Exhibit 10.1
SECOND RESTATED CREDIT AGREEMENT
AMONG
CONTINENTAL RESOURCES, INC.
CONTINENTAL GAS, INC., AND
CONTINENTAL RESOURCES OF ILLINOIS, INC.
AS BORROWERS
AND
MIDFIRST BANK
JULY 9, 2001
TABLE OF CONTENTS
Page No.
1. Definitions......................................................1
2. Commitments of the Bank..........................................14
2.1 Terms of Term Loan...............................................14
2.2 Terms of Revolving Commitment....................................14
2.3 Procedure for Borrowing..........................................14
2.4 Letters of Credit................................................15
2.5 Procedure for Obtaining Letters of Credit........................16
2.6 Voluntary Reduction of Revolving Commitment......................16
2.7 Commitment Reductions............................................16
2.8 Several Obligations..............................................17
3. Notes Evidencing Loans...........................................17
3.1 Form of Term Notes...............................................17
3.2 Form of Revolving Notes..........................................17
3.3 Issuance of Additional Notes.....................................17
3.4 Interest Rates...................................................18
3.5 Payment of Interest..............................................18
3.6 Payment of Principal.............................................18
3.7 Payment to Banks.................................................18
3.8 Sharing of Payments, Etc.........................................18
3.9 Non-Receipt of Funds by the Agent................................19
3.10 Capital Adequacy.................................................19
4. Interest Rates...................................................20
4.1 Options..........................................................20
4.2 Interest Rate Determination......................................20
4.3 Conversion Option................................................21
4.4 Recoupment.......................................................21
5. Change of Circumstances..........................................21
5.1 Unavailability of Funds or Inadequacy of Pricing.................21
5.2 Change in Laws...................................................21
5.3 Increased Cost or Reduced Return.................................22
5.4 Discretion of Bank as to Manner of Funding.......................24
5.5 Breakage Fees....................................................24
6. Collateral Security..............................................24
6.1 Pledge of Collateral.............................................24
6.2 Documentation and Title Review...................................25
6.3 Letters in Lieu of Transfer Orders...............................25
7. Borrowing Base...................................................26
7.1 Initial Borrowing Base...........................................26
7.2 Subsequent Determinations of Borrowing Base......................26
8. Fees.............................................................27
8.1 Unused Commitment Fee............................................27
8.2 The Letter of Credit Fee.........................................28
8.3 Upfront Fee......................................................28
8.4 Other Fees.......................................................28
9. Prepayments......................................................28
9.1 Voluntary Prepayments............................................28
9.2 Mandatory Prepayment For Borrowing Base Deficiency...............28
10. Representations and Warranties...................................29
10.1 Creation and Existence...........................................29
10.2 Power and Authority..............................................29
10.3 Binding Obligations..............................................29
10.4 No Legal Bar or Resultant Lien...................................29
10.5 No Consent.......................................................29
10.6 Financial Condition..............................................30
10.7 Liabilities......................................................30
10.8 Litigation.......................................................30
10.9 Taxes; Governmental Charges......................................30
10.10 Titles, Etc......................................................30
10.11 Defaults.........................................................30
10.12 Casualties; Taking of Properties.................................31
10.13 Use of Proceeds; Margin Stock....................................31
10.14 Location of Business and Offices.................................31
10.15 Compliance with the Law..........................................31
10.16 No Material Misstatements........................................32
10.17 ERISA............................................................32
10.18 Public Utility Holding Company Act...............................32
10.19 Subsidiaries.....................................................32
10.20 Environmental Matters............................................32
10.21 Liens............................................................32
10.22 Gas Contracts....................................................32
10.23 Delhi Oakdale Lateral System.....................................33
10.24 Eagle Chief Gas Gathering System................................33
10.25 Senior Subordinated Notes........................................33
11. Conditions of Lending............................................33
12. Affirmative Covenants............................................35
12.1 Financial Statements and Reports.................................35
12.2 Certificates of Compliance.......................................36
12.3 Taxes and Other Liens............................................36
12.4 Compliance with Laws.............................................37
12.5 Further Assurances...............................................37
12.6 Performance of Obligations.......................................37
12.7 Insurance........................................................37
12.8 Accounts and Records.............................................38
12.9 Right of Inspection..............................................38
12.10 Notice of Certain Events.........................................38
12.11 ERISA Information and Compliance.................................38
12.12 Environmental Reports and Notices................................39
12.13 Compliance and Maintenance.......................................39
12.14 Operation of Properties..........................................39
12.15 Compliance with Leases and Other Instruments.....................40
12.16 Certain Additional Assurances Regarding Maintenance and
Operations of Properties........................................40
12.17 Title Matters....................................................40
12.18 Curative Matters.................................................40
12.19 Change of Principal Place of Business............................41
12.20 Operating Accounts...............................................41
12.21 Mortgages to Achieve Required Percentage.........................41
12.22 Additional Property..............................................41
12.23 Eagle Chief Gas Gathering System................................42
12.24 Letters In Lieu of Transfer Orders...............................42
12.25 Division Orders..................................................42
12.26 Take or Pay Agreement............................................42
13. Negative Covenants...............................................42
13.1 Negative Pledge..................................................42
13.2 Current Ratio....................................................43
13.3 Ratio of Debt to Minimum Tangible Net Worth......................43
13.4 Minimum Debt Service Coverage Ratio..............................43
13.5 Consolidations and Mergers.......................................43
13.6 Debts, Guaranties and Other Obligations..........................43
13.7 Dividends or Distributions.......................................44
13.8 Loans and Advances...............................................44
13.9 Sale or Discount of Receivables..................................45
13.10 Nature of Business...............................................45
13.11 Transactions with Affiliates.....................................45
13.12 Hedging Transactions.............................................45
13.13 Investments......................................................45
13.14 Amendment to Articles of Incorporation or Bylaws.................46
13.15 Leases...........................................................46
13.16 Senior Subordinated Notes........................................46
13.17 Speculative Trading..............................................46
14. Events of Default................................................46
15. The Agent and the Banks..........................................49
15.1 Appointment and Authorization....................................49
15.2 Note Holders.....................................................50
15.3 Consultation with Counsel........................................50
15.4 Documents........................................................50
15.5 Resignation or Removal of Agent..................................50
15.6 Responsibility of Agent..........................................51
15.7 Independent Investigation........................................52
15.8 Indemnification..................................................52
15.9 Benefit of Section 15............................................53
15.10 Pro Rata Treatment...............................................53
15.11 Assumption as to Payments........................................53
15.12 Other Financings.................................................53
15.13 Interests of Banks...............................................54
15.14 Investments......................................................54
16. Exercise of Rights...............................................54
17. Notices..........................................................54
18. Expenses.........................................................55
19. Indemnity........................................................55
20. Governing Law....................................................56
21. Invalid Provisions...............................................56
22. Maximum Interest Rate............................................56
23. Amendments.......................................................57
24. Multiple Counterparts............................................57
25. Conflict.........................................................57
26. Survival.........................................................57
27. Parties Bound....................................................57
28. Assignments and Participations...................................57
29. Choice of Forum: Consent to Service of Process and Jurisdiction..59
30. Waiver of Jury Trial.............................................59
31. Other Agreements.................................................60
32. Financial Terms..................................................60
Exhibits
Exhibit "A".......- Notice of Borrowing
Exhibit "B".......- Revolving Note
Exhibit "C".......- Certificate of Compliance
Exhibit "D".......- Form of Assignment and Acceptance Agreement
Schedules
Schedule 1........- Liens
Schedule 2........- Financial Condition
Schedule 3........- Liabilities
Schedule 4........- Litigation
Schedule 5........- Subsidiaries
Schedule 6........- Environmental Matters
Schedule 7........- Gas Contract
Schedule 8........- Title Matters
Schedule 9........- Curative Matters
SECOND
RESTATED CREDIT AGREEMENT
THIS SECOND RESTATED CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 9th day of July, 2001 by and among CONTINENTAL
RESOURCES, INC., an Oklahoma corporation ("Resources"), CONTINENTAL GAS, INC.,
an Oklahoma corporation ("Gas"), CONTINENTAL RESOURCES OF ILLINOIS, INC., an
Oklahoma corporation ("Continental Illinois") (Resources, Gas, and Continental
Illinois are hereinafter collectively referred to as "Borrowers" and
individually as a "Borrower") and MIDFIRST BANK, a federally chartered savings
association ("MidFirst"), and each of the financial institutions which is a
party hereto (as evidenced by the signature pages to this Agreement) or which
may from time to time become a party hereto pursuant to the provisions of
Section 28 hereof or any successor or assignee thereof (hereinafter collectively
referred to as "Banks", and individually, "Bank") and MidFirst, as Agent.
W I T N E S S E T H:
WHEREAS, on April 21st, 2000, Borrowers and Bank entered into that certain
Restated Credit Agreement ("Original Agreement") whereby Bank provided Borrowers
with a $25,000,000 revolving credit facility as evidenced by a $25,000,000
revolving note (the "Original Note");
WHEREAS, on August 1st, 2000 the Original Agreement was amended for the
first time (the "First Amendment") in order to, among other things not
specifically set forth in this recital, add Local Oklahoma Bank, N.A. as a
"Bank";
WHEREAS, on May 31, 2001, the Original Agreement was amended for the second
time (the "Second Amendment") in order to increase the existing revolving line
of credit to $60,000,000 and to increase by $30,000,000 the dollar amount of
Senior Subordinated Notes the Borrowers are permitted to purchase, repurchase or
otherwise acquire (the Original Agreement as amended by the First and Second
Amendments is referred to herein as the "Credit Agreement");
WHEREAS, the revolving line of credit described in the Credit Agreement is
currently evidenced by those certain revolving promissory notes in the aggregate
amount of $60,000,000 from the Borrowers in favor of Banks dated as of May 31,
2001 (the "Former Notes").
WHEREAS, Borrowers and Bank desire to amend and restate their existing
credit facility to increase it and to begin amortizing a portion of the
outstanding indebtedness as well as other modifications as set forth herein; and
WHEREAS, in consideration of the mutual covenants and agreements herein
contained, the parties hereby agree to restate the Credit Agreement as follows:
1. Definitions. When used herein the terms "Agent", "Agreement", "Bank",
"Borrower", "Banks", "Borrowers", "First Amendment", "Former Agreement", "Former
Notes", "Gas", "MidFirst", "Original Agreement", "Original Note", "Resources"
and "Second Amendment" shall have the meanings indicated above. When used herein
the following terms shall have the following meanings:
"Adjusted EBITDA" shall mean EBITDA as defined by GAAP plus Exploration
Expenses.
"Advance or Advances" shall mean a Revolving Loan or Revolving Loans
hereunder.
"Affiliate" shall mean any Person which, directly or indirectly, controls,
is controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean a member of the board of directors, a partner or an
officer of such Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee, or by
proxy) of voting shares, partnership interests or voting rights, through a
management contract or otherwise. Any Person owning or controlling directly or
indirectly ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be deemed to be
an Affiliate of such Person.
"Eagle Chief Gas Gathering System" shall mean that System located in the
State of Oklahoma and described in the Security Instruments.
"Assignment and Acceptance" shall mean a document substantially in the form
of Exhibit "D" hereto.
"Available Commitment" shall mean the lesser of (i) $33,000,000.00 or (ii)
the difference between the Total Commitment and the Total Outstandings.
"Borrowing Base" shall mean that amount set by the Bank as the amount
available to Borrowers under the Loans pursuant to Section 7.2 hereof.
"Borrowing Date" shall mean the date elected by Borrowers pursuant to
Section 2.2 hereof for an Advance on the Revolving Loan.
"Business Day" shall mean the normal banking hours during any day (other
than Saturdays or Sundays) that banks are legally open for business in Oklahoma
City, Oklahoma.
"Change of Management" shall occur if there is any material change in the
ownership and/or management personnel of either Borrower. Notwithstanding the
foregoing, as long as (i) Xxxxxx Xxxx owns a controlling beneficial interest or
ownership in Resources; (ii) Xxxxxx Xxxx continues to act as CEO of Resources;
and (iii) Resources owns 100% of all of the issued and outstanding shares of
common stock of Gas, Borrowers shall be entitled to make changes in their
ownership and management. For the purposes hereof, "controlling interest" is
defined as beneficial ownership of 50% of all issued and outstanding shares of
common stock plus one additional share thereof.
"Commitment Percentage" shall mean for each Bank the percentage derived by
dividing its Commitment at the time of the determination by the Commitments of
all Banks at the time of determination. The Commitment Percentage of each Bank
hereunder shall be adjusted from time to time to reflect assignments made by
such Bank pursuant to Section 28 hereof.
"Commitments" shall refer to (A) for all Banks the sum of the Revolving
Commitments and Term Commitments and (B) for each Bank, such Bank's Revolving
Commitment and Term Commitment.
"Current Assets" shall mean the total of the Borrowers' consolidated
current assets determined in accordance with GAAP, plus, as of any date, the
current unused availability on the Revolving Commitment.
"Current Liabilities" shall mean the total of Borrowers' consolidated
current obligations as determined in accordance with GAAP, excluding therefrom
current maturities due on the Loans.
"Debt" shall mean, with respect to any Person, all obligations and
liabilities of such Person to any other Person including, without limitation,
all debts, claims, overdrafts, contingent liabilities and indebtedness
heretofore, now and/or from time to time hereafter owing, due or payable,
however, evidenced, created, incurred, acquired or owing and however arising,
whether under written or oral agreement, operation of law or otherwise as shown
in Borrowers' Financial Statements..
"Debt Service Coverage Ratio" shall mean the sum of (i) quarterly Net
Income for the immediately preceding four (4) fiscal quarters including the
quarter then ended, adjusted for any nonrecurring or extraordinary items, minus
any dividends, plus (ii) depreciation, depletion and amortization, lease
impairment, interest expense, deferred income tax expense and uncapitalized,
discretionary exploration expenses, all as determined in accordance with GAAP
for such period, divided by (i) 1/6th of the principal balance outstanding as of
such date on the Revolving Loans plus (ii) total interest expense for the
immediately preceding four (4) fiscal quarters including the quarter then ended,
plus (iii) any other current maturities of long-term debt.
"Default" shall mean any Event of Default and the occurrence of an event or
condition which would with the giving of any requisite notice and/or passage of
time or both constitute an Event of Default.
"Default Rate" shall mean a per annum variable rate of interest equal to
the Prime Rate as then in effect plus five percent (5%), calculated on the basis
of a year of 360 days and actual number of days elapsed (including the first day
but excluding the last day), but in no event exceeding the Maximum Rate.
"Defaulting Bank" shall mean the term "Defaulting Bank" as used herein and
defined in Section 3.7 hereof.
"Delhi Lease" shall mean that pipeline lease and any and all extensions and
renewals thereof from Delhi Gas Pipeline Corporation to Gas covering the Delhi
Oakdale Lateral System.
"Delhi Oakdale Lateral System" shall mean that portion of the Eagle Chief
Gas Gathering System leased from Delhi Gas Pipeline Corporation.
"Delta Trust" shall mean the Xxxxxx Xxxx Delta Trust, Xxxxxx Xxxx, Grantor,
dated December 31, 1996.
"Effective Date" shall mean the date of this Agreement.
"Eligible Assignee" shall mean any of (i) a Bank or any Affiliate of a
Bank; (ii) a commercial bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus of at least
$100,000,000; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000.00, provided that such
bank is acting through a branch or agency located in the United States; (iv) a
Person that is primarily engaged in the business of commercial banking and that
(A) is a subsidiary of a Bank, (B) a subsidiary of a Person of which a Bank is a
subsidiary, or (C) a Person of which a Bank is a subsidiary; (v) any other
entity (other than a natural person) which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses, including, but not limited to, insurance
companies, mutual funds, investments funds and lease financing companies; and
(vi) with respect to any Bank that is a fund that invests in loans, any other
fund that invests in loans and is managed by the same investment advisor of such
Bank or by an Affiliate of such investment advisor (and treating all such funds
so managed as a single Eligible Assignee); provided, however, that no Affiliate
of either Borrower shall be an Eligible Assignee.
"Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Super Fund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A.ss.9601, et seq., the Resource
Conservation and Recovery Act, as amended by the Hazardous Solid Waste Amendment
of 1984, 42 U.S.C.A.ss.6901, et seq., the Clean Air Act, 42 U.S.C.A.ss.1251, et
seq., the Toxic Substances Control Act, 15 U.S.C.A.ss.2601, et seq., The Oil
Pollution Act of 1990, 33 U.S.G. ss.2701, et seq., and all other laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, order and restrictions of any federal, state, county, municipal and
other governments, departments, commissions, boards, agencies, courts,
authorities, officials and officers, domestic or foreign, relating to air
pollution, water pollution, noise control and/or the handling, discharge,
disposal or recovery of on-site or off-site asbestos or "hazardous substances"
as defined by 42 U.S.C.ss.9601, et seq., as amended, as each of the foregoing
may be amended from time to time.
"Environmental Liability" shall mean any claim, demand, obligation, cause
of action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other costs or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law or the imposition of any
Environmental Lien (as hereinafter defined) which could reasonably be expected
to individually or in the aggregate have a Material Adverse Effect.
"Environmental Lien" shall mean a Lien in favor of any court, governmental
agency or instrumentality or any other Person (i) for any Environmental
Liability or (ii) for damages arising from or cost incurred by such court or
governmental agency or instrumentality or other person in response to a release
or threatened release of asbestos or "hazardous substance" into the environment,
the imposition of which Lien could reasonably be expected to have a Material
Adverse Effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exploration Expenses" shall mean "Exploration Expenses" as set forth on
Borrower's consolidated financial statement prepared in accordance with GAAP.
"Financial Statements" shall mean balance sheets, income statements,
statements of cash flow and appropriate footnotes and schedules, prepared in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Interest Payment Date" shall mean the last day of the calendar month.
"Interest Period" shall mean any Prime Rate Interest Period, or LIBOR
Interest Period, as applicable.
"Leverage Ratio" shall mean that ratio calculated by dividing (i) the Total
Outstandings plus the Senior Subordinated Notes by (ii) Adjusted EBITDA based
upon the immediately preceding four quarters.
"Letters of Credit" shall mean the term "Letters of Credit" is used herein
as defined in Section 2.4 hereof.
"LIBOR Interest Period" shall mean with respect to any LIBOR Loan (i)
initially, the period commencing on the date such LIBOR Loan is made and ending
one (1), two (2), three (3) or six (6) months thereafter as selected by the
Borrowers pursuant to Section 4, and (ii) thereafter, each period commencing on
the day following the last day of the next preceding Interest Period applicable
to such LIBOR Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrowers pursuant to Section 4.1.2; provided,
however, that (i) if any LIBOR Interest Period would otherwise expire on a day
which is not a London Business Day, such Interest Period shall expire on the
next succeeding London Business Day unless the result of such extension would be
to extend such Interest Period into the next calendar month, in which case such
Interest Period shall end on the immediately preceding London Business Day, (ii)
if any LIBOR Interest Period begins on the last London Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) such Interest Period
shall end on the last London Business Day of a calendar month, and (iii) any
LIBOR Interest Period which would otherwise expire after the Maturity Date shall
end on such Maturity Date.
"LIBOR Loan" shall mean any loan during any period which bears interest at
the LIBOR Rate, or which would bear interest at such rate if the Maximum Rate
ceiling was not in effect at a particular time.
"LIBOR Margin" shall be:
(i) one and one half of one percent (1.50%) per annum whenever the Leverage
Ratio, at the time in question, is equal to or less than 1.50:1;
(ii) one and three quarters of one percent (1.75%) per annum whenever the
Leverage Ratio, at the time in question, is greater than 1.50:1 but less than
2.00:1;
(iii) two percent (2.00%) per annum whenever the Leverage Ratio, at the
time in question, is greater than 2.00:1 but less than 3.00:1; or
(iv) two and one quarter of one percent (2.25%) per annum whenever the
Leverage Ratio, at the time in question, is greater than 3.00:1.
"LIBOR Rate" with respect to each particular LIBOR Interest Period, shall
mean the arithmetic average of the rate at which dollar deposits in immediately
available funds and for a maturity equal to the applicable one, two, three or
six-month period are offered or available in the London Interbank Market for
Eurodollars as of 11:00 a.m. (London time) on the date of a determination, as
reported in the "Money Rates" section of The Wall Street Journal or a substitute
source reasonably determined by Agent in the event such source is no longer
available. If more than one LIBOR Rate is published in The Wall Street Journal
for the one, two, three or six-month time period, then the LIBOR Rate shall be
the highest of such published rates. The LIBOR Rate determined by Agent shall be
fixed at such rate for the duration of the associated LIBOR Interest Period. If
Agent is unable to so determine the LIBOR Rate for any LIBOR Interest Period,
Borrower shall be deemed not to have elected such LIBOR Interest Period.
"Lien" shall mean any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments and all other documents executed in connection with the transaction
described in this Agreement.
"London Business Day" shall mean a Business Day on which dealings in U.S.
Dollar deposits are carried on in the London interbank market.
"Majority Banks" shall mean Banks holding 75% or more of the Commitments or
if the Commitments have been terminated, Banks holding 75% of the outstanding
Loans.
"Material Adverse Effect" shall mean any circumstance or event which could
have a material adverse effect on (i) the assets or properties, liabilities,
financial condition, business, operations, affairs or circumstances of either
Borrower, or (ii) the ability of either Borrower to carry out its respective
business as of the date of this Agreement or as proposed at the date of this
Agreement to be conducted or to meet their obligations under the Notes, this
Agreement or the other Loan Documents on a timely basis.
"Maximum Rate" shall mean at any particular time in question, the maximum
non-usurious rate of interest which under applicable law may then be charged on
the Note. If such Maximum Rate changes after the date hereof, the Maximum Rate
shall be automatically increased or decreased, as the case may be, without
notice to Borrowers from time to time as of the effective date of each change in
such Maximum Rate.
"Monthly Commitment Reduction" is used herein, as defined in Section 2.7
hereof.
"Net Income" shall mean Borrowers' consolidated net income after income
taxes calculated in accordance with GAAP.
"1984 Trust" shall mean the Revocable Inter Vivos Trust of Xxxxxx X. Xxxx,
dated April 23, 1984, as amended.
"Notes" shall mean each of (i) the Revolving Notes, substantially in the
form of Exhibit "B-1" hereto issued or to be issued hereunder to each Bank,
respectively, to evidence the indebtedness to such Bank arising by reason of the
Advances on the Revolving Loan, together with all modifications, renewals and
extensions thereof or any part thereof and (ii) the Term Notes, substantially in
the form of Exhibit "B-2" hereto issued to each Bank, respectively, to evidence
the indebtedness to such Bank arising by reason of the refinancing of the Former
Notes together with all modifications, renewals and extensions thereof or any
part thereof.
"Oil and Gas Properties" shall mean all oil, gas and mineral properties and
interests, related personal properties, in which Borrowers grant to the Banks
either a first and prior lien and security interest pursuant to Section 6
hereof.
"Other Financing" shall mean the term "Other Financing" is used herein as
defined in Section 15.12 hereof.
"Payor" is used herein as defined in Section 3.9hereof.
"Permitted Liens" shall mean (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens; (ii) joint
operating agreements, sales contracts or other arrangements for the sale of
production of oil, gas or associated liquid or gaseous hydrocarbons which would
not (when considered cumulatively with the matters discussed in clause (i)
above) deprive either Borrower of any material right in respect of any such
Borrower's assets or properties (except for rights customarily granted with
respect to such contracts and arrangements); (iii) statutory Liens for taxes or
other assessments that are not yet delinquent (or that, if delinquent, are being
contested in good faith by appropriate proceedings, levy and execution thereon
having been stayed and continue to be stayed and for which such Borrower has set
aside on its books adequate reserves in accordance with GAAP); (iv) easements,
rights of way, servitudes, permits, surface leases and other rights in respect
to surface operations, pipelines, grazing, logging, canals, ditches, reservoirs
or the like, conditions, covenants and other restrictions, and easements of
streets, alleys, highways, pipelines, telephone lines, power lines, railways and
other easements and rights of way on, over or in respect of either Borrower's
assets or properties and that do not individually or in the aggregate, cause a
Material Adverse Effect; (v) materialmen's, mechanic's, repairman's, employee's,
warehousemen's, landlord's, carrier's, pipeline's, contractor's,
sub-contractor's, operator's, non-operator's (arising under operating or joint
operating agreements), and other Liens (including any financing statements filed
in respect thereof) incidental to obligations incurred by either Borrower in
connection with the construction, maintenance, development, transportation,
storage or operation of such Borrower's assets or properties to the extent not
delinquent (or which, if delinquent, are being contested in good faith by
appropriate proceedings and for which such Borrower has set aside on its books
adequate reserves in accordance with GAAP); (vi) all contracts, agreements and
instruments, and all defects and irregularities and other matters affecting
either Borrower's assets and properties which were in existence at the time such
Borrower's assets and properties were originally acquired by such Borrower and
all routine operational agreements entered into in the ordinary course of
business, which contracts, agreements, instruments, defects, irregularities and
other matters and routine operational agreements are not such as to,
individually or in the aggregate, interfere materially with the operation, value
or use of such Borrower's assets and properties, considered in the aggregate;
(vii) liens in connection with workmen's compensation, unemployment insurance or
other social security, old age pension or public liability obligations; (viii)
legal or equitable encumbrances deemed to exist by reason of the existence of
any litigation or other legal proceeding or arising out of a judgment or award
with respect to which an appeal is being prosecuted in good faith and levy and
execution thereon have been stayed and continue to be stayed; (ix) rights
reserved to or vested in any municipality, governmental, statutory or other
public authority to control or regulate either Borrower's assets and properties
in any manner, and all applicable laws, rules and orders from any governmental
authority; (x) landlord's liens; (xi) Liens incurred pursuant to the Security
Instruments or otherwise created in favor of the Agent or the Banks pursuant to
the Loan Documents; and (xii) Liens existing at the date of this Agreement which
have been disclosed to Banks in the Borrowers' December 31, 1997 Financial
Statements or identified in Schedule "1" hereto and (xiii) Liens covering
properties which are not Oil and Gas Properties and the value of which is less
than $500,000 in the aggregate.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pipelines" shall mean and include Gas' gas gathering and/or residue
pipeline systems in the State of Oklahoma associated with the gathering and/or
transportation of gas and the delivery of gas or residue gas to purchasers or
transporters (as the same now exist or as may hereafter be extended), including,
but not by way of limitation, the Right-Of-Way Properties and all buildings,
structures, attachments, fittings and fixtures, facilities, tools, materials,
equipment, machinery, appliances, pipeline, piping, powerlines, electrical
systems, metering and calibration facilities, compressors, dehydrators, sponge
units, instrument and equipment housing, equipment storage facilities, tanks,
engines, valves, traps, pumps, motors, instruments, fencing, office equipment,
expanders, heat exchangers, chillers, separators, cooling towers, boilers and
reboilers, turbines, generators, meters and instruments, fractionators, stills,
debutanizers, heaters, coolers, stabilizers, scrubbers, absorbers, reabsorbers,
flash towers, oil reclaimers, loading racks, injection facilities, accumulators,
economizers, fans, condensers and valves, and appurtenances of every nature and
kind whatsoever now or hereafter forming a part of, appertaining to or used or
for use in connection with said Pipeline.
"Plans" shall mean any plan subject to Title IV of ERISA and maintained by
either Borrower, or any such plan to which either Borrower is required to
contribute on behalf of its employees.
"Plant" shall mean the fee property and surface leases in Oklahoma
associated with the processing of hydrocarbons and including, but not by way of
limitation, together with all property, real or personal, associated therewith
including all buildings, structures, attachments, fittings and fixtures,
facilities, tools, materials, equipment, machinery, appliances, pipeline,
piping, powerlines, electrical systems, metering and calibration facilities,
compressors, dehydrators, sponge units, instrument and equipment housing,
equipment storage facilities, tanks, engines, valves, traps, pumps, motors,
instruments, fencing, office equipment, expanders, heat exchangers, chillers,
separators, cooling towers, boilers and reboilers, turbines, generators, meters
and instruments, fractionators, stills, debutanizers, heaters, coolers,
stabilizers, scrubbers, absorbers, reabsorbers, flash towers, oil reclaimers,
loading racks, injection facilities, accumulators, economizers, fans, condensers
and valves, and appurtenances of every nature and kind whatsoever now or
hereafter forming a part of, located on, appertaining to or used or for use in
connection with said fee property and surface leases.
"Prime Rate" shall mean the U.S. prime rate reported in The Wall Street
Journal (or the average prime rate if a high and a low prime rate is therein
reported) . Each change in the Prime Rate shall become effective without prior
notice to Borrowers automatically as of the opening of business on the date of
such change in the Prime Rate.
"Prime Rate Interest Period" shall mean with respect to any Prime Rate
Loan, the period ending on the last day of each month, provided, however, that
(i) if any Prime Rate Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day,
and (ii) if any Prime Rate Interest Period would otherwise end after the
Maturity Date such Interest Period shall end on the Maturity Date.
"Prime Rate Loans" shall mean any loan during any period which bears
interest based upon the Prime Rate or which would bear interest based upon the
Prime Rate if the Maximum Rate ceiling was not in effect at that particular
time.
"Prime Rate Margin" shall be:
(i) zero percent (0%) per annum whenever the Leverage Ratio, at the time in
question, is equal to or less than 1.50:1;
(ii) zero percent (0%) per annum whenever the Leverage Ratio, at the time
in question, is greater than 1.50:1 but less than 2.00:1;
(iii) one quarter of one percent (.25%) per annum whenever the Leverage
Ratio, at the time in question, is greater than 2.00:1 but less than 3.00:1; or
(iv) one half of one percent (.50%) per annum whenever the Leverage Ratio,
at the time in question, is greater than 3.00:1. . "Pro Rata or Pro Rata Part"
shall mean for each Bank, (i) for all purposes where no Loan is outstanding,
such Bank's Commitment Percentage and (ii) otherwise, the proportion which the
portion of the outstanding Loans owed to such Bank bears to the aggregate
outstanding Loans owed to all Banks at the time in question.
"Reimbursement Obligations" shall mean at any time, the obligations of the
Borrowers in respect of all Letters of Credit then outstanding to reimburse
amounts actually paid by any Bank in respect of any drawing or drawings under a
Letter of Credit.
"Required Payment" is used herein as defined in Section 3.9 hereof.
"Revolving Commitment" shall mean (A) for all Banks, the lesser of (i)
$33,000,000.00 or (ii) the Borrowing Base in effect from time to time minus the
principal amount outstanding of the Term Loan, in each case as reduced from time
to time pursuant to Sections 2 and 7 hereof, and (B) as to any Bank, its
obligation to make Advances hereunder on the Revolving Loan and purchase
participations in Letters of Credit issued hereunder by the Agent in amounts not
exceeding, in the aggregate, an amount equal to such Bank's Revolving Commitment
Percentage times the total Revolving Commitment as of any date. The Revolving
Commitment of each Bank hereunder shall be adjusted from time to time to reflect
assignments made by such Bank pursuant to Section 28 hereof. Each reduction in
the Revolving Commitment shall result in a Pro Rata reduction in each Bank's
Revolving Commitment.
"Revolving Commitment Percentage" shall mean for each Bank the percentage
derived by dividing its Revolving Commitment at the time of the determination by
the Revolving Commitments of all Banks at the time of determination. The
Revolving Commitment Percentage of each Bank hereunder shall be adjusted from
time to time to reflect assignments made by such Bank pursuant to Section 28
hereof.
"Revolving Loan" shall mean loan or loans made under the Revolving
Commitment pursuant to Section 2 hereof.
"Revolving Maturity Date" shall mean May 31, 2003 or as such date may be
extended from time to time with the consent of all Banks.
"Revolving Notes" shall mean the Revolving Notes described in Section 3.2
hereof.
"Right-Of-Way Properties" shall mean and include all lands, easements,
rights-of-way, leases, surface rights, servitudes, grants, permits, licenses,
authorizations, privileges, franchises, consents, prescriptive rights and other
title and interest now or hereafter owned by Borrower and now or hereafter
necessary or useful for the construction and operation of the Pipeline.
"Security Instruments" shall mean the term Security Instruments is used
collectively herein to mean this Agreement, all Deeds of Trust, Mortgages,
Security Agreements, Assignments of Production and Financing Statements, and
other collateral documents covering the Oil and Gas Properties and related
personal property, equipment, oil and gas inventory and proceeds of the
foregoing, all such documents to be in form and substance satisfactory to Agent.
"Senior Subordinated Notes" shall mean those certain $150,000,000.00, 10.25%
Senior Subordinated Notes due August of 2008.
"Subsidiary" shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by either Borrower or another subsidiary.
"Support Parties" shall mean Xxxxxx Xxxx.
"System" shall mean and include the Pipeline, the Plants, and the contracts
and contract rights arising in connection therewith, together with all tangible
or intangible property, personal or real, now or at any time arising out of,
relating to, located in or upon, used in connection with or obtained directly or
indirectly by virtue of the Pipeline, the Plant or the Contracts, whether now
owned and existing or hereafter acquired or arising, including, but not by way
of limitation, accounts receivable, contract rights, general intangibles,
chattel paper, documents, instruments, business goodwill, records and books,
trade names, mineral interests, oil and gas leasehold interests, inventory
(whether consisting of hydrocarbons or otherwise) supplies, materials and any
other property.
"Tangible Net Worth" shall mean an amount equal to the Borrowers'
consolidated stockholders equity, as determined in accordance with GAAP, plus
any subordinated debt owed by any Borrower less any Affiliate receivables and
any Intangible Assets.
"Term Commitment" shall mean (A) for all Banks $27,000,000 and (B) as to
any Bank, its Term Commitment Percentage times the total Term Commitment as of
any date. The Term Commitment of each Bank hereunder shall be adjusted from time
to time to affect assignments made by each Bank pursuant to Section 28 hereof.
Each reduction in the Term Commitment shall result in a Pro Rata reduction in
each Bank's Term Commitment.
"Term Commitment Percentage" shall mean for each Bank the percentage
derived by dividing its Term Commitment at the time of the determination by the
Term Commitments of all Banks at the time of determination. The Term Commitment
Percentage of each Bank hereunder shall be adjusted from time to time to reflect
assignments made by such Bank pursuant to Section 28 hereof.
"Term Loan" shall mean that certain amortizing loan made pursuant to
Section 2.1 hereof.
"Term Notes" shall mean the Term Notes described in Section 3.1 hereof.
"Term Maturity Date" shall mean July 9, 2006.
"Total Commitment" shall mean the lesser of (i) $60,000,000.00 or (ii) the
Borrowing Base in effect from time to time, in each case as reduced from time to
time pursuant to Sections 2 and 7 hereof.
"Total Outstandings" shall mean as of any date, the sum of (i) the total
principal balance outstanding on the Revolving Notes, plus (ii) the total face
amount of all outstanding Letters of Credit, plus (iii) the total amount of all
unpaid Reimbursement Obligations, plus (iv) the total principal balance
outstanding on the Term Notes.
"Tranche" shall mean a LIBOR Loan or a Prime Rate Loan.
"Unscheduled Redetermination" shall mean a redetermination of the Borrowing
Base made at any time other than on the dates set for the regular semi-annual
redetermination of the Borrowing Base which are made (A) at the reasonable
request of Borrowers, (B) at any time it appears to Agent or Majority Banks, in
the exercise of their reasonable discretion, that either (i) there has been an
unscheduled material decrease in the value of the Oil and Gas Properties, or
(ii) an event has occurred which is reasonably expected to have a Material
Adverse Effect.
"Unused Fee Rate" shall mean the percentage used to calculate the Unused
Commitment Fee (as such term is defined in Section 8.1 hereof), which percentage
shall be:
(i) eighteen and three quarters (18.75) basis points per annum whenever the
Leverage Ratio, at the time in question, is equal to or less than 1.50:1;
(ii) twenty (20) basis points per annum whenever the Leverage Ratio, at the
time in question, is greater than 1.50:1 but less than 2.00:1;
(iii) twenty two and one half (22.50) basis points per annum whenever the
Leverage Ratio, at the time in question, is greater than 2.00:1 but less than
3.00:1; or
(iv) twenty five (25) basis points per annum whenever the Leverage Ratio,
at the time in question, is greater than 3.00:1.
2. Commitments of the Bank.
2.1 Terms of Term Loan. Subject to the terms and conditions hereof, and the
terms and conditions of the Loan Documents as hereafter defined, each Bank
agrees to extend credit to the Borrower to the extent of its Pro Rata Part and
the Borrower agrees to such extension of credit from the Banks (the "Term
Loan"), in the maximum principal amount of Twenty Seven Million and No/100
Dollars ($27,000,000.00), which will be evidenced by the Term Notes. The
proceeds of the Term Notes shall refinance and be a continuation of a portion of
the outstanding indebtedness evidenced by the Former Notes. The obligation of
the Borrowers hereunder shall be evidenced by this Agreement and the Term Notes
issued in connection herewith, said Term Notes to be as described in Section 3.1
hereof.
2.2 Terms of Revolving Commitment.Subject to the terms and conditions
hereof, and the terms and conditions of the Loan Documents as hereafter defined,
each Bank agrees severally to make Advances to the Borrowers from time to time
during the period beginning on the Effective Date and ending on the Revolving
Maturity Date in such amounts as the Borrowers may request up to an amount not
to exceed, in the aggregate principal amount outstanding at any time, the
Revolving Commitment. The obligation of the Borrowers hereunder shall be
evidenced by this Agreement and the Revolving Notes issued in connection
herewith, said Revolving Notes to be as described in Section 3.2 hereof.
Notwithstanding any other provision of this Agreement, no Advance shall be
required to be made hereunder if any Event of Default (as hereinafter defined)
has occurred and is continuing or if any event or condition has occurred or
failed to occur which with the passage of time or service of notice, or both,
would constitute an Event of Default. Each Advance under the Revolving
Commitment shall be an aggregate amount of at least $100,000 or a whole number
multiple thereof except an Advance of the entire remaining unborrowed Revolving
Commitment. Irrespective of the face amount of the Revolving Note or Notes, the
Banks shall never have the obligation to Advance any amount or amounts in excess
of the Available Commitment or to increase the Revolving Commitment. The total
number of Tranches under the Revolving Commitment which may be outstanding at
any time hereunder shall never exceed five (5), whether such Tranches are Prime
Rate Loans, LIBOR Loans, or a combination thereof. Within the limit of each
Bank's Revolving Commitment, the Borrowers may borrow, repay and reborrow under
this Section 2 prior to the Revolving Maturity Date.
2.3 Procedure for Borrowing. Whenever the Borrowers desire an Advance
hereunder, they shall give Agent telegraphic, telex, facsimile or telephonic
notice ("Notice of Borrowing") of such requested Advance, which in the case of
telephonic notice, shall be promptly confirmed in writing. Each Notice of
Borrowing shall be in the form of Exhibit "A" attached hereto and shall be
received by Agent not later than 11:00 a.m. Oklahoma City, Oklahoma time, (i)
one Business Day prior to the Borrowing Date in the case of the Prime Rate Loan,
or (ii) two London Business Days prior to any proposed Borrowing Date in the
case of LIBOR Loans. Each Notice of Borrowing shall specify (i) the Borrowing
Date (which, if at Prime Rate Loan, shall be a Business Day and if a LIBOR Loan,
a London Business Day), (ii) the principal amount to be borrowed, (iii) the
portion of the Advance constituting Prime Rate Loans and/or LIBOR Loans and (iv)
if any portion of the proposed Advance is to constitute LIBOR Loans, the initial
Interest Period selected by Borrowers pursuant to Section 4 hereof to be
applicable thereto. Upon receipt of such Notice, Agent shall advise each Bank
thereof; provided, that if the Banks have received at least one (1) day's notice
of such Advance prior to funding of a Prime Rate Loan, or at least two (2) days'
notice of each Advance prior to funding in the case of a LIBOR Loan, each Bank
shall provide Agent at its office at 000 Xxxx X-00 Xxxxxxx Xxxx, Xxxxxxxx Xxxx,
Xxxxxxxx 00000, not later than 1:00 p.m.,Oklahoma City, Oklahoma time, on the
Borrowing Date, in immediately available funds, its pro rata share of the
requested Advance, but the aggregate of all such fundings by each Bank shall
never exceed such Bank's Revolving Commitment. Not later than 2:00 p.m.,
Oklahoma City, Oklahoma time, on the Borrowing Date, Agent shall make available
to the Borrowers at the same office, in like funds, the aggregate amount of such
requested Advance. Neither Agent nor any Bank shall incur any liability to the
Borrowers in acting upon any Notice of Borrowing which Agent or such Bank
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Borrowers or for otherwise acting in
good faith under this Section 2.3 . Upon funding of Advances by Banks in
accordance with this Agreement, pursuant to any such Notice, the Borrowers shall
have effected Advances hereunder.
2.4 Letters of Credit. On the terms and conditions hereinafter set forth,
the Agent shall from time to time during the period beginning on the Effective
Date and ending on the Revolving Maturity Date upon request of Borrowers issue
standby and/or commercial Letters of Credit for the account of Borrowers (the
"Letters of Credit") in such face amounts as Borrowers may request, but not to
exceed in the aggregate face amount at any time outstanding the sum of Two
Million Dollars ($2,000,000.00). The face amount of all Letters of Credit issued
and outstanding hereunder shall be considered as Advances for Borrowing Base
purposes and all payments made by the Agent on such Letters of Credit shall be
considered as Advances under the Revolving Notes. Each Letter of Credit issued
for the account of Borrowers hereunder shall (i) be in favor of such
beneficiaries as specifically requested by Borrowers, (ii) have an expiration
date not exceeding one year from the Revolving Maturity Date, and (iii) contain
such other terms and provisions as may be reasonably required by Bank. Each Bank
(other than Agent) agrees that, upon issuance of any Letter of Credit hereunder,
it shall automatically acquire a participation in the Agent's liability under
such Letter of Credit in an amount equal to such Bank's Revolving Commitment
Percentage of such liability, and each Bank (other than Agent) thereby shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and shall be unconditionally obligated to Agent to pay and discharge
when due, its Revolving Commitment Percentage of Agent's liability under such
Letter of Credit. The Borrowers hereby unconditionally agree to pay and
reimburse the Agent for the amount of each demand for payment under any Letter
of Credit that is in substantial compliance with the provisions of any such
Letter of Credit at or prior to the date on which payment is to be made by the
Agent to the beneficiary thereunder, without presentment, demand, protest or
other formalities of any kind. Upon receipt from any beneficiary of any Letter
of Credit of any demand for payment under such Letter of Credit, the Agent shall
promptly notify the Borrowers of the demand and the date upon which such payment
is to be made by the Agent to such beneficiary in respect of such demand.
Forthwith upon receipt of such notice from the Agent, Borrowers shall advise the
Agent whether or not they intend to borrow hereunder to finance their
obligations to reimburse the Agent, and if so, submit a Notice of Borrowing as
provided in Section 2.3 hereof. If Borrowers fail to so advise Agent and
thereafter fail to reimburse Agent, the Agent shall notify each Bank of the
demand and the failure of the Borrowers to reimburse the Agent, and each Bank
shall reimburse the Agent for its Revolving Commitment Percentage of each such
draw paid by the Agent and unreimbursed by the Borrowers. All such amounts paid
by Agent and/or reimbursed by the Banks shall be treated as an Advance or
Advances under the Revolving Commitment, which Advances shall be immediately due
and payable and shall bear interest at the Default Rate.
2.5 Procedure for Obtaining Letters of Credit. The amount and date of
issuance, renewal, extension or reissuance of a Letter of Credit pursuant to the
Banks' commitment above in Section 2.4 shall be designated by Borrowers' written
request delivered to Agent at least three (3) Business Days prior to the date of
such issuance, renewal, extension or reissuance. Concurrently with or promptly
following the delivery of the request for a Letter of Credit, Borrowers shall
execute and deliver to the Agent an application and agreement with respect to
the Letters of Credit, said application and agreement to be in the form used by
the Agent. The Agent shall not be obligated to issue, renew, extend or reissue
such Letters of Credit if (A) the amount thereon when added to the face amount
of all outstanding Letters of Credit plus any Reimbursement Obligations exceeds
Two Million Dollars ($2,000,000.00) or (B) the amount thereof when added to the
Total Outstandings would exceed the Available Commitment. Borrowers agree to pay
the Agent for the benefit of the Banks the following commissions and fees for
issuing the Letters of Credit (calculated separately for each Letter of Credit):
a fee in an amount equal to the greater of: (i) one percent (1%) per annum on
the maximum face amount of the Letter of Credit due quarterly in arrears
computed on a basis of a year containing 360 days or (ii) $500.00. Borrowers
further agree to pay Agent an additional fronting fee equal to one-eighth of one
percent (.125%) per annum on the maximum face amount of each Letter of Credit.
Borrowers hereby agree to pay such other amounts as are customary for letter of
credit as are published by Agent from time to time. Such commissions shall be
payable prior to the issuance of each Letter of Credit and thereafter on each
anniversary date of such issuance while such Letter of Credit is outstanding.
2.6 Voluntary Reduction of Revolving Commitment. The Borrowers may at any
time, or from time to time, upon not less than three (3) Business Days' prior
written notice to Agent, reduce or terminate the Revolving Commitment; provided,
however, that (i) each reduction in the Revolving Commitment must be in the
amount of $500,000 or more, in increments of $100,000 and (ii) each reduction
must be accompanied by a prepayment of the Revolving Notes in the amount by
which the outstanding principal balance of the Revolving Notes exceeds the
Revolving Commitment as reduced pursuant to this Section 2.
2.7 Commitment Reductions. The Borrowing Base shall be reduced from time to
time in accordance with Section 7.2 hereof be pursuant to Section 7.2 hereof.
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 9.2
hereof. Initially, the Monthly Commitment Reduction shall be $0.00 and will
remain at such amount until redetermined in a subsequent determination of the
Borrowing Base pursuant to Section 7.2 below. The Monthly Commitment Reduction
shall be redetermined in conjunction with each subsequent redetermination of the
Borrowing Base pursuant to Section 7.2
2.8 Several Obligations. The obligations of the Banks under the Revolving
Commitment and pursuant to the Term Commitment are several and not joint. The
failure of any Bank to make an Advance required to be made by it shall not
relieve any other Bank of its obligation to make its Advance, and no Bank shall
be responsible for the failure of any other Bank to make the Advance to be made
by such other Bank.
3. Notes Evidencing Loans. The loans described above in Section 2 shall be
evidenced by promissory notes of Borrowers as follows:
3.1 Form of Term Notes. The Term Loan shall be evidenced by the Term Notes
in the aggregate face amount of $27,000,000, and shall be in the form of Exhibit
"B-2" hereto with appropriate insertions (each a "Term Note"). Although the Term
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 Term Notes may be higher, the
Term Notes shall be enforceable, with respect to Borrowers' obligation to pay
the principal amount thereof, only to the extent of the unpaid principal amount
of the loans. Banks shall have no obligation to advance any additional funds
pursuant to the Term Loan or Term Notes.
3.2 Form of Revolving Notes. The Revolving Loan shall be evidenced by a
Note or Notes in the aggregate face amount of $33,000,000, and shall be in the
form of Exhibit "B-1" hereto with appropriate insertions (each a "Revolving
Note"). Notwithstanding the face amount of the Revolving Notes, the actual
principal amount due from the Borrowers to Banks on account of the Revolving
Notes, as of any date of computation, shall be the sum of Advances then and
theretofore made on account thereof, less all principal payments actually
received by Banks in collected funds with respect thereto. Although the
Revolving Notes may be dated as of the Effective Date, interest in respect
thereof shall be payable only for the period during which the loans evidenced
thereby are outstanding and, although the stated amount of the Revolving Notes
may be higher, the Revolving Notes shall be enforceable, with respect to
Borrowers' obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the loans. Irrespective of the face amount of the
Revolving Notes, no Bank shall ever be obligated to advance on the Revolving
Commitment any amount in excess of its Revolving Commitment then in effect.
3.3 Issuance of Additional Notes. From time to time new Notes may be issued
to other Banks as such Banks become parties to this Agreement. Upon request from
Agent, the Borrowers shall execute and deliver to Agent any such new or
additional Notes. From time to time as new Notes are issued the Agent shall
require that each Bank exchange their Notes for newly issued Notes to better
reflect the extent of each Bank's Commitment hereunder. The notes replaced shall
be marked to indicate that they have been replaced and/or returned to the
Borrowers.
3.4 Interest Rates. The unpaid principal balance of the Notes shall bear
interest from time to time as set forth in Section 4 hereof.
3.5 Payment of Interest. Interest on the Notes shall be payable on each
Interest Payment Date.
3.6 Payment of Principal.
3.6.1 Beginning September 30, 2001, and continuing on or before the last
day of each calendar quarter thereafter through the Term Maturity Date, Borrower
shall, in addition to the payment of interest required pursuant to Section 3.5
above, make a payment of principal on the Term Notes to the Agreement for the
ratable benefit of the Banks in the amount of $1,350,000.00. All outstanding
principal plus all accrued but unpaid interest due on the Note shall be due and
payable in full on the Term Maturity Date.
3.6.2 Principal of the Revolving Notes shall be due and payable to the
Agent for the ratable benefit of the Banks on the Revolving Maturity Date unless
earlier due in whole or in part as a result of an acceleration of the amount due
or pursuant to the mandatory prepayment provisions of Section 9.2 hereof.
3.7 Payment to Banks. Each Bank's Pro Rata Part of each payment or
prepayment of the Loans shall be directed by wire transfer to such Bank by the
Agent at the address provided to the Agent for such Bank for payments no later
than 2:00 p.m., Oklahoma City, Oklahoma, time on the Business Day such payments
or prepayments are deemed hereunder to have been received by Agent; provided,
however, in the event that any Bank shall have failed to make an Advance as
contemplated under Section 2 hereof (a "Defaulting Bank") and the Agent or
another Bank or Banks shall have made such Advance, payment received by Agent
for the account of such Defaulting Bank or Banks shall not be distributed to
such Defaulting Bank or Banks until such Advance or Advances shall have been
repaid in full to the Bank or Banks who funded such Advance or Advances. Any
payment or prepayment received by Agent at any time after 12:00 noon, Oklahoma
City, Oklahoma, time on a Business Day shall be deemed to have been received on
the next Business Day. Interest shall cease to accrue on any principal as of the
end of the day preceding the Business Day on which any such payment or
prepayment is deemed hereunder to have been received by Agent. If Agent fails to
transfer any principal amount to any Bank as provided above, then Agent shall
promptly direct such principal amount by wire transfer to such Bank.
3.8 Sharing of Payments, Etc. If any Bank shall obtain any payment (whether
voluntary, involuntary, or otherwise) on account of the Loans, (including,
without limitation, any set-off) which is in excess of its Pro Rata Part of
payments on either of the Loans, as the case may be, obtained by all Banks, such
Bank shall purchase from the other Banks such participation as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided that, if all or any portion of such excess payment
is thereafter recovered from such purchasing Bank, the purchase shall be
rescinded and the purchase price restored to the extent of the recovery. The
Borrowers agree that any Bank so purchasing a participation from another Bank
pursuant to this Section may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of offset) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrowers in the amount of such participation.
3.9 Non-Receipt of Funds by the Agent. Unless the Agent shall have been
notified by a Bank or the Borrowers (the "Payor") prior to the date on which
such Bank is to make payment to the Agent of the proceeds of a Loan to be made
by it hereunder or the Borrowers are to make a payment to the Agent for the
account of one or more of the Banks, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was made available by the Agent until the date the Agent recovers
such amount at the rate applicable to such portion of the applicable Loan.
3.10 Capital Adequacy. If either (i) the introduction or implementation of
or the compliance with or any change in or in the interpretation of any law,
rule or regulation or (ii) the introduction or implementation of or the
compliance with any mandatory request, directive or guideline from any central
bank or other governmental authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected to be
maintained by any Bank or any corporation controlling any Bank as a result of
maintaining its Pro Rata Part of the Revolving Commitment, then within fifteen
(15) days after demand by such Bank, the Borrowers will pay to such Bank, from
time to time as specified by such Bank, such additional amount or amounts which
such Bank shall reasonably determine to be appropriate to compensate such Bank
or any corporation controlling such Bank in light of such circumstances, to the
extent that such Bank reasonably determines that the amount of any such capital
would be increased, or the rate of return on any such capital would be reduced
in whole or in part, based on the existence of the amount of the Loans or such
Bank's Revolving Commitment under this Agreement; provided, however, that to the
extent such notice is given by any such Bank more than 180 days after the
occurrence of the event giving rise to the additional costs of the type
described in this Section, such Bank shall not be entitled to compensation
pursuant to this Section for any amounts incurred or accruing prior to the date
180 days before the giving of such notice, except to the extent such law, rule,
regulation, request, directive or guideline shall have been given retroactive
effective affecting a period beginning more than 180 days prior to such notice.
4. Interest Rates.
4.1 Options.
4.1.1 Prime Rate Loans. On Prime Rate Loans the Borrowers agree to pay
interest on the Notes calculated on the basis of the actual days elapsed in
a year consisting of 360 days with respect to the unpaid principal amount
of each Prime Rate Loan from the date the proceeds thereof are advanced to
Borrowers until maturity (whether by acceleration or otherwise), at a
varying rate per annum equal to the lesser of (i) the Maximum Rate, or (ii)
the sum of the Prime Rate plus the Prime Rate Margin. Subject to the
provisions of this Agreement as to prepayment, the principal of the Notes
representing Prime Rate Loans shall be payable as specified in Section 3.6
hereof and the interest in respect of each Prime Rate Loan shall be payable
on each Interest Payment Date. Past due principal and, to the extent
permitted by law, past due interest in respect to each Prime Rate Loan,
shall bear interest, payable on demand, at a rate per annum equal to the
Default Rate.
4.1.2 LIBOR Loans. On LIBOR Loans the Borrowers agree to pay interest
calculated on the basis of a year consisting of 360 days with respect to
the unpaid principal amount of each LIBOR Loan from the date the proceeds
thereof are advanced to Borrowers until maturity (whether by acceleration
or otherwise), at a varying rate per annum equal to the lesser of (i) the
Maximum Rate, or (ii) the LIBOR Rate plus the LIBOR Margin. Subject to the
provisions of this Agreement with respect to prepayment, the principal of
the Notes shall be payable as specified in Section 3.6 hereof and the
interest with respect to each LIBOR Loan shall be payable on each Interest
Payment Date. Past due principal and, to the extent permitted by law, past
due interest shall bear interest, payable on demand, at a rate per annum
equal to the Default Rate. Upon three (3) London Business Days' written
notice prior to the making by the Banks of any LIBOR Loan (in the case of
the initial Interest Period therefor) or the expiration date of each
succeeding Interest Period (in the case of subsequent Interest Periods
therefor), Borrowers shall have the option, subject to compliance by
Borrowers with all of the provisions of this Agreement, as long as no Event
of Default exists, to specify whether the Interest Period commencing on any
such date shall be a one (1), two (2), three (3) or six (6) month period.
If Agent shall not have received timely notice of a designation of such
Interest Period as herein provided, Borrowers shall be deemed to have
elected to convert all maturing LIBOR Loans to Prime Rate Loans.
4.2 Interest Rate Determination. The Leverage Ratio shall be determined as
of the end of each fiscal quarter of the Borrowers' fiscal year based upon the
Borrowers' financial statements delivered pursuant to Section 12.1.2 below. Each
change in the Prime Rate Margin and the LIBOR Margin resulting from a change in
the Leverage Ratio shall be effective during the period commencing on and
including the date of delivery to the Agent of such financial statements
indicating such change and ending on the date immediately preceding the
effective date of the next change. Agent shall determine each interest rate
applicable to the Loans hereunder in accordance with the provisions of this
Agreement. The Agent shall give prompt notice to the Borrowers and the Banks of
each rate of interest so determined and its determination thereof shall be
conclusive absent error.
4.3 Conversion Option. Borrowers may elect from time to time (i) to convert
all or any part of its LIBOR Loans to Prime Rate Loans by giving Agent
irrevocable notice of such election in writing prior to 10:00 a.m. (Oklahoma
City, Oklahoma time) on the conversion date and such conversion shall be made on
the requested conversion date, provided that any such conversion of a LIBOR Loan
shall only be made on the last day of the LIBOR Interest Period with respect
thereof, (ii) to convert all or any part of its Prime Rate Loans to LIBOR Loans
by giving the Agent irrevocable written notice of such election three (3) London
Business Days prior to the proposed conversion and such conversion shall be made
on the requested conversion date or, if such requested conversion date is not a
London Business Day or a Business Day, as the case may be, on the next
succeeding London Business Day or Business Day, as the case may be. Any such
conversion shall not be deemed to be a prepayment of any of the loans for
purposes of this Agreement or the Notes.
4.4 Recoupment. If at any time the applicable rate of interest selected
pursuant to Sections 4.1.1 or 4.1.2 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 4.1.1 or 4.1.2, as the case may be, had at all times been in effect.
5. Change of Circumstances.
5.1 Unavailability of Funds or Inadequacy of Pricing. In the event that, in
connection with any proposed LIBOR Loan, the Agent determines, which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties, due to changes in circumstances since the date hereof,
adequate and fair means do not exist for determining the LIBOR Rate or such rate
will not accurately reflect the costs to the Banks of funding LIBOR Loans for
such LIBOR Interest Period, the Agent shall give notice of such determination to
the Borrowers and the Banks, whereupon, until the Agent notifies the Borrowers
and the Banks that the circumstances giving rise to such suspension no longer
exist, the obligations of the Banks to make, continue or convert Loans into
LIBOR Loans shall be suspended, and all loans to Borrowers shall be Prime Rate
Loans during the period of suspension.
5.2 Change in Laws. If at any time any new law or any change in existing
laws or in the interpretation of any new or existing laws shall make it unlawful
for any Bank to make or continue to maintain or fund LIBOR Loans hereunder, then
such Bank shall promptly notify Borrowers in writing and such Bank's obligation
to make, continue or convert Loans into LIBOR Loans under this Agreement shall
be suspended until it is no longer unlawful for such Bank to make or maintain
LIBOR Loans. Upon receipt of such notice, Borrowers shall either repay the
outstanding LIBOR Loans owed to the Banks, without penalty, on the last day of
the current Interest Periods (or, if any Bank may not lawfully continue to
maintain and fund such LIBOR Loans, immediately), or Borrowers may convert such
LIBOR Loans at such appropriate time to Prime Rate Loans.
5.3 Increased Cost or Reduced Return.
5.3.1 If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Bank with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(A) shall subject such Bank to any tax, duty, or other charge
with respect to any LIBOR Loans, its Notes, or its obligation to make
LIBOR Loans, or change the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any LIBOR
Loans (other than franchise taxes and taxes imposed on the overall net
income of such Bank);
(B) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than reserve
requirements, if any, taken into account in the determination of the
LIBOR Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such
Bank, including the Commitment of such Bank hereunder; or
(C) shall impose on such Bank or on the London interbank market
any other condition affecting this Agreement or its Notes or any of
such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank
of making, converting into, continuing, or maintaining any LIBOR Loans or
to reduce any sum received or receivable by such Bank under this Agreement
or its Notes with respect to any LIBOR Loans, then Borrowers shall pay to
such Bank on demand such amount or amounts as will compensate such Bank for
such increased cost or reduction. If any Bank requests compensation by
Borrowers under this Section 5.3, Borrowers may, by notice to such Bank
(with a copy to Agent), suspend the obligation of such Bank to make or
continue LIBOR Loans, or to convert all or part of the Prime Rate Loan
owing to such Bank to LIBOR Loans, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of
Section 5.3 shall be applicable); provided that such suspension shall not
affect the right of such Bank to receive the compensation so requested.
5.3.2 If, after the date hereof, any Bank shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Bank or any corporation controlling such Bank as a
consequence of such Bank's obligations hereunder to a level below that
which such Bank or such corporation could have achieved but for such
adoption, change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then from time to time upon
demand Borrowers shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
5.3.3 Each Bank shall promptly notify Borrowers and Agent of any event
of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section 5.3 will
designate a separate lending office, if applicable, if such designation
will avoid the need for, or reduce the amount of, such compensation and
will not, in the judgment of such Bank, be otherwise disadvantageous to it.
Any Bank claiming compensation under this Section 5.3 shall furnish to
Borrowers and Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence
of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
5.3.4 Any Bank giving notice to the Borrowers through the Agent,
pursuant to Section 5.3 shall give to the Borrowers a statement signed by
an officer of such Bank setting forth in reasonable detail the basis for,
and the calculation of such additional cost, reduced payments or capital
requirements, as the case may be, and the additional amounts required to
compensate such Bank therefor.
5.3.5 Within five (5) Business Days after receipt by the Borrowers of
any notice referred to in Section 5.3, the Borrowers shall pay to the Agent
for the account of the Bank issuing such notice such additional amounts as
are required to compensate such Bank for the increased cost, reduce
payments or increase capital requirements identified therein, as the case
may be; provided, that the Borrowers shall not be obligated to compensate
such Bank for any increased costs, reduced payments or increased capital
requirements to the extent that such Bank incurs the same prior to a date
six (6) months before such Bank gives the required notice.
5.4 Discretion of Bank as to Manner of Funding. Notwithstanding any
provisions of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if each Bank had actually funded
and maintained each LIBOR Loan through the purchase of deposits having a
maturity corresponding to the last day of the LIBOR Interest Period applicable
to such LIBOR Loan and bearing an interest rate to the applicable interest rate
for such LIBOR Period.
5.5 Breakage Fees. Without duplication under any other provision hereof, if
any Bank incurs any loss, cost or expense (including, without limitation, any
loss of profit and loss, cost, expense or premium reasonably incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by such
Bank to fund or maintain any LIBOR Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to the Banks) as a result of any of the
following events other than any such occurrence as a result in the change of
circumstances described in Sections 5.1 and 5.2 above:
5.5.1 any payment, prepayment or conversion of a LIBOR Loan on a date
other than the last day of its LIBOR Interest Period (whether by
acceleration, prepayment or otherwise);
5.5.2 any failure to make a principal payment of a LIBOR Loan on the
due date thereof; or
5.5.3 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 2.3 or 4.3 hereof;
then the Borrowers shall pay to such Bank such amount as will reimburse
such Bank for such loss, cost or expense. If any Bank makes such a claim
for compensation, it shall furnish to Borrowers and Agent a statement
setting forth the amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the computation of such
loss, cost or expense) and the amounts shown on such statement shall be
conclusive and binding absent manifest error.
6. Collateral Security.
6.1 Pledge of Collateral. To secure the performance by Borrowers of their
obligations hereunder, and under the Notes and Security Instruments, whether now
or hereafter incurred, matured or unmatured, direct or contingent, joint or
several, or joint and several, including extensions, modifications, renewals and
increases thereof, and substitutions therefore, Borrowers have heretofore
granted and assigned to Bank One-Oklahoma and/or MidFirst Bank a first and prior
lien on certain of their Oil and Gas Properties, certain related equipment, oil
and gas inventory and the proceeds of the foregoing. Contemporaneously with the
execution of this Agreement and the Notes, the Borrowers shall grant and assign
to Agent for the ratable benefit of the Banks a first and prior Lien on certain
of its Oil and Gas Properties, certain related equipment, oil and gas inventory,
certain bank accounts, the System, the Plant and proceeds of the foregoing. The
Liens held by Bank One-Oklahoma on the Oil and Gas Properties shall be assigned,
as of the Effective Date, to the Agent for the ratable benefit of the Banks. The
Oil and Gas Properties heretofore and herewith mortgaged to the Agent shall
represent not less than 70% of the Borrowers' aggregate present worth in proved
developed producing properties, as determined by Borrowers' most recent
engineering report as of the Effective Date. All Oil and Gas Properties and
other collateral in which Borrowers have heretofore granted to Bank
One-Oklahoma, or herewith grant or hereafter grant to Agent for the ratable
benefit of the Banks a first and prior Lien (to the satisfaction of the Agent)
in accordance with this Section 6, as such properties and interests are from
time to time constituted, are hereinafter collectively called the "Collateral".
6.2 Documentation and Title Review. The granting and assigning of such
security interests and Liens by Borrowers shall be pursuant to Security
Instruments in form and substance reasonably satisfactory to the Agent.
Concurrently with the delivery of each of the Security Instruments or within a
reasonable time thereafter, Borrowers shall furnish to the Agent mortgage and
title opinions and other title information satisfactory to Agent with respect to
the title and Lien status of Borrowers' interests in not less than 80% of the
Engineered Value of the Oil and Gas Properties covered by the Security
Instruments as Agent shall have designated. "Engineered Value" for this purpose
shall mean future net revenues discounted at the discount rate being used by the
Agent as of the date of any such determination utilizing the pricing parameters
used in the engineering report furnished to the Agent for the ratable benefit of
the Banks, pursuant to Sections 7 and 12 hereof. Borrowers will cause to be
executed and delivered to the Agent, in the future, additional Security
Instruments if the Agent reasonably deems such are necessary to insure
perfection or maintenance of Banks' security interests and Liens in the
Collateral or any part thereof.
6.3 Letters in Lieu of Transfer Orders. The Borrowers shall provide the
Agent for the benefit of the Banks, undated letters in lieu of transfer orders,
in form and substance satisfactory to Agent, from the Borrowers to each
purchaser of hydrocarbons and disburser proceeds of hydrocarbons from and
attributable to the Oil and Gas Properties, together with additional letters
with addresses left blank authorizing and directing the addressees to make
future payments attributable to hydrocarbons from the Oil and Gas Properties
directly to the Agent for the benefit of the Banks. The Banks agree that none of
the letters in lieu of transfer orders provided by the Borrowers pursuant to
this Section 6.3 will be sent to the address prior to the occurrence of an Event
of Default, at which time the Agent may, at its option and in addition to the
exercise of any of its other rights and remedies, send any and all of such
letters to such addressees; provided, however, that upon the occurrence of an
Event of Default other than those specified in Sections 14.6 and 14.7, the Agent
shall not send any or all of such letters until the applicable period to cure,
if any, such Default has lapsed without such Default being cured. Borrowers
hereby designate the Agent as its agent and attorney-in-fact, to act in its
name, place and stead for the purpose of completing and delivering any and all
letters in lieu of transfer orders delivered by the Borrowers to the Agent for
the benefit of the Banks pursuant to Sections 6.3 and 12.23 hereof, including,
without limitation, completing any blanks contained in such letters and
attaching exhibits thereto describing the relevant Collateral. Borrowers hereby
ratify and confirm all that the Agent shall lawfully do or cause to be done by
virtue of this power of attorney and the rights granted with respect to such
power of attorney. This power of attorney is coupled with the interests of the
Agent in the Collateral, shall commence and be in full force and effect as of
the Effective Date and shall remain in full force and effect and shall be
irrevocable until the obligations, if any, of the Agent hereunder have
terminated and the full satisfaction of all obligations due hereunder or under
the Notes. The powers conferred on Agent by this appointment may only be
exercised by the Agent by execution by any Person who, at the time of exercise,
is an officer of the Agent, and are solely to protect the interests of the Agent
and the Banks under the Loan Documents and shall not impose any duty upon the
Agent to exercise any such powers. The Agent shall be accountable only for
amounts that it actually receives or has expressly directed that others receive
as a result of the exercise of such powers and shall not be responsible to the
Borrowers, or any other Person for any act or failure to act with respect to
such powers, except for gross negligence or willful misconduct.
7. Borrowing Base.
7.1 Initial Borrowing Base. At the Effective Date, the Borrowing Base shall
be $60,000,000.00.
7.2 Subsequent Determinations of Borrowing Base. Subsequent determinations
of the Borrowing Base and Monthly Commitment Reduction shall be made by the
Banks at least semi-annually based on engineering reports effectively dated
January 1 and July 1 of each year beginning July 1, 2001 or as otherwise
required to accommodate Unscheduled Redeterminations. The Borrowers shall
furnish to the Banks as soon as possible but in any event no later than April 1
of each year, beginning April 1, 2001, with an engineering report in form and
substance satisfactory to the Agent prepared by an independent petroleum
engineering firm acceptable to Agent covering the Oil and Gas Properties
utilizing economic and pricing parameters used by Agent as established from time
to time, together with such other information concerning the value of the Oil
and Gas Properties as the Agent shall deem necessary to determine the value of
the Oil and Gas Properties. By October 1 of each year, or within thirty (30)
days after either (i) receipt of notice from Agent that the Banks require an
Unscheduled Redetermination, or (ii) the Borrowers give notice to Agent of their
desire to have an Unscheduled Redetermination performed, the Borrowers shall
furnish to the Banks an engineering report in form and substance satisfactory to
Agent prepared by Borrowers' in-house engineering staff valuing the Oil and Gas
Properties utilizing economic and pricing parameters used by the Agent as
established from time to time, together with such other information, reports and
data concerning the value of the Oil and Gas Properties as Agent shall deem
reasonably necessary to determine the value of such Oil and Gas Properties.
Agent shall by notice to the Borrowers no later than May 1 and November 1 of
each year, or within a reasonable time thereafter (herein called the
"Determination Date"), notify the Borrowers of the designation by the Banks of
the new Borrowing Base and Monthly Commitment Reduction for the period beginning
on such Determination Date and continuing until, but not including, the next
Determination Date. If an Unscheduled Redetermination is made by the Banks, the
Agent shall notify the Borrowers within a reasonable time after receipt of all
requested information of the new Borrowing Base, and such new Borrowing Base and
Monthly Commitment Reduction 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 7.2, the Banks may nonetheless designate the
Borrowing Base and Monthly Commitment Reduction at any amount which the Banks in
their discretion determine and may redesignate the Borrowing Base and Monthly
Commitment Reduction from time to time thereafter until the Banks receive all
such information, reports and data, whereupon the Banks shall designate a new
Borrowing Base and Monthly Commitment Reduction as described above. Each Bank
shall determine the amount of the Borrowing Base and Monthly Commitment
Reduction based upon the loan value which such Bank in its discretion (using
such methodology, assumptions and discounts rates as such Bank customarily uses
in assigning loan value to oil and gas properties, oil and gas gathering
systems, gas processing and plant operations) assigns to such Oil and Gas
Properties and other Collateral of the Borrowers at the time in question and
based upon such other credit factors consistently applied (including, without
limitation, the assets, liabilities, cash flow, business, properties, prospects,
management and ownership of the Borrowers and their affiliates) as such Bank
customarily considers in evaluating similar oil and gas credits, but such Bank
in its discretion shall not be required to give any additional positive value to
any Oil and Gas Property over the current economic and pricing parameters used
by such Bank for such Determination Date which additional value is derived
directly from a hedging, forward sale or swap agreement covering such Oil and
Gas Property as of the date of such determination. All determinations or
Unscheduled Redeterminations of the Borrowing Base require the approval of
Majority Banks; provided, however, that notwithstanding anything to the contrary
herein, the amount of the Borrowing Base and the Monthly Commitment Reduction
may not be increased, without the approval of all Banks. If the Banks cannot
otherwise agree on the Borrowing Base and the Monthly Commitment Reduction, each
Bank shall submit in writing to the Agent its proposed Borrowing Base and the
Borrowing Base shall be set on the basis of the weighted average of the
Borrowing Bases proposed by the Banks. If at any time any of the Oil and Gas
Properties are sold, the Borrowing Base then in effect may be reduced as a
result of an Unscheduled Redetermination . The Borrowing Base shall be
additionally reduced from time to time pursuant to the provisions of Sections
2.6 and 2.7 hereof. It is expressly understood that the Banks have no obligation
to designate the Borrowing Base at any particular amounts, except in the
exercise of their discretion. Provided, however, that the Banks shall not have
the obligation to designate a Borrowing Base in an amount in excess of the
Commitment or its legal or internal lending limits. The Banks shall have the
right to perform an Unscheduled Redetermination of the Borrowing Base.
8. Fees.
8.1 Unused Commitment Fee. The Borrowers shall pay to Agent for the ratable
benefit of the Banks an unused commitment fee (the "Unused Commitment Fee")
equivalent to the Unused Fee Rate times the unadvanced amount of the Revolving
Commitment (calculated on a daily basis). The Unused Commitment Fee shall be
payable in arrears on the last Business Day of each calendar quarter beginning
June 30, 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 monthly period, the Borrowers shall pay to the
Agent for the ratable benefit of the Banks, on the date of such termination, the
total Unused Commitment Fee due for the period in which such termination occurs.
8.2 The Letter of Credit Fee. Borrowers shall pay to the Agent the Letter
of Credit fees required above in Section 2.5.
8.3 Upfront Fee. Borrowers shall pay to the Agent for the ratable benefit
of Lenders an upfront fee in the amount of $62,500.00.
8.4 Other Fees. The Borrowers shall pay to the Agent such other fees as are
set forth in that certain letter dated July 9, 2001 from Agent to Borrowers.
9. Prepayments.
9.1 Voluntary Prepayments. Subject to the provisions of Section 5.5 hereof,
the Borrowers may at any time and from time to time, without penalty or premium,
prepay the Notes, in whole or in part. Each such prepayment shall be made on at
least three (3) London Business Days' notice to Agent in the case of LIBOR Loan
Tranches and without notice in the case of Prime Rate Loan Tranches and shall be
in a minimum amount of $100,000.00 or any larger multiple thereof or the unpaid
balance on the Notes, whichever is less, plus accrued interest thereon to the
date of prepayment.
9.2 Mandatory Prepayment For Borrowing Base Deficiency. In the event the
Total Outstandings ever exceed the Borrowing Base as determined by Banks
pursuant to Section 7.2 hereof, the Borrowers shall, within thirty (30) days
after notification from the Agent, either (A) by instruments reasonably
satisfactory in form and substance to the Bank, provide the Agent with
collateral with value and quality in amounts satisfactory to all of the Banks in
their discretion in order to increase the Borrowing Base by an amount at least
equal to such excess, or (B) prepay, without premium or penalty, the principal
amount of the Term Notes or the Revolving Notes, in Banks' discretion, in an
amount at least equal to such excess plus accrued interest thereon to the date
of prepayment. If the Total Outstandings ever exceed the Commitment as a result
of a Monthly Commitment Reduction or any other required reduction in the
Commitment, then in such event, Borrowers shall immediately prepay the principal
amount of the Term Notes or the Revolving Notes, in Banks' discretion, 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 Banks to enter into
this Agreement, the Borrowers hereby, jointly and severally, represent and
warrant to the Banks (which representations and warranties will survive the
delivery of the Notes) that:
10.1 Creation and Existence. Borrowers are each a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it was formed and is duly qualified in all jurisdictions
wherein failure to qualify may result in a Material Adverse Effect. Borrowers
each have all power and authority to own its properties and assets and to
transact the business in which it is engaged.
10.2 Power and Authority. Borrowers are each duly authorized and empowered
to create and issue the Notes; and Borrowers are duly authorized and empowered
to execute, deliver and perform their respective Loan Documents, including this
Agreement; and all corporation action on each Borrower's part requisite for the
due creation and issuance of the Notes and for the due execution, delivery and
performance of the Loan Documents, including this Agreement, has been duly and
effectively taken. Each Support Party is duly authorized and empowered to
execute, deliver and perform the respective Loan Documents to which they are a
party; and all action on each Support Party's part requisite for the due
execution, delivery and performance of such Loan Documents has been duly and
effectively taken.
10.3 Binding Obligations. This Agreement does, and the Notes and other Loan
Documents upon their creation, issuance, execution and delivery will, constitute
valid and binding obligations of Borrowers, enforceable in accordance with their
respective terms (except that enforcement may be subject to applicable
principles of equity and the effect of any applicable bankruptcy, insolvency, or
similar debtor relief laws now or hereafter in effect and relating to or
affecting the enforcement of creditors' rights generally).
10.4 No Legal Bar or Resultant Lien. The Notes and the Loan Documents,
including this Agreement, do not and will not, to the best of each Borrower's
and each Support Party's knowledge violate any provisions of any contract,
agreement, law, regulation, order, injunction, judgment, decree or writ to which
any Borrower or any Support Party is subject which could reasonable be expected
to have a Material Adverse Effect, or result in the creation or imposition of
any lien or other encumbrance upon any assets or properties of any Borrower or
any Support Party, other than those contemplated by this Agreement.
10.5 No Consent. The execution, delivery and performance by the Borrowers
of the Notes and other Loan Documents, including this Agreement, does not
require the consent or approval of any other person or entity, including without
limitation any regulatory authority or governmental body of the United States or
any state thereof or any political subdivision of the United States or any state
thereof except for consents required for federal, state and, in some instances,
private leases, right of ways and other conveyances or encumbrances of oil and
gas leases, if any, all of which consents have been obtained by the Borrowers.
10.6 Financial Condition. The unaudited Financial Statements of Borrowers
dated March 31, 2001, which have been delivered to Banks are complete and
correct in all material respects, and fully and accurately reflect in all
material respects the financial condition and results of the operations of the
Borrowers on a consolidated basis as of the date or dates and for the period or
periods stated. No change has since occurred in the condition, financial or
otherwise, of the Borrowers which is reasonably expected to have a Material
Adverse Effect, except as disclosed to the Banks in Schedule "2" attached
hereto.
10.7 Liabilities. Neither Borrower has any material (individually or in the
aggregate) liability, direct or contingent, except as disclosed to the Banks in
the Financial Statements or on Schedule "3" attached hereto. No unusual or
unduly burdensome restrictions, restraint, or hazard exists by contract, law or
governmental regulation or otherwise relative to the business, assets or
properties of Borrowers which is reasonably expected to have a Material Adverse
Effect.
10.8 Litigation. Except as described in the Financial Statements, or as
otherwise disclosed to the Banks in Schedule "4" attached hereto, there is no
litigation, legal or administrative proceeding, investigation or other action of
any nature pending or, to the knowledge of the officers of Borrowers threatened
against or affecting Borrowers which involves the possibility of any judgment or
liability not fully covered by insurance, and which is reasonably expected to
have a Material Adverse Effect.
10.9 Taxes; Governmental Charges. Borrowers have each filed all tax returns
and reports required to be filed and has paid all taxes, assessments, fees and
other governmental charges levied upon them or their assets, properties or
income which are due and payable, including interest and penalties, the failure
of which to pay could reasonably be expected to have a Material Adverse Effect,
except such as are being contested in good faith by appropriate proceedings and
for which adequate reserves for the payment thereof as required by GAAP has been
provided and levy and execution thereon have been stayed and continue to be
stayed.
10.10 Titles, Etc. Borrowers each have defensible title to all of its
respective assets, including without limitation, the Oil and Gas Properties, the
Plants and the Systems, free and clear of all liens or other encumbrances except
Permitted Liens, except such failure or failures of title which in the aggregate
could not reasonably be expected to reduce the Borrowing Base by more than
$500,000.
10.11 Defaults. Neither Borrower is in default and no event or circumstance
has occurred which, but for the passage of time or the giving of notice, or
both, would constitute a default under any loan or credit agreement, indenture,
mortgage, deed of trust, security agreement or other agreement or instrument to
which either Borrower is a party in any respect that would be reasonably
expected to have a Material Adverse Effect. No Event of Default hereunder has
occurred and is continuing.
10.12 Casualties; Taking of Properties. Since the dates of the latest
Financial Statements of the Borrowers delivered to Banks, neither the business
nor the assets or properties of Borrowers have been affected (to the extent it
is reasonably likely to cause a Material Adverse Effect), as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of property or
cancellation of contracts, permits or concessions by any domestic or foreign
government or any agency thereof, riot, activities of armed forces or acts of
God or of any public enemy.
10.13 Use of Proceeds; Margin Stock. The proceeds of the Commitment may be
used by the Borrowers for the purposes of (i) refinancing existing debt, (ii)
acquisition, exploration and development of oil and gas properties or entities
owning oil and gas properties, (iii) Letters of Credit, and (iv) general
corporate purposes. Neither Borrower is engaged principally or as one of its
important activities in the business of extending credit for the purpose of
purchasing or carrying any "margin stock " as defined in Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of said
Regulation G or U.
Neither Borrower nor any person or entity acting on behalf of Borrowers has
taken or will take any action which might cause the loans hereunder or any of
the Loan Documents, including this Agreement, to violate Regulation G or U or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter be in
effect.
10.14 Location of Business and Offices. The principal place of business and
chief executive offices of the Borrowers are located at the address stated in
Section 17 hereof.
10.15 Compliance with the Law. To the best of either Borrower's knowledge,
neither Borrower:
(i) is in violation of any law, judgment, decree, order, ordinance, or
governmental rule or regulation to which either Borrower, or any of its
assets or properties are subject; or
(ii) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of its assets
or properties or the conduct of its business;
which violation or failure is reasonably expected to have a Material Adverse
Effect.
10.16 No Material Misstatements. No information, exhibit or report
furnished by Borrowers to the Banks in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading.
10.17 ERISA. Borrowers are each in compliance in all material respects with
the applicable provisions of ERISA, and no "reportable event", as such term is
defined in Section 403 of ERISA, has occurred with respect to any Plan of
Borrowers.
10.18 Public Utility Holding Company Act. Neither Borrower is a "holding
company", or "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a"subsidiary company" of a "holding company", or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
10.19 Subsidiaries. All of the Borrowers' Subsidiaries are listed on
Schedule "5" hereto.
10.20 Environmental Matters. Except as disclosed on Schedule "6", neither
Borrower (i) has received notice or otherwise learned of any Environmental
Liability which would be reasonably likely to individually or in the aggregate
have a Material Adverse Effect arising in connection with (A) any non-compliance
with or violation of the requirements of any Environmental Law or (B) the
release or threatened release of any toxic or hazardous waste into the
environment, (ii) has received notice of any threatened or actual liability in
connection with the release or notice of any threatened release of any toxic or
hazardous waste into the environment which would be reasonably likely to
individually or in the aggregate have a Material Adverse Effect or (iii) has
received notice or otherwise learned of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any toxic or hazardous waste into the environment for
which either Borrower is or may be liable which may reasonably be expected to
result in a Material Adverse Effect.
10.21 Liens. Except (i) as disclosed on Schedule "1" hereto and (ii) for
Permitted Liens, the assets and properties of the Borrowers are free and clear
of all liens and encumbrances.
10.22 Gas Contracts. Except as described on Schedule "7" hereto, the
Borrowers (a) are not obligated in any material respect by virtue of any
prepayment made under any contract containing a "take-or-pay,", "recoupment," or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Oil and Gas Properties at some future
date without receiving full payment therefor at the time of delivery, and (b)
has not produced gas, in any material amount, subject to, and is not, nor are
any of the Oil and Gas Properties, subject to balancing rights of third parties
or subject to balancing duties under governmental requirements, except as to
such matters for which the Borrowers have established monetary reserves adequate
in an amount to satisfy such obligations and has segregated such reserves from
other accounts or the Borrowers' balancing obligations in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
10.23 Delhi Oakdale Lateral System. A portion of the Eagle Chief Gas
Gathering System is not owned by either Borrower, rather, it is leased pursuant
to the Delhi Lease. The primary term of the Delhi Lease has expired, however,
the Borrowers' right to use the Delhi Oakdale Lateral System is renewed on a
month-to-month basis. The Delhi Oakdale Lateral System is not a critical portion
of the Eagle Chief Gas Gathering System. The Delhi Oakdale Lateral System
accounts for no more than one percent (1%) of the volume of hydrocarbons flowing
through the Eagle Chief Gas Gathering System.
10.24 Eagle Chief Gas Gathering System. At least ninety percent (90%) of
the hydrocarbons flowing through the Gathering System originate from xxxxx
directly connected to the Eagle Chief Gas Gathering System or flows through the
Eagle Chief Gas Gathering System prior to delivery to the Oklahoma Natural Gas
Company's or other purchaser's system.
10.25 Senior Subordinated Notes. The Senior Subordinated Notes are
unsecured and are subordinate, in terms of payment and collection, to the Loan.
11. Conditions of Lending.
11.1 The effectiveness of this Agreement, and the obligation to make the
Term Loan or the initial Advance or issue any initial Letter of Credit under the
Revolving Commitment shall be subject to satisfaction of the following
conditions precedent:
11.1.1 Execution and Delivery. The Borrowers shall each have executed
and delivered the Agreement, the Notes and other required Loan Documents,
and the other Security Instruments, all in form and substance satisfactory
to the Agent;
11.1.2 Legal Opinion. The Agent shall have received from Borrowers'
and Support Party's legal counsel a favorable legal opinion or opinions in
form and substance satisfactory to it as to such other matters as Agent or
its counsel may reasonably request;
11.1.3 Corporate Resolutions. The Agent shall have received
appropriate certified corporate resolutions of Borrowers;
11.1.4 Good Standing. The Agent shall have received evidence of
existence and good standing for Borrowers;
11.1.5 Incumbency. The Agent shall have received a signed certificate
of Borrowers, certifying the names of the officers of Borrowers authorized
to sign loan documents on behalf of Borrowers, together with the true
signatures of each such officer. The Agent may conclusively rely on such
certificate until the Agent receives a further certificate of Borrowers
canceling or amending the prior certificate and submitting signatures of
the officers named in such further certificate;
11.1.6 Certificate of Incorporation and Bylaws. The Agent shall have
received copies of the Certificate of Incorporation of Borrowers and all
amendments thereto, certified by the Secretary of State of the State of its
incorporation, and a copy of the bylaws of Borrowers and all amendments
thereto, certified by Borrowers as being true, correct and complete;
11.1.7 Priority of Liens. The Agent shall have received satisfactory
evidence of the first lien status of the Liens granted by Borrowers to the
Banks;
11.1.8 Letters in Lieu. The Agent shall have received undated letters
in lieu of transfer orders, in form and substance satisfactory to the
Agent, from the Borrowers to each purchaser of hydrocarbons and disburser
of proceeds of hydrocarbons from and attributable to the Oil and Gas
Properties, together with additional letters with the addresses left blank,
authorizing and directing the addressees to make future payments
attributable to the hydrocarbons from the Oil and Gas Properties directly
to the Agent for the benefit of the Banks, all as required by Section 6
hereof;
11.1.9 Payment of Fees. The Agent shall have received payment of all
fees due from Borrowers as of the Effective Date, including any agreed upon
"agency fee".
11.1.10 Representation and Warranties. The representations and
warranties of Borrowers under this Agreement are true and correct in all
material respects as of such date, as if then made (except to the extent
that such representations and warranties related solely to an earlier
date);
11.1.11 No Event of Default. No Event of Default shall have occurred
and be continuing nor shall any event have occurred or failed to occur
which, with the passage of time or service of notice, or both, would
constitute an Event of Default;
11.1.12 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
11.1.13 Legal Matters Satisfactory. All legal matters incident to the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory to special counsel for Agent retained at the expense of the
Borrowers.
11.2 The obligation of the Banks to make any Advance or issue any Letter of
Credit under the Revolving Commitment (including the initial Advance) shall be
subject to the following additional conditions precedent that, at the date of
making each such Advance and after giving effect thereto:
11.2.1 Representation and Warranties. The representations and
warranties of Borrowers under this Agreement are true and correct in all
material respects as of such date, as if then made (except to the extent
that such representations and warranties related solely to an earlier
date);
11.2.2 No Event of Default. No Event of Default shall have occurred
and be continuing nor shall any event have occurred or failed to occur
which, with the passage of time or service of notice, or both, would
constitute an Event of Default;
11.2.3 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
11.2.4 Legal Matters Satisfactory. All legal matters incident to the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory to special counsel for Agent retained at the expense of
Borrowers.
12. Affirmative Covenants. A deviation from the provisions of this Section 12
shall not constitute a Default or Event of Default under this Agreement if such
deviation is consented to in writing by the required percentage of the Banks
prior to the date of deviation. The Borrowers will at all times comply with the
covenants contained in this Section 12 from the date hereof and for so long as
the Commitment is in existence or any amount is owed to the Agent or the Banks
under this Agreement or the other Loan Documents.
12.1 Financial Statements and Reports. Borrowers shall promptly furnish to
the Agent from time to time upon request such information regarding the business
and affairs and financial condition of Borrowers, as the Agent may reasonably
request, and will furnish to the Agent:
12.1.1 Annual Audited Financial Statements. As soon as available, and
in any event within one hundred and twenty (120) days after the close of
each fiscal year beginning with the fiscal year ended December 31, 2001,
the annual audited consolidated Financial Statements of Borrowers, prepared
in accordance with GAAP accompanied by an unqualified opinion rendered by
an independent accounting firm reasonably acceptable to the Agent;
12.1.2 Quarterly Financial Statements. As soon as available, and in
any event within forty-five (45) days after the end of each calendar
quarter of each year, the quarterly unaudited consolidated and
consolidating Financial Statements of Borrowers prepared in accordance with
GAAP;
12.1.3 Report on Properties. As soon as available and in any event on
or before April 1 and October 1 of each calendar year, and at such other
times as any Bank, in accordance with Section 7.2 hereof, may request, the
engineering reports required to be furnished to the Agent under such
Section 7.2 on the Oil and Gas Properties;
12.1.4 Quarterly Production Reports. Within forty-five (45) days after
the end of each calendar quarter, a quarterly report, in form and substance
satisfactory to the Agent, indicating the immediately preceding month's
sales volume, sales revenues, production taxes, operating expense and net
operating income from or attributable to the Oil and Gas Properties, and
any material gas balance liabilities of either Borrower, with detailed
calculations and worksheets, and, in the case of take or pay or prepayment
agreements during such month, provide copies of the same, all in form and
substance satisfactory to Agent;
12.1.5 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 12.1above shall be in such detail as the Agent
may reasonably request and shall be prepared in a manner consistent with
the Financial Statements.
12.2 Certificates of Compliance. Concurrently with the furnishing of the
annual audited Financial Statements pursuant to Subsection 12.1.1 hereof and the
quarterly unaudited Financial Statements pursuant to Subsection 12.1.2 hereof
for the months coinciding with the end of each calendar quarter, Borrowers will
furnish or cause to be furnished to the Agent a certificate in the form of
Exhibit "C" attached hereto, signed by the President or Chief Financial Officer
of each Borrower, (i) stating that each Borrower has fulfilled in all material
respects its obligations under the Notes and the Loan Documents, including this
Agreement, and that all representations and warranties made herein and therein
continue (except to the extent they relate solely to an earlier date) to be true
and correct in all material respects (or specifying the nature of any change),
or if a Default has occurred, specifying the Default and the nature and status
thereof; (ii) to the extent requested from time to time by the Agent,
specifically affirming compliance of each Borrower in all material respects with
any of its representations (except to the extent they relate solely to an
earlier date) or obligations under said instruments; (iii) setting forth the
computation, in reasonable detail as of the end of each period covered by such
certificate, of compliance with Sections 13.1.2, 13.1.3, and 13.1.4 and (iv)
containing or accompanied by such financial or other details, information and
material as the Agent may reasonably request to evidence such compliance.
12.3 Taxes and Other Liens. The Borrowers will pay and discharge promptly
all taxes, assessments and governmental charges or levies imposed upon the
Borrowers, or upon the income or any assets or property of Borrowers, as well as
all claims of any kind (including claims for labor, materials, supplies and
rent) which, if unpaid, might become a Lien or other encumbrance upon any or all
of the assets or property of Borrowers and which could reasonably be expected to
result in a Material Adverse Effect; provided, however, that neither Borrower
shall be required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings diligently conducted, levy and execution
thereon have been stayed and continue to be stayed and if Borrowers shall have
set up adequate reserves therefor, if required, under GAAP.
12.4 Compliance with Laws. Borrowers will observe and comply, in all
material respects, with all applicable laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, orders and
restrictions relating to environmental standards or controls or to energy
regulations of all federal, state, county, municipal and other governments,
departments, commissions, boards, agencies, courts, authorities, officials and
officers, domestic or foreign.
12.5 Further Assurances. Upon Agent's request, the Borrowers will cure
promptly any defects in the creation and issuance of the Notes and the execution
and delivery of the Notes and the Loan Documents, including this Agreement. The
Borrowers at their sole expense will promptly execute and deliver to Agent upon
its reasonable request all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
in this Agreement, or to correct any omissions in the Notes or more fully to
state the obligations set out herein.
12.6 Performance of Obligations. The Borrowers will pay the Notes and other
obligations incurred by it hereunder according to the reading, tenor and effect
thereof and hereof; and Borrowers will do and perform every act and discharge
all of the obligations provided to be performed and discharged by the Borrowers
under the Loan Documents, including this Agreement, at the time or times and in
the manner specified.
12.7 Insurance. The Borrowers now maintain and will continue to maintain
insurance with financially sound and reputable insurers with respect to its
assets against such liabilities, fires, casualties, risks and contingencies and
in such types and amounts as is customary in the case of persons engaged in the
same or similar businesses and similarly situated. Upon request of the Agent,
the Borrowers will furnish or cause to be furnished to the Agent from time to
time a summary of the respective insurance coverage of Borrowers in form and
substance satisfactory to the Agent, and, if requested, will furnish the Agent
copies of the applicable policies. Upon demand by Agent any insurance policies
covering any such property shall be endorsed (i) to provide that such policies
may not be canceled, reduced or affected in any manner for any reason without
fifteen (15) days prior notice to Agent, (ii) to provide for insurance against
fire, casualty and other hazards normally insured against, in the amount of the
full value (less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated business and properties) of the property
insured, and (iii) to provide for such other matters as the Agent may reasonably
require. Additionally, the Borrowers shall at all times maintain adequate
insurance with respect to all of its other assets and xxxxx in accordance with
prudent business practices.
12.8 Accounts and Records. Borrowers will keep books, records and accounts
in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and activities, prepared in a manner
consistent with prior years, subject to changes suggested by such Borrowers'
auditors.
12.9 Right of Inspection. Borrowers will permit any officer, employee or
agent of the Banks to examine Borrowers' books, records and accounts, and take
copies and extracts therefrom, all at such reasonable times during normal
business hours and as often as the Banks may reasonably request. The Banks will
use best efforts to keep all Confidential Information (as herein defined)
confidential and will not disclose or reveal the Confidential Information or any
part thereof other than (i) as required by law, and (ii) to the Banks', and the
Banks' subsidiaries', Affiliates, officers, employees, legal counsel and
regulatory authorities or advisors to whom it is necessary to reveal such
information for the purpose of effectuating the agreements and undertakings
specified herein or as otherwise required in connection with the enforcement of
the Banks' and the Agent's rights and remedies under the Notes, this Agreement
and the other Loan Documents. As used herein, "Confidential Information" means
information about the Borrowers furnished by the Borrowers to the Banks, but
does not include information (i) which was publicly known, or otherwise known to
the Banks, at the time of the disclosure, (ii) which subsequently becomes
publicly known through no act or omission by the Banks, or (iii) which otherwise
becomes known to the Banks, other than through disclosure by the Borrowers.
12.10 Notice of Certain Events. The Borrowers shall promptly notify the
Agent if Borrowers learn of the occurrence of (i) any event which constitutes a
Default or Event of Default together with a detailed statement by Borrowers of
the steps being taken to cure such Event of Default; (ii) any legal, judicial or
regulatory proceedings affecting Borrowers, or any of the assets or properties
of Borrowers which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect; (iii) any dispute between Borrowers and any
governmental or regulatory body or any other Person or entity which, if
adversely determined, might reasonably be expected to cause a Material Adverse
Effect; (iv) any event or circumstance which requires the prepayment, purchase
or redemption of any outstanding public note issue, whether issued prior or
subsequent to the Effective Date, with a detailed statement of steps being taken
to cure such Default or Event of Default, or (v) any other matter which in
Borrowers' reasonable opinion could have a Material Adverse Effect.
12.11 ERISA Information and Compliance. The Borrowers will promptly furnish
to the Agent immediately upon becoming aware of the occurrence of any
"reportable event", as such term is defined in Section 4043 of ERISA, or of any
"prohibited transaction", as such term is defined in Section 4975 of the
Internal Revenue Code of 1954, as amended, in connection with any Plan or any
trust created thereunder, a written notice signed by the chief financial officer
of Borrowers specifying the nature thereof, what action Borrowers are taking or
proposes to take with respect thereto, and, when known, any action taken by the
Internal Revenue Service with respect thereto.
12.12 Environmental Reports and Notices. The Borrowers will deliver to the
Agent (i) promptly upon its becoming available, one copy of each report sent by
Borrowers to any court, governmental agency or instrumentality pursuant to any
Environmental Law, (ii) notice, in writing, promptly upon Borrowers' receipt of
notice or otherwise learning of any claim, demand, action, event, condition,
report or investigation indicating any potential or actual liability arising in
connection with (x) the non-compliance with or violation of the requirements of
any Environmental Law which reasonably could be expected to have a Material
Adverse Effect; (y) the release or threatened release of any toxic or hazardous
waste into the environment which reasonably could be expected to have a Material
Adverse Effect or which release Borrower would have a duty to report to any
court or government agency or instrumentality, or (iii) the existence of any
Environmental Lien on any properties or assets of Borrowers, and Borrowers shall
immediately deliver a copy of any such notice to Agent.
12.13 Compliance and Maintenance. The Borrowers will (i) observe and comply
in all material respects with all Environmental Laws; (ii) except as provided in
Subsections 12.15 and 12.16 below, maintain the Oil and Gas Properties and other
assets and properties in good and workable condition at all times and make all
repairs, replacements, additions, betterments and improvements to the Oil and
Gas Properties and other assets and properties as are needed and proper so that
the business carried on in connection therewith may be conducted properly and
efficiently at all times in the opinion of the Borrowers exercised in good
faith; (iii) take or cause to be taken whatever actions are necessary or
desirable to prevent an event or condition of default by Borrowers under the
provisions of any gas purchase or sales contract or any other contract,
agreement or lease comprising a part of the Oil and Gas Properties or other
collateral security hereunder which default could reasonably be expected to
result in a Material Adverse Effect; and (iv) furnish Agent upon request
evidence satisfactory to Agent that there are no Liens, claims or encumbrances
on the Oil and Gas Properties, except laborers', vendors', repairmen's,
mechanics', worker's, or materialmen's liens arising by operation of law or
incident to the construction or improvement of property if the obligations
secured thereby are not yet due or are being contested in good faith by
appropriate legal proceedings or Permitted Liens.
12.14 Operation of Properties. Except as provided in Subsection 12.15 and
12.16 below, the Borrowers will operate, or use reasonable efforts to cause to
be operated, all Oil and Gas Properties in a careful and efficient manner in
accordance with the practice of the industry and in compliance in all material
respects with all applicable laws, rules, and regulations, and in compliance in
all material respects with all applicable proration and conservation laws of the
jurisdiction in which the properties are situated, and all applicable laws,
rules, and regulations, of every other agency and authority from time to time
constituted to regulate the development and operation of the properties and the
production and sale of hydrocarbons and other minerals therefrom; provided,
however, that the Borrowers shall have the right to contest in good faith by
appropriate proceedings, the applicability or lawfulness of any such law, rule
or regulation and pending such contest may defer compliance therewith, as long
as such deferment shall not subject the properties or any part thereof to
foreclosure or loss.
12.15 Compliance with Leases and Other Instruments. The Borrowers will pay
or cause to be paid and discharge all rentals, delay rentals, royalties,
production payment, and indebtedness required to be paid by Borrowers (or
required to keep unimpaired in all material respects the rights of Borrowers in
the Oil and Gas Properties) accruing under, and perform or cause to be performed
in all material respects each and every act, matter, or thing required of
Borrowers by each and all of the assignments, deeds, leases, subleases,
contracts, and agreements in any way relating to Borrowers or any of the Oil and
Gas Properties and do all other things necessary of Borrowers to keep unimpaired
in all material respects the rights of Borrowers thereunder and to prevent the
forfeiture thereof or default thereunder; provided, however, that nothing in
this Agreement shall be deemed to require Borrowers to perpetuate or renew any
oil and gas lease or other lease by payment of rental or delay rental or by
commencement or continuation of operations nor to prevent Borrowers from
abandoning or releasing any oil and gas lease or other lease or well thereon
when, in any of such events, in the opinion of Borrowers exercised in good
faith, it is not in the best interest of the Borrowers to perpetuate the same.
12.16 Certain Additional Assurances Regarding Maintenance and Operations of
Properties. With respect to those Oil and Gas Properties which are being
operated by operators other than the Borrowers, the Borrowers shall not be
obligated to perform any undertakings contemplated by the covenants and
agreement contained in Subsections 12.15 and/or this 12.16 hereof which are
performable only by such operators and are beyond the control of the Borrowers;
however, the Borrowers agree to promptly take all reasonable actions available
under any operating agreements or otherwise to bring about the performance of
any such material undertakings required to be performed thereunder.
12.17 Title Matters. Within thirty (30) days after the Effective Date with
respect to the Oil and Gas Properties listed on Schedule "8" hereto, Borrowers
shall furnish Agent with title opinions and/or title information reasonably
satisfactory to Agent showing defensible title of the applicable Borrower to
such Oil and Gas Properties subject only to the Permitted Liens. As to any Oil
and Gas Properties hereafter mortgaged to Agent, Borrowers will promptly (but in
no event more than thirty (30) days following such mortgaging), furnish Agent
with title opinions and/or title information reasonably satisfactory to Agent
covering a sufficient value of such Oil and Gas Properties to maintain the
required level of title coverage at 80% of the Engineered Value of the total Oil
and Gas Properties covered by Security Instruments. Said title information shall
show defensible title of the applicable Borrower to such Oil and Gas Properties
subject only to Permitted Liens.
12.18 Curative Matters. Within sixty (60) days after the Effective Date
with respect to matters listed on Schedule "9" and, thereafter, within sixty
(60) days after receipt by Borrowers from Agent or its counsel of written notice
of title defects the Agent reasonably requires to be cured, Borrowers shall
either (i) provide such curative information, in form and substance satisfactory
to Agent, or (ii) substitute Oil and Gas Properties of value and quality
satisfactory to the Agent for all of Oil and Gas Properties for which such title
curative was requested but upon which Borrowers elected not to provide such
title curative information, and, within sixty (60) days of such substitution,
provide title opinions or title information satisfactory to the Agent covering
the Oil and Gas Properties so substituted.
12.19 Change of Principal Place of Business. Borrowers shall give Agent at
least thirty (30) days prior written notice of its intention to move its
principal place of business from the address set forth in Section 17 hereof.
12.20 Operating Accounts. Borrowers shall establish and maintain with Agent
one or more operating accounts (the "Operating Accounts"), the maintenance of
each of which shall be subject to such rules and regulations as the Agent shall
from time to time specify. Such Operating Accounts shall be the primary oil and
gas operating account of the Borrowers and such accounts shall be maintained
with the Agent until all amounts due hereunder and under the Notes have been
paid in full. The Borrowers hereby grant a security interest to Banks in and to
the Operating Accounts and all checks, drafts and other items ever received by
any Bank for deposit therein. If any Event of Default shall occur and be
continuing, Agent shall have the immediate right, without prior notice or
demand, to take and apply against the Borrowers' obligations hereunder any and
all funds legally and beneficially owned by the Borrowers then or thereafter on
deposit in the Operating Accounts for the ratable benefit of the Banks.
12.21 Mortgages to Achieve Required Percentage. To the extent Borrower does
not have, as of the date hereof, at least 70% of (i) the Borrowers' aggregate
present worth in proved developed producing properties, as determined by
Borrowers' most recent engineering report plus (ii) the properties acquired from
Xxxxxx Oil Company, currently encumbered by a mortgage or deed of trust in favor
of Banks, Borrower shall provide the Agent within forty-five (45) days from the
date hereof with such information necessary to prepare a mortgage or deed of
trust to encumber same and shall promptly execute upon request any and all such
mortgages or deeds of trust as the case may be.
12.22 Additional Property. Borrowers shall, within five (5) days after
receiving a written request thereof from Agent, execute and deliver, or cause to
be executed and delivered, such mortgages, deeds of trust, instruments, security
agreements, assignments, financing statements, and other documents, as may be
reasonably necessary in the opinion of Agent and Agent's counsel, to grant Agent
valid first mortgage liens and first, prior and perfected security interests in
and to additional oil and gas properties of such value as Agent shall deem
necessary to provide additional security for full and prompt payment of all
amounts owed hereunder and under the Notes. At Agent's option and on request
therefor, Borrowers will furnish Agent title opinions covering such additional
oil and gas properties prepared by counsel not employed by Borrowers (or such
other evidence to Borrowers' ownership thereof and their revenue interest
therein or attributable thereto as Agent may reasonably require), in form and
substance satisfactory to Agent, subject only to title defects approved by
Agent.
12.23 Eagle Chief Gas Gathering System. Substantially maintain the current
levels of throughput from xxxxx directly connected to the Eagle Chief Gas
Gathering System.
12.24 Letters In Lieu of Transfer Orders. The Borrowers shall promptly upon
the reasonable request of the Agent, at any time and from time to time and
without limitation on the rights of Agent in accordance with Section 6.3 hereof,
execute such letters in lieu of transfer orders, in addition to the letters
signed by the Borrowers and delivered to the Agent in satisfaction of the
conditions set forth in Sections 6.3 and 11.1.8 hereof, as are necessary or
appropriate to transfer and deliver to the Agent for the benefit of the Banks
proceeds from or attributable to any Oil and Gas Property or other Collateral;
provided, however, that such letters shall only be delivered to the addressees
thereof in accordance with the provision of Section 6.3 hereof.
12.25 Division Orders. The Borrowers shall promptly upon request by the
Agent at any time and from time to time following the occurrence of any Event of
Default and without limitations on the rights of the Agent in accordance with
Section 6.3 hereof, execute such division and/or transfer orders as are
necessary or appropriate to transfer and deliver to the Agent for the ratable
benefit of the Banks proceeds from the sale of hydrocarbon production from or
attributable to any Oil and Gas Property; provided, however, that the Banks
shall only send or deliver such division orders and/or transfer orders in
accordance with Section 6.3 hereof.
12.26 Take or Pay Agreement. The Borrowers shall, in connection with their
delivery of the engineering reports required by Sections 7 and 12 hereof,
deliver to Agent copies of contracts or other agreements concerning "take or
pay" and "prepayment", and provide notice of all gas balance liabilities of the
Borrowers.
13. Negative Covenants. A deviation from the provisions of this Section 13 shall
not constitute a Default or an Event of Default under this Agreement if such
deviation is consented to in writing by the Majority Banks prior to the date of
deviation. The Borrowers will at all times comply with the covenants contained
in this Section 13 from the date hereof and for so long as the Commitment is in
existence or any amount is owed to the Agent or the Banks under this Agreement
or the other Loan Documents.
13.1 Negative Pledge. Neither Borrower shall, without the prior written
consent of the Majority Banks:
13.1.1 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
13.1.2 sell, lease, transfer or otherwise dispose of, in any fiscal
year, any of its assets except for (A) sales, leases, transfers or other
dispositions made in the ordinary course of Borrowers' oil and gas
businesses, and (B) sales, leases or transfers or other dispositions made
by Borrowers during any fiscal year, one or any series of transactions, the
aggregate value of which does not exceed $5,000,000.00 in any such year if,
and only if, such sale, lease, transfer or other disposition does not
result in the occurrence of a Default or Event of Default;
13.2 Current Ratio. Borrowers shall not allow their ratio of consolidated
Current Assets to consolidated Current Liabilities to be less than 1.0 to 1.0 as
of the end of any fiscal quarter.
13.3 Ratio of Debt to Minimum Tangible Net Worth. The Borrowers will not
allow their ratio of consolidated Debt to consolidated Tangible Net Worth to
ever be greater than 1.0 to 1.0 as of the end of any fiscal quarter. For the
purposes of this ratio, "Debt" is calculated as Total Liabilities less the
Senior Subordinated Notes.
13.4 Minimum Debt Service Coverage Ratio. Beginning with the calendar
quarter ending June 30, 2000, the Borrowers will not allow their consolidated
Debt Service Coverage Ratio to ever be less than 1.20 to 1.0.
13.5 Consolidations and Mergers. Neither Borrower will consolidate or merge
with or into any other Person, except that either Borrower may merge with
another Person if such Borrower is the surviving entity in such merger and if,
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing.
13.6 Debts, Guaranties and Other Obligations. Without the consent of
Majority Banks, neither Borrower will incur, create, assume, suffer to exist or
in any manner become or be liable in respect of any indebtedness, nor will
either Borrower guarantee or otherwise in any manner become or be liable in
respect of any indebtedness, liabilities or other obligations of any other
person or entity, whether by agreement to purchase the indebtedness of any other
person or entity or agreement for the furnishing of funds to any other person or
entity through the purchase or lease of goods, supplies or services (or by way
of stock purchase, capital contribution, advance or loan) for the purpose of
paying or discharging the indebtedness of any other person or entity, or
otherwise, except that the foregoing restrictions shall not apply to:
(i) the Notes and any renewal or increase thereof, or other
indebtedness of the Borrowers heretofore disclosed to Banks in the
Borrowers' Financial Statements or on Schedule "3" hereto; or
(ii) taxes, assessments or other government charges which are not yet
due or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall be required by
GAAP shall have been made therefor and levy and execution thereon have been
stayed and continue to be stayed; or
(iii) indebtedness (other than in connection with a loan or lending
transaction) incurred in the ordinary course of business, including, but
not limited to indebtedness for drilling, completing, leasing and reworking
oil and gas xxxxx or the treatment, distribution, transportation of sale of
production therefrom and loans or lending transactions in which the
outstanding principal balance does not exceed $500,000 at any time and
which does not result in the imposition of a Lien other than a Permitted
Lien; or; or
(iv) indebtedness currently outstanding issued pursuant to an
indenture providing for the sale of notes to the public not exceeding the
face amount of $150,000,000.00, which indebtedness (A) is expressly
subordinated (to the satisfaction of Majority Banks) to all obligations
owed the Banks hereunder and under the Notes, (B) is issued by the
Borrowers or an Affiliate of the Borrowers, within one hundred eighty (180)
days of the Effective Date, and (C) the net proceeds of which are used in
part to repay or reduce the outstanding balance on the Notes, said
indebtedness to be approved in advance by Majority Banks, which approval
will not be unreasonably withheld; or
(v) other indebtedness owed to Affiliates of Borrowers which is
expressly made subordinate to the indebtedness owed hereunder and under the
Notes, which subordination is approved in advance by Majority Banks, which
approval will not be unreasonably withheld; or
(vi) any renewals or extensions of (but not increases in) any of the
foregoing.
13.7 Dividends or Distributions. Neither Borrower will declare, pay or
make, whether in cash or property (excluding stock dividends), or set aside or
apply any money or assets to pay or make any dividend or distribution during any
fiscal year except the foregoing restriction shall not apply to (i) cash
dividends paid by Resources to its shareholders in amounts equal to each such
shareholders' allocable share of federal or state income taxes attributable to
Resources taxable net income and (ii) dividends made by Gas to Resources.
Provided, however, that no dividend shall be made by either Borrower if an Event
of Default has occurred and is continuing or would occur as a result of the
making of such dividends. Resources shall provide the Agent at least annually
with sufficient information from which Agent can verify all shareholders'
allocable share of such income taxes.
13.8 Loans and Advances. Neither Borrower shall make or permit to remain
outstanding any loans or advances made by either Borrower to or in any person or
entity, except that the foregoing restriction shall not apply to:
(i) loans or advances to any person, the material details of which
have been set forth in the Financial Statements of the Borrowers heretofore
furnished to Banks; or
(ii) advances made in the ordinary course of Borrowers' oil and gas
business; or
(iii) loans or advances among Borrowers; or
(iv) loans or advances not to exceed $2,000,000 in the aggregate to
Affiliates of the Borrowers.
13.9 Sale or Discount of Receivables. Neither Borrower will discount or
sell with recourse, or sell for less than the greater of the face or market
value thereof, any of its notes receivable or accounts receivable except for
such discounts or sales not exceeding $250,000 in any fiscal year.
13.10 Nature of Business. Neither Borrower will permit any material change
to be made in the character of its business as carried on at the date hereof.
13.11 Transactions with Affiliates. Neither Borrower will enter into any
transaction with any Affiliate (other than Borrower), except transactions upon
terms that are no less favorable to it than would be obtained in a transaction
negotiated at arm's length with an unrelated third party.
13.12 Hedging Transactions. Neither Borrower will enter into any
transaction providing (i) for the hedging, forward sale, swap or any deviation
thereof of crude oil or natural gas or other commodities, or (ii) for a swap,
collar, floor, cap, option, corridor, or other contract which is intended to
reduce or eliminate the risk of fluctuation in interest rates, as such terms are
referred to in the capital markets, except the foregoing prohibitions shall not
apply to (x) transactions consented to in writing by the Banks which are on
terms acceptable to the Banks, or (y) Pre-Approved Contracts. The term
"Pre-Approved Contracts" as used herein shall mean any contract or agreement (i)
to hedge, forward, sell or swap crude oil or natural gas or otherwise sell up to
50% of the Borrowers' monthly production forecast for all of Borrowers', proved
and producing oil and gas properties for the period covered by the proposed
hedging transaction, and (ii) with a maturity of twelve (12) months or less.
13.13 Investments. Neither Borrower shall make any investments in any
person or entity, except such restriction shall not apply to:
(i) investments and direct obligations of the United States of America
or any agency thereof;
(ii) investments in certificates of deposit issued by the Banks or
certificates of deposit with maturities of less than one year, issued by
other commercial banks in the United States having capital and surplus in
excess of $100,000,000.00; or
(iii) investments in money market funds, LIBOR investment accounts and
other similar accounts at Agent or such investment with maturities of less
than ninety (90) days at other commercial banks having capital and surplus
in excess of $100,000,000.00; or
(iv) investments in oil and gas properties; or
(v) acquisitions of controlling interests in entities engaged
primarily in owning and/or operating oil and gas properties not exceeding
in the aggregate the sum of $5,000,000.00 inclusive of any amount invested
pursuant to Section 13.1.14(iv) above; or
(vi) investments by Borrowers and their Subsidiaries made in
third-party entities by way of capital contributions, loans or advances
which do not exceed $250,000 in the aggregate outstanding at any time.
13.14 Amendment to Articles of Incorporation or Bylaws. Neither Borrower
will permit any amendment to, or any alteration of, its Articles of
Incorporation or Bylaws, which amendment or alteration could reasonably be
expected to have a Material Adverse Effect.
13.15 Leases. With the exception of the lease agreement, as it currently
exists, with Xxxxxx Xxxx regarding The Continental Center North Building located
in Enid, Oklahoma, the Borrowers will not enter into or agree to enter into, any
rental or lease agreement resulting or which would result in aggregate rental or
lease payments of the Borrowers exceeding $250,000 in the aggregate in any
fiscal year of the Borrowers under all rental or lease agreement under which
either Borrower is a lessee of the property or assets covered thereby; provided,
however, that the foregoing restriction shall not apply to oil, gas and mineral
leases or permits or similar agreements entered into in the ordinary course of
business or orders of any governmental authority adjudicating the rights or
pooling the interests of the owners of oil and gas properties or lease
agreements in effect as of the date hereof.
13.16 Senior Subordinated Notes. Notwithstanding any other provision
contained in the Agreement to the contrary, the Borrowers shall not purchase,
repurchase or otherwise acquire Senior Subordinated Notes in excess of
$10,000,000.00 during the term hereof, without prior written approval of the
Banks.
13.17 Speculative Trading. The Borrowers shall not engage in any
speculative trading activity which exposes the Borrowers to risks in excess of
$1,000,000.00.
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:
14.1 The Borrowers shall fail to pay when due or declared due the principal
of, and the interest on, the Notes, or any fee or any other indebtedness of the
Borrowers incurred pursuant to this Agreement or any other Loan Document and
such failure to pay continued five (5) days after notice is given by Agent; or
14.2 Any representation or warranty made by Borrowers under this Agreement,
or in any certificate or statement furnished or made to the Banks pursuant
hereto, or in connection herewith, or in connection with any document furnished
hereunder, shall prove to be untrue in any material respect as of the date on
which such representation or warranty is made (or deemed made), or any
representation, statement (including financial statements), certificate, report
or other data furnished or to be furnished or made by Borrowers under any Loan
Document, including this Agreement, proves to have been untrue in any material
respect, as of the date as of which the facts therein set forth were stated or
certified; or
14.3 Default shall be made in the due observance or performance of any of
the covenants or agreements of the Borrowers contained in the Loan Documents,
including this Agreement (excluding covenants contained in Sections 12 and 13 of
the Agreement for which there is no cure period), and such default shall
continue for more than thirty (30) days after notice thereof from Agent to
Borrowers; or
14.4 Default shall be made in the due observance or performance of the
covenants of Borrowers contained in Sections 12 and 13 of this Agreement for
which it is impossible for Borrower to cure such a default; or
14.5 Default shall be made in respect of any obligation for borrowed money
in excess of $250,000, other than the Notes (including, but not limited to, the
Senior Subordinated Notes) for which Borrowers are liable (directly, by
assumption, as guarantor or otherwise), or any obligations secured by any
mortgage, pledge or other security interest, lien, charge or encumbrance with
respect thereto, on any asset or property of Borrowers in respect of any
agreement relating to any such obligations unless Borrowers are not liable for
same (i.e., unless remedies or recourse for failure to pay such obligations is
limited to foreclosure of the collateral security therefor), and if such default
shall continue beyond the applicable grace period, if any; or
14.6 Borrowers shall commence a voluntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking an appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action authorizing the foregoing; or
14.7 An involuntary case or other proceeding, shall be commenced against
Borrowers seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of sixty (60) days; or an order for relief shall be entered against
Borrowers under the federal bankruptcy laws as now or hereinafter in effect; or
14.8 A final judgment or order for the payment of money in excess of
$1,500,000 (or judgments or orders aggregating in excess of $1,500,000) shall be
rendered against Borrowers and such judgments or orders shall continue
unsatisfied and unstayed for a period of thirty (30) days; or
14.9 In the event the Total Outstandings shall at any time exceed the
Borrowing Base established for the Revolving Notes, and the Borrowers shall fail
to comply with the provisions of Section 9.2 hereof; or
14.10 A Change of Management shall occur; or
14.11 Any Security Instrument shall for any reason not, or cease to, create
valid and perfected first-priority Liens against the Collateral purportedly
covered thereby and such occurrence would have a Material Adverse Effect; or
14.12 The good faith determination by the Agent that a Material Adverse
Effect has occurred or will occur or that the value of the Collateral has, or
will be, materially decreased.
Upon occurrence of any Event of Default specified in Subsections 14.1,
14.2, 14.3, 14.4, 14.6, 14.7 and 14.9 hereof, the entire principal amount due
under the Notes and all interest then accrued thereon, and any other liabilities
of the Borrowers hereunder, shall become immediately due and payable all without
notice and without presentment, demand, protest, notice of protest or dishonor
or any other notice of default of any kind, all of which are hereby expressly
waived by the Borrowers. In any other Event of Default, the Agent, upon request
of Majority Banks, shall deliver written notice of such Event of Default and
offer the Borrowers thirty (30) days to cure said Event of Default to Agent's
satisfaction. In the event the Event of Default is not cured after the
expiration of this "cure" period (or upon the occurrence of an Event of Default
for which there is no "cure" period), the Agent, upon request of Majority Banks,
shall by notice to the Borrowers declare the principal of, and all interest then
accrued on, the Notes and any other liabilities hereunder to be forthwith due
and payable, whereupon the same shall forthwith become due and payable without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which the Borrowers hereby
expressly waive, anything contained herein or in the Note to the contrary
notwithstanding. Nothing contained in this Section 14 shall be construed to
limit or amend in any way the Events of Default enumerated in the Note, or any
other document executed in connection with the transaction contemplated herein.
Upon the occurrence and during the continuance of any Event of Default, the
Banks are hereby authorized at any time and from time to time, without notice to
the Borrowers (any such notice being expressly waived by the Borrowers), to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by any of the Banks to or for the credit or the account of the Borrowers against
any and all of the indebtedness of the Borrowers under the Notes and the Loan
Documents, including this Agreement, irrespective of whether or not the Banks
shall have made any demand under the Loan Documents, including this Agreement or
the Notes and although such indebtedness may be unmatured. Any amount set-off by
any of the Banks shall be applied against the indebtedness owed the Banks by the
Borrowers pursuant to this Agreement and the Notes. The Banks agree promptly to
notify the Borrowers after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Banks may have.
15. The Agent and the Banks.
15.1 Appointment and Authorization. Each Bank hereby appoints Agent as its
nominee and agent, in its name and on its behalf: (i) to act as nominee for and
on behalf of such Bank in and under all Loan Documents; (ii) to arrange the
means whereby the funds of Banks are to be made available to the Borrowers under
the Loan Documents; (iii) to take such action as may be requested by any Bank
under the Loan Documents (when such Bank is entitled to make such request under
the Loan Documents); (iv) to receive all documents and items to be furnished to
Banks under the Loan Documents; (v) to be the secured party, mortgagee,
beneficiary, and similar party in respect of, and to receive, as the case may
be, any collateral for the benefit of Banks; (vi) to promptly distribute to each
Bank all material information, requests, documents and items received from the
Borrowers under the Loan Documents; (vii) to promptly distribute to each Bank
such Bank's Pro Rata Part of each payment or prepayment (whether voluntary, as
proceeds of insurance thereon, or otherwise) in accordance with the terms of the
Loan Documents and (viii) to deliver to the appropriate Persons requests,
demands, approvals and consents received from Banks. Each Bank hereby authorizes
Agent to take all actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. With respect to its
commitments hereunder and the Notes issued to it, Agent and any successor Agent
shall have the same rights under the Loan Documents as any other Bank and may
exercise the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Agent and any
successor Agent in its capacity as a Bank. Agent and any successor Agent and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of and generally engage in any kind of business with the Borrowers,
and any person which may do business with the Borrowers, all as if Agent and any
successor Agent was not Agent hereunder and without any duty to account therefor
to the Banks; provided that, if any payments in respect of any property (or the
proceeds thereof) now or hereafter in the possession or control of Agent which
may be or become security for the obligations of the Borrowers arising under the
Loan Documents by reason of the general description of indebtedness secured or
of property contained in any other agreements, documents or instruments related
to any such other business shall be applied to reduction of the obligations of
the Borrowers arising under the Loan Documents, then each Bank shall be entitled
to share in such application according to its pro rata part thereof. Each Bank,
upon request of any other Bank, shall disclose to all other Banks all
indebtedness and liabilities, direct and contingent, of the Borrowers to such
Bank as of the time of such request.
15.2 Note Holders. From time to time as other Banks become a party to this
Agreement, Agent shall obtain execution by the Borrowers of additional Notes in
amounts representing the Commitment of each such new Bank, up to an aggregate
face amount of all Revolving Notes not exceeding $33,000,000.00 and up to an
aggregate face amount of all Term Notes not exceeding $27,000,000.00. The
obligation of such Bank shall be governed by the provisions of this Agreement,
including but not limited to, the obligations specified in Section 2 hereof.
From time to time, Agent may require that the Banks exchange their Notes for
newly issued Notes to better reflect the Commitments of the Banks. Agent may
treat the payee of any Note as the holder thereof until written notice of
transfer has been filed with it, signed by such payee and in form satisfactory
to Agent.
15.3 Consultation with Counsel. Banks agree that Agent may consult with
legal counsel selected by Agent and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
15.4 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.
15.5 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving written notice thereof to Banks and the Borrowers, and Agent may be
removed at any time with or without cause by all Banks. If no successor Agent
has been so appointed by all Banks (and approved by the Borrowers) and has
accepted such appointment within 30 days after the retiring Agent's giving of
notice of resignation or removal of the retiring Agent, then the retiring Agent
may, on behalf of Banks, appoint a successor Agent. Any successor Agent must be
approved by Borrowers, which approval will not be unreasonably withheld. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent, shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Section 15
shall continue in effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Agent. To be eligible to be an
Agent hereunder the party serving, or to serve, in such capacity must own a Pro
Rata Part of the Commitments equal to the level of Commitment required to be
held by any Bank pursuant to Section 28 hereof.
15.6 Responsibility of Agent. It is expressly understood and agreed that
the obligations of Agent under the Loan Documents are only those expressly set
forth in the Loan Documents as to each and that Agent, shall be entitled to
assume that no Default or Event of Default has occurred and is continuing,
unless Agent has actual knowledge of such fact or has received notice from a
Bank or the Borrowers that such Bank or the Borrowers considers that a Default
or an Event of Default has occurred and is continuing and specifying the nature
thereof. Neither Agent nor any of its directors, officers, attorneys or
employees shall be liable for any action taken or omitted to be taken by them
under or in connection with the Loan Documents, except for its or their own
gross negligence or willful misconduct. Agent shall not incur liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything which it may do or refrain from doing in the reasonable exercise of its
judgment, or which may seem to it to be necessary or desirable.
Agent shall not be responsible to Banks for any of the Borrowers' recitals,
statements, representations or warranties contained in any of the Loan
Documents, or in any certificate or other document referred to or provided for
in, or received by any Bank under, the Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of or any of
the Loan Documents or for any failure by the Borrowers to perform any of its
obligations hereunder or thereunder. Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.
The relationship between Agent and each Bank is only that of agent and
principal and has no fiduciary aspects. Nothing in the Loan Documents or
elsewhere shall be construed to impose on Agent any duties or responsibilities
other than those for which express provision is therein made. In performing its
duties and functions hereunder, Agent does not assume and shall not be deemed to
have assumed, and hereby expressly disclaims, any obligation or responsibility
toward or any relationship of agency or trust with or for the Borrower or any of
its beneficiaries or other creditors. As to any matters not expressly provided
for by the Loan Documents, Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of all Banks and such instructions shall be binding upon
all Banks and all holders of the Notes; provided, however, that Agent shall not
be required to take any action which is contrary to the Loan Documents or
applicable law.
Agent shall have the right to exercise or refrain from exercising, without
notice or liability to the Banks, any and all rights afforded to Agent by the
Loan Documents or which Agent may have as a matter of law; provided, however,
Agent shall not (i) except as provided in Section 7.2 hereof, without the
consent of Majority Banks designate the amount of the Borrowing Base or the
Monthly Commitment Reduction or (ii) without the consent of all Majority Banks,
take any other action with regard to amending the Loan Documents, waiving any
default under the Loan Documents or taking any other action with respect to the
Loan Documents which requires consent of all Banks. Provided further, however,
that no amendment, waiver, or other action shall be effected pursuant to the
preceding clause (ii) without the consent of all Banks which: (i) would increase
the Borrowing Base or decrease the Monthly Commitment Reduction, (ii) would
reduce any fees hereunder, or the principal of, or the interest on, any Bank's
Note or Notes, (iii) would postpone any date fixed for any payment of any fees
hereunder, or any principal or interest of any Bank's Note or Notes, (iv) would
materially increase any Bank's obligations hereunder or would materially alter
Agent's obligations to any Bank hereunder, (v) would release Borrowers from
their obligation to pay any Bank's Note or Notes, (vi) release any of the
Collateral, (vii) would change the definition of all Banks, (viii) would amend,
modify or change any provision of this Agreement requiring the consent of all
the Banks, (ix) would waive any of the conditions precedent to the Effective
Date or the making of any Loan or issuance of any Letter of Credit or (x) would
extend the Revolving Maturity Date or (xi) would amend this sentence or the
previous sentence. Agent shall not have liability to Banks for failure or delay
in exercising any right or power possessed by Agent pursuant to the Loan
Documents or otherwise unless such failure or delay is caused by the gross
negligence of the Agent, in which case only the Agent responsible for such gross
negligence shall have liability therefor to the Banks.
15.7 Independent Investigation. Each Bank severally represents and warrants
to Agent that it has made its own independent investigation and assessment of
the financial condition and affairs of the Borrowers in connection with the
making and continuation of its participation hereunder and has not relied
exclusively on any information provided to such Bank by Agent in connection
herewith, and each Bank represents, warrants and undertakes to Agent that it
shall continue to make its own independent appraisal of the credit worthiness of
the Borrowers while the Notes are outstanding or its commitments hereunder are
in force. Agent shall not be required to keep itself informed as to the
performance or observance by the Borrowers of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of the Borrowers. Other than as provided in this Agreement, Agent shall
not have any duty, responsibility or liability to provide any Bank with any
credit or other information concerning the affairs, financial condition or
business of the Borrowers which may come into the possession of Agent.
15.8 Indemnification. Banks agree to indemnify Agent, ratably according to
their respective Commitments on a Pro Rata basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any proper and reasonable kind or nature
whatsoever which may be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of the Loan Documents or any action taken or
omitted by Agent under the Loan Documents, provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Each Bank shall be entitled to
be reimbursed by the Agent for any amount such Bank paid to Agent under this
Section 15.9 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.
15.9 Benefit of Section 15. The agreements contained in this Section 15 are
solely for the benefit of Agent and the Banks and are not for the benefit of, or
to be relied upon by, the Borrowers, any affiliate of the Borrowers or any other
person.
15.10 Pro Rata Treatment. Subject to the provisions of this Agreement, each
payment (including each prepayment) by the Borrowers and collection by Banks
(including offsets) on account of the principal of and interest on the Notes and
fees provided for in this Agreement, payable by the Borrowers shall be made Pro
Rata; provided, however, in the event that any Defaulting Bank shall have failed
to make an Advance as contemplated under Section 3 hereof and Agent or another
Bank or Banks shall have made such Advance, payment received by Agent for the
account of such Defaulting Bank or Banks shall not be distributed to such
Defaulting Bank or Banks until such Advance or Advances shall have been repaid
in full to the Bank or Banks who funded such Advance or Advances.
15.11 Assumption as to Payments. Except as specifically provided herein,
unless Agent shall have received notice from the Borrowers prior to the date on
which any payment is due to Banks hereunder that the Borrowers will not make
such payment in full, Agent may, but shall not be required to, assume that the
Borrowers have made such payment in full to Agent on such date and Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent the
Borrowers shall not have so made such payment in full to Agent, each Bank shall
repay to Agent forthwith on demand such amount distributed to such Bank together
with interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to Agent, at the interest
rate applicable to such portion of the Revolving Loan.
15.12 Other Financings. Without limiting the rights to which any Bank
otherwise is or may become entitled, such Bank shall have no interest, by virtue
of this Agreement or the Loan Documents, in (a) any present or future loans
from, letters of credit issued by, or leasing or other financial transactions
by, any other Bank to, on behalf of, or with the Borrowers (collectively
referred to herein as "Other Financings") other than the obligations hereunder;
(b) any present or future guarantees by or for the account of the Borrowers
which are not contemplated by the Loan Documents; (c) any present or future
property taken as security for any such Other Financings; or (d) any property
now or hereafter in the possession or control of any other Bank which may be or
become security for the obligations of the Borrowers arising under any loan
document by reason of the general description of indebtedness secured or
property contained in any other agreements, documents or instruments relating to
any such Other Financings.
15.13 Interests of Banks. Nothing in this Agreement shall be construed to
create a partnership or joint venture between Banks for any purpose. Agent,
Banks and the Borrowers recognize that the respective obligations of Banks under
the Commitment shall be several and not joint and that neither Agent nor any of
Banks shall be responsible or liable to perform any of the obligations of the
other under this Agreement. Each Bank is deemed to be the owner of an undivided
interest in and to all rights, titles, benefits and interests belonging and
accruing to Agent under the Security Instruments, including, without limitation,
liens and security interests in any collateral, fees and payments of principal
and interest by the Borrowers under the Commitment on a Pro Rata basis. Each
Bank shall perform all duties and obligations of Banks under this Agreement in
the same proportion as its ownership interest in the Loans outstanding at the
date of determination thereof.
15.14 Investments. Whenever Agent in good faith determines that it is
uncertain about how to distribute to Banks any funds which it has received, or
whenever Agent in good faith determines that there is any dispute among the
Banks about how such funds should be distributed, Agent may choose to defer
distribution of the funds which are the subject of such uncertainty or dispute.
If Agent in good faith believes that the uncertainty or dispute will not be
promptly resolved, or if Agent is otherwise required to invest funds pending
distribution to the Banks, Agent may invest such funds pending distribution (at
the risk of the Borrowers). All interest on any such investment shall be
distributed upon the distribution of such investment and in the same proportions
and to the same Persons as such investment. All monies received by Agent for
distribution to the Banks (other than to the Person who is Agent in its separate
capacity as a Bank) shall be held by the Agent pending such distribution solely
as Agent for such Banks, and Agent shall have no equitable title to any portion
thereof.
16. Exercise of Rights. No failure to exercise, and no delay in exercising, on
the part of the Agent or the Banks, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right. The rights
of the Agent and the Banks hereunder shall be in addition to all other rights
provided by law. No modification or waiver of any provision of the Loan
Documents, including this Agreement, or the Note nor consent to departure
therefrom, shall be effective unless in writing, and no such consent or waiver
shall extend beyond the particular case and purpose involved. No notice or
demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other circumstances without such notice or
demand.
17. Notices. Any notices or other communications required or permitted to be
given by this Agreement or any other documents and instruments referred to
herein must be given in writing (which may be by facsimile transmission) and
must be personally delivered or mailed by prepaid certified or registered mail
to the party to whom such notice or communication is directed at the address of
such party as follows: (a) BORROWERS: c/o CONTINENTAL RESOURCES, INC., X.X. Xxx
0000, Xxxx, Xxxxxxxx 00000, Facsimile No.: 580/548-5281, Attention: Xxxxxx Xxxx
and Xxxxx Xxxxxxx; (b) AGENT: MIDFIRST BANK, XxxXxxxx Xxxxx, X.X. Xxx 000000,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, Facsimile No.405/879-6155, Attention: Xxx
Xxxxxxx, Vice President. Any such notice or other communication shall be deemed
to have been given (whether actually received or not) on the day it is
personally delivered or delivered by facsimile as aforesaid or, if mailed, on
the third day after it is mailed as aforesaid. Any party may change its address
for purposes of this Agreement by giving notice of such change to the other
party pursuant to this Section 17. Any notice required to be given to the Banks
shall be given to the Agent and distributed to all Banks by the Agent.
18. Expenses. The Borrowers shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Banks, including reasonable fees and disbursements
of special counsel for the Agent, in connection with the preparation of this
Agreement, any waiver or consent hereunder or any amendment hereof or any
default or Event of Default or alleged default or Event of Default hereunder,
(ii) all reasonable and necessary out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent in connection
with the preparation of any participation agreement for a participant or
participants requested by the Borrowers or any amendment thereof and (iii) if a
default or an Event of Default occurs, all reasonable and necessary
out-of-pocket expenses incurred by the Banks, including reasonable fees and
disbursements of counsel, in connection with such default and Event of Default
and collection and other enforcement proceedings resulting therefrom. The
Borrowers shall indemnify the Banks against any transfer taxes, document taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery and filing of the Loan Documents. The obligations of this
Section 18 shall survive any termination of this Agreement, the expiration of
the Loans and the payment of all indebtedness of the Borrowers to the Banks
hereunder and under the Notes.
19. Indemnity. The Borrowers agree to indemnify and hold harmless the Banks and
their respective officers, employees, agents, attorneys and representatives
(singularly, an "Indemnified Party", and collectively, the "Indemnified
Parties") from and against any loss, cost, liability, damage or expense
(including the reasonable fees and out-of-pocket expenses of counsel to the
Banks, including all local counsel hired by such counsel) ("Claim") incurred by
the Banks in investigating or preparing for, defending against, or providing
evidence, producing documents or taking any other action in respect of any
commenced or threatened litigation, administrative proceeding or investigation
under any federal securities law, federal or state environmental law, or any
other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon any acts, practices
or omissions or alleged acts, practices or omissions of the Borrowers or their
agents or arises in connection with the duties, obligations or performance of
the Indemnified Parties in negotiating, preparing, executing, accepting,
keeping, completing, countersigning, issuing, selling, delivering, releasing,
assigning, handling, certifying, processing or receiving or taking any other
action with respect to the Loan Documents and all documents, items and materials
contemplated thereby even if any of the foregoing arises out of an Indemnified
Party's ordinary negligence. The indemnity set forth herein shall be in addition
to any other obligations or liabilities of the Borrowers to the Banks hereunder
or at common law or otherwise, and shall survive any termination of this
Agreement, the expiration of the Loans and the payment of all indebtedness of
the Borrowers to the Banks hereunder and under the Notes, provided that the
Borrowers shall have no obligation under this Section to the Bank with respect
to any of the foregoing arising out of the gross negligence or willful
misconduct of the Bank. If any Claim is asserted against any Indemnified Party,
the Indemnified Party shall endeavor to notify the Borrowers of such Claim (but
failure to do so shall not affect the indemnification herein made except to the
extent of the actual harm caused by such failure). The Indemnified Party shall
have the right to employ, at the Borrowers' expense, counsel of the Indemnified
Parties' choosing and to control the defense of the Claim. The Borrowers may at
their own expense also participate in the defense of any Claim. Each Indemnified
Party may employ separate counsel in connection with any Claim to the extent
such Indemnified Party believes it reasonably prudent to protect such
Indemnified Party. The parties intend for the provisions of this Section to
apply to and protect each Indemnified Party from the consequences of any
liability including strict liability imposed or threatened to be imposed on
Agent as well as from the consequences of its own negligence, whether or not
that negligence is the sole, contributing, or concurring cause of any Claim.
20. Governing Law. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN OKLAHOMA, OKLAHOMA COUNTY, OKLAHOMA, AND THE
SUBSTANTIVE LAWS OF OKLAHOMA SHALL GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND
INSTRUMENTS REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
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. It is the intention of the parties hereto to comply
strictly with any applicable usury laws as in effect from time to time and, in
this regard, there shall never be taken, received, contracted for, collected,
charged or received on any sums advanced hereunder interest in excess of that
which would accrue at the Maximum Rate.
If, under any circumstances, the aggregate amounts paid on the Notes or
under this Agreement or any other Loan Document include amounts which by law are
deemed interest and which would exceed the amount permitted if the Maximum Rate
were in effect, the Borrowers stipulate that such payment and collection will
have been and will be deemed to have been, to the fullest extent permitted by
applicable laws of the State of Oklahoma or the United States of America, the
result of mathematical error on the part of the Borrowers and the Agent; and the
Agent shall promptly credit the amount of such excess to the principal amount
due on the Notes, or if the principal amount due on the Notes shall have been
paid in full, refund the amount of such excess to the Borrowers (to the extent
only of such interest payments in excess of that which would have accrued and
been payable on the basis of the Maximum Rate) upon discovery of such error by
the Agent or notice thereof from the Borrowers.
If the maturity of the Notes is accelerated by reason of an election of the
Agent resulting from any Event of Default or otherwise in accordance with this
Agreement, or in the event any prepayment, then such consideration that
constitutes interest under applicable laws may never include amounts which are
more than the Maximum Rate, and the amount of such excess, if any, provided for
in this Agreement or otherwise shall be canceled automatically by the Agent as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited by the Agent on the principal amount due on the Notes, or if the
principal amount due on the Notes shall have been paid in full, refunded by the
Agent to the Borrowers.
All sums paid, or agreed to be paid, to the Agent for the use, forbearance
and detention of the proceeds of any Advance hereunder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term hereof until paid in full so that the actual rate of
interest is uniform but does not exceed the Maximum Rate throughout the full
term hereof.
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.
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 Banks, assign any rights,
powers, duties or obligations hereunder.
28. Assignments and Participations.
28.1 Each Bank shall have the right to sell, assign or transfer all or any
part of its Note or Notes, its Commitments and its rights and obligations
hereunder to one or more Affiliates, Banks, financial institutions, pension
plans, insurance companies, investment funds, or similar Persons who are
Eligible Assignees or to a Federal Reserve Bank; provided, that in connection
with each sale, assignment or transfer (other than to an Affiliate, a Bank or a
Federal Reserve Bank), the applicable Bank will consider the opinion and
recommendation of Borrowers, which opinion and recommendation shall in no way be
binding upon such Bank, and each such sale, assignment, or transfer (other than
to an Affiliate, a Bank or a Federal Reserve Bank), shall require the consent of
Agent, which consent will not be unreasonably withheld, and the assignee,
transferee or recipient shall have, to the extent of such sale, assignment, or
transfer, the same rights, benefits and obligations as it would if it were such
Bank and a holder of such Note, Commitments and rights and obligations,
including, without limitation, the right to vote on decisions requiring consent
or approval of all Banks or Majority Banks and the obligation to fund its
Commitments; provided, further, that (1) each such sale, assignment, or transfer
(other than to an Affiliate, a Bank or a Federal Reserve Bank) shall be in an
aggregate principal amount not less than $2,500,000.00, (2) each remaining Bank
shall at all times maintain Commitments then outstanding in an aggregate
principal amount at least equal to $2,500,000.00; (3) each such sale, assignment
or transfer shall be of a Pro Rata portion of such Bank's Commitment , (4) no
Bank may offer to sell its Note or Notes, Commitments, rights and obligations or
interests therein in violation of any securities laws; and (5) no such
assignments (other than to a Federal Reserve Bank) shall become effective until
the assigning Bank and its assignee delivers to Agent and Borrowers an
Assignment and Acceptance and the Note or Notes subject to such assignment and
other documents evidencing any such assignment. An assignment fee in the amount
of $5,000 for each such assignment (other than to an Affiliate, a Bank or the
Federal Reserve Bank) will be payable to Agent by assignor or assignee. Within
five (5) Business Days after its receipt of copies of the Assignment and
Acceptance and the other documents relating thereto and the Note or Notes, the
Borrowers shall execute and deliver to Agent (for delivery to the relevant
assignee) a new Note or Notes evidencing such assignee's assigned Commitments
and if the assignor Bank has retained a portion of its Commitments, a
replacement Note in the principal amount of the Commitments retained by the
assignor (except as provided in the last sentence of this paragraph (a) such
Note or Notes to be in exchange for, but not in payment of, the Note or Notes
held by such Bank). On and after the effective date of an assignment hereunder,
the assignee shall for all purposes be a Bank, party to this Agreement and any
other Loan Document executed by the Banks and shall have all the rights and
obligations of a Bank under the Loan Documents, to the same extent as if it were
an original party thereto, and no further consent or action by Borrowers, Banks
or the Agent shall be required to release the transferor Bank with respect to
its Commitments assigned to such assignee and the transferor Bank shall
henceforth be so released.
28.2 Each Bank shall have the right to grant participations in all or any
part of such Bank's Notes and Commitments hereunder to one or more pension
plans, investment funds, insurance companies, financial institutions or other
Persons, provided, that:
(i) each Bank granting a participation shall retain the right to vote
hereunder, and no participant shall be entitled to vote hereunder on
decisions requiring consent or approval of Bank or Majority Banks (except
as set forth in (iii) below);
(ii) in the event any Bank grants a participation hereunder, such
Bank's obligations under the Loan Documents shall remain unchanged, such
Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Bank shall remain the holder of any
such Note or Notes for all purposes under the Loan Documents, and Agent,
each Bank and Borrowers shall be entitled to deal with the Bank granting a
participation in the same manner as if no participation had been granted;
and
(iii) no participant shall ever have any right by reason of its
participation to exercise any of the rights of Banks hereunder, except that
any Bank may agree with any participant that such Bank will not, without
the consent of such participant (which consent may not be unreasonably
withheld) consent to any amendment or waiver requiring approval of all
Banks.
28.3 It is understood and agreed that any Bank may provide to assignees and
participants and prospective assignees and participants financial information
and reports and data concerning Borrowers' properties and operations which was
provided to such Bank pursuant to this Agreement.
28.4 Upon the reasonable request of either Agent or Borrowers, each Bank
will identify those to whom it has assigned or participated any part of its
Notes and Commitment, and provide the amounts so assigned or participated.
29. Choice of Forum: Consent to Service of Process and Jurisdiction. THE
OBLIGATIONS OF BORROWERS UNDER THE LOAN DOCUMENTS ARE PERFORMABLE IN OKLAHOMA
COUNTY, OKLAHOMA. ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWERS WITH
RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT
THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF OKLAHOMA, COUNTY OF
OKLAHOMA, OR IN THE UNITED STATES COURTS LOCATED IN OKLAHOMA COUNTY, OKLAHOMA
AND THE BORROWERS HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS
FOR THE PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWERS HEREBY
IRREVOCABLY CONSENT TO SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN
SAID COURT BY THE MAILING THEREOF BY BANK BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWERS, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS
PROVIDED IN SECTION 17. THE BORROWERS HEREBY IRREVOCABLY WAIVE ANY OBJECTION
WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE
COURTS LOCATED IN THE STATE OF OKLAHOMA, COUNTY OF OKLAHOMA, AND HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
30. Waiver of Jury Trial. THE BORROWERS, THE AGENT AND THE BANKS (BY THEIR
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE
BORROWERS, THE AGENT AND THE BANKS, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN THE AGENT, THE
BANKS AND THE BORROWERS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE AGENT
AND THE BANKS TO PROVIDE THE FINANCING DESCRIBED HEREIN .
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 defined in accordance with GAAP.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWERS:
CONTINENTAL RESOURCES, INC.
an Oklahoma corporation
XXXXXX XXXX
By: Xxxxxx Xxxx
Title: President
CONTINENTAL GAS, INC.
ATTEST: an Oklahoma corporation
XXXXX XXXXXX
Secretary By: Xxxxx Xxxxxx
[SEAL] Title: President
CONTINENTAL RESOURCES OF ILLINOIS, INC.
an Oklahoma corporation
XXXXXX XXXX
By: Xxxxxx Xxxx
Title: President
BANKS:
MIDFIRST BANK,
a federally chartered savings association
XXX XXXXXXX
By: Xxx Xxxxxxx
Title: Vice President
BANCFIRST
ART XXXXX
By: Art Xxxxx
Title: Vice President
LOCAL OKLAHOMA BANK, N.A.
XXXX X. XXXX, XX.
By: Xxxx X. Xxxx, Xx.
Title: Senior Vice President
GUARANTY BANK, F.S.B.
XXXXXXX X. XXXXXXXX
By: Xxxxxxx X. Xxxxxxxx
Title: Vice President
AGENT:
MIDFIRST BANK,
a federally chartered savings association
XXX XXXXXXX
By: Xxx Xxxxxxx
Title: Vice President
