EXHIBIT 99.1
RESTATED CREDIT AGREEMENT
AMONG
EXCO RESOURCES, INC.
AND EXCO OPERATING, L.P.,
AS BORROWERS,
AND
BANK ONE, NA
AND THE INSTITUTIONS NAMED HEREIN
AS LENDERS,
BANK ONE, NA,
AS ADMINISTRATIVE AGENT
AND
BNP PARIBAS, AS SYNDICATION AGENT
AND
THE BANK OF NOVA SCOTIA,
AS DOCUMENTATION AGENT
AND
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND BOOKRUNNER
DECEMBER 18, 2001
$124,000,000 REVOLVING CREDIT
TABLE OF CONTENTS
PAGE NO.
1. Definitions............................................................1
2. Commitments of the Lender.............................................13
(a) Terms of Revolving Commitment...................................13
(b) Procedure for Borrowing.........................................14
(c) Letters of Credit...............................................14
(d) Procedure for Obtaining Letters of Credit.......................15
(e) Voluntary Reduction of Revolving Commitment.....................16
(f) Mandatory Revolving Commitment Reductions.......................16
(g) Several Obligations.............................................16
(h) Type and Number of Advances.....................................16
3. Notes Evidencing Loans................................................17
(a) Form of Revolving Notes.........................................17
(b) Issuance of Additional Notes....................................17
(c) Interest Rates..................................................17
(d) Payment of Interest.............................................17
(e) Payment of Principal............................................17
(f) Payment to Lenders..............................................17
(g) Sharing of Payments, Etc........................................18
(h) Non-Receipt of Funds by the Agent...............................18
4. Interest Rates........................................................19
(a) Options.........................................................19
(b) Interest Rate Determination.....................................20
(c) Conversion Option...............................................20
(d) Recoupment......................................................20
5. Special Provisions Relating to Loans..................................20
(a) Unavailability of Funds or Inadequacy of Pricing................20
(b) Change in Laws..................................................21
(c) Increased Cost or Reduced Return................................21
(d) Discretion of Lender as to Manner of Funding....................23
(e) Breakage Fees...................................................23
(f) Replacement of Lenders..........................................24
6. Collateral Security...................................................24
7. Borrowing Base........................................................26
(a) Initial Borrowing Base..........................................26
(b) Subsequent Determinations of Borrowing Base.....................26
8. Fees..................................................................27
(a) Unused Commitment Fee...........................................27
(b) The Letter of Credit Fee........................................27
(c) Closing Fee.....................................................28
(d) Borrowing Base Increase Fee.....................................28
(e) Agency Fee......................................................28
i
9. Prepayments...........................................................28
(a) Voluntary Prepayments...........................................28
(b) Mandatory Prepayment For Borrowing Base Deficiency..............28
10. Representations and Warranties........................................29
(a) Creation and Existence..........................................29
(b) Power and Authority.............................................29
(c) Binding Obligations.............................................29
(d) No Legal Bar or Resultant Lien..................................29
(e) No Consent......................................................30
(f) Financial Condition.............................................30
(g) Liabilities.....................................................30
(h) Litigation......................................................30
(i) Taxes; Governmental Charges.....................................30
(j) Titles, Etc.....................................................31
(k) Defaults........................................................31
(l) Casualties; Taking of Properties................................31
(m) Use of Proceeds; Margin Stock...................................31
(n) Location of Business and Offices................................31
(o) Compliance with the Law.........................................32
(p) No Material Misstatements.......................................32
(q) Not A Utility...................................................32
(r) ERISA...........................................................32
(s) Public Utility Holding Company Act..............................32
(t) Subsidiaries....................................................32
(u) Environmental Matters...........................................32
(v) Liens...........................................................33
11. Conditions of Lending.................................................33
12. Affirmative Covenants.................................................34
(a) Financial Statements and Reports................................34
(b) Certificates of Compliance......................................35
(c) Taxes and Other Liens...........................................36
(d) Compliance with Laws............................................36
(e) Further Assurances..............................................36
(f) Performance of Obligations......................................36
(g) Insurance.......................................................37
(h) Accounts and Records............................................37
(i) Right of Inspection.............................................38
(j) Notice of Certain Events........................................38
(k) ERISA Information and Compliance................................38
(l) Environmental Reports and Notices...............................38
(m) Compliance and Maintenance......................................39
(n) Operation of Properties.........................................39
(o) Compliance with Leases and Other Instruments....................40
(p) Certain Additional Assurances Regarding Maintenance and
ii
Operations of Properties........................................40
(q) Sale of Certain Assets/Prepayment of Proceeds...................40
(r) Title Matters...................................................41
(s) Curative Matters................................................41
(t) Change of Principal Place of Business...........................41
(u) Additional Collateral...........................................41
(v) Cash Collateral Accounts........................................42
(w) Stock of Foreign Subsidiaries...................................42
(x) Hedging.........................................................42
13. Negative Covenants....................................................42
(a) Negative Pledge.................................................43
(b) Current Ratio...................................................43
(c) Debt Coverage Ratio.............................................43
(d) Minimum Consolidated Tangible Net Worth.........................43
(e) Leverage Ratio..................................................43
(f) Consolidations and Mergers......................................43
(g) Debts, Guaranties and Other Obligations.........................44
(h) Restricted Payments.............................................44
(i) Loans and Advances..............................................45
(j) Receivables and Payables........................................45
(k) Nature of Business..............................................45
(l) Transactions with Affiliates....................................45
(m) Hedging Transactions............................................45
(n) Investments.....................................................46
(o) Amendment to Articles of Incorporation or Bylaws................46
(p) Issuance of Preferred Stock....................................46
14. Events of Default.....................................................47
15. The Agent and the Lenders.............................................49
(a) Appointment and Authorization...................................49
(b) Note Holders....................................................50
(c) Consultation with Counsel.......................................50
(d) Documents.......................................................50
(e) Resignation or Removal of Agent.................................50
(f) Responsibility of Agent.........................................51
(g) Independent Investigation.......................................52
(h) Indemnification.................................................53
(i) Benefit of Section 15...........................................53
(j) Pro Rata Treatment..............................................53
(k) Assumption as to Payments.......................................54
(l) Other Financings................................................54
(m) Interests of Lenders............................................54
(n) Investments.....................................................54
16. Exercise of Rights....................................................55
17. Notices...............................................................55
iii
18. Expenses..............................................................55
19. Indemnity.............................................................56
20. Governing Law.........................................................57
21. Invalid Provisions....................................................57
22. Maximum Interest Rate.................................................57
23. Amendments............................................................58
24. Multiple Counterparts.................................................58
25. Conflict..............................................................58
26. Survival..............................................................58
27. Parties Bound.........................................................58
28. Assignments and Participations........................................59
29. Choice of Forum: Consent to Service of Process and
Jurisdiction..........................................................60
30. Waiver of Jury Trial..................................................61
31. Other Agreements......................................................61
32. Financial Terms.......................................................61
EXHIBITS
--------
Exhibit "A" - Form of Notice of Borrowing
Exhibit "B" - Form of Revolving Note
Exhibit "C" - Form of Guaranty
Exhibit "D" - Form of Certificate of Compliance
Exhibit "E" - 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 - Title Matters
Schedule 8 - Curative Matters
Schedule 9 - Closing Fees
iv
RESTATED
CREDIT AGREEMENT
THIS RESTATED
CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 18th day of December, 2001, by and among EXCO
RESOURCES, INC., a
Texas corporation ("EXCO") and EXCO OPERATING, LP, a Delaware
limited partnership ("Operating") (EXCO and Operating are hereinafter
collectively referred to as "Borrowers" and individually as a "Borrower") and
BANK ONE, NA, a national banking association ("Bank One"), 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 "Lenders", and individually,
"Lender") and Bank One, as Administrative Agent (the "Agent") and BNP Paribas,
as Syndication Agent, and The Bank of Nova Scotia, as Documentation Agent and
Banc One Capital Markets, Inc., as Lead Arranger and Bookrunner ("Arranger").
W I T N E S S E T H:
WHEREAS, as of April 26, 2001, EXCO, certain of the Lenders and Fleet
National Bank entered into a
Credit Agreement pursuant to which Lenders made
available to EXCO certain credit facilities in the form therein described; and
WHEREAS, Borrowers have requested that the Lenders provide Borrowers with
a restated revolving credit facility and the Lenders are willing to make such
facility available to Borrowers;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. DEFINITIONS. When used herein the terms "Agent", "Agreement",
"Arranger", "Bank One", "Borrowers", "Lender" and "Lenders", shall have
the meanings indicated above. When used herein the following terms shall
have the following meanings:
ADDISON means (i) Addison Energy Inc., an Alberta, Canada
corporation.
ADVANCE OR ADVANCES means a loan or loans hereunder.
AFFILIATE means 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.
ASSIGNMENT AND ACCEPTANCE means a document substantially in the form of
Exhibit "E" hereto.
BASE RATE shall mean, as of any date, (i) a rate of interest per annum
equal to the higher of (A) the Prime Rate for such date, or (B) the sum of the
Federal Funds Effective Rate for such date plus one-half of one percent (.50%)
per annum, plus (ii) the Base Rate Margin.
BASE RATE LOANS shall mean any loan during any period which bears interest
based upon the Base Rate or which would bear interest based upon the Base Rate
if the Maximum Rate ceiling was not in effect at that particular time.
BASE RATE MARGIN shall be:
(i) At any time (i)(b) below does not apply:
(a) three-quarters of one percent (.75%) per
annum whenever the Borrowing Base Usage is
equal to or greater than 90%;
(b) one-half of one percent (.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 70%,
but less than 90%; or
(c) one-quarter of one percent (.25%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50% but
less than 70%; or
(d) zero percent (0%) per annum whenever the
Borrowing Base Usage is less than 50%; or
(ii) At any time (A) that EXCO's ratio of (x) Consolidated Funded
Debt to Consolidated EBITDA is less than 2.0 to 1.0 as of the
most recent fiscal quarter, and (y) Consolidated Debt to
Consolidated Total Capital is less than .60 to 1.0 as of the
most recent fiscal quarter, and (B) no Borrowing Base
Deficiency exists:
(a) one-half of one percent (.50%) per annum
whenever the Borrowing Base Usage is equal
to or greater than 90%;
(b) one-quarter of one percent (.25%) per annum whenever the
Borrowing Base Usage is equal to or greater than 70%,
but less than 90%; or
2
(c) zero percent (0%) per annum whenever the Borrowing Base
Usage is less than 70%.
BORROWING BASE shall mean the value assigned by the Lenders from time to
time to the Oil and Gas Properties pursuant to Section 7 hereof.
BORROWING BASE DEFICIENCY is used herein as defined in Section 9(b)
hereof.
BORROWING BASE USAGE shall mean, as of any date, all amounts outstanding
on the Loan plus all outstanding Letters of Credit, divided by the Borrowing
Base.
BORROWING DATE means the date elected by Borrowers pursuant to Section
2(c) hereof for an Advance on the Revolving Loan.
BUSINESS DAY shall mean (i) with respect to any borrowing, payment or note
selection of LIBOR Loans, a day (other than Saturdays or Sundays) on which banks
are legally open for business in Dallas,
Texas and New York, New York and on
which dealings in United States dollars are carried on in the London interbank
market, and (ii) for all other purposes a day (other than Saturdays and Sundays)
on which banks are legally open for business in Dallas,
Texas.
CANADIAN
CREDIT AGREEMENT means that certain Restated
Credit Agreement
between Addison and Xxxx Xxx, XX, Xxxxxx Branch, as Administrative Agent for
itself and the Lenders named therein dated as of December 18, 2001 pursuant to
which the Lenders therein agree to make a $77,500,000 Canadian revolving loan
available to Addison.
CAPITAL EVENT is any issuance by EXCO of any equity securities or
indebtedness after the Effective Date.
CHANGE OF CONTROL shall occur if any Person (or syndicate or group of
Persons which is deemed a Person for the purposes of Sections 13(d) or 14(d)(ii)
of the Securities Act of 1934, as amended) shall acquire, directly or indirectly
a number of voting stock in EXCO sufficient to change the control of EXCO by
causing the election or change of a majority of the board of directors of EXCO.
COLLATERAL is used herein as defined in Section 6 hereof.
COMMITMENTS means the Revolving Commitment.
CONSOLIDATED CURRENT ASSETS means the total of the consolidated current
assets determined in accordance with GAAP, PLUS, as of any date, the unused
availability on the Revolving Commitment, LESS any amount required to be
included in Consolidated Current Assets as a result of the application of FASB
Statement 133.
3
CONSOLIDATED CURRENT LIABILITIES means the total of consolidated current
obligations as determined in accordance with GAAP, excluding therefrom any
amount required to be included in Consolidated Current Liabilities as a result
of the application of FASB Statement 133.
CONSOLIDATED DEBT means, without duplication, all obligations and
liabilities of a Person on a consolidated basis to any other person, including,
without limitation, all debts, claims 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. Debt includes, without limiting the
foregoing, (i) indebtedness for borrowed money (including without duplication
obligations to reimburse the issuer of any letter of credit or any guarantor or
surety), (ii) indebtedness for the deferred purchase price of property or
services, excluding trade accounts payable within ninety (90) days and arising
in the ordinary course of business, (ii) indebtedness evidenced by bonds,
debentures, notes or other similar instruments, (iv) obligations and liabilities
secured by a Lien on property owned by such Person whether or not such Person
has assumed such obligations and liabilities and the amount of which Debt shall
not exceed the fair market value of the property subject to the Lien if such
Person has not assumed such obligations and liabilities, (v) obligations or
liabilities created or arising under any capitalized lease, (vi) all net
payments or amounts owing by such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity swap agreements or
other interests, exchange rate or commodity hedging arrangements and (vii)
liabilities in respect of unfunded vested benefits under any Plan. Debt shall
not include accounts payable and expense accruals incurred or assumed in the
ordinary course of business nor shall it include liabilities required to be
included as balance sheet liabilities as a result of the application of FASB
Statement 133.
CONSOLIDATED EBITDA shall mean Consolidated Net Income (excluding gains
and losses from asset sales, extraordinary and non-recurring non-cash gains and
losses) plus the sum of (i) (A) income tax expense (but excluding income tax
expense relating to the sales or other disposition of assets, including capital
stock, the gains and losses from which are excluded in the determination of
Consolidated Net Income), plus (B) Consolidated Interest Expense, plus (C)
depreciation, depletion and amortization expense, plus (D) any other non-cash
expenses less (ii) any other non-cash income, all as determined in accordance
with GAAP, in each case for four (4) fiscal quarters ending on the date of
determination.
CONSOLIDATED FUNDED DEBT means, as of any date, without duplication, (i)
all obligations for borrowed money or for the purchase price of property, (ii)
all obligations evidenced by bonds, debentures, notes, or other similar
instruments, (iii) all other indebtedness (including obligations under capital
leases, other than usual and customary oil and gas leases) on which interest
charges are customarily paid or accrued, (iv) all guarantees, (v) the unfunded
or unreimbursed portion of all letters of credit, (vi) any indebtedness or other
obligation secured by a Lien on assets, whether or not assumed, and (vii) all
liability as a general partner of a partnership for obligations of that
partnership of the nature described in (i) through (vii) preceding.
4
CONSOLIDATED INTANGIBLE ASSETS means the amount (to the extent reflected
in determining such consolidated shareholders equity) of all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, tradenames, copyrights, organization expenses and
other intangible items.
CONSOLIDATED INTEREST EXPENSE shall mean the aggregate amount of interest
expense as determined on a consolidated basis in accordance with GAAP.
CONSOLIDATED NET INCOME shall mean consolidated net income after income
taxes calculated in accordance with GAAP, but excluding (i) any non-cash gains
or losses as a result of the application of FASB Statement 133, and (ii) the
effect of ceiling test write downs.
CONSOLIDATED TANGIBLE NET WORTH shall mean consolidated shareholders
equity less Consolidated Intangible Assets calculated in accordance with GAAP.
CONSOLIDATED TOTAL CAPITAL means the sum of all Consolidated Debt plus
Consolidated Tangible Net Worth.
CONVERTIBLE PREFERRED STOCK means the 5% Convertible Preferred Stock
issued by EXCO on June 29, 2001.
CURRENT RATIO means the ratio of Consolidated Current Assets for the date
or period being measured to the Consolidated Current Liabilities for such date
or period.
DEFAULT means all the events specified in Section 14 hereof, regardless of
whether there shall have occurred any passage of time or giving of notice, or
both, that would be necessary in order to constitute such event as an Event of
Default.
DEFAULT RATE means the Base Rate plus three percent (3%) per annum.
EFFECTIVE DATE means the date of this Agreement.
ELIGIBLE ASSIGNEE means any of (i) a Lender or any Affiliate of a Lender;
(ii) a commercial bank organized under the laws of the United States, or any
state thereof, 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 lending and that (A) is a subsidiary of a
Lender, (B) a subsidiary of a Person of which a Lender is a subsidiary, or (C) a
Person of which a Lender 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
5
companies; and (vi) with respect to any Lender 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 Lender 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 Borrowers shall be an
Eligible Assignee.
ENGINEERED VALUE is used herein as defined in Section 6 hereof.
ENVIRONMENTAL LAWS means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, ET
SEQ., the Resource Conservation and Recovery Act, as amended by the
Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A. Section 6901, ET SEQ.,
the Clean Water Act, 33 U.S.C.A. Section 1251, et seq., the Clean Air Act,
42 U.S.C.A. Section 1251, ET SEQ., the Toxic Substances Control Act, 15
U.S.C.A. Section 2601, ET SEQ., The Oil Pollution Act of 1990, 33 U.S.G.
Section 2701, ET SEQ., and all other laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
orders, permits 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 oil
pollution, air pollution, water pollution, noise control and/or the
handling, discharge, disposal or recovery of on-site or off-site asbestos,
radioactive materials, spilled or leaked petroleum products, distillates
or fractions and industrial solid waste or "hazardous substances" as
defined by 42 U.S.C. Section 9601, ET SEQ., as amended, as each of the
foregoing may be amended from time to time.
ENVIRONMENTAL LIABILITY means 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 release of any
substance into the environment which is required to be remediated by a
regulatory agency or governmental authority 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 means 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 means the Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT is used herein as defined in Section 14 hereof.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the
6
Federal Reserve System arranged by Federal funds brokers on such day, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10:00 a.m. (Dallas,
Texas time) on
such day on such transactions received by the Agent from three (3) Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
FINANCIAL STATEMENTS means balance sheets, income statements, statements
of cash flow and appropriate footnotes and schedules, prepared in accordance
with GAAP.
GAAP means generally accepted accounting principles, consistently applied.
GUARANTIES means the Subsidiary Guaranties in the form of Exhibit "C"
hereto.
GUARANTORS means all material Subsidiaries of EXCO other than foreign
Subsidiaries.
INTERCREDITOR AGREEMENT means that certain intercreditor agreement between
the Agent and the Lenders and the agent and the lenders under the Canadian
Credit Agreement.
INTEREST PAYMENT DATE shall mean the last day of each calendar month in
the case of Base Rate Loans and, in the case of LIBOR Loans, the last day of the
applicable Interest Period, and if such Interest Period is longer than three (3)
months, at three (3) month intervals following the first day of such Interest
Periods.
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) or three (3) 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) or three (3) months thereafter, as
selected by the Borrowers pursuant to Section 4(a)(ii); provided, however, that
(i) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding 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 Business Day, (ii) if any Interest Period begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) such Interest Period shall end on the last Business Day of a calendar
month, and (iii) any Interest Period which would otherwise expire after the
Revolving Maturity Date shall end on such Revolving Maturity Date.
LETTERS OF CREDIT is used herein as defined in Section 2(d) hereof.
LIBOR BASE RATE shall mean the offered rate for the period equal to or
greater than the Interest Period for U.S. dollar deposits of not less than
$1,000,000 as of 11:00 a.m. City of London, England time two (2) Business Days
prior to the first day of the Interest Period as
7
shown on the display designated as "British Bankers Association Interest
Settlement Rates" on Xxxxxx'x for the purpose of displaying such rate. In the
event such rate is not available on Xxxxxx'x, then such offered rate shall be
otherwise independently determined by the Agent from an alternate,
substantially independent source available to Agent or shall be calculated by
Agent by substantially similar methodology as that theretofore used to
determine such offered rate.
LIBOR LOANS means any loans during any period which bear 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 be:
(i) At any time (ii) below does not apply:
(a) two percent (2.0%) per annum whenever the
Borrowing Base Usage is equal to or greater
than 90%;
(b) one and three-quarters percent (1.75%) per annum
whenever the Borrowing Base Usage is equal to or greater
than 70%, but less than 90%; or
(c) one and one-half percent (1.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50% but
less than 70%; or
(d) one and one-quarter percent (1.25%) per
annum whenever the Borrowing Base Usage is
less than 50%; or
(ii) At any time (A) that EXCO's ratio of (x) Consolidated Funded
Debt to Consolidated EBITDA is less than 2.0 to 1.0 as of the
most recent fiscal quarter, and (y) Consolidated Debt to
Consolidated Total Capital is less than .60 to 1.0 as of the
most recent fiscal quarter, and (B) no Borrowing Base
Deficiency exists:
(a) one and three-quarters percent (1.75%) per
annum whenever the Borrowing Base Usage is
equal to or greater than 90%;
(b) one and one-half percent (1.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 70%,
but less than 90%; or
8
(c) one and one-quarter percent (1.25%) per annum whenever
the Borrowing Base Usage is equal to or greater than 50%
but less than 70%; or
(d) one percent (1%) per annum whenever the Borrowing Base
Usage is less than 50%.
LIBOR RATE means, with respect to a LIBOR Loan for the relevant Interest
Period, the sum of (i) the quotient of (A) the LIBOR Base Rate applicable to
such Interest Period, divided by (B) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Interest Period, plus the (ii) LIBOR
Margin. The LIBOR Rate shall be rounded to the next higher multiple of 1/100th
of one percent if the rate is not such a multiple.
LIEN means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
LOAN DOCUMENTS means this Agreement, the Notes, the Guaranties, the
Security Instruments and all other documents executed by Borrowers or any of
their Subsidiaries with Agent or the Lenders in connection with the transaction
described in this Agreement.
LOANS means the Revolving Loans.
MAJORITY LENDERS means Lenders holding 66-2/3% or more of the Commitments
hereunder.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (i) the
assets or properties, liabilities, financial condition, business, operations,
affairs or circumstances of EXCO, (ii) the ability of the Borrowers to carry out
their businesses as of the date of this Agreement or as proposed at the date of
this Agreement to be conducted, (iii) the ability of Borrowers to perform fully
and on a timely basis its obligations under any of the Loan Documents, or (iv)
the validity or enforceability of any of the Loan Documents or the rights and
remedies of the Agent or the Lenders thereunder.
MAXIMUM RATE is used herein as defined in Section 22 hereof.
NOTES means the Revolving Notes.
OIL AND GAS PROPERTIES means all oil, gas and mineral properties and
interests, related personal properties, in which Borrowers or the Guarantors
grant to the Lenders either a first and prior lien and security interest
pursuant to Section 6 hereof (subject only to Permitted Liens) or a negative
pledge pursuant to Section 13(a) hereof.
OTHER FINANCING is used herein as defined in Section 15(l) hereof.
9
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) 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 Borrowers
of any material right in respect of Borrowers' 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 Borrowers have set aside on their 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 Borrowers' assets or properties and that could not
individually or in the aggregate, reasonably be expected to cause a Material
Adverse Effect; (v) materialmen's, mechanic's, repairman's, employee's, vendor's
laborer'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 Borrowers in
connection with the construction, maintenance, development, transportation,
processing, storage or operation of Borrowers' assets or properties to the
extent not delinquent (or which, if delinquent, are being contested in good
faith by appropriate proceedings and for which Borrowers have set aside on their
books adequate reserves in accordance with GAAP); (vi) all contracts, agreements
and instruments, and all defects and irregularities and other matters affecting
Borrowers' assets and properties which were in existence at the time Borrowers'
assets and properties were originally acquired by Borrowers 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 Borrowers'
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 Borrowers' 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 and Liens expressly
subordinated to the Liens under the Security Instruments that secure obligations
under Rate Management Transactions permitted pursuant to Section 13(m) hereof;
and (xii) Liens existing at the date of this Agreement which are identified in
Schedule "1" hereto.
10
PERSON means 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.
PLAN means any plan subject to Title IV of ERISA and maintained by
Borrowers, or any such plan to which Borrowers are required to contribute on
behalf of their employees.
PRE-APPROVED CONTRACTS as used herein shall mean any contracts or
agreements entered into in connection with any Rate Management Transaction which
are (i) designed to hedge, provide a price floor for, or swap crude oil or
natural gas or otherwise sell up to (A) 80% of the Borrowers' anticipated
production from proved, developed producing reserves of crude oil, and/or (B)
80% of the Borrowers' anticipated production from proved, developed producing
reserves of natural gas, during the period from the immediately preceding
settlement date (or the commencement of the term of such hedge transactions if
there is no prior settlement date) to such settlement date, (ii) interest rate
xxxxxx in an aggregate notional amount of not more than eighty percent (80%) of
the total Consolidated Funded Debt of EXCO projected to be outstanding for any
period covered by such xxxxxx, (iii) with a maturity of thirty (30) months or
less, and (iv) with counterparties to the hedging agreement which are approved
by the Lender that is a party to such contract or agreement, or if no Lender is
a party thereto, by Agent.
PRIME RATE means the rate per annum equal to the Prime Rate announced from
time to time by Agent or its parent (which is not necessarily the lowest rate
charged to any customer), changing when and as said Prime Rate changes.
PRO RATA OR PRO RATA PART means for each Lender, (i) for all purposes
where no Loan is outstanding, such Lender's Commitment Percentage and (ii)
otherwise, the proportion which the portion of the outstanding Loans owed to
such Lender bears to the aggregate outstanding Loans owed to all Lenders at the
time in question.
RATE MANAGEMENT TRANSACTION means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by either Borrower
or any of their Subsidiaries which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, forward
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.
REGULATION D shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
and other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
11
REIMBURSEMENT OBLIGATIONS means, at any time, the obligations of the
Borrowers in respect of all Letters of Credit then outstanding to reimburse
amounts paid by any Lender in respect of any drawing or drawings under a Letter
of Credit.
RELEASE PRICE is used herein as defined in Section 12(q) hereof.
REQUIRED LENDERS means Lenders holding 66-2/3% or more of the aggregate of
the Commitments hereunder and the commitments under the Canadian
Credit
Agreement.
REQUIRED PAYMENT is used herein as defined in Section 3(h) hereof.
RESERVE REQUIREMENT means, with respect to any Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
REVOLVING COMMITMENT means (A) for all Lenders, the LESSER of (i)
$124,000,000 or (ii) the Borrowing Base, as reduced or increased from time to
time pursuant to Sections 2 and 7 hereof, and (B) as to any Lender, 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 Lender's Revolving
Commitment Percentage times the total Revolving Commitment as of any date. The
Revolving Commitment of each Lender hereunder shall be adjusted from time to
time to reflect assignments made by such Lender pursuant to Section 28 hereof.
Each reduction in the Revolving Commitment shall result in a Pro Rata reduction
in each Lender's Revolving Commitment.
REVOLVING COMMITMENT PERCENTAGE means for each Lender the percentage set
forth opposite the Lender's name on the signature page hereto. The Revolving
Commitment Percentage of each Lender hereunder shall be adjusted from time to
time to reflect assignments made by such Lender pursuant to Section 28 hereof.
REVOLVING LOAN OR LOANS means an Advance or Advances made under the
Revolving Commitment.
REVOLVING MATURITY DATE shall mean April 30, 2004.
REVOLVING NOTES means the Notes, substantially in the form of Exhibit "B"
hereto issued or to be issued hereunder to each Lender, respectively, to
evidence the indebtedness to such Lender arising by reason of the Advances on
the Revolving Commitment, together with all modifications, renewals and
extensions thereof or any part thereof.
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 Guaranties, all
12
pledge agreements and all collateral assignments of notes and Liens, all such
documents to be in form and substance reasonably satisfactory to Agent.
SUBSIDIARY means 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 EXCO or another Subsidiary.
TOTAL OUTSTANDINGS means, 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 means a set of LIBOR Loans made by the Lenders at the same time
and for the same Interest Period.
UNSCHEDULED REDETERMINATIONS means 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 request of
Borrowers (but only once between Borrowing Base redeterminations), or (B) at the
request of Majority Lenders, or (C) immediately after the issuance by EXCO or
any Subsidiary of EXCO, including but not limited to, Addison, of any debt or
any equity other than the common stock.
UNUSED COMMITMENT FEE RATE shall be three-eighths of one percent (3/8%)
per annum.
2. COMMITMENTS OF THE LENDER.
(a) TERMS OF REVOLVING COMMITMENT. On the terms and conditions
hereinafter set forth, each Lender 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 advanced at any time, the aggregate Revolving
Commitment less Total Outstandings. 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. The obligations of the Borrowers hereunder, under the
Revolving Notes and the other Loan Documents shall be joint and several.
Provided, however, that the liability of Operating hereunder and under the
Revolving Notes and the Loan Documents shall be limited to the maximum
amount of liability that can be incurred without rendering the obligations
of Operating under such Loan Documents voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount. Notwithstanding any other provision of this Agreement, no
Advance shall be required to be made hereunder if any Default or Event of
Default (as hereinafter defined) has occurred and is continuing. Each
Advance under the Revolving Commitment shall be an aggregate amount of at
least $1,000,000 or any whole multiples of $100,000 in excess
13
thereof. Irrespective of the face amount of the Revolving Note or
Notes, the Lenders shall never have the obligation to Advance any
amount or amounts in excess of the Revolving Commitment or to increase
the Revolving Commitment.
(b) PROCEDURE FOR BORROWING. Whenever the Borrowers desire an
Advance under the Revolving Commitment, it 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. Dallas,
Texas time, (i) one Business Day prior to
the Borrowing Date in the case of the Base Rate Loan, or (ii) three
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 shall be a Business Day), (ii) the principal amount to be borrowed,
(iii) the portion of the Advance constituting Base 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 Lender thereof; provided, that if the Lenders have
received at least one (1) day's notice of such Advance prior to funding of
a Base Rate Loan, or at least three (3) days' notice of each Advance prior
to funding in the case of a LIBOR Loan, each Lender shall provide Agent at
its office at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, not later than 1:00
p.m., Dallas,
Texas 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 Lender shall never exceed such Lender's
Commitment. Not later than 2:00 p.m., Dallas,
Texas 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 Lender shall incur any liability to the Borrowers in acting upon
any Notice of Borrowing referred to above which Agent or such Lender
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
Lenders and such funds being made available to Borrowers 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 issues Letters of Credit for the account of Borrowers or any
of their Subsidiaries (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 Five Million Dollars ($5,000,000). The
face amount of all Letters of Credit issued and outstanding hereunder
shall be considered as Advances on the Revolving Commitment and all
payments made by the Agent on such Letters of Credit shall be considered
as Advances under the Revolving Notes. Each
14
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) five (5) business days prior to the Revolving
Maturity Date, and (iii) contain such other terms and provisions as may
be required by the Agent. Any letter of Credit with a one-year expiry
date may provide for automatic renewal thereof for additional one-year
periods (but shall in no event extend beyond the fifth (5th) Business
Day prior to the Revolving Maturity Date) unless the issuer provides
prior notice of non-renewal thereof to the beneficiary. Each Lender
(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 Lender's Revolving Commitment Percentage of such liability, and
each Lender (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 its obligations to reimburse
the Agent, and if so, submit a Notice of Borrowing as provided in
Section 2(c) hereof. If Borrowers fail to so advise Agent and
thereafter fail to reimburse Agent, the Agent shall notify each Lender
of the demand and the failure of the Borrowers to reimburse the Agent,
and each Lender 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
Lenders 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 Lenders' commitments 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
15
the face amount of the outstanding Letters of Credit plus any
Reimbursement Obligations exceeds Five Million Dollars ($5,000,000) 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 Lenders commissions for issuing the Letters of
Credit (calculated separately for each Letter of Credit) in an amount
equal to the greater of (i) a per annum rate equal to the LIBOR Margin
then in effect applied to the face amount of the Letter of Credit or
(ii) $150.00. Provided, however, at any time while an Event of Default
has occurred and is continuing, the commission on the Letters of Credit
shall be increased to two percent (2%) per annum on the face amount of
each outstanding Letter of Credit. Borrowers further agree to pay Agent
an additional fronting fee equal to the lesser of (i) one-eighth of one
percent (0.125%) per annum on the maximum face amount of each Letter of
Credit, or (ii) $150, plus documentary and processing charges in
accordance with Agent's standard schedule of charges with respect to
the issuance, amendment, cancellation, negotiation or transfer of each
Letter of Credit and drawing made thereunder. Such commissions shall be
payable prior to the issuance of each Letter of Credit and thereafter
on each annual anniversary date of such issuance while such Letter of
Credit is outstanding.
(e) VOLUNTARY REDUCTION OF REVOLVING COMMITMENT. Subject to the
provisions of Section 5(e) hereof, 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 $1,000,000 or more, in increments of $1,000,000 and (ii)
each reduction must be accompanied by a prepayment of the Notes in the
amount by which the outstanding principal balance of the Notes exceeds the
Revolving Commitment as reduced pursuant to this Section 2.
(f) MANDATORY REVOLVING COMMITMENT REDUCTIONS. The Borrowing Base
shall be reduced from time to time by an amount of any prepayment required
by Section 12(q) hereof upon the sale of assets. 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 Lenders under the
Commitments are several and not joint. The failure of any Lender to make
an Advance required to be made by it shall not relieve any other Lender of
its obligation to make its Advance, and no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender. No Lender shall be required to lend hereunder any amount in
excess of its legal lending limit.
(h) TYPE AND NUMBER OF ADVANCES. Any Advance on the Commitments may
be a Base Rate Loan or a LIBOR Loan, or a combination thereof, as selected
by the
16
Borrowers pursuant to Section 4 hereof. The total number of Tranches
which may be outstanding at any time shall never exceed four (4).
3. 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 Revolving Note or Notes in the aggregate face amount of $124,000,000,
and shall be in the form of Exhibit "B" hereto with appropriate
insertions. Notwithstanding the face amount of the Revolving Notes, the
actual principal amount due from the Borrowers to Lenders 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 Lenders 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 Revolving Loans. Irrespective of the face amount of the
Revolving Notes, no Lender 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. At the Effective Date there shall
be outstanding Revolving Notes in the aggregate face amount of
$124,000,000 payable to the order of Lenders payable to the order of
Lenders. From time to time new Notes may issued to other Lenders as such
Lenders 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 Lender exchange its Note(s) for newly issued Note(s) to better
reflect the extent of each Lender's Commitments hereunder.
(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
Lenders 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 Sections 9(b) hereof.
(f) PAYMENT TO LENDERS. Each Lender's Pro Rata Part of payment or
prepayment of the Loans shall be directed by wire transfer to such Lender
by the Agent at
17
the address provided to the Agent for such Lender for payments no later
than 2:00 p.m., Dallas,
Texas, 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 Lender shall have failed to
make an Advance as contemplated under Section 2 hereof (a "Defaulting
Lender") and the Agent or another Lender or Lenders shall have made
such Advance, payment received by Agent for the account of such
Defaulting Lender or Lenders shall not be distributed to such
Defaulting Lender or Lenders until such Advance or Advances shall have
been repaid in full to the Lender or Lenders who funded such Advance or
Advances. Any payment or prepayment received by Agent at any time after
12:00 noon, Dallas,
Texas, 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 Lender as provided above, then Agent shall promptly direct such
principal amount by wire transfer to such Lender.
(g) SHARING OF PAYMENTS, ETC. If any Lender 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 Lenders, such Lender shall purchase from the other Lenders such
participation as shall be necessary to cause such purchasing Lender 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 Lender, the purchase shall be rescinded and the purchase price
restored to the extent of the recovery. The Borrowers agree that any
Lender so purchasing a participation from another Lender 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 Lender 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 Lender or the Borrowers (the "Payor") prior to the date
on which such Lender 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 Lenders, 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
18
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.
4. INTEREST RATES.
(a) OPTIONS.
(i) BASE RATE LOANS. On all Base 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 365 days, or if
appropriate, 366 days with respect to the unpaid principal amount of
each Base Rate Loan from the date the proceeds thereof are made
available 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 Base Rate. Subject to
the provisions of this Agreement as to prepayment, the principal of
the Notes representing Base Rate Loans shall be payable as specified
in Section 3(e) hereof and the interest in respect of each Base Rate
Loan shall be payable on each Interest Payment Date applicable
thereto. Past due principal and, to the extent permitted by law,
past due interest in respect to each Base Rate Loan, shall bear
interest, payable on demand, at a rate per annum equal to the
Default Rate.
(ii) LIBOR LOANS. On all 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 made available 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. 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
applicable thereto. 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) Business
Days' written notice prior to the making by the Lenders 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) or three (3) month period. If Agent
shall not have received timely notice of a designation of such
Interest Period as herein provided, Borrowers shall be
19
deemed to have elected to convert all maturing LIBOR Loans to
Base Rate Loans.
(b) INTEREST RATE DETERMINATION. The Agent shall determine each
interest rate applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrowers and the Lenders 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 Base Rate Loans by giving
Agent irrevocable notice of such election in writing prior to 10:00 a.m.
(Dallas,
Texas time) on the conversion date and such conversion shall be
made on the requested conversion date, provided that any such conversion
of LIBOR Loan shall only be made on the last day of the Interest Period
with respect thereof, (ii) to convert all or any part of its Base Rate
Loans to LIBOR Loans by giving the Agent irrevocable written notice of
such election three (3) 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 Business Day, on the next succeeding
Business Day. 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.
5. SPECIAL PROVISIONS RELATING TO LOANS.
(a) UNAVAILABILITY OF FUNDS OR INADEQUACY OF PRICING. In the event
that, in connection with any proposed LIBOR Loan, the Agent reasonably
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 Lenders of funding LIBOR Loan for such Interest Period, the
Agent shall give notice of such determination to the Borrowers and the
Lenders, whereupon, until the Agent notifies the Borrowers and the Lenders
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make, continue or convert Loans into LIBOR
Loan shall be suspended, and all loans to Borrowers shall be Base Rate
Loans during the period of suspension.
20
(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 Lender to make or continue to maintain or fund
LIBOR Loans hereunder, then such Lender shall promptly notify Borrowers in
writing and such Lender'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 Lender to make or maintain LIBOR Loans. Upon
receipt of such notice, Borrowers shall either repay the outstanding LIBOR
Loans owed to such Lender, without penalty, on the last day of the current
Interest Periods (or, if any Lender may not lawfully continue to maintain
and fund such LIBOR Loans, immediately), or Borrowers may convert such
LIBOR Loans at such appropriate time to Base 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 Lender 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 Lender 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 Lender under this
Agreement or its Notes in respect of any LIBOR Loan (other
than franchise taxes and taxes imposed on or measured by the
overall net income of such Lender);
(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 Lender, including
the Commitment of such Lender hereunder; or
(C) shall impose on such Lender or on the London
interbank market any other condition affecting this
21
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 Lender of making, converting into, continuing, or maintaining
any LIBOR Loan or to reduce any sum received or receivable by such
Lender under this Agreement or its Notes with respect to any LIBOR
Loan, then Borrowers shall pay to such Lender on demand such amount
or amounts as will reasonably compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by
Borrowers under this Section 5(c), Borrowers may, by notice to such
Lender (with a copy to Agent), suspend the obligation of such Lender
to make or continue LIBOR Loans, or to convert all or part of the
Base Rate Loans owing to such Lender 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
Lender to receive the compensation so requested.
(ii) If, after the date hereof, any Lender 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 Lender or any corporation
controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender 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 Lender such additional amount or amounts
as will reasonably compensate such Lender for such reduction.
(iii) Each Lender shall promptly notify Borrowers and Agent of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to
this Section 5(c) and 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 Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 5(c) shall furnish to Borrowers and
Agent a statement setting forth
22
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 Lender may use any reasonable
averaging and attribution methods.
(iv) Any Lender 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 Lender 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
Lender 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 Lender issuing such
notice such additional amounts as are required to compensate such
Lender for the increased cost, reduced payments or increased capital
requirements identified therein, as the case may be.
(d) DISCRETION OF LENDER AS TO MANNER OF FUNDING. Notwithstanding
any provisions of this Agreement to the contrary, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loan
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 Lender had actually funded and maintained each LIBOR Loan through
the purchase of deposits having a maturity corresponding to the last day
of the 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 Lender 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 Lender to fund or maintain any
LIBOR Loan or the relending or reinvesting of such deposits or amounts
paid or prepaid to the Lenders 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 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
23
(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 Lender such amount as will reimburse
such Lender for such loss, cost or expense. If any Lender 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.
(f) REPLACEMENT OF LENDERS. If any Lender suspends its obligations
to make LIBOR Loans pursuant to Section 5(b) or requests compensation
under Section 5(c), then Borrowers, with the consent of the Agent, shall
have the right to remove or replace such Lender as a party to this
Agreement, Borrowers may, upon notice to such Lender and Agent and with
the consent of the Agent, (i) remove such Lender by terminating such
Lender's Revolving Commitment, or (ii) replace such Lender by causing such
Lender to assign its Revolving Commitment (without payment of any
assignment fee) pursuant to Section 28 to one or more other Lenders or
Eligible Assignees procured by Borrowers and approved by Agent. Borrowers
shall pay in full all principal, interest, fees, and other amounts owing
to such Lender through the date of termination or assignment. Any Lender
being replaced shall execute and deliver an Assignment and Acceptance
Agreement with respect to such Lender's Revolving Commitment and
outstanding Loans.
6. COLLATERAL SECURITY. 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 therefor, Borrowers have heretofore granted
and assigned to Agent for the ratable benefit of the Lenders a first and prior
Lien on certain of their Oil and Gas Properties, certain related equipment, oil
and gas inventory and proceeds of the foregoing. To secure the performance of
the Guarantors under the Guaranties, 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 therefor, the Guarantors have heretofore granted and assigned to
Agent for the ratable benefit of the Lenders 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. To further secure the performance
by the Borrowers hereunder, the Borrowers have heretofore (i) granted to the
Agent for the ratable benefit of the Lenders a first and prior Lien on all of
the issued and outstanding voting securities of each of their domestic
Subsidiaries and (ii) granted to the Agent for the ratable benefit of the
Lenders a first and prior lien on 66% of the outstanding voting stock of their
foreign Subsidiaries, including but not limited to, Addison, and (iii)
collaterally assigned to the Agent for the ratable benefit of the Lenders the
Cdn $150,000,000 promissory note (the "Addison Note") and collateral documents
executed by
24
Addison for the benefit of Borrowers and all collateral, if any, securing the
same. The Oil and Gas Properties heretofore and hereafter mortgaged to the
Agent by the Borrowers and the Guarantors shall represent not less than 90%
of the Engineered Value (as hereinafter defined) of Borrowers' and
Guarantors' Oil and Gas Properties as of the Effective Date. In addition to
the mortgaging of the Oil and Gas Properties, EXCO has provided the Lenders
with the Guaranties of all of its material domestic subsidiaries. Obligations
arising from (i) agreements arising from Rate Management Transactions between
Borrowers or any Guarantor and one or more of the Lenders or an Affiliate of
any of the Lenders and (ii) Borrowers' guaranty of obligations owed by
Addison under the Canadian
Credit Agreement shall be secured by the
Collateral (as hereinafter defined) on a pari passu basis with the
indebtedness and obligations of the Borrowers under the Loan Documents. All
Oil and Gas Properties and other collateral in which Borrowers or any
Guarantor herewith grants or hereafter grants to Agent for the ratable
benefit of the Lenders a first and prior Lien (to the satisfaction of the
Agent) in accordance with this Section 6 or the Oil and Gas Properties, as
such properties and interests are from time to time constituted, are
hereinafter collectively called the "Collateral".
Notwithstanding anything contained herein or in the other Loan Documents
to the contrary, the principal of the Addison Note may be converted, in whole or
in part, into equity of Addison and the Addison Note returned to Borrowers and
cancelled so long as (a) no Event of Default exists, (b) no Borrowing Base
Deficiency exists, (c) 66% of the outstanding voting stock of Addison is
collaterally assigned to Agent for the ratable benefit of Lenders, and (d) any
substitute note or notes for the Addison Note are collaterally assigned to Agent
for the ratable benefit of Lenders.
The granting and assigning of such security interests and Liens by
Borrowers and one or more of the Guarantors 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 and the Guarantors shall have furnished to
the Agent mortgage and title opinions and other title information reasonably
satisfactory to Agent with respect to the title and Lien status of Borrowers'
and Guarantors' interests in not less than 80% of the Engineered Value .
"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, 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 Lenders' security interests and Liens in the Oil
and Gas Properties or any part thereof.
25
7. BORROWING BASE.
(a) INITIAL BORROWING BASE. At the Effective Date, the
Borrowing Base shall be $58,000,000.
(b) SUBSEQUENT DETERMINATIONS OF BORROWING BASE. Subsequent
determinations of the Borrowing Base shall be made by the Lenders
semi-annually on May 1 and November 1 of each year beginning May 1, 2002
or as Unscheduled Redeterminations. By March 1 each year, beginning March
1, 2002, Borrowers shall furnish to the Lenders an engineering report in
form and substance reasonably satisfactory to Agent prepared by an
independent petroleum engineering firm acceptable to Agent, said
engineering report to utilize 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. By September 1 of each year beginning
September 1, 2002, or within thirty (30) days after either (i) receipt of
notice from Agent that the Lenders 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
Lenders an engineering report in form and substance reasonably
satisfactory to Agent, said engineering report to utilize economic and
pricing parameters used by the Agent as established from to time, together
with such other information, reports and data concerning the value of such
Oil and Gas Properties. Agent shall by written 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 Lenders 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 to be made by the Lenders, 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), unless such
failure is of no fault of the Borrowers, the Lenders may nonetheless
designate the Borrowing Base at any amounts which the Lenders in their
reasonable discretion determine and may redesignate the Borrowing Base
from time to time thereafter until the Lenders receive all such
information, reports and data, whereupon the Lenders shall designate a new
Borrowing Base as described above. The procedure for determining the
Borrowing Base at each redetermination shall be that the Agent shall
determine the Borrowing Base and submit the same to the Lenders. Increases
in the Borrowing Base will require approval of all Lenders, but other
changes in the Borrowing Base will be subject to the approval of Majority
Lenders. If any redetermined Borrowing Base is not approved by Majority
Lenders within twenty (20) days after submission to the Lenders by the
Agent, the Agent shall notify each of the Lenders that the proposed
Borrowing Base has not been approved and each Lender will submit within
ten (10) days thereafter
26
its proposed Borrowing Base. The redetermined Borrowing Base shall be
then determined based upon the weighted arithmetic average of the
proposed amounts submitted by each Lender, said proposals to be
weighted according to each Lender's Commitment. Each Lender shall
determine the amount of the Borrowing Base based upon the loan
collateral value which such Lender in its sole discretion (using such
methodology, assumptions and discount rates as such Lender customarily
uses in assigning collateral value to oil and gas properties, oil and
gas gathering systems, gas processing and plant operations) assigns to
such Oil and Gas Properties 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 Lender customarily considers in
evaluating similar oil and gas credits. 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, if
any, required to be made pursuant to Section 12(q) hereof. The
Borrowing Base shall be additionally reduced from time to time pursuant
to the provisions of Sections 2(f) hereof. It is expressly understood
that the Lenders have no obligation to designate the Borrowing Base at
any particular amounts, except in the exercise of their discretion,
whether in relation to the Commitments or otherwise. Provided, however,
that the Lenders shall not have the obligation to designate a Borrowing
Base in an amount in excess of the Revolving Commitment.
8. FEES.
(a) UNUSED COMMITMENT FEE. The Borrowers shall pay to Agent for the
ratable benefit of the Lenders an unused commitment fee (the "Unused
Commitment Fee") equivalent to the Unused Commitment Fee Rate times the
daily average of the unadvanced amount of the Revolving Commitment (i.e.,
the Revolving Commitment minus the Total Outstandings). Such Unused
Commitment Fee shall be calculated on the basis of a year consisting of
360 days. The Unused Commitment Fee shall be payable in arrears on the
last Business Day of each calendar quarter beginning December 31, 2001
with the final fee payment due on the Revolving 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 quarterly period, the Borrowers shall
pay to the Agent for the ratable benefit of the Lenders, 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).
27
(c) CLOSING FEE. The Borrowers shall pay to The Bank of
Nova Scotia a Closing Fee in the amount of one-half of one percent
(.50%) of the amount of its initial Commitment.
(d) BORROWING BASE INCREASE FEE. The Borrowers shall pay to the
Agent for the ratable benefit of the Lenders a Borrowing Base increase fee
equal to one-quarter of one percent (.25%) of the amount of any
incremental increase in the Borrowing Base from the amount of the
Borrowing Base set as of the preceding Determination Date (whether
scheduled or made as an Unscheduled Redetermination), said fee to be
payable upon notice to Borrowers of such increase.
(e) AGENCY FEE. The Borrowers shall pay to the Agent an
annual Agency Fee for acting as administrative agent hereunder in an
amount agreed upon between Agent and Borrowers.
9. 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) Business Days' notice to
Agent in the case of LIBOR Loan Tranches and without notice in the case of
Base Rate Loans and shall be in a minimum amount of (i) $500,000 or any
whole multiple of $100,000 in excess thereof (or the unpaid balance of the
Notes, whichever is less), for Base Rate Loans, plus accrued interest
thereon and (ii) $1,000,000 or any whole multiple of $100,000 in excess
thereof (or the unpaid balance on the Notes, whichever is less) for LIBOR
Loans, plus accrued interest thereon to the date of prepayment.
(b) MANDATORY PREPAYMENT FOR BORROWING BASE DEFICIENCY. In the event
the Total Outstandings ever exceeds the Borrowing Base as determined by
Lenders pursuant to Section 7(b) hereof (a "Borrowing Base Deficiency"),
the Borrowers shall, within ten (10) days after written notification from
the Agent, either (A) by instruments reasonably satisfactory in form and
substance to the Lender, provide the Agent with Collateral with value and
quality in amounts satisfactory to all of the Lenders 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 Notes in an amount at least equal to such excess plus
accrued interest thereon to the date of prepayment, or (C) prepay, without
premium or penalty, the principal amount of such excess in not more than
six (6) equal monthly installments to be applied to principal plus accrued
interest thereon with the first such monthly payment being due upon the
30th day after receipt of notice of such deficiency; provided, however,
that the entire principal amount of such excess must be repaid before the
next Determination Date. If the Total Outstandings ever exceeds the
Revolving Commitment as a result of a required reduction in the Revolving
28
Commitment pursuant to Section 2(f) hereof, then in such event, Borrowers
shall, upon written notice, immediately prepay the principal amount of the
Notes in an amount at least equal to such excess plus accrued interest to
the date of prepayment.
10. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lenders to enter into this Agreement, each Borrower represents and
warrants to the Lenders (which representations and warranties will survive
the delivery of the Notes) that:
(a) CREATION AND EXISTENCE. EXCO is a corporation validly existing
and in good standing under the laws of the of the State of Texas and is
duly qualified in all jurisdictions wherein failure to qualify may result
in a Material Adverse Effect. Operating is a limited partnership duly
formed and existing and in good standing under the laws of the of the
State of Delaware and is duly qualified in all jurisdictions wherein
failure to qualify may result in a Material Adverse Effect. Each of the
Guarantors is 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 and each Guarantor has all
corporate power and authority to own their respective properties and
assets and to transact the business in which they are engaged.
(b) POWER AND AUTHORITY. Borrowers are duly authorized and empowered
to create and issue the Notes; and Borrowers and each Guarantor is duly
authorized and empowered to execute, deliver and perform their respective
Loan Documents, including this Agreement; and all corporate action on each
Borrower's and each Guarantor'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.
(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 each Borrower and each
Guarantor, respectively, enforceable in accordance with its respective
terms (except that enforcement may be subject to general principles of
equity and 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, or any Guarantor's, knowledge violate any provisions of
any contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which each Borrower or any Guarantor is subject, or
result in the creation or imposition of any lien or other encumbrance upon
any assets or properties of Borrowers, other than those contemplated by
this Agreement.
29
(e) NO CONSENT. The execution, delivery and performance by Borrowers
of the Notes and the execution, delivery and performance by each Borrower
and each Guarantor of the 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.
(f) FINANCIAL CONDITION. The audited Financial Statements of EXCO
dated as of December 31, 2000 and the interim Financial Statements dated
as of September 30, 2001 which have been delivered to Lenders by Borrowers
are complete and correct in all material respects and fully and accurately
reflect in all material respects the financial conditions and the results
of the operations of EXCO and its Subsidiaries as of such dates and for
the periods stated and no changes have occurred between such dates and the
Effective Date in the condition, financial or otherwise of EXCO and its
Subsidiaries which are reasonably expected to have a Material Adverse
Effect, except as disclosed to Lenders in Schedule "2" attached hereto.
(g) LIABILITIES. Neither Borrower nor any Guarantor has any material
liability, direct or contingent on the Effective Date, except as disclosed
to the Lenders in the Financial Statements and 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 either Borrower or any Guarantor
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 Lenders in Schedule "4" attached hereto, on
the Effective Date there is no litigation, legal or administrative
proceeding, investigation or other action of any nature pending or, to the
knowledge of the officers of each Borrower, threatened against or
affecting either Borrower or any Guarantor 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. Each Borrower and each Guarantor
have filed all tax returns and reports required to be filed and has paid
all taxes, assessments, fees and other governmental charges levied upon it
or its 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.
30
(j) TITLES, ETC. Each Borrower and each Guarantor have good and
defensible title to all of their material assets, including without
limitation, the Oil and Gas Properties, free and clear of all liens or
other encumbrances except Permitted Liens.
(k) DEFAULTS. Neither Borrower nor any Guarantor 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 or any
Guarantor 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 Borrowers delivered to Lenders, neither the
business nor the assets or properties of Borrowers or any Guarantor has
been affected (to the extent it is reasonably expected 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 Commitment
may be used by Borrowers for the purposes of (i) refinance existing
indebtedness, (ii) acquisition, exploration and development of oil and gas
properties, (iii) Letters of Credit, and (iv-) working capital and other
general corporate purposes. Neither Borrower is engaged principally or as
one of their 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 U.
Neither Borrower nor any person or entity acting on behalf of either
Borrower 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 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 each Borrower and each
Guarantor are located at the address as stated in Section 17 hereof.
31
(o) COMPLIANCE WITH THE LAW. To the best of each Borrower's
knowledge, neither Borrower nor any Guarantor:
(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 either Borrower or any Guarantor to the Lenders 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 statements contained therein not materially misleading.
(q) NOT A UTILITY. Neither Borrower nor any Guarantor is an entity
engaged in the State of Texas in the (i) generation, transmission, or
distribution and sale of electric power; (ii) transportation, distribution
and sale through a local distribution system of natural or other gas for
domestic, commercial, industrial, or other use; (iii) provision of
telephone or telegraph service to others; (iv) production, transmission,
or distribution and sale of steam or water; (v) operation of a railroad;
or (vii) provision of sewer service to others.
(r) ERISA. Each Borrower and each Guarantor is 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 either Borrower or any Guarantor.
(s) PUBLIC UTILITY HOLDING COMPANY ACT. Neither Borrower nor any
Guarantor 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.
(t) SUBSIDIARIES. Each of the Borrowers' and the
Guarantors' Subsidiaries are listed on Schedule "5" hereto.
(u) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule "6", as
of the Effective Date neither Borrower nor any Guarantor (i) has received
notice or otherwise learned of any Environmental Liability which would be
reasonably expected to
32
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 expected
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 or any Guarantor
is or may be liable which could reasonably be expected to result in a
Material Adverse Effect.
(v) LIENS. Except (i) as disclosed on Schedule "1" hereto and (ii)
for Permitted Liens, the assets and properties of each Borrower and each
Guarantor are free and clear of all Liens and encumbrances.
11. 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 Commitment shall
be subject to satisfaction of the following conditions precedent:
(i) BORROWER'S EXECUTION AND DELIVERY. Each Borrower
shall have executed and delivered the Agreement, the Notes and
other required Loan Documents, all in form and substance
satisfactory to the Agent;
(ii) GUARANTOR'S EXECUTION AND DELIVERY. Each
Guarantor shall have executed and delivered its Guaranty in
the form of Exhibit "C" hereto and other required Loan
Documents;
(iii) RESOLUTIONS. The Agent shall have received
appropriate certified resolutions of each Borrower and each
Guarantor;
(iv) GOOD STANDING. The Agent shall have received
evidence of existence and good standing for each Borrower and
each Guarantor;
(v) SUBORDINATION. The Agent shall have received evidence that all
notes owed by Addison to EXCO have been satisfactorily subordinated to
obligations owed under the Canadian Credit Facility;
(vi) INTERCREDITOR AGREEMENT means that certain intercreditor
agreement between the Agent and the Lenders and the agent and the lenders
under the Canadian Credit Agreement.
33
(vii) PAYMENT OF FEES. The Agent shall have received for the
benefit of Lenders the Fees required pursuant to Section 8 hereof;
(viii) REPRESENTATION AND WARRANTIES. The representations
and warranties of each Borrower under this Agreement shall be 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);
(ix) NO EVENT OF DEFAULT. No Default or Event of Default shall
have occurred and be continuing;
(x) 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
(xi) 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 each
Borrower.
(b) The obligation of the Lenders to make any Advance or issue any Letter
of Credit under the Commitment (other than 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 each Borrower 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); and
(ii) NO EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing.
12. AFFIRMATIVE COVENANTS. A deviation from the provisions of this Section
12 shall not constitute a Default or an Event of Default under this Agreement if
such deviation is consented to in writing by Majority Lenders prior to the date
of deviation. Each Borrower will at all times comply, and will cause each
Guarantor to comply, with the covenants contained in this Section 12 from the
date hereof and for so long as the Commitments are in existence or any amount is
owed to the Agent or the Lenders under this Agreement or the other Loan
Documents.
(a) FINANCIAL STATEMENTS AND REPORTS. Each Borrower shall promptly
furnish to the Agent from time to time upon request such information
regarding the business and affairs and financial condition of each
Borrower and each Guarantor, as the Agent may reasonably request, and will
furnish to the Agent:
34
(i) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as
available, and in any event within ninety (90) days after the
close of each fiscal year, the annual audited consolidated
Financial Statements of EXCO, prepared in accordance with GAAP
accompanied by an unqualified opinion on such consolidated
statements 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 fiscal quarter of each year, the quarterly unaudited,
consolidated and consolidating Financial Statements of EXCO
prepared in accordance with GAAP;
(iii) REPORT ON PROPERTIES. As soon as available and in any
event on or before March 1 and September 1 of each calendar year,
and at such other times as any Lender, 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. If requested by Lenders
and within thirty (30) days of such request, a monthly report, in
form and substance satisfactory to the Agent, indicating the next
preceding month's sales volumes, sales revenues, production
taxes, operating expenses and net operating income from the Oil
and Gas Properties, with detail, calculations and worksheets, all
in form and substance reasonably satisfactory to the 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, EXCO will furnish or cause to be furnished to the Agent
a certificate in the form of Exhibit "D" attached hereto, signed by the
President or Chief Financial Officer of EXCO, (i) stating that EXCO has
fulfilled in all material respects its respective 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
35
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 and each Guarantor 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), (d) and
(e); 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. Each Borrower and each Guarantor will pay
and discharge promptly all taxes, assessments and governmental charges or
levies imposed upon each Borrower and each Guarantor, or upon the income
or any assets or property of each Borrower and each Guarantor, 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 each Borrower or any Guarantor and
which could reasonably be expected to result in a Material Adverse Effect;
provided, however, that neither Borrower nor any Guarantor 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 either
Borrower or any such Guarantor shall have set up adequate reserves
therefor, if required, under GAAP.
(d) COMPLIANCE WITH LAWS. Each Borrower and each Guarantor 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. Each Borrower and each Guarantor 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. Each Borrower and each Guarantor 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. Each Borrower will pay the Notes and
other obligations incurred by it hereunder according to the reading, tenor
and effect thereof and hereof; and each Borrower and each Guarantor will
do and perform every act and
36
discharge all of the obligations provided to be performed and
discharged by each Borrower or any Guarantor under the Loan Documents,
including this Agreement, at the time or times and in the manner
specified.
(g) INSURANCE. Each Borrower and each Guarantor now maintains 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, each Borrower will
furnish or cause to be furnished to the Agent from time to time a summary
of the respective insurance coverage of each Borrower and each Guarantor
in form and substance reasonably 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. Each Borrower and each Guarantor shall at all times
maintain adequate insurance with respect to all of its assets, including
but not limited to, the Oil and Gas Properties or any collateral against
its liability for injury to persons or property, which insurance shall be
by financially sound and reputable insurers and shall without limitation
provide the following coverages: comprehensive general liability
(including coverage for damage to underground resources and equipment,
damage caused by blowouts or cratering, damage caused by explosion, damage
to underground minerals or resources caused by saline substances, broad
form property damage coverage, broad form coverage for contractually
assumed liabilities and broad form coverage for acts of independent
contractors), worker's compensation and automobile liability. Each
Borrower and each Guarantor shall at all times maintain cost of control of
well insurance with respect to the Oil and Gas Properties which shall
insure each Borrower and each Guarantor against seepage and pollution
expense; redrilling expense; and cost of control of well; fires, blowouts,
etc., if deemed economical in the reasonable discretion of each Borrower
and each such Guarantor. Additionally, each Borrower 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. Each Borrower and each Guarantor 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 each Borrower's or any Guarantor's auditors.
37
(i) RIGHT OF INSPECTION. Each Borrower and each Guarantor will
permit any officer, employee or agent of the Lenders upon reasonable
notice to examine each Borrower's and each Guarantor's books, records and
accounts, and take copies and extracts therefrom, all at such reasonable
times during normal business hours and as often as the Lenders may
reasonably request. The Lenders 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 Lenders', and the Lenders'
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 Lenders' 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 each Borrower or any
Guarantor furnished by each Borrower or any Guarantor to the Lenders, but
does not include information (i) which was publicly known, or otherwise
known to the Lenders, at the time of the disclosure, (ii) which
subsequently becomes publicly known through no act or omission by the
Lenders, or (iii) which otherwise becomes known to the Lenders, other than
through disclosure by each Borrower.
(j) NOTICE OF CERTAIN EVENTS. Each Borrower and each Guarantor shall
promptly notify the Agent if either Borrower or any Guarantor learns of
the occurrence of (i) any event which constitutes an Event of Default
together with a detailed statement by either Borrower of the steps being
taken to cure such Event of Default; (ii) any legal, judicial or
regulatory proceedings affecting either Borrower or any Guarantor or any
of the assets or properties of either Borrower or any Guarantor which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect; (iii) any dispute between either Borrower or any Guarantor
and any governmental or regulatory body or any other Person or entity
which, if adversely determined, could reasonably be expected to cause a
Material Adverse Effect; (iv) any other matter which in either Borrower's
or any Guarantor's reasonable opinion could have a Material Adverse
Effect.
(k) ERISA INFORMATION AND COMPLIANCE. Each Borrower and each
Guarantor will promptly furnish to the Agent 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 each Borrower or any Guarantor,
as the case may be, specifying the nature thereof, what action such party
is 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. Each Borrower and each
Guarantor will deliver to the Agent (i) promptly upon its becoming
available, one copy of each
38
report (other than routine informational filings) sent by either
Borrower or any Guarantor to any court, governmental agency or
instrumentality pursuant to any Environmental Law, (ii) notice, in
writing, promptly upon either Borrower's or any Guarantor's 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 either Borrower or any Guarantor 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
either Borrower or any Guarantor, and each Borrower and such Guarantor
shall promptly deliver a copy of any such notice to Agent.
(m) COMPLIANCE AND MAINTENANCE. Each Borrower and each Guarantor
will (i) observe and comply in all material respects with all
Environmental Laws; (ii) except as provided in Subsections 12(n) and 12(o)
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 each Borrower or
the affected Guarantor 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 either Borrower or any Guarantor 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 reasonably satisfactory to Agent that there are no
Liens, claims or encumbrances on the Oil and Gas Properties, except
Permitted Liens.
(n) OPERATION OF PROPERTIES. Except as provided in Subsection 12(o)
and (p) below, each Borrower and each Guarantor 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 each Borrower and each Guarantor 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.
39
(o) COMPLIANCE WITH LEASES AND OTHER INSTRUMENTS. Each Borrower and
each Guarantor will pay or cause to be paid and discharge all rentals,
delay rentals, royalties, production payment, and indebtedness required to
be paid by such party (or required to keep unimpaired in all material
respects the rights of such party in 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 such party by each and all of
the assignments, deeds, leases, subleases, contracts, and agreements in
any way relating to such party or any of the Oil and Gas Properties and do
all other things necessary of such party to keep unimpaired in all
material respects the rights of such party thereunder and to prevent the
forfeiture thereof or default thereunder; provided, however, that nothing
in this Agreement shall be deemed to require either Borrower or any
Guarantor 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 either Borrower or any Guarantor 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 each Borrower or any Guarantor
exercised in good faith, it is not in the best interest of each Borrower
or such Guarantor 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 each Borrower or any
Guarantor, neither Borrower nor any Guarantor shall be obligated to
perform any undertakings contemplated by the covenants and agreement
contained in Subsections 12(n) or 12(o) hereof which are performable only
by such operators and are beyond the control of either Borrower or any
Guarantor; however, each Borrower and each Guarantor agrees 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) SALE OF CERTAIN ASSETS/PREPAYMENT OF PROCEEDS. Each Borrower and
each Guarantor will immediately pay over to the Agent for the ratable
benefit of the Lenders as a prepayment of principal on the Notes and a
reduction of the Commitments, an amount equal to 100% of the Release Price
from the proceeds of the sale of the Oil and Gas Properties, which sale
has been either (i) made in compliance with the provisions of Section
13(a)(ii) hereof, or (ii) approved in advance by all of the Lenders. The
term "Release Price" as used herein shall mean a price determined by the
Majority Lenders in their discretion based upon the loan collateral value
of the Oil and Gas Properties being sold by each Borrower which such
Lenders in their discretion (using such methodology, assumptions and
discounts rates as such Lenders customarily use in assigning collateral
value to oil and gas properties, oil and gas gathering systems, gas
processing and plant operations) assign to such Oil and Gas Properties at
the time in question. Any such prepayment of principal on the Notes
required by this Section 12(q), shall not be in lieu of, but shall be in
addition to, any mandatory prepayment of principal required to be paid
pursuant to Section 9(b) hereof.
40
(r) TITLE MATTERS. Within sixty (60) days after the Effective Date
with respect to the Oil and Gas Properties listed on Schedule "7" hereto,
Borrowers shall furnish Agent with title opinions and/or title information
reasonably satisfactory to Agent showing good and defensible title of each
Borrower or each Guarantor, as the case may be, 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,
if requested, Agent with title opinions and/or title information
reasonably satisfactory to Agent showing good and defensible title of
either Borrower or a Guarantor, as the case may be, to such Oil and Gas
Properties subject only to Permitted Liens. The obligation of the
Borrowers to furnish title opinions and/or title information required by
this Section 12(q) shall be limited to its obligation to furnish title
opinions and other title information on not less than 80% of the
Engineered Value.
(s) CURATIVE MATTERS. Within sixty (60) days after the Effective
Date with respect to matters listed on Schedule "8" 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. If Borrowers fail to satisfy (i) or
(ii) above within the time specified, the loan collateral value assigned
by the Lenders to the Oil and Gas Properties for which such curative
information was requested shall be deducted from the Borrowing Base
resulting in a reduction thereof.
(t) CHANGE OF PRINCIPAL PLACE OF BUSINESS. Borrowers and each
Guarantor 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.
(u) ADDITIONAL COLLATERAL. Borrowers agree to regularly monitor
engineering data covering all producing oil and gas properties and
interests owned or acquired by Borrowers on or after the date hereof and
to mortgage or cause to be mortgaged such of the same to Agent for the
ratable benefit of the Lenders in substantially the form of the Security
Instruments, as applicable, to the extent that the Lenders shall at all
times during the existence of the Revolving Commitment be secured by
perfected Liens and security interests covering not less than ninety
percent (90%) of the Engineered Value of all producing oil and gas
properties of Borrowers. In addition, Borrowers agree that in connection
with the mortgaging of such additional oil and gas properties, they shall
within a reasonable time thereafter, deliver or cause to be delivered to
the Agent such mortgage and title opinions and other title information
with respect to the title and Lien
41
status of such oil and gas properties as may be necessary to maintain
at all times a level of such title opinions and title information of
not less than eighty percent (80%) of the Engineered Value of all Oil
and Gas Properties mortgaged to the Agent for the ratable benefit of
the Lenders.
(v) CASH COLLATERAL ACCOUNTS. Each Borrower shall establish and
maintain with Agent one or more operating accounts (the "Operating
Accounts"), the maintenance of which shall be subject to such rules and
regulations as Agent from time to time specify. Such Operating Accounts
shall be the sole operating accounts of Borrowers. Such accounts shall be
maintained with the Agent until all amounts due hereunder and under the
Notes have been paid in full. To the extent not already so instructed,
each Borrower shall within sixty (60) days of the Effective Date instruct
and cause all monetary proceeds of production from the Oil and Gas
Properties to be remitted to its Operating Accounts. Such proceeds of
production shall not be redirected without the prior written consent of
the Agent until such time as all indebtedness due Lenders by Borrowers has
been paid in full and the Commitments have been terminated. Borrowers
hereby grant a security interest to Lenders in and to their Operating
Accounts (collectively, the "Cash Collateral Accounts") and all checks,
drafts and other items ever received by any Lender 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
Borrowers' obligations hereunder any and all funds legally and
beneficially owned by Borrowers then or thereafter on deposit in the Cash
Collateral Accounts for the ratable benefit of the Lenders.
(w) STOCK OF FOREIGN SUBSIDIARIES. Borrowers shall maintain at all
times a first and prior Lien on not less than 66% of the outstanding
voting stock of their foreign Subsidiaries, including, but not limited to,
Addison. Borrowers agree from time to time to pledge such additional
voting securities as may be necessary to maintain such 66% level.
(x) HEDGING. Within ten (10) days after the Effective Date,
Borrowers shall provide to the Agent satisfactory evidence that they
and/or the Guarantors have entered into Rate Management Transactions
covering at least 75% of the Borrowers' anticipated production from
proved, developed producing reserves upon its Oil and Gas Properties,
which Rate Management Transactions shall have a maturity of twenty-four
(24) months or less and shall otherwise be satisfactory to Majority
Lenders.
13. NEGATIVE COVENANTS. A deviation from the provisions of this Section 13
shall not constitute an Event of Default under this Agreement if such deviation
is consented to in writing by Majority Lenders prior to the date of deviation.
The Borrowers will at all times comply, and cause each Guarantor to comply, with
the covenants contained in this Section 13 from the date hereof and for so long
as the Commitment is in existence or any amount is owed to the Agent or the
Lenders under this Agreement or the other Loan Documents.
42
(a) NEGATIVE PLEDGE. Neither any Borrower nor any Guarantor
shall without the prior written consent of Majority Lenders:
(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' or any Guarantor's oil and gas businesses (including
sales of leasehold inventory), (B) other sales, leases, transfer or
other dispositions made with the consent of Majority Lenders, except
that any sale, lease, transfer or other disposition of Collateral
shall require the consent of all Lenders and (C) sales, leases or
transfers or other dispositions made by Borrowers and Guarantors
which do not exceed $2,500,000 in the aggregate between Borrowing
Base redeterminations;
(b) CURRENT RATIO. Borrowers shall not allow EXCO's ratio Current
Ratio to be less than 1.0 to 1.0 as of the end of any fiscal quarter
beginning with the fiscal quarter ending June 30, 2001.
(c) DEBT COVERAGE RATIO. The Borrowers will not allow EXCO's ratio
of Consolidated Funded Debt to Consolidated EBITDA to be greater than 2.5
to 1.0 as of the end of any fiscal quarter beginning with the fiscal
quarter ending June 30, 2001.
(d) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrowers will not
allow EXCO's Consolidated Tangible Net Worth to ever be less than the sum
of (i) $48,000,000, plus (ii) as of the end of each fiscal quarter
beginning with the fiscal quarter ending June 30, 2001, 50% of EXCO's
Consolidated Net Income for such fiscal quarter then ended (but only if
positive) and (iii) 75% of the net proceeds received by EXCO from the
issuance of any equity securities after April 26, 2001, excluding, in each
instance, the effect of ceiling test write downs.
(e) LEVERAGE RATIO. Borrowers will not allow EXCO's ratio of
Consolidated Debt to Consolidated Total Capital to ever be greater than
0.65 to 1.0 tested at the end of each fiscal quarter beginning with the
fiscal quarter ending June 30, 2001.
(f) CONSOLIDATIONS AND MERGERS. Neither Borrower nor any Guarantor
will consolidate or merge with or into any other Person, except that (i)
each Borrower or any Guarantor may merge with another Person if such
Borrower or such Guarantor is the surviving entity in such merger or (ii)
any Guarantor may merge with either Borrower if either Borrower is the
surviving entity, or with any other Guarantor, if, after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing.
43
(g) DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Neither Borrower nor
any Guarantor will incur, create, assume or in any manner become or be
liable in respect of any indebtedness, nor will Borrowers or any Guarantor
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 Borrower heretofore disclosed to Lenders in the
Borrowers' Financial Statements or on Schedule "4" 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
(iv) obligations under Rate Management Transactions
permitted pursuant to Section 13(m) hereof; or
(v) other indebtedness of any nature not in excess of
$500,000 in outstanding principal amount in the aggregate; or
(vi) EXCO guarantee of obligations owed by Addison under the
Canadian Credit Agreement; or
(vii) any renewals or extensions of (but not increases in)
any of the foregoing.
(h) RESTRICTED PAYMENTS. Neither the Borrower nor any Subsidiary
will declare or pay any cash dividend, purchase, redeem or otherwise
acquire for value any of its stock now or hereafter outstanding, return
any capital to its stockholders, or make any distribution of its assets to
its stockholders except (A) that any Subsidiary may pay dividends to any
Borrower or any Guarantor, and (B) EXCO may pay dividends required to be
paid on the Convertible Preferred Stock if, and only if, (i) no Borrowing
Base
44
Deficiency exists (whether or not said Borrowing Base Deficiency is
in the process of being cured pursuant to the provisions of Section 9(b)
hereof), or (ii) immediately before and after giving effect to any such
dividend payment any Default or Event of Default shall exist. Neither
Borrower nor any Subsidiary will retire, redeem or prepay prior to
scheduled maturity any indebtedness other than obligations under this
Agreement.
(i) LOANS AND ADVANCES. Neither Borrower nor any Guarantor
shall make or permit to remain outstanding any loans or advances 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 and each of the Guarantors heretofore furnished to
Lenders; or
(ii) advances made in the ordinary course of Borrowers'
or any Guarantor's oil and gas business; or
(iii) loans made to Addison pursuant to the Addison Note.
(j) RECEIVABLES AND PAYABLES. Neither Borrower nor any Guarantor
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.
(k) NATURE OF BUSINESS. Neither Borrower nor any Guarantor
will permit any material change to be made in the character of its
businesses as carried on at the date hereof.
(l) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any Guarantor
will enter into any transaction with any Affiliate, 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.
(m) HEDGING TRANSACTIONS. Neither Borrower nor any Guarantor will
enter into any Rate Management Transactions, except the foregoing
prohibitions shall not apply to (x) transactions consented to in writing
by the Majority Lenders which are on terms acceptable to the Majority
Lenders, or (y) Pre-Approved Contracts with Agent, a Lender or an
Affiliate of Agent, a Lender or with other counterparties acceptable to
the Lender that is a party to such Pre-Approved Contract, or if no Lender
is a party thereto, to the Agent. Once Borrowers or any Guarantor enters
into a Rate Management Transaction, the terms and conditions of such Rate
Management Transaction may not be amended or modified, nor may such Rate
Management Transaction be cancelled without the prior written consent of
Majority Lenders.
45
(n) INVESTMENTS. Neither Borrower nor any Guarantor 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 or time deposits
issued by the Lenders 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 $500,000,000 and
which have a rating of (A) 50 or above by Sheshunoff and (B) "B" or
above by Xxxx-Xxxxxx; or
(iii) investments in insured money market funds, and other
similar accounts at Agent or any Lender or such investment with
maturities of less than ninety (90) days at other commercial banks
having capital and surplus in excess of $500,000,000 and which have
a rating of (A) 50 or above by Sheshunoff and (B) "B" or above by
Xxxx-Xxxxxx; or
(iv) investments in commercial paper with maturities of less
than one year with a rating of A-2 or higher from Standard & Poor's
or a rating of P-2 or higher from Xxxxx'x Investors Services, Inc.;
or
(v) investments in Addison not exceeding the amount of all
dividends received from Addison;
(vi) investments in Subsidiaries (excluding Addison) but
only to the extent of such investments as of the Effective Date; or
(vii) other investments not exceeding in the aggregate at the
time of the incurrence thereof the amount of (A) $5,000,000
(measured in costs on a cumulative basis) whenever the Borrowing
Base Usage is equal to or greater than 75%, and (B) $10,000,000
(measured in costs on a cumulative basis) whenever the Borrowing
Base Usage is less than 75%.
(o) AMENDMENT TO ARTICLES OF INCORPORATION OR BYLAWS. Neither
Borrower nor any Guarantor will permit any material amendment to, or any
alteration of, its Articles of Incorporation or its Bylaws or, in the
case of Operating, its Partnership Agreement.
(p) ISSUANCE OF PREFERRED STOCK. Borrowers shall not issue any
preferred stock after the Effective Date except that the foregoing shall
not apply to the issuance of the Convertible Preferred Stock if, and only
if, said Convertible Preferred Stock is issued within one hundred eighty
(180) days after the Effective Date.
46
14. 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 the Notes; or
(b) Borrowers shall fail to pay when due accrued interest on any of
the Notes or any fees or any other amount payable hereunder and such
failure shall continue for a period of three (3) days following the due
date; or
(c) Any representation or warranty made by Borrowers or any
Guarantor under this Agreement, or in any certificate or statement
furnished or made to the Lenders 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 or
any Guarantor 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
(d) Default shall be made in the due observance or performance of
any of the covenants or agreements of the Borrowers or any Guarantor
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 written notice from Agent is received by Borrowers; or
(e) Default shall be made in the due observance or performance
of the covenants of Borrowers or any Guarantor contained in Section 13
of this Agreement; or
(f) Default shall be made in respect of any obligation for borrowed
money in excess of $250,000, other than the Notes, for which Borrowers or
any Guarantor is liable (directly, by assumption, as guarantor or
otherwise), or any obligations secured by any mortgage, pledge or other
consensual security interest with respect thereto, on any asset or
property of Borrowers or any Guarantor or in respect of any agreement
relating to any such obligations unless Borrowers or such Guarantor is 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
(g) Borrowers or any Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking 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
47
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
(h) An involuntary case or other proceeding, shall be commenced
against Borrowers or any Guarantor 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 or any Guarantor under the federal bankruptcy laws as
now or hereinafter in effect; or
(i) A final judgment or order for the payment of money in excess of
$500,000 (or judgments or orders aggregating in excess of $500,000) shall
be rendered against Borrowers or any Guarantor and such judgments or
orders shall continue unsatisfied and unstayed for a period of thirty (30)
days; or
(j) In the event the Total Outstandings shall at any time exceed the
Borrowing Base established for the Notes, and the Borrowers shall fail to
comply with the provisions of Section 9(b) hereof; or
(k) A Change of Control shall occur; or
(l) Xxxxxxx X. Xxxxxx or Xxx Xxxxxx shall cease for any reason to
serve as the Chief Executive Officer or President, respectively, of
Borrowers on a full-time basis; or.
(m) An Event of Default (as defined therein) shall occur under the
Canadian Credit Agreement.
Upon occurrence of any Event of Default specified in Subsections 14(g) and
(h) 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 automatically and 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. Upon the occurrence of any other Event of Default, the Agent,
upon request of Required Lenders, shall by written 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.
48
Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrowers or any Guarantor (any such notice being expressly waived
by the Borrowers and the Guarantors), 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 Lenders to or for the credit
or the account of the Borrowers or any Guarantor 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 Lenders 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
Lenders shall be applied against the indebtedness owed the Lenders by the
Borrowers pursuant to this Agreement and the Notes. The Lenders agree promptly
to notify the Borrowers and the affected Guarantor 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 Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Lenders may have.
Notwithstanding the foregoing, after the occurrence of an Event of
Default, the provisions of the Intercreditor Agreement shall apply with respect
to the rights of the Agent and all Lenders under this Agreement and the Canadian
Credit Agreement.
15. THE AGENT AND THE LENDERS.
(a) APPOINTMENT AND AUTHORIZATION. Each Lender 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 Lender in and under all Loan Documents;
(ii) to arrange the means whereby the funds of Lenders are to be made
available to the Borrowers under the Loan Documents; (iii) to take such
action as may be requested by any Lender under the Loan Documents (when
such Lender is entitled to make such request under the Loan Documents);
(iv) to receive all documents and items to be furnished to Lenders 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 Lenders; (vi) to promptly distribute to each
Lender all material information, requests, documents and items received
from the Borrowers under the Loan Documents; (vii) to promptly distribute
to each Lender such Lender'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 Lenders. Each Lender 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 Lender and may
exercise the same as though it were not the Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly
49
indicated, include Agent and any successor Agent in its capacity as a
Lender. 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 Lenders; 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 Lender shall be entitled to share in such application according to
its pro rata part thereof. Each Lender, upon request of any other
Lender, shall disclose to all other Lenders all indebtedness and
liabilities, direct and contingent, of the Borrowers to such Lender as
of the time of such request.
(b) NOTE HOLDERS. From time to time as other Lenders become a party
to this Agreement, Agent shall obtain execution by the Borrowers of
additional Notes in amounts representing the Commitments of each such new
Lender, up to an aggregate face amount of all Notes not exceeding
$124,000,000 for the Revolving Commitment. The obligation of such Lender
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 Lenders exchange their Notes for newly
issued Notes to better reflect the Commitments of the Lenders. 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. Lenders 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. LENDERS ACKNOWLEDGE THAT GARDERE XXXXX XXXXXX LLP IS
COUNSEL FOR BANK ONE, BOTH AS AGENT AND AS A LENDER, AND THAT SUCH FIRM
DOES NOT REPRESENT ANY OF THE OTHER LENDERS IN CONNECTION WITH THIS
TRANSACTION.
(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
50
giving written notice thereof to Lenders and the Borrowers, and
Agent may be removed at any time with or without cause by all Lenders
(excluding the Agent). If no successor Agent has been so appointed by
Majority Lenders (and approved by the Borrowers) and has accepted such
appointment within thirty (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 Lenders, 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, as the case may be, 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 Lender 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 Lender or the Borrowers that such Lender or the
Borrowers consider 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. The Documentation Agent and the Arranger shall have no
responsibilities as an agent hereunder.
Agent shall not be responsible to Lenders 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 Lender 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 their 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.
51
The relationship between Agent and each Lender 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 Borrowers or any of their 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 Lenders and such instructions shall be binding upon
all Lenders 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 Lenders, 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 herein and in
Section 7(b) hereof, without the consent of Majority Lenders designate the
amount of the Borrowing Base or (ii) without the consent of Majority
Lenders, 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. Provided further, however, that no
amendment, waiver, or other action shall be effected pursuant to the
preceding clause (ii) without the consent of all Lenders which: (a) would
increase the Borrowing Base, (b) would reduce any fees hereunder, or the
principal of, or the interest on, any Lender's Note or Notes, (c) would
postpone any date fixed for any payment of any fees hereunder, or any
principal or interest of any Lender's Note or Notes, (d) would increase
the aggregate Commitments or any Lender's individual Commitment hereunder
or would materially alter Agent's obligations to any Lender hereunder, (e)
would release Borrowers from their obligation to pay any Lender's Note or
Notes, (f) would change the definition of Majority Lenders or Required
Lenders, (g) would waive any of the conditions precedent to the Effective
Date (h) would extend the Revolving Maturity Date or (i) would release and
substitute any Collateral or (j) would amend this sentence or the previous
sentence. Agent shall not have liability to Lenders 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 Lenders.
(g) INDEPENDENT INVESTIGATION. Each Lender 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 Lender
by Agent in connection herewith, and each Lender
52
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 Lender 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. Lenders 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 Lender 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 Lender shall be entitled to be
reimbursed by the Agent for any amount such Lender 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 Lenders 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 each
collection by Lenders (including offsets) on account of the principal of
and interest on the Notes and fees provided for in this Agreement, that
are payable by the Borrowers, shall be made Pro Rata; provided, however,
in the event that any Defaulting Lender shall have failed to make an
Advance as contemplated under Section 3 hereof and Agent or another Lender
or Lenders shall have made such Advance, payment received by Agent for the
account of such Defaulting Lender or Lenders shall not be distributed to
such Defaulting Lender or
53
Lenders until such Advance or Advances shall have been repaid in full to
the Lender or Lenders 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 Lenders 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 Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers shall not
have so made such payment in full to Agent, each Lender shall repay to
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount
to Agent, at the interest rate applicable to such portion of the Loan.
(l) OTHER FINANCINGS. Without limiting the rights to which any
Lender otherwise is or may become entitled, such Lender 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 Lender 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 Lender 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 LENDERS. Nothing in this Agreement shall be
construed to create a partnership or joint venture between Lenders for any
purpose. Agent, Lenders and the Borrowers recognize that the respective
obligations of Lenders under the Commitments shall be several and not
joint and that neither Agent nor any of Lenders shall be responsible or
liable to perform any of the obligations of the other under this
Agreement. Each Lender 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 Commitments
on a Pro Rata basis. Each Lender shall perform all duties and obligations
of Lenders 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 Lenders any funds which it has
received, or whenever Agent in
54
good faith determines that there is any dispute among the Lenders 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 Lenders, 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 Lenders (other than to the Person who is Agent in
its separate capacity as a Lender) shall be held by the Agent pending
such distribution solely as Agent for such Lenders, and Agent shall
have no equitable title to any portion thereof.
16. EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Agent or the Lenders, 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 Lenders hereunder shall be in addition to
all other rights provided by law.
17. NOTICES. Any notices or other communications required or
permitted to be given by this Agreement or any other documents or instruments
referred to herein must be given in writing (which may be by bank wire,
telecopy or similar writing) and shall be given to the party to whom such
notice or communication is directed at the address or telecopy number of such
party as follows: (a) BORROWERS: EXCO RESOURCES, INC., 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 000, X.X. 00, Xxxxxx, Xxxxx 00000, Facsimile No. (214)
368-2087, Attention: Xxxxxxx X. Xxxxxx, Chief Executive Officer, (b)
GUARANTORS: C/O EXCO RESOURCES, INC., 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000, Facsimile No. (000) 000-0000, Attention: Xxxxxxx X.
Xxxxxx, Chief Executive Officer, (c) AGENT c/o BANK ONE, NA, 0000 Xxxx
Xxxxxx, XX0-0000, Xxxxxx, Xxxxx 00000, Facsimile No. (000) 000-0000,
Attention: Wm. Xxxx Xxxxxxx, Vice President and (d) LENDERS: c/o BANK ONE,
NA, 0000 Xxxx Xxxxxx, XX0-0000, Xxxxxx, Xxxxx 00000, Facsimile No. (214)
290-2332, Attention: Wm. Xxxx Xxxxxxx, Vice President, with a copy to: Xxxx
Xxx, XX, 0 Bank Xxx Xxxxx, XX0-0000, Xxxxxxx, Xxxxxxxx 00000, Attention:
Syndication. Any such notice or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 17 and the appropriate answerback is
received or receipt is otherwise confirmed, (b) if given by mail, three (3)
days after deposit in the mails with first-class postage, prepaid, as
addressed as aforesaid or (c) if given by any other method, when delivered at
the address specified in this Section 17; provided, however, that notices to
the Agent under Sections 2, 3, 4 or 5 hereof shall not be effective until
received. Any notice required to be given to the Lenders shall be given to
the Agent and distributed to all Lenders by the Agent.
18. EXPENSES. The Borrowers shall pay (i) 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 this
Agreement, any waiver or consent
55
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 Lenders, 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 HEREBY ACKNOWLEDGE THAT GARDERE XXXXX XXXXXX LLP IS SPECIAL COUNSEL
TO BANK ONE, AS AGENT AND AS A LENDER, UNDER THIS AGREEMENT AND THAT IT IS
NOT COUNSEL TO, NOR DOES IT REPRESENT THE BORROWERS IN CONNECTION WITH THE
TRANSACTIONS DESCRIBED IN THIS AGREEMENT. The Borrowers are relying on
separate counsel in the transaction described herein. The Borrowers shall
indemnify the Lenders 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 Lenders hereunder
and under the Notes.
19. INDEMNITY. The Borrowers agree to indemnify and hold harmless the
Lenders 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 Lenders, including all local counsel hired by such counsel) ("Claim")
incurred by the Lenders 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
Lenders 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 Lenders hereunder and under the Notes,
provided that the Borrowers shall have no obligation under this Section to a
Lender with respect to any of the foregoing arising out of the gross negligence
or willful misconduct of any Lender. 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
56
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.
20. GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN DALLAS, DALLAS COUNTY, TEXAS, AND THE SUBSTANTIVE
LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
21. 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.
22. MAXIMUM INTEREST RATE. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the
Lenders shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and in the event any Lender ever receives, collects or applies as interest
any such excess, or if an acceleration of the maturities of any Notes or if any
prepayment by the Borrowers results in the Borrowers having paid any interest in
excess of the Maximum Rate, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Notes for
which such excess was received, collected or applied, and, if the principal
balance of such Note is paid in full, any remaining excess shall forthwith be
paid to the Borrowers. All sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of the indebtedness evidenced by the Notes and/or
this Agreement shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the Maximum Rate. In determining whether or not the
interest paid or payable under any specific contingency exceeds
57
the Maximum Rate of interest permitted by law, the Borrowers and the Lenders
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as an expense, fee or premium, rather than as
interest; and (ii) exclude voluntary prepayments and the effect thereof; and
(iii) compare the total amount of interest contracted for, charged or
received with the total amount of interest which could be contracted for,
charged or received throughout the entire contemplated term of the Note at
the Maximum Rate.
For purposes of Section 303 of the Texas Finance Code, to the extent
applicable to any Lender or Agent, Borrowers agree that the Maximum Rate (as
defined herein) shall be the "weekly ceiling" as defined in said Chapter,
provided that such Lender or Agent, as applicable, may also rely, to the extent
permitted by applicable laws of the State of Texas and the United States of
America, on alternative maximum rates of interest under the Texas Finance Code
or other laws applicable to such Lender or Agent from time to time if greater.
23. 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. No modification or waiver of any provision
of the Loan Documents, including this Agreement, or the Notes nor consent to
departure therefrom, shall be effective unless in writing signed by Borrowers
and Majority Lenders (or by Agent on behalf of Majority Lenders) subject to the
additional requirements of Section 15(f) hereof, to the extent applicable. 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.
24. 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.
25. 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.
26. 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.
27. 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 Lenders, assign any rights,
powers, duties or obligations hereunder.
58
28. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender shall have the right to sell, assign or transfer all
or any part of its Note or Notes, its Commitment and its rights and
obligations hereunder to one or more Affiliates, Lenders, financial
institutions, pension plans, insurance companies, investment funds, or
similar Persons who are Eligible Assignees or to a Federal Reserve Bank;
PROVIDED, that each sale, assignment or transfer (other than to an
Affiliate, a Bank or a Federal Reserve Bank) shall require the consent of
Agent and the Borrowers, which consents will not be unreasonably withheld;
provided, however, that if an Event of Default has occurred and is
continuing, the consent of the Borrowers shall not be required. Any such
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 Lender and a holder of such Note, Commitment and
rights and obligations, including, without limitation, the right to vote
on decisions requiring consent or approval of all Lenders or Majority
Lenders and the obligation to fund its Commitment; provided, 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 Lender shall at all times maintain
Commitment 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 Lender's Commitment, (4) no Lender may offer
to sell its Note or Notes, Commitment, 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 Lender 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 $3,500 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 Commitment and if the assignor Lender has retained a
portion of its Commitment, a replacement Note in the principal amount of
the Commitment 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 Lender). On and
after the effective date of an assignment hereunder, the assignee shall
for all purposes be a Lender, party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party thereto, and no further consent or action by
Borrowers, Lenders or the Agent shall be required to release the
transferor Lender with respect to its Commitment assigned to such assignee
and the transferor Lender shall henceforth be so released.
59
(b) Each Lender shall have the right to grant participations in all
or any part of such Lender's Notes and Commitment hereunder to one or more
pension plans, investment funds, insurance companies, financial
institutions or other Persons, provided, that:
(i) each Lender 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 Lender
or Majority Lenders (except as set forth in (iii) below);
(ii) in the event any Lender grants a participation hereunder,
such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender
shall remain the holder of any such Note or Notes for all purposes
under the Loan Documents, and Agent, each Lender and Borrowers shall
be entitled to deal with the Lender 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 Lenders
hereunder, except that any Lender may agree with any participant
that such Lender 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 Lenders.
(c) It is understood and agreed that any Lender 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 Lender pursuant to
this Agreement, provided, that each recipient thereto has first agreed,
for the benefit of Borrowers, to hold such information, reports and data
in confidence on the terms set out in Section 12(i) hereof.
(d) Upon the reasonable request of either Agent or Borrowers, each
Lender 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.
29. CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS AND JURISDICTION. THE
OBLIGATIONS OF BORROWERS UNDER THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS
COUNTY, TEXAS. 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 TEXAS, COUNTY OF DALLAS, OR IN THE
00
XXXXXX XXXXXX XXXXXX XXXXXXX XX XXXXXX XXXXXX, XXXXX 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 LENDER BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE BORROWERS, 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
TEXAS, COUNTY OF DALLAS, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
30. WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
31. 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.
32. FINANCIAL TERMS. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance
with GAAP.
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWERS:
----------
EXCO RESOURCES, INC.
By: /s/ J. XXXXXXX XXXXXX
---------------------------------
Name: J. Xxxxxxx Xxxxxx
Title: Vice President
EXCO OPERATING, LP
a Delaware limited partnership
By: EXCO Investment II, LLC,
its General Partner
By: /s/ X.X. XXXXXX
---------------------------
Name: X.X. Xxxxxx
Title: President
62
LENDERS:
--------
COMMITMENT BANK ONE, NA
PERCENTAGE: a national banking association
(Main Office Chicago)
31.59073936% as a Lender and as
Administrative Agent
By: /s/ WM. XXXX XXXXXXX
---------------------------------
Wm. Xxxx Xxxxxxx, Director
Capital Markets
63
COMMITMENT BNP PARIBAS
PERCENTAGE: as a Lender and as Syndication
Agent
26.92307692%
By: /s/ A. XXXXX XXXX
---------------------------------
Name: A. Xxxxx Xxxx
Title: Vice President
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
64
COMMITMENT THE BANK OF NOVA SCOTIA
PERCENTAGE: as a Lender and as Documentation
Agent
26.92307692%
By: /s/ A.S. XXXXXXXXXX
---------------------------------
Name: A.S. Xxxxxxxxxx
Title: Sr. Team Leader-Loan
Operations
65
COMMITMENT COMERICA BANK-TEXAS
PERCENTAGE:
14.56310680% By: /s/ XXXXXXX X. XXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
66
