Exhibit 4.4
RESTATED CREDIT AGREEMENT
AMONG
CONTINENTAL RESOURCES, INC. AND
CONTINENTAL GAS, INC.,
AS BORROWERS
AND
MIDFIRST BANK
APRIL 21, 2000
TABLE OF CONTENTS
Page No.
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1. Definitions 1
2. Commitments of the Bank 12
(a) Terms of Revolving Commitment 12
(b) Procedure for Borrowing 12
(c) Letters of Credit 13
(d) Procedure for Obtaining Letters of Credit 14
(e) Voluntary Reduction of Revolving Commitment 14
(f) Commitment Reductions 15
(g) Several Obligations 15
3. Notes Evidencing Loans. 15
(a) Form of Revolving Notes 15
(b) Issuance of Additional Notes 15
(c) Interest Rate 16
(d) Payment of Interest 16
(e) Payment of Principal 16
(f) Payment to Banks 16
(g) Sharing of Payments, Etc. 16
(h) Non-Receipt of Funds by the Agent 16
(i) Capital Adequacy 17
4. Interest Rates. 17
(a) Options 17
(b) Interest Rate Determination 18
(c) Conversion Option 18
(d) Recoupment 19
5. Change of Circumstances 19
(a) Unavailability of Funds or Inadequacy of Pricing 19
(b) Change in Laws 19
(c) Increased Cost or Reduced Return 19
(d) Discretion of Bank as to Manner of Funding 21
(e) Breakage Fees 21
6. Collateral Security 22
(a) Pledge of Collateral 22
(b) Documentation and Title Review 23
(c) Letters in Lieu of Transfer Orders 23
7. Borrowing Base 24
(a) Initial Borrowing Base 24
(b) Subsequent Determinations of Borrowing Base 24
8. Fees 25
(a) Unused Commitment Fee 25
(b) The Letter of Credit Fee 26
9. Prepayments 26
(a) Voluntary Prepayments 26
(b) Mandatory Prepayment For Borrowing Base Deficiency 26
10. Representations and Warranties 26
(a) Creation and Existence 26
(b) Power and Authority 26
(c) Binding Obligations 27
(d) No Legal Bar or Resultant Lien 27
(e) No Consent 27
(f) Financial Condition 27
(g) Liabilities 27
(h) Litigation 28
(i) Taxes; Governmental Charges 28
(j) Titles, Etc 28
(k) Defaults 28
(l) Casualties; Taking of Properties 28
(m) Use of Proceeds; Margin Stock 29
(n) Location of Business and Offices 29
(o) Compliance with the Law 29
(p) No Material Misstatements 29
(q) ERISA 29
(r) Public Utility Holding Company Act 30
(s) Subsidiaries 30
(t) Environmental Matters 30
(u) Liens 30
(v) Gas Contracts 30
(w) Delhi Oakdale Lateral System 30
(x) Eagle Chief Gas Gathering System 31
(y) Senior Subordinated Notes 31
11. Conditions of Lending 31
12. Affirmative Covenants 33
(a) Financial Statements and Reports 33
(b) Certificates of Compliance 34
(c) Taxes and Other Liens 35
(d) Compliance with Laws 35
(e) Further Assurances 35
(f) Performance of Obligations 35
(g) Insurance 35
(h) Accounts and Records 36
(i) Right of Inspection 36
(j) Notice of Certain Events 36
(k) ERISA Information and Compliance 37
(l) Environmental Reports and Notices 37
(m) Compliance and Maintenance 37
(n) Operation of Properties 37
(o) Compliance with Leases and Other Instruments 38
(p) Certain Additional Assurances Regarding
Maintenance and Operations of Properties 38
(q) Title Matters 38
(r) Curative Matters 39
(s) Change of Principal Place of Business 39
(t) Operating Accounts 39
(u) Additional Property 39
(v) Eagle Chief Gas Gathering System 40
(w) Letters In Lieu of Transfer Orders 40
(x) Division Orders 40
(y) Take or Pay Agreement 40
13. Negative Covenants 40
(a) Negative Pledge 40
(b) Current Ratio 41
(c) Ratio of Debt to Minimum Tangible Net Worth 41
(d) Minimum Debt Service Coverage Ratio 41
(e) Consolidations and Mergers 41
(f) Debts, Guaranties and Other Obligations 41
(g) Dividends or Distributions 42
(h) Loans and Advances 43
(i) Sale or Discount of Receivables 43
(j) Nature of Business 43
(k) Transactions with Affiliates 43
(l) Hedging Transactions 43
(m) Investments 43
(n) Amendment to Articles of Incorporation or Xxxxxx 00
00. Events of Xxxxxxx 00
00. The Agent and the Banks 47
(a) Appointment and Authorization 47
(b) Note Holders 48
(c) Consultation with Counsel 48
(d) Documents 48
(e) Resignation or Removal of Agent 48
(f) Responsibility of Agent 49
(g) Independent Investigation 50
(h) Indemnification 51
(i) Benefit of Section 15 51
(j) Pro Rata Treatment 51
(k) Assumption as to Payments 51
(l) Other Financings 52
(m) Interests of Banks 52
(n) Investments 52
16. Exercise of Rights 52
17. Notices 53
18. Expenses 53
19. Indemnity 53
20. Governing Law 54
21. Invalid Provisions 54
22. Maximum Interest Rate 54
23. Amendments 55
24. Multiple Counterparts 55
25. Conflict 55
26. Survival 56
27. Parties Bound 56
28. Assignments and Participations 56
29. Choice of Forum: Consent to Service of Process and
Jurisdiction 57
30. Waiver of Jury Trial 58
31. Other Agreements 58
32. Financial Terms 58
Exhibits
Exhibit "A" - Notice of Borrowing
Exhibit "B" - Revolving Note
Exhibit "C" - Certificate of Compliance
Exhibit "D" - Form of Assignment and Acceptance Agreement
Schedules
Schedule 1 - Liens
Schedule 2 - Financial Condition
Schedule 3 - Liabilities
Schedule 4 - Litigation
Schedule 5 - Subsidiaries
Schedule 6 - Environmental Matters
Schedule 7 - Gas Contract
Schedule 8 - Title Matters
Schedule 9 - Curative Matters
RESTATED CREDIT AGREEMENT
THIS RESTATED CREDIT AGREEMENT (hereinafter referred to as
the "Agreement") executed as of the 21st day of April, 2000, by
and among CONTINENTAL RESOURCES, INC., an Oklahoma corporation
("Resources") and CONTINENTAL GAS, INC., an Oklahoma corporation
("Gas") (Resources and Gas are hereinafter collectively referred
to as "Borrowers" and individually as a "Borrower") and MIDFIRST
BANK, a federally chartered savings association ("MidFirst"),
and each of the financial institutions which is a party hereto
(as evidenced by the signature pages to this Agreement) or which
may from time to time become a party hereto pursuant to the
provisions of Section 28 hereof or any successor or assignee
thereof (hereinafter collectively referred to as "Banks", and
individually, "Bank") and MidFirst, as Agent.
W I T N E S S E T H:
WHEREAS, Borrowers and Bank desire to enter into a lending
transaction under the terms of which Bank would agree, subject to
the satisfaction of certain conditions precedent set forth
therein, to provide Borrowers with a revolving loan facility in
amounts of up to $25,000,000; and
WHEREAS, in consideration of the mutual covenants and
agreements herein contained, the parties hereby agree to restate
the Credit Agreement as follows:
Definitions. When used herein the terms "Agent",
"Agreement", "Bank", "Borrower", "Banks", "Borrowers", "Gas",
"MidFirst" and "Resources" shall have the meanings indicated
above. When used herein the following terms shall have the
following meanings:
"Advance or Advances" shall mean a loan or loans
hereunder.
"Affiliate" shall mean any Person which, directly or
indirectly, controls, is controlled by or is under common
control with the relevant Person. 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 a member of
the board of directors, a partner or an officer of such
Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such Person, through the
ownership (of record, as trustee, or by proxy) of voting
shares, partnership interests or voting rights, through a
management contract or otherwise. Any Person owning or
controlling directly or indirectly ten percent or more of
the voting shares, partnership interests or voting rights,
or other equity interest of another Person shall be deemed
to be an Affiliate of such Person.
"Eagle Chief Gas Gathering System" shall mean that
System located in the State of Oklahoma and described in the
Security Instruments.
"Assignment and Acceptance" shall mean a document
substantially in the form of Exhibit "D" hereto.
"Borrowing Base" shall mean that amount set by the
Bank as the amount available to Borrowers under the Loan
pursuant to Section 7(b) hereof.
"Borrowing Date" shall mean the date elected by
Borrowers pursuant to Section 2(b) hereof for an Advance on
the Revolving Loan.
"Business Day" shall mean the normal banking hours
during any day (other than Saturdays or Sundays) that banks
are legally open for business in Oklahoma City, Oklahoma.
"Change of Management" shall occur if there is any
material change in the ownership and/or management personnel
of either Borrower. Notwithstanding the foregoing, as long
as (i) Xxxxxx Xxxx owns a controlling beneficial interest or
ownership in Resources; (ii) Xxxxxx Xxxx continues to act as
CEO of Resources; and (iii) Resources owns 100% of all of
the issued and outstanding shares of common stock of Gas,
Borrowers shall be entitled to make changes in their
ownership and management. For the purposes hereof,
"controlling interest" is defined as beneficial ownership of
50% of all issued and outstanding shares of common stock
plus one additional share thereof.
"Current Assets" shall mean the total of the Borrowers'
consolidated current assets determined in accordance with
GAAP, plus, as of any date, the current unused availability
on the Revolving Commitment.
"Current Liabilities" shall mean the total of
Borrowers' consolidated current obligations as determined in
accordance with GAAP, excluding therefrom current maturities
due on the Revolving Loan.
"Debt" shall mean, with respect to any Person, all
obligations and liabilities of such Person to any other
Person including, without limitation, all debts, claims,
overdrafts, contingent liabilities and indebtedness
heretofore, now and/or from time to time hereafter owing,
due or payable, however, evidenced, created, incurred,
acquired or owing and however arising, whether under written
or oral agreement, operation of law or otherwise as shown in
Borrowers' Financial Statements.
"Debt Service Coverage Ratio" shall mean the sum of (i)
quarterly Net Income for the immediately preceding four (4)
fiscal quarters including the quarter then ended, adjusted
for any nonrecurring or extraordinary items, minus any
dividends, plus (ii) depreciation, depletion and
amortization, lease impairment, interest expense, deferred
income tax expense and uncapitalized, discretionary
exploration expenses, all as determined in accordance with
GAAP for such period, divided by (i) 1/6th of the principal
balance outstanding as of such date on the Revolving Loans
plus (ii) total interest expense for the immediately
preceding four (4) fiscal quarters including the quarter
then ended, plus (iii) any other current maturities of long-
term debt.
"Default" shall mean any Event of Default and the
occurrence of an event or condition which would with the
giving of any requisite notice and/or passage of time or
both constitute an Event of Default.
"Default Rate" shall mean a per annum variable rate of
interest equal to the Prime Rate as then in effect plus five
percent (5%), calculated on the basis of a year of 360 days
and actual number of days elapsed (including the first day
but excluding the last day), but in no event exceeding the
Maximum Rate.
"Defaulting Bank" shall mean the term "Defaulting
Bank" is used herein as defined in Section 3(g) hereof.
"Delhi Lease" shall mean that pipeline lease and any
and all extensions and renewals thereof from Delhi Gas
Pipeline Corporation to Gas covering the Delhi Oakdale
Lateral System.
"Delhi Oakdale Lateral System" shall mean that portion
of the Eagle Chief Gas Gathering System leased from Delhi
Gas Pipeline Corporation.
"Delta Trust" shall mean the Xxxxxx Xxxx Delta Trust,
Xxxxxx Xxxx, Grantor, dated December 31, 1996.
"Effective Date" shall mean the date of this Agreement.
"Eligible Assignee" shall mean any of (i) a Bank or any
Affiliate of a Bank; (ii) a commercial bank organized under
the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least
$100,000,000; (iii) a commercial bank organized under the
laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a
political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000.00,
provided that such bank is acting through a branch or agency
located in the United States; (iv) a Person that is
primarily engaged in the business of commercial banking and
that (A) is a subsidiary of a Bank, (B) a subsidiary of a
Person of which a Bank is a subsidiary, or (C) a Person of
which a Bank is a subsidiary; (v) any other entity (other
than a natural person) which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which
extends credit or buys loans as one of its businesses,
including, but not limited to, insurance companies, mutual
funds, investments funds and lease financing companies; and
(vi) with respect to any Bank that is a fund that invests in
loans, any other fund that invests in loans and is managed
by the same investment advisor of such Bank or by an
Affiliate of such investment advisor (and treating all such
funds so managed as a single Eligible Assignee); provided,
however, that no Affiliate of either Borrower shall be an
Eligible Assignee.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended by the Super Fund Amendments and
Reauthorization Act of 1986, 42 U.S.C.A. 9601, et seq., the
Resource Conservation and Recovery Act, as amended by the
Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A. 6901,
et seq., the Clean Air Act, 42 U.S.C.A. 1251, et seq., the
Toxic Substances Control Act, 15 U.S.C.A. 2601, et seq.,
The Oil Pollution Act of 1990, 33 U.S.G. 2701, et seq., and
all other laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, order
and restrictions of any federal, state, county, municipal
and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers,
domestic or foreign, relating to air pollution, water
pollution, noise control and/or the handling, discharge,
disposal or recovery of on-site or off-site asbestos or
"hazardous substances" as defined by 42 U.S.C. 9601, et
seq., as amended, as each of the foregoing may be amended
from time to time.
"Environmental Liability" shall mean any claim, demand,
obligation, cause of action, order, violation, damage,
injury, judgment, penalty or fine, cost of enforcement, cost
of remedial action or any other costs or expense whatsoever,
including reasonable attorneys' fees and disbursements,
resulting from the violation or alleged violation of any
Environmental Law or the imposition of any Environmental
Lien (as hereinafter defined) which could reasonably be
expected to individually or in the aggregate have a Material
Adverse Effect.
"Environmental Lien" shall mean a Lien in favor of any
court, governmental agency or instrumentality or any other
Person (i) for any Environmental Liability or (ii) for
damages arising from or cost incurred by such court or
governmental agency or instrumentality or other person in
response to a release or threatened release of asbestos or
"hazardous substance" into the environment, the imposition
of which Lien could reasonably be expected to have a
Material Adverse Effect.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Financial Statements" shall mean balance sheets,
income statements, statements of cash flow and appropriate
footnotes and schedules, prepared in accordance with GAAP.
"GAAP" shall mean generally accepted accounting
principles, consistently applied.
"Interest Payment Date" shall mean the earlier of (i)
the last day of each Interest Period or (ii) the last day of
each calendar month.
"Interest Period" shall mean any Prime Rate Interest
Period, or LIBOR Interest Period, as applicable.
"Letters of Credit" shall mean the term "Letters of
Credit" is used herein as defined in Section 2(c) hereof.
"LIBOR Interest Period" shall mean with respect to any
LIBOR Loan (i) initially, the period commencing on the date
such LIBOR Loan is made and ending one (1), two (2), three
(3) or six (6) months thereafter as selected by the
Borrowers pursuant to Section 4(a)(ii), and (ii) thereafter,
each period commencing on the day following the last day of
the next preceding Interest Period applicable to such LIBOR
Loan and ending one (1), two (2), three (3) or six (6)
months thereafter, as selected by the Borrowers pursuant to
Section 4(a)(ii); provided, however, that (i) if any LIBOR
Interest Period would otherwise expire on a day which is not
a London Business Day, such Interest Period shall expire on
the next succeeding London Business Day unless the result of
such extension would be to extend such Interest Period into
the next calendar month, in which case such Interest Period
shall end on the immediately preceding London Business Day,
(ii) if any LIBOR Interest Period begins on the last London
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) such Interest
Period shall end on the last London Business Day of a
calendar month, and (iii) any LIBOR Interest Period which
would otherwise expire after the Maturity Date shall end on
such Maturity Date.
"LIBOR Loan" shall mean any loan during any period
which bears interest at the LIBOR Rate, or which would bear
interest at such rate if the Maximum Rate ceiling was not in
effect at a particular time.
"LIBOR Margin" shall mean:
(i) two percent (2.00%) per annum whenever the
Total Outstandings are 75% or greater of the Borrowing
Base in effect at the time in question;
(ii) one and three-quarters of one percent (1.75%)
per annum whenever the Total Outstandings are equal to
or greater than 50%, but less than 75%, of the
Borrowing Base in effect at the time in question;
(iii) one and one-half percent (1.50%) per
annum whenever the Total Outstandings are equal to or
greater than 25% but less than 50% of the Borrowing
Base in effect at the time in question; or
(iv) one and one-quarter percent (1.25%) per annum
whenever the Total Outstandings are less than 25% of
the Borrowing Base in effect at the time in question.
"LIBOR Rate" shall mean with respect to any LIBOR
Interest Period, with respect to each particular LIBOR
Interest Period, the arithmetic average of the rate at
which dollar deposits in immediately available funds and for
a maturity equal to the applicable one, two, three or six-
month period are offered or available in the London
Interbank Market for Eurodollars as of 11:00 a.m. (London
time) on the date of a determination, as reported in the
"Money Rates" section of The Wall Street Journal (Southwest
Edition) or a substitute source reasonably determined by
Agent in the event such source is no longer available. If
more than one LIBOR Rate is published in The Wall Street
Journal (Southwest Edition) for the one, two, three or six-
month time period, then the LIBOR Rate shall be the highest
of such published rates. The LIBOR Rate determined by Agent
shall be fixed at such rate for the duration of the
associated LIBOR Interest Period. If Agent is unable to so
determine the LIBOR Rate for any LIBOR Interest Period,
Borrower shall be deemed not to have elected such LIBOR
Interest Period.
"Lien" shall mean any mortgage, deed of trust, pledge,
security interest, assignment, encumbrance or lien
(statutory or otherwise) of every kind and character.
"Loan" shall mean the Revolving Loan.
"Loan Documents" shall mean this Agreement, the Notes,
the Security Instruments and all other documents executed in
connection with the transaction described in this Agreement.
"London Business Day" shall mean a Business Day on
which dealings in U.S. Dollar deposits are carried on in the
London interbank market.
"Majority Banks" shall mean Banks holding 75% or more
of the Revolving Commitments or if the Revolving Commitments
have been terminated, Banks holding 75% of the outstanding
Loans.
"Material Adverse Effect" shall mean any circumstance
or event which could have a material adverse effect on (i)
the assets or properties, liabilities, financial condition,
business, operations, affairs or circumstances of either
Borrower, or (ii) the ability of either Borrower to carry
out its respective business as of the date of this Agreement
or as proposed at the date of this Agreement to be conducted
or to meet their obligations under the Notes, this Agreement
or the other Loan Documents on a timely basis.
"Maximum Rate" shall mean at any particular time in
question, the maximum non- usurious rate of interest which
under applicable law may then be charged on the Note. If
such Maximum Rate changes after the date hereof, the Maximum
Rate shall be automatically increased or decreased, as the
case may be, without notice to Borrowers from time to time
as of the effective date of each change in such Maximum
Rate.
"Monthly Commitment Reduction" is used herein, as
defined in Section 2(f) hereof.
"Net Income" shall mean Borrowers' consolidated net
income after income taxes calculated in accordance with
GAAP.
"1984 Trust" shall mean the Revocable Inter Vivos Trust
of Xxxxxx X. Xxxx, dated April 23, 1984, as amended.
"Notes" shall mean the Revolving Notes, substantially
in the form of Exhibit "B" hereto issued or to be issued
hereunder to each Bank, respectively, to evidence the
indebtedness to such Bank arising by reason of the Advances
on the Revolving Loan, together with all modifications,
renewals and extensions thereof or any part thereof.
"Oil and Gas Properties" shall mean all oil, gas and
mineral properties and interests, related personal
properties, in which Borrowers grant to the Banks either a
first and prior lien and security interest pursuant to
Section 6 hereof.
"Other Financing" shall mean the term "Other Financing"
is used herein as defined in Section 15(l) hereof.
"Payor" is used herein as defined in Section
3(h)hereof.
"Permitted Liens" shall mean (i) royalties, overriding
royalties, reversionary interests, production payments and
similar burdens; (ii) joint operating agreements, sales
contracts or other arrangements for the sale of production
of oil, gas or associated liquid or gaseous hydrocarbons
which would not (when considered cumulatively with the
matters discussed in clause (i) above) deprive either
Borrower of any material right in respect of any such
Borrower's assets or properties (except for rights
customarily granted with respect to such contracts and
arrangements); (iii) statutory Liens for taxes or other
assessments that are not yet delinquent (or that, if
delinquent, are being contested in good faith by appropriate
proceedings, levy and execution thereon having been stayed
and continue to be stayed and for which such Borrower has
set aside on its books adequate reserves in accordance with
GAAP); (iv) easements, rights of way, servitudes, permits,
surface leases and other rights in respect to surface
operations, pipelines, grazing, logging, canals, ditches,
reservoirs or the like, conditions, covenants and other
restrictions, and easements of streets, alleys, highways,
pipelines, telephone lines, power lines, railways and other
easements and rights of way on, over or in respect of either
Borrower's assets or properties and that do not individually
or in the aggregate, cause a Material Adverse Effect; (v)
materialmen's, mechanic's, repairman's, employee's,
warehousemen's, landlord's, carrier's, pipeline's,
contractor's, sub-contractor's, operator's, non-operator's
(arising under operating or joint operating agreements), and
other Liens (including any financing statements filed in
respect thereof) incidental to obligations incurred by
either Borrower in connection with the construction,
maintenance, development, transportation, storage or
operation of such Borrower's assets or properties to the
extent not delinquent (or which, if delinquent, are being
contested in good faith by appropriate proceedings and for
which such Borrower has set aside on its books adequate
reserves in accordance with GAAP); (vi) all contracts,
agreements and instruments, and all defects and
irregularities and other matters affecting either Borrower's
assets and properties which were in existence at the time
such Borrower's assets and properties were originally
acquired by such Borrower and all routine operational
agreements entered into in the ordinary course of business,
which contracts, agreements, instruments, defects,
irregularities and other matters and routine operational
agreements are not such as to, individually or in the
aggregate, interfere materially with the operation, value or
use of such Borrower's assets and properties, considered in
the aggregate; (vii) liens in connection with workmen's
compensation, unemployment insurance or other social
security, old age pension or public liability obligations;
(viii) legal or equitable encumbrances deemed to exist by
reason of the existence of any litigation or other legal
proceeding or arising out of a judgment or award with
respect to which an appeal is being prosecuted in good faith
and levy and execution thereon have been stayed and continue
to be stayed; (ix) rights reserved to or vested in any
municipality, governmental, statutory or other public
authority to control or regulate either Borrower's assets
and properties in any manner, and all applicable laws, rules
and orders from any governmental authority; (x) landlord's
liens; (xi) Liens incurred pursuant to the Security
Instruments or otherwise created in favor of the Agent or
the Banks pursuant to the Loan Documents; and (xii) Liens
existing at the date of this Agreement which have been
disclosed to Banks in the Borrowers' December 31, 1997
Financial Statements or identified in Schedule "1" hereto
and (xiii) Liens covering properties which are not Oil and
Gas Properties and the value of which is less than $500,000
in the aggregate.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Pipelines" shall mean and include Gas' gas gathering
and/or residue pipeline systems in the State of Oklahoma
associated with the gathering and/or transportation of gas
and the delivery of gas or residue gas to purchasers or
transporters (as the same now exist or as may hereafter be
extended), including, but not by way of limitation, the
Right-Of-Way Properties and all buildings, structures,
attachments, fittings and fixtures, facilities, tools,
materials, equipment, machinery, appliances, pipeline,
piping, powerlines, electrical systems, metering and
calibration facilities, compressors, dehydrators, sponge
units, instrument and equipment housing, equipment storage
facilities, tanks, engines, valves, traps, pumps, motors,
instruments, fencing, office equipment, expanders, heat
exchangers, chillers, separators, cooling towers, boilers
and reboilers, turbines, generators, meters and instruments,
fractionators, stills, debutanizers, heaters, coolers,
stabilizers, scrubbers, absorbers, reabsorbers, flash
towers, oil reclaimers, loading racks, injection facilities,
accumulators, economizers, fans, condensers and valves, and
appurtenances of every nature and kind whatsoever now or
hereafter forming a part of, appertaining to or used or for
use in connection with said Pipeline.
"Plans" shall mean any plan subject to Title IV of
ERISA and maintained by either Borrower, or any such plan to
which either Borrower is required to contribute on behalf of
its employees.
"Plant" shall mean the fee property and surface leases
in Oklahoma associated with the processing of hydrocarbons
and including, but not by way of limitation, together with
all property, real or personal, associated therewith
including all buildings, structures, attachments, fittings
and fixtures, facilities, tools, materials, equipment,
machinery, appliances, pipeline, piping, powerlines,
electrical systems, metering and calibration facilities,
compressors, dehydrators, sponge units, instrument and
equipment housing, equipment storage facilities, tanks,
engines, valves, traps, pumps, motors, instruments, fencing,
office equipment, expanders, heat exchangers, chillers,
separators, cooling towers, boilers and reboilers, turbines,
generators, meters and instruments, fractionators, stills,
debutanizers, heaters, coolers, stabilizers, scrubbers,
absorbers, reabsorbers, flash towers, oil reclaimers,
loading racks, injection facilities, accumulators,
economizers, fans, condensers and valves, and appurtenances
of every nature and kind whatsoever now or hereafter forming
a part of, located on, appertaining to or used or for use in
connection with said fee property and surface leases.
"Prime Rate" shall mean as of any date, the fluctuating
rate of interest per annum established from time to time by
Chase Manhattan Bank, N.A. as its Prime Rate (which rate of
interest may not be the lowest, best or most favorable rate
of interest which Agent may charge on loans to its
customers). Each change in the Prime Rate shall become
effective without prior notice to Borrowers automatically as
of the opening of business on the date of such change in the
Prime Rate.
"Prime Rate Interest Period" shall mean with respect to
any Prime Rate Loan, the period ending on the last day of
each month, provided, however, that (i) if any Prime Rate
Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next
succeeding Business Day, and (ii) if any Prime Rate Interest
Period would otherwise end after the Maturity Date such
Interest Period shall end on the Maturity Date.
"Prime Rate Loans" shall mean any loan during any
period which bears interest based upon the Prime Rate or
which would bear interest based upon the Prime Rate if the
Maximum Rate ceiling was not in effect at that particular
time.
"Prime Rate Margin" shall be zero percent (0%).
"Pro Rata or Pro Rata Part" shall mean for each Bank,
(i) for all purposes where no Loan is outstanding, such
Bank's Revolving Commitment Percentage and (ii) otherwise,
the proportion which the portion of the outstanding Loans
owed to such Bank bears to the aggregate outstanding Loans
owed to all Banks at the time in question.
"Reimbursement Obligations" shall mean at any time, the
obligations of the Borrowers in respect of all Letters of
Credit then outstanding to reimburse amounts actually paid
by any Bank in respect of any drawing or drawings under a
Letter of Credit.
"Required Payment" is used herein as defined in Section
3(h) hereof.
"Revolving Commitment" shall mean (A) for all Banks,
the lesser of (i) $25,000,000 or (ii) the Borrowing Base in
effect from time to time, in each case as reduced from time
to time pursuant to Sections 2 and 7 hereof, and (B) as to
any Bank, its obligation to make Advances hereunder on the
Revolving Loan and purchase participations in Letters of
Credit issued hereunder by the Agent in amounts not
exceeding, in the aggregate, an amount equal to such Bank's
Revolving Loan Commitment Percentage times the total
Revolving Commitment as of any date. The Revolving
Commitment of each Bank hereunder shall be adjusted from
time to time to reflect assignments made by such Bank
pursuant to Section 28 hereof. Each reduction in the
Revolving Commitment shall result in a Pro Rata reduction in
each Bank's Revolving Commitment.
"Revolving Commitment Percentage" shall mean for each
Bank the percentage derived by dividing its Revolving
Commitment at the time of the determination by the Revolving
Commitments of all Banks at the time of determination. The
Revolving Commitment Percentage of each Bank hereunder shall
be adjusted from time to time to reflect assignments made by
such Bank pursuant to Section 28 hereof.
"Revolving Loan" shall mean loan or loans made under
the Revolving Commitment pursuant to Section 2 hereof.
"Revolving Maturity Date" shall mean May 31, 2001 or as
such date may be extended from time to time with the consent
of all Banks.
"Revolving Notes" shall mean the Revolving Notes
described in Section 3 hereof.
"Right-Of-Way Properties" shall mean and include all
lands, easements, rights-of-way, leases, surface rights,
servitudes, grants, permits, licenses, authorizations,
privileges, franchises, consents, prescriptive rights and
other title and interest now or hereafter owned by Borrower
and now or hereafter necessary or useful for the
construction and operation of the Pipeline.
"Security Instruments" shall mean the term Security
Instruments is used collectively herein to mean this
Agreement, all Deeds of Trust, Mortgages, Security
Agreements, Assignments of Production and Financing
Statements, and other collateral documents covering the Oil
and Gas Properties and related personal property, equipment,
oil and gas inventory and proceeds of the foregoing, all
such documents to be in form and substance satisfactory to
Agent.
"Senior Subordinated Notes" shall mean those certain
$150,000,000.00, 10.25% Senior Subordinated Notes due 2008.
"Subsidiary" shall mean 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 are
at the time directly or indirectly owned by either Borrower
or another subsidiary.
"Support Parties" shall mean Xxxxxx Xxxx.
"System" shall mean and include the Pipeline, the
Plants, and the contracts and contract rights arising in
connection therewith, together with all tangible or
intangible property, personal or real, now or at any time
arising out of, relating to, located in or upon, used in
connection with or obtained directly or indirectly by virtue
of the Pipeline, the Plant or the Contracts, whether now
owned and existing or hereafter acquired or arising,
including, but not by way of limitation, accounts
receivable, contract rights, general intangibles, chattel
paper, documents, instruments, business goodwill, records
and books, trade names, mineral interests, oil and gas
leasehold interests, inventory (whether consisting of
hydrocarbons or otherwise) supplies, materials and any other
property.
"Tangible Net Worth" shall mean an amount equal to the
Borrowers' consolidated stockholders equity, as determined
in accordance with GAAP, plus any subordinated debt owed by
either Borrower less any Affiliate receivables.
"Total Outstandings" shall mean as of any date, the sum
of (i) the total principal balance outstanding on the
Revolving Notes, plus (ii) the total face amount of all
outstanding Letters of Credit, plus (iii) the total amount
of all unpaid Reimbursement Obligations.
"Tranche" shall mean a LIBOR Loan or a Prime Rate Loan.
"Unscheduled Redeterminations" shall mean a
redetermination of the Borrowing Base made at any time other
than on the dates set for the regular semi-annual
redetermination of the Borrowing Base which are made (A) at
the reasonable request of Borrowers, (B) at any time it
appears to Agent or Majority Banks, in the exercise of their
reasonable discretion, that either (i) there has been an
unscheduled material decrease in the value of the Oil and
Gas Properties, or (ii) an event has occurred which is
reasonably expected to have a Material Adverse Effect.
"Unused Fee Rate" shall mean the percentage used to
calculate the Unused Commitment Fee (as such term is defined
in Section 8(a) hereof), which percentage shall be:
(i) twenty five (25.00) basis points per annum
whenever the Total Outstandings are greater than
seventy-five percent (75%) of the Borrowing Base in
effect at the time in question;
(ii) twenty-two and 50/100ths (22.5)basis points
per annum whenever Total Outstandings are greater than
fifty percent (50%) but less than seventy-five
percent (75%) of the Borrowing Base in effect at the
time in question;
(iii) twenty (20) basis points per annum
whenever Total Outstandings are greater than twenty-
five percent (25%) but less than fifty percent (50%) of
the Borrowing Base in effect at the time in question;
or
(iv) eighteen and 75/100ths (18.75) basis points
per annum whenever Total Outstandings are less than
twenty-five percent (25%) of the Borrowing Base in
effect at the time in question.
Commitments of the Bank.
(a) Terms of Revolving Commitment. On the terms and
conditions hereinafter set forth, each Bank agrees severally
to make Advances to the Borrowers from time to time during
the period beginning on the Effective Date and ending on the
Revolving Maturity Date in such amounts as the Borrowers may
request up to an amount not to exceed, in the aggregate
principal amount outstanding at any time, the Revolving
Commitment. The obligation of the Borrowers hereunder shall
be evidenced by this Agreement and the Revolving Notes
issued in connection herewith, said Revolving Notes to be as
described in Section 3 hereof. Notwithstanding any other
provision of this Agreement, no Advance shall be required to
be made hereunder if any Event of Default (as hereinafter
defined) has occurred and is continuing or if any event or
condition has occurred or failed to occur which with the
passage of time or service of notice, or both, would
constitute an Event of Default. Each Advance under the
Revolving Commitment shall be an aggregate amount of at
least $100,000 or a whole number multiple thereof except an
Advance of the entire remaining unborrowed Revolving
Commitment. Irrespective of the face amount of the
Revolving Note or Notes, the Banks shall never have the
obligation to Advance any amount or amounts in excess of the
Revolving Commitment or to increase the Revolving
Commitment. The total number of Tranches under the
Revolving Commitment which may be outstanding at any time
hereunder shall never exceed five (5), whether such Tranches
are Prime Rate Loans, LIBOR Loans, or a combination thereof.
Within the limit of each Bank's Revolving Commitment, the
Borrowers may borrow, repay and reborrow under this Section
2 prior to the Revolving Maturity Date.
(b) Procedure for Borrowing. Whenever the Borrowers
desire an Advance hereunder, they shall give Agent
telegraphic, telex, facsimile or telephonic notice ("Notice
of Borrowing") of such requested Advance, which in the case
of telephonic notice, shall be promptly confirmed in
writing. Each Notice of Borrowing shall be in the form of
Exhibit "A" attached hereto and shall be received by Agent
not later than 11:00 a.m. Oklahoma City, Oklahoma time, (i)
one Business Day prior to the Borrowing Date in the case of
the Prime Rate Loan, or (ii) two London Business Days prior
to any proposed Borrowing Date in the case of LIBOR Loans.
Each Notice of Borrowing shall specify (i) the Borrowing
Date (which, if at Prime Rate Loan, shall be a Business Day
and if a LIBOR Loan, a London Business Day), (ii) the
principal amount to be borrowed, (iii) the portion of the
Advance constituting Prime Rate Loans and/or LIBOR Loans and
(iv) if any portion of the proposed Advance is to constitute
LIBOR Loans, the initial Interest Period selected by
Borrowers pursuant to Section 4 hereof to be applicable
thereto. Upon receipt of such Notice, Agent shall advise
each Bank thereof; provided, that if the Banks have received
at least one (1) day's notice of such Advance prior to
funding of a Prime Rate Loan, or at least two (2) days'
notice of each Advance prior to funding in the case of a
LIBOR Loan, each Bank shall provide Agent at its office at
000 Xxxx X-00 Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000,
not later than 1:00 p.m.,Oklahoma City, Oklahoma time, on
the Borrowing Date, in immediately available funds, its pro
rata share of the requested Advance, but the aggregate of
all such fundings by each Bank shall never exceed such
Bank's Revolving Commitment. Not later than 2:00 p.m.,
Oklahoma City, Oklahoma time, on the Borrowing Date, Agent
shall make available to the Borrowers at the same office, in
like funds, the aggregate amount of such requested Advance.
Neither Agent nor any Bank shall incur any liability to the
Borrowers in acting upon any Notice of Borrowing which Agent
or such Bank believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow
on behalf of Borrowers or for otherwise acting in good faith
under this Section 2(b). Upon funding of Advances by Banks
in accordance with this Agreement, pursuant to any such
Notice, the Borrowers shall have effected Advances
hereunder.
(c) Letters of Credit. On the terms and conditions
hereinafter set forth, the Agent shall from time to time
during the period beginning on the Effective Date and ending
on the Revolving Maturity Date upon request of Borrowers
issue standby and/or commercial Letters of Credit for the
account of Borrowers (the "Letters of Credit") in such face
amounts as Borrowers may request, but not to exceed in the
aggregate face amount at any time outstanding the sum of Two
Million Dollars ($2,000,000.00). The face amount of all
Letters of Credit issued and outstanding hereunder shall be
considered as Advances for Borrowing Base purposes and all
payments made by the Agent on such Letters of Credit shall
be considered as Advances under the Revolving Notes. Each
Letter of Credit issued for the account of Borrowers
hereunder shall (i) be in favor of such beneficiaries as
specifically requested by Borrowers, (ii) have an expiration
date not exceeding the earlier of (a) one year or (b) the
Revolving Maturity Date, and (iii) contain such other terms
and provisions as may be reasonably required by Bank. Each
Bank (other than Agent) agrees that, upon issuance of any
Letter of Credit hereunder, it shall automatically acquire a
participation in the Agent's liability under such Letter of
Credit in an amount equal to such Bank's Revolving
Commitment Percentage of such liability, and each Bank
(other than Agent) thereby shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to Agent to
pay and discharge when due, its Revolving Commitment
Percentage of Agent's liability under such Letter of Credit.
The Borrowers hereby unconditionally agree to pay and
reimburse the Agent for the amount of each demand for
payment under any Letter of Credit that is in substantial
compliance with the provisions of any such Letter of Credit
at or prior to the date on which payment is to be made by
the Agent to the beneficiary thereunder, without
presentment, demand, protest or other formalities of any
kind. Upon receipt from any beneficiary of any Letter of
Credit of any demand for payment under such Letter of
Credit, the Agent shall promptly notify the Borrowers of the
demand and the date upon which such payment is to be made by
the Agent to such beneficiary in respect of such demand.
Forthwith upon receipt of such notice from the Agent,
Borrowers shall advise the Agent whether or not they intend
to borrow hereunder to finance their obligations to
reimburse the Agent, and if so, submit a Notice of Borrowing
as provided in Section 2(b) hereof. If Borrowers fail to so
advise Agent and thereafter fail to reimburse Agent, the
Agent shall notify each Bank of the demand and the failure
of the Borrowers to reimburse the Agent, and each Bank shall
reimburse the Agent for its Revolving Commitment Percentage
of each such draw paid by the Agent and unreimbursed by the
Borrowers. All such amounts paid by Agent and/or reimbursed
by the Banks shall be treated as an Advance or Advances
under the Revolving Commitment, which Advances shall be
immediately due and payable and shall bear interest at the
Default Rate.
(d) Procedure for Obtaining Letters of Credit. The
amount and date of issuance, renewal, extension or
reissuance of a Letter of Credit pursuant to the Banks'
commitment above in Section 2(c) shall be designated by
Borrowers' written request delivered to Agent at least three
(3) Business Days prior to the date of such issuance,
renewal, extension or reissuance. Concurrently with or
promptly following the delivery of the request for a Letter
of Credit, Borrowers shall execute and deliver to the Agent
an application and agreement with respect to the Letters of
Credit, said application and agreement to be in the form
used by the Agent. The Agent shall not be obligated to
issue, renew, extend or reissue such Letters of Credit if
(A) the amount thereon when added to the face amount of all
outstanding Letters of Credit plus any Reimbursement
Obligations exceeds Twenty-Five Million Dollars
($25,000,000.00) or (B) the amount thereof when added to the
Total Outstandings would exceed the Revolving Commitment.
Borrowers agree to pay the Agent for the benefit of the
Banks commissions for issuing the Letters of Credit
(calculated separately for each Letter of Credit) in an
amount equal to the greater of (i) one percent (1%) per
annum on the maximum face amount of the Letter of Credit or
(ii) $500.00. Borrowers further agree to pay Agent an
additional fronting fee equal to one-eighth of one percent
(.125%) per annum on the maximum face amount of each Letter
of Credit. Such commissions shall be payable prior to the
issuance of each Letter of Credit and thereafter on each
anniversary date of such issuance while such Letter of
Credit is outstanding.
(e) Voluntary Reduction of Revolving Commitment. The
Borrowers may at any time, or from time to time, upon not
less than three (3) Business Days' prior written notice to
Agent, reduce or terminate the Revolving Commitment;
provided, however, that (i) each reduction in the Revolving
Commitment must be in the amount of $500,000 or more, in
increments of $100,000 and (ii) each reduction must be
accompanied by a prepayment of the Revolving Notes in the
amount by which the outstanding principal balance of the
Revolving Notes exceeds the Revolving Commitment as reduced
pursuant to this Section 2.
(f) Commitment Reductions . The Borrowing Base shall
be reduced from time to time by the amount of any prepayment
required by Section 12(r) hereof upon the sale of Oil and
Gas Properties. If, as a result of any such reduction in
the Borrowing Base, the Total Outstandings ever exceed the
Borrowing Base then in effect, the Borrowers shall make the
mandatory prepayment of principal required pursuant to
Section 9(b) hereof.
(g) Several Obligations. The obligations of the Banks
under the Revolving Commitment are several and not joint.
The failure of any Bank to make an Advance required to be
made by it shall not relieve any other Bank of its
obligation to make its Advance, and no Bank shall be
responsible for the failure of any other Bank to make the
Advance to be made by such other Bank.
Notes Evidencing Loans. The loans described above in
Section 2 shall be evidenced by promissory notes of Borrowers as
follows:
(a) Form of Revolving Notes - The Revolving Loan shall
be evidenced by a Note or Notes in the aggregate face amount
of $25,000,000, and shall be in the form of Exhibit "B"
hereto with appropriate insertions (each a "Revolving
Note"). Notwithstanding the face amount of the Revolving
Notes, the actual principal amount due from the Borrowers to
Banks on account of the Revolving Notes, as of any date of
computation, shall be the sum of Advances then and
theretofore made on account thereof, less all principal
payments actually received by Banks in collected funds with
respect thereto. Although the Revolving Notes may be dated
as of the Effective Date, interest in respect thereof shall
be payable only for the period during which the loans
evidenced thereby are outstanding and, although the stated
amount of the Revolving Notes may be higher, the Revolving
Notes shall be enforceable, with respect to Borrowers'
obligation to pay the principal amount thereof, only to the
extent of the unpaid principal amount of the loans.
Irrespective of the face amount of the Revolving Notes, no
Bank shall ever be obligated to advance on the Revolving
Commitment any amount in excess of its Revolving Commitment
then in effect.
(b) Issuance of Additional Notes - From time to time
new Notes may be issued to other Banks as such Banks become
parties to this Agreement. Upon request from Agent, the
Borrowers shall execute and deliver to Agent any such new or
additional Notes. From time to time as new Notes are issued
the Agent shall require that each Bank exchange their Notes
for newly issued Notes to better reflect the extent of each
Bank's Revolving Commitment hereunder. The notes replaced
shall be marked to indicate that they have been replaced
and/or returned to the Borrowers.
(c) Interest Rates - The unpaid principal balance of
the Notes shall bear interest from time to time as set forth
in Section 4 hereof.
(d) Payment of Interest - Interest on the Notes shall
be payable on each Interest Payment Date.
(e) Payment of Principal - Principal of the Revolving
Note or Notes shall be due and payable to the Agent for the
ratable benefit of the Banks on the Revolving Maturity Date
unless earlier due in whole or in part as a result of an
acceleration of the amount due or pursuant to the mandatory
prepayment provisions of Section 9(b) hereof.
(f) Payment to Banks - Each Bank's Pro Rata Part of
each payment or prepayment of the Loans shall be directed by
wire transfer to such Bank by the Agent at the address
provided to the Agent for such Bank for payments no later
than 2:00 p.m., Oklahoma City, Oklahoma, time on the
Business Day such payments or prepayments are deemed
hereunder to have been received by Agent; provided, however,
in the event that any Bank shall have failed to make an
Advance as contemplated under Section 2 hereof (a
"Defaulting Bank") and the Agent or another Bank or Banks
shall have made such Advance, payment received by Agent for
the account of such Defaulting Bank or Banks shall not be
distributed to such Defaulting Bank or Banks until such
Advance or Advances shall have been repaid in full to the
Bank or Banks who funded such Advance or Advances. Any
payment or prepayment received by Agent at any time after
12:00 noon, Oklahoma City, Oklahoma, time on a Business Day
shall be deemed to have been received on the next Business
Day. Interest shall cease to accrue on any principal as of
the end of the day preceding the Business Day on which any
such payment or prepayment is deemed hereunder to have been
received by Agent. If Agent fails to transfer any principal
amount to any Bank as provided above, then Agent shall
promptly direct such principal amount by wire transfer to
such Bank.
(g) Sharing of Payments, Etc. - If any Bank shall
obtain any payment (whether voluntary, involuntary, or
otherwise) on account of the Loans, (including, without
limitation, any set-off) which is in excess of its Pro Rata
Part of payments on either of the Loans, as the case may be,
obtained by all Banks, such Bank shall purchase from the
other Banks such participation as shall be necessary to
cause such purchasing Bank to share the excess payment pro
rata with each of them; provided that, if all or any portion
of such excess payment is thereafter recovered from such
purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of the recovery. The
Borrowers agree that any Bank so purchasing a participation
from another Bank pursuant to this Section may, to the
fullest extent permitted by law, exercise all of its rights
of payment (including the right of offset) with respect to
such participation as fully as if such Bank were the direct
creditor of the Borrowers in the amount of such
participation.
(h) Non-Receipt of Funds by the Agent - Unless the
Agent shall have been notified by a Bank or the Borrowers
(the "Payor") prior to the date on which such Bank is to
make payment to the Agent of the proceeds of a Loan to be
made by it hereunder or the Borrowers are to make a payment
to the Agent for the account of one or more of the Banks, as
the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date
and, if the Payor has not in fact made the Required Payment
to the Agent, the recipient of such payment shall, on
demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period
commencing on the date such amount was made available by the
Agent until the date the Agent recovers such amount at the
rate applicable to such portion of the applicable Loan.
(i) Capital Adequacy - If either (i) the introduction
or implementation of or the compliance with or any change in
or in the interpretation of any law, rule or regulation or
(ii) the introduction or implementation of or the compliance
with any mandatory request, directive or guideline from any
central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount
of capital required or expected to be maintained by any Bank
or any corporation controlling any Bank as a result of
maintaining its Pro Rata Part of the Revolving Commitment,
then within fifteen (15) days after demand by such Bank, the
Borrowers will pay to such Bank, from time to time as
specified by such Bank, such additional amount or amounts
which such Bank shall reasonably determine to be appropriate
to compensate such Bank or any corporation controlling such
Bank in light of such circumstances, to the extent that such
Bank reasonably determines that the amount of any such
capital would be increased, or the rate of return on any
such capital would be reduced in whole or in part, based on
the existence of the amount of the Loans or such Bank's
Revolving Commitment under this Agreement; provided,
however, that to the extent such notice is given by any such
Bank more than 180 days after the occurrence of the event
giving rise to the additional costs of the type described in
this Section, such Bank shall not be entitled to
compensation pursuant to this Section for any amounts
incurred or accruing prior to the date 180 days before the
giving of such notice, except to the extent such law, rule,
regulation, request, directive or guideline shall have been
given retroactive effective affecting a period beginning
more than 180 days prior to such notice.
Interest Rates.
(a) Options.
(i) Prime Rate Loans. On Prime Rate Loans the
Borrowers agree to pay interest on the Notes calculated
on the basis of the actual days elapsed in a year
consisting of 360 days with respect to the unpaid
principal amount of each Prime Rate Loan from the date
the proceeds thereof are advanced to Borrowers until
maturity (whether by acceleration or otherwise), at a
varying rate per annum equal to the lesser of (i) the
Maximum Rate (defined herein), or (ii) the sum of the
Prime Rate plus the Prime Rate Margin. Subject to the
provisions of this Agreement as to prepayment, the
principal of the Notes representing Prime Rate Loans
shall be payable as specified in Section 3(e) hereof
and the interest in respect of each Prime Rate Loan
shall be payable on each Interest Payment Date. Past
due principal and, to the extent permitted by law, past
due interest in respect to each Prime Rate Loan, shall
bear interest, payable on demand, at a rate per annum
equal to the Default Rate.
(ii) LIBOR Loans. On LIBOR Loans the Borrowers
agree to pay interest calculated on the basis of a year
consisting of 360 days with respect to the unpaid
principal amount of each LIBOR Loan from the date the
proceeds thereof are advanced to Borrowers until
maturity (whether by acceleration or otherwise), at a
varying rate per annum equal to the lesser of (i) the
Maximum Rate, or (ii) the LIBOR Rate plus the LIBOR
Margin. Subject to the provisions of this Agreement
with respect to prepayment, the principal of the Notes
shall be payable as specified in Section 3(e) hereof
and the interest with respect to each LIBOR Loan shall
be payable on each Interest Payment Date. Past due
principal and, to the extent permitted by law, past due
interest shall bear interest, payable on demand, at a
rate per annum equal to the Default Rate. Upon three
(3) London Business Days' written notice prior to the
making by the Banks of any LIBOR Loan (in the case of
the initial Interest Period therefor) or the expiration
date of each succeeding Interest Period (in the case of
subsequent Interest Periods therefor), Borrowers shall
have the option, subject to compliance by Borrowers
with all of the provisions of this Agreement, as long
as no Event of Default exists, to specify whether the
Interest Period commencing on any such date shall be a
one (1), two (2), three (3) or six (6) month period.
If Agent shall not have received timely notice of a
designation of such Interest Period as herein provided,
Borrowers shall be deemed to have elected to convert
all maturing LIBOR Loans to Prime Rate Loans.
(b) Interest Rate Determination. The Agent shall
determine each interest rate applicable to the Loans
hereunder in accordance with the provisions of this
Agreement. The Agent shall give prompt notice to the
Borrowers and the Banks of each rate of interest so
determined and its determination thereof shall be conclusive
absent error.
(c) Conversion Option. Borrowers may elect from time
to time (i) to convert all or any part of its LIBOR Loans to
Prime Rate Loans by giving Agent irrevocable notice of such
election in writing prior to 10:00 a.m. (Oklahoma City,
Oklahoma time) on the conversion date and such conversion
shall be made on the requested conversion date, provided
that any such conversion of a LIBOR Loan shall only be made
on the last day of the LIBOR Interest Period with respect
thereof, (ii) to convert all or any part of its Prime Rate
Loans to LIBOR Loans by giving the Agent irrevocable written
notice of such election three (3) London Business Days prior
to the proposed conversion and such conversion shall be made
on the requested conversion date or, if such requested
conversion date is not a London Business Day or a Business
Day, as the case may be, on the next succeeding London
Business Day or Business Day, as the case may be. Any such
conversion shall not be deemed to be a prepayment of any of
the loans for purposes of this Agreement or the Notes.
(d) Recoupment. If at any time the applicable rate of
interest selected pursuant to Sections 4(a)(i) or 4(a)(ii)
above shall exceed the Maximum Rate, thereby causing the
interest on the Notes to be limited to the Maximum Rate,
then any subsequent reduction in the interest rate so
selected or subsequently selected shall not reduce the rate
of interest on the Notes below the Maximum Rate until the
total amount of interest accrued on the Note equals the
amount of interest which would have accrued on the Notes if
the rate or rates selected pursuant to Sections 4(a)(i) or
(ii), as the case may be, had at all times been in effect.
Change of Circumstances.
(a) Unavailability of Funds or Inadequacy of Pricing.
In the event that, in connection with any proposed LIBOR
Loan, the Agent determines, which determination shall,
absent manifest error, be final, conclusive and binding upon
all parties, due to changes in circumstances since the date
hereof, adequate and fair means do not exist for determining
the LIBOR Rate or such rate will not accurately reflect the
costs to the Banks of funding LIBOR Loans for such LIBOR
Interest Period, the Agent shall give notice of such
determination to the Borrowers and the Banks, whereupon,
until the Agent notifies the Borrowers and the Banks that
the circumstances giving rise to such suspension no longer
exist, the obligations of the Banks to make, continue or
convert Loans into LIBOR Loans shall be suspended, and all
loans to Borrowers shall be Prime Rate Loans during the
period of suspension.
(b) Change in Laws. If at any time any new law or any
change in existing laws or in the interpretation of any new
or existing laws shall make it unlawful for any Bank to make
or continue to maintain or fund LIBOR Loans hereunder, then
such Bank shall promptly notify Borrowers in writing and
such Bank's obligation to make, continue or convert Loans
into LIBOR Loans under this Agreement shall be suspended
until it is no longer unlawful for such Bank to make or
maintain LIBOR Loans. Upon receipt of such notice,
Borrowers shall either repay the outstanding LIBOR Loans
owed to the Banks, without penalty, on the last day of the
current Interest Periods (or, if any Bank may not lawfully
continue to maintain and fund such LIBOR Loans,
immediately), or Borrowers may convert such LIBOR Loans at
such appropriate time to Prime Rate Loans.
(c) Increased Cost or Reduced Return.
(i) 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 with
any request or directive (whether or not having the
force of law) of any such governmental authority,
central bank, or comparable agency:
(A) shall subject such Bank to any tax,
duty, or other charge with respect to any LIBOR
Loans, its Notes, or its obligation to make LIBOR
Loans, or change the basis of taxation of any
amounts payable to such Bank under this Agreement
or its Notes in respect of any LIBOR Loans (other
than franchise taxes and taxes imposed on the
overall net income of such Bank);
(B) shall impose, modify, or deem applicable
any reserve, special deposit, assessment, or
similar requirement (other than reserve
requirements, if any, taken into account in the
determination of the LIBOR Rate) relating to any
extensions of credit or other assets of, or any
deposits with or other liabilities or commitments
of, such Bank, including the Revolving Commitment
of such Bank hereunder; or
(C) shall impose on such Bank or on the
London interbank market any other condition
affecting this Agreement or its Notes 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 of making, converting into,
continuing, or maintaining any LIBOR Loans or to reduce
any sum received or receivable by such Bank under this
Agreement or its Notes with respect to any LIBOR Loans,
then Borrowers 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 Borrowers under this Section 5(c),
Borrowers may, by notice to such Bank (with a copy to
Agent), suspend the obligation of such Bank to make or
continue LIBOR Loans, or to convert all or part of the
Prime Rate Loan owing to such Bank to LIBOR Loans,
until the event or condition giving rise to such
request ceases to be in effect (in which case the
provisions of Section 5(c) shall be applicable);
provided that such suspension shall not affect the
right of such Bank to receive the compensation so
requested.
(ii) If, after the date hereof, any Bank shall
have determined that the adoption of any applicable
law, rule, or regulation regarding capital adequacy or
any change therein or in the interpretation or
administration thereof by any governmental authority,
central bank, or comparable agency charged with the
interpretation or administration thereof, or any
request or directive regarding capital adequacy
(whether or not having the force of law) of any such
governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the
rate of return on the capital of such Bank or any
corporation controlling such Bank as a consequence of
such Bank's obligations hereunder to a level below that
which such Bank or such corporation could have achieved
but for such adoption, change, request, or directive
(taking into consideration its policies with respect to
capital adequacy), then from time to time upon demand
Borrowers shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such
reduction.
(iii) Each Bank shall promptly notify
Borrowers and 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(c) will designate a separate lending office,
if applicable, 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(c) shall furnish to Borrowers and
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.
(iv) Any Bank giving notice to the Borrowers
through the Agent, pursuant to Section 5(c) shall give
to the Borrowers a statement signed by an officer of
such Bank setting forth in reasonable detail the basis
for, and the calculation of such additional cost,
reduced payments or capital requirements, as the case
may be, and the additional amounts required to
compensate such Bank therefor.
(v) Within five (5) Business Days after receipt
by the Borrowers of any notice referred to in Section
5(c), the Borrowers shall pay to the Agent for the
account of the Bank issuing such notice such additional
amounts as are required to compensate such Bank for the
increased cost, reduce payments or increase capital
requirements identified therein, as the case may be;
provided, that the Borrowers shall not be obligated to
compensate such Bank for any increased costs, reduced
payments or increased capital requirements to the
extent that such Bank incurs the same prior to a date
six (6) months before such Bank gives the required
notice.
(d) Discretion of Bank 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 Loans 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 each Bank had actually funded and
maintained each LIBOR Loan through the purchase of deposits
having a maturity corresponding to the last day of the LIBOR
Interest Period applicable to such LIBOR Loan and bearing an
interest rate to the applicable interest rate for such LIBOR
Period.
(e) Breakage Fees. Without duplication under any
other provision hereof, if any Bank incurs any loss, cost or
expense (including, without limitation, any loss of profit
and loss, cost, expense or premium reasonably incurred by
reason of the liquidation or re-employment of deposits or
other funds acquired by such Bank to fund or maintain any
LIBOR Loan or the relending or reinvesting of such deposits
or amounts paid or prepaid to the Banks) as a result of any
of the following events other than any such occurrence as a
result in the change of circumstances described in Sections
5(a) and (b):
(i) any payment, prepayment or conversion of a
LIBOR Loan on a date other than the last day of its
LIBOR Interest Period (whether by acceleration,
prepayment or otherwise);
(ii) any failure to make a principal payment of a
LIBOR Loan on the due date thereof; or
(iii) any failure by the Borrowers to borrow,
continue, prepay or convert to a LIBOR Loan on the
dates specified in a notice given pursuant to Section
2(b) or 4(c) hereof;
then the Borrowers shall pay to such Bank such amount as
will reimburse such Bank for such loss, cost or expense. If
any Bank makes such a claim for compensation, it shall
furnish to Borrowers and Agent a statement setting forth the
amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts
shown on such statement shall be conclusive and binding
absent manifest error.
Collateral Security.
(a) Pledge of Collateral. To secure the performance
by Borrowers of their obligations hereunder, and under the
Notes and Security Instruments, whether now or hereafter
incurred, matured or unmatured, direct or contingent, joint
or several, or joint and several, including extensions,
modifications, renewals and increases thereof, and
substitutions therefore, Borrowers have heretofore granted
and assigned to Bank One-Oklahoma a first and prior lien on
certain of their Oil and Gas Properties, certain related
equipment, oil and gas inventory and the proceeds of the
foregoing. Contemporaneously with the execution of this
Agreement and the Notes, the Borrowers shall grant and
assign to Agent for the ratable benefit of the Banks a first
and prior Lien on certain of its Oil and Gas Properties,
certain related equipment, oil and gas inventory, certain
bank accounts, the System, the Plant and proceeds of the
foregoing. The Liens held by Bank One-Oklahoma on the Oil
and Gas Properties shall be assigned, as of the Effective
Date, to the Agent for the ratable benefit of the Banks.
The Oil and Gas Properties heretofore and herewith mortgaged
to the Agent shall represent not less than 70% of the
Borrowers' aggregate present worth in proved developed
producing properties, as determined by Borrowers' most
recent engineering report as of the Effective Date. All Oil
and Gas Properties and other collateral in which Borrowers
have heretofore granted to Bank One-Oklahoma, or herewith
grant or hereafter grant to Agent for the ratable benefit of
the Banks a first and prior Lien (to the satisfaction of the
Agent) in accordance with this Section 6, as such properties
and interests are from time to time constituted, are
hereinafter collectively called the "Collateral".
The Banks are aware that Borrowers are currently
obligated under an agreement with a third party to convey
its interest of equivalent value in the south half of the
"Cedar Hills Field" in exchange for the receipt of its
interests in the north half of the "Cedar Hills Field".
This exchange is to be completed on May 10, 2000. In
accordance with the terms of the agreement, the Oil and Gas
Properties mortgaged in the south half of the "Cedar Hills
Field" can not be mortgaged or encumbered.
(b) Documentation and Title Review. The granting and
assigning of such security interests and Liens by Borrowers
shall be pursuant to Security Instruments in form and
substance reasonably satisfactory to the Agent.
Concurrently with the delivery of each of the Security
Instruments or within a reasonable time thereafter,
Borrowers shall furnish to the Agent mortgage and title
opinions and other title information satisfactory to Agent
with respect to the title and Lien status of Borrowers'
interests in not less than 80% of the Engineered Value of
the Oil and Gas Properties covered by the Security
Instruments as Agent shall have designated. "Engineered
Value" for this purpose shall mean future net revenues
discounted at the discount rate being used by the Agent as
of the date of any such determination utilizing the pricing
parameters used in the engineering report furnished to the
Agent for the ratable benefit of the Banks, pursuant to
Sections 7 and 12 hereof. Borrowers will cause to be
executed and delivered to the Agent, in the future,
additional Security Instruments if the Agent reasonably
deems such are necessary to insure perfection or maintenance
of Banks' security interests and Liens in the Collateral or
any part thereof.
(c) Letters in Lieu of Transfer Orders. The Borrowers
shall provide the Agent for the benefit of the Banks,
undated letters in lieu of transfer orders, in form and
substance satisfactory to Agent, from the Borrowers to each
purchaser of hydrocarbons and disburser proceeds of
hydrocarbons from and attributable to the Oil and Gas
Properties, together with additional letters with addresses
left blank authorizing and directing the addressees to make
future payments attributable to hydrocarbons from the Oil
and Gas Properties directly to the Agent for the benefit of
the Banks. The Banks agree that none of the letters in lieu
of transfer orders provided by the Borrowers pursuant to
this Section 6(c) will be sent to the address prior to the
occurrence of an Event of Default, at which time the Agent
may, at its option and in addition to the exercise of any of
its other rights and remedies, send any and all of such
letters to such addressees; provided, however, that upon the
occurrence of an Event of Default other than those specified
in Sections 14(f) and (g), the Agent shall not send any or
all of such letters until the applicable period to cure, if
any, such Default has lapsed without such Default being
cured. Borrowers hereby designate the Agent as its agent
and attorney-in-fact, to act in its name, place and stead
for the purpose of completing and delivering any and all
letters in lieu of transfer orders delivered by the
Borrowers to the Agent for the benefit of the Banks pursuant
to Sections 6(c) and 11(a)(x) hereof, including, without
limitation, completing any blanks contained in such letters
and attaching exhibits thereto describing the relevant
Collateral. Borrowers hereby ratify and confirm all that
the Agent shall lawfully do or cause to be done by virtue of
this power of attorney and the rights granted with respect
to such power of attorney. This power of attorney is
coupled with the interests of the Agent in the Collateral,
shall commence and be in full force and effect as of the
Effective Date and shall remain in full force and effect and
shall be irrevocable until the obligations, if any, of the
Agent hereunder have terminated and the full satisfaction of
all obligations due hereunder or under the Notes. The
powers conferred on Agent by this appointment may only be
exercised by the Agent by execution by any Person who, at
the time of exercise, is an officer of the Agent, and are
solely to protect the interests of the Agent and the Banks
under the Loan Documents and shall not impose any duty upon
the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives or
has expressly directed that others receive as a result of
the exercise of such powers and shall not be responsible to
the Borrowers, or any other Person for any act or failure to
act with respect to such powers, except for gross negligence
or willful misconduct.
Borrowing Base.
(a) Initial Borrowing Base. At the Effective Date, the
Borrowing Base shall be $25,000,000.00.
(b) Subsequent Determinations of Borrowing Base.
Subsequent determinations of the Borrowing Base shall be
made by the Banks at least semi-annually on January 1 and
July 1 of each year beginning July 1, 2000 or as Unscheduled
Redeterminations. The Borrowers shall furnish to the Banks
as soon as possible but in any event no later than April 1
of each year, beginning April 1, 2001, with an engineering
report in form and substance satisfactory to the Agent
prepared by an independent petroleum engineering firm
acceptable to Agent covering the Oil and Gas Properties
utilizing economic and pricing parameters used by Agent as
established from time to time, together with such other
information concerning the value of the Oil and Gas
Properties as the Agent shall deem necessary to determine
the value of the Oil and Gas Properties. By October 1 of
each year, or within thirty (30) days after either (i)
receipt of notice from Agent that the Banks require an
Unscheduled Redetermination, or (ii) the Borrowers give
notice to Agent of their desire to have an Unscheduled
Redetermination performed, the Borrowers shall furnish to
the Banks an engineering report in form and substance
satisfactory to Agent prepared by Borrowers' in-house
engineering staff valuing the Oil and Gas Properties
utilizing economic and pricing parameters used by the Agent
as established from time to time, together with such other
information, reports and data concerning the value of the
Oil and Gas Properties as Agent shall deem reasonably
necessary to determine the value of such Oil and Gas
Properties. Agent shall by notice to the Borrowers no later
than May 1 and November 1 of each year, or within a
reasonable time thereafter (herein called the "Determination
Date"), notify the Borrowers of the designation by the Banks
of the new Borrowing Base for the period beginning on such
Determination Date and continuing until, but not including,
the next Determination Date. If an Unscheduled
Redetermination is made by the Banks, the Agent shall notify
the Borrowers within a reasonable time after receipt of all
requested information of the new Borrowing Base, and such
new Borrowing Base shall continue until the next
Determination Date. If the Borrowers do not furnish all
such information, reports and data by any date specified in
this Section 7(b), the Banks may nonetheless designate the
Borrowing Base at any amount which the Banks in their
discretion determine and may redesignate the Borrowing Base
from time to time thereafter until the Banks receive all
such information, reports and data, whereupon the Banks
shall designate a new Borrowing Base as described above.
Each Bank shall determine the amount of the Borrowing Base
based upon the loan value which such Bank in its discretion
(using such methodology, assumptions and discounts rates as
such Bank customarily uses in assigning loan value to oil
and gas properties, oil and gas gathering systems, gas
processing and plant operations) assigns to such Oil and Gas
Properties and other Collateral of the Borrowers at the time
in question and based upon such other credit factors
consistently applied (including, without limitation, the
assets, liabilities, cash flow, business, properties,
prospects, management and ownership of the Borrowers and
their affiliates) as such Bank customarily considers in
evaluating similar oil and gas credits, but such Bank in its
discretion shall not be required to give any additional
positive value to any Oil and Gas Property over the current
economic and pricing parameters used by such Bank for such
Determination Date which additional value is derived
directly from a hedging, forward sale or swap agreement
covering such Oil and Gas Property as of the date of such
determination. All determinations or Unscheduled
Redeterminations of the Borrowing Base require the approval
of Majority Banks; provided, however, that notwithstanding
anything to the contrary herein, the amount of the Borrowing
Base may not be increased, without the approval of all
Banks. If the Banks cannot otherwise agree on the Borrowing
Base, each Bank shall submit in writing to the Agent its
proposed Borrowing Base and the Borrowing Base shall be set
on the basis of the weighted average of the Borrowing Bases
proposed by the Banks. If at any time any of the Oil and
Gas Properties are sold, the Borrowing Base then in effect
shall automatically be reduced by a sum equal to the amount
of prepayment required to be made pursuant to Section 12(r)
hereof. The Borrowing Base shall be additionally reduced
from time to time pursuant to the provisions of Sections
2(e) and 2(f) hereof. It is expressly understood that the
Banks have no obligation to designate the Borrowing Base at
any particular amounts, except in the exercise of their
discretion, whether in relation to the Revolving Commitment
or otherwise. Provided, however, that the Banks shall not
have the obligation to designate a Borrowing Base in an
amount in excess of the Revolving Commitment or its legal or
internal lending limits. Upon the issuance of any public
note issue permitted pursuant to Section 13(f)(iv) hereof,
the Banks shall have the right to perform an Unscheduled
Redetermination of the Borrowing Base.
Fees.
(a) Unused Commitment Fee. The Borrowers shall pay to
Agent for the ratable benefit of the Banks an unused
commitment fee (the "Unused Commitment Fee") equivalent to
the Unused Fee Rate times the unadvanced amount of the
Revolving Commitment (calculated on a daily basis). The
Unused Commitment Fee shall be payable in arrears on the
last Business Day of each calendar quarter beginning June
30, 2000 with the final fee payment due on the Maturity Date
for any period then ending for which the Unused Commitment
Fee shall not have been theretofore paid. In the event the
Revolving Commitment terminates on any date prior to the end
of any such monthly period, the Borrowers shall pay to the
Agent for the ratable benefit of the Banks, on the date of
such termination, the total Unused Commitment Fee due for
the period in which such termination occurs.
(b) The Letter of Credit Fee. Borrowers shall pay to
the Agent the Letter of Credit fees required above in
Section 2(d).
Prepayments.
(a) Voluntary Prepayments. Subject to the provisions
of Section 5(e) hereof, the Borrowers may at any time and
from time to time, without penalty or premium, prepay the
Notes, in whole or in part. Each such prepayment shall be
made on at least three (3) London Business Days' notice to
Agent in the case of LIBOR Loan Tranches and without notice
in the case of Prime Rate Loan Tranches and shall be in a
minimum amount of $100,000.00 or any larger multiple thereof
or the unpaid balance on the Notes, whichever is less, plus
accrued interest thereon to the date of prepayment.
(b) Mandatory Prepayment For Borrowing Base
Deficiency. In the event the Total Outstandings ever exceed
the Borrowing Base as determined by Banks pursuant to
Section 7(b) hereof, the Borrowers shall, within thirty (30)
days after notification from the Agent, either (A) by
instruments reasonably satisfactory in form and substance to
the Bank, provide the Agent with collateral with value and
quality in amounts satisfactory to all of the Banks in their
discretion in order to increase the Borrowing Base by an
amount at least equal to such excess, or (B) prepay, without
premium or penalty, the principal amount of the Revolving
Notes in an amount at least equal to such excess plus
accrued interest thereon to the date of prepayment. If the
Total Outstandings ever exceed the Revolving Commitment as a
result of a Monthly Commitment Reduction or any other
required reduction in the Revolving Commitment, then in such
event, Borrowers shall immediately prepay the principal
amount of the Revolving Notes in an amount at least equal to
such excess plus accrued interest to the date of prepayment.
Representations and Warranties. In order to induce the
Banks to enter into this Agreement, the Borrowers hereby, jointly
and severally, represent and warrant to the Banks (which
representations and warranties will survive the delivery of the
Notes) that:
(a) Creation and Existence. Borrowers are each a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was
formed and is duly qualified in all jurisdictions wherein
failure to qualify may result in a Material Adverse Effect.
Borrowers each have all power and authority to own its
properties and assets and to transact the business in which
it is engaged.
(b) Power and Authority. Borrowers are each duly
authorized and empowered to create and issue the Notes; and
Borrowers are duly authorized and empowered to execute,
deliver and perform their respective Loan Documents,
including this Agreement; and all corporation action on each
Borrower's part requisite for the due creation and issuance
of the Notes and for the due execution, delivery and
performance of the Loan Documents, including this Agreement,
has been duly and effectively taken. Each Support Party is
duly authorized and empowered to execute, deliver and
perform the respective Loan Documents to which they are a
party; and all action on each Support Party's part requisite
for the due execution, delivery and performance of such Loan
Documents has been duly and effectively taken.
(c) Binding Obligations. This Agreement does, and the
Notes and other Loan Documents upon their creation,
issuance, execution and delivery will, constitute valid and
binding obligations of Borrowers, enforceable in accordance
with their respective terms (except that enforcement may be
subject to applicable principles of equity and the effect of
any applicable bankruptcy, insolvency, or similar debtor
relief laws now or hereafter in effect and relating to or
affecting the enforcement of creditors' rights generally).
(d) No Legal Bar or Resultant Lien. The Notes and the
Loan Documents, including this Agreement, do not and will
not, to the best of each Borrower's and each Support Party's
knowledge violate any provisions of any contract, agreement,
law, regulation, order, injunction, judgment, decree or writ
to which any Borrower or any Support Party is subject which
could reasonable be expected to have a Material Adverse
Effect, or result in the creation or imposition of any lien
or other encumbrance upon any assets or properties of any
Borrower or any Support Party, other than those contemplated
by this Agreement.
(e) No Consent. The execution, delivery and
performance by the Borrowers of the Notes and other Loan
Documents, including this Agreement, does not require the
consent or approval of any other person or entity, including
without limitation any regulatory authority or governmental
body of the United States or any state thereof or any
political subdivision of the United States or any state
thereof except for consents required for federal, state and,
in some instances, private leases, right of ways and other
conveyances or encumbrances of oil and gas leases, if any,
all of which consents have been obtained by the Borrowers.
(f) Financial Condition. The unaudited Financial
Statements of Borrowers dated December 31, 1999, which have
been delivered to Banks are complete and correct in all
material respects, and fully and accurately reflect in all
material respects the financial condition and results of the
operations of the Borrowers on a consolidated basis as of
the date or dates and for the period or periods stated. No
change has since occurred in the condition, financial or
otherwise, of the Borrowers which is reasonably expected to
have a Material Adverse Effect, except as disclosed to the
Banks in Schedule "2" attached hereto.
(g) Liabilities. Neither Borrower has any material
(individually or in the aggregate) liability, direct or
contingent, except as disclosed to the Banks in the
Financial Statements or on Schedule "3" attached hereto. No
unusual or unduly burdensome restrictions, restraint, or
hazard exists by contract, law or governmental regulation or
otherwise relative to the business, assets or properties of
Borrowers which is reasonably expected to have a Material
Adverse Effect.
(h) Litigation. Except as described in the Financial
Statements, or as otherwise disclosed to the Banks in
Schedule "4" attached hereto, there is no litigation, legal
or administrative proceeding, investigation or other action
of any nature pending or, to the knowledge of the officers
of Borrowers threatened against or affecting Borrowers which
involves the possibility of any judgment or liability not
fully covered by insurance, and which is reasonably expected
to have a Material Adverse Effect.
(i) Taxes; Governmental Charges. Borrowers have each
filed all tax returns and reports required to be filed and
has paid all taxes, assessments, fees and other governmental
charges levied upon them or their assets, properties or
income which are due and payable, including interest and
penalties, the failure of which to pay could reasonably be
expected to have a Material Adverse Effect, except such as
are being contested in good faith by appropriate proceedings
and for which adequate reserves for the payment thereof as
required by GAAP has been provided and levy and execution
thereon have been stayed and continue to be stayed.
(j) Titles, Etc. Borrowers each have defensible title
to all of its respective assets, including without
limitation, the Oil and Gas Properties, the Plants and the
Systems, free and clear of all liens or other encumbrances
except Permitted Liens, except such failure or failures of
title which in the aggregate could not reasonably be
expected to reduce the Borrowing Base by more than $500,000.
(k) Defaults. Neither Borrower is in default and no
event or circumstance has occurred which, but for the
passage of time or the giving of notice, or both, would
constitute a default under any loan or credit agreement,
indenture, mortgage, deed of trust, security agreement or
other agreement or instrument to which either Borrower is a
party in any respect that would be reasonably expected to
have a Material Adverse Effect. No Event of Default
hereunder has occurred and is continuing.
(l) Casualties; Taking of Properties. Since the dates
of the latest Financial Statements of the Borrowers
delivered to Banks, neither the business nor the assets or
properties of Borrowers have been affected (to the extent it
is reasonably likely to cause a Material Adverse Effect), as
a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance,
embargo, requisition or taking of property or cancellation
of contracts, permits or concessions by any domestic or
foreign government or any agency thereof, riot, activities
of armed forces or acts of God or of any public enemy.
(m) Use of Proceeds; Margin Stock. The proceeds of
the Revolving Commitment may be used by the Borrowers for
the purposes of (i) refinancing existing debt owed to Bank
One, Oklahoma, N.A. and others pursuant to that certain
Restated Credit Agreement dated May 14, 1998, (ii)
acquisition, exploration and development of oil and gas
properties or entities owning oil and gas properties, (iii)
Letters of Credit, and (iv) general corporate purposes.
Neither Borrower is engaged principally or as one of its
important activities in the business of extending credit for
the purpose of purchasing or carrying any "margin stock " as
defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 221), or for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry a margin stock or
for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said
Regulation G or U.
Neither Borrower nor any person or entity acting on
behalf of Borrowers has taken or will take any action which
might cause the loans hereunder or any of the Loan
Documents, including this Agreement, to violate Regulation G
or U or any other regulation of the Board of Governors of
the Federal Reserve System or to violate the Securities
Exchange Act of 1934 or any rule or regulation thereunder,
in each case as now in effect or as the same may hereafter
be in effect.
(n) Location of Business and Offices. The principal
place of business and chief executive offices of the
Borrowers are located at the address stated in Section 17
hereof.
(o) Compliance with the Law. To the best of either
Borrower's knowledge, neither Borrower:
(i) is in violation of any law, judgment, decree,
order, ordinance, or governmental rule or regulation to
which either Borrower, or any of its assets or
properties are subject; or
(ii) has failed to obtain any license, permit,
franchise or other governmental authorization necessary
to the ownership of any of its assets or properties or
the conduct of its business;
which violation or failure is reasonably expected to have a
Material Adverse Effect.
(p) No Material Misstatements. No information,
exhibit or report furnished by Borrowers to the Banks in
connection with the negotiation of this Agreement contained
any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement
contained therein not materially misleading.
(q) ERISA. Borrowers are each in compliance in all
material respects with the applicable provisions of ERISA,
and no "reportable event", as such term is defined in
Section 403 of ERISA, has occurred with respect to any Plan
of Borrowers.
(r) Public Utility Holding Company Act. Neither
Borrower is a "holding company", or "subsidiary company" of
a "holding company", or an "affiliate" of a "holding
company" or of a"subsidiary company" of a "holding company",
or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(s) Subsidiaries. All of the Borrowers' Subsidiaries
are listed on Schedule "5" hereto.
(t) Environmental Matters. Except as disclosed on
Schedule "6", neither Borrower (i) has received notice or
otherwise learned of any Environmental Liability which would
be reasonably likely to individually or in the aggregate
have a Material Adverse Effect arising in connection with
(A) any non-compliance with or violation of the requirements
of any Environmental Law or (B) the release or threatened
release of any toxic or hazardous waste into the
environment, (ii) has received notice of any threatened or
actual liability in connection with the release or notice of
any threatened release of any toxic or hazardous waste into
the environment which would be reasonably likely to
individually or in the aggregate have a Material Adverse
Effect or (iii) has received notice or otherwise learned of
any federal or state investigation evaluating whether any
remedial action is needed to respond to a release or
threatened release of any toxic or hazardous waste into the
environment for which either Borrower is or may be liable
which may reasonably be expected to result in a Material
Adverse Effect.
(u) Liens. Except (i) as disclosed on Schedule "1"
hereto and (ii) for Permitted Liens, the assets and
properties of the Borrowers are free and clear of all liens
and encumbrances.
(v) Gas Contracts. Except as described on Schedule
"7" hereto, the Borrowers (a) are not obligated in any
material respect by virtue of any prepayment made under any
contract containing a "take-or-pay,", "recoupment," or
"prepayment" provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of
the Oil and Gas Properties at some future date without
receiving full payment therefor at the time of delivery, and
(b) has not produced gas, in any material amount, subject
to, and is not, nor are any of the Oil and Gas Properties,
subject to balancing rights of third parties or subject to
balancing duties under governmental requirements, except as
to such matters for which the Borrowers have established
monetary reserves adequate in an amount to satisfy such
obligations and has segregated such reserves from other
accounts or the Borrowers' balancing obligations in the
aggregate would not reasonably be expected to have a
Material Adverse Effect.
(w) Delhi Oakdale Lateral System. A portion of the
Eagle Chief Gas Gathering System is not owned by either
Borrower, rather, it is leased pursuant to the Delhi Lease.
The primary term of the Delhi Lease has expired, however,
the Borrowers' right to use the Delhi Oakdale Lateral System
is renewed on a month-to-month basis. The Delhi Oakdale
Lateral System is not a critical portion of the Eagle Chief
Gas Gathering System. The Delhi Oakdale Lateral System
accounts for no more than one percent (1%) of the volume of
hydrocarbons flowing through the Eagle Chief Gas Gathering
System.
(x) Eagle Chief Gas Gathering System. At least
ninety percent (90%) of the hydrocarbons flowing through the
Gathering System originate from xxxxx directly connected to
the Eagle Chief Gas Gathering System or flows through the
Eagle Chief Gas Gathering System prior to delivery to the
Oklahoma Natural Gas Company's or other purchaser's system.
(y) Senior Subordinated Notes. The Senior
Subordinated Notes are unsecured and are subordinate, in
terms of payment and collection , to the Loan.
Conditions of Lending.
(a) The effectiveness of this Agreement, and the
obligation to make the initial Advance or issue any initial
Letter of Credit under the Revolving Commitment shall be
subject to satisfaction of the following conditions
precedent:
(i) Execution and Delivery. The Borrowers shall
each have executed and delivered the Agreement, the
Notes and other required Loan Documents, and the other
Security Instruments, all in form and substance
satisfactory to the Agent;
(ii) Legal Opinion. The Agent shall have received
from Borrowers' and Support Party's legal counsel a
favorable legal opinion or opinions in form and
substance satisfactory to it (i) as to the matters set
forth in Subsections 10(a), (b), (c), (d), (e) , (h)
and (y) hereof and (ii) as to such other matters as
Agent or its counsel may reasonably request;
(iii) Corporate Resolutions. The Agent shall
have received appropriate certified corporate
resolutions of Borrowers;
(iv) Good Standing. The Agent shall have received
evidence of existence and good standing for Borrowers;
(v) Incumbency. The Agent shall have received a
signed certificate of Borrowers, certifying the names
of the officers of Borrowers authorized to sign loan
documents on behalf of Borrowers, together with the
true signatures of each such officer. The Agent may
conclusively rely on such certificate until the Agent
receives a further certificate of Borrowers canceling
or amending the prior certificate and submitting
signatures of the officers named in such further
certificate;
(vi) Certificate of Incorporation and Bylaws. The
Agent shall have received copies of the Certificate of
Incorporation of Borrowers and all amendments thereto,
certified by the Secretary of State of the State of its
incorporation, and a copy of the bylaws of Borrowers
and all amendments thereto, certified by Borrowers as
being true, correct and complete;
(vii) Priority of Liens. The Agent shall have
received satisfactory evidence of the first lien status
of the Liens granted by Borrowers to the Banks;
(viii) Letters in Lieu. The Agent shall have
received undated letters in lieu of transfer orders, in
form and substance satisfactory to the Agent, from the
Borrowers to each purchaser of hydrocarbons and
disburser of proceeds of hydrocarbons from and
attributable to the Oil and Gas Properties, together
with additional letters with the addresses left blank,
authorizing and directing the addressees to make future
payments attributable to the hydrocarbons from the Oil
and Gas Properties directly to the Agent for the
benefit of the Banks, all as required by Section 6
hereof;
(ix) Payment of Fees. The Agent shall have
received payment of all fees due from Borrowers as of
the Effective Date.
(x) Representation and Warranties. The
representations and warranties of Borrowers under this
Agreement are true and correct in all material respects
as of such date, as if then made (except to the extent
that such representations and warranties related solely
to an earlier date);
(xi) No Event of Default. No Event of Default
shall have occurred and be continuing nor shall any
event have occurred or failed to occur which, with the
passage of time or service of notice, or both, would
constitute an Event of Default;
(xii) Other Documents. Agent shall have
received such other instruments and documents
incidental and appropriate to the transaction provided
for herein as Agent or its counsel may reasonably
request, and all such documents shall be in form and
substance reasonably satisfactory to the Agent; and
(xiii) Legal Matters Satisfactory. All legal
matters incident to the consummation of the
transactions contemplated hereby shall be reasonably
satisfactory to special counsel for Agent retained at
the expense of the Borrowers.
(b) The obligation of the Banks to make any Advance or
issue any Letter of Credit under the Revolving Commitment
(including the initial Advance) shall be subject to the
following additional conditions precedent that, at the date
of making each such Advance and after giving effect thereto:
(i) Representation and Warranties. The
representations and warranties of Borrowers under this
Agreement are true and correct in all material respects
as of such date, as if then made (except to the extent
that such representations and warranties related solely
to an earlier date);
(ii) No Event of Default. No Event of Default
shall have occurred and be continuing nor shall any
event have occurred or failed to occur which, with the
passage of time or service of notice, or both, would
constitute an Event of Default;
(iii) Other Documents. Agent shall have
received such other instruments and documents
incidental and appropriate to the transaction provided
for herein as Agent or its counsel may reasonably
request, and all such documents shall be in form and
substance reasonably satisfactory to the Agent; and
(iv) Legal Matters Satisfactory. All legal
matters incident to the consummation of the
transactions contemplated hereby shall be reasonably
satisfactory to special counsel for Agent retained at
the expense of Borrowers.
Affirmative Covenants. A deviation from the provisions
of this Section 12 shall not constitute a Default or Event of
Default under this Agreement if such deviation is consented to in
writing by the required percentage of the Banks prior to the date
of deviation. The Borrowers will at all times comply with the
covenants contained in this Section 12 from the date hereof and
for so long as the Revolving Commitment is in existence or any
amount is owed to the Agent or the Banks under this Agreement or
the other Loan Documents.
(a) Financial Statements and Reports. Borrowers shall
promptly furnish to the Agent from time to time upon request
such information regarding the business and affairs and
financial condition of Borrowers, as the Agent may
reasonably request, and will furnish to the Agent:
(i) Annual Audited Financial Statements. As soon
as available, and in any event within one hundred and
twenty (120) days after the close of each fiscal year
beginning with the fiscal year ended December 31, 1999,
the annual audited consolidated Financial Statements of
Borrowers, prepared in accordance with GAAP accompanied
by an unqualified opinion rendered by an independent
accounting firm reasonably acceptable to the Agent;
(ii) Quarterly Financial Statements. As soon as
available, and in any event within forty-five (45) days
after the end of each calendar quarter of each year,
the quarterly unaudited consolidated and consolidating
Financial Statements of Borrowers prepared in
accordance with GAAP;
(iii) Report on Properties. As soon as
available and in any event on or before April 1 and
October 1 of each calendar year, and at such other
times as any Bank, in accordance with Section 7 hereof,
may request, the engineering reports required to be
furnished to the Agent under such Section 7 on the Oil
and Gas Properties;
(iv) Monthly Production Reports. Within forty-
five (45) days after the end of each month, a monthly
report, in form and substance satisfactory to the
Agent, indicating the immediately preceding month's
sales volume, sales revenues, production taxes,
operating expense and net operating income from or
attributable to the Oil and Gas Properties, and any
material gas balance liabilities of either Borrower,
with detailed calculations and worksheets, and, in the
case of take or pay or prepayment agreements during
such month, provide copies of the same, all in form and
substance satisfactory to Agent;
(v) Additional Information. Promptly upon
request of the Agent from time to time any additional
financial information or other information that the
Agent may reasonably request.
All such reports, information, balance sheets and Financial
Statements referred to in Subsection 12(a) above shall be in
such detail as the Agent may reasonably request and shall be
prepared in a manner consistent with the Financial
Statements.
(b) Certificates of Compliance. Concurrently with the
furnishing of the annual audited Financial Statements
pursuant to Subsection 12(a)(i) hereof and the quarterly
unaudited Financial Statements pursuant to Subsection
12(a)(ii) hereof for the months coinciding with the end of
each calendar quarter, Borrowers will furnish or cause to be
furnished to the Agent a certificate in the form of Exhibit
"C" attached hereto, signed by the President or Chief
Financial Officer of each Borrower, (i) stating that each
Borrower has fulfilled in all material respects its
obligations under the Notes and the Loan Documents,
including this Agreement, and that all representations and
warranties made herein and therein continue (except to the
extent they relate solely to an earlier date) to be true and
correct in all material respects (or specifying the nature
of any change), or if a Default has occurred, specifying the
Default and the nature and status thereof; (ii) to the
extent requested from time to time by the Agent,
specifically affirming compliance of each Borrower in all
material respects with any of its representations (except to
the extent they relate solely to an earlier date) or
obligations under said instruments; (iii) setting forth the
computation, in reasonable detail as of the end of each
period covered by such certificate, of compliance with
Sections 13(b), (c) and (d); and (iv) containing or
accompanied by such financial or other details, information
and material as the Agent may reasonably request to evidence
such compliance.
(c) Taxes and Other Liens. The Borrowers will pay and
discharge promptly all taxes, assessments and governmental
charges or levies imposed upon the Borrowers, or upon the
income or any assets or property of Borrowers, as well as
all claims of any kind (including claims for labor,
materials, supplies and rent) which, if unpaid, might become
a Lien or other encumbrance upon any or all of the assets or
property of Borrowers and which could reasonably be expected
to result in a Material Adverse Effect; provided, however,
that neither Borrower shall be required to pay any such tax,
assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings
diligently conducted, levy and execution thereon have been
stayed and continue to be stayed and if Borrowers shall have
set up adequate reserves therefor, if required, under GAAP.
(d) Compliance with Laws. Borrowers will observe and
comply, in all material respects, with all applicable laws,
statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, orders and
restrictions relating to environmental standards or controls
or to energy regulations of all federal, state, county,
municipal and other governments, departments, commissions,
boards, agencies, courts, authorities, officials and
officers, domestic or foreign.
(e) Further Assurances. Upon Agent's request, the
Borrowers will cure promptly any defects in the creation and
issuance of the Notes and the execution and delivery of the
Notes and the Loan Documents, including this Agreement. The
Borrowers at their sole expense will promptly execute and
deliver to Agent upon its reasonable request all such other
and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and
agreements in this Agreement, or to correct any omissions in
the Notes or more fully to state the obligations set out
herein.
(f) Performance of Obligations. The Borrowers will
pay the Notes and other obligations incurred by it hereunder
according to the reading, tenor and effect thereof and
hereof; and Borrowers will do and perform every act and
discharge all of the obligations provided to be performed
and discharged by the Borrowers under the Loan Documents,
including this Agreement, at the time or times and in the
manner specified.
(g) Insurance. The Borrowers now maintain and will
continue to maintain insurance with financially sound and
reputable insurers with respect to its assets against such
liabilities, fires, casualties, risks and contingencies and
in such types and amounts as is customary in the case of
persons engaged in the same or similar businesses and
similarly situated. Upon request of the Agent, the
Borrowers will furnish or cause to be furnished to the Agent
from time to time a summary of the respective insurance
coverage of Borrowers in form and substance satisfactory to
the Agent, and, if requested, will furnish the Agent copies
of the applicable policies. Upon demand by Agent any
insurance policies covering any such property shall be
endorsed (i) to provide that such policies may not be
canceled, reduced or affected in any manner for any reason
without fifteen (15) days prior notice to Agent, (ii) to
provide for insurance against fire, casualty and other
hazards normally insured against, in the amount of the full
value (less a reasonable deductible not to exceed amounts
customary in the industry for similarly situated business
and properties) of the property insured, and (iii) to
provide for such other matters as the Agent may reasonably
require. Additionally, the Borrowers shall at all times
maintain adequate insurance with respect to all of its other
assets and xxxxx in accordance with prudent business
practices.
(h) Accounts and Records. Borrowers will keep books,
records and accounts in which full, true and correct entries
will be made of all dealings or transactions in relation to
its business and activities, prepared in a manner consistent
with prior years, subject to changes suggested by such
Borrowers' auditors.
(i) Right of Inspection. Borrowers will permit any
officer, employee or agent of the Banks to examine
Borrowers' books, records and accounts, and take copies and
extracts therefrom, all at such reasonable times during
normal business hours and as often as the Banks may
reasonably request. The Banks will use best efforts to keep
all Confidential Information (as herein defined)
confidential and will not disclose or reveal the
Confidential Information or any part thereof other than (i)
as required by law, and (ii) to the Banks', and the Banks'
subsidiaries', Affiliates, officers, employees, legal
counsel and regulatory authorities or advisors to whom it is
necessary to reveal such information for the purpose of
effectuating the agreements and undertakings specified
herein or as otherwise required in connection with the
enforcement of the Banks' and the Agent's rights and
remedies under the Notes, this Agreement and the other Loan
Documents. As used herein, "Confidential Information" means
information about the Borrowers furnished by the Borrowers
to the Banks, but does not include information (i) which was
publicly known, or otherwise known to the Banks, at the time
of the disclosure, (ii) which subsequently becomes publicly
known through no act or omission by the Banks, or (iii)
which otherwise becomes known to the Banks, other than
through disclosure by the Borrowers.
(j) Notice of Certain Events. The Borrowers shall
promptly notify the Agent if Borrowers learn of the
occurrence of (i) any event which constitutes a Default or
Event of Default together with a detailed statement by
Borrowers of the steps being taken to cure such Event of
Default; (ii) any legal, judicial or regulatory proceedings
affecting Borrowers, or any of the assets or properties of
Borrowers which, if adversely determined, could reasonably
be expected to have a Material Adverse Effect; (iii) any
dispute between Borrowers and any governmental or regulatory
body or any other Person or entity which, if adversely
determined, might reasonably be expected to cause a Material
Adverse Effect; (iv) any event or circumstance which
requires the prepayment, purchase or redemption of any
outstanding public note issue, whether issued prior or
subsequent to the Effective Date, with a detailed statement
of steps being taken to cure such Default or Event of
Default, or (v) any other matter which in Borrowers'
reasonable opinion could have a Material Adverse Effect.
(k) ERISA Information and Compliance. The Borrowers
will promptly furnish to the Agent immediately upon becoming
aware of the occurrence of any "reportable event", as such
term is defined in Section 4043 of ERISA, or of any
"prohibited transaction", as such term is defined in Section
4975 of the Internal Revenue Code of 1954, as amended, in
connection with any Plan or any trust created thereunder, a
written notice signed by the chief financial officer of
Borrowers specifying the nature thereof, what action
Borrowers are taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto.
(l) Environmental Reports and Notices. The Borrowers
will deliver to the Agent (i) promptly upon its becoming
available, one copy of each report sent by Borrowers to any
court, governmental agency or instrumentality pursuant to
any Environmental Law, (ii) notice, in writing, promptly
upon Borrowers' receipt of notice or otherwise learning of
any claim, demand, action, event, condition, report or
investigation indicating any potential or actual liability
arising in connection with (x) the non-compliance with or
violation of the requirements of any Environmental Law which
reasonably could be expected to have a Material Adverse
Effect; (y) the release or threatened release of any toxic
or hazardous waste into the environment which reasonably
could be expected to have a Material Adverse Effect or which
release Borrower would have a duty to report to any court or
government agency or instrumentality, or (iii) the existence
of any Environmental Lien on any properties or assets of
Borrowers, and Borrowers shall immediately deliver a copy of
any such notice to Agent.
(m) Compliance and Maintenance. The Borrowers will
(i) observe and comply in all material respects with all
Environmental Laws; (ii) except as provided in Subsections
12(o) and 12(p) below, maintain the Oil and Gas Properties
and other assets and properties in good and workable
condition at all times and make all repairs, replacements,
additions, betterments and improvements to the Oil and Gas
Properties and other assets and properties as are needed and
proper so that the business carried on in connection
therewith may be conducted properly and efficiently at all
times in the opinion of the Borrowers exercised in good
faith; (iii) take or cause to be taken whatever actions are
necessary or desirable to prevent an event or condition of
default by Borrowers under the provisions of any gas
purchase or sales contract or any other contract, agreement
or lease comprising a part of the Oil and Gas Properties or
other collateral security hereunder which default could
reasonably be expected to result in a Material Adverse
Effect; and (iv) furnish Agent upon request evidence
satisfactory to Agent that there are no Liens, claims or
encumbrances on the Oil and Gas Properties, except
laborers', vendors', repairmen's, mechanics', worker's, or
materialmen's liens arising by operation of law or incident
to the construction or improvement of property if the
obligations secured thereby are not yet due or are being
contested in good faith by appropriate legal proceedings or
Permitted Liens.
(n) Operation of Properties. Except as provided in
Subsection 12(p) and (q) below, the Borrowers will operate,
or use reasonable efforts to cause to be operated, all Oil
and Gas Properties in a careful and efficient manner in
accordance with the practice of the industry and in
compliance in all material respects with all applicable
laws, rules, and regulations, and in compliance in all
material respects with all applicable proration and
conservation laws of the jurisdiction in which the
properties are situated, and all applicable laws, rules, and
regulations, of every other agency and authority from time
to time constituted to regulate the development and
operation of the properties and the production and sale of
hydrocarbons and other minerals therefrom; provided,
however, that the Borrowers shall have the right to contest
in good faith by appropriate proceedings, the applicability
or lawfulness of any such law, rule or regulation and
pending such contest may defer compliance therewith, as long
as such deferment shall not subject the properties or any
part thereof to foreclosure or loss.
(o) Compliance with Leases and Other Instruments. The
Borrowers will pay or cause to be paid and discharge all
rentals, delay rentals, royalties, production payment, and
indebtedness required to be paid by Borrowers (or required
to keep unimpaired in all material respects the rights of
Borrowers in the Oil and Gas Properties) accruing under, and
perform or cause to be performed in all material respects
each and every act, matter, or thing required of Borrowers
by each and all of the assignments, deeds, leases,
subleases, contracts, and agreements in any way relating to
Borrowers or any of the Oil and Gas Properties and do all
other things necessary of Borrowers to keep unimpaired in
all material respects the rights of Borrowers thereunder and
to prevent the forfeiture thereof or default thereunder;
provided, however, that nothing in this Agreement shall be
deemed to require Borrowers to perpetuate or renew any oil
and gas lease or other lease by payment of rental or delay
rental or by commencement or continuation of operations nor
to prevent Borrowers from abandoning or releasing any oil
and gas lease or other lease or well thereon when, in any of
such events, in the opinion of Borrowers exercised in good
faith, it is not in the best interest of the Borrowers to
perpetuate the same.
(p) Certain Additional Assurances Regarding
Maintenance and Operations of Properties. With respect to
those Oil and Gas Properties which are being operated by
operators other than the Borrowers, the Borrowers shall not
be obligated to perform any undertakings contemplated by the
covenants and agreement contained in Subsections 12(o) or
12(p) hereof which are performable only by such operators
and are beyond the control of the Borrowers; however, the
Borrowers agree to promptly take all reasonable actions
available under any operating agreements or otherwise to
bring about the performance of any such material
undertakings required to be performed thereunder.
(q) Title Matters. Within thirty (30) days after the
Effective Date with respect to the Oil and Gas Properties
listed on Schedule "8" hereto, Borrowers shall furnish Agent
with title opinions and/or title information reasonably
satisfactory to Agent showing defensible title of the
applicable Borrower to such Oil and Gas Properties subject
only to the Permitted Liens. As to any Oil and Gas
Properties hereafter mortgaged to Agent, Borrowers will
promptly (but in no event more than thirty (30) days
following such mortgaging), furnish Agent with title
opinions and/or title information reasonably satisfactory to
Agent covering a sufficient value of such Oil and Gas
Properties to maintain the required level of title coverage
at 80% of the Engineered Value of the total Oil and Gas
Properties covered by Security Instruments. Said title
information shall show defensible title of the applicable
Borrower to such Oil and Gas Properties subject only to
Permitted Liens.
(r) Curative Matters. Within sixty (60) days after
the Effective Date with respect to matters listed on
Schedule "9" and, thereafter, within sixty (60) days after
receipt by Borrowers from Agent or its counsel of written
notice of title defects the Agent reasonably requires to be
cured, Borrowers shall either (i) provide such curative
information, in form and substance satisfactory to Agent, or
(ii) substitute Oil and Gas Properties of value and quality
satisfactory to the Agent for all of Oil and Gas Properties
for which such title curative was requested but upon which
Borrowers elected not to provide such title curative
information, and, within sixty (60) days of such
substitution, provide title opinions or title information
satisfactory to the Agent covering the Oil and Gas
Properties so substituted.
(s) Change of Principal Place of Business. Borrowers
shall give Agent at least thirty (30) days prior written
notice of its intention to move its principal place of
business from the address set forth in Section 17 hereof.
(t) Operating Accounts. Borrowers shall establish and
maintain with Agent one or more operating accounts (the
"Operating Accounts"), the maintenance of each of which
shall be subject to such rules and regulations as the Agent
shall from time to time specify. Such Operating Accounts
shall be the primary oil and gas operating account of the
Borrowers and such accounts shall be maintained with the
Agent until all amounts due hereunder and under the Notes
have been paid in full. The Borrowers hereby grant a
security interest to Banks in and to the Operating Accounts
and all checks, drafts and other items ever received by any
Bank for deposit therein. If any Event of Default shall
occur and be continuing, Agent shall have the immediate
right, without prior notice or demand, to take and apply
against the Borrowers' obligations hereunder any and all
funds legally and beneficially owned by the Borrowers then
or thereafter on deposit in the Operating Accounts for the
ratable benefit of the Banks.
(u) Additional Property. Borrowers shall, within five
(5) days after receiving a written request thereof from
Agent, execute and deliver, or cause to be executed and
delivered, such mortgages, deeds of trust, instruments,
security agreements, assignments, financing statements, and
other documents, as may be reasonably necessary in the
opinion of Agent and Agent's counsel, to grant Agent valid
first mortgage liens and first, prior and perfected security
interests in and to additional oil and gas properties of
such value as Agent shall deem necessary to provide
additional security for full and prompt payment of all
amounts owed hereunder and under the Notes. At Agent's
option and on request therefor, Borrowers will furnish Agent
title opinions covering such additional oil and gas
properties prepared by counsel not employed by Borrowers (or
such other evidence to Borrowers' ownership thereof and
their revenue interest therein or attributable thereto as
Agent may reasonably require), in form and substance
satisfactory to Agent, subject only to title defects
approved by Agent.
(v) Eagle Chief Gas Gathering System. Substantially
maintain the current levels of throughput from xxxxx
directly connected to the Eagle Chief Gas Gathering System.
(w) Letters In Lieu of Transfer Orders. The Borrowers
shall promptly upon the reasonable request of the Agent, at
any time and from time to time and without limitation on the
rights of Agent in accordance with Section 6(c) hereof,
execute such letters in lieu of transfer orders, in addition
to the letters signed by the Borrowers and delivered to the
Agent in satisfaction of the conditions set forth in
Sections 6(c) and 11(a)(x) hereof, as are necessary or
appropriate to transfer and deliver to the Agent for the
benefit of the Banks proceeds from or attributable to any
Oil and Gas Property or other Collateral; provided, however,
that such letters shall only be delivered to the addressees
thereof in accordance with the provision of Section 6(c)
hereof.
(x) Division Orders. The Borrowers shall promptly
upon request by the Agent at any time and from time to time
following the occurrence of any Event of Default and without
limitations on the rights of the Agent in accordance with
Section 6(c) hereof, execute such division and/or transfer
orders as are necessary or appropriate to transfer and
deliver to the Agent for the ratable benefit of the Banks
proceeds from the sale of hydrocarbon production from or
attributable to any Oil and Gas Property; provided, however,
that the Banks shall only send or deliver such division
orders and/or transfer orders in accordance with Section
6(c) hereof.
(y) Take or Pay Agreement. The Borrowers shall, in
connection with their delivery of the engineering reports
required by Sections 7 and 12 hereof, deliver to Agent
copies of contracts or other agreements concerning "take or
pay" and "prepayment", and provide notice of all gas balance
liabilities of the Borrowers.
Negative Covenants. A deviation from the provisions of
this Section 13 shall not constitute a Default or an Event of
Default under this Agreement if such deviation is consented to in
writing by the Majority Banks prior to the date of deviation.
The Borrowers will at all times comply with the covenants
contained in this Section 13 from the date hereof and for so long
as the Revolving Commitment is in existence or any amount is owed
to the Agent or the Banks under this Agreement or the other Loan
Documents.
(a) Negative Pledge. Neither Borrower shall, without
the prior written consent of the Majority Banks:
(i) create, incur, assume or permit to exist any
Lien, security interest or other encumbrance on any of
its assets or properties except Permitted Liens; or
(ii) sell, lease, transfer or otherwise dispose
of, in any fiscal year, any of its assets except for
(A) sales, leases, transfers or other dispositions made
in the ordinary course of Borrowers' oil and gas
businesses, (B) sales made with the consent of Majority
Banks which are made pursuant to, and in full
compliance with, Section 12(r) hereof; and (C) sales,
leases or transfers or other dispositions made by
Borrowers during any fiscal year, one or any series of
transactions, the aggregate value of which does not
exceed $5,000,000.00 in any such year if, and only if,
such sale, lease, transfer or other disposition does
not result in the occurrence of a Default or Event of
Default;
(b) Current Ratio. Borrowers shall not allow their
ratio of consolidated Current Assets to consolidated Current
Liabilities to be less than 1.0 to 1.0 as of the end of any
fiscal quarter.
(c) Ratio of Debt to Minimum Tangible Net Worth. The
Borrowers will not allow their ratio of consolidated Debt to
consolidated Tangible Net Worth to ever be greater than 1.0
to 1.0 as of the end of any fiscal quarter. For the purposes
of this ratio, "Debt" is calculated as Total Liabilities
less the Senior Subordinated Notes.
(d) Minimum Debt Service Coverage Ratio. Beginning
with the calendar quarter ending June 30, 2000, the
Borrowers will not allow their consolidated Debt Service
Coverage Ratio to ever be less than 1.20 to 1.0.
(e) Consolidations and Mergers. Neither Borrower will
consolidate or merge with or into any other Person, except
that either Borrower may merge with another Person if such
Borrower is the surviving entity in such merger and if,
after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing.
(f) Debts, Guaranties and Other Obligations. Without
the consent of Majority Banks, neither Borrower will incur,
create, assume, suffer to exist or in any manner become or
be liable in respect of any indebtedness, nor will either
Borrower guarantee or otherwise in any manner become or be
liable in respect of any indebtedness, liabilities or other
obligations of any other person or entity, whether by
agreement to purchase the indebtedness of any other person
or entity or agreement for the furnishing of funds to any
other person or entity through the purchase or lease of
goods, supplies or services (or by way of stock purchase,
capital contribution, advance or loan) for the purpose of
paying or discharging the indebtedness of any other person
or entity, or otherwise, except that the foregoing
restrictions shall not apply to:
(i) the Notes and any renewal or increase
thereof, or other indebtedness of the Borrowers
heretofore disclosed to Banks in the Borrowers'
Financial Statements or on Schedule "3" hereto; or
(ii) taxes, assessments or other government
charges which are not yet due or are being contested in
good faith by appropriate action promptly initiated and
diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefor and levy
and execution thereon have been stayed and continue to
be stayed; or
(iii) indebtedness (other than in connection
with a loan or lending transaction) incurred in the
ordinary course of business, including, but not limited
to indebtedness for drilling, completing, leasing and
reworking oil and gas xxxxx or the treatment,
distribution, transportation of sale of production
therefrom and loans or lending transactions in which
the outstanding principal balance does not exceed
$500,000 at any time and which does not result in the
imposition of a Lien other than a Permitted Lien; or;
or
(iv) indebtedness issued pursuant to an indenture
providing for the sale of notes to the public not
exceeding the face amount of $150,000,000.00, which
indebtedness (A) is expressly subordinated (to the
satisfaction of Majority Banks) to all obligations owed
the Banks hereunder and under the Notes, (B) is issued
by the Borrowers or an Affiliate of the Borrowers,
within one hundred eighty (180) days of the Effective
Date, and (C) the net proceeds of which are used in
part to repay or reduce the outstanding balance on the
Notes, said indebtedness to be approved in advance by
Majority Banks, which approval will not be unreasonably
withheld; or
(v) other indebtedness owed to Affiliates of
Borrowers which is expressly made subordinate to the
indebtedness owed hereunder and under the Notes, which
subordination is approved in advance by Majority Banks,
which approval will not be unreasonably withheld; or
(vi) any renewals or extensions of (but not
increases in) any of the foregoing.
(g) Dividends or Distributions. Neither Borrower will
declare, pay or make, whether in cash or property (excluding
stock dividends), or set aside or apply any money or assets
to pay or make any dividend or distribution during any
fiscal year except the foregoing restriction shall not apply
to (i) cash dividends paid by Resources to its shareholders
in amounts equal to each such shareholders' allocable share
of federal or state income taxes attributable to Resources
taxable net income and (ii) dividends made by Gas to
Resources. Provided, however, that no dividend shall be
made by either Borrower if an Event of Default has occurred
and is continuing or would occur as a result of the making
of such dividends. Resources shall provide the Agent at
least annually with sufficient information from which Agent
can verify all shareholders' allocable share of such income
taxes.
(h) Loans and Advances. Neither Borrower shall make
or permit to remain outstanding any loans or advances made
by either Borrower to or in any person or entity, except
that the foregoing restriction shall not apply to:
(i) loans or advances to any person, the material
details of which have been set forth in the Financial
Statements of the Borrowers heretofore furnished to
Banks; or
(ii) advances made in the ordinary course of
Borrowers' oil and gas business; or
(iii) loans or advances among Borrowers; or
(iv) loans or advances not to exceed $2,000,000 in
the aggregate to Affiliates of the Borrowers.
(i) Sale or Discount of Receivables. Neither Borrower
will discount or sell with recourse, or sell for less than
the greater of the face or market value thereof, any of its
notes receivable or accounts receivable except for such
discounts or sales not exceeding $250,000 in any fiscal
year.
(j) Nature of Business. Neither Borrower will permit
any material change to be made in the character of its
business as carried on at the date hereof.
(k) Transactions with Affiliates. Neither Borrower
will enter into any transaction with any Affiliate (other
than Borrower), except transactions upon terms that are no
less favorable to it than would be obtained in a transaction
negotiated at arm's length with an unrelated third party.
(l) Hedging Transactions. Neither Borrower will enter
into any transaction providing (i) for the hedging, forward
sale, swap or any deviation thereof of crude oil or natural
gas or other commodities, or (ii) for a swap, collar, floor,
cap, option, corridor, or other contract which is intended
to reduce or eliminate the risk of fluctuation in interest
rates, as such terms are referred to in the capital markets,
except the foregoing prohibitions shall not apply to (x)
transactions consented to in writing by the Banks which are
on terms acceptable to the Banks, or (y) Pre-Approved
Contracts. The term "Pre-Approved Contracts" as used herein
shall mean any contract or agreement (i) to hedge, forward,
sell or swap crude oil or natural gas or otherwise sell up
to 50% of the Borrowers' monthly production forecast for all
of Borrowers', proved and producing oil and gas properties
for the period covered by the proposed hedging transaction,
and (ii) with a maturity of twelve (12) months or less.
(m) Investments. Neither Borrower shall make any
investments in any person or entity, except such restriction
shall not apply to:
(i) investments and direct obligations of the
United States of America or any agency thereof;
(ii) investments in certificates of deposit issued
by the Banks or certificates of deposit with maturities
of less than one year, issued by other commercial banks
in the United States having capital and surplus in
excess of $100,000,000.00; or
(iii) investments in money market funds, LIBOR
investment accounts and other similar accounts at Agent
or such investment with maturities of less than ninety
(90) days at other commercial banks having capital and
surplus in excess of $100,000,000.00; or
(iv) investments in oil and gas properties; or
(v) acquisitions of controlling interests in
entities engaged primarily in owning and/or operating
oil and gas properties not exceeding in the aggregate
the sum of $5,000,000.00 inclusive of any amount
invested pursuant to Section 13(m)(vi) above; or
(vi) investments by Borrowers and their
Subsidiaries made in third-party entities by way of
capital contributions, loans or advances which do not
exceed $250,000 in the aggregate outstanding at any
time.
(n) Amendment to Articles of Incorporation or Bylaws.
Neither Borrower will permit any amendment to, or any
alteration of, its Articles of Incorporation or Bylaws,
which amendment or alteration could reasonably be expected
to have a Material Adverse Effect.
(o) Leases. With the exception of the lease
agreement, as it currently exists, with Xxxxxx Xxxx
regarding The Continental Center North Building located in
Enid, Oklahoma, the Borrowers will not enter into or agree
to enter into, any rental or lease agreement resulting or
which would result in aggregate rental or lease payments of
the Borrowers exceeding $250,000 in the aggregate in any
fiscal year of the Borrowers under all rental or lease
agreement under which either Borrower is a lessee of the
property or assets covered thereby; provided, however, that
the foregoing restriction shall not apply to oil, gas and
mineral leases or permits or similar agreements entered into
in the ordinary course of business or orders of any
governmental authority adjudicating the rights or pooling
the interests of the owners of oil and gas properties or
lease agreements in effect as of the date hereof.
(p) Senior Subordinated Notes. Notwithstanding any
other provision contained in the Agreement to the contrary,
the Borrowers shall not purchase, repurchase or otherwise
acquire Senior Subordinated Notes in excess of
$15,000,000.00 during the term hereof, without prior written
approval of the Banks.
Events of Default. Any one or more of the following
events shall be considered an "Event of Default" as that term is
used herein:
(a) The Borrowers shall fail to pay when due or
declared due the principal of, and the interest on, the
Notes, or any fee or any other indebtedness of the Borrowers
incurred pursuant to this Agreement or any other Loan
Document; or
(b) Any representation or warranty made by Borrowers
under this Agreement, or in any certificate or statement
furnished or made to the Banks pursuant hereto, or in
connection herewith, or in connection with any document
furnished hereunder, shall prove to be untrue in any
material respect as of the date on which such representation
or warranty is made (or deemed made), or any representation,
statement (including financial statements), certificate,
report or other data furnished or to be furnished or made by
Borrowers under any Loan Document, including this Agreement,
proves to have been untrue in any material respect, as of
the date as of which the facts therein set forth were stated
or certified; or
(c) Default shall be made in the due observance or
performance of any of the covenants or agreements of the
Borrowers contained in the Loan Documents, including this
Agreement (excluding covenants contained in Section 13 of
the Agreement for which there is no cure period), and such
default shall continue for more than thirty (30) days after
notice thereof from Agent to Borrowers; or
(d) Default shall be made in the due observance or
performance of the covenants of Borrowers contained in
Section 13 of this Agreement; or
(e) Default shall be made in respect of any obligation
for borrowed money in excess of $250,000, other than the
Notes (including, but not limited to, the Senior
Subordinated Notes) for which Borrowers are liable
(directly, by assumption, as guarantor or otherwise), or any
obligations secured by any mortgage, pledge or other
security interest, lien, charge or encumbrance with respect
thereto, on any asset or property of Borrowers in respect of
any agreement relating to any such obligations unless
Borrowers are not liable for same (i.e., unless remedies or
recourse for failure to pay such obligations is limited to
foreclosure of the collateral security therefor), and if
such default shall continue beyond the applicable grace
period, if any; or
(f) Borrowers shall commence a voluntary case or other
proceedings 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 an appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action
authorizing the foregoing; or
(g) An involuntary case or other proceeding, shall be
commenced against Borrowers seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or 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 Borrowers under
the federal bankruptcy laws as now or hereinafter in effect;
or
(h) A final judgment or order for the payment of money
in excess of $1,500,000 (or judgments or orders aggregating
in excess of $1,500,000) shall be rendered against Borrowers
and such judgments or orders shall continue unsatisfied and
unstayed for a period of thirty (30) days; or
(i) In the event the Total Outstandings shall at any
time exceed the Borrowing Base established for the Revolving
Notes, and the Borrowers shall fail to comply with the
provisions of Section 9(b) hereof; or
(j) A Change of Management shall occur; or
(k) Any Security Instrument shall for any reason not,
or cease to, create valid and perfected first-priority Liens
against the Collateral purportedly covered thereby and such
occurrence would have a Material Adverse Effect; or
(l) The good faith determination by the Agent that a
Material Adverse Effect has occurred or will occur or that
the value of the Collateral has, or will be, materially
decreased.
Upon occurrence of any Event of Default specified in
Subsections 14(f) and (g) hereof, the entire principal
amount due under the Notes and all interest then accrued
thereon, and any other liabilities of the Borrowers
hereunder, shall become immediately due and payable all
without notice and without presentment, demand, protest,
notice of protest or dishonor or any other notice of default
of any kind, all of which are hereby expressly waived by the
Borrowers. In any other Event of Default, the Agent, upon
request of Majority Banks, shall deliver written notice of
such Event of Default and offer the Borrowers thirty (30)
days to cure said Event of Default to Agent's satisfaction.
In the event the Event of Default is not cured after the
expiration of this "cure" period, the Agent, upon request of
Majority Banks, shall by notice to the Borrowers declare the
principal of, and all interest then accrued on, the Notes
and any other liabilities hereunder to be forthwith due and
payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other notice
of any kind, all of which the Borrowers hereby expressly
waive, anything contained herein or in the Note to the
contrary notwithstanding. Nothing contained in this Section
14 shall be construed to limit or amend in any way the
Events of Default enumerated in the Note, or any other
document executed in connection with the transaction
contemplated herein.
Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any
time and from time to time, without notice to the Borrowers
(any such notice being expressly waived by the Borrowers),
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 any of the
Banks to or for the credit or the account of the Borrowers
against any and all of the indebtedness of the Borrowers
under the Notes and the Loan Documents, including this
Agreement, irrespective of whether or not the Banks shall
have made any demand under the Loan Documents, including
this Agreement or the Notes and although such indebtedness
may be unmatured. Any amount set-off by any of the Banks
shall be applied against the indebtedness owed the Banks by
the Borrowers pursuant to this Agreement and the Notes. The
Banks agree promptly to notify the Borrowers after any such
setoff and application, provided that the failure to give
such notice shall not affect the validity of such set-off
and application. The rights of the Bank under this Section
are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Banks
may have.
The Agent and the Banks.
(a) Appointment and Authorization. Each Bank hereby
appoints Agent as its nominee and agent, in its name and on
its behalf: (i) to act as nominee for and on behalf of such
Bank in and under all Loan Documents; (ii) to arrange the
means whereby the funds of Banks are to be made available to
the Borrowers under the Loan Documents; (iii) to take such
action as may be requested by any Bank under the Loan
Documents (when such Bank is entitled to make such request
under the Loan Documents); (iv) to receive all documents and
items to be furnished to Banks under the Loan Documents; (v)
to be the secured party, mortgagee, beneficiary, and similar
party in respect of, and to receive, as the case may be, any
collateral for the benefit of Banks; (vi) to promptly
distribute to each Bank all material information, requests,
documents and items received from the Borrowers under the
Loan Documents; (vii) to promptly distribute to each Bank
such Bank's Pro Rata Part of each payment or prepayment
(whether voluntary, as proceeds of insurance thereon, or
otherwise) in accordance with the terms of the Loan
Documents and (viii) to deliver to the appropriate Persons
requests, demands, approvals and consents received from
Banks. Each Bank hereby authorizes Agent to take all
actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof
or thereof, together with all other powers reasonably
incidental thereto. With respect to its commitments
hereunder and the Notes issued to it, Agent and any
successor Agent shall have the same rights under the Loan
Documents as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include Agent
and any successor Agent in its capacity as a Bank. Agent
and any successor Agent and its Affiliates may accept
deposits from, lend money to, act as trustee under
indentures of and generally engage in any kind of business
with the Borrowers, and any person which may do business
with the Borrowers, all as if Agent and any successor Agent
was not Agent hereunder and without any duty to account
therefor to the Banks; provided that, if any payments in
respect of any property (or the proceeds thereof) now or
hereafter in the possession or control of Agent which may be
or become security for the obligations of the Borrowers
arising under the Loan Documents by reason of the general
description of indebtedness secured or of property contained
in any other agreements, documents or instruments related to
any such other business shall be applied to reduction of the
obligations of the Borrowers arising under the Loan
Documents, then each Bank shall be entitled to share in such
application according to its pro rata part thereof. Each
Bank, upon request of any other Bank, shall disclose to all
other Banks all indebtedness and liabilities, direct and
contingent, of the Borrowers to such Bank as of the time of
such request.
(b) Note Holders. From time to time as other Banks
become a party to this Agreement, Agent shall obtain
execution by the Borrowers of additional Notes in amounts
representing the Commitment of each such new Bank, up to an
aggregate face amount of all Revolving Notes not exceeding
$25,000,000.00. The obligation of such Bank shall be
governed by the provisions of this Agreement, including but
not limited to, the obligations specified in Section 2
hereof. From time to time, Agent may require that the Banks
exchange their Notes for newly issued Notes to better
reflect the Commitments of the Banks. Agent may treat the
payee of any Note as the holder thereof until written notice
of transfer has been filed with it, signed by such payee and
in form satisfactory to Agent.
(c) Consultation with Counsel. Banks agree that Agent
may consult with legal counsel selected by Agent and shall
not be liable for any action taken or suffered in good faith
by it in accordance with the advice of such counsel.
(d) Documents. Agent shall not be under a duty to
examine or pass upon the validity, effectiveness,
enforceability, genuineness or value of any of the Loan
Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Agent shall
be entitled to assume that the same are valid, effective,
enforceable and genuine and what they purport to be.
(e) Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving written notice
thereof to Banks and the Borrowers, and Agent may be removed
at any time with or without cause by all Banks. If no
successor Agent has been so appointed by all Banks (and
approved by the Borrowers) and has accepted such appointment
within 30 days after the retiring Agent's giving of notice
of resignation or removal of the retiring Agent, then the
retiring Agent may, on behalf of Banks, appoint a successor
Agent. Any successor Agent must be approved by Borrowers,
which approval will not be unreasonably withheld. Upon the
acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties
of the retiring Agent, and the retiring Agent, shall be
discharged from its duties and obligations hereunder. After
any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 15 shall continue in
effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Agent. To
be eligible to be an Agent hereunder the party serving, or
to serve, in such capacity must own a Pro Rata Part of the
Commitments equal to the level of Commitment required to be
held by any Bank pursuant to Section 28 hereof.
(f) Responsibility of Agent. It is expressly
understood and agreed that the obligations of Agent under
the Loan Documents are only those expressly set forth in the
Loan Documents as to each and that Agent, shall be entitled
to assume that no Default or Event of Default has occurred
and is continuing, unless Agent has actual knowledge of such
fact or has received notice from a Bank or the Borrowers
that such Bank or the Borrowers considers that a Default or
an Event of Default has occurred and is continuing and
specifying the nature thereof. Neither Agent nor any of its
directors, officers, attorneys or employees shall be liable
for any action taken or omitted to be taken by them under or
in connection with the Loan Documents, except for its or
their own gross negligence or willful misconduct. Agent
shall not incur liability under or in respect of any of the
Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed
by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything which
it may do or refrain from doing in the reasonable exercise
of its judgment, or which may seem to it to be necessary or
desirable.
Agent shall not be responsible to Banks for any of the
Borrowers' recitals, statements, representations or
warranties contained in any of the Loan Documents, or in any
certificate or other document referred to or provided for
in, or received by any Bank under, the Loan Documents, or
for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of or any of the Loan
Documents or for any failure by the Borrowers to perform any
of its obligations hereunder or thereunder. Agent may
employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it
or its authorized agents, for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with
reasonable care.
The relationship between Agent and each Bank is only
that of agent and principal and has no fiduciary aspects.
Nothing in the Loan Documents or elsewhere shall be
construed to impose on Agent any duties or responsibilities
other than those for which express provision is therein
made. In performing its duties and functions hereunder,
Agent does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation or
responsibility toward or any relationship of agency or trust
with or for the Borrower or any of its beneficiaries or
other creditors. As to any matters not expressly provided
for by the Loan Documents, Agent shall not be required to
exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon
the instructions of all Banks and such instructions shall be
binding upon all Banks and all holders of the Notes;
provided, however, that Agent shall not be required to take
any action which is contrary to the Loan Documents or
applicable law.
Agent shall have the right to exercise or refrain from
exercising, without notice or liability to the Banks, any
and all rights afforded to Agent by the Loan Documents or
which Agent may have as a matter of law; provided, however,
Agent shall not (i) except as provided in Section 7(b)
hereof, without the consent of Majority Banks designate the
amount of the Borrowing Base or the Monthly Commitment
Reduction or (ii) without the consent of all Majority Banks,
take any other action with regard to amending the Loan
Documents, waiving any default under the Loan Documents or
taking any other action with respect to the Loan Documents
which requires consent of all Banks. Provided further,
however, that no amendment, waiver, or other action shall be
effected pursuant to the preceding clause (ii) without the
consent of all Banks which: (i) would increase the Borrowing
Base or decrease the Monthly Commitment Reduction, (ii)
would reduce any fees hereunder, or the principal of, or the
interest on, any Bank's Note or Notes, (iii) would postpone
any date fixed for any payment of any fees hereunder, or any
principal or interest of any Bank's Note or Notes, (iv)
would materially increase any Bank's obligations hereunder
or would materially alter Agent's obligations to any Bank
hereunder, (v) would release Borrowers from their obligation
to pay any Bank's Note or Notes, (vi) release any of the
Collateral, (vii) would change the definition of all Banks,
(viii) would amend, modify or change any provision of this
Agreement requiring the consent of all the Banks, (ix) would
waive any of the conditions precedent to the Effective Date
or the making of any Loan or issuance of any Letter of
Credit or (x) would extend the Revolving Maturity Date or
(xi) would amend this sentence or the previous sentence.
Agent shall not have liability to Banks for failure or delay
in exercising any right or power possessed by Agent pursuant
to the Loan Documents or otherwise unless such failure or
delay is caused by the gross negligence of the Agent, in
which case only the Agent responsible for such gross
negligence shall have liability therefor to the Banks.
(g) Independent Investigation. Each Bank severally
represents and warrants to Agent that it has made its own
independent investigation and assessment of the financial
condition and affairs of the Borrowers in connection with
the making and continuation of its participation hereunder
and has not relied exclusively on any information provided
to such Bank by Agent in connection herewith, and each Bank
represents, warrants and undertakes to Agent that it shall
continue to make its own independent appraisal of the credit
worthiness of the Borrowers while the Notes are outstanding
or its commitments hereunder are in force. Agent shall not
be required to keep itself informed as to the performance or
observance by the Borrowers of this Agreement or any other
document referred to or provided for herein or to inspect
the properties or books of the Borrowers. Other than as
provided in this Agreement, Agent shall not have any duty,
responsibility or liability to provide any Bank with any
credit or other information concerning the affairs,
financial condition or business of the Borrowers which may
come into the possession of Agent.
(h) Indemnification. Banks agree to indemnify Agent,
ratably according to their respective Commitments on a Pro
Rata basis, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any proper and
reasonable kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent in any way
relating to or arising out of the Loan Documents or any
action taken or omitted by Agent under the Loan Documents,
provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful
misconduct. Each Bank shall be entitled to be reimbursed by
the Agent for any amount such Bank paid to Agent under this
Section 15(h) to the extent the Agent has been reimbursed
for such payments by the Borrowers or any other Person. The
parties intend for the provisions of this Section to apply
to and protect the Agent from the consequences of any
liability including strict liability imposed or threatened
to be imposed on Agent as well as from the consequences of
its own negligence, whether or not that negligence is the
sole, contributing or concurring cause of any such
liability.
(i) Benefit of Section 15. The agreements contained
in this Section 15 are solely for the benefit of Agent and
the Banks and are not for the benefit of, or to be relied
upon by, the Borrowers, any affiliate of the Borrowers or
any other person.
(j) Pro Rata Treatment. Subject to the provisions of
this Agreement, each payment (including each prepayment) by
the Borrowers and collection by Banks (including offsets) on
account of the principal of and interest on the Notes and
fees provided for in this Agreement, payable by the
Borrowers shall be made Pro Rata; provided, however, in the
event that any Defaulting Bank shall have failed to make an
Advance as contemplated under Section 3 hereof and Agent or
another Bank or Banks shall have made such Advance, payment
received by Agent for the account of such Defaulting Bank or
Banks shall not be distributed to such Defaulting Bank or
Banks until such Advance or Advances shall have been repaid
in full to the Bank or Banks who funded such Advance or
Advances.
(k) Assumption as to Payments. Except as specifically
provided herein, unless Agent shall have received notice
from the Borrowers prior to the date on which any payment is
due to Banks hereunder that the Borrowers will not make such
payment in full, Agent may, but shall not be required to,
assume that the Borrowers have made such payment in full to
Agent on such date and Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If
and to the extent the Borrowers shall not have so made such
payment in full to Agent, each Bank shall repay to Agent
forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date
such amount is distributed to such Bank until the date such
Bank repays such amount to Agent, at the interest rate
applicable to such portion of the Revolving Loan.
(l) Other Financings. Without limiting the rights to
which any Bank otherwise is or may become entitled, such
Bank shall have no interest, by virtue of this Agreement or
the Loan Documents, in (a) any present or future loans from,
letters of credit issued by, or leasing or other financial
transactions by, any other Bank to, on behalf of, or with
the Borrowers (collectively referred to herein as "Other
Financings") other than the obligations hereunder; (b) any
present or future guarantees by or for the account of the
Borrowers which are not contemplated by the Loan Documents;
(c) any present or future property taken as security for any
such Other Financings; or (d) any property now or hereafter
in the possession or control of any other Bank which may be
or become security for the obligations of the Borrowers
arising under any loan document by reason of the general
description of indebtedness secured or property contained in
any other agreements, documents or instruments relating to
any such Other Financings.
(m) Interests of Banks. Nothing in this Agreement
shall be construed to create a partnership or joint venture
between Banks for any purpose. Agent, Banks and the
Borrowers recognize that the respective obligations of Banks
under the Revolving Commitment shall be several and not
joint and that neither Agent nor any of Banks shall be
responsible or liable to perform any of the obligations of
the other under this Agreement. Each Bank is deemed to be
the owner of an undivided interest in and to all rights,
titles, benefits and interests belonging and accruing to
Agent under the Security Instruments, including, without
limitation, liens and security interests in any collateral,
fees and payments of principal and interest by the Borrowers
under the Revolving Commitment on a Pro Rata basis. Each
Bank shall perform all duties and obligations of Banks under
this Agreement in the same proportion as its ownership
interest in the Loans outstanding at the date of
determination thereof.
(n) Investments. Whenever Agent in good faith
determines that it is uncertain about how to distribute to
Banks any funds which it has received, or whenever Agent in
good faith determines that there is any dispute among the
Banks about how such funds should be distributed, Agent may
choose to defer distribution of the funds which are the
subject of such uncertainty or dispute. If Agent in good
faith believes that the uncertainty or dispute will not be
promptly resolved, or if Agent is otherwise required to
invest funds pending distribution to the Banks, Agent may
invest such funds pending distribution (at the risk of the
Borrowers). All interest on any such investment shall be
distributed upon the distribution of such investment and in
the same proportions and to the same Persons as such
investment. All monies received by Agent for distribution
to the Banks (other than to the Person who is Agent in its
separate capacity as a Bank) shall be held by the Agent
pending such distribution solely as Agent for such Banks,
and Agent shall have no equitable title to any portion
thereof.
Exercise of Rights. No failure to exercise, and no
delay in exercising, on the part of the Agent or the Banks, any
right hereunder 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. The rights
of the Agent and the Banks hereunder shall be in addition to all
other rights provided by law. No modification or waiver of any
provision of the Loan Documents, including this Agreement, or the
Note nor consent to departure therefrom, shall be effective
unless in writing, and no such consent or waiver shall extend
beyond the particular case and purpose involved. No notice or
demand given in any case shall constitute a waiver of the right
to take other action in the same, similar or other circumstances
without such notice or demand.
Notices. Any notices or other communications required
or permitted to be given by this Agreement or any other documents
and instruments referred to herein must be given in writing
(which may be by facsimile transmission) and must be personally
delivered or mailed by prepaid certified or registered mail to
the party to whom such notice or communication is directed at the
address of such party as follows: (a) BORROWERS: c/o CONTINENTAL
RESOURCES, INC., X.X. Xxx 0000, Xxxx, Xxxxxxxx 00000, Facsimile
No.: 580/548-5281, Attention: Xxxxxx Xxxx and Xxxxx Xxxxxxx; (b)
AGENT: MIDFIRST BANK, XxxXxxxx Xxxxx, X.X. Xxx 000000, Xxxxxxxx
Xxxx, Xxxxxxxx 00000, Facsimile No.405/879-6155, Attention: W.
Xxxxxx Xxxxxxx, Vice President. Any such notice or other
communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered
or delivered by facsimile as aforesaid or, if mailed, on the
third day after it is mailed as aforesaid. Any party may change
its address for purposes of this Agreement by giving notice of
such change to the other party pursuant to this Section 17. Any
notice required to be given to the Banks shall be given to the
Agent and distributed to all Banks by the Agent.
Expenses. The Borrowers shall pay (i) all reasonable
and necessary out-of-pocket expenses of the Banks, including
reasonable fees and disbursements of special counsel for the
Agent, in connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any
default or Event of Default or alleged default or Event of
Default hereunder, (ii) all reasonable and necessary out-of-
pocket expenses of the Agent, including reasonable fees and
disbursements of special counsel for the Agent in connection with
the preparation of any participation agreement for a participant
or participants requested by the Borrowers or any amendment
thereof and (iii) if a default or an Event of Default occurs, all
reasonable and necessary out-of-pocket expenses incurred by the
Banks, including reasonable fees and disbursements of counsel, in
connection with such default and Event of Default and collection
and other enforcement proceedings resulting therefrom. The
Borrowers shall indemnify the Banks against any transfer taxes,
document taxes, assessments or charges made by any governmental
authority by reason of the execution, delivery and filing of the
Loan Documents. The obligations of this Section 18 shall survive
any termination of this Agreement, the expiration of the Loans
and the payment of all indebtedness of the Borrowers to the Banks
hereunder and under the Notes.
Indemnity. The Borrowers agree to indemnify and hold
harmless the Banks and their respective officers, employees,
agents, attorneys and representatives (singularly, an
"Indemnified Party", and collectively, the "Indemnified Parties")
from and against any loss, cost, liability, damage or expense
(including the reasonable fees and out-of-pocket expenses of
counsel to the Banks, including all local counsel hired by such
counsel) ("Claim") incurred by the Banks in investigating or
preparing for, defending against, or providing evidence,
producing documents or taking any other action in respect of any
commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law, federal or state
environmental law, or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged
to arise out of or is based upon any acts, practices or omissions
or alleged acts, practices or omissions of the Borrowers or their
agents or arises in connection with the duties, obligations or
performance of the Indemnified Parties in negotiating, preparing,
executing, accepting, keeping, completing, countersigning,
issuing, selling, delivering, releasing, assigning, handling,
certifying, processing or receiving or taking any other action
with respect to the Loan Documents and all documents, items and
materials contemplated thereby even if any of the foregoing
arises out of an Indemnified Party's ordinary negligence. The
indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrowers to the Banks
hereunder or at common law or otherwise, and shall survive any
termination of this Agreement, the expiration of the Loans and
the payment of all indebtedness of the Borrowers to the Banks
hereunder and under the Notes, provided that the Borrowers shall
have no obligation under this Section to the Bank with respect to
any of the foregoing arising out of the gross negligence or
willful misconduct of the Bank. If any Claim is asserted against
any Indemnified Party, the Indemnified Party shall endeavor to
notify the Borrowers of such Claim (but failure to do so shall
not affect the indemnification herein made except to the extent
of the actual harm caused by such failure). The Indemnified
Party shall have the right to employ, at the Borrowers' expense,
counsel of the Indemnified Parties' choosing and to control the
defense of the Claim. The Borrowers may at their own expense
also participate in the defense of any Claim. Each Indemnified
Party may employ separate counsel in connection with any Claim to
the extent such Indemnified Party believes it reasonably prudent
to protect such Indemnified Party. The parties intend for the
provisions of this Section to apply to and protect each
Indemnified Party from the consequences of any liability
including strict liability imposed or threatened to be imposed on
Agent as well as from the consequences of its own negligence,
whether or not that negligence is the sole, contributing, or
concurring cause of any Claim.
Governing Law. THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED, AND IS INTENDED TO BE PERFORMED, IN OKLAHOMA, OKLAHOMA
COUNTY, OKLAHOMA, AND THE SUBSTANTIVE LAWS OF OKLAHOMA SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, such
provisions shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of the Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance
from this Agreement.
Maximum Interest Rate. It is the intention of the
parties hereto to comply strictly with any applicable usury laws
as in effect from time to time and, in this regard, there shall
never be taken, received, contracted for, collected, charged or
received on any sums advanced hereunder interest in excess of
that which would accrue at the Maximum Rate.
If, under any circumstances, the aggregate amounts paid on
the Notes or under this Agreement or any other Loan Document
include amounts which by law are deemed interest and which would
exceed the amount permitted if the Maximum Rate were in effect,
the Borrowers stipulate that such payment and collection will
have been and will be deemed to have been, to the fullest extent
permitted by applicable laws of the State of Oklahoma or the
United States of America, the result of mathematical error on the
part of the Borrowers and the Agent; and the Agent shall promptly
credit the amount of such excess to the principal amount due on
the Notes, or if the principal amount due on the Notes shall have
been paid in full, refund the amount of such excess to the
Borrowers (to the extent only of such interest payments in excess
of that which would have accrued and been payable on the basis of
the Maximum Rate) upon discovery of such error by the Agent or
notice thereof from the Borrowers.
If the maturity of the Notes is accelerated by reason of an
election of the Agent resulting from any Event of Default or
otherwise in accordance with this Agreement, or in the event any
prepayment, then such consideration that constitutes interest
under applicable laws may never include amounts which are more
than the Maximum Rate, and the amount of such excess, if any,
provided for in this Agreement or otherwise shall be canceled
automatically by the Agent as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the
Agent on the principal amount due on the Notes, or if the
principal amount due on the Notes shall have been paid in full,
refunded by the Agent to the Borrowers.
All sums paid, or agreed to be paid, to the Agent for the
use, forbearance and detention of the proceeds of any Advance
hereunder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full
term hereof until paid in full so that the actual rate of
interest is uniform but does not exceed the Maximum Rate
throughout the full term hereof.
Amendments. This Agreement may be amended only by an
instrument in writing executed by an authorized officer of the
party against whom such amendment is sought to be enforced.
Multiple Counterparts. This Agreement may be executed
in a number of identical separate counterparts, each of which for
all purposes is to be deemed an original, but all of which shall
constitute, collectively, one agreement. No party to this
Agreement shall be bound hereby until a counterpart of this
Agreement has been executed by all parties hereto.
Conflict. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the Loan
Documents, the terms or provisions contained in this Agreement
shall be controlling.
Survival. All covenants, agreements, undertakings,
representations and warranties made in the Loan Documents,
including this Agreement, the Notes or other documents and
instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by
any party.
Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, legal representatives and
estates, provided, however, that the Borrowers may not, without
the prior written consent of all of the Banks, assign any rights,
powers, duties or obligations hereunder.
Assignments and Participations.
(a) Each Bank shall have the right to sell, assign or
transfer all or any part of its Note or Notes, its
Commitments and its rights and obligations hereunder to one
or more Affiliates, Banks, financial institutions, pension
plans, insurance companies, investment funds, or similar
Persons who are Eligible Assignees or to a Federal Reserve
Bank; provided, that in connection with each sale,
assignment or transfer (other than to an Affiliate, a Bank
or a Federal Reserve Bank), the applicable Bank will
consider the opinion and recommendation of Borrowers, which
opinion and recommendation shall in no way be binding upon
such Bank, and each such sale, assignment, or transfer
(other than to an Affiliate, a Bank or a Federal Reserve
Bank), shall require the consent of Agent, which consent
will not be unreasonably withheld, and the assignee,
transferee or recipient shall have, to the extent of such
sale, assignment, or transfer, the same rights, benefits and
obligations as it would if it were such Bank and a holder of
such Note, Commitments and rights and obligations,
including, without limitation, the right to vote on
decisions requiring consent or approval of all Banks or
Majority Banks and the obligation to fund its Commitments;
provided, further, that (1) each such sale, assignment, or
transfer (other than to an Affiliate, a Bank or a Federal
Reserve Bank) shall be in an aggregate principal amount not
less than $5,000,000, (2) each remaining Bank shall at all
times maintain Commitments then outstanding in an aggregate
principal amount at least equal to $5,000,000; (3) each such
sale, assignment or transfer shall be of a Pro Rata portion
of such Bank's Revolving Commitment and its Bridge Loan
Commitment, (4) no Bank may offer to sell its Note or Notes,
Commitments, rights and obligations or interests therein in
violation of any securities laws; and (5) no such
assignments (other than to a Federal Reserve Bank) shall
become effective until the assigning Bank and its assignee
delivers to Agent and Borrowers an Assignment and Acceptance
and the Note or Notes subject to such assignment and other
documents evidencing any such assignment. An assignment fee
in the amount of $5,000 for each such assignment (other than
to an Affiliate, a Bank or the Federal Reserve Bank) will be
payable to Agent by assignor or assignee. Within five (5)
Business Days after its receipt of copies of the Assignment
and Acceptance and the other documents relating thereto and
the Note or Notes, the Borrowers shall execute and deliver
to Agent (for delivery to the relevant assignee) a new Note
or Notes evidencing such assignee's assigned Commitments and
if the assignor Bank has retained a portion of its
Commitments, a replacement Note in the principal amount of
the Commitments retained by the assignor (except as provided
in the last sentence of this paragraph (a) such Note or
Notes to be in exchange for, but not in payment of, the Note
or Notes held by such Bank). On and after the effective
date of an assignment hereunder, the assignee shall for all
purposes be a Bank, party to this Agreement and any other
Loan Document executed by the Banks and shall have all the
rights and obligations of a Bank under the Loan Documents,
to the same extent as if it were an original party thereto,
and no further consent or action by Borrowers, Banks or the
Agent shall be required to release the transferor Bank with
respect to its Commitments assigned to such assignee and the
transferor Bank shall henceforth be so released.
(b) Each Bank shall have the right to grant
participations in all or any part of such Bank's Notes and
Commitments hereunder to one or more pension plans,
investment funds, insurance companies, financial
institutions or other Persons, provided, that:
(i) each Bank granting a participation shall
retain the right to vote hereunder, and no participant
shall be entitled to vote hereunder on decisions
requiring consent or approval of Bank or Majority Banks
(except as set forth in (iii) below);
(ii) in the event any Bank grants a participation
hereunder, such Bank's obligations under the Loan
Documents shall remain unchanged, such Bank shall
remain solely responsible to the other parties hereto
for the performance of such obligations, such Bank
shall remain the holder of any such Note or Notes for
all purposes under the Loan Documents, and Agent, each
Bank and Borrowers shall be entitled to deal with the
Bank granting a participation in the same manner as if
no participation had been granted; and
(iii) no participant shall ever have any right
by reason of its participation to exercise any of the
rights of Banks hereunder, except that any Bank may
agree with any participant that such Bank will not,
without the consent of such participant (which consent
may not be unreasonably withheld) consent to any
amendment or waiver requiring approval of all Banks.
(c) It is understood and agreed that any Bank may
provide to assignees and participants and prospective
assignees and participants financial information and reports
and data concerning Borrowers' properties and operations
which was provided to such Bank pursuant to this Agreement.
(d) Upon the reasonable request of either Agent or
Borrowers, each Bank will identify those to whom it has
assigned or participated any part of its Notes and
Commitment, and provide the amounts so assigned or
participated.
Choice of Forum: Consent to Service of Process and
Jurisdiction. THE OBLIGATIONS OF BORROWERS UNDER THE LOAN
DOCUMENTS ARE PERFORMABLE IN OKLAHOMA COUNTY, OKLAHOMA. ANY
SUIT, ACTION OR PROCEEDING AGAINST THE BORROWERS WITH RESPECT TO
THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN
RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF
OKLAHOMA, COUNTY OF OKLAHOMA, OR IN THE UNITED STATES COURTS
LOCATED IN OKLAHOMA COUNTY, OKLAHOMA AND THE BORROWERS HEREBY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE
PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWERS
HEREBY IRREVOCABLY CONSENT TO SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING IN SAID COURT BY THE MAILING THEREOF BY BANK
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWERS, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS PROVIDED
IN SECTION 17. THE BORROWERS HEREBY IRREVOCABLY WAIVE ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN
THE STATE OF OKLAHOMA, COUNTY OF OKLAHOMA, AND HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
Waiver of Jury Trial. THE BORROWERS, THE AGENT AND THE
BANKS (BY THEIR ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE BORROWERS, THE
AGENT AND THE BANKS, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN
THE AGENT, THE BANKS AND THE BORROWERS. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE AGENT AND THE BANKS TO PROVIDE THE
FINANCING DESCRIBED HEREIN.
Other Agreements. THIS WRITTEN CREDIT AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Financial Terms. All accounting terms used in this
Agreement which are not specifically defined herein shall be
defined in accordance with GAAP.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
BORROWERS:
CONTINENTAL RESOURCES, INC.
an Oklahoma corporation
XXXXXX XXXX
By: Xxxxxx Xxxx
Title: President
CONTINENTAL GAS, INC.
ATTEST: an Oklahoma corporation
XXXXX X. XXXXXXX XXXXX XXXXXX
Secretary By: Xxxxx Xxxxxx
[SEAL] Title: President
BANKS:
MIDFIRST BANK,
a federally chartered savings association
W. XXXXXX XXXXXXX
By: W. Xxxxxx Xxxxxxx
Title: Vice President
BANCFIRST
E. G. ALEXANDER
By: E. G. Alexander
Title: Senior Vice President
AGENT:
MIDFIRST BANK,
a federally chartered savings association
W. XXXXXX XXXXXXX
By: W. Xxxxxx Xxxxxxx
Title: Vice President
