
(provided, that if such amount in default is principal of a Eurodollar Borrowing
-------- ----
and the due date is a day other than the last day of an Interest Period
therefor, the "Default Rate" for such principal shall be, for the period from
------------
and including the due date and to but excluding the last day of the Interest
Period therefor, (a) three percent (3%), plus (b) the Applicable Margin, plus
(c) the Eurodollar Rate for such Borrowing for such Interest Period as provided
in Section 3.3 hereof, and thereafter, the rate provided for above in this
-----------
definition).
"Distribution" by any Person, means (a) with respect to any stock
------------
issued by such Person or any partnership, joint venture, limited liability
company, membership or other interest of such Person, the retirement,
redemption, purchase, or other acquisition for value of any such stock or
partnership, joint venture, limited liability company, membership or other
interest, (b) the declaration or payment of any dividend or other distribution
on or with respect to any stock, partnership, joint venture, limited liability
company, membership or other interest of any Person, and (c) any other payment
by such Person with respect to such stock, partnership, joint venture, limited
liability company, membership or other interest of such Person.
"Domestic Business Day" means any day except a Saturday, Sunday or
---------------------
other day on which national banks in Dallas, Texas are authorized by Law to
close.
"Domestic Lending Office" means, as to each Bank, (a) its office
-----------------------
located at its address identified on Schedule 1 hereto as its Domestic Lending
----------
Office, (b) its office located at its address identified on the Register (as
defined in Section 15.10(c)) as its Domestic Lending Office, or (c) such other
----------------
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to Borrower and Administrative Agent.
"Eligible Assignee" means (a) a Bank; (b) an Affiliate of a Bank; (c)
-----------------
an Approved Fund; and (d) any other Person (other than a natural Person)
approved by (i) the Administrative Agent and (ii) unless a Default or Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the
-------------
- 8 -
foregoing, "Eligible Assignee" shall not include the Borrower or any of the
-----------------
Borrower's Affiliates or Subsidiaries.
"Environmental Complaint" means any complaint, summons, citation,
-----------------------
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, state or municipal
authority or any other party against any Credit Party involving (a) a Hazardous
Discharge from, onto or about any real property owned, leased or operated at any
time by any Credit Party, (b) a Hazardous Discharge caused, in whole or in part,
by any Credit Party or by any Person acting on behalf of or at the instruction
of any Credit Party, or (c) any violation of any Applicable Environmental Law by
any Credit Party.
"Equity" means shares of capital stock or a partnership, profits,
------
capital, member or other equity interest, or options, warrants or any other
rights to substitute for or otherwise acquire the capital stock or a
partnership, profits, capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"ERISA Affiliate" means any corporation or trade or business under
---------------
common control with any Credit Party as determined under section 4001(a)(14) of
ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
-----------------------
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, (a) its office,
-------------------------
branch or affiliate located at its address identified on Schedule 1 hereto as
----------
its Eurodollar Lending Office, (b) its office, branch or affiliate located at
its address identified on the Register (as defined in Section 15.10(b)) as its
----------------
Eurodollar Lending Office, or (c) such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"Eurodollar Loans" means Loans that bear interest at rates based upon
----------------
the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Loan which is the subject of a
---------------
Eurodollar Tranche for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term
"Eurodollar Rate" shall mean, for the principal amount of the Loan which is the
---------------
subject of a Eurodollar Tranche for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
-------- -------
Reuters Screen LIBO Page, the
- 9 -
applicable rate shall be the arithmetic mean of all such rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%).
"Events of Default" has the meaning set forth in Section 13.1.
----------------- ------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Excluded Accounts" means, collectively, all accounts receivable or
-----------------
other Debt which are owed to Borrower by any Related Party, other than those
which arise in the ordinary course of business as a result of sales of goods to,
or rendering of services to, a Related Party who has the ability to pay, and is
expected to pay, the same.
"Exhibit" refers to an exhibit attached to this Agreement and
-------
incorporated herein by reference, unless specifically provided otherwise.
"Existing Credit Agreement" has the meaning assigned to such term in
-------------------------
the recitals hereto.
"Existing Reserve Report" means an engineering and economic analysis of
-----------------------
certain of the Borrowing Base Properties prepared as of January 1, 2002 by
Schlumberger Holditch-Reservoir Technologies Consulting Services.
"Existing Section 29 Documents" means each of the following documents,
-----------------------------
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Assignment, dated as of December 1, 1997, by and between
Mercury, as assignor, and MA Gas LLC ("MAG"), as assignee;
---
(b) Assignment by and between Mercury, as assignor, and
Borrower, as assignee;
(c) Partial Assignment of Reversionary Interest, dated
effective as of December 1, 1997, by and between Borrower, as assignor, and MAG,
as assignee;
(d) Conveyance of Production Payment, dated as of December
1, 1997, by and between MAG, as assignor, and Mercury, as assignee;
(e) Amendment to Conveyance of Production Payment, dated
effective as of December 1, 1997, by and between MAG, as assignor, and Borrower,
as assignee;
(f) Second Amendment to Conveyance of Production Payment,
dated effective as of March 1, 1997, by and between MAG and Borrower;
(g) Mortgage, dated as of December 1, 1997, by and between
MAG, as mortgagor, and Mercury, as mortgagee;
- 10 -
(h) Assignment, dated as of December 1, 1997 by and between
Michigan Gas Partners, a Texas limited partnership and predecessor in interest
to Borrower ("MGP"), as assignor, and MGP Gas L.L.C. ("MGPG"), as assignee;
--- ----
(i) Partial Assignment of Reversionary Interest, dated
effective as of December 1, 1997, by and between Borrower, as assignor, and
MGPG, as assignee
(j) Conveyance of Production Payment, dated as of December
1, 1997, by and between MGPG, as assignor, and MGP, as assignee;
(k) Amendment to Conveyance of Production Payment, dated
effective as of December 1, 1997, by and between MGPG, as assignor, and
Borrower, as assignee;
(l) Mortgage, dated as of December 1, 1997, by and between
MGPG, as mortgagor, and MGP, as mortgagee;
(m) Purchase and Sale Agreement, dated as of December 1,
1997, by and between Mercury, as seller, and MAG, as buyer;
(n) Amendment of Purchase and Sale Agreement, dated
effective as of December 1, 1997, by and among Mercury, Borrower and MAG;
(o) Second Amendment to Purchase Agreement, dated as of
March 31, 2000, by and between Borrower and MAG;
(p) Credit Payment Note, dated December 1, 1997, executed by
MAG, as maker, payable to the order of Mercury, as payee;
(q) Amended and Restated Credit Payment Note, dated as of
December 1, 1997, executed by MAG, as maker, payable to the order of Borrower,
as payee;
(r) Fixed Payment Note, dated December 1, 1997, executed by
MAG, as maker, payable to the order of Mercury, as payee, in the original
principal amount of $5,092,721;
(s) Amended and Restated Fixed Payment Note, dated as of
December 1, 1997, executed by MAG, as maker, payable to the order of Borrower,
as payee;
(t) Assignment of Enforcement Rights, dated effective
December 1, 1997, by and between MAG and Mercury, and acknowledged and consented
to by State Street and Antrim Corporation;
(u) Management Agreement, dated as of December 1, 1997, by
and between MAG and Mercury, as manager;
(v) Purchase and Sale Agreement, dated as of December 1,
1997, by and between MGP, as seller, and MGPG, as buyer;
- 11 -
(w) Credit Payment Note, dated December 1, 1997, executed by
MGPG, as maker, payable to the order of MGP, as payee;
(x) Fixed Payment Note, dated December 1, 1997, executed by
MGPG, as maker, payable to the order of MGP, as payee, in the original principal
amount of $2,017,373;
(y) Assignment of Enforcement Rights, dated effective
December 1, 1997, by and between MGPG and MGP, and acknowledged and consented to
by State Street and Antrim Corporation; and
(z) Management Agreement, dated as of December 1, 1997, by
and between MGPG and MGP, as manager.
"Existing Section 29 Mortgages" means each of the following documents,
-----------------------------
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Mortgage, dated as of December 1, 1997, by and between
Mercury, as mortgagor, and MAG, as mortgagee; and
(b) Mortgage, dated as of December 1, 1997, by and between
MGPG, as mortgagor, and MGP, as mortgagee.
"Falcon Seaboard Settlement Agreement" means that certain settlement
------------------------------------
agreement dated as of September 30, 1994, pursuant to which Borrower (as
successor in interest to Mercury) is obligated to deliver certain gas volumes at
a fixed price, as more particularly described therein.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (a) if the day for which such rate is to be
-------- ----
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
-----------------
provided, that if no Person serves in such capacity, "Financial Officer" shall
-------- ---- -----------------
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
--------------
June 30, September 30 and December 31 of each Fiscal Year.
- 12 -
"Fiscal Year" means a twelve (12) month period ending December 31.
-----------
"Fund" means any Person (other than a natural person) that is (or will
----
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"GAAP" means those generally accepted accounting principles and
----
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
Closing Date so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of a Person and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by the said Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of the said
Boards) in order to continue as a generally accepted accounting principle or
practice may be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby
-----------------------
any Credit Party, or any other party having an interest in any Hydrocarbons to
be produced from Mineral Interests in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
----------------------
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or
---------
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions, by "comfort letter" or other similar undertaking of support or
otherwise) or (b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part),
provided, that the term "Guarantee" shall not include endorsements for
-------- ---- ---------
collection or deposit in the ordinary course of business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
-------------------
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
-------------------
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or
- 13 -
infectious pursuant to any Applicable Environmental Law or which is otherwise
regulated by any Applicable Environmental Law or is required to be investigated
and/or remediated by or pursuant to any Applicable Environmental Law.
"Hedge Agreements" means, collectively, any agreement, instrument,
----------------
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.
"Hedge Transaction" means any commodity, interest rate, currency or
-----------------
other swap, option, collar, futures contract or other contract pursuant to which
a Person xxxxxx risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. "Hedge
-----
Transactions" expressly includes Oil and Gas Hedge Transactions.
------------
"Immaterial Title Deficiencies" has the meaning set forth in Section
----------------------------- -------
9.9 herein
---
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
------------
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
"Initial Borrowing Base" means a Borrowing Base in the amount of
----------------------
$210,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and
---------------
each Continuation of Eurodollar Loans and each Conversion of all or part of the
Base Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), three (3)
and, if available to all Banks, six (6) months thereafter, as Borrower may elect
in the applicable Request for Borrowing or Notice of Continuation or Conversion;
provided, that:
-------- ----
(a) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Eurodollar Business Day of a
calendar month;
(c) if any Interest Period includes a date on which any
payment of principal of the Eurodollar Loans which are the subject of such
Borrowing, Continuation or Conversion is
- 14 -
required to be made hereunder, but does not end on such date, then (i) the
principal amount of such Eurodollar Loans required to be repaid on such date
shall have an Interest Period ending on such date, and (ii) the remainder of
each such Eurodollar Loans shall have an Interest Period determined as set
forth above; and
(d) no Interest Period shall extend past the Termination
Date.
"Investment" means, with respect to any Person, any loan, advance,
----------
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that
-------- ----
"Investment" shall not include customer and trade accounts which are payable in
----------
accordance with customary trade terms.
"Laws" means all applicable statutes, laws, ordinances, regulations,
----
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
--------------
its Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
-------------------------
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit
--------------------
issued hereunder, a fee in an amount equal to a percentage of the stated amount
of such Letter of Credit (calculated on a per annum basis based on the stated
term of such Letter of Credit) determined by reference to the ratio of the
Outstanding Credit to the Borrowing Base in effect on the date such Letter of
Credit is issued in accordance with the table below:
======================================= =====================================
Ratio of Outstanding Per Annum Letter of
Credit to Borrowing Base Credit Fee
--------------------------------------- -------------------------------------
# .50 to 1 1.250%
--------------------------------------- -------------------------------------
> .50 to 1 # .75 to 1 1.500%
--------------------------------------- -------------------------------------
> .75 to 1 # .90 to 1 1.875%
--------------------------------------- -------------------------------------
> .90 to 1 2.250%
======================================= =====================================
"Letter of Credit Fronting Fee" means, with respect to any Letter of
-----------------------------
Credit issued hereunder, a fee equal to one hundred twenty five one thousandths
of one percent (0.125%) per annum of the stated amount of such Letter of Credit.
"Letters of Credit" means letters of credit issued for the account of
-----------------
Borrower pursuant to Section 3.1(b).
--------------
- 15 -
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means the revolving credit loan in an amount outstanding at any
----
time not to exceed the amount of the Total Commitment then in effect less the
amount of the Letter of Credit Exposure then outstanding to be made by Banks to
Borrower in accordance with Section 3.1 hereof. The Loan may be comprised of the
-----------
Base Rate Loan and one or more Eurodollar Loans as Borrower may select in a
Request for Borrowing or a Notice of Continuation or Conversion.
"Loan Papers" means this Agreement, the Notes, any Subsidiary Guaranty
-----------
(which may hereafter be executed), all Mortgages now or at any time hereafter
delivered pursuant to Section 7.1, the Collateral Assignments, any Borrower
-----------
Pledge Agreement (which may hereafter be executed), any Subsidiary Pledge
Agreement (which may hereafter be executed), the Subordination Agreement and all
other certificates, documents or instruments delivered in connection with this
Agreement, as the foregoing may be amended from time to time.
"Long Term Debt" means Debt which matures more than one year from the
--------------
date it is incurred, or which can be extended at the option of the obligor(s) to
a date more than one year from the date it is incurred.
"Margin Regulations" means Regulations T, U and X of the Board of
------------------
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
------------
"Mariner" means Mariner Gas LLC, a Massachusetts limited liability
-------
company.
"Mariner Section 29 Documents" means each of the following documents,
----------------------------
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Assignment, dated effective as of April 1, 2000, by and
between Borrower, as assignor, and Mariner, as assignee;
(b) Conveyance of Production Payment, dated as of March 31,
2000, by and between Mariner, as assignor, and Borrower, as assignee;
(c) Mariner Section 29 Mortgage;
(d) Purchase and Sale Agreement dated as of March 31, 2000,
by and between Borrower, as seller, and Mariner, as buyer;
(e) Fixed Payment Note, dated April 1, 2000, executed by
Mariner, as maker, payable to the order of Borrower, as payee, in the original
principal amount of $22,803,169;
- 16 -
(f) Assignment of Enforcement Rights, dated effective March
31, 2000, by and between Mariner and Borrower, and acknowledged and consented to
by State Street;
(g) Management Agreement, dated as of March 31, 2000, by and
between Mariner and Borrower, as manager; and
(h) Intercreditor Agreement, dated as of March 31, 2000, by
and among Administrative Agent, TCW Agent and Mariner.
"Mariner Section 29 Mortgage" means that certain Mortgage, dated as of
---------------------------
March 31, 2000, by and between Borrower, as mortgagor, and Mariner, as mortgagee
(as the same may have been amended, modified, extended or supplemented).
"Material Adverse Change" means any circumstance or event that has had
-----------------------
or would reasonably be expected to have (a) a material and adverse effect on the
financial condition, business operations, prospects, properties or assets of any
Credit Party, (b) an adverse effect on (i) the validity and enforceability of
any Loan Paper, or (ii) the perfection or priority of any Lien purported to be
created thereby, or (c) a material adverse effect on the right or ability of any
Credit Party to fully, completely and timely pay and perform its obligations
under the Loan Papers.
"Material Agreement" means any material written or oral agreement,
------------------
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
----------------------
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net negative gas imbalance to any Credit
Party in excess of $250,000.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if
-------------------
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the portion of the Loan owed to such Bank at such time to exceed the maximum
amount which such Bank would be allowed to contract for, charge, take, reserve,
or receive under applicable Laws after taking into account, to the extent
required by applicable Laws, any and all relevant payments or charges under the
Loan Papers. To the extent the Laws of the State of Texas are applicable for
purposes of determining the "Maximum Lawful Rate," such term shall mean the
-------------------
"indicated rate ceiling" from time to time in effect under Chapter 303 of the
Texas Finance Code, as amended, substituted for or restated, or, if permitted by
applicable Law and effective upon the giving of the notices required by such
Chapter 303 (or effective upon any other date otherwise specified by applicable
Law), the "quarterly ceiling" or "annualized ceiling" from time to time in
effect under such Chapter 303, whichever Administrative Agent (with the approval
of Required Banks) shall elect to substitute for the "indicated rate ceiling,"
and vice versa, each such substitution to have the effect provided in such
---- -----
- 17 -
Chapter 303, and Administrative Agent (with the approval of Required Banks)
shall be entitled to make such election from time to time and one or more times
and, without notice to Borrower, to leave any such substitute rate in effect for
subsequent periods in accordance with such Chapter 303.
"Mercury" means Mercury Exploration Company, a Texas corporation.
-------
"Mercury Subordinate Debt" means all Debt of Borrower evidenced by the
------------------------
Mercury Subordinate Note.
"Mercury Subordinate Note" means that certain promissory note dated as
------------------------
of January 5, 2001, in the original principal amount of $3,200,000, executed by
Borrower in favor of Mercury.
"MGV" means MGV Energy Inc., a corporation organized under the laws of
---
Canada.
"Mineral Interests" means rights, estates, titles, and interests in and
-----------------
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interest, production payment, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Laws, which now or hereafter include all or any
part of the foregoing. Without limiting the foregoing, in the case of Borrower,
"Mineral Interests" also includes all rights of Borrower under the Section 29
-----------------
Documents.
"MMI" means Mercury Michigan, Inc., a Michigan corporation.
---
"Monthly Date" means the fifteenth day of each calendar month.
------------
"Mortgages" means all mortgages, deeds of trusts, amendments to
---------
mortgages, security agreements, amendments to security agreements, assignments
of production, amendments to assignments of production, pledge agreements,
collateral mortgages, collateral chattel mortgages, collateral assignments,
financing statements and other documents, instruments and agreements evidencing,
creating, perfecting or otherwise establishing the Liens required by Section 7.1
hereof. All Mortgages shall be in form and substance satisfactory to
Administrative Agent in its sole discretion.
"Non-Recourse Debt" means indebtedness (a) secured solely by the assets
-----------------
acquired with the proceeds of such indebtedness, (b) with respect to which no
Credit Party shall have any liability for repayment beyond the assets pledged,
and (c) with respect to which Borrower has delivered to Banks an opinion in a
form satisfactory to Required Banks of counsel acceptable to Administrative
Agent stating that such indebtedness meets the criteria set forth in (a) and (b)
preceding.
"Note" means a promissory note of Borrower payable to the order of a
----
Bank, in substantially the form of Exhibit B hereto, in the amount of such
---------
Bank's Commitment, evidencing the obligation of Borrower to repay to such Bank
its Commitment Percentage of the
- 18 -
Loan, together with all modifications, extensions, renewals, and rearrangements
thereof, and "Notes" means all of such Notes collectively.
-----
"Notice of Continuation or Conversion" has the meaning set forth in
------------------------------------
Section 3.3(c).
--------------
"Obligations" means all present and future indebtedness, obligations
-----------
and liabilities, and all renewals and extensions thereof, or any part thereof,
of each Credit Party to Administrative Agent or to any Bank or any Affiliate of
any Bank arising pursuant to the Loan Papers or pursuant to any Hedge Agreement
or Hedge Transaction entered into with any Bank or any Affiliate of any Bank,
and all interest accrued thereon and costs, expenses, and attorneys' fees
incurred in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.
"Oil and Gas Hedge Transaction" means a Hedge Transaction pursuant to
-----------------------------
which any Person xxxxxx the price to be received by it for future production of
Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
------------------
outstanding Letter of Credit Exposure on such date, including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Loan on such date,
including the amount of any Borrowing to be made on such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, with respect to any asset:
----------------------
(a) Liens (if any) securing the Obligations in favor of
Banks;
(b) minor defects in title which do not secure the payment
of money and otherwise have no material adverse effect on the value or the
operation of the subject property, and for the purposes of this Agreement, a
minor defect in title shall include, but not be limited to, easements,
rights-of-way, servitudes, permits, surface leases and other similar rights in
respect of surface operations, and easements for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other easements and
rights-of-way, on, over or in respect of any of the properties of any Credit
Party that are customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing
obligations for labor, services, materials and supplies furnished to Mineral
Interests which are not delinquent (except to the extent permitted by Section
-------
10.7);
----
(d) mechanic's, materialmen's, warehouseman's, journeyman's
and carrier's Liens and other similar Liens arising by operation of Law in the
ordinary course of business which are not delinquent (except to the extent
permitted by Section 10.7);
------------
- 19 -
(e) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action, as permitted by Section 10.7;
------------
(f) lease burdens payable to third parties which are
deducted in the calculation of discounted present value in the Reserve Report
including, without limitation, any royalty, overriding royalty, net profits
interest, production payment, carried interest or reversionary working interest
in existence as of the Closing Date or as a result of or in accordance with the
Credit Party's acquisition of the property burdened thereby;
(g) the Section 29 Mortgages;
(h) the TCW Royalty Documents;
(i) Liens in favor of TCW Agent and the Subordinate
Noteholders to secure the Subordinate Debt which are junior, subordinate and
inferior to the Liens of the Mortgages; and
(j) Liens securing Non-Recourse Debt to the extent permitted
by Section 11.1; and
------------
(k) Liens perfected or purportedly perfected under the
following financing statements: (i) file #C975864, naming Terra, as debtor,
filed with the Secretary of State of Michigan on May 30, 1995; (ii) file
#C982828, naming Terra, as debtor, filed with the Secretary of State of Michigan
on June 16, 1995; (iii) file #C971103, naming Guardian Energy Management
Corporation and Terra, as debtors, filed with the Secretary of State of Michigan
on May 17, 1995; (iv) file #C998172, naming Guardian Energy Management
Corporation and Terra, as debtors, filed with the Secretary of State of Michigan
on August 1, 1995; (v) file #C998173, naming Guardian Energy Management
Corporation and Terra, as debtors, filed with the Secretary of State of Michigan
on August 1, 1995; (vi) file #C971101, naming Guardian Energy Management
Corporation and Terra, as debtors, filed with the Secretary of State of Michigan
on May 17, 1995; and (vii) file #D4D2038, naming Guardian Energy Management
Corporation and Terra, as debtors, filed with the Secretary of State of Michigan
on July 23, 1998.
"Permitted Investments" means (a) readily marketable direct obligations
---------------------
of the United States of America (or investments in mutual funds or similar funds
which invest solely in such obligations), (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$500,000,000, (c) Investments held by any Credit Party in the form cash or cash
equivalents, (d) Investments by any Credit Party in Sweep Accounts, (e)
commercial paper of a domestic issuer if at the time of purchase such paper is
rated in one of the two highest ratings categories of Standard and Poor's
Corporation or Xxxxx'x Investors Service, (f) money market mutual or similar
funds having assets in excess of $100,000,000, at least 95% of the assets of
which are comprised of assets specified in clauses (a) through (e) above, (g)
Investments described on Schedule 2 hereto, (h) Investments by any Credit Party
----------
in a direct or indirect
- 20 -
Subsidiary of Borrower, so long as such Subsidiary (other than Voyager) has
provided a Subsidiary Guaranty and the Equity of such Subsidiary owned by
Borrower or a Subsidiary of Borrower has been pledged to Administrative Agent
pursuant to a Borrower Pledge Agreement or a Subsidiary Pledge Agreement, as
applicable, and (i) other Investments; provided that, the aggregate amount of
-------- ----
all other Investments made pursuant to this clause (i) outstanding at any time
shall not exceed $500,000 (measured on a cost basis).
"Permitted Redemption" means (a) the retirement, redemption or payment
--------------------
at any time and from time to time by Borrower or any Affiliate of Borrower of
all or a portion of the principal of and interest on the Subordinate Debt prior
to the stated maturity thereof, (b) the retirement, redemption or payment at any
time and from time to time by Borrower or any Affiliate of Borrower of all or a
portion of the principal of and interest on the Mercury Subordinate Debt prior
to the stated maturity thereof, or (c) delivery of gas volumes at any time and
from time to time prior to the stated delivery date thereof by Borrower or any
Affiliate of Borrower under the Falcon Seaboard Settlement Agreement.
"Person" means an individual, a corporation, a partnership, an
------
association, a trust or any other entity or organization, including a Government
Authority.
"Plan" means an employee benefit plan within the meaning of section
----
3(3) of ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which any Credit Party or an ERISA Affiliate of a Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's dependents or beneficiaries, has any current
or future right to benefits resulting from the present or former employee's
employment relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.
"Prime Rate" means the per annum rate of interest established from time
----------
to time by Bank of America as its prime rate, which rate may not be the lowest
rate of interest charged by Bank of America to its customers.
"Property Description" means the legal description of Mineral Interests
--------------------
attached to the Certificate of Ownership Interests.
"Proved Mineral Interests" means, collectively, Proved Producing
------------------------
Mineral Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests
-------------------------------------
which constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
----------------------------------
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests
------------------------------------
which constitute proved undeveloped reserves.
- 21 -
"QELC" means Quicksilver Energy, L.C., a Michigan limited liability
----
company.
"Quarterly Date" means the last day of each March, June, September and
--------------
December.
"Recognized Value" means, with respect to Mineral Interests, the
----------------
discounted present value of the estimated net cash flow to be realized from the
production of Hydrocarbons from such Mineral Interests as determined by Bank of
America for purposes of determining the portion of the Borrowing Base which it
attributes to such Mineral Interests in accordance with Article VI hereof.
----------
"Redetermination" means any Scheduled Redetermination or any Special
---------------
Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
--------------------
Redetermination, each May 1 and November 1, commencing November 1, 2002, and (b)
with respect to any Special Redetermination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date of
a request for a Special Redetermination.
"Regulation A" means Regulation A of the Board of Governors of the
------------
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees,
shareholders, agents and advisors of such Person and such Person's Affiliates.
"Request for Borrowing" has the meaning set forth in Section 3.1(d).
--------------------- --------------
"Request for Letter of Credit" has the meaning set forth in Section
---------------------------- -------
3.1(e).
------
"Required Banks" means Banks holding at least sixty-six and two-thirds
--------------
percent (66 2/3%) of the Outstanding Credit, or if no principal amount of the
Loans or Letter of Credit Exposure is then outstanding, Banks holding at least
sixty-six and two-thirds percent (66 2/3%) of the Total Commitment.
"Required Reserve Value" means Proved Mineral Interests that have a
----------------------
Recognized Value of not less than eighty percent (80%) of the Recognized Value
of all Proved Mineral Interests held by Borrower and its Subsidiaries.
"Reserve Report" means an unsuperseded engineering analysis of the
--------------
Mineral Interests owned by Borrower, in form and substance reasonably acceptable
to Required Banks, prepared in accordance with customary and prudent practices
in the petroleum engineering industry and Financial Accounting Standards Board
Statement 69. Each Reserve Report required to be delivered by March 31 of each
year pursuant to Section 6.1 shall be prepared by the Approved Petroleum
-----------
Engineer. Each other Reserve Report shall be prepared by Borrower's in-house
staff. Notwithstanding the foregoing, in connection with any Special
Redetermination requested by
- 22 -
Borrower, the Reserve Report shall be in form and scope mutually acceptable to
Borrower and Required Banks.
"Reserve Requirement" means, at any time, the maximum rate at which
-------------------
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
------------------
Distribution by such Person, (b) the retirement, redemption or prepayment prior
to scheduled maturity by such Person or any Affiliate of such Person of any Debt
of such Person, other than the Permitted Redemptions, (c) the retirement,
redemption or payment by Borrower or any Affiliate of Borrower of any part of
the principal of the Subordinate Debt at any time prior to the termination of
all Commitments and the payment and performance in full of the Obligations,
other than the Permitted Redemptions, or (d) upon the occurrence and during the
continuance of a Default, Event of Default or Borrowing Base Deficiency, and to
the extent not otherwise prohibited pursuant to the terms hereof or the terms of
the Subordination Agreement, the payment by Borrower or any Affiliate of
Borrower in cash of any interest on the Subordinate Debt in excess of ten
percent (10%).
"Schedule" means a "schedule" attached to this Agreement and
--------
incorporated herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing
-------------------------
Base pursuant to Section 6.2.
-----------
"Section" refers to a "section" or "subsection" of this Agreement
-------
unless specifically indicated otherwise.
"Section 29 Documents" means, collectively, the Existing Section 29
--------------------
Documents and the Mariner Section 29 Documents.
"Section 29 Mortgages" means, collectively, the Existing Section 29
--------------------
Mortgages and the Mariner Section 29 Mortgage.
"Sole Lead Arranger" means Banc of America Securities LLC in its
------------------
capacity as sole lead arranger for the credit facility hereunder, or any
successor thereto.
- 23 -
"Solvent" means, with respect to any Person on a particular date, the
-------
condition that, on such date, (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without limitation,
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 liability of such Person on its debts as they become absolute and
matured, (iii) 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, (iv) such Person does not intend to,
and such Person does not believe that it will, incur debts or liabilities beyond
its ability to pay as such debts and liabilities mature, and (v) such Person is
not engaged in a business or transaction, and such Person is not about to engage
in a business or transaction for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged.
"Special Redetermination" means any Redetermination of the Borrowing
-----------------------
Base pursuant to Section 6.3.
-----------
"State Street" means State Street Bank and Trust Company, a
------------
Massachusetts trust company.
"Subordinate Debt" means all Debt of Borrower outstanding under the
----------------
Subordinate Note Agreement, including all renewals and extensions thereof to the
extent permitted hereunder.
"Subordinate Note Agreement" means that certain Note Purchase Agreement
--------------------------
dated as of March 31, 2000, by and among Borrower, TCW Agent and Subordinate
Noteholders, as the same may be modified, amended, renewed, extended or restated
from time to time to the extent permitted hereunder and under the Subordination
Agreement.
"Subordinate Note Documents" means the Subordinate Note Agreement, the
--------------------------
Subordinate Notes, and all promissory notes, security agreements, deeds of
trust, assignments, guarantees and other documents, instruments and agreements
executed and delivered pursuant to the Subordinate Note Agreement evidencing,
securing, guaranteeing or otherwise pertaining to the Subordinate Debt and the
other obligations arising under the Subordinate Note Agreement, as the foregoing
may be amended, renewed, extended, supplemented, increased or otherwise modified
from time to time to the extent permitted hereunder and under the Subordination
Agreement.
"Subordinate Noteholders" means each holder of Subordinate Notes, and
-----------------------
their successors and assigns.
"Subordinate Notes" means, collectively, each of Borrower's 14.75%
-----------------
Second Mortgage Notes due March 30, 2009.
"Subordination Agreement" means the Subordination Agreement dated as of
-----------------------
March 31, 2000, by and among Bank of America, as administrative agent, TCW, as
collateral agent, and the noteholders party thereto, as the same may be renewed,
extended, amended and restated from time to time.
- 24 -
"Subsidiary" means, for any Person, any corporation or other entity of
----------
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term "Subsidiary" shall include Subsidiaries of Subsidiaries (and so
----------
on). Unless otherwise expressly stated herein, Voyager shall be deemed a
Subsidiary of Borrower.
"Subsidiary Guaranty" means a Guaranty substantially in the form of
-------------------
Exhibit C hereto to be executed by each existing and future Subsidiary of
---------
Borrower in favor of Banks pursuant to which each Subsidiary of Borrower
guaranties payment and performance in full of the Obligations.
"Subsidiary Pledge Agreement" means an Amended and Restated Pledge
---------------------------
Agreement substantially in the form of Exhibit A attached hereto (with
----------
applicable conforming changes) to be executed by each existing and future
Subsidiary of Borrower (for purposes of this definition and Section 7.1(d)
--------------
hereof, such Subsidiary is referred to herein and therein as a "First Tier
----------
Subsidiary"), pursuant to which such First Tier Subsidiary shall pledge to
----------
Administrative Agent, for the ratable benefit of Banks, all of the issued and
outstanding Equity owned by such First Tier Subsidiary of each existing or
hereafter created Subsidiary of such First Tier Subsidiary to secure the
Obligations.
"Sweep Accounts" means deposit accounts, the proceeds of which are
--------------
transferred nightly to an interest-bearing concentration account maintained by
Administrative Agent, and re-transferred each morning to the applicable Credit
Party's deposit accounts, all on terms and conditions satisfactory to
Administrative Agent.
"Taxes" means all taxes, assessments, filing or other fees, levies,
-----
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.
---
"TCW Agent" means TCW Asset Management Company, a California
---------
corporation, as collateral agent for the Subordinate Noteholders under the
Subordinate Note Agreement.
"TCW Royalty Documents" means, collectively, (a) the Royalty Agreement
---------------------
dated November 14, 1996 by and between QELC and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P., as amended by a First Amendment to Royalty
Agreement dated as of April 9, 1998, and (b) the Conveyance of Adjustable
Overriding Royalty Interest dated November 14, 1996 granted by QELC to TCW
Portfolio No. 1555 DR V Sub-Custody Partnership, L.P., as amended by an
Amendment to Conveyance of Overriding Royalty Interest dated as of April 9,
1998.
"Termination Date" means May 13, 2005.
----------------
"Terra" means Terra Energy Ltd., a Michigan corporation.
-----
- 25 -
"Total Commitment" means the Commitments of all Banks in an initial
----------------
aggregate amount of $250,000,000, as such amount may be reduced from time to
time pursuant to Section 3.6.
-----------
"Tranche" means the Base Rate Loan or a Eurodollar Loan and "Tranches"
------- --------
means the Base Rate Loan or Eurodollar Loans or any combination thereof.
"Type" means with reference to a Loan, the characterization of such
----
Loan as the Base Rate Loan or a Eurodollar Loan based on the method by which the
accrual of interest on such Tranche is calculated.
"Unused Commitment Fee Percentage" means, for any day, the percentage
--------------------------------
determined pursuant to the table below based on the ratio of the Outstanding
Credit on such date to the Borrowing Base in effect on such date:
======================================= =====================================
Ratio of Outstanding Unused Commitment
Credit to Borrowing Base Fee Percentage
--------------------------------------- -------------------------------------
# .50 to 1 .250%
--------------------------------------- -------------------------------------
> .50 to 1 # .75 to 1 .375%
--------------------------------------- -------------------------------------
> .75 to 1 # .90 to 1 .375%
--------------------------------------- -------------------------------------
> .90 to 1 .500%
======================================= =====================================
"Voyager" means Voyager Compression Services, LLC, a Michigan limited
-------
liability company.
SECTION 2.2. Accounting Terms and Determinations. Unless
-----------------------------------
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent with the most recent
audited consolidated financial statements of Borrower and its Consolidated
Subsidiaries delivered to Banks prior to the date hereof except for changes
concurred in by Borrower's independent certified public accountants and which
are disclosed to Administrative Agent on the next date on which financial
statements are required to be delivered to Banks pursuant to Section 10.1.
------------
SECTION 2.3. Petroleum Terms. As used herein, the terms
---------------
"proved reserves," "proved developed reserves," "proved developed producing
reserves," "proved developed nonproducing reserves," and "proved undeveloped
reserves" have the meaning given such terms from time to time and at the time
in question by the Society of Petroleum Engineers of the American Institute of
Mining Engineers.
SECTION 2.4. Money. Unless expressly stipulated otherwise,
-----
all references herein to "dollars," "money," "funds," "payments," "prepayments"
------- ----- ----- -------- -----------
or other similar financial or monetary terms, are references to currency of the
United States of America.
- 26 -
ARTICLE III
THE CREDIT
SECTION 3.1. Commitments. (a) Each Bank severally agrees,
-----------
subject to Sections 3.1(c), 8.1 and 8.2 and the other terms and conditions set
-------------------- ---
forth in this Agreement, to lend to Borrower from time to time prior to the
Termination Date amounts requested by Borrower not to exceed in the aggregate
at any one time outstanding, the amount of such Bank's Commitment reduced by an
amount equal to such Bank's Letter of Credit Exposure. Each Borrowing shall be
in an aggregate principal amount of $1,000,000 or any larger integral multiple
of $100,000 (except that any Base Rate Borrowing may be in an amount equal to
the Availability at such time), and (ii) shall be made from Banks ratably in
accordance with their respective Commitment Percentages. Subject to the
foregoing limitations and the other provisions of this Agreement, prior to the
Termination Date Borrower may borrow under this Section 3.1(a), repay amounts
--------------
borrowed and request new Borrowings to be made under this Section 3.1(a).
--------------
(b) Administrative Agent will, from time to time prior to
the Termination Date, upon request by Borrower, issue Letters of Credit for the
account of Borrower, so long as (i) the sum of (A) the total Letter of Credit
Exposure then existing and (B) the amount of the requested Letter of Credit
does not exceed ten percent (10%) of the Borrowing Base, and (ii) Borrower
would be entitled to a Borrowing under Sections 3.1(a) and 3.1(c) in the amount
--------------- ------
of the requested Letter of Credit. Not less than three (3) Domestic Business
Days prior to the requested date of issuance of any such Letter of Credit,
Borrower shall execute and deliver to Administrative Agent, Administrative
Agent's customary letter of credit application. Each Letter of Credit shall be
in the minimum amount of $5,000, shall not expire more than 12 months after the
date of its issuance or last renewal, and shall otherwise be in form and
substance acceptable to Administrative Agent. Upon the date of issuance of a
Letter of Credit, Administrative Agent shall be deemed to have sold to each
other Bank, and each other Bank shall be deemed to have unconditionally and
irrevocably purchased from Administrative Agent, a non-recourse participation
in the related Letter of Credit and Letter of Credit Exposure equal to such
Bank's Commitment Percentage of such Letter of Credit and Letter of Credit
Exposure. Upon request of any Bank, but not less often than quarterly,
Administrative Agent shall provide notice to each Bank by telephone,
teletransmission or telex setting forth each Letter of Credit issued and
outstanding pursuant to the terms hereof and specifying the beneficiary and
expiration date of each such Letter of Credit, each Bank's percentage of each
such Letter of Credit and the actual dollar amount of each Bank's participation
held by Administrative Agent thereof for such Bank's account and risk. At the
time of issuance of each Letter of Credit, Borrower shall pay to Administrative
Agent in respect of such Letter of Credit (a) the applicable Letter of Credit
Fee, and (b) the applicable Letter of Credit Fronting Fee. Administrative Agent
shall distribute the Letter of Credit Fee payable upon the issuance of each
Letter of Credit to Banks in accordance with their respective Commitment
Percentages, and Administrative Agent shall retain the Letter of Credit
Fronting Fee for its own account. Any (y) material amendment or modification,
or (z) renewal or extension of any Letter of Credit shall be deemed to be the
issuance of a new Letter of Credit for purposes of this Section 3.1(b).
--------------
Notwithstanding anything to the contrary contained herein, Borrower shall pay
to Administrative Agent in connection with any
- 27 -
amendment or modification of any nature, Administrative Agent's usual and
customary fees for amendments or modifications to, and processing of, Letters
of Credit.
Immediately upon the occurrence of an Event of Default, Borrower shall
deposit with Administrative Agent cash in such amounts as Administrative Agent
may request, up to a maximum amount equal to one hundred and five percent (105%)
of the aggregate existing Letter of Credit Exposure of all Banks; provided
--------
however, that immediately upon an Event of Default under Sections 13.1(g) and
------- ----------------
(h) herein, Borrower shall deposit with Administrative Agent cash in an amount
---
equal to one hundred and five percent (105%) of the aggregate existing Letter of
Credit Exposure of all Banks. To the extent any outstanding Letter of Credit has
an expiry date later than the Termination Date, then at least five (5) days
prior to the Termination Date, Borrower shall deposit with Administrative Agent
cash in such amounts as Administrative Agent may request, up to a maximum amount
equal to one hundred and five percent (105%) of the Letter of Credit Exposure so
terminating after the Termination Date. Any amounts so deposited shall be held
by Administrative Agent for the ratable benefit of all Banks as security for the
outstanding Letter of Credit Exposure and the other Obligations, and Borrower
will, in connection therewith, execute and deliver such security agreements in
form and substance satisfactory to Administrative Agent which Administrative
Agent may, in its discretion, require. As drafts or demands for payment are
presented under any Letter of Credit, Administrative Agent shall apply such cash
to satisfy such drafts or demands. When all Letters of Credit have expired and
the Obligations have been repaid in full (and no Bank has any obligation to lend
or issue Letters of Credit hereunder) or such Event of Default has been cured to
the satisfaction of Required Banks, Administrative Agent shall release to
Borrower any remaining cash deposited under this Section 3.1(b). Whenever
--------------
Borrower is required to make deposits under this Section 3.1(b) and fails to do
--------------
so on the day such deposit is due, Administrative Agent or any Bank may, without
notice to Borrower, make such deposit (whether by application of proceeds of any
collateral for the Obligations, by transfers from other accounts maintained with
any Bank or otherwise) using any funds then available to any Bank of any Credit
Party, any guarantor, or any other party liable for repayment of the
Obligations.
Notwithstanding anything to the contrary contained herein, Borrower
hereby agrees to reimburse Administrative Agent immediately upon demand by
Administrative Agent, and in immediately available funds, for any payment or
disbursement made by Administrative Agent under any Letter of Credit issued by
it. Payment shall be made by Borrower with interest on the amount so paid or
disbursed by Administrative Agent from and including the date payment is made
under any Letter of Credit to and including the date of payment, at the lesser
of (i) the Maximum Lawful Rate, or (ii) the Default Rate. The obligations of
Borrower under this paragraph will continue until all Letters of Credit have
expired and all reimbursement obligations with respect thereto have been paid in
full by Borrower and until all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Administrative Agent upon
demand for all amounts paid under Letters of Credit as set forth in the
immediately preceding paragraph hereof; provided, however, if Borrower for any
-------- -------
reason fails to reimburse Administrative Agent in full upon demand, Banks shall
reimburse Administrative Agent in accordance with each Banks' Commitment
Percentage for amounts due and unpaid from Borrower as set forth hereinbelow;
- 28 -
provided, however, that no such reimbursement made by Banks shall discharge
-------- ------- ----
Borrower's obligations to reimburse Administrative Agent. All reimbursement
amounts payable by any Bank under this Section 3.1(b) shall include interest
--------------
thereon at the Federal Funds Rate, from the date of the payment of such amounts
by Administrative Agent to the date of reimbursement by such Bank. No Bank shall
be liable for the performance or nonperformance of the obligations of any other
Bank under this paragraph. The reimbursement obligations of Banks under this
paragraph shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Papers.
Borrower shall indemnify and hold Administrative Agent and each Bank,
and their respective officers, directors, representatives and employees,
harmless from loss for any claim, demand or liability which may be asserted
against any or such indemnified party in connection with actions taken under
Letters of Credit or in connection therewith (including losses resulting from
the negligence of any or such indemnified party), and shall pay each indemnified
party for reasonable fees of attorneys and legal costs paid or incurred by each
indemnified party in connection with any matter related to Letters of Credit,
except for losses and liabilities incurred as a direct result of the gross
negligence or willful misconduct of such indemnified party, IT BEING THE EXPRESS
INTENTION OF THE PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR
THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for any reason
fails to indemnify or pay such indemnified party as set forth herein in full,
Banks shall indemnify and pay such indemnified party upon demand, in accordance
with each Bank's Commitment Percentage of such amounts due and unpaid from
Borrower. The provisions of this paragraph shall survive the termination of this
Agreement.
Administrative Agent does not make any representation or warranty, and
does not assume any responsibility with respect to the validity, legality,
sufficiency or enforceability of any letter of credit application executed and
delivered in connection with any Letter of Credit issued hereunder or any
document relative thereto or to the collectibility thereunder. Administrative
Agent does not assume any responsibility for the financial condition of Borrower
or for the performance of any obligation of Borrower. Administrative Agent may
use its discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in it
or which it may be entitled to take or assert with respect to any Letter of
Credit or any letter of credit application. FURTHERMORE, EXCEPT AS SET FORTH
HEREIN, ADMINISTRATIVE AGENT SHALL BE UNDER NO LIABILITY TO ANY BANK, WITH
RESPECT TO ANYTHING ADMINISTRATIVE AGENT MAY DO OR REFRAIN FROM DOING IN THE
EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND RESPONSIBILITY OF
ADMINISTRATIVE AGENT BEING TO HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS
AS ADMINISTRATIVE AGENT HANDLES ITS OWN SHARE. ADMINISTRATIVE AGENT SHALL NOT
HAVE ANY DUTIES OR RESPONSIBILITIES EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND
THOSE DUTIES AND LIABILITIES SHALL BE SUBJECT TO THE LIMITATIONS AND
QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE, NEITHER ADMINISTRATIVE AGENT, NOR
ANY OF ITS DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE LIABLE FOR ANY ACTION
TAKEN OR
- 29 -
OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR OMITTED IS EXPRESSLY SET FORTH
HEREIN) UNDER OR IN CONNECTION HEREWITH OR UNDER ANY OTHER INSTRUMENT OR
DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Administrative Agent shall not incur any liability to any Bank,
Borrower, or any Affiliate of any Bank or Borrower, in acting upon any notice,
document, order, consent, certificate, warrant or other instrument reasonably
believed by Administrative Agent to be genuine or authentic and to be signed by
the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder
or incur Letter of Credit Exposure, and Borrower shall not be entitled to
borrow hereunder or obtain Letters of Credit hereunder, in an amount which
would cause the Outstanding Credit to exceed the Borrowing Base then in effect.
No Bank shall be obligated to fund Borrowings hereunder and Borrower shall not
be entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency. Nothing in this Section 3.1(c) shall be deemed to limit any Bank's
--------------
obligation to reimburse Administrative Agent with respect to its participation
in Letters of Credit as a result of the drawing under any Letter of Credit
pursuant to Section 3.1(b).
--------------
(d) In order to request any Borrowing under this Section
-------
3.1, Borrower shall hand deliver, telex or telecopy to Administrative Agent a
---
duly completed Request for Borrowing (herein so called) prior to 12:00 noon
(Dallas, Texas time), (i) at least one (1) Domestic Business Day before the
Borrowing Date specified for a proposed Base Rate Borrowing, and (ii) at least
three (3) Eurodollar Business Days before the Borrowing Date of a proposed
Eurodollar Borrowing. Each such Request for Borrowing shall be substantially in
the form of Exhibit D hereto, and shall specify:
---------
(i) the Borrowing Date of such Borrowing, which
shall be a Domestic Business Day in the case of a Base Rate Borrowing
or a Eurodollar Business Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate
Borrowing or a Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the
duration of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
Upon receipt of a Request for Borrowing, Administrative Agent shall promptly
notify each Bank of the contents thereof and the amount of the Borrowing to be
loaned by such Bank pursuant thereto, and such Request for Borrowing shall not
thereafter be revocable by Borrower. Not later than 12:00 noon (Dallas, Texas
time) on the date of each Borrowing, each Bank shall make available its
Commitment Percentage of such Borrowing, in Federal or other funds immediately
available in Dallas, Texas to Administrative Agent at its address set forth on
Schedule 1 hereto. Notwithstanding the foregoing, if Borrower delivers to
----------
Administrative Agent a Request for Borrowing prior to 10:00 a.m. (Dallas, Texas
time) on a Domestic Business Day requesting a Base Rate Borrowing on such day,
each Bank shall use its best efforts to make available to
- 30 -
Administrative Agent its Commitment Percentage of such Borrowing by 1:00 p.m.
(Dallas, Texas time) on the same day. Unless Administrative Agent determines
that any applicable condition specified in Section 8.2 has not been satisfied,
Administrative Agent will make the funds so received from Banks available to
Borrower at Administrative Agent's aforesaid address.
(e) In order to request any Letter of Credit hereunder,
Borrower shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Letter of Credit (herein so called) prior to 12:00 noon
(Dallas, Texas time) at least three (3) Domestic Business Days before the date
specified for issuance of such Letter of Credit. Each Request for Letter of
Credit shall be substantially in the form of Exhibit E hereto, shall be
accompanied by Administrative Agent's duly completed and executed letter of
credit application and agreement and shall specify:
(i) the requested date for issuance of such Letter
of Credit;
(ii) the terms of such requested Letter of Credit,
including the name and address of the beneficiary, the stated amount,
the expiration date and the conditions under which drafts under such
Letter of Credit are to be available; and
(iii) the purpose of such Letter of Credit.
Upon receipt of a Request for Letter of Credit, Administrative Agent shall
promptly notify each Bank of the contents thereof, including the amount of the
requested Letter of Credit, and such Request for Letter of Credit shall not
thereafter be revocable by Borrower. No later than 12:00 noon (Dallas, Texas
time) on the date each Letter of Credit is requested, unless Administrative
Agent determines that any applicable condition precedent set forth in Section
8.2 hereof has not been satisfied, Administrative Agent will issue and deliver
such Letter of Credit pursuant to the instructions of Borrower.
SECTION 3.2. Notes. Each Bank's Commitment Percentage of
-----
the Loan shall be evidenced by a single Note payable to the order of such Bank
in an amount equal to such Bank's Commitment.
SECTION 3.3. Interest Rates; Payments. (a) The principal
------------------------
amount of the Base Rate Loan outstanding from day to day shall bear interest at
a rate per annum equal to the Base Rate in effect from day to day; provided,
--------
that in no event shall the rate charged hereunder or under the Notes exceed the
----
Maximum Lawful Rate. Interest on the Base Rate Loan shall be payable as it
accrues on each Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding
from day to day shall bear interest for the Interest Period applicable thereto
at a rate per annum equal to the sum of (i) the Applicable Margin plus (ii) the
applicable Adjusted Eurodollar Rate; provided, that in no event shall the rate
-------- ----
charged hereunder or under the Notes exceed the Maximum Lawful Rate. Interest
on any portion of the principal of each Eurodollar Loan subject to an Interest
Period of one (1), two (2) or three (3) months shall be payable on the last day
of the Interest Period applicable thereto. Interest on any portion of the
principal of each Eurodollar Loan
- 31 -
having an Interest Period of six (6) months shall be payable on the last day of
the Interest Period applicable thereto and on each Quarterly Date.
(c) So long as no Default or Event of Default shall be
continuing, subject to the provisions of this Section 3.3, Borrower shall have
-----------
the option of having all or any portion of the principal outstanding under the
Loan be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall bear
interest at rates determined by reference to the Base Rate and the Adjusted
Eurodollar Rate, respectively; provided, that each Eurodollar Loan shall be in
-------- ----
a minimum amount of $1,000,000 and shall be in an amount which is an integral
multiple of $100,000. Prior to the termination of each Interest Period with
respect to each Eurodollar Loan, Borrower shall give written notice (a "Notice
------
of Continuation or Conversion") in the form of Exhibit F attached hereto to
----------------------------- ---------
Administrative Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest Period.
Such Notice of Continuation or Conversion shall be given to Administrative
Agent at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection, and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then expiring.
If Borrower shall specify a Eurodollar Loan, such Notice of Continuation or
Conversion shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definition of such term) selected by
Borrower. Each Notice of Continuation or Conversion shall be irrevocable and
effective upon notification thereof to Administrative Agent. If the required
Notice of Continuation or Conversion shall not have been timely received by
Administrative Agent, Borrower shall be deemed to have elected that the
principal of the Eurodollar Loan subject to the Interest Period then expiring
be Converted to the Base Rate Loan upon the expiration of such Interest Period
and Borrower will be deemed to have given Administrative Agent notice of such
election. Subject to the limitations set forth in this Section 3.3(c) on the
--------------
amount and number of Eurodollar Loans, Borrower shall have the right to Convert
all or any part of the Base Rate Loan to a Eurodollar Loan by giving
Administrative Agent a Notice of Continuation or Conversion of such election at
least three (3) Eurodollar Business Days prior to the date on which Borrower
elects to make such Conversion (a "Conversion Date"). The Conversion Date
---------------
selected by Borrower shall be a Eurodollar Business Day. Notwithstanding
anything in this Section 3.3 to the contrary, no portion of the principal of
-----------
the Base Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar Loan
may be Continued as such when any Default or Event of Default has occurred and
is continuing, but each such Eurodollar Loan shall be automatically Converted
to the Base Rate Loan on the last day of each applicable Interest Period.
Borrower shall not be permitted to have more than five (5) Eurodollar Loans in
effect at any time.
(d) Notwithstanding anything to the contrary set forth in
Section 3.3(a) or (b) above, after the occurrence of an Event of Default,
-------------- ---
interest shall accrue on the outstanding principal balance of the Loan, and to
the extent permitted by Law, on the accrued but unpaid interest on the Loan and
all other Obligations from the period from and including the occurrence of such
Event of Default to but excluding the date the same is remedied at a rate per
annum equal to the lesser of (a) the Default Rate, and (b) the Maximum Lawful
Rate.
(e) Administrative Agent shall determine each interest rate
applicable to the Loan in accordance with the terms hereof. Administrative
Agent shall promptly notify Borrower
- 32 -
and Banks by telex, telecopy or cable of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(f) Notwithstanding the foregoing, if at any time the rate
of interest calculated with reference to the Base Rate or the Eurodollar Rate
hereunder (the "contract rate") is limited to the Maximum Lawful Rate, any
-------------
subsequent reductions in the contract rate shall not reduce the rate of
interest on the Loan below the Maximum Lawful Rate until the total amount of
interest accrued equals the amount of interest which would have accrued if the
contract rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of any Note, the total amount
of interest paid or accrued on such Note is less than the amount of interest
which would have accrued if the contract rate had at all times been in effect
with respect thereto, then at such time, to the extent permitted by law,
Borrower shall pay to the holder of such Note an amount equal to the difference
between (i) the lesser of the amount of interest which would have accrued if
the contract rate had at all times been in effect and the amount of interest
which would have accrued if the Maximum Lawful Rate had at all times been in
effect, and (ii) the amount of interest actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall
be computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest payable hereunder on the Base
Rate Loan shall be computed based on the actual number of days elapsed assuming
that each calendar year consisted of 365 days.
SECTION 3.4. Mandatory Prepayments Resulting From Borrowing
----------------------------------------------
Base Deficiency. In the event a Borrowing Base Deficiency exists after giving
---------------
effect to any Redetermination, Borrower shall, at its option, either (a)
eliminate such Borrowing Base Deficiency by making a single mandatory
prepayment of principal on the Loan in an amount equal to the entire amount of
such Borrowing Base Deficiency on the first Monthly Date following the date on
which such Borrowing Base Deficiency is determined to exist, or (b) eliminate
such deficiency by making six (6) consecutive mandatory prepayments of
principal on the Loan each of which shall be in the amount of one sixth (1/6th)
of the amount of such Borrowing Base Deficiency commencing on the first Monthly
Date following the date on which such Borrowing Base Deficiency is determined
to exist and continuing on each Monthly Date thereafter. If a Borrowing Base
Deficiency cannot be eliminated pursuant to this Section 3.4 by prepayment of
-----------
the Loan in full (as a result of outstanding Letter of Credit Exposure) on each
Monthly Date, Borrower shall also deposit cash with Administrative Agent, to be
held by Administrative Agent to secure outstanding Letter of Credit Exposure in
the manner contemplated by Section 3.1(b), in an amount at least equal to
--------------
one-sixth (1/6th) of the balance of such Borrowing Base Deficiency (i.e.,
one-sixth (1/6th) of the difference between the Borrowing Base Deficiency and
the remaining outstanding principal under the Loan on the date such Borrowing
Base Deficiency is first determined to occur).
SECTION 3.5. Voluntary Prepayments. Borrower may, subject to
---------------------
Section 5.5 and the other provisions of this Agreement, upon three (3) Domestic
-----------
Business Days advance notice to Administrative Agent, prepay the principal of
the Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $1,000,000 and shall be in an integral multiple of $100,000.
- 33 -
SECTION 3.6. Voluntary Reduction of Commitments. Borrower
----------------------------------
may, by notice to Administrative Agent five (5) Domestic Business Days prior to
the effective date of any such reduction, reduce the Total Commitment (and
thereby reduce the Commitment of each Bank ratably) in amounts not less than
$5,000,000 and in an amount which is an integral multiple of $1,000,000. On the
effective date of any such reduction, Borrower shall, to the extent required as
a result of such reduction, make a principal payment on the Loan in an amount
sufficient to cause the principal balance of the Loan then outstanding to be
equal to or less than the Total Commitment as thereby reduced. Notwithstanding
the foregoing, Borrower shall not be permitted to voluntarily reduce the Total
Commitment to an amount less than the aggregate Letter of Credit Exposure of
all Banks.
SECTION 3.7. Termination of Commitments; Final Maturity of
---------------------------------------------
Loan. The Total Commitment (and the Commitment of each Bank) shall terminate,
----
and the entire outstanding principal balance of the Loan, all interest accrued
thereon, all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on the Termination Date.
SECTION 3.8. Unused Commitment Fee. On the Termination Date,
---------------------
on each Quarterly Date prior to the Termination Date, and, in the event the
Commitments are terminated in their entirety prior to the Termination Date, on
the date of such termination, Borrower shall pay to Administrative Agent, for
the ratable benefit of each Bank based on each Bank's Commitment Percentage, a
commitment fee equal to the Unused Commitment Fee Percentage in effect from day
to day (applied on a per annum basis and computed on the basis of actual days
elapsed and as if each calendar year consisted of 365 days) of the average
daily Availability for the Fiscal Quarter (or portion thereof) ending on the
date such payment is due.
SECTION 3.9. Agency and other Fees. Borrower shall pay to
---------------------
Administrative Agent and its Affiliates such other fees and amounts as Borrower
shall be required to pay to Administrative Agent and its Affiliates from time
to time pursuant to any separate agreement between Borrower and Administrative
Agent or such Affiliates. Such fees and other amounts shall be retained by
Administrative Agent and its Affiliates, and no Bank (other than Administrative
Agent) shall have any interest therein. Administrative Agent may disburse any
fees paid to Administrative Agent and its Affiliates pursuant to this Section
-------
3.9 in any manner Administrative Agent desires in its sole discretion.
---
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Delivery and Endorsement of Notes. On the
---------------------------------
Closing Date, Administrative Agent shall deliver to each Bank the Note payable
to such Bank. Each Bank may endorse (and prior to any transfer of its Note
shall endorse) on the schedules attached and forming a part thereof appropriate
notations to evidence the date and amount of its Commitment Percentage of each
Borrowing, the Interest Period applicable thereto, and the date and amount of
each payment of principal made by Borrower with respect thereto; provided that
-------- ----
the failure by any Bank to so endorse its Note shall not affect the liability
of Borrower for the repayment of all amounts outstanding under such Note
together with interest thereon. Each Bank is hereby
- 34 -
irrevocably authorized by Borrower to endorse its Note and to attach to and
make a part of any such Note a continuation of any such schedule as required.
SECTION 4.2. General Provisions as to Payments. (a) Borrower
---------------------------------
shall make each payment of principal of, and interest on, the Loan, and all
fees payable hereunder shall be paid, not later than 12:00 noon (Dallas, Texas
time) on the date when due, in Federal or other funds immediately available in
Dallas, Texas, to Administrative Agent at its address set forth on Schedule 1
----------
hereto, without condition or deduction for any counterclaim, defense,
recoupment or setoff. Administrative Agent will promptly (and if such payment
is received by Administrative Agent by 10:00 a.m., and otherwise if reasonably
possible, on the same Domestic Business Day) distribute to each Bank its
Commitment Percentage of each such payment received by Administrative Agent for
the account of Banks. Whenever any payment of principal of, or interest on, any
portion of the Loan subject to a Base Rate Tranche or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, any portion of the Loan subject to a Eurodollar
Tranche shall be due on a day which is not a Eurodollar Business Day, the date
for payment thereof shall be extended to the next succeeding Eurodollar
Business Day (subject to the provisions of the definition of Interest Period).
If the date for any payment of principal is extended by operation of Law or
otherwise, interest thereon shall be payable for such extended time. Borrower
hereby authorizes Administrative Agent to charge from time to time against
Borrower's accounts with Administrative Agent any amount then due.
(b) Prior to the occurrence of an Event of Default, all
principal payments received by Banks with respect to the Loan shall be applied
first to Eurodollar Tranches outstanding with Interest Periods ending on the
date of such payment, then to Base Rate Tranches, and then to Eurodollar
Tranches next maturing until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank shall be applied
first to the payment of all proper costs incurred by Administrative Agent in
connection with the collection thereof (including reasonable expenses and
disbursements of Administrative Agent), second to the payment of all proper
costs incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of Banks), third to the reimbursement of
any advances made by Banks to effect performance of any unperformed covenants
of any Credit Party under any of the Loan Papers, fourth to the payment of any
unpaid fees required pursuant to Section 3.9, fifth to the payment of any
-----------
unpaid fees required pursuant to Sections 3.1(b) and 3.8, sixth, pari passu to
--------------- ---
(i) payment to each Bank of its Commitment Percentage of the outstanding
principal of the Loan and accrued but unpaid interest thereon, and (ii) payment
to each Bank or Affiliate thereof party to Hedge Transactions of all amounts
due and owing thereunder, and seventh to establish the deposits required in
Section 3.1(b). All payments received by a Bank after the occurrence of an
--------------
Event of Default for application to the principal of the Loan shall be applied
by such Bank in the manner provided in Section 4.2(b).
--------------
- 35 -
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1. Increased Cost and Reduced Return. (a) If,
---------------------------------
after the date hereof, the adoption of any applicable law, rule, or regulation,
or any change in any applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency:
(i) shall subject such Bank (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Note, or its obligation to make Eurodollar Loans
or issue or participate in Letters of Credit, or change the basis of
taxation of any amounts payable to such Bank (or its Applicable Lending
Office) under this Agreement or its Note in respect of any Eurodollar
Loans (other than taxes imposed on the overall net income of such Bank
or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, compulsory loan, or similar
requirement (other than the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, such Bank (or its Applicable Lending
Office), including the Commitment of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or issuing or participating in Letters of
Credit, or to reduce any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or its Note with respect to any
Eurodollar Loans, then Borrower shall pay to such Bank on demand such amount or
amounts as will compensate such Bank for such increased cost or reduction. If
any Bank requests compensation by Borrower under this Section 5.1(a), Borrower
--------------
may, by notice to such Bank (with a copy to Administrative Agent), suspend the
obligation of such Bank to make or Continue Eurodollar Loans or to Convert all
or part of the Base Rate Loan owing to such Bank into Eurodollar Loans, until
the event or condition giving rise to such request ceases to be in effect (in
which case the provisions of Section 5.4 shall be applicable); provided, that
----------- -------- ----
such suspension shall not affect the right of such Bank to receive the
compensation so requested.
(b) If, after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation or
administration thereof by any Governmental Authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
any request
- 36 -
or directive regarding capital adequacy (whether or not having the force of
law) of any such Governmental Authority, central bank, or comparable agency,
has or would have the effect of reducing the rate of return on the capital of
such Bank or any corporation controlling such Bank as a consequence of such
Bank's obligations hereunder to a level below that which such Bank or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then, from time to time upon demand, Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
reduction.
(c) Each Bank shall promptly notify Borrower and
Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant to this
Section 5.1 and will designate a different Applicable Lending Office if such
-----------
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to it.
Any Bank claiming compensation under this Section 5.1 shall furnish to Borrower
-----------
and Administrative Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 5.2. Limitation on Types of Loans. If on or prior
----------------------------
to the first day of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination
shall be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to Banks of funding Eurodollar
Loans for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Loans and the relevant amounts or periods, and so long as
such condition remains in effect, Banks shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and Borrower shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Loans of the affected
Type, either prepay such Loans or Convert such Loans into another Type of Loan
in accordance with the terms of this Agreement.
SECTION 5.3. Illegality. Notwithstanding any other provision
----------
of this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans
hereunder, then such Bank shall promptly notify Borrower thereof and such
Bank's obligation to make or Continue Eurodollar Loans and to Convert other
Types of Loans into Eurodollar Loans shall be suspended until such time as such
Bank may again make, maintain, and fund Eurodollar Loans (in which case the
provisions of Section 5.4 shall be applicable).
-----------
- 37 -
SECTION 5.4. Treatment of Affected Loans. If the obligation
---------------------------
of any Bank to make particular Eurodollar Loans or to Continue Loans, or to
Convert Loans of another Type into Loans of a particular Type shall be
suspended pursuant to Section 5.1 or 5.3 hereof (Loans of such Type being
----------- ---
herein called "Affected Loans" and such Type being herein called the "Affected
-------------- --------
Type"), such Bank's Affected Loans shall be automatically Converted into the
----
Base Rate Loan on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion required by Section 5.3 hereof,
-----------
on such earlier date as such Bank may specify to Borrower with a copy to
Administrative Agent) and, unless and until such Bank gives notice as provided
below that the circumstances specified in Section 5.1 or 5.3 hereof that gave
----------- ---
rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been
so Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to the Base Rate
Loan; and
(b) all Loans that would otherwise be made or Continued by
such Bank as Loans of the Affected Type shall be made or Continued instead as
part of the Base Rate Loan, and all Loans of such Bank that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into (or
shall remain) as part of the Base Rate Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
----------- ---
Conversion of such Bank's Affected Loans pursuant to this Section 5.4 no longer
-----------
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type made by other Banks are
outstanding, such Bank's portion of the Base Rate Loan shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type to the extent necessary so that,
after giving effect thereto, all Loans held by Banks holding Loans of the
Affected Type and by such Bank are held pro rata (as to principal amounts, Types
and Interest Periods) in accordance with their respective Commitments.
SECTION 5.5. Compensation. Upon the request of any Bank,
------------
Borrower shall pay to such Bank such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate it for any loss, cost,
or expense (including loss of anticipated profits) incurred by it as a result
of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of the
Loan) on a date other than the last day of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in Article
-------
VIII to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
----
on the date for such Borrowing, Conversion, Continuation, or prepayment
specified in the relevant Request for Borrowing, Notice of Continuation or
Conversion, or other notice of Borrowing, prepayment, Continuation, or
Conversion under this Agreement.
- 38 -
SECTION 5.6. Taxes. (a) Any and all payments by Borrower to
-----
or for the account of any Bank or Administrative Agent hereunder or under any
other Loan Paper shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in the
---------
case of each Bank and Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by any relevant taxation authority (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to in this Section 5.6 as
-----------
"Non-Excluded Taxes"). If Borrower shall be required by law to deduct any
------------------
Non-Excluded Taxes from or in respect of any sum payable under this Agreement
or any other Loan Paper to any Bank or Administrative Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.6) such Bank or Administrative Agent receives an amount equal to
-----------
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law, and (iv) Borrower shall furnish to Administrative Agent, at its
address set forth in Schedule 1 hereto, the original or a certified copy of a
----------
receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present
or future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Paper or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Paper (hereinafter
referred to as "Other Taxes").
-----------
(c) Borrower agrees to indemnify each Bank and
Administrative Agent for the full amount of Non-Excluded Taxes and Other Taxes
(including, without limitation, any Non-Excluded Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section 5.6) paid
-----------
by such Bank or Administrative Agent (as the case may be) and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on Schedule 1 hereto
----------
and on or prior to the date on which it becomes a Bank in the case of each
other Bank, and from time to time thereafter if requested in writing by
Borrower or Administrative Agent (but only so long as such Bank remains
lawfully able to do so), shall provide Borrower and Administrative Agent with
(i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Bank is entitled to
- 39 -
an exemption from or a reduced rate of tax on payments to this Agreement or any
of the other Loan Papers.
(e) For any period with respect to which a Bank has failed to
provide Borrower and Administrative Agent with the appropriate form pursuant to
Section 5.6(d) (unless such failure is due to a change in treaty, law, or
-------------
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 5.6(a) or 5.6(b) with respect to Non-Excluded Taxes imposed by
-------------- ------
the United States; provided, however, that should a Bank, which is otherwise
-------- -------
exempt from or subject to a reduced rate of withholding tax, become subject to
Non-Excluded Taxes because of its failure to deliver a form required hereunder,
Borrower shall take such steps as such Bank shall reasonably request to assist
such Bank to recover such Non-Excluded Taxes.
(f) If Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 5.6, then such Bank will agree
-----------
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of Non-
Excluded Taxes, Borrower shall furnish to Administrative Agent the original or
a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 5.6 shall survive the termination of the Commitments and the
-----------
payment in full of the Notes.
SECTION 5.7. Discretion of Banks as to Manner of Funding.
--------------------------------------------
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for
the purposes of this Agreement all determinations hereunder shall be made as if
such Bank had actually funded and maintained each Eurodollar Loan during the
Interest Period for such Eurodollar Loan through the purchase of deposits
having a maturity corresponding to the last day of such Interest Period and
bearing an interest rate equal to the Adjusted Eurodollar Rate for such
Interest Period.
ARTICLE VI
BORROWING BASE
SECTION 6.1. Reserve Report; Proposed Borrowing Base. As soon as
---------------------------------------
available and in any event by March 31 and September 30 of each year,
commencing September 30, 2002, Borrower shall deliver to Administrative Agent
and each Bank a Reserve Report prepared as of the immediately preceding
December 31 and June 30 respectively. Simultaneously with the delivery to
Administrative Agent and each Bank of each Reserve Report, Borrower shall
notify Administrative Agent and each Bank of the amount of the Borrowing Base
which Borrower
- 40 -
requests become effective on the next Redetermination Date (or such date
promptly following such Redetermination Date as Required Banks shall elect).
SECTION 6.2. Scheduled Redeterminations of the Borrowing Base;
-------------------------------------------------
Procedures and Standards. Based in part on the Reserve Reports made available
------------------------
to Banks pursuant to Section 6.1, Banks shall redetermine the Borrowing Base on
-----------
or prior to the next Redetermination Date (or such date promptly thereafter as
reasonably possible based on the engineering and other information available to
Banks). Any Borrowing Base which becomes effective as a result of any
Redetermination of the Borrowing Base shall be subject to the following
restrictions: (a) such Borrowing Base shall not exceed the Borrowing Base
requested by Borrower pursuant to Sections 6.1 or 6.3 (as applicable), (b) such
------------ ---
Borrowing Base shall not exceed the Total Commitment then in effect, (c) to the
extent such Borrowing Base represents an increase from the Borrowing Base in
effect prior to such Redetermination, such Borrowing Base shall be approved by
all Banks, and (d) to the extent such Borrowing Base represents a decrease in
the Borrowing Base in effect prior to such Redetermination, or a reaffirmation
of such prior Borrowing Base, such Borrowing Base shall be approved by Required
Banks. Each Redetermination shall be made by Banks in their sole reasonable
discretion. Without limiting such discretion, Borrower acknowledges and agrees
that Banks (i) may make such assumptions regarding appropriate existing and
projected pricing for Hydrocarbons as they deem appropriate in their sole
reasonable discretion, (ii) may make such assumptions regarding projected rates
and quantities of future production of Hydrocarbons from the Mineral Interests
owned by Borrower or its Subsidiaries (as applicable) as they deem appropriate
in their sole reasonable discretion, (iii) may consider the projected cash
requirements of the Credit Parties, (iv) are not required to consider any
asset, other than Proved Mineral Interests owned by Borrower or its
Subsidiaries (as applicable), so long as each such Person has granted first and
prior Liens in favor of Administrative Agent for the ratable benefit of Banks
to the extent required by Section 7.1 hereof, and (v) may make such other
-----------
assumptions, considerations and exclusions as Banks deem appropriate in the
exercise of their sole reasonable discretion. It is further acknowledged and
agreed that each Bank may consider such other credit factors as it deems
appropriate in the exercise of its sole reasonable discretion and shall have no
obligation in connection with any Redetermination to approve any increase from
the Borrowing Base in effect prior to such Redetermination. Promptly following
any Redetermination of the Borrowing Base, Administrative Agent shall notify
Borrower of the amount of the Borrowing Base as redetermined, which Borrowing
Base shall be effective as of the date specified in such notice, and shall
remain in effect for all purposes of this Agreement until the next
Redetermination.
SECTION 6.3. Special Redetermination. (a) In addition to Scheduled
-----------------------
Redeterminations, Required Banks shall be permitted to make a Special
Redetermination of the Borrowing Base once in each period between Scheduled
Redeterminations. Any request by Required Banks pursuant to this Section 6.3(a)
--------------
shall be submitted to Administrative Agent and Borrower.
(b) In addition to Scheduled Redeterminations, Borrower shall be
permitted to
request a Special Redetermination of the Borrowing Base once in each Fiscal
Year. Such request shall be submitted to Administrative Agent and Banks and at
the time of such request Borrower shall deliver to Administrative Agent and each
Bank a Reserve Report. Together with such
- 41 -
request, Borrower shall also notify Administrative Agent and each Bank of the
Borrowing Base requested by Borrower in connection with such Special
Redetermination.
(c) Any Special Redetermination shall be made by Banks in
accordance with the procedures and standards set forth in Section 6.2;
-----------
provided, that, no Reserve Report will be required to be delivered to
-------- ----
Administrative Agent and Banks in connection with any Special Redetermination
requested by Required Banks pursuant to clause (a) above.
----------
SECTION 6.4. Borrowing Base Deficiency. If a Borrowing Base
--------------------------
Deficiency exists after giving effect to any Redetermination, Borrower shall be
obligated to eliminate such Borrowing Base Deficiency by making the mandatory
prepayments of the Loan required by Section 3.4.
-----------
SECTION 6.5. Initial Borrowing Base. Notwithstanding anything to the
----------------------
contrary contained herein, the Borrowing Base in effect during the period
commencing on the Closing Date and ending on the effective date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.
ARTICLE VII
COLLATERAL AND GUARANTEES
SECTION 7.1. Security. (a) The Obligations shall be secured by first
--------
and prior Liens (subject only to Permitted Encumbrances) covering and
encumbering (i) one hundred percent (100%) of all Borrowing Base Properties,
(ii) all of the issued and outstanding Equity owned by Borrower of each
existing and future Subsidiary of Borrower, and (iii) all of the issued and
outstanding Equity owned by each Subsidiary of Borrower (other than Voyager) of
each existing and future Subsidiary thereof. On the Closing Date, Borrower
shall deliver to Administrative Agent for the ratable benefit of each Bank, (A)
a Borrower Pledge Agreement together with (i) all certificates evidencing the
issued and outstanding Equity owned by Borrower of each existing Subsidiary of
Borrower of every class which shall be duly endorsed or accompanied by stock
powers executed in blank, and (ii) such UCC-1 financing statements as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect first and prior Liens in all of the issued and outstanding Equity owned
by Borrower of each existing Subsidiary of Borrower, (B) a Subsidiary Pledge
Agreement from each Subsidiary of Borrower (other than Voyager), as applicable,
together with (i) all certificates evidencing the issued and outstanding Equity
owned by each Subsidiary of Borrower of each existing Subsidiary thereof of
every class which shall be duly endorsed or accompanied by stock powers
executed in blank, and (ii) such UCC-1 financing statements as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect first
and prior Liens in all of the issued and outstanding Equity owned by each
Subsidiary of Borrower of each existing Subsidiary thereof, and (C) the
Mortgages in form and substance acceptable to Administrative Agent and duly
executed by Borrower or its Subsidiaries (as applicable), together with such
other assignments, conveyances, amendments, agreements and other writings,
including, without limitation, UCC-1 and UCC-3 financing statements as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect first and prior Liens in all Borrowing Base Properties and other
interests of Borrower and its Subsidiaries (as applicable) required by this
Section 7.1(a).
-------------
- 42 -
(b) On or before each Redetermination Date after the Closing Date
and at such other times as Administrative Agent or Required Banks shall
request, Borrower and its Subsidiaries shall execute and deliver to
Administrative Agent, for the ratable benefit of each Bank, Mortgages in form
and substance acceptable to Administrative Agent and duly executed by Borrower
and any such Subsidiary (as applicable) together with such other assignments,
conveyances, amendments, agreements and other writings, including, without
limitation, UCC-1 financing statements as Administrative Agent shall deem
necessary or appropriate to grant, evidence and perfect the Liens required by
Section 7.1(a) preceding with respect to Borrowing Base Properties acquired by
--------------
Borrower and its Subsidiaries subsequent to the last date on which Borrower or
any such Subsidiary was required to execute and deliver Mortgages pursuant to
this Section 7.1(b), or which, for any other reason are not the subject of
--------------
valid, enforceable, perfected first priority Liens (subject only to Permitted
Encumbrances) in favor of Administrative Agent for the ratable benefit of Banks.
(c) At any time Borrower or any of its Subsidiaries is required
to execute and deliver Mortgages to Administrative Agent pursuant to this
Section 7.1, Borrower shall also deliver to Administrative Agent such opinions
-----------
of counsel (including, if so requested, title opinions, and in each case
addressed to Administrative Agent) and other evidence of title as
Administrative Agent shall deem necessary or appropriate to verify (i)
Borrower's or such Subsidiary's title to the Required Reserve Value of the
Proved Mineral Interests which are subject to such Mortgages, and (ii) the
validity, perfection and priority of the Liens created by such Mortgages and
such other matters regarding such Mortgages and the Loan Papers as
Administrative Agent shall reasonably request.
(d) On the date of the creation or acquisition by Borrower of any
Subsidiary, or on the date of creation or acquisition by any First Tier
Subsidiary of any Subsidiary, Borrower or such First Tier Subsidiary (as
applicable) shall execute and deliver to Administrative Agent a Borrower Pledge
Agreement or a Subsidiary Pledge Agreement (as applicable) together with (i)
all certificates (or other evidence acceptable to Administrative Agent)
evidencing the issued and outstanding Equity of any such Subsidiary of every
class owned by Borrower or such First Tier Subsidiary (as applicable) which
shall be duly endorsed or accompanied by stock powers executed in blank (as
applicable), and (ii) such UCC-1 financing statements as Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect the Liens
required by Section 7.1(a)(ii) in the issued and outstanding Equity of each
------------------
such Subsidiary.
(e) Notwithstanding the forgoing set forth in clause (a) above,
Oil and Gas Hedge Transactions with any Bank or Affiliate thereof maturing
after the Termination Date shall, at least five (5) days prior to the
Termination Date, be secured in a manner satisfactory to each such Bank or
Affiliate, in such Bank's or Affiliate's sole reasonable discretion.
SECTION 7.2. Guarantees. Payment and performance of the Obligations
----------
shall be fully guaranteed by each existing or hereafter created or acquired
Subsidiary of Borrower (other than Voyager) pursuant to a Subsidiary Guaranty.
On the date of creation or acquisition by Borrower of any direct or indirect
wholly owned Subsidiary, Borrower shall cause such Subsidiary to execute and
deliver to Administrative Agent a Subsidiary Guaranty.
- 43 -
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. Conditions to Amendment and Restatement and Initial
---------------------------------------------------
Borrowing and Participation in Letter of Credit Exposure. The obligation of
--------------------------------------------------------
each Bank to amend and restate the Existing Credit Agreement in the form of
this Agreement and the obligation of each Bank to loan its Commitment
Percentage of the initial Borrowing made hereunder, and the obligation of
Administrative Agent to issue (or cause another Bank to issue) the initial
Letter of Credit issued hereunder, is subject to the satisfaction of each of
the following conditions:
(a) Closing Deliveries. Administrative Agent shall have
------------------
received each of the following documents, instruments and agreements, each of
which shall be in form and substance and executed in such counterparts as shall
be acceptable to Administrative Agent and each Bank and each of which shall,
unless otherwise indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in
the amount of such Bank's Commitment, duly executed by Borrower;
(ii) a Borrower Pledge Agreement duly executed and
delivered by Borrower, together with (A) certificates evidencing all of
the issued and outstanding Equity of each Subsidiary of Borrower of every
class owned by Borrower, and Borrower's percentage of Equity owned
therein, which certificates shall be duly endorsed or accompanied by
stock powers executed in blank, and (B) such financing statements as
Administrative Agent shall request to evidence and perfect the Liens
granted pursuant to such Borrower Pledge Agreement;
(iii) a Subsidiary Pledge Agreement duly executed and
delivered by each First Tier Subsidiary, together with (A) certificates
evidencing all of the issued and outstanding Equity of each Subsidiary of
each such First Tier Subsidiary of every class owned by each such First
Tier Subsidiary, and such First Tier Subsidiary's percentage of Equity
owned therein, which certificates shall be duly endorsed or accompanied
by stock powers executed in blank, and (B) such financing statements as
Administrative Agent shall request to evidence and perfect the Liens
granted pursuant to such Subsidiary Pledge Agreement;
(iv) the Mortgages to be executed on the Closing Date
pursuant to Section 7.1(a), duly executed and delivered by Borrower and
--------------
its Subsidiaries (as applicable), together with such other assignments,
conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 and UCC-3 financing statements, in form and
substance satisfactory to Administrative Agent, creating first and prior
Liens in all Borrowing Base Properties;
- 44 -
(v) the Collateral Assignments duly executed by
Borrower, together with such financing statements as Administrative Agent
shall request to evidence and perfect the Liens granted pursuant to such
Collateral Assignments;
(vi) such financing statements (including, without
limitation, the financing statements referenced in subclauses (ii),
--------------
(iii) and (iv) above) in form and substance acceptable to Administrative
----- ----
Agent as Administrative Agent shall specify to fully evidence and perfect
all Liens contemplated by the Loan Papers, all of which shall be filed of
record in such jurisdictions as Administrative Agent shall require in its
sole direction;
(vii) a Subsidiary Guaranty duly executed and delivered
by each Subsidiary of Borrower (other than Voyager) in favor of Banks;
(viii) a copy of the articles or certificate of
incorporation, certificate of limited partnership, articles of
organization or comparable charter documents, and all amendments thereto,
of each Credit Party accompanied by a certificate that such copy is true,
correct and complete, and dated within ten (10) days of the Closing Date
(or within such other period as acceptable to Administrative Agent),
issued by the appropriate Governmental Authority of the jurisdiction of
incorporation or organization of each Credit Party, and accompanied by a
certificate of the Secretary or comparable Authorized Officer of each
Credit Party that such copy is true, correct and complete on the Closing
Date;
(ix) a copy of the bylaws, partnership agreement,
regulations, operating agreement or comparable charter documents, and
all amendments thereto, of each Credit Party accompanied by a certificate
of the Secretary or comparable Authorized Officer of each Credit Party
that such copy is true, correct and complete as of the Closing Date;
(x) certain certificates and other documents issued
by the appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence of each
Credit Party and to the effect that each Credit Party is in good standing
with respect to the payment of franchise and similar Taxes and is duly
qualified to transact business in such jurisdictions;
(xi) a certificate of incumbency of all officers of each
Credit Party who will be authorized to execute or attest to any Loan
Paper, dated the Closing Date, executed by the Secretary or comparable
Authorized Officer of each Credit Party;
(xii) copies of resolutions or comparable
authorizations approving the Loan Papers and authorizing the
transactions contemplated by this Agreement and the other Loan Papers,
duly adopted by the Board of Directors or comparable authority of each
Credit Party accompanied by certificates of the Secretary or comparable
officer of each Credit Party that such copies are true and correct copies
of resolutions duly adopted at a meeting of or (if permitted by
applicable Law and, if required by such Law, by the bylaws or other
charter documents of such Credit Party) by the unanimous written
- 45 -
consent of the Board of Directors of each Credit Party, and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect,
and are in full force and effect as of the Closing Date;
(xiii) an opinion of Xxxxxx & Hanger, L.L.P., special
counsel for Borrower, dated the Closing Date, favorably opining as to the
enforceability of each of the Loan Papers and otherwise in form and
substance satisfactory to Administrative Agent;
(xiv) an opinion of Xxxxxx Xxxxxxxx & Xxxx LLP,
special Michigan counsel for Administrative Agent, dated the Closing
Date, favorably opining as to the enforceability of the Mortgages in
Michigan and otherwise in form and substance satisfactory to
Administrative Agent;
(xv) an opinion of Xxxxxxx Link, Esq., special Indiana
counsel for Administrative Agent, dated the Closing Date, favorably
opining as to the enforceability of the Mortgages in Indiana and
otherwise in form and substance satisfactory to Administrative Agent;
(xvi) a certificate signed by an Authorized Officer
of Borrower stating that (a) the representations and warranties
contained in this Agreement and the other Loan Papers are true and
correct in all respects, (b) no Default or Event of Default has occurred
and is continuing, (c) except as otherwise set forth in the post-closing
letter agreement dated as of the date hereof between Borrower,
Administrative Agent and the Banks, all conditions set forth in this
Section 8.1 and Section 8.2 have been satisfied, and (d) after giving
----------- -----------
effect to the initial Borrowing and the issuance of the initial Letter of
Credit, Borrower and each other Credit Party are Solvent;
(xvii) a Certificate of Ownership Interests executed by an
Authorized Officer of Borrower in the form of Exhibit G attached hereto;
---------
(xviii) certificates from Borrower's insurance broker
setting forth the insurance maintained by Borrower, stating that such
insurance is in full force and effect, that all premiums due have been
paid and that such insurance is adequate and complies with the
requirements of Section 10.6; and
------------
(xix) a copy of each Hedge Agreement to which
Borrower or any other Credit Party is a party accompanied by a
certificate executed by an Authorized Officer of Borrower certifying that
such copies are accurate and complete and represent the complete
understanding and agreement of the parties thereto.
(b) No Material Adverse Change. In the sole discretion of each
--------------------------
Bank, no Material Adverse Change shall have occurred since December 31, 2001
with respect to Borrower or its Subsidiaries (including, without limitation, no
Material Adverse Change with respect to
- 46 -
any facts or information regarding such Persons as represented to any Agent or
any Bank on or prior to the Closing Date).
(c) No Legal Prohibition. The transactions contemplated by this
--------------------
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent, any Bank, or any Credit Party to any Material Adverse Change.
(d) No Litigation. No litigation, arbitration or similar
-------------
proceeding shall be pending or threatened which calls into question the
validity or enforceability of this Agreement, the other Loan Papers or the
transactions contemplated hereby or thereby.
(e) Closing Fees. Borrower shall have paid to Administrative
------------
Agent for the ratable benefit of each Bank, and shall have paid to
Administrative Agent and its Affiliates (for its own account), the fees to be
paid on the Closing Date pursuant to Section 3.9.
-----------
(f) Other Matters. All matters related to this Agreement, the
-------------
other Loan Papers, and the Credit Parties shall be acceptable to each Bank in
its sole discretion, and each Credit Party shall have delivered to
Administrative Agent and each Bank such evidence to substantiate any matters
related to this Agreement and the other Loan Papers, as Administrative Agent or
any Bank shall request.
Upon satisfaction of each of the conditions set forth in this Section
-------
8.1, Borrower and Administrative Agent shall execute the Certificate of
---
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and completely
be amended and restated on the terms set forth herein without necessity of any
other action on the part of any Bank, any Agent or Borrower. Until execution and
delivery of the Certificate of Effectiveness, the Existing Credit Agreement
shall remain in full force and effect in accordance with its terms. Each Bank
hereby authorizes Administrative Agent to execute the Certificate of
Effectiveness on its behalf and acknowledges and agrees that the execution of
the Certificate of Effectiveness by Administrative Agent shall be binding on
each such Bank.
SECTION 8.2. Conditions to Each Borrowing and each Letter of Credit.
-------------------------------------------------------
The obligation of each Bank to loan its Commitment Percentage of each Borrowing
and the obligation of Administrative Agent to issue a Letter of Credit on the
date such Letter of Credit is to be issued is subject to the further
satisfaction of the following conditions:
(a) timely receipt by Administrative Agent of a Request for
Borrowing or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such
Borrowing or issuance of such Letter of Credit, no Default or Event of Default
shall have occurred and be continuing and the funding of such Borrowing or the
issuance of the requested Letter of Credit (as applicable) shall not cause a
Default or Event of Default;
- 47 -
(c) the representations and warranties of each Credit Party
contained in this Agreement and the other Loan Papers shall be true and correct
on and as of the date of such Borrowing or issuance of such Letter of Credit
(as applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter
of Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in Sections 8.2(b) through (f).
--------------- ---
SECTION 8.3. Materiality of Conditions. Each condition precedent
-------------------------
herein is material to the transactions contemplated herein, and time is of the
essence in respect of each thereof.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank
that each of the following statements is true and correct on the date hereof,
and will be true and correct on the occasion of each Borrowing and the issuance
of each Letter of Credit:
SECTION 9.1. Existence and Power. Each Credit Party (a) is a
-------------------
corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, (b) has all corporate,
partnership or limited liability company power (as applicable) and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation, partnership or
limited liability company in each jurisdiction where a failure to be so
qualified could result in a Material Adverse Change.
SECTION 9.2. Credit Party and Governmental Authorization;
--------------------------------------------
Contravention. The execution, delivery and performance of this Agreement and
the other Loan Papers by each Credit Party (to the extent each Credit Party is
a party to this Agreement and such Loan Papers) are within such Credit Party's
corporate, partnership or limited liability company powers, when executed will
be duly authorized by all necessary corporate, partnership or limited liability
company action, require no action by or in respect of, or filing with, any
Governmental Authority and do not contravene, or constitute a default under,
any provision of applicable Law (including, without limitation, the Margin
Regulations) or of the articles or certificate of incorporation, bylaws,
regulations, partnership agreement or comparable charter documents of any
Credit Party
- 48 -
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon any Credit Party or result in the creation or imposition of any
Lien on any asset of any Credit Party other than the Liens securing the
Obligations.
SECTION 9.3. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of Borrower; the other Loan Papers when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of each Credit Party executing the same; and each Loan Paper is, or
when executed and delivered will be, enforceable against each Credit Party
which executes the same in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar Laws
affecting creditors rights generally, and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability.
SECTION 9.4. Financial Information.
---------------------
(a) The most recent annual audited consolidated balance sheet
of Borrower and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, fairly present, in conformity with GAAP, the consolidated financial
position of Borrower as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated balance
sheet of Borrower delivered to Banks, and the related unaudited consolidated
statements of operations and cash flows for the portion of Borrower's Fiscal
Year then ended, fairly present, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in Section 9.4(a), the
--------------
consolidated financial position of Borrower as of such date and its consolidated
results of operations and cash flows for such portion of Borrower's Fiscal Year.
(c) Except as disclosed in writing to Banks prior to the
execution and delivery of this Agreement, since December 31, 2001, no Material
Adverse Change has occurred with respect to Borrower or its Subsidiaries
(including, without limitation, no Material Adverse Change with respect to any
facts or information regarding such Persons as represented to any Agent or any
Bank on or prior to the Closing Date).
(d) After giving effect to the transactions contemplated by this
Agreement, each Credit Party is Solvent.
SECTION 9.5. Litigation. Except for matters disclosed on Schedule 3
---------- ----------
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could result in a Material Adverse
Change or which could in any manner draw into question the validity of the Loan
Papers.
SECTION 9.6. ERISA. No Credit Party nor any ERISA Affiliate of any
-----
Credit Party maintains or has ever maintained or been obligated to contribute
to any Plan covered by
- 49 -
Title IV of ERISA or subject to the funding requirements of Section 412 of the
Code or Section 302 of ERISA. Each Plan maintained by any Credit Party or any
ERISA Affiliate of any Credit Party is in compliance in all material respects
with all applicable Laws. Except in such instances where an omission or failure
would not result in a Material Adverse Change, (a) all returns, reports and
notices required to be filed with any regulatory agency with respect to any
Plan have been filed timely, and (b) no Credit Party nor any ERISA Affiliate of
any Credit Party has failed to make any contribution or pay any amount due or
owing as required by the terms of any Plan. There are not pending or, to the
best of Borrower's knowledge, threatened claims, lawsuits, investigations or
actions (other than routine claims for benefits in the ordinary course)
asserted or instituted against, and no Credit Party nor any ERISA Affiliate of
any Credit Party has knowledge of any threatened litigation or claims against,
the assets of any Plan or its related trust or against any fiduciary of a Plan
with respect to the operation of such Plan that are likely to result in
liability of any Credit Party resulting in a Material Adverse Change. Except in
such instances where an omission or failure would not result in a Material
Adverse Change, each Plan that is intended to be "qualified" within the meaning
of section 401(a) of the Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation and all necessary
governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. No Credit Party nor any ERISA Affiliate of any
Credit Party has engaged in any prohibited transactions, within the meaning of
section 406 of ERISA or section 4975 of the Code, in connection with any Plan
which would result in liability of any Credit Party resulting in a Material
Adverse Change. No Credit Party nor any ERISA Affiliate of any Credit Party
maintains or contributes to any Plan that provides a post-employment health
benefit, other than a benefit required under Section 601 of ERISA, or maintains
or contributes to a Plan that provides health benefits that is not fully funded
except where the failure to fully fund such Plan would not result in a Material
Adverse Change. No Credit Party nor any ERISA Affiliate of any Credit Party
maintains, has established or has ever participated in a multiple employer
welfare benefit arrangement within the meaning of section 3(40)(A) of ERISA.
SECTION 9.7. Taxes and Filing of Tax Returns. Each Credit Party has
-------------------------------
filed all tax returns required to have been filed and has paid all Taxes shown
to be due and payable on such returns, including interest and penalties, and
all other Taxes which are payable by such party, to the extent the same have
become due and payable. No Credit Party knows of any proposed material Tax
assessment against it and all Tax liabilities of each Credit Party are
adequately provided for. Except as disclosed in writing to Banks prior to the
date hereof, no income tax liability of any Credit Party has been asserted by
the Internal Revenue Service or other Governmental Authority for Taxes in
excess of those already paid. The production from the xxxxx subject to the
Section 29 Documents is, to the extent represented by Borrower in those
documents, entitled to the benefits of tax credits under Section 29 of the Code.
SECTION 9.8. Ownership of Properties Generally. Each Credit Party has
---------------------------------
good and valid fee simple or leasehold title to all material properties and
assets purported to be owned by it, including, without limitation, all assets
reflected in the balance sheets referred to in Section 9.4 (a) and all assets
---------------
which are used by the Credit Parties in the operation of their respective
businesses, and none of such properties or assets is subject to any Lien other
than Permitted Encumbrances.
- 50 -
SECTION 9.9. Mineral Interests. The Property Description is an accurate
-----------------
and complete description of all Borrowing Base Properties on the Closing Date.
Subject only to Immaterial Title Deficiencies (as herein defined), Borrower and
each of its Subsidiaries executing a Mortgage (as applicable) have good and
defensible title to all Mineral Interests described in the Reserve Report,
including, without limitation, all Borrowing Base Properties, free and clear of
all Liens except for Permitted Encumbrances. Subject only to Immaterial Title
Deficiencies, all Mineral Interests described in the Reserve Report are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid. Without regard
to any consent or non-consent provisions of any joint operating agreement
covering any of Borrower's or such Subsidiary's (as applicable) Proved Mineral
Interests, subject to Immaterial Title Deficiencies, Borrower's share and/or
the share of each Subsidiary executing a Mortgage (as applicable) of (a) the
costs for each Proved Mineral Interest described in the Reserve Report is not
greater than the decimal fraction set forth in the Reserve Report, before and
after payout, as the case may be, and described therein by the respective
designations "working interests," "WI," "gross working interest," "GWI," or
similar terms, and (b) production from, allocated to, or attributed to each
such Proved Mineral Interest is not less than the decimal fraction set forth in
the Reserve Report, before and after payout, as the case may be, and described
therein by the designations "net revenue interest," "NRI," or similar terms. As
used herein, the term "Immaterial Title Deficiencies" means minor defects or
-----------------------------
deficiencies in title which do not effect, in the aggregate, more than two
percent (2%) (by value) of all Borrowing Base Properties. Each well drilled in
respect of each Proved Producing Mineral Interest described in the Reserve
Report (y) is capable of, and is presently, producing Hydrocarbons in
commercially profitable quantities, and after giving effect to the transactions
contemplated by this Agreement, Borrower and each of its Subsidiaries executing
a Mortgage (as applicable) will receive payments on a current basis for its
share of production, with no funds in respect of any thereof held in suspense,
other than any such funds held in suspense pending delivery of appropriate
division orders, and (z) has been drilled, bottomed, completed, and operated in
compliance with all applicable Laws and no such well which is currently
producing Hydrocarbons is subject to any penalty in production by reason of
such well having produced in excess of its allowable production.
SECTION 9.10. Licenses, Permits, Etc. Each Credit Party possesses such
----------------------
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not result in a Material Adverse Change.
SECTION 9.11. Compliance with Law. The business and operations of the
-------------------
Credit Parties have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which do not (either individually
or collectively) result in a Material Adverse Change.
SECTION 9.12. Full Disclosure. All information heretofore furnished by
---------------
each Credit Party to Administrative Agent or any Bank for purposes of or in
connection with this Agreement, any Loan Paper or any transaction contemplated
hereby or thereby is, and all such
- 51 -
information hereafter furnished by or on behalf of any Credit Party to
Administrative Agent or any Bank will be, true, complete and accurate in every
material respect. The Credit Parties have disclosed or have caused to be
disclosed to Banks in writing any and all facts (other than facts of general
public knowledge) which might reasonably be expected to result in a Material
Adverse Change.
SECTION 9.13. Organizational Structure; Nature of Business. The Credit
--------------------------------------------
Parties are engaged only in the business of acquiring, exploring, developing
and operating Mineral Interests and the production, marketing, processing and
transporting of Hydrocarbons therefrom. Schedule 4 hereto accurately reflects
----------
(i) the jurisdiction of incorporation or organization of each Credit Party,
(ii) each jurisdiction in which each Credit Party is qualified to transact
business as a foreign corporation, foreign partnership or foreign limited
liability company, and (iii) the authorized, issued and outstanding Equity of
each Credit Party.
SECTION 9.14. Environmental Matters. Except for matters disclosed on
---------------------
Schedule 5 hereto, no operation conducted by any Credit Party and no real or
personal property now or previously owned or leased by any Credit Party
(including, without limitation, Mineral Interests) and no operations conducted
thereon, and to any Credit Party's knowledge, no operations of any prior owner,
lessee or operator of any such properties, is or has been in violation of any
Applicable Environmental Law other than violations which neither individually
nor in the aggregate could result in a Material Adverse Change. Except for
matters disclosed on Schedule 5 hereto, no Credit Party, nor any such property
----------
nor operation is the subject of any existing, pending or, to any Credit Party's
knowledge, threatened Environmental Complaint which could, individually or in
the aggregate, result in a Material Adverse Change. All notices, permits,
licenses, and similar authorizations, required to be obtained or filed in
connection with the ownership of each tract of real property or operations of
any Credit Party thereon and each item of personal property owned, leased or
operated by any Credit Party, including, without limitation, notices, licenses,
permits and authorizations required in connection with any past or present
treatment, storage, disposal, or release of Hazardous Substances into the
environment, have been duly obtained or filed except to the extent the failure
to obtain or file such notices, licenses, permits and authorizations would not
result in a Material Adverse Change. All Hazardous Substances generated at each
tract of real property and by each item of personal property owned, leased or
operated by any Credit Party have been transported, treated, and disposed of
only by carriers or facilities maintaining valid permits under RCRA (as
hereinafter defined) and all other Applicable Environmental Laws for the
conduct of such activities except in such cases where the failure to obtain
such permits could not, individually or in the aggregate, result in a Material
Adverse Change. Except for matters disclosed on Schedule 5 hereto, there have
----------
been no Hazardous Discharges which were not in compliance with Applicable
Environmental Laws other than Hazardous Discharges which would not,
individually or in the aggregate, result in a Material Adverse Change. Except
for matters disclosed on Schedule 5 hereto, no Credit Party nor any Subsidiary
----------
of any Credit Party has any contingent liability in connection with any
Hazardous Discharge which could reasonably be expected to result in a Material
Adverse Change. As used in this Section 9.14, the term "RCRA" shall mean the
------------ ----
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Recovery Act of 1976, as amended by the
Solid Waste Disposal Act of
- 52 -
1980, and the Hazardous and Solid Waste Amendments of 1984, as the same may be
further amended and in effect from time to time.
SECTION 9.15. Burdensome Obligations. No Credit Party, nor any of the
----------------------
properties of any Credit Party is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of their properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to result in a Material Adverse Change. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement or subject
to any order of any Governmental Authority which prohibits or restricts in any
way the right of such Credit Party to make Distributions.
SECTION 9.16. Fiscal Year. Borrower's Fiscal Year is January 1 through
-----------
December 31.
SECTION 9.17. No Default. Neither a Default nor an Event of Default
----------
has occurred or will exist after giving effect to the transactions contemplated
by this Agreement or the other Loan Papers.
SECTION 9.18. Government Regulation. No Credit Party is subject to
---------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Credit Party of Debt, including, but not limited to Laws
relating to common contract carriers or the sale of electricity, gas, stream,
water or other public utility services.
SECTION 9.19. Insider. No Credit Party is, and no Person having
-------
"control" (as that term is defined in 12 U.S.C. Section 375(b) or regulations
promulgated thereunder) of any Credit Party is, an "executive officer,"
"director" or "shareholder" of any Bank or any bank holding company of which
any Bank is a Subsidiary or of any Subsidiary of such bank holding company.
SECTION 9.20. Gas Balancing Agreements and Advance Payment Contracts.
------------------------------------------------------
On the date of this Agreement and on the Closing Date, (a) there is no Material
Gas Imbalance, and (b) the aggregate amount of all Advance Payments received by
any Credit Party under Advance Payment Contracts which have not been satisfied
by delivery of production does not exceed $250,000.
SECTION 9.21. Cinnabar. Borrower owns a fifty percent (50%) membership
--------
or other equity interest in Cinnabar, and MMI, a wholly owned Subsidiary of
Borrower, owns a fifty percent (50%) membership or other equity interest in
Cinnabar.
SECTION 9.22. Commodity Price Risk Policy. Borrower's policy with
---------------------------
respect to commodity price risk as presently in effect, addressing Borrower's
policies with respect to Hedge Agreements for Hydrocarbons, is attached hereto
as Exhibit K (the "Commodity Price Risk
--------- --------------------
- 53 -
Policy"). The Commodity Price Risk Policy has not been rescinded, revoked,
------
modified or amended in any respect, and is in full force and effect.
SECTION 9.23. Subordinate Debt, Mercury Subordinate Debt, and Falcon
------------------------------------------------------
Seaboard Settlement Agreement. (a) The outstanding principal amount of the
-----------------------------
Subordinate Debt does not exceed $53,000,000 (except as otherwise permitted in
the Subordinate Note Agreement in connection with the issuance of new notes in
lieu of the payment of cash interest thereunder).
(b) (i) The outstanding principal amount of the Mercury
Subordinate Debt does not exceed $4,000,000; (ii) the aggregate principal amount
of the Mercury Subordinate Debt as of May 1, 2002, is $2,560,000; and (iii) the
Mercury Subordinate Debt (A) is unsecured, (B) has a stated maturity of no
earlier than December 31, 2005, and does not provide for or otherwise require
any mandatory redemption, repayment, defeasance, repurchase or other
amortization (except in accordance with a quarterly amortization schedule set
forth therein) prior to the scheduled maturity, (C) does not provide for a
non-default rate of interest greater than nine percent (9%) per annum, and (D)
is fully subordinated to the Obligations.
(c) The book value of Borrower's obligations under the Falcon
Seaboard Settlement Agreement as of May 1, 2002, is $1,829,000.
ARTICLE X
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 10.1. Information. Borrower will deliver, or cause to be
-----------
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90)
days after the end of each Fiscal Year, a consolidated and consolidating balance
sheet of Borrower and each other Credit Party as of the end of such Fiscal Year
and the related consolidated and consolidating statements of income and
statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by such
Credit Party in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing and acceptable to Administrative
Agent;
(b) as soon as available and in any event within forty-five
(45) days after the end of each of the first three (3) Fiscal Quarters of each
Fiscal Year, consolidated and consolidating balance sheets of Borrower and each
other Credit Party as of the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income and statements of cash flow
for such quarter and for the portion of such Credit Party's Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of such
Credit Party's previous Fiscal Year;
- 54 -
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 10.1(a) and (b), a certificate of a Financial
---------------- ---
Officer of Borrower in the form of Exhibit H attached hereto, (i) setting forth
---------
in reasonable detail the calculations required to establish whether Borrower was
in compliance with the requirements of Article XII on the date of such financial
statements, (ii) stating whether there exists on the date of such certificate
any Default and, if any Default then exists, setting forth the details thereof
and the action which Borrower is taking or proposes to take with respect
thereto, (iii) stating whether or not such financial statements fairly reflect
in all material respects the results of operations and financial condition of
Borrower and each other Credit Party as of the date of the delivery of such
financial statements and for the period covered thereby, (iv) setting forth (A)
whether as of such date there is a Material Gas Imbalance and, if so, setting
forth the amount of net gas imbalances under Gas Balancing Agreements to which
any Credit Party is a party or by which any Mineral Interests owned by Borrower
is bound, and (B) the aggregate amount of all Advance Payments received under
Advance Payment Contracts to which any Credit Party is a party or by which any
Mineral Interests owned by Borrower is bound which have not been satisfied by
delivery of production, if any, and (v) setting forth a summary of the Hedge
Transactions to which each Credit Party is a party on such date and attaching a
copy of each Hedge Agreement evidencing such Hedge Transactions (or a statement
certifying that Borrower has previously delivered to Administrative Agent true
and correct copies of all such Hedge Agreements, the same have not been modified
or amended in any respect, and such Hedge Agreements represent the valid,
binding and enforceable obligations of the Credit Party a party thereto);
(d) promptly upon the mailing thereof to the stockholders of any
Credit Party generally, copies of all financial statements, reports and proxy
statements so mailed;
(e) promptly upon the filing thereof, copies of all final
registration statements post effective amendments thereto and annual, quarterly
or special reports which any Credit Party shall have filed with the Securities
and Exchange Commission; provided, that Borrower must deliver, or cause to be
-------- ----
delivered, any annual reports which any Credit Party shall have filed with the
Securities and Exchange Commission, within ninety (90) days after the end of
each Fiscal Year of such Credit Party, and any quarterly reports which any
Credit Party shall have filed with the Securities and Exchange Commission,
within forty-five (45) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year of such Credit Party;
(f) promptly upon receipt of same, any notice or other
information received by any Credit Party indicating (i) any potential, actual or
alleged non-compliance with or violation of the requirements of any Applicable
Environmental Law which could result in liability to any Credit Party for fines,
clean up or any other remediation obligations or any other liability in excess
of $50,000 in the aggregate; (ii) any threatened Hazardous Discharge which
Hazardous Discharge would impose on any Credit Party a duty to report to a
Governmental Authority or to pay cleanup costs or to take remedial action under
any Applicable Environmental Law which could result in liability to any Credit
Party for fines, clean up and other remediation obligations or any other
liability in excess of $50,000 in the aggregate; or (iii) the existence of any
Lien arising under any Applicable Environmental Law securing any obligation to
pay fines, clean up or other remediation costs or any other liability in excess
of $50,000 in the aggregate.
- 55 -
Without limiting the foregoing, each Credit Party shall provide to Banks
promptly upon receipt of same by any Credit Party copies of all environmental
consultants' or engineers' reports received by any Credit Party which would
render the representations and warranties (or any of them) contained in Section
-------
9.14 untrue or inaccurate in any respect;
----
(g) in the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 10.1(f) hereof or Administrative Agent
---------------
or any Bank otherwise learns of any event or condition under which any such
notice would be required, then, upon request of Required Banks, Borrower shall
within thirty (30) days of such request, cause to be furnished to Administrative
Agent and each Bank a report by an environmental consulting firm acceptable to
Administrative Agent and Required Banks, stating that a review of such event,
condition or circumstance has been undertaken (the scope of which shall be
acceptable to Administrative Agent and Required Banks) and detailing the
findings, conclusions and recommendations of such consultant; Borrower shall
bear all expenses and costs associated with such review and updates thereof;
(h) immediately upon any Authorized Officer becoming aware of
the occurrence of any Default, a certificate of an Authorized Officer setting
forth the details thereof and the action which Borrower is taking or proposes
to take with respect thereto;
(i) no later than March 31 and September 30 of each year,
commencing September 30, 2002, reports of production volumes, revenue, expenses
and product prices for all Mineral Interests owned by Borrower and each of its
Subsidiaries for the periods of six (6) months ending the preceding December 31
and June 30, respectively. Such reports shall be prepared on an accrual basis;
(j) promptly notify Banks of any Material Adverse Change; and
(k) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent, at
the request of any Bank, may reasonably request.
SECTION 10.2. Business of Borrower and Subsidiaries. The sole business
-------------------------------------
of Borrower shall be the acquisition, exploration, development and operation of
Mineral Interests and the production, marketing, processing and transportation
of Hydrocarbons therefrom; and each Subsidiary's business is substantially
similar and/or related thereto.
SECTION 10.3. Maintenance of Existence. Borrower shall, and shall cause
------------------------
each other Credit Party to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of
incorporation or organization, and (b) maintain its good standing and
qualification to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could result in a
Material Adverse Change.
SECTION 10.4. Title Data. Borrower shall, upon the request of Required
----------
Banks, cause to be delivered to Administrative Agent such title opinions and
other information regarding title to Mineral Interests owned by Borrower and
each of its Subsidiaries and the
- 56 -
perfection and priority of Administrative Agent's Liens therein as are
appropriate to determine the status thereof.
SECTION 10.5. Right of Inspection. Borrower will permit, and will cause
-------------------
each other Credit Party to permit, any officer, employee or agent of
Administrative Agent or of any Bank to visit and inspect any of the assets of
any Credit Party, examine each Credit Party's books of record and accounts,
take copies and extracts therefrom, and discuss the affairs, finances and
accounts of each Credit Party with such Credit Party's officers, accountants
and auditors, all at such reasonable times and as often as Administrative Agent
or any Bank may desire, and upon and during the continuance of an Event of
Default all at the expense of Borrower.
SECTION 10.6. Maintenance of Insurance. Borrower will, and will cause
------------------------
each other Credit Party to, at all times maintain or cause to be maintained
insurance covering such risks as are customarily carried by businesses
similarly situated, including, without limitation, the following: (a) workmen's
compensation insurance; (b) employer's liability insurance; (c) comprehensive
general public liability and property damage insurance; (d) insurance against
losses customarily insured against as a result of damage by fire, lightning,
hail, tornado, explosion and other similar risk; and (e) comprehensive
automobile liability insurance. All loss payable clauses or provisions in all
policies of insurance maintained by Borrower pursuant to this Section 10.6
------------
shall be endorsed in favor of and made payable to Administrative Agent for the
ratable benefit of Banks, as their interests may appear. Administrative Agent
shall have the right, for the ratable benefit of Banks, to collect, and
Borrower hereby assigns to Administrative Agent for the ratable benefit of
Banks, any and all monies that may become payable under any such policies of
insurance by reason of damage, loss or destruction of any property which stands
as security for the Obligations or any part thereof, and Administrative Agent
may, at its election, either apply for the ratable benefit of Banks all or any
part of the sums so collected toward payment of the Obligations, whether or not
such Obligations are then due and payable, in such manner as Administrative
Agent may elect, or release same to the applicable Credit Party.
SECTION 10.7. Payment of Taxes and Claims. Borrower will, and will
---------------------------
cause each other Credit Party to, pay (a) all Taxes imposed upon it or any of
its assets or with respect to any of its franchises, business, income or
profits before any material penalty or interest accrues thereon and (b) all
material claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
law have or might become a Lien (other than a Permitted Encumbrance) on any of
its assets; provided however, that no payment of Taxes or claims shall be
-------- -------
required if (i) the amount, applicability or validity thereof is currently
being contested in good faith by appropriate action promptly initiated and
diligently conducted in accordance with good business practices and no material
part of the property or assets of any Credit Party is subject to any pending
levy or execution, (ii) the Credit Parties, as and to the extent required in
accordance with GAAP, shall have set aside on their books reserves (segregated
to the extent required by GAAP) deemed by them to be adequate with respect
thereto, and (iii) the Credit Parties have notified Administrative Agent of
such circumstances, in detail satisfactory to Administrative Agent.
SECTION 10.8. Compliance with Laws and Documents. Borrower will, and
----------------------------------
will cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles)
- 57 -
of incorporation, bylaws, regulations and similar organizational documents and
all Material Agreements to which any Credit Party is a party, if a violation,
alone or when combined with all other such violations, could result in a
Material Adverse Change.
SECTION 10.9. Operation of Properties and Equipment. (a) Borrower will,
-------------------------------------
and will cause each of its Subsidiaries to, maintain, develop and operate (or
use its best efforts to cause the operator to maintain and operate to the
extent Borrower is not the operator) its Mineral Interests in a good and
workmanlike manner, and observe and comply with all of the terms and
provisions, express or implied, of all oil and gas leases relating to such
Mineral Interests so long as such Mineral Interests are capable of producing
Hydrocarbons and accompanying elements in paying quantities.
(b) Borrower will, and will cause each of its Subsidiaries to,
comply in all respects with all contracts and agreements applicable to or
relating to its Mineral Interest or the production and sale of Hydrocarbons and
accompanying elements therefrom.
(c) Borrower will, and will cause each of its Subsidiaries to,
at all times maintain, preserve and keep all operating equipment used with
respect to its Mineral Interests in proper repair, working order and condition,
and make all necessary or appropriate repairs, renewals, replacements, additions
and improvements thereto so that the efficiency of such operating equipment
shall at all times be properly preserved and maintained; provided further, that
-------- ------- ----
no item of operating equipment need be so repaired, renewed, replaced, added to
or improved, if Borrower shall in good faith determine that such action is not
necessary or desirable for the continued efficient and profitable operation of
the business of such Credit Party.
SECTION 10.10. Environmental Law Compliance. Borrower will, and will
----------------------------
cause each other Credit Party to, comply with all Applicable Environmental
Laws, including, without limitation, (a) all licensing, permitting,
notification and similar requirements of Applicable Environmental Laws, and (b)
all provisions of all Applicable Environmental Laws regarding storage,
discharge, release, transportation, treatment and disposal of Hazardous
Substances. Borrower will, and will cause each other Credit Party to, promptly
pay and discharge when due all legal debts, claims, liabilities and obligations
with respect to any clean-up or remediation measures necessary to comply with
Applicable Environmental Laws.
SECTION 10.11. ERISA Reporting Requirements. Borrower shall furnish,
----------------------------
or cause to be furnished, to Administrative Agent:
(a) promptly and in any event (i) within thirty (30) days
after Borrower or any ERISA Affiliate receives notice from any regulatory agency
of the commencement of an audit, investigation or similar proceeding with
respect to a Plan, and (ii) within ten (10) days after Borrower or any ERISA
Affiliate contacts the Internal Revenue Service for the purpose of participation
in a closing agreement or any voluntary resolution program with respect to a
Plan or knows or has reason to know that any event with respect to any Plan of
Borrower or any ERISA Affiliate has occurred, a written notice describing such
event and describing what action is being taken or is proposed to be taken with
respect thereto, together with a copy of any notice of event that is given to
the PBGC;
- 58 -
(b) promptly and in any event within thirty (30) days after
the receipt by Borrower of a request therefor by a Bank, copies of any annual
and other report (including Schedule B thereto) with respect to a Plan filed by
Borrower or any ERISA Affiliate with the United States Department of Labor, the
Internal Revenue Service or the PBGC;
(c) notification within thirty (30) days of the effective date
thereof of any material increases in the benefits, or material change in the
funding method, of any existing Plan which is not a multiemployer plan (as
defined in section 4001(a)(3) of ERISA), or the establishment of any material
new Plans, or the commencement of contributions to any Plan to which Borrower or
any ERISA Affiliate was not previously contributing; and
(d) promptly after receipt of written notice of commencement
thereof, notice of all (i) claims made by participants or beneficiaries with
respect to any Plan and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not result in a Material Adverse Change.
SECTION 10.12. Additional Documents. Borrower will, and will cause each
--------------------
other Credit Party (to the extent each is party thereto) to, cure promptly any
defects in the creation and issuance of each Note, and the execution and
delivery of this Agreement and the other Loan Papers and, at Borrower's
expense, Borrower shall promptly and duly execute and deliver to each Bank, and
cause each other Credit Party to promptly and duly execute and deliver to each
Bank, upon reasonable request, all such other and further documents, agreements
and instruments in compliance with or accomplishment of the covenants and
agreements of the Credit Parties in this Agreement and the other Loan Papers as
may be reasonably necessary or appropriate in connection therewith.
SECTION 10.13. Environmental Review. Not later than thirty (30) days
--------------------
prior to the date of any acquisition by any Credit Party of Mineral Interests
or related assets, other than an acquisition of additional interests in Mineral
Interests in which a Credit Party previously held an interest, Borrower shall
deliver to Administrative Agent a report in form, scope and detail acceptable
to Administrative Agent from environmental engineering firms acceptable to
Administrative Agent, which report or reports shall set forth the results of a
Phase I environmental review of such Mineral Interests and related assets.
ARTICLE XI
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
- 59 -
SECTION 11.1. Incurrence of Debt. Borrower will not, nor will Borrower
------------------
permit any other Credit Party to, incur, become or remain liable for any Debt,
other than (a) the Obligations, (b) the Subordinate Debt, (c) the Mercury
Subordinate Debt, (d) the guarantee by Borrower of a percentage of any
Contractual Obligation of any Subsidiary of Borrower, so long as the percentage
referred to in any such guaranty shall not exceed the percentage of common
equity owned directly or indirectly by Borrower in such Subsidiary at the time
such guaranty is executed; and (e) the Falcon Seaboard Settlement Agreement;
provided, that, in the event no Default, Event of Default or Borrowing Base
-------- ----
Deficiency has occurred which is continuing, (x) Borrower may incur and remain
liable for Non-Recourse Debt to the extent such Non-Recourse Debt has been
specifically approved in writing by Required Banks, (y) Borrower and its
Subsidiaries may incur and remain liable for other unsecured Debt in an
aggregate amount outstanding at any time not to exceed $2,000,000, and (z)
Borrower and its Subsidiaries may incur and remain liable for other secured
Non-Recourse Debt in an aggregate amount outstanding at any time not to exceed
$2,000,000, so long as the Liens and security interests granted to secure such
Debt do not cover or affect the Mortgaged Property.
SECTION 11.2. Restricted Payments. Borrower will not, nor will Borrower
-------------------
permit any other Credit Party to, directly or indirectly, declare or pay, or
incur any liability to declare or pay, any Restricted Payment; provided, that
-------- ----
Borrower or any Affiliate of Borrower may, subject to Section 11.14, consummate
-------------
the Permitted Redemptions; and provided further, that (a) any Subsidiary of
-------- ------- ----
Borrower that has provided a Subsidiary Guaranty, and all of the Equity of
which owned by Borrower has been pledged to Administrative Agent pursuant to a
Borrower Pledge Agreement, may make Distributions to Borrower; (b) any indirect
Subsidiary of Borrower that has provided a Subsidiary Guaranty may make
Distributions to any First Tier Subsidiary of Borrower owning Equity therein,
so long as all of the Equity in the indirect Subsidiary of Borrower owned by
such First Tier Subsidiary of Borrower has been pledged to Administrative Agent
pursuant to a Subsidiary Pledge Agreement, all of the Equity in the First Tier
Subsidiary of Borrower owned by Borrower has been pledged to Administrative
Agent pursuant to the Borrower Pledge Agreement, and such First Tier Subsidiary
of Borrower makes a Distribution to Borrower in an equal amount and on the same
Business Day of receipt thereof; (c) any Person in which Borrower directly or
indirectly owns Equity may make Distributions to Borrower and other Persons
owning Equity in such Person, so long as any such Distribution is in each case
made to Borrower and such other Persons ratably in accordance with its Equity
interests therein; and (d), in the event no Default, Event of Default or
Borrowing Base Deficiency has occurred which is continuing, Borrower may (i)
make regularly scheduled payments of principal and interest on the Mercury
Subordinate Debt in accordance with the terms of the Mercury Subordinate Note,
(ii) make regularly scheduled payments of principal and interest on the
Subordinate Debt in accordance with the terms of the Subordinate Notes, and
(iii) repurchase, during the term of this Agreement, a portion of its common
stock, par value $.01 per share, for an aggregate and cumulative purchase price
of not more than $5,000,000. Nothing in this Section 11.2 shall preclude
------------
Borrower's delivery of gas pursuant to the terms of the Falcon Seaboard
Settlement Agreement.
SECTION 11.3. Negative Pledge. Borrower will not, nor will Borrower
---------------
permit any other Credit Party to, create, assume or suffer to exist any Lien on
any of their respective assets, other than Permitted Encumbrances. Borrower
will not, nor will Borrower permit any other
- 60 -
Credit Party to, enter into or become bound by any agreement (other than this
Agreement) that prohibits or otherwise restricts the right of Borrower or any
other Credit Party to create, assume or suffer to exist any Lien on any of
their respective assets in favor of Administrative Agent for the ratable
benefit of Banks.
SECTION 11.4. Consolidations and Mergers. Borrower will not, nor will
--------------------------
Borrower permit any other Credit Party to, consolidate or merge with or into
any other Person; provided, that, so long as no Default or Event of Default
exists or will result therefrom, (a) Borrower may merge or consolidate with
another Person so long as Borrower is the surviving corporation, and (b) any
wholly owned Subsidiary of Borrower may merge or consolidate with any other
Person so long as a wholly owned Subsidiary of Borrower is the surviving Person.
SECTION 11.5. Asset Dispositions. (a) Borrower will not, nor will
Borrower permit any other Credit Party to, sell, lease, transfer, abandon or
otherwise dispose of any asset, other than the sale in the ordinary course of
business of Hydrocarbons produced from Borrower's and any other Credit Party's
Mineral Interests (and not pursuant to Advance Payment Contracts); provided,
--------
that, so long as no Default or Event of Default has occurred which is
----
continuing, Borrower shall be permitted to sell or dispose of (i) machinery and
equipment which is obsolete or otherwise not necessary or useful in the
operation of Borrower's business; (ii) Mineral Interests during any period
between Scheduled Redeterminations with an aggregate Recognized Value (measured
at the time of such sale or disposition) not in excess of five percent (5%) of
the Borrowing Base in effect during such period; and (iii) the Seller's
Interest (as defined in the Purchase and Sale Agreement dated as of March 31,
2000, between Borrower, as seller, and Mariner, as buyer (the "Mariner Purchase
----------------
and Sale Agreement") pursuant to the terms of the Buyer's Option (as defined in
------------------
the Mariner Purchase and Sale Agreement) and in accordance with Article X of
the Mariner Purchase and Sale Agreement; provided, however, and without
-------- -------
limiting the foregoing, Borrower will not, nor will Borrower permit any other
Credit Party to, (A) sell any Hydrocarbons under Advance Payment Contracts, (B)
sell or securitize any of their accounts receivable (other than those deemed
doubtful or uncollectible), (C) sell any production payment or other term
royalty, (D) purchase property subject to any production payment or term
royalty created within 180 days prior to such purchase, or (E) sell assets and
then lease them back (or commit to lease them back) within 180 days after such
sale. Borrower will not sell, transfer or dispose of, or permit any other
Credit Party to sell, transfer or dispose of, any capital stock or other equity
interest in any Subsidiary of Borrower; provided, however, that Borrower may
-------- ------- ----
sell, transfer, or dispose of its membership interest in Voyager.
(b) In the event of any disposition of assets permitted under
this Section 11.5, Administrative Agent is authorized on behalf of the Banks to
------------
release and shall promptly release any Liens in favor of Administrative Agent
for the benefit of the Banks covering such assets upon written request from an
Authorized Officer of Borrower which specifically identifies the subject assets
and certifies that such disposition complies with the terms of this Section
-------
11.5.
----
- 61 -
SECTION 11.6. Amendments to Organizational Documents; Other Material
------------------------------------------------------
Agreements. Borrower will not, nor will Borrower permit any other Credit Party
----------
to, enter into or permit any modification or amendment of, or waive any
material right or obligations of any Person under, (a) its certificate or
articles of incorporation, bylaws, partnership agreement, regulations or other
organizational documents other than amendments, modifications and waivers which
could not, individually or in the aggregate, result in a Material Adverse
Change, (b) the Subordinate Note Documents, (c) the Section 29 Documents, (d)
the Mercury Subordinate Note, and (e) the Commodity Price Risk Policy;
provided, that Borrower may enter into amendments to the Subordinate Note
Documents which do not provide for or have any of the following effects: (i)
increase the overall principal amount of the Subordinate Debt beyond the
$53,000,000 presently outstanding (as reduced by any principal payments
hereafter made with the express written consent of Required Banks) (except as
otherwise permitted in the Subordinate Note Agreement in connection with the
issuance of new notes in lieu of the payment of cash interest thereunder); (ii)
increase the amount of any scheduled payment of principal or interest on the
Subordinate Debt; (iii) hasten or accelerate the date upon which any
installment of principal or interest of any Subordinate Debt is due or
otherwise accelerates the amortization schedule with respect to such
Subordinate Debt; (iv) increase the rate of interest accruing on the
Subordinate Debt; (v) provide for the payment of additional fees or for any
increase in existing fees in connection with any Subordinate Debt; or (vi)
amend, modify or add any performance obligation of Borrower to any Subordinate
Noteholder in a manner which requires Borrower to comply with more restrictive
financial ratios or is otherwise more onerous or more restrictive to Borrower.
SECTION 11.7. Use of Proceeds. The proceeds of Borrowings will not be
---------------
used for any purpose other than (a) working capital, (b) to finance the
acquisition, exploration and development of Mineral Interests and related
capital assets, (c) to refinance the obligations outstanding under the Existing
Credit Agreement, and (d) to finance the Permitted Redemptions.
SECTION 11.8. Investments. Borrower will not, nor will Borrower permit
-----------
any other Credit Party to, directly or indirectly, make or have outstanding any
Investment, other than Permitted Investments.
SECTION 11.9. Transactions with Affiliates. Borrower will not, nor will
----------------------------
Borrower permit any other Credit Party to, engage in any transaction with any
Affiliate unless such transaction is as favorable to such party as could be
obtained in an arm's length transaction with an unaffiliated Person in
accordance with prevailing industry customs and practices.
SECTION 11.10. ERISA. Except in such instances where an omission or
-----
failure would not result in a Material Adverse Change, Borrower will not, nor
will Borrower permit any other Credit Party to, (a) take any action or fail to
take any action which would result in a violation of ERISA, the Code or other
Laws applicable to the Plans maintained or contributed to by it or any ERISA
Affiliate, or (b) modify the term of, or the funding obligations or
contribution requirements under any existing Plan, establish a new Plan, or
become obligated or incur any liability under a Plan that is not maintained or
contributed to by Borrower or any ERISA Affiliate as of the Closing Date.
- 62 -
SECTION 11.11. Hedge Transactions. With the exception of Oil and Gas
------------------
Hedge Transactions entered into pursuant to Section 8.1(e), Borrower will not,
-------------
nor will Borrower permit any other Credit Party to, enter into Oil and Gas
Hedge Transactions which would cause the volume of Hydrocarbons with respect to
which a settlement payment is calculated under such Oil and Gas Hedge
Transactions to exceed seventy-five percent (75%) of the aggregate of (a)
Borrower's anticipated production from Proved Mineral Interests plus (b)
associated royalty owners' gas produced from the same xxxxx, and which gas
Borrower has the authority to market and sell, during the period from the
immediately preceding settlement date (or the commencement of such Hedge
Transaction if there is no prior settlement date) to such settlement date.
SECTION 11.12. Fiscal Year. Borrower will not, and Borrower will not
-----------
permit any other Credit Party to, change its Fiscal Year.
SECTION 11.13. Change in Business. Borrower will not, nor will
------------------
Borrower permit any other Credit Party to, engage in any business other than
the businesses engaged in by such parties on the date hereof as described in
Section 9.13 hereof.
------------
SECTION 11.14. Subordinate Debt, Mercury Subordinate Debt, and Falcon
------------------------------------------------------
Seaboard Settlement Agreement. Borrower will not (a) make any payment on or
-----------------------------
with respect to any Subordinate Debt, except as expressly permitted by the
terms hereof and by the terms of the Subordination Agreement, or permit the
outstanding principal balance of the Subordinate Notes to exceed $53,000,000
(except as otherwise permitted in the Subordinate Note Agreement in connection
with the issuance of new notes in lieu of the payment of cash interest
thereunder); (b) make any payment on or with respect to any Mercury Subordinate
Debt, except as expressly permitted by the terms of this Agreement and by the
terms of the Mercury Subordinate Note, or permit the outstanding principal
balance of the Mercury Subordinate Note to exceed $4,000,000; or (c) make any
delivery on or with respect to the Falcon Seaboard Settlement Agreement, except
as expressly permitted by the terms of the Falcon Seaboard Settlement
Agreement; provided however, that Borrower may make the Permitted Redemptions
-------- -------
so long as, and only so long as, both immediately before and after giving
effect thereto, (i) no Default, Event of Default, or Borrowing Base Deficiency
has occurred and is continuing or results therefrom, and (ii) at least
$10,000,000 of Availability exists at the time of any such Permitted
Redemption. Administrative Agent and Banks agree to enter into any amendment,
waiver or other document, letter or agreement under the Subordinate Note
Documents in order to permit the Permitted Redemption thereunder, subject to
the restrictions set forth in this Section 11.14.
--------------
ARTICLE XII
FINANCIAL COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding, as of the
end of any Fiscal Quarter, commencing with the Fiscal Quarter ending June 30,
2002, Borrower will not permit its ratio of:
- 63 -
(a) Consolidated Current Assets to Consolidated Current
Liabilities to be less than 1.00 to 1.00; and
(b) Consolidated EBITDAX (for the four (4) Fiscal Quarters ending
on such date) to Consolidated Net Interest Expense (for the four (4) Fiscal
Quarters ending on such date) to be less than 2.50 to 1.00.
ARTICLE XIII
DEFAULTS
SECTION 13.1. Events of Default. If one or more of the following events
-----------------
(collectively, "Events of Default," and each individually, an "Event of
----------------- --------
Default") shall have occurred and be continuing:
-------
(a) Borrower shall fail to pay when due any principal on any
Note;
(b) Borrower shall fail to pay when due accrued interest on any
Note or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date thereof;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Article XI or Article XII of this Agreement;
---------- -----------
(d) any Credit Party shall fail to observe or perform any
covenant or agreement contained in this Agreement or any other Loan Paper (other
than those referenced in Sections 13.1(a), (b) and (c)) and such failure
--------------------- ---
continues for a period of twenty (20) days after the earlier of (i) the date any
Authorized Officer of any Credit Party acquires knowledge of such failure, or
(ii) written notice of such failure has been given to any Credit Party by
Administrative Agent or any Bank;
(e) any representation, warranty, certification or statement
made or deemed to have been made by any Credit Party in any certificate,
financial statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due
on any Debt of such Person in a principal amount equal to or greater than
$250,000 or any other event or condition shall occur which (i) results in the
acceleration of the maturity of any such Debt, or (ii) entitles the holder of
such Debt to accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar Law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced
- 64 -
against it, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
corporate, partnership or limited liability company action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against any Credit Party under the federal
bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of
money aggregating in excess of $250,000 shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied or unstayed for
thirty (30) days;
(j) any event occurs with respect to any Plan or Plans pursuant
to which any Credit Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for benefit
payments under such Plan or Plans in excess of $250,000; or (ii) any Credit
Party, any ERISA Affiliate, or any other "party-in-interest" or "disqualified
person," as such terms are defined in section 3(14) of ERISA and section
4975(e)(2) of the Code, shall engage in transactions which in the aggregate
would reasonably result in a direct or indirect liability to any Credit Party
or any ERISA Affiliate in excess of $250,000 under section 409 or 502 of ERISA
or section 4975 of the Code;
(k) this Agreement or any other Loan Paper shall cease to be
in full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party, or
any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Papers to which it is a party, or any Lien created by the
Loan Papers shall for any reason (other than the release thereof in accordance
with the Loan Papers) cease to be a valid, first priority, perfected Lien upon
any of the Proved Mineral Interests or other collateral purported to be covered
thereby;
(l) a Material Adverse Change shall occur with respect to
Borrower and its Subsidiaries, taken as a whole;
(m) a Change of Control shall occur;
(n) a default or event of default shall occur under any
Subordinate Note Document or the Mercury Subordinate Note; or
(o) Borrower, any Subordinate Noteholder or TCW Agent shall
(i) default in the observance or performance of any obligation to be observed or
performed by such party under the Subordination Agreement, (ii) breach any
representation or warranty made by such party in the Subordination Agreement in
any material respect, or (iii) repudiate the Subordination
- 65 -
Agreement or assert in writing that the Subordination Agreement or any
provision thereof is not valid, binding and enforceable against any such party;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (i) if requested by Required Banks, terminate the
Commitments and they shall thereupon terminate, and (ii) if requested by
Required Banks, take such other actions as may be permitted by the Loan Papers
including, without limitation, declaring the Notes (together with accrued
interest thereon) to be, and the Notes shall thereupon become, immediately due
and payable; provided that in the case of any of the Events of Default specified
-------- ----
in Sections 13.1(g) or (h), without any notice to any Credit Party or any other
------------ --- ---
act by Administrative Agent or Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become immediately
due and payable.
ARTICLE XIV
AGENTS
SECTION 14.1. Appointment, Powers, and Immunities. Each Bank hereby
-----------------------------------
irrevocably appoints and authorizes each Agent to act as its agent under this
Agreement and the other Loan Papers with such powers and discretion as are
specifically delegated to each such Agent by the terms of this Agreement and
the other Loan Papers, together with such other powers as are reasonably
incidental thereto. No Agent (which term as used in this sentence and in
Section 14.5 and the first sentence of Section 14.6 hereof shall include their
------------ ------------
Affiliates and their own and their Affiliates' officers, directors, employees,
and agents): (a) shall have any duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Papers and no Agent
shall be a trustee or fiduciary for any Bank; (b) shall be responsible to Banks
for any recital, statement, representation, or warranty (whether written or
oral) made in or in connection with any Loan Paper or any certificate or other
document referred to or provided for in, or received by any of them under, any
Loan Paper, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Paper, or any other document
referred to or provided for therein or for any failure by any Credit Party or
any other Person to perform any of its obligations thereunder; (c) shall be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or to inspect the property (including the
books and records) of any Credit Party or any of their Subsidiaries or
Affiliates; (d) shall be required to initiate or conduct any litigation or
collection proceedings under any Loan Paper; and (e) shall be responsible for
any action taken or omitted to be taken by it under or in connection with any
Loan Paper, except for its own gross negligence or willful misconduct. Each
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by any such Agent with reasonable care. Banks identified as either a
Co-Syndication Agent or a Co-Documentation Agent under this Agreement shall not
have any right, power, obligation, liability, responsibility or duty under this
Agreement in such capacity. Each Bank acknowledges that it has not relied, and
will not rely, on any Bank identified as either the Syndication Agent or the
Documentation Agent in deciding to enter into this Agreement or in taking or
not taking action hereunder.
- 66 -
SECTION 14.2. Reliance by Agents. Each Agent shall be entitled to rely
------------------
upon any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Credit Party), independent accountants, and
other experts selected by any such Agent. Each Agent may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and
until Administrative Agent receives and accepts an Assignment and Assumption
Agreement executed in accordance with Section 15.10 hereof. As to any matters
-------------
not expressly provided for by this Agreement, no Agent shall be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Required Banks, and such instructions
shall be binding on Banks; provided, however, that no Agent shall be required
-------- ------- ----
to take any action that exposes such Agent to personal liability or that is
contrary to any Loan Paper or applicable Law unless it shall first be
indemnified to its satisfaction by Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.
SECTION 14.3. Defaults. No Agent shall be deemed to have knowledge or
--------
notice of the occurrence of a Default or Event of Default unless such Agent has
received written notice from a Bank or Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In the
event that Administrative Agent receives such a notice of the occurrence of a
Default or Event of Default, Administrative Agent shall give prompt notice
thereof to Banks. Administrative Agent shall (subject to Section 14.2 hereof)
------------
take such action with respect to such Default or Event of Default as shall
reasonably be directed by Required Banks; provided, that unless and until
-------- ----
Administrative Agent shall have received such directions, Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of Banks.
SECTION 14.4. Rights as Bank. With respect to its Commitment and the
--------------
Loans made by it, Bank of America (and any successor acting as Administrative
Agent) in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as Administrative Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Administrative Agent in its
individual capacity. Bank of America (and any successor acting as
Administrative Agent), each other Agent and their Affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with Borrower or any of its Subsidiaries or
Affiliates as if it were not acting as Agent, and Bank of America (and any
successor acting as Administrative Agent), each other Agent and their
Affiliates may accept fees and other consideration from Borrower or any of its
Subsidiaries or Affiliates for services in connection with this Agreement or
otherwise without having to account for the same to Banks.
SECTION 14.5. Indemnification. Banks agree to indemnify each Agent,
---------------
Co-Syndication Agent and Co-Documentation Agent (to the extent not reimbursed by
Borrower or
- 67 -
any Subsidiary of Borrower hereof, but without limiting the obligations of any
Credit Party to so reimburse) ratably in accordance with their respective
Commitments, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys'
fees), or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against any such Agent, Co-Syndication Agent or
Co-Documentation Agent (including by any Bank) in any way relating to or
arising out of any Loan Paper or the transactions contemplated thereby or any
action taken or omitted by any Agent, Co-Syndication Agent or Co-Documentation
Agent under any Loan Paper (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF ANY AGENT, CO-SYNDICATION AGENT, OR CO-DOCUMENTATION AGENT);
provided, that no Bank shall be liable for any of the foregoing to the extent
-------- ----
they arise from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Bank agrees to reimburse
each Agent, Co-Syndication Agent and Co-Documentation Agent promptly upon
demand for its ratable share of any costs or expenses payable by Borrower
hereunder, to the extent that any such Agent, Co-Syndication Agent or
Co-Documentation Agent is not promptly reimbursed for such costs and expenses
by Borrower. The agreements contained in this Section 14.5 shall survive
------------
payment and performance in full of the Obligations and all other amounts
payable under this Agreement.
SECTION 14.6. Non-Reliance on Agents and Other Banks. Each Bank agrees
--------------------------------------
that it has, independently and without reliance on any Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of each Credit Party and decision to enter into this
Agreement and that it will, independently and without reliance upon any 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 analysis and decisions in
taking or not taking action under the Loan Papers. Except for notices, reports,
and other documents and information expressly required to be furnished to Banks
by Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of any Credit Party or
their Affiliates that may come into the possession of any such Agent or any of
their Affiliates.
SECTION 14.7. Resignation of Agents. Any Agent may resign at any time
---------------------
by giving notice thereof to Banks and Borrower. Upon any such resignation,
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by Required Banks and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of
Banks, appoint a successor Agent which shall be a commercial bank organized
under the Laws of the United States of America having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XIV shall continue in effect
-----------
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
- 68 -
SECTION 14.8. Foreign Banks. Each Bank that is a "foreign corporation,
-------------
partnership or trust" within the meaning of the Code (a "Foreign Banks") shall
-------------
deliver to the Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or after accepting an assignment of an interest
herein), two duly signed completed copies of either IRS Form W-8BEN or any
successor thereto (relating to such Person and entitling it to an exemption
from, or reduction of, withholding tax on all payments to be made to such Person
by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Person by the Borrower
pursuant to this Agreement) or such other evidence satisfactory to the Borrower
and the Administrative Agent that such Person is entitled to an exemption from,
or reduction of, U.S. withholding tax. Thereafter and from time to time, each
such Person shall (a) promptly submit to the Administrative Agent such
additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to the
Borrower and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Person by the Borrower pursuant to this Agreement, (b) promptly
notify the Administrative Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction, and (c) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Bank, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws that the Borrower make any deduction or withholding for taxes from amounts
payable to such Person. If such Person fails to deliver the above forms or other
documentation, then the Administrative Agent may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction. If any
Governmental Authority asserts that the Administrative Agent did not properly
withhold any tax or other amount from payments made in respect of such Person,
such Person shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, and costs and expenses (including
attorneys' fees and expenses) of the Administrative Agent. The obligation of the
Banks under this Section shall survive the payment of all Obligations and the
resignation or replacement of the Administrative Agent.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank, at
its address or telecopier number set forth on Schedule 1 hereto, and if given
----------
to Borrower, at its address or telecopy number set forth on the signature pages
hereof (or in either case, at such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 15.1 and the appropriate answerback is
------------
received or receipt is otherwise confirmed, (b) if given by mail, three (3)
Domestic Business Days after deposit in the mails with first class postage
prepaid, addressed as aforesaid or (c) if
- 69 -
given by any other means, when delivered at the address specified in this
Section 15.1; provided, that notices to Administrative Agent under Article III
------------ -------- ---- -----------
or IV shall not be effective until received.
--
SECTION 15.2. No Waivers. No failure or delay by Administrative Agent
----------
or any Bank in exercising any right, power or privilege hereunder or under any
Note or other Loan Paper shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by Law or in any of the other Loan Papers.
SECTION 15.3. Expenses; Indemnification. (a) Borrower agrees to pay on
-------------------------
demand all reasonable costs and expenses of each Agent in connection with the
syndication, preparation, execution, delivery, modification, and amendment of
this Agreement, the other Loan Papers, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for Administrative Agent with respect thereto and with respect to
advising Administrative Agent as to its rights and responsibilities under the
Loan Papers. Borrower further agrees to pay on demand all reasonable costs and
expenses of Administrative Agent and Banks, if any (including, without
limitation, reasonable attorneys' fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of
the Loan Papers and the other documents to be delivered hereunder.
(b) Borrower agrees to indemnify and hold harmless each Agent,
Co-Syndication Agent, Co-Documentation Agent, each Bank and each of their
Affiliates and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party") from and against any and all claims,
-----------------
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Loan Papers, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loan (INCLUDING ANY
OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), except
to the extent such claim, damage, loss, liability, cost, or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 15.3 applies, such indemnity shall be effective
------------
whether or not such investigation, litigation or proceeding is brought by
Borrower, its directors, shareholders or creditors or an Indemnified Party or
any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. Borrower
agrees not to assert any claim against any Agent, Co-Syndication Agent,
Co-Documentation Agent, any Bank, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Papers, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loan.
- 70 -
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 15.3 shall survive the payment in full of the Loans and all other
------------
amounts payable under this Agreement.
SECTION 15.4. Right of Set-off; Adjustments. (a) Upon the occurrence
-----------------------------
and during the continuance of any Event of Default, each Bank (and each of its
Affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank (or any of its Affiliates) to
or for the credit or the account of Borrower against any and all of the
Obligations, irrespective of whether such Bank shall have made any demand under
this Agreement or Note held by such and although such obligations may be
unmatured. Each Bank agrees promptly to notify Borrower after any such set-off
and application made by such Bank; provided however, that the failure to give
-------- ------- ----
such notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section 15.4 are in addition to other rights and
------------
remedies (including, without limitation, other rights of set-off) that such
Bank may have.
(b) If any Bank (a "benefitted Bank") shall at any time
---------------
receive any payment of all or part of the Loans owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Bank, if any, in respect of such
other Bank's Loans owing to it, or interest thereon, such benefitted Bank shall
purchase for cash from the other Banks a participating interest in such portion
of each such other Bank's Loans owing to it, or shall provide such other Banks
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Bank to share the excess payment or benefits
of such collateral or proceeds ratably with each other Bank; provided however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
----
recovered from such benefitted Bank, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. Borrower agrees that any Bank so purchasing a participation
from a Bank pursuant to this Section 15.4 may, to the fullest extent permitted
------------
by Law, exercise all of its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Person were the direct
creditor of Borrower in the amount of such participation.
SECTION 15.5. Amendments and Waivers. Any provision of this Agreement
----------------------
or any other Loan Paper may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Required Banks
(and, if Article XIV or the rights or duties of any Agent are affected thereby,
-----------
by such Agent); provided, that no such amendment or waiver shall, unless signed
-------- ----
by each Bank directly affected thereby, (i) increase the Commitments of Banks,
(ii) reduce the principal of or rate of interest on any Loan or any fees or
other amounts payable hereunder, (iii) postpone any date fixed for the payment
of any scheduled installment of principal of or interest on any Loan or any
fees or other amounts payable hereunder or for termination of any Commitment,
(iv) change the percentage of the Commitments or of the unpaid principal amount
of the Notes, or the number of Banks, which shall be required for Banks or any
of them to take any action under this Section 15.5 or any other provision of
------------
this
- 71 -
Agreement, or (v) release any guarantor of the Obligations or a material portion
of the collateral securing the Obligations.
SECTION 15.6. Survival. All representations, warranties and covenants
--------
made by any Credit Party herein or in any certificate or other instrument
delivered by it or in its behalf under the Loan Papers shall be considered to
have been relied upon by Banks and shall survive the delivery to Banks of such
Loan Papers or the extension of the Loan (or any part thereof), regardless of
any investigation made by or on behalf of Banks. The indemnity provided in
Section 15.3(b) herein shall survive the repayment of all credit advances
---------------
hereunder and/or the discharge or release of any Lien granted hereunder or in
any other Loan Paper, contract or agreement between Borrower or any other
Credit Party and any Agent or any Bank.
SECTION 15.7. Limitation on Interest. Regardless of any provision
----------------------
contained in the Loan Papers, Banks shall never be entitled to receive,
collect, or apply, as interest on the Loan, any amount in excess of the Maximum
Lawful Rate, and in the event any Bank ever receives, collects or applies as
interest any such excess, such amount which would be deemed excessive interest
shall be deemed a partial prepayment of principal and treated hereunder as
such; and if the Loan is paid in full, any remaining excess shall promptly be
paid to Borrower. In determining whether or not the interest paid or payable
under any specific contingency exceeds the Maximum Lawful Rate, Borrower and
Banks shall, to the extent permitted under applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof and (c) amortize,
prorate, allocate and spread, in equal parts, the total amount of the interest
throughout the entire contemplated term of the Notes, so that the interest rate
is the Maximum Lawful Rate throughout the entire term of the Notes; provided
--------
however, that if the unpaid principal balance thereof is paid and performed in
------- ----
full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the
Maximum Lawful Rate, Banks shall refund to Borrower the amount of such excess
and, in such event, Banks shall not be subject to any penalties provided by any
Laws for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Lawful Rate.
SECTION 15.8. Invalid Provisions. If any provision of the Loan Papers
------------------
is held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of the
Loan Papers a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and enforceable.
SECTION 15.9. Waiver of Consumer Credit Laws. Pursuant to Chapter 346
------------------------------
of the Texas Finance Code, as amended, Borrower agrees that such Chapter 346
shall not govern or in any manner apply to the Loan.
- 72 -
SECTION 15.10. Assignments and Participations. (a) The provisions of
------------------------------
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Bank and no
Bank may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of clause (b) of this section, (ii) by way of participation in accordance with
the provisions of clause (d) of this section or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of clause (f) of
this section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in clause (d) of this section and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Banks) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Bank may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided, that (i) except in the case of an assignment of the entire
-------- ----
remaining amount of the assigning Bank's Commitment, the Loans at the time owing
to it and the Letter of Credit Exposure, or in the case of an assignment to a
Bank or an Affiliate of a Bank or an Approved Fund with respect to a Bank, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loan of the assigning Bank subject to
each such assignment, and the Letter of Credit Exposure (in each case determined
as of the date the Assignment and Assumption Agreement with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000, unless each of the Administrative Agent and, so long as no Default
or Event of Default has occurred and is continuing, the Borrower otherwise
consent (each such consent not to be unreasonably withheld or delayed); (ii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Bank's rights and obligations under this Agreement with
respect to the Loan, the Commitment or the Letter of Credit Exposure assigned;
(iii) any assignment of a Bank's Commitment must be approved by the
Administrative Agent (such approval not to be unreasonably withheld) unless the
Person that is the proposed assignee is itself a Bank with a Commitment (whether
or not the proposed assignee would otherwise qualify as an Eligible Assignee);
and (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption Agreement, together with a
processing and recordation fee of $3,500.00, and the Eligible Assignee, if it
shall not be a Bank, shall deliver to the Administrative Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof by the Administrative
Agent pursuant to clause (c) of this section, from and after the effective date
specified in each Assignment and Assumption Agreement, the Eligible Assignee
thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption Agreement, have the rights and
obligations of a Bank under this Agreement, and the assigning Bank thereunder
shall, to the extent of the interest assigned by such Assignment and Assumption
Agreement, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption Agreement covering all of
- 73 -
the assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 5.1 through 5.6 with respect to facts and circumstances
------------ ---
occurring prior to the effective date of such assignment. Any assignment or
transfer by a Bank of rights or obligations under this Agreement that does not
comply with this clause shall be treated for purposes of this Agreement as a
sale by such Bank of a participation in such rights and obligations in
accordance with clause (d) of this section.
(c) The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at one of its offices listed on
Schedule 1 hereto a copy of each Assignment and Assumption Agreement delivered
----------
to it and a register for the recordation of the names and addresses of the
Banks, and the Commitments of, and principal amounts of the Loans owing to, each
Bank pursuant to the terms hereof from time to time (the "Register"). The
--------
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Banks may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Bank hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.
(d) Any Bank may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
-----------
Bank's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it and the Letter of Credit
Exposure); provided, that (i) such Bank's obligations under this Agreement shall
--------
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent 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. Any agreement or instrument pursuant to which a Bank sells
such a participation shall provide that such Bank shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement. Subject to clause (e) of this section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 5.1, 5.2, 5.4, 5.5, and 5.6 to the same extent as if it were a Bank and
-------- --- --- --- --- ---
had acquired its interest by assignment pursuant to clause (b) of this section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 15.4 as though it were a Bank, provided such Participant
------------
agrees to be subject to Section 3.1 as though it were a Bank.
-----------
(e) A Participant shall not be entitled to receive any greater
payment under Sections 5.1, 5.5 and 5.6 than the applicable Bank would have been
-------- --- --- ---
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Bank if
it were a Bank shall not be entitled to the benefits of Section 5.6 unless the
-----------
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section 14.8
------------
as though it were a Bank.
- 74 -
(f) Any Bank may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Bank, including without limitation any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided, that no such pledge
-------- ----
or assignment shall release such Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.
SECTION 15.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
---------
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS
LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN
FAVOR OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B)
THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH
PROPERTY.
SECTION 15.12. Consent to Jurisdiction; Waiver of Immunities. (a)
---------------------------------------------
Borrower hereby irrevocably submits to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas over any action or
proceeding arising out of or relating to this Agreement or any other Loan
Papers, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court. As an alternative, Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of
copies of such process to such Person at its address specified in Section 15.1.
------------
Borrower agrees that a final judgment on any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law.
(b) Nothing in this Section 15.12 shall affect any right of
-------------
Banks to serve legal process in any other manner permitted by Law or affect the
right of any Bank to bring any action or proceeding against any Credit Party or
their properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Person hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the other Loan Papers.
SECTION 15.13. Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the terms and conditions herein set forth, this
Agreement shall become effective when Administrative Agent shall have received
counterparts hereof signed by all of the parties hereto or, in the case of any
Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
- 75 -
SECTION 15.14. No Third Party Beneficiaries. Except for the provisions
----------------------------
hereof inuring to the benefit of Agents not a party to this Agreement, it is
expressly intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained other
than third party beneficiaries permitted pursuant to Section 15.10.
-------------
SECTION 15.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
------------------
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS,
ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS,
ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG BANKS, ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES.
SECTION 15.16. WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT,
--------------------
AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 15.17. Confidentiality. Administrative Agent and each Bank
---------------
(each, a "Lending Party") agrees to keep confidential any information furnished
-------------
or made available to it by Borrower pursuant to this Agreement that is marked
confidential; provided, that nothing herein shall prevent any Lending Party
-------- ----
from disclosing such information (a) to any other Lending Party or any
Affiliate of any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or Affiliate of any Lending Party, (b) to any
other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any Law, rule, or regulation, (d)
upon the order of any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or becomes available
to the public or that is or becomes available to any Lending Party other than
as a result of a disclosure by any Lending Party prohibited by this Agreement,
(g) in connection with any litigation to which such Lending Party or any of its
Affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Loan Paper, and (i)
subject to provisions substantially similar to those contained in this Section
-------
15.17, to any actual or proposed participant or assignee.
-----
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year first
above written.
Remainder of Page Intentionally Blank
Signature Pages to Follow
- 76 -
BORROWER:
--------
QUICKSILVER RESOURCES INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx
President
Address for Notice:
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx
Fax No. (000) 000-0000
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
ADMINISTRATIVE AGENT:
--------------------
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
Principal
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
BANKS:
-----
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
Principal
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
BNP PARIBAS
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
--------------------------
Title: Managing Director
--------------------------
/s/ Xxxx X. Ursor
Vice President
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
CIBC INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
--------------------------
Title: Managing Director
--------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
CREDIT LYONNAIS, NEW YORK BRANCH
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
--------------------------
Title: Senior Vice President
--------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
COMERICA BANK - TEXAS
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------
Title: Vice President
--------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
COMPASS BANK
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
--------------------------
Title: Senior Vice President
--------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
FORTIS CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Managing Director
-----------------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxx
--------------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
THE BANK OF NOVA SCOTIA
By: /s/ X. Xxxx
--------------------------------------------
Name: X. Xxxx
-----------------------------------
Title: Senior Manager
-----------------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
WASHINGTON MUTUAL BANK, FA
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
Signature Page to Quicksilver Resources Inc.
Fourth Amended and Restated Credit Agreement
