EXHIBIT 10.XXIV
RESTATED
LOAN AGREEMENT
AMONG
GOTHIC ENERGY CORPORATION,
GOTHIC ENERGY OF TEXAS, INC.
AND
GOTHIC GAS CORPORATION,
AS BORROWERS
AND
BANK ONE, TEXAS, N.A.
AND THE BANKS NAMED HEREIN
AS BANKS
AND
BANK ONE, TEXAS, N.A.,
AS AGENT
FEBRUARY 17, 1997
TABLE OF CONTENTS
Page No.
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1. Definitions........................................................... 2
2. Commitments of the Bank............................................... 12
(a) Terms of Revolving Commitment.................................. 12
(b) Bridge Loan.................................................... 13
(c) Procedure for Borrowing........................................ 13
(d) Letters of Credit.............................................. 13
(e) Procedure for Obtaining Letters of Credit...................... 14
(f) Voluntary Reduction of Revolving Commitment.................... 15
(g) Monthly Commitment Reduction................................... 15
(h) Special Advance Facility....................................... 15
(i) Special Drilling Facility...................................... 15
(j) Additional Reduction of Availability Under Revolving
Commitment................................................... 16
(k) Several Obligations............................................ 16
(l) Limited Liability of Gas....................................... 16
3. Notes Evidencing Loans................................................ 17
(a) Form of Revolving Notes........................................ 17
(b) Form of Bridge Notes........................................... 17
(c) Issuance of Additional Notes................................... 17
(d) Interest Rate.................................................. 17
(e) Payment of Interest............................................ 18
(f) Payment of Principal........................................... 18
(g) Payment to Banks............................................... 18
(h) Sharing of Payments, Etc....................................... 18
(i) Non-Receipt of Funds by the Agent.............................. 19
(j) Capital Adequacy............................................... 19
4. Interest Rates........................................................ 20
(a) Options........................................................ 20
(b) Interest Rate Determination.................................... 21
(c) Conversion Option.............................................. 21
(d) Recoupment..................................................... 21
5. Special Provisions Relating to Eurodollar Loans....................... 21
(a) Unavailability of Funds or Inadequacy of Pricing............... 21
(b) Reserve Requirements........................................... 22
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(c) Taxes.......................................................... 22
(d) Change in Laws................................................. 23
(e) Option to Fund................................................. 23
(f) Indemnity...................................................... 23
(g) Payments Not at End of Interest Period......................... 23
6. Collateral Securities................................................. 24
7. Borrowing Base........................................................ 25
(a) Initial Borrowing Base......................................... 25
(b) Subsequent Determinations of Borrowing Base.................... 25
8. Fees.................................................................. 26
(a) Unused Commitment Fee.......................................... 26
(b) Borrowing Base Increase Fee.................................... 27
(c) The Letter of Credit Fee....................................... 27
(d) Agency Fees.................................................... 27
(e) Special Advance Fee............................................ 27
9. Prepayments........................................................... 27
(a) Voluntary Prepayments.......................................... 27
(b) Mandatory Prepayment For Borrowing Base Deficiency............. 27
10. Representations and Warranties........................................ 28
(a) Creation and Existence......................................... 28
(b) Power and Authority............................................ 28
(c) Binding Obligations............................................ 28
(d) No Legal Bar or Resultant Lien................................. 28
(e) No Consent..................................................... 28
(f) Financial Condition............................................ 29
(g) Liabilities.................................................... 29
(h) Litigation..................................................... 29
(i) Taxes; Governmental Charges.................................... 29
(j) Titles, Etc.................................................... 29
(k) Defaults....................................................... 29
(l) Casualties; Taking of Properties............................... 30
(m) Use of Proceeds; Margin Stock.................................. 30
(n) Location of Business and Offices............................... 30
(o) Compliance with the Law........................................ 30
(p) No Material Misstatements...................................... 31
(q) Not A Utility.................................................. 31
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(r) ERISA.......................................................... 31
(s) Public Utility Holding Company Act............................. 31
(t) Subsidiaries................................................... 31
(u) Environmental Matters.......................................... 31
(v) Liens.......................................................... 32
11. Conditions of Lending................................................. 32
12. Affirmative Covenants................................................. 34
(a) Financial Statements and Reports............................... 34
(b) Certificates of Compliance..................................... 36
(c) Accountants' Certificate....................................... 36
(d) Taxes and Other Liens.......................................... 36
(e) Compliance with Laws........................................... 36
(f) Further Assurances............................................. 37
(g) Performance of Obligations..................................... 37
(h) Insurance...................................................... 37
(i) Accounts and Records........................................... 38
(j) Right of Inspection............................................ 38
(k) Notice of Certain Events....................................... 38
(l) ERISA Information and Compliance............................... 38
(m) Environmental Reports and Notices.............................. 39
(n) Compliance and Maintenance..................................... 39
(o) Operation of Properties........................................ 39
(p) Compliance with Leases and Other Instruments................... 40
(q) Certain Additional Assurances Regarding
Maintenance and Operations of Properties....................... 40
(r) Sale of Certain Assets/Prepayment of Proceeds.................. 40
(s) Title Matters.................................................. 41
(t) Curative Matters............................................... 41
(u) Change of Principal Place of Business.......................... 41
(v) Cash Collateral Accounts....................................... 41
(w) Hedging........................................................ 42
13. Negative Covenants.................................................... 42
(a) Negative Pledge................................................ 42
(b) Current Ratio.................................................. 42
(c) Debt Service Coverage Ratio.................................... 42
(d) Minimum Tangible Net Worth..................................... 42
(e) General and Administrative Expenses............................ 43
(f) Consolidations and Mergers..................................... 43
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(g) Debts, Guaranties and Other Obligations........................ 43
(h) Dividends...................................................... 44
(i) Loans and Advances............................................. 44
(j) Sale or Discount of Receivables................................ 44
(k) Nature of Business............................................. 44
(l) Transactions with Affiliates................................... 44
(m) Hedging Transactions........................................... 45
(n) Investment..................................................... 45
(o) Amendment to Articles of Incorporation or Bylaws............... 45
(p) Sale of Assets................................................. 45
(q) Proceeds of Production......................................... 46
(r) Amendments to Preferred Stock and Convertible
Promissory Notes............................................... 46
15. The Agent and the Banks............................................... 48
(a) Appointment and Authorization.................................. 48
(b) Note Holders................................................... 49
(c) Consultation with Counsel...................................... 49
(d) Documents...................................................... 49
(e) Resignation or Removal of Agent................................ 49
(f) Responsibility of Agent........................................ 50
(g) Independent Investigation...................................... 51
(h) Indemnification................................................ 52
(i) Benefit of Section 15.......................................... 52
(j) Pro Rata Treatment............................................. 52
(k) Assumption as to Payments...................................... 53
(l) Other Financings............................................... 53
(m) Interests of Banks............................................. 53
(n) Investments.................................................... 53
16. Exercise of Rights.................................................... 54
17. Notices............................................................... 54
18. Expenses.............................................................. 54
19. Indemnity............................................................. 55
20. Governing Law......................................................... 56
21. Invalid Provisions.................................................... 56
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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. Other Agreements...................................................... 59
30. Financial Terms....................................................... 59
EXHIBITS
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Exhibit "A" - Notice of Borrowing
Exhibit "B" - Revolving Note
Exhibit "C" - Bridge Note
Exhibit "D" - Certificate of Compliance
Exhibit "E" - Form of Assignment and Acceptance Agreement
SCHEDULES
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Schedule 1 - Liens
Schedule 2 - List of Xxxxx to be Drilled with Special Drilling Facility
Schedule 3 - Financial Condition
Schedule 4 - Liabilities
Schedule 5 - Litigation
Schedule 6 - Subsidiaries
Schedule 7 - Environmental Matters
Schedule 8 - Title Matters
Schedule 9 - Curative Matters
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RESTATED LOAN AGREEMENT
THIS RESTATED LOAN AGREEMENT (hereinafter referred to as the "Agreement")
executed as of the 17th day of February, 1997, by and between GOTHIC ENERGY
CORPORATION, an Oklahoma corporation ("Energy") and GOTHIC ENERGY OF TEXAS,
INC., an Oklahoma corporation ("Texas") GOTHIC GAS CORPORATION, an Oklahoma
corporation ("Gas") (Energy, Gas and Texas are hereinafter collectively referred
to as "Borrowers" and individually as a "Borrower") and BANK ONE, TEXAS, N.A., a
national banking association ("Bank One") and each of the financial institutions
which is a party hereto (as evidenced by the signature pages to this Agreement)
or which may from time to time become a party hereto pursuant to the provisions
of Section 28 hereof or any successor or assignee thereof (hereinafter
collectively referred to as "Banks", and individually, "Bank") and Bank One, as
Agent.
W I T N E S S E T H:
WHEREAS, Borrowers and Bank One entered into a Loan Agreement dated as of
January 19, 1996 (the "Loan Agreement") under the terms of which Bank One
agreed, subject to the satisfaction of certain conditions precedent set forth
therein, to provide Borrowers, Buttonwood Energy Corporation ("Buttonwood") and
Buttonwood Petroleum, Inc., ("Petroleum") with a revolving loan facility in
amounts of up to $20,000,000.00; and
WHEREAS, pursuant to a First Amendment to Loan Agreement dated as of
January 30, 1996, Buttonwood and Petroleum were joined as Borrowers under the
Loan Agreement and assumed any and all obligations due Bank One under the Loan
Agreement; and
WHEREAS, the Loan Agreement was thereafter amended pursuant to a Second
Amendment to Loan Agreement dated as of May 14, 1996, and a Third Amendment to
Loan Agreement dated July 31, 1996; and
WHEREAS, on the 9th day of May, 1996 Buttonwood merged into Petroleum with
Petroleum being the survivor; and
WHEREAS, on the 22nd day of October, 1996, Energy merged into a newly
formed, wholly-owned, subsidiary called Gothic Energy Newco, Inc., an Oklahoma
corporation ("Newco") with Newco being the survivor and on the same date Newco
changed its name to Gothic Energy Corporation; and
WHEREAS, the Loan Agreement was further amended pursuant to a Fourth
Amendment to Loan Agreement dated as of November 26, 1996; and
WHEREAS, on the 4th day of December, 1996, Petroleum merged into Energy
with Energy being the survivor; and
WHEREAS, the Loan Agreement was further amended pursuant to a Fifth
Amendment to Loan Agreement dated December 27, 1996; and
WHEREAS, the Borrowers and Bank One have agreed to restate the Loan
Agreement to increase the amount of the reducing revolver, add a new bridge loan
facility, add a new Special Drilling Facility, add Gas as a Borrower, and make
certain other changes thereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree to restate the Loan Agreement as
follows:
1. DEFINITIONS. When used herein the terms "Agent," "Agreement," "Bank",
"Banks", "Bank One," "Borrower," "Borrowers", "Energy", "Gas" and "Texas" shall
have the meanings indicated above. When used herein the following terms shall
have the following meanings:
(a) Acquisitions - The term "Acquisitions" is used herein as defined
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in Section 11(a)(vii) hereof.
(b) Advance or Advances - A loan or loans hereunder.
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(c) Affiliate - Any Person which, directly or indirectly, controls, is
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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.
(d) Assignment and Acceptance - A document substantially in the form
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of Exhibit "E" hereto.
(e) Base Rate - As of any date, the fluctuating rate of interest per
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annum established from time to time by Agent as its Base Rate (which rate
of interest may not be the lowest, best or most favorable rate of interest
which Agent may charge on loans to its customers). Each change in the Base
Rate shall become effective without prior notice to Borrowers automatically
as of the opening of business on the date of such change in the Base Rate.
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(f) Base Rate Interest Period - With respect to any Base Rate Loan,
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the period ending on the first day of each month, provided, however, that
(i) if any Base 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 Base Rate Interest Period would otherwise end
after the Maturity Date such Interest Period shall end on the Maturity
Date.
(g) Base Rate Loans - Any loan during any period which bears interest
---------------
based upon the Base Rate or which would bear interest based upon the Base
Rate if the Maximum Rate ceiling was not in effect at that particular time.
(h) Base Rate Margin -
----------------
(i) For Revolving Loans the Base Rate Margin will be one
percent (1%) when any amount is outstanding on the Special Advance
Facility, the Special Drilling Facility or the Bridge Loan; at any
other time, the Base Rate Margin shall be zero percent (0%);
(ii) For the Bridge Loans the Base Rate Margin will be three
percent (3%) from the Effective Date through May 31, 1997, and
thereafter the Base Rate Margin shall be five percent (5%);
(iii) For the Special Advance Facility and the Special Drilling
Facility, the Base Rate Margin will be three percent (3%).
(i) Borrowing Base - The value assigned by the Banks from time to time
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to the Oil and Gas Properties pursuant to Section 7 hereof. Until the next
determination of the Borrowing Base pursuant to Section 7(b) hereof the
Borrowing Base shall be $32,000,000.
(j) Borrowing Date - The date elected by Borrowers pursuant to Section
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2(b) hereof for an Advance on the Revolving Loan.
(k) Bridge Loan - The $10,000,000 Loan made pursuant to Section 2(b)
-----------
hereof.
(l) Bridge Loan Commitment - As to all Banks, $10,000,000 and as to
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any Bank, its obligation with regard to the Bridge Loan in the amount set
forth opposite the name of such Bank on the signature pages hereto under
the heading "Bridge Loan Commitment".
(m) Bridge Loan Commitment Percentage - For each Bank, the percentage
---------------------------------
derived by dividing its Bridge Loan Commitment at the time of determination
by the Bridge
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Loan Commitment of all Banks at the time of determination. At Effective
Date, Bank One's Bridge Loan Commitment Percentage is 100%.
(n) Bridge Loan Maturity Date - September 1, 1997.
-------------------------
(o) Bridge Notes - The Bridge Notes described in Section 3 hereof.
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(p) Business Day - The normal banking hours during any day (other than
------------
Saturdays or Sundays) that banks are legally open for business in Dallas,
Texas.
(q) Change of Control - A Change of Control shall occur if any Person
-----------------
(or syndicate or group of Persons which is deemed a Person for the purposes
of Sections 13(d) or 14(d)(ii) of the Securities Act of 1934, as amended)
shall acquire, directly or indirectly an amount of issued and outstanding
voting stock of any Borrower (including the acquisition of newly-issued
stock) sufficient to change the control of such Borrower by causing the
election or change of a majority of the directors of such Borrower.
(r) Change of Management - A Change of Management shall occur if
--------------------
Xxxxxxx Xxxxx ever ceases to act as President of Energy and a replacement
for such officer, acceptable to Agent, is not appointed within thirty (30)
days thereafter .
(s) Commitments - The Revolving Commitment and the Bridge Loan
-----------
Commitment.
(t) Current Assets - The total of the Borrowers' consolidated current
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assets determined in accordance with GAAP, plus, as of any date, the
current unused availability on the Revolving Commitment.
(u) Current Liabilities - The total of Borrowers' consolidated current
-------------------
obligations as determined in accordance with GAAP, excluding therefrom
current maturities due on the Revolving Loan.
(v) Defaulting Bank - The term "Defaulting Bank" is used herein as
---------------
defined in Section 3(g) hereof.
(w) Effective Date - The date of this Agreement.
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(x) Eligible Assignee - Any of (i) a Bank or any Affiliate of a Bank;
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(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
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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; and (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.
(y) Environmental Laws - 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. (S)9601, et seq.,
-- ---
the Resource Conservation and Recovery Act, as amended by the Hazardous
Solid Waste Amendment of 1984, 42 U.S.C.A. (S)6901, et seq., the Clean Air
-- ---
Act, 42 U.S.C.A. (S)1251, et seq., the Toxic Substances Control Act, 15
-- ---
U.S.C.A. (S)2601, et seq., The Oil Pollution Act of 1990, 33 U.S.G.
-- ---
(S)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. (S) 9601, et seq., as amended, as each
-- ---
of the foregoing may be amended from time to time.
(z) Environmental Liability - 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.
(aa) Environmental Lien - 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.
(bb) ERISA - The Employee Retirement Income Security Act of 1974, as
-----
amended.
(cc) Eurodollar Business Day - A Business Day on which dealings in
-----------------------
U.S. Dollar deposits are carried on in the London interbank market.
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(dd) Eurodollar Interest Period - With respect to any Eurodollar Loan
--------------------------
(i) initially, the period commencing on the date such Eurodollar Loan is
made and ending one (1), two (2) or three (3) months thereafter as selected
by the Borrowers pursuant to Section 4(a)(ii), and (ii) thereafter, each
period commencing on the day following the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one (1), two
(2) or three (3) months thereafter, as selected by the Borrowers pursuant
to Section 4(a)(ii); provided, however, that (i) if any Eurodollar Interest
Period would otherwise expire on a day which is not a Eurodollar Business
Day, such Interest Period shall expire on the next succeeding Eurodollar
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 Eurodollar Business Day, (ii)
if any Eurodollar Interest Period begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
such Interest Period shall end on the last Eurodollar Business Day of a
calendar month, and (iii) any Eurodollar Interest Period which would
otherwise expire after the Maturity Date shall end on such Maturity Date.
(ee) Eurodollar Loan - Any loan during any period which bears interest
---------------
at the Eurodollar Rate, or which would bear interest at such rate if the
Maximum Rate ceiling was not in effect at a particular time.
(ff) Eurodollar Margin - The fluctuating Eurodollar Margin in effect
-----------------
from day to day shall be:
(i) At any time any amount is outstanding on the Special Advance
Facility, the Special Drilling Facility or the Bridge Loan:
(A) three and three-quarters percent (3.75%) per annum
whenever the Total Outstandings are greater than 75% of the
Borrowing Base in effect at the time in question;
(B) three and one-half percent (3.50%) per annum whenever
the Total Outstandings are greater than 50%, but less than or
equal to 75%, of the Borrowing Base in effect at the time in
question; or
(C) three and one-quarter percent (3.25%) per annum whenever
the Total Outstandings are 50% or less of the Borrowing Base in
effect at the time in question.
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(ii) When there is no outstanding balance due on the Special
Advance Facility, the Special Drilling Facility or the Bridge Loan:
(A) two and one-half percent (2.50%) per annum whenever the
Total Outstandings are greater than 75% of the Borrowing Base in
effect at the time in question;
(B) two and one-quarter percent (2.25%) per annum whenever
the Total Outstandings are greater than 50%, but less than or
equal to 75%, of the Borrowing Base in effect at the time in
question; or
(C) two percent (2.00%) per annum whenever the Total
Outstandings are 50% or less of the Borrowing Base in effect at
the time in question.
(gg) Eurodollar Rate - With respect to each Eurodollar Interest
---------------
Period, the rate of interest per annum at which deposits in immediately
available and freely transferable funds in U.S. Dollars are offered to the
Agent (at approximately 10:00 a.m., Dallas, Texas time three Eurodollar
Business Days prior to the first day of each Eurodollar Interest Period) in
the London interbank market for delivery on the first day of such
Eurodollar Interest Period in an amount equal to or comparable to the
principal amount of the Eurodollar Loan to which such Eurodollar Interest
Period relates. Each determination of the Eurodollar Rate by the Agent
shall, in the absence of error, be conclusive and binding.
(hh) Financial Statements - Balance sheets, income statements,
--------------------
statements of cash flow and appropriate footnotes and schedules, prepared
in accordance with GAAP.
(ii) GAAP - Generally accepted accounting principles, consistently
----
applied.
(jj) General and Administrative Expenses - Expenses of providing
-----------------------------------
corporate, management, supervisory and engineering services and other
corporate services with respect to the management and assets of the
Borrowers, determined in accordance with GAAP.
(kk) Interest Payment Date - The earlier of (i) the last day of each
---------------------
Interest Period or (ii) the last day of each calendar month.
(ll) Interest Period - Any Base Rate Interest Period, or Eurodollar
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Interest Period.
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(mm) Letters of Credit - The term "Letters of Credit" is used herein
-----------------
as defined in Section 2(d) hereof.
(nn) Lien - Any mortgage, deed of trust, pledge, security interest,
----
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
(oo) Loans - The Revolving Loan and the Bridge Loan.
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(pp) Loan Documents - This Agreement, the Notes, the Security
--------------
Instruments and all other documents executed in connection with the
transaction described in this Agreement.
(qq) Majority Xxxxx - Xxxxx holding 100% or more of the Commitments.
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(rr) Material Adverse Effect - 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 the Borrowers from the facts represented or warranted in
this Agreement or any other Security Instrument, or (ii) the ability of the
Borrowers to carry out their respective businesses 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 Note, this Agreement or the other Loan
Documents on a timely basis.
(ss) Maximum Rate - 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 the effective date
of each change in such Maximum Rate.
(tt) Monthly Commitment Reduction - The term "Monthly Commitment
----------------------------
Reduction" is used herein, as defined in Section 2(g) hereof.
(uu) Net Cash Flow - Net Income plus non-cash charges (such as
------------- ----
depreciation, depletion or amortization) excluding gains or losses from the
sale of capital assets minus preferred stock cash dividends, calculated on
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a consolidated basis in accordance with GAAP.
(vv) Net Income - Borrowers' consolidated net income after income
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taxes calculated in accordance with GAAP.
(ww) Net Revenues - The sum of (i) revenue received by or on behalf of
------------
Borrowers with respect to the Oil and Gas Properties during any period plus
----
(ii) Overhead
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Reimbursement Revenue, less the sum of (i) production taxes attributable to
----
the Oil and Gas Properties and (ii) lease operating expenses attributable
to the Oil and Gas Properties, to the extent that such production taxes and
lease operating expenses are actually paid during the period, all as
calculated in accordance with GAAP.
(xx) Notes - The Revolving Notes and the Bridge Notes, substantially
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in the form of Exhibit "B" and "C" 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 and the Bridge
Loan, together with all modifications, renewals and extensions thereof or
any part thereof.
(yy) Oil and Gas Properties - 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 or negative pledge pursuant to Section 13 hereof.
(zz) Other Financing - The term "Other Financing" is used herein as
---------------
defined in Section 15(l) hereof.
(aaa) Overhead Reimbursement Revenue - Revenue received by one or
------------------------------
more Borrowers to reimburse such Borrower or Borrowers for overhead
expenses incurred in connection with the operation of oil and gas
properties by such Borrower or Borrowers.
(bbb) Payor - The term "Payor" is used herein as defined in Section
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3(i)hereof.
(ccc) Xxxxx Note - That certain Promissory Note in the original
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principal amount of $158,000 dated as of November 26, 1996 executed by
Xxxxxxx Xxxxx payable to the order of Bank One.
(ddd) Permitted Liens - The term Permitted Lien shall mean (i)
---------------
royalties, overriding royalties, reversionary interests, production
payments and similar burdens; (ii) sales contracts or other arrangements
for the sale of production of oil, gas or associated liquid or gaseous
hydrocarbons which would not (when considered cumulatively with the matters
discussed in clause (i) above) deprive any 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,
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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 any 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 any 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 such 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 such 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; and (xii) Liens existing at the date
of this Agreement which have been disclosed to Banks in the Borrowers'
September 30, 1996 Financial Statements or identified in Schedule "1"
hereto.
(eee) Person - 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.
(fff) Plan - Any plan subject to Title IV of ERISA and maintained by
----
any Borrower, or any such plan to which a Borrower is required to
contribute on behalf of its employees.
(ggg) Pro Rata or Pro Rata Part - For each Bank, (i) for all purposes
-------------------------
where no Loan is outstanding, such Bank's Revolving Commitment Percentage
for matters relating to
-10-
the Revolving Commitment and its Bridge Loan Commitment Percentage for
matters relating to the Bridge Loan Commitment 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 (calculated separately for each Bank for the Revolving Loan and
the Bridge Loan).
(hhh) Rainwater Note - That certain Promissory Note in the original
--------------
principal amount of $158,000 dated as of November 26, 1996 executed by Xxxx
X. Xxxxxxxxx payable to the order of Bank One.
(iii) Reimbursement Obligations - At any time, the obligations of the
-------------------------
Borrowers in respect of all Letters of Credit then outstanding to reimburse
amounts paid by any Bank in respect of any drawing or drawings under a
Letter of Credit.
(jjj) Required Payment - The term "Required Payment" is used herein
----------------
as defined in Section 3(i) hereof.
(kkk) Revolving Commitment - (A) For all Banks, the lesser of (i)
-------------------- ------
$75,000,000 or (ii) the Borrowing Base, as reduced from time to time
pursuant to Sections 2 and 7 hereof, plus the Special Advance Facility and
----
the Special Drilling Facility, 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, the amount set forth opposite the name of such
Bank on the signature pages hereto under the heading "Revolving
Commitment".
(lll) Revolving Commitment Percentage - For each Bank the percentage
-------------------------------
derived by dividing its Revolving Commitment at the time of the termination
by the Revolving Commitments of all Banks at the time of determination. At
the Effective Date, Bank One's Revolving Commitment Percentage is 100%.
(mmm) Revolving Loan - Loan or loans made under the Revolving
--------------
Commitment pursuant to Section 2 hereof.
(nnn) Revolving Maturity Date - January 30, 1999.
-----------------------
(ooo) Security Instruments - 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,
all Pledge Agreements, Security Agreements and other collateral documents
covering the Oil and Gas Properties and related personal property,
equipment, oil and gas inventory, stock and partnership interest and
-11-
proceeds of the foregoing, all such documents to be in form and substance
satisfactory to Agent.
(ppp) Special Advance Facility - An Advance under the Revolving
------------------------
Commitment made to Borrowers pursuant to the provisions of Section 2(h)
hereof.
(qqq) Special Drilling Facility - An Advance under the Revolving
-------------------------
Commitment made to Borrowers pursuant to the provisions of Section 2(i)
hereof.
(rrr) Subsidiary - 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 any
Borrower or another subsidiary.
(sss) Tangible Net Worth - An amount equal to the Borrowers'
------------------
consolidated stockholders equity, as determined in accordance with GAAP.
(ttt) Total Outstandings - As of any date, the sum of (i) the total
------------------
principal balance outstanding on the Notes, plus (ii) the total face amount
of all outstanding Letters of Credit plus (iii) the total amount of all
unpaid Reimbursement Obligations.
(uuu) Tranche - A Eurodollar Loan or a Base Rate Loan.
-------
(vvv) Unscheduled Redeterminations - 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 a 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.
-12-
2. COMMITMENTS OF THE BANK.
(a) Terms of Revolving Commitment. On the terms and conditions
-----------------------------
hereinafter set forth, each Bank agrees severally to make Advances to the
Borrowers from time to time during the period beginning on the Effective
Date and ending on the 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 Note
issued in connection herewith, said Note to be as described in Section 3
hereof. Notwithstanding any other provision of this Agreement, no Advance
shall be required to be made hereunder if any Event of Default (as
hereinafter defined) has occurred and is continuing or if any event or
condition has occurred or failed to occur which with the passage of time or
service of notice, or both, would constitute an Event of Default. Each
Advance under the Revolving Commitment shall be an aggregate amount of at
least $100,000 or a whole number multiple thereof. Irrespective of the
face amount of the Revolving Note or Notes, the Banks shall never have the
obligation to Advance any amount or amounts in excess of the Revolving
Commitment or to increase the Revolving Commitment. The total number of
Tranches under the Revolving Commitment (exclusive of Tranches under the
Special Advance Facility or the Special Drilling Facility) which may be
outstanding at any time hereunder shall never exceed three (3), whether
such Tranches are Base Rate Loans, Eurodollar Loans, or a combination
thereof.
(b) Bridge Loan. On the terms and conditions hereinafter set forth,
-----------
Bank One agrees to make an advance to the Borrowers on the Effective Date
equal to $10,000,000. No portion of the Bridge Loan, once repaid, may be
reborrowed by Borrowers.
(c) 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. Dallas,
Texas time, (i) one Business Day prior to the Borrowing Date in the case of
the Base Rate Loan, or (ii) three Business Days prior to any proposed
Borrowing Date in the case of Eurodollar Loans. Each Notice of Borrowing
shall specify (i) the Borrowing Date (which, if at Base Rate Loan, shall be
a Business Day and if a Eurodollar Loan, a Eurodollar Business Day), (ii)
the principal amount to be borrowed, (iii) the portion of the Advance
constituting Base Rate Loans and/or Eurodollar Loans, (iv) if any portion
of the proposed Advance is to constitute Eurodollar Loans, the initial
Interest Period selected by Borrower pursuant to Section 4 hereof to be
applicable thereto, and (v) the date upon which such Advance is required.
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
-13-
to funding of a Base Rate Loan, or at least three (3) days' notice of each
Advance prior to funding in the case of a Eurodollar Loan, each Bank shall
provide Agent at its office at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, not
later than 1:00 p.m., Dallas, Texas time, on the Borrowing Date, in
immediately available funds, its pro rata share of the requested Advance,
but the aggregate of all such fundings by each Bank shall never exceed such
Bank's Revolving Commitment. Not later than 2:00 p.m., Dallas, Texas time,
on the Borrowing Date, Agent shall make available to the Borrowers at the
same office, in like funds, the aggregate amount of such requested Advance.
Neither Agent nor any Bank shall incur any liability to the Borrowers in
acting upon any Notice referred to above which Agent or such Bank believes
in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Borrowers or for otherwise acting
in good faith under this Section 2(b). Upon funding of Advances by Banks in
accordance with this Agreement, pursuant to any such Notice, the Borrowers
shall have effected Advances hereunder.
(d) 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 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 One Million Dollars ($1,000,000.00). 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 Note. Each Letter of Credit issued for the account of Borrowers
hereunder shall (i) be in favor of such beneficiaries as specifically
requested by Borrowers, (ii) have an expiration date not exceeding the
Maturity Date, and (iii) contain such other terms and provisions as may be
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, and each of them,
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
-14-
Agent to such beneficiary in respect of such demand. Forthwith upon receipt
of such notice from the Agent, Borrowers shall advise the Agent whether or
not they intend to borrow hereunder to finance their obligations to
reimburse the Agent, and if so, submit a Notice of Borrowing as provided in
Section 2(b) hereof.
(e) Procedure for Obtaining Letters of Credit. The amount and date of
-----------------------------------------
issuance, renewal, extension or reissuance of a Letter of Credit pursuant
to the Banks' commitment above in Section 2(c) shall be designated by
Borrowers' written request delivered to Agent at least three (3) Business
Days prior to the date of such issuance, renewal, extension or reissuance.
Concurrently with or promptly following the delivery of the request for a
Letter of Credit, Borrowers shall execute and deliver to the Agent an
application and agreement with respect to the Letters of Credit, said
application and agreement to be in the form used by the Agent. The Agent
shall not be obligated to issue, renew, extend or reissue such Letters of
Credit if (A) the amount thereon when added to the amount of the
outstanding Letters of Credit exceeds One Million Dollars ($1,000,000.00)
or (B) the amount thereof when added to the Total Outstandings would exceed
the Revolving Commitment. Borrowers agree to pay the Agent for the benefit
of the Banks commissions for issuing the Letters of Credit (calculated
separately for each Letter of Credit) in an amount equal to the greater of
(i) one percent (1%) per annum on the maximum face amount of the Letter of
Credit or (ii) $400.00. 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.
(f) 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 $100,000 or more, in increments of
$100,000 and (ii) each reduction must be accompanied by a prepayment of the
Notes in the amount by which the outstanding principal balance of the Note
exceeds the Revolving Commitment as reduced pursuant to this Section 2.
(g) Monthly Commitment Reduction. The Revolving Commitment shall be
----------------------------
reduced as of the first day of each month beginning on the first day of the
first month after the Effective Date by an amount determined by the Banks
pursuant to Section 7(b) hereof (the "Monthly Commitment Reduction"). The
Monthly Commitment Reduction shall be $240,000 on March 1, 1997, and
thereafter, beginning April 1, 1997, $475,000.00 per month until
redetermined pursuant to Section 7(b) hereof.
(h) Special Advance Facility. On the terms and conditions hereinafter
------------------------
set forth, each Bank agrees severally from time to time to make available
to Borrowers upon their written request certain amounts in the form of a
Special Advance Facility to be used for the
-15-
sole purpose of acquisition of oil and gas properties. Within a reasonable
time after the receipt of a written request for a Special Advance Facility,
Agent shall notify Borrowers of the amount and the maturity of any such
Special Advance Facility. It is expressly understood that the Banks have no
obligation to designate the Special Advance Facility at any particular
amount, except in their discretion. Any Advance on the Special Advance
Facility shall be an Advance or Advances under the Revolving Commitment and
such Special Advance Facility shall be available to Borrowers in one or
more Advances, but all amounts, once repaid, in whole or in part, may not
be reborrowed. At the Effective Date the amount available as a Special
Advance Facility shall be $0.
(i) Special Drilling Facility. On the terms and conditions
-------------------------
hereinafter set forth, each Bank agrees severally from time to time to make
available to Borrowers upon their written request certain amounts in the
form of a Special Drilling Facility to be used for the sole purpose of
development drilling on the Oil and Gas Properties. Within a reasonable
time after the receipt of a written request for a Special Drilling
Facility, Agent shall notify Borrowers of the amount, maturity and purpose
for which the funds shall be used for such Special Drilling Facility. It
is expressly understood that the Banks have no obligation to designate the
Special Drilling Facility at any particular amount, except in their
discretion. After designation of a Special Drilling Facility, any request
for an Advance under the Special Drilling Facility shall be accompanied by
an AFE or completion information or other information covering the well or
xxxxx to be drilled in connection with the Advance, such information to be
in form and substance satisfactory to Agent. At the Agent's discretion and
based on the Agent's assessment of the information provided, Agent shall
notify Borrowers of the amount, if any, of any such Advance. It is
expressly understood that the Agent has no obligation to designate an
Advance under the Special Drilling Facility at any particular amount,
except in its discretion. Any Advance on the Special Drilling Facility
shall be a Advance or Advances under the Revolving Commitment and such
Special Drilling Facility shall be available to Borrowers, at the Agent's
discretion, in one or more Advances, but all amounts, once repaid, in whole
or in part, may not be reborrowed. At the Effective Date, there shall be
available to Borrowers a Special Drilling Facility of $2,000,000, with a
maturity of September 1, 1997, such Special Drilling Facility to be used to
drill the oil and gas xxxxx designated on Schedule 2 hereto.
(j) Additional Reduction of Availability Under Revolving Commitment.
---------------------------------------------------------------
The availability under the Revolving Commitment shall be reduced dollar for
dollar by the face amount of the Xxxxx Note and the Rainwater Note. If a
default occurs on either the Xxxxx Note or the Rainwater Note, or both,
whether as a result of failure to pay on maturity or upon acceleration or
otherwise, and such Note or Notes are guaranteed by Energy, Bank One shall
give the Agent notice thereof and the Agent shall give Energy written
notice of such default pursuant to the provisions of Energy's Guaranty. If
such defaulted Note or Notes are not paid within five (5) days of such
written notice, the Banks shall make an
-16-
Advance against the Revolving Commitment to pay the total amount due to
Bank One on the defaulted Note or Notes which are guaranteed by Energy,
including principal, interest and expense without further action being
required by the Borrowers, Bank One or the Banks hereunder. The Borrowers
specifically grant to the Banks the authority to make such Advance or
Advances on the Revolving Commitment to pay amounts due Bank One on any
such defaulted Note or Notes. Within five (5) Business Days after such
Advance, the Agent shall give written notice thereof to the Borrowers.
However, failure to give such notice will not affect the validity of such
Advance.
(k) Several Obligations. The obligations of the Banks under the
-------------------
Revolving Commitment are several and not joint. The failure of any Bank to
make an Advance required to be made by it shall not relieve any other Bank
of its obligation to make its Advance, and no Bank shall be responsible for
the failure of any other Bank to make the Advance to be made by such other
Bank. No Bank shall be required to lend hereunder any amount in excess of
its legal lending limit.
(l) Limited Liability of Gas. While the obligations of the Borrowers
------------------------
under this Agreement and the Notes shall be joint and several obligations
of Energy, Texas and Gas, the liability of Gas thereunder shall be limited
to the maximum amount of liability that can be incurred without rendering
the obligations of Gas under the Loan Documents voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for
any greater amount.
3. NOTES EVIDENCING LOANS. The loans described above in Section 2 shall
be evidenced by a promissory notes of Borrowers as follows:
(a) Form of Revolving Notes - The Revolving Loan shall be evidenced by
-----------------------
a Note or Notes in the aggregate face amount of $75,000,000, and shall be
in the form of Exhibit "B" hereto with appropriate insertions, which Note
or Notes shall replace the $20,000,000 Revolving Note dated January 19,
1996 and the $5,000,000 Acquisition Note dated December 27, 1996.
Notwithstanding the face amount of the Notes, the actual principal amount
due from the Borrowers to Banks on account of the 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 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 Notes may be higher, the 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.
-17-
(b) Form of Bridge Notes - The Bridge Loan shall be evidenced by a
--------------------
Bridge Note or Notes in the aggregate face amount of $10,000,000, and shall
be in the form of Exhibit "C" hereto with appropriate insertions.
(c) Issuance of Additional Notes - At the Effective Date there shall
----------------------------
be outstanding (i) one Revolving Note in the aggregate face amount of
$75,000,000 payable to the order of Bank One, and (ii) one Bridge Note, in
the aggregate face amount of $10,000,000 payable to Bank One. From time to
time new Notes may 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
Commitments hereunder.
(d) Interest Rates - The unpaid principal balance of the Notes shall
--------------
bear interest from time to time as follows:
(i) Revolving Notes. Interest on the Revolving Notes shall bear
---------------
interest from time to time as set forth in Section 4 hereof;
(ii) Bridge Notes. The unpaid principal balance of the Bridge
------------
Notes shall bear interest from time to time as set forth in Sections
4(a) and (d) hereof.
(e) Payment of Interest - Interest on the Notes shall be payable on
-------------------
each Interest Payment Date.
(f) Payment of Principal -
--------------------
(i) Revolving Notes. Principal of the Revolving Note or Notes
---------------
shall be due and payable to the Agent for the ratable benefit of the
Banks on the Revolving Maturity Date unless earlier due in whole or in
part as a result of an acceleration of the amount due or pursuant to
the mandatory prepayment provisions of Section 9(b) hereof or as
required under Sections 2(h) and 2(i) hereof;
(ii) Bridge Notes. Principal of the Bridge Note or Notes shall
------------
be due and payable to the Agent for the ratable benefit of the Banks
on the Bridge Loan Maturity Date unless earlier due in whole or in
part as a result of an acceleration of the amount due or pursuant to
the mandatory prepayment provisions of Section 9(b) hereof;
-18-
(g) Payment to Banks - Each Bank's Pro Rata Part of 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., Dallas, Texas, time on the Business Day such
payments or prepayments are deemed hereunder to have been received by
Agent; provided, however, in the event that any 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, Dallas, Texas, time on a Business Day
shall be deemed to have been received on the next Business Day. Interest
shall cease to accrue on any principal as of the end of the day preceding
the Business Day on which any such payment or prepayment is deemed
hereunder to have been received by Agent. If Agent fails to transfer any
principal amount to any Bank as provided above, then Agent shall promptly
direct such principal amount by wire transfer to such Bank.
(h) 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.
(i) 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 is 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
-19-
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.
(j) 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 the Loans, 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 Commitment under this Agreement.
4. INTEREST RATES.
(a) Options.
-------
(i) Base Rate Loans. Borrowers agree to pay interest on the
---------------
Notes calculated on the basis of the actual days elapsed in a year
consisting of 365 or, if appropriate, 366 days with respect to the
unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to Borrowers until maturity
(whether by acceleration or otherwise), at a varying rate per annum
equal to the lesser of (i) the Maximum Rate (defined herein), or (ii)
the sum of the Base Rate plus the Base Rate Margin. Subject to the
provisions of this Agreement as to prepayment, the principal of the
Notes representing Base Rate Loans shall be payable as specified in
Section 3(d) hereof and the interest in respect of each Base 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 Base Rate Loan, shall bear interest, payable on demand, at a rate
per annum equal to the Maximum Rate.
(ii) Eurodollar Loans. 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 Eurodollar Loan from the date
the proceeds thereof
-20-
are made available to Borrowers until maturity (whether by
acceleration or otherwise), at a varying rate per annum equal to the
lesser of (i) the Maximum Rate, or (ii) the Eurodollar Rate plus the
Eurodollar 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(d) hereof and the interest with respect to each
Eurodollar 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 Maximum Rate. Upon three (3) Eurodollar Business Days' written
notice prior to the making by the Banks of any Eurodollar Loan (in the
case of the initial Interest Period therefor) or the expiration date
of each succeeding Interest Period (in the case of subsequent Interest
Periods therefor), Borrowers shall have the option, subject to
compliance by Borrowers with all of the provisions of this Agreement,
as long as no Event of Default exists, to specify whether the Interest
Period commencing on any such date shall be a one (1), two (2) or
three (3) month period. If Agent shall not have received timely notice
of a designation of such Interest Period as herein provided, Borrowers
shall be deemed to have elected to convert all maturing Eurodollar
Loans to Base Rate Loans.
(b) Interest Rate Determination. The Agent shall determine each
---------------------------
interest rate applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrowers of each rate of interest so determined and
its determination thereof shall be conclusive absent error.
(c) Conversion Option. Borrowers may elect from time to time (i) to
-----------------
convert all or any part of its Eurodollar Loans to Base Rate Loans by
giving Agent irrevocable notice of such election in writing prior to 10:00
a.m. (Dallas, Texas time) on the conversion date and such conversion shall
be made on the requested conversion date, provided that any such conversion
of Eurodollar Loan shall only be made on the last day of the Eurodollar
Interest Period with respect thereof, (ii) to convert all or any part of
its Base Rate Loans to Eurodollar Loans by giving the Agent irrevocable
written notice of such election three (3) Eurodollar 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 Eurodollar
Business Day or a Business Day, as the case may be, on the next succeeding
Eurodollar 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 on the Notes.
(d) Recoupment. If at any time the applicable rate of interest
----------
selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall exceed the
Maximum Rate, thereby causing the
-21-
interest on the Notes to be limited to the Maximum Rate, then any
subsequent reduction in the interest rate so selected or subsequently
selected shall not reduce the rate of interest on the Notes below the
Maximum Rate until the total amount of interest accrued on the Note equals
the amount of interest which would have accrued on the Notes if the rate or
rates selected pursuant to Sections 4(a)(i) or (ii), as the case may be,
had at all times been in effect.
5. SPECIAL PROVISIONS RELATING TO EURODOLLAR LOANS.
(a) Unavailability of Funds or Inadequacy of Pricing. In the event
------------------------------------------------
that, in connection with any proposed Eurodollar Loan, any Bank (i) shall
have determined that U.S. Dollar deposits of the relevant amount and for
the relevant Eurodollar Interest Period for Eurodollar Loans are not
available to such Bank in the London interbank market; or (ii) in good
faith determines that the Eurodollar Interest Rate will not adequately
reflect the cost to the Banks of maintaining or funding the Eurodollar
Loans for such Interest Period, the obligations of the Banks to make the
Eurodollar Loans, as the case may be, shall be suspended until such time
such Bank in its sole discretion reasonably exercised determines that the
event resulting in such suspension has ceased to exist. If any Bank shall
make such determination it shall promptly notify the Agent in writing, and
Agent shall promptly notify Borrowers in writing, and Borrowers shall
either repay the outstanding Eurodollar Loans, as the case may be, owed to
Banks, without penalty, on the last day of the current Interest Period or
convert the same to Base Rate Loans in the case of Eurodollar Loans on the
last day of the then current Interest Period for such Eurodollar Loan.
(b) Reserve Requirements. In the event of any change in any
--------------------
applicable law, treaty or regulation or in the interpretation or
administration thereof, or in the event any central bank or other fiscal
monetary or other authority having jurisdiction over any Bank or the loans
contemplated by this Agreement shall impose, modify or deem applicable any
reserve requirement of the Board of Governors of the Federal Reserve System
on any Eurodollar Loan or loans, or any other reserve, special deposit, or
some requirements against assets to, deposits with or for the account of,
or credit extended by, the Banks or shall impose on any Bank or the London
interbank market, as the case may be, any other condition affecting this
Agreement or the Eurodollar Loans and the result of any of the foregoing is
to increase the cost to any Bank in making or maintaining its Eurodollar
Loans or to reduce any amount (or the effective return on any amount)
received by any Bank hereunder, then Borrowers shall pay to the Banks upon
demand of any Bank as additional interest on the Notes evidencing the
Eurodollar Loans such additional amount or amounts as will reimburse the
Banks for such additional cost or such reduction. The Banks shall give
notice to Borrowers upon becoming aware of any such change or imposition
which may result in any such increase or reduction. A certificate of any
Bank setting forth the basis for the determination of such amount necessary
to compensate Banks as aforesaid
-22-
shall be delivered to Borrowers and shall be conclusive as to such
determination and such amount, absent error.
(c) Taxes. Both principal and interest on the Notes evidencing the
-----
Eurodollar Loans are payable without withholding or deduction for or on
account of any taxes. If any taxes are levied or imposed on or with
respect to the Notes evidencing the Eurodollar Loans or on any payment on
the Notes evidencing the Eurodollar Loans made to any Bank, then, and in
any such event, Borrowers shall pay to the Banks upon demand of any Bank
such additional amounts as may be necessary so that every net payment of
principal and interest on the Notes evidencing the Eurodollar Loans, after
withholding or deduction for or on account of any such taxes, will not be
less than any amount provided for herein. In addition, if at any time when
the Eurodollar Loans are outstanding any laws enacted or promulgated, or
any court of law or governmental agency interprets or administers any law,
which, in any such case, materially changes the basis of taxation of
payments to any Bank of principal of or interest on the Notes evidencing
the Eurodollar Loans by reason of subjecting such payments to double
taxation or otherwise (except through an increase in the rate of tax on the
overall net income of such Bank or Banks) then Borrowers will pay the
amount of loss to the extent that such loss is caused by such a change.
The Banks shall give notice to Borrowers upon becoming aware of the amount
of any loss incurred by any Bank through enactment or promulgation of any
such law which materially changes the basis of taxation of payments to one
or more of the Banks. The Banks shall also give notice on becoming aware of
any such enactment or promulgation which may result in such payments
becoming subject to double taxation or otherwise. A certificate of any Bank
setting forth the basis for the determination of such loss and the
computation of such amounts shall be delivered to Borrowers and shall be
conclusive of such determination and such amount, absent error.
(d) 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 the Banks to maintain or fund its Eurodollar Loans
hereunder, then the Banks shall promptly notify Borrowers in writing and
Borrowers shall either repay the outstanding Eurodollar 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
Eurodollar Loans, immediately), or Borrowers may convert such Eurodollar
Loans at such appropriate time to Base Rate Loans.
(e) Option to Fund. The Banks shall each have the option if the
--------------
Borrowers elect a Eurodollar Loan, to purchase one or more deposits in
order to fund or maintain its funding of the principal balance of its Note
to which such Eurodollar Loan is applicable during the Interest Period in
question; it being understood that the provisions of this Agreement
relating to such funding are included only for the purpose of determining
the rate of interest
-23-
to be paid under such Eurodollar Loan and any amounts owing hereunder and
under the Notes. Any Bank shall be entitled to fund and maintain its
funding of all or any part of that portion of the principal balance of the
Notes in any manner it sees fit, but all such determinations hereunder
shall be made as if such Bank have actually funded and maintained that
portion of the principal balance of the Notes to which a Eurodollar Loan is
applicable during the applicable Interest Period through the purchase of
deposits in an amount equal to the principal balance of the Notes to which
such Eurodollar Loan is applicable and having a maturity corresponding to
such Interest Period. Any Bank may fund the outstanding principal balance
of the Notes which is to be subject to any Eurodollar Loan from any branch
or office of such Bank as any Bank may designate from time to time.
(f) Indemnity. Borrowers shall indemnify and hold harmless the Banks
---------
against all reasonable and necessary out-of-pocket costs and expenses which
the Banks may sustain (i) as a consequence of any default by Borrowers
under this Agreement, or (ii) as a result of the making of any loan or
loans as a Eurodollar Loan under this Agreement.
(g) Payments Not at End of Interest Period. If the Borrowers make any
--------------------------------------
payment of principal with respect to any Eurodollar Loan on any day other
than the last day of the Interest Period applicable to such Eurodollar
Loan, then Borrowers shall reimburse the Banks on demand for any loss, cost
or expense incurred by the Banks as a result of the timing of such payment
or in redepositing such principal amount, including the sum of (i) the cost
of funds to the Banks in respect of such principal amount so paid, for the
remainder of the Interest Period applicable to such sum, reduced, if any
Bank is able to redeposit such principal amount so paid for the balance of
the Interest Period, by the interest earned by such Bank as a result of so
redepositing such principal amount, plus (ii) any expense or penalty
incurred by the Bank in redepositing such principal amount. A certificate
of any Bank setting forth the basis for the determination of the amount
owed by Borrowers pursuant to this Section 5(g) shall be delivered to the
Borrowers and shall be conclusive in the absence of manifest error.
6. COLLATERAL SECURITIES. 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 a first and prior Lien on certain
of its Oil and Gas Properties, and certain related equipment, oil and gas
inventory and proceeds of the foregoing, and shall contemporaneously with or
prior to the execution of this Agreement and the Notes, grant and assign to
Agent for the ratable benefit of the Banks a first and prior security interest
and Lien on certain of their Oil and Gas Properties, general partnership
interest in the Sycamore Gas System and stock in Sycamore Pipeline, Inc. being
acquired as of the Effective Date. The Liens held by Bank One on the Oil and
Gas Properties shall be assigned, as of the Effective Date, to the Agent for
-24-
the ratable benefit of the Banks. The Oil and Gas Properties heretofore and
herewith mortgaged to the Agent shall represent not less than 90% of the
Engineered Value (as hereinafter defined) of Borrower's Oil and Gas Properties
as of the Effective Date. All Oil and Gas Properties and other collateral in
which Borrowers have heretofore granted to Bank One, or herewith granted or
hereafter grants to Agent for the ratable benefit of the Banks a first and prior
Lien (to the satisfaction of the Agent) in accordance with this Section 6, as
such properties and interests are from time to time constituted, are hereinafter
collectively called the "Collateral."
The 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, 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 90% 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 Oil and
Gas Properties or any part thereof.
7. BORROWING BASE.
(a) Initial Borrowing Base. During the period from the date hereof to
----------------------
the first Determination Date (as hereinafter defined), the Borrowing Base
shall be $32,000,000.
(b) Subsequent Determinations of Borrowing Base. Subsequent
-------------------------------------------
determinations of the Borrowing Base shall be made by the Banks on June 1,
1997, and thereafter, at least semi-annually on April 1 and October 1 of
each year beginning October 1, 1997 or as Unscheduled Redeterminations. In
connection with, and as of, each determination of the Borrowing Base, the
Banks shall also redetermine the Monthly Commitment Reduction. The
Borrowers shall furnish to the Banks as soon as possible but in any event
no later than March 1 of each year, beginning March 1, 1997, with an
Engineering Report in form and substance satisfactory to the Agent prepared
by an independent petroleum engineering 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 September 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
-25-
desire to have an Unscheduled Redetermination performed, an engineering
report in form and substance satisfactory to Agent prepared by Borrower's
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 June 1, 1997, and thereafter
on April 1 and October 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 Monthly Commitment Reduction, 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 the date specified in this Section 7(b),
unless such failure is of no fault of the Borrowers, the Banks may
nonetheless designate the Borrowing Base and Monthly Commitment Reduction
at any amounts which the Banks determine in their discretion 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 collateral value which such Bank in its discretion (using
such methodology, assumptions and discounts rates as such Bank customarily
uses in assigning collateral value to oil and gas properties, oil and gas
gathering systems, gas processing and plant operations) assigns to such Oil
and Gas Properties of the Borrowers at the time in question and based upon
such other credit factors consistently applied (including, without
limitation, the assets, liabilities, cash flow, business, properties,
prospects, management and ownership of the Borrowers and their affiliates)
as such 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. If the Banks cannot otherwise agree on the Borrowing
Base or the Monthly Commitment Reduction, each Bank shall submit in writing
to the Agent its proposed Borrowing Base and Monthly Commitment Reduction
and the Borrowing Base and Monthly Commitment Reduction shall be set on the
basis of the lowest Borrowing Base and the highest Monthly Commitment
Reduction proposed by any Bank. Notwithstanding any other provision herein
to the contrary, the amount of the Borrowing Base may not be increased at
any time without the approval of all Banks. If at
-26-
any time any of the Oil and Gas Properties are sold, the Borrowing Base
then in effect shall automatically be reduced by a sum equal to the amount
of prepayment required to be made pursuant to Section 12(r) hereof. The
Borrowing Base shall be additionally reduced from time to time pursuant to
the provisions of Sections 2(e) and 2(f) hereof. It is expressly understood
that the Banks have no obligation to designate the Borrowing Base or the
Monthly Commitment Reduction at any particular amounts, except in the
exercise of their discretion, whether in relation to the Revolving
Commitment or otherwise. Provided, however, that the Banks shall not have
the obligation to designate a Borrowing Base in an amount in excess of its
legal or internal lending limits.
8. FEES.
(a) Unused Commitment Fee. The Borrowers shall pay to Agent for the
---------------------
ratable benefit of the Banks an unused commitment fee (the "Unused
Commitment Fee") equivalent to one-half of one percent ( 1/2%) per annum on
the daily average of the unadvanced amount of the Revolving Commitment.
The Unused Commitment Fee shall be payable in arrears on the last Business
Day of each calendar quarter beginning March 31, 1997 with the final fee
payment due on the Maturity Date for any period then ending for which the
Unused Commitment Fee shall not have been theretofore paid. In the event
the Revolving Commitment terminates on any date prior to the end of any
such monthly period, the Borrowers shall pay to the Agent for the ratable
benefit of the Banks, on the date of such termination, the total Unused
Commitment Fee due for the period in which such termination occurs.
(b) Borrowing Base Increase Fee. From and after the Effective Date,
---------------------------
Borrowers shall pay to the Agent for the ratable benefit of the Banks a
Borrowing Base increase fee (the "Borrowing Base Increase Fee") equal to
one-fourth of one percent (1/4%) of the amount of any increase in the
Borrowing Base from the amount of the Borrowing Base set as of the
preceding Determination Date (excluding in each case the amounts of the
Special Advance Facility and the Special Drilling Facility), said fee to be
payable upon notice to Borrowers of such increase.
(c) The Letter of Credit Fee. Borrowers shall pay to the Agent the
------------------------
Letter of Credit fees required above in Section 2(d).
(d) Agency Fees. The Borrowers shall pay to the Agent certain fees
-----------
for acting as Agent hereunder in amounts to be negotiated between the
Borrowers and the Agent.
(e) Special Advance Fee. Borrowers shall pay to Agent for the ratable
-------------------
benefit of the Banks, a Special Advance Fee (the "Special Advance Fee")
equal to one percent (1%) per annum of the amount of any Special Advance
Facility, such amount to be due upon
-27-
notice to Borrowers as provided in Section 2(h) hereof. No Special Advance
Fee shall be due at the Effective Date.
(f) Special Drilling Facility Fee. Borrowers shall pay to Agent for
-----------------------------
the ratable benefit of the Banks, a Special Drilling Facility Fee (the
"Special Drilling Facility Fee") equal to 1% per annum of the amount of any
Special Drilling Facility, such amount to be due upon notice to Borrowers
as provided in Section 2(i) hereof. No Special Drilling Facility Fee shall
be due at the Effective Date.
9. PREPAYMENTS.
(a) Voluntary Prepayments. 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 one (1) Business
Day's notice to Agent and shall be in a minimum amount of $100,000 or any
larger multiple thereof or the unpaid balance on the Notes, whichever is
less, plus accrued interest thereon to the date of prepayment.
(b) Mandatory Prepayment For Borrowing Base Deficiency. In the event
--------------------------------------------------
the Total Outstandings ever exceed the Borrowing Base as determined by
Banks pursuant to Section 7(b) hereof, the Borrowers shall, within thirty
(30) days after notification from the Agent, either (A) by instruments
reasonably satisfactory in form and substance to the Bank, provide the
Agent with collateral with value and quality in amounts satisfactory to the
Majority 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 Notes in an amount at least equal
to such excess plus accrued interest thereon 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:
(a) Creation and Existence. Each Borrower is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it was formed and is duly qualified in all
jurisdictions wherein failure to qualify may result in a Material Adverse
Effect. Each Borrower has all power and authority to own its properties
and assets and to transact the business in which it is engaged.
(b) Power and Authority. Each Borrower is duly authorized and
-------------------
empowered to create and issue the Notes; and each Borrower is duly
authorized and empowered to execute, deliver and perform the Loan
Documents, including this Agreement; and all corporation action on each
Borrower's part requisite for the due creation and issuance of the
-28-
Notes and for the due execution, delivery and performance of the Loan
Documents, including this Agreement, has been duly and effectively taken.
(c) Binding Obligations. This Agreement does, and the Notes and other
-------------------
Loan Documents upon their creation, issuance, execution and delivery will,
constitute valid and binding obligations of each Borrower, enforceable in
accordance with its respective terms (except that enforcement may be
subject to any applicable bankruptcy, insolvency, or similar debtor relief
laws now or hereafter in effect and relating to or affecting the
enforcement of creditors rights generally).
(d) No Legal Bar or Resultant Lien. The Notes and the Loan Documents,
------------------------------
including this Agreement, do not and will not, to the best of each of the
Borrower's knowledge violate any provisions of any contract, agreement,
law, regulation, order, injunction, judgment, decree or writ to which each
Borrower is subject, or result in the creation or imposition of any lien or
other encumbrance upon any assets or properties of any Borrower, other than
those contemplated by this Agreement.
(e) No Consent. The execution, delivery and performance by each
----------
Borrower of the Notes and the 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 (all of which
consents have been obtained by the Borrowers).
(f) Financial Condition. The audited Financial Statements of Energy
-------------------
dated December 31, 1995 and the unaudited consolidated and consolidating
Financial Statements of Energy dated September 30, 1996, 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 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 "3" attached hereto.
(g) Liabilities. No Borrower has any material (individually or in the
-----------
aggregate) liability, direct or contingent, except as disclosed to the
Banks in the Financial Statements and on Schedule "4" 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 any Borrower which is reasonably expected
to have a Material Adverse Effect.
-29-
(h) Litigation. Except as described in the Financial Statements, or
----------
as otherwise disclosed to the Banks in Schedule "5" 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
any Borrower threatened against or affecting any Borrower which involves
the possibility of any judgment or liability not fully covered by
insurance, and which is reasonably expected to have a Material Adverse
Effect.
(i) Taxes; Governmental Charges. Each Borrower has filed all tax
---------------------------
returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon them or their
assets, properties or income which are due and payable, including interest
and penalties, the failure of which to pay could reasonably be expected to
have a Material Adverse Effect, except such as are being contested in good
faith by appropriate proceedings and for which adequate reserves for the
payment thereof as required by GAAP has been provided and levy and
execution thereon have been stayed and continue to be stayed.
(j) Titles, Etc. Each Borrower has good and defensible title to all
------------
of its respective assets, including without limitation, the Oil and Gas
Properties, free and clear of all liens or other encumbrances except
Permitted Liens.
(k) Defaults. No 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 any Borrowers is a party in any respect that would
be reasonably expected to have a Material Adverse Effect. No Event of
Default hereunder has occurred and is continuing.
(l) Casualties; Taking of Properties. Since the dates of the latest
--------------------------------
Financial Statements of the Borrowers delivered to Banks, neither the
business nor the assets or properties of any Borrower have been affected
(to the extent it is reasonably likely to cause a Material Adverse Effect),
as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or taking
of property or cancellation of contracts, permits or concessions by any
domestic or foreign government or any agency thereof, riot, activities of
armed forces or acts of God or of any public enemy.
(m) Use of Proceeds; Margin Stock. The proceeds of the Revolving
-----------------------------
Commitment will be used by the Borrowers for the purposes of (i)
acquisition and development of oil and gas properties, (ii) to refinance
existing debt, (iii) for letters of credit, and (iv) for general corporate
purposes. The proceeds of the Bridge Loan
-30-
commitment will be used to fund and close the Acquisitions. Borrowers are
not engaged principally or as one of their important activities in the
business of extending credit for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 221), or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulation U.
No Borrower nor any person or entity acting on behalf of any Borrower
has taken or will take any action which might cause the loans hereunder or
any of the Loan Documents, including this Agreement, to violate Regulation
U or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.
(n) Location of Business and Offices. The principal place of
--------------------------------
business and chief executive offices of the Borrowers are located at the
address stated in Section 16 hereof.
(o) Compliance with the Law. To the best of each Borrower's
-----------------------
knowledge, no Borrower:
(i) is in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which any Borrower,
or any of its assets or properties are subject; or
(ii) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of its
assets or properties or the conduct of its business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(p) No Material Misstatements. No information, exhibit or report
-------------------------
furnished by any Borrower to the Banks in connection with the negotiation
of this Agreement contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statement contained
therein not materially misleading.
(q) Not A Utility. No Borrower is an entity engaged in the State of
-------------
Texas in the (i) generation, transmission, or distribution and sale of
electric power; (ii) transportation, distribution and sale through a local
distribution system of natural or other gas for domestic, commercial,
industrial, or other use; (iii) provision of telephone or telegraph service
to
-31-
others; (iv) production, transmission, or distribution and sale of steam or
water; (v) operation of a railroad; or (vii) provision of sewer service to
others.
(r) ERISA. Each Borrower is in compliance in all material respects
-----
with the applicable provisions of ERISA, and no "reportable event", as such
term is defined in Section 403 of ERISA, has occurred with respect to any
Plan of any Borrowers.
(s) Public Utility Holding Company Act. No 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.
(t) Subsidiaries. All of the Borrowers' Subsidiaries are listed on
------------
Schedule "6" hereto.
(u) Environmental Matters. Except as disclosed on Schedule "7", no
---------------------
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 any Borrowers are or may be
liable which may reasonably be expected to result in a Material Adverse
Effect.
(v) Liens. Except (i) as disclosed on Schedule "1" hereto and (ii)
-----
for Permitted Liens, the assets and properties of the Borrowers are free
and clear of all liens and encumbrances.
11. CONDITIONS OF LENDING.
(a) The effectiveness of this Agreement, and the obligation to make
the initial Advance under the Revolving Commitment shall be subject to
satisfaction of the following conditions precedent:
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(i) Execution and Delivery. The Borrowers shall each have
----------------------
executed and delivered the Agreement and other required documents, all
in form and substance satisfactory to the Agent;
(ii) Legal Opinion. The Agent shall have received from
-------------
Borrowers' legal counsel a favorable legal opinion in form and
substance satisfactory to it (i) as to the matters set forth in
Subsections 10(a), (b), (c), (d), (e) and (h) hereof and (ii) as to
such other matters as Agent or its counsel may reasonably request,
including, but not limited to, matters relating to the stock of
Sycamore Pipeline, Inc. being acquired by Gas;
(iii) Corporate Resolutions. The Agent shall have received
---------------------
appropriate certified corporate resolutions of each Borrower;
(iv) Good Standing. The Agent shall have received evidence of
-------------
existence and good standing for each Borrower;
(v) Incumbency. The Agent shall have received a signed
----------
certificate of each Borrower, certifying the names of the officers of
such Borrower authorized to sign loan documents on behalf of such
Borrower, together with the true signatures of each such officer. The
Agent may conclusively rely on such certificate until the Bank
receives a further certificate of any Borrower canceling or amending
the prior certificate and submitting signatures of the officers named
in such further certificate;
(vi) Articles of Incorporation and Bylaws. The Agent shall
------------------------------------
have received copies of the Articles of Incorporation of each Borrower
and all amendments thereto, certified by the Secretary of State of the
State of its incorporation, and a copy of the bylaws of each Borrower
and all amendments thereto, certified by each Borrower as being true,
correct and complete;
(vii) Closing of the Norse, Xxxxxxx and Horizon Acquisitions.
------------------------------------------------------
The Agent shall have received satisfactory evidence of the closing of
the transactions described in the Sale and Purchase Agreements between
Horizon Gas Partners, L.P., HSRTW, Inc. and Energy dated January 22,
1997, between X. Xxxxxxx and Energy dated December 13, 1996 and Norse
Exploration, Inc., Sycamore Pipeline, Inc. and Energy dated December
11, 1996 (the "Acquisitions");
(viii) Documentation for the Convertible Promissory Note
-------------------------------------------------
Transactions. Agent shall have received copies of the documentation
------------
relating to the (i) promissory note dated February 18, 1997 in the
face amount of $1,800,000 executed by Gothic and payable to the order
of Loire Sextant, S.A. London, England (the "Sextant
-33-
Note"), (ii) the promissory note dated February 14, 1997, in the face
amount of $200,000 executed by Gothic and payable to the order of
Clarion Capital Corporation, Cleveland, Ohio (the "Clarion Note") and
(iii) the promissory note dated February 18, 1997, in the face amount
of $2,500,000 executed by Gothic and payable to the order of Loire
Sextant, S.A. of London, England (the "Second Sextant Note") (the
Sextant Note, the Clarion Note and the Second Sextant Note are
hereinafter collectively referred to as the "Convertible Promissory
Notes") executed by all parties thereto, said documents to be in form
and substance satisfactory to Agent;
(ix) Closing of Convertible Promissory Notes and Convertible
-------------------------------------------------------
Preferred Stock Transactions. Agent shall have received satisfactory
----------------------------
evidence of the closing and funding of the Convertible Promissory
Notes, said closings have occurred prior to the Effective Date;
(x) Title. The Agent shall have received satisfactory
-----
evidence to the state of the title to at least 90% of the Engineered
Value of the Oil and Gas Properties to be mortgaged to the Banks at
the Effective Date;
(xi) Payment of Fees. The Agent shall have received payment in
---------------
full of all fees due at the Effective Date.
(xii) 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);
(xiii) 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;
(xiv) Other Documents. Agent shall have received such other
---------------
instruments and documents incidental and appropriate to the
transaction provided for herein as Bank or its counsel may reasonably
request, and all such documents shall be in form and substance
reasonably satisfactory to the Agent; and
(xv) 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.
-34-
(b) The obligation of the Banks to make any Advance on the Revolving
Commitment (including the initial Advance) shall be subject to the
following additional conditions precedent that, at the date of making each
such Advance and after giving effect thereto:
(i) Representation and Warranties. The representations and
-----------------------------
warranties of Borrowers under this Agreement are true and correct in
all material respects as of such date, as if then made (except to the
extent that such representations and warranties related solely to an
earlier date);
(ii) No Event of Default. No Event of Default shall have
-------------------
occurred and be continuing nor shall any event have occurred or failed
to occur which, with the passage of time or service of notice, or
both, would constitute an Event of Default;
(iii) Other Documents. Agent shall have received such other
---------------
instruments and documents incidental and appropriate to the
transaction provided for herein as Agent or its counsel may reasonably
request, and all such documents shall be in form and substance
reasonably satisfactory to the Agent; and
(iv) Legal Matters Satisfactory. All legal matters incident to
--------------------------
the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to special counsel for Agent retained at the
expense of the Borrowers.
12. AFFIRMATIVE COVENANTS. A deviation from the provisions of this
Section 12 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Bank. Without the prior written consent
of Majority Banks, the Borrowers will at all times comply with the covenants
contained in this Section 12 from the date hereof and for so long as the
Revolving Commitment is in existence or any part of the Revolving Loan is
outstanding.
(a) Financial Statements and Reports. Each Borrower shall promptly
--------------------------------
furnish to the Agent from time to time upon request such information
regarding the business and affairs and financial condition of Borrowers, as
the Agent may reasonably request, and will furnish to the Agent:
(i) Annual Audited Financial Statements. As soon as
-----------------------------------
available, and in any event within ninety (90) days after the close of
each fiscal year beginning with the fiscal year ended December 31,
1996, the annual audited consolidated and consolidating 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;
-35-
(ii) Quarterly Financial Statements. As soon as available, and
------------------------------
in any event within forty-five (45) days after the end of each
calendar quarter of each year (except the last calendar quarter of any
fiscal year), beginning with the fiscal quarter ended March 31, 1997,
the quarterly unaudited consolidated and consolidating Financial
Statements of Borrowers prepared in accordance with GAAP;
(iii) Report on Properties. As soon as available and in any
--------------------
event on or before March 1 and September 1 of each calendar year, and
at such other times as any Bank, in accordance with Section 7 hereof,
may request, the engineering reports required to be furnished to the
Agent under such Section 7 on the Oil and Gas Properties;
(iv) Monthly Production Reports. Within 30 days after the end
--------------------------
of each month, a monthly report, in form and substance satisfactory to
the Agent, indicating the next preceding month's sales volume, sales
revenues, production taxes, operating expense and net operating income
from the Oil and Gas Properties, with detailed calculations and
worksheets, all in form and substance satisfactory to Agent;
(v) SEC Reports. As soon as available, and in any event
-----------
within five (5) days of filing, copies of all filings by Energy with
the Securities and Exchange Commission;
(vi) Additional Information. Promptly upon request of the
----------------------
Agent from time to time any additional financial information or other
information that the Agent may reasonably request.
All such reports, information, balance sheets and Financial Statements
referred to in Subsection 12(a) above shall be in such detail as the Agent
may reasonably request and shall be prepared in a manner consistent with
the Financial Statements.
(b) Certificates of Compliance. Concurrently with the furnishing of
--------------------------
the annual audited Financial Statements pursuant to Subsection 12(a)(i)
hereof and the quarterly unaudited Financial Statements pursuant to
Subsection 12(a)(ii) hereof for the months coinciding with the end of each
calendar quarter, Borrowers will furnish or cause to be furnished to the
Agent a certificate in the form of Exhibit "C" attached hereto, signed by
the President or Chief Financial Officer of each Borrower, (i) stating that
each Borrower has fulfilled in all material respects its obligations under
the Notes and the Loan Documents, including this Agreement, and that all
representations and warranties made herein and therein continue (except to
the extent they relate solely to an earlier date) to be true and correct in
all material respects (or specifying the nature of any change), or if an
Event of Default has occurred, specifying the Event of Default and the
nature and status thereof; (ii)
-36-
to the extent requested from time to time by the Agent, specifically
affirming compliance of each Borrower in all material respects with any of
its representations (except to the extent they relate solely to an earlier
date) or obligations under said instruments; (iii) setting forth the
computation, in reasonable detail as of the end of each period covered by
such certificate, of compliance with Sections 13(b), (c), (d) and (e); and
(iv) containing or accompanied by such financial or other details,
information and material as the Agent may reasonably request to evidence
such compliance.
(c) Accountants' Certificate. Concurrently with the furnishing of
------------------------
the annual audited Financial Statement pursuant to Section 12(a)(i) hereof,
Borrowers will furnish a statement from the firm of independent public
accountants which prepared such Financial Statement to the effect that
nothing has come to their attention to cause them to believe that there
existed on the date of such statements any Event of Default and
specifically calculating Borrowers' compliance with Sections 13(b), (c),
(d) and (e) of this Agreement.
(d) 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 any
Borrowers and which could reasonably be expected to result in a Material
Adverse Effect; provided, however, that no 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 such Borrower
shall have set up adequate reserves therefor, if required, under GAAP.
(e) Compliance with Laws. Each Borrower 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.
(f) Further Assurances. The Borrowers will cure promptly any defects
------------------
in the creation and issuance of the Note 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 Note or
more fully to state the obligations set out herein.
-37-
(g) 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.
(h) 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 each Borrower 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. The Borrowers shall at all
times maintain adequate insurance with respect to all of their assets,
including but not limited to, the Oil and Gas Properties or any collateral
against its liability for injury to persons or property, which insurance
shall be by financially sound and reputable insurers and shall without
limitation provide the following coverages: comprehensive general liability
(including coverage for damage to underground resources and equipment,
damage caused by blowouts or cratering, damage caused by explosion, damage
to underground minerals or resources caused by saline substances, broad
form property damage coverage, broad form coverage for contractually
assumed liabilities and broad form coverage for acts of independent
contractors), worker's compobile liability. The Borrowers shall at all
times maintain cost of control of well insurance with respect to the Oil
and Gas Properties which shall insure the Borrowers against seepage and
pollution expense; redrilling expense; and cost of control of well; fires,
blowouts, etc., if deemed economical in the reasonable discretion of the
Borrowers. 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.
(i) Accounts and Records. Each Borrower 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 Borrower's auditors.
-38-
(j) Right of Inspection. Each Borrower will permit any officer,
-------------------
employee or agent of the Banks to examine such Borrower's books, records
and accounts, and take copies and extracts therefrom, all at such
reasonable times during normal business hours and as often as the Banks may
reasonably request. The Banks will keep all such information confidential
and will not without prior written consent disclose or reveal the
information or any part thereof to any person other than the Banks'
officers, employees, legal counsel, 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 by law or 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.
(k) Notice of Certain Events. The Borrowers shall promptly notify
------------------------
the Agent if any Borrower learns of the occurrence of (i) any event which
constitutes an Event of Default together with a detailed statement by such
Borrower of the steps being taken to cure the Event of Default; or (ii) any
legal, judicial or regulatory proceedings affecting any Borrower, or any of
the assets or properties of any Borrower which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect; or (iii)
any dispute between any Borrower 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; or (iv) any other matter
which in Bank's reasonable opinion could have a Material Adverse Effect.
(l) 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
such Borrower is taking or proposes to take with respect thereto, and, when
known, any action taken by the Internal Revenue Service with respect
thereto.
(m) Environmental Reports and Notices. The Borrowers will deliver to
--------------------------------
the Agent (i) promptly upon its becoming available, one copy of each report
sent by any Borrower to any court, governmental agency or instrumentality
pursuant to any Environmental Law, (ii) notice, in writing, promptly upon
any Borrower's receipt of notice or otherwise learning of any claim,
demand, action, event, condition, report or investigation indicating any
potential or actual liability arising in connection with (x) the non-
compliance with or violation of the requirements of any Environmental Law
which reasonably could be expected to have a Material Adverse Effect; (y)
the release or threatened release of any
-39-
toxic or hazardous waste into the environment which reasonably could be
expected to have a Material Adverse Effect or which release any 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 any Borrower, and such Borrower shall immediately
deliver a copy of any such notice to Agent.
(n) Compliance and Maintenance. The Borrowers will (i) observe and
--------------------------
comply in all material respects with all Environmental Laws; (ii) except as
provided in Subsections 12(o) and 12(p) below, maintain the Oil and Gas
Properties and other assets and properties in good and workable condition
at all times and make all repairs, replacements, additions, betterments and
improvements to the Oil and Gas Properties and other assets and properties
as are needed and proper so that the business carried on in connection
therewith may be conducted properly and efficiently at all times in the
opinion of the Borrowers exercised in good faith; (iii) take or cause to be
taken whatever actions are necessary or desirable to prevent an event or
condition of default by any Borrower 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.
(o) Operation of Properties. Except as provided in Subsection 12(p)
-----------------------
and(q) below, the Borrowers will operate, or use reasonable efforts to
cause to be operated, all Oil and Gas Properties in a careful and efficient
manner in accordance with the practice of the industry and in compliance in
all material respects with all applicable laws, rules, and regulations, and
in compliance in all material respects with all applicable proration and
conservation laws of the jurisdiction in which the properties are situated,
and all applicable laws, rules, and regulations, of every other agency and
authority from time to time constituted to regulate the development and
operation of the properties and the production and sale of hydrocarbons and
other minerals therefrom; provided, however, that the Borrowers shall have
the right to contest in good faith by appropriate proceedings, the
applicability or lawfulness of any such law, rule or regulation and pending
such contest may defer compliance therewith, as long as such deferment
shall not subject the properties or any part thereof to foreclosure or
loss.
(p) 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 any
Borrower (or required to keep unimpaired in all
-40-
material respects the rights of any Borrower in Oil and Gas Properties)
accruing under, and perform or cause to be performed in all material
respects each and every act, matter, or thing required of any Borrower by
each and all of the assignments, deeds, leases, subleases, contracts, and
agreements in any way relating to any Borrower or any of the Oil and Gas
Properties and do all other things necessary of any Borrower to keep
unimpaired in all material respects the rights of any Borrower thereunder
and to prevent the forfeiture thereof or default thereunder; provided,
however, that nothing in this Agreement shall be deemed to require any
Borrower 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 any Borrower 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 any Borrower exercised in good faith, it is not in the
best interest of the any Borrower to perpetuate the same.
(q) Certain Additional Assurances Regarding Maintenance and
-------------------------------------------------------
Operations of Properties. With respect to those Oil and Gas Properties
------------------------
which are being operated by operators other than the Borrowers, the
Borrowers shall not be obligated to perform any undertakings contemplated
by the covenants and agreement contained in Subsections 12(o) or 12(p)
hereof which are performable only by such operators and are beyond the
control of the Borrowers; however, the Borrowers agree to promptly take all
reasonable actions available under any operating agreements or otherwise to
bring about the performance of any such material undertakings required to
be performed thereunder.
(r) Sale of Certain Assets/Prepayment of Proceeds. The Borrowers
---------------------------------------------
will immediately pay over to the Agent for the ratable benefit of the Banks
as a prepayment of principal, an amount equal to 100% of the Release Price
received by any Borrower from the sale of the Oil and Gas Properties, which
sale has been approved in advance by the Majority Banks. The term "Release
Price" as used herein shall mean a price determined by the Majority Banks
in their discretion based upon the loan collateral value which Bank in its
discretion (using such methodology, assumptions and discounts rates as such
Banks customarily use in assigning collateral value to oil and gas
properties, oil and gas gathering systems, gas processing and plant
operations) assigns to such Oil and Gas Properties at the time in question.
(s) Title Matters. Within forty-five (45) days after the date hereof
-------------
with respect to the Oil and Gas Properties listed on Schedule "8" hereto,
furnish Agent with title opinions and/or title information reasonably
satisfactory to Agent showing good and defensible title of Borrowers 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 showing
-41-
good and defensible title of Borrowers to such Oil and Gas Properties
subject only to Permitted Liens.
(t) Curative Matters. Within sixty (60) days after the date hereof
----------------
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.
(u) Change of Principal Place of Business. Each Borrower 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
16 hereof.
(v) Cash Collateral Accounts. Borrowers shall establish and maintain
------------------------
with Agent one or more operating accounts for each Borrower (the "Operating
Accounts") and lockbox accounts for each Borrower ("Lockbox 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 accounts shall be
maintained with the Agent until all amounts due hereunder and under the
Notes have been paid in full. Borrowers shall within ten (10) days of the
Effective Date instruct and cause all monetary proceeds of production from
the Oil and Gas Properties to be remitted to their respective Lockbox
Accounts. Such proceeds of production shall not be redirected without the
prior written consent of the Agent until such time as all indebtedness due
Banks by Borrowers has been paid in full. If no Event of Default (and no
event which, with notice or lapse of time or both, would become an Event of
Default) has occurred and is continuing, the full balance of the Lockbox
Accounts each day will be deposited into the Operating Accounts. The
Borrowers hereby grant a security interest to Banks in and to the Lockbox
Accounts and the Operating Accounts (collectively, the "Cash Collateral
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 Cash Collateral Accounts for the ratable benefit of the
Banks.
(w) Hedging. As soon as practicable, but in any event within
-------
fourteen (14) days after the Effective Date, Borrowers will arrange for
xxxxxx covering not less than 75% of Borrowers' proved developed production
of oil and natural gas for a period of not less than
-42-
twelve (12) months with minimum floor prices to be mutually agreed upon by
Borrowers and Agent for natural gas and for oil, with counterparties
acceptable to Banks. Contracts made in compliance with the foregoing shall
be deemed to be "Pre-Approved Contracts" (as such term is defined in
Section 13(m) hereof).
13. NEGATIVE COVENANTS. A deviation from the provisions of this Section
13 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Banks. Without the prior
written consent of Majority Banks, the Borrowers will at all times comply with
the covenants contained in this Section 13 from the date hereof and for so long
as the Revolving Commitment is in existence or any part of the Revolving Loan is
outstanding.
(a) Negative Pledge. Borrowers shall not without the prior written
---------------
consent of the Banks:
(i) create, incur, assume or permit to exist any Lien,
security interest or other encumbrance on any of its assets or
properties except Permitted Liens; or
(ii) sell, lease, transfer or otherwise dispose of, in any
fiscal year, any of its assets, except for sales, leases, transfers or
other disposition made in the ordinary course of the Borrowers' oil
and gas businesses.
(b) Current Ratio. The Borrowers will not allow their ratio of
-------------
Current Assets to Current Liabilities to be less than 1.0 to 1.0 as of the
end of any fiscal quarter.
(c) Debt Service Coverage Ratio. The Borrowers will not allow their
---------------------------
ratio of Net Cash Flow for the fiscal quarter being measured to the Monthly
Commitment Reductions required for such fiscal quarter to be less than 1.10
to 1.0, as of the end of any fiscal quarter.
(d) Minimum Tangible Net Worth. The Borrowers' Tangible Net Worth
--------------------------
will not, as of the end of any fiscal quarter, ever be less than
$10,250,000 plus fifty percent (50%) of Net Income, if positive, before
extraordinary gains but after extraordinary losses, for the period
commencing on January 30, 1996, and ending at the end of the fiscal quarter
being tested, plus seventy-five (75%) of the proceeds from the issuance of
common or preferred stock during such quarter, net of reasonable and
customary costs, expenses and commissions relating to such issue.
(e) General and Administrative Expenses. The Borrowers' consolidated
-----------------------------------
General and Administrative Expenses will not be more than (i) 25% of
Consolidated Net Revenues for the fiscal quarter ended March 31, 1997, and
(ii) thereafter, as of the end of
-43-
any fiscal quarter, ever be more than 20% of Consolidated Net Revenues for
the period being measured.
(f) Consolidations and Mergers. No Borrower will consolidate or
--------------------------
merge with or into any other Person, except that any Borrowers 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.
(g) Debts, Guaranties and Other Obligations. No Borrower will incur,
---------------------------------------
create, assume or in any manner become or be liable in respect of any
indebtedness, nor will any 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 "4" hereto; or
(ii) taxes, assessments or other government charges which are
not yet due or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as shall
be required by GAAP shall have been made therefor and levy and
execution thereon have been stayed and continue to be stayed; or
(iii) indebtedness (other than in connection with a loan or
lending transaction) incurred in the ordinary course of business,
including, but not limited to indebtedness for drilling, completing,
leasing and reworking oil and gas xxxxx; or
(iv) indebtedness owed by one Borrower to another Borrower as a
result of intercompany loans or advances; or
(v) guaranties of the Xxxxx Note and the Rainwater Note by
Energy; or
(vi) Convertible Promissory Notes.
(h) Dividends. No Borrowers will declare or pay any dividend,
---------
purchase, redeem or otherwise acquire for value any of its stock now or
hereafter outstanding, return
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any capital to its stockholders, or make any distribution of its assets to
its stockholders as such, except the foregoing shall not apply to (i) cash
dividends paid by Energy on its preferred stock or (ii) cash dividends paid
by one Borrower to another Borrower; provided, however, that immediately
before and after giving effect thereto no (i) default or Event of Default
or (ii) Borrowing Base deficiency pursuant to Section 9(b) hereof, shall
exist.
(i) Loans and Advances. No Borrower shall make or permit to remain
------------------
outstanding any loans or advances to or in any person or entity, except
that the foregoing restriction shall not apply to:
(i) loans or advances to any person, the material details of
which have been set forth in the Financial Statements of the Borrowers
heretofore furnished to Banks; or
(ii) advances made in the ordinary course of such Borrower's
oil and gas business; or
(iii) loans or advances among Borrowers.
(j) Sale or Discount of Receivables. No 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.
(k) Nature of Business. No Borrower will permit any material change
------------------
to be made in the character of its business as carried on at the date
hereof.
(l) Transactions with Affiliates. No Borrower will enter into any
----------------------------
transaction with any Affiliate, except transactions upon terms that are no
less favorable to it than would be obtained in a transaction negotiated at
arm's length with an unrelated third party.
(m) Hedging Transactions. No 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 75% 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, (ii) with a maturity of twelve (12)
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months or less, (iii) with "strike prices" per barrel greater than the
Agent's forecasted price in the most recent engineering evaluation of the
Borrowers' oil and gas properties, adjusted for the difference between the
forecasted price and the Borrowers' actual product price as determined by
Agent, and (iv) with counter-parties to the hedging agreement which are
approved by Agent.
(n) Investments. No 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 Agent or
certificates of deposit with maturities of less than one year, issued
by other commercial banks in the United States having capital and
surplus in excess of $500,000,000 and which have a rating of (A) 50 or
above by Sheshunoff and (B) "B" or above by Xxxx-Xxxxxx; or
(iii) investments in insured money market funds, Eurodollar
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 $500,000,000
and which have a rating of (A) 50 or above by Sheshunoff and (B) "B"
or above by Xxxx-Xxxxxx.
(o) Amendment to Articles of Incorporation or Bylaws. No Borrower
------------------------------------------------
will permit any amendment to, or any alteration of, its Articles of
Incorporation or Bylaws.
(p) Sale of Assets. No Borrower shall sell, transfer or otherwise
--------------
dispose of any of its assets, except for production from oil, gas and
mineral properties and other assets sold in the ordinary course of such
Borrower's business.
(q) Proceeds of Production. No Borrower shall redirect the payment
----------------------
of the proceeds of production from the Oil and Gas Properties to anyone or
any place other than to the Lockbox Account at the Agent.
(r) Amendments to Preferred Stock and Convertible Promissory Notes.
--------------------------------------------------------------
Borrowers shall not (i) amend the Convertible Promissory Notes, or (ii)
issue any additional Preferred Stock after the Effective.
-46-
14. EVENTS OF DEFAULT. Any one or more of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) The Borrowers shall fail to pay when due or declared due the
principal of, and the interest on, the Notes, or any fee or any other
indebtedness of the Borrowers incurred pursuant to this Agreement or any
other Loan Document; or
(b) Any representation or warranty made by any Borrower 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 any Borrower under any Loan Document, including this Agreement,
proves to have been untrue in any material respect, as of the date as of
which the facts therein set forth were stated or certified; or
(c) Default shall be made in the due observance or performance of any
of the covenants or agreements of the Borrowers contained in the Loan
Documents, including this Agreement (excluding covenants contained in
Section 13 of the Agreement for which there is not cure period), and such
default shall continue for more than thirty (30) days; or
(d) Default shall be made in the due observance or performance of the
covenants of Borrowers contained in Section 13 of this Agreement; or
(e) Default shall be made in respect of any obligation for borrowed
money, other than the Notes, for which any Borrower is 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 any Borrower or in
respect of any agreement relating to any such obligations unless such
Borrower is not liable for same (i.e., unless remedies or recourse for
failure to pay such obligations is limited to foreclosure of the collateral
security therefor), and if such default shall continue beyond the
applicable grace period, if any; or
(f) Any Borrower 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
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shall fail generally to pay its debts as they become due, or shall take any
corporate action authorizing the foregoing; or
(g) An involuntary case or other proceeding, shall be commenced
against any Borrower 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 any Borrower under
the federal bankruptcy laws as now or hereinafter in effect; or
(h) A final judgment or order for the payment of money in excess of
$100,000 (or judgments or orders aggregating in excess of $100,000) shall
be rendered against any Borrower and such judgments or orders shall
continue unsatisfied and unstayed for a period of thirty (30) days; or
(i) In the event the aggregate principal amount outstanding under the
Note shall at any time exceed the Borrowing Base established for the Note,
and the Borrowers shall fail to comply with the provisions of Section 9(b)
hereof; or
(j) A Change of Control shall occur; or
(k) A Change of Management shall occur.
Upon occurrence of any Event of Default specified in Subsections 14(f) and
(g) hereof, the entire principal amount due under the Note 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 by
notice to the Borrowers declare the principal of, and all interest then accrued
on, the Note 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
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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.
(a) Appointment and Authorization. Each Bank hereby appoints Agent
-----------------------------
as its nominee and agent, in its name and on its behalf: (i) to act as
nominee for and on behalf of such Bank in and under all Loan Documents;
(ii) to arrange the means whereby the funds of Banks are to be made
available to the Borrowers under the Loan Documents; (iii) to take such
action as may be requested by any Bank under the Loan Documents (when such
Bank is entitled to make such request under the Loan Documents); (iv) to
receive all documents and items to be furnished to Banks under the Loan
Documents; (v) to be the secured party, mortgagee, beneficiary, and similar
party in respect of, and to receive, as the case may be, any collateral for
the benefit of Banks; (vi) to promptly distribute to each Bank all material
information, requests, documents and items received from the Borrowers
under the Loan Documents; (vii) to promptly distribute to each Bank such
Bank's Pro Rata Part of each payment or prepayment (whether voluntary, as
proceeds of insurance thereon, or otherwise) in accordance with the terms
of the Loan Documents and (viii) to deliver to the appropriate Persons
requests, demands, approvals and consents received from Banks. Each Bank
hereby authorizes Agent to take all actions and to exercise such powers
under the Loan Documents as are specifically delegated to such 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 borrowers, all as if Agent and any successor Agent were 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
-49-
proceeds thereof) now or hereafter in the possession or control of Agent
which may be or become security for the obligations of the Borrowers
arising under the Loan Documents by reason of the general description of
indebtedness secured or of property contained in any other agreements,
documents or instruments related to any such other business shall be
applied to reduction of the obligations of the Borrowers arising under the
Loan Documents, then each Bank shall be entitled to share in such
application according to its pro rata part thereof. Each Bank, upon request
of any other Bank, shall disclose to all other Banks all indebtedness and
liabilities, direct and contingent, of the Borrowers to such Bank as of the
time of such request.
(b) Note Holders. From time to time as other Banks become a party to
------------
this Agreement after receiving the consent of the Borrowers, 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 $75,000,000 and all such Bridge
Notes not exceeding $10,000,000. The obligation of such Bank shall be
governed by the provisions of this Agreement, including but not limited to,
the obligations specified in Section 2 hereof. From time to time, Agent may
require that the Banks exchange their Notes for newly issued Notes to
better reflect the Commitments of the Banks. Agent may treat the payee of
any Note as the holder thereof until written notice of transfer has been
filed with it, signed by such payee and in form satisfactory to Agent.
(c) Consultation with Counsel. Banks agree that Agent may consult
-------------------------
with legal counsel selected by Agent and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
(d) Documents. Agent shall not be under a duty to examine or pass
---------
upon the validity, effectiveness, enforceability, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Agent shall be entitled to
assume that the same are valid, effective, enforceable and genuine and what
they purport to be.
(e) Resignation or Removal of Agent. Subject to the appointment and
-------------------------------
acceptance of a successor Agent as provided below, Agent may resign at any
time by giving written notice thereof to Banks and the Borrowers, and Agent
may be removed at any time with or without cause by Majority Banks. If no
successor Agent has been so appointed by Majority 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
-50-
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.
(f) Responsibility of Agent. It is expressly understood and agreed
-----------------------
that the obligations of Agent under the Loan Documents are only those
expressly set forth in the Loan Documents and that Agent, as the case may
be, shall be entitled to assume that no Default or Event of Default has
occurred and is continuing, unless Agent, as the case may be, has actual
knowledge of such fact or has received notice from a Bank or the Borrowers
that such Bank or the Borrowers consider that a Default or an Event of
Default has occurred and is continuing and specifying the nature thereof.
Neither Agent nor any of their 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 incur no 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 their obligations hereunder or thereunder.
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents,
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
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 Borrowers 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
-51-
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, as the case may be, by the Loan Documents or which Agent may have as
a matter of law; provided, however, Agent shall not (i) except as provided
in Section 7(b) hereof, without the consent of Majority Banks designate the
amount of the Borrowing Base (provided, however, that any increase in the
Borrowing Base shall require the consent of all Banks) or (ii) without the
consent of 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 Majority 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 Commitment
amount of any Bank, (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 its obligation to
pay any Bank's Note or Notes, (vi) release any of the Collateral, or (vii)
would amend this sentence. For purposes of this paragraph, a Bank shall be
deemed to have consented to any such action by Agent upon the passage of
five (5) Business Days after written notice thereof is given to such Bank
in accordance with Section 17 hereof, unless such Bank shall have
previously given Agent notice, complying with the provision of Section 17
hereof, to the contrary. 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.
(g) Independent Investigation. Each Bank severally represents and
-------------------------
warrants to Agent that it has made its own independent investigation and
assessment of the financial condition and affairs of the Borrowers in
connection with the making and continuation of its participation hereunder
and has not relied exclusively on any information provided to such Bank by
Agent in connection herewith, and each Bank represents, warrants and
undertakes to Agent that it shall continue to make its own independent
appraisal of the credit worthiness of the Borrowers while the Notes are
outstanding or its commitments hereunder are in force. Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrowers of this Agreement or any other document referred to or provided
for herein or to inspect the properties or books of the Borrowers. Other
than as provided in this Agreement, Agent shall not have any duty,
responsibility or liability to
-52-
provide any Bank with any credit or other information concerning the
affairs, financial condition or business of the Borrowers which may come
into the possession of Agent.
(h) Indemnification. Banks agree to indemnify Agent, ratably
---------------
according to their respective Commitments on a Pro Rata basis, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any proper
and reasonable kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by Agent under the Loan
Documents, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Each Bank shall be entitled to be
reimbursed by the Agent for any amount such Bank paid to Agent under this
Section 15(h) to the extent the Agent has been reimbursed for such payments
by the Borrowers or any other Person. THE PARTIES INTEND FOR THE PROVISIONS
OF THIS SECTION TO APPLY TO AND PROTECT THE AGENT FROM THE CONSEQUENCES OF
ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR THREATENED TO BE
IMPOSED ON AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE,
WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING OR CONCURRING
CAUSE OF ANY SUCH LIABILITY.
(i) Benefit of Section 15. The agreements contained in this Section
---------------------
15 are solely for the benefit of Agent and the Banks and are not for the
benefit of, or to be relied upon by, the Borrowers, any affiliate of the
Borrowers or any other person.
(j) Pro Rata Treatment. Subject to the provisions of this Agreement,
------------------
each payment (including each prepayment) by the Borrowers and collection by
Banks (including offsets) on account of the principal of and interest on
the Notes and fees provided for in this Agreement, payable by the Borrowers
shall be made Pro Rata; provided, however, in the event that any Defaulting
Bank shall have failed to make an Advance as contemplated under Section 3
hereof and Agent or another Bank or Banks shall have made such Advance,
payment received by Agent for the account of such Defaulting Bank or Banks
shall not be distributed to such Defaulting Bank or Banks until such
Advance or Advances shall have been repaid in full to the Bank or Banks who
funded such Advance or Advances.
(k) Assumption as to Payments. Except as specifically provided
-------------------------
herein, unless Agent shall have received notice from the Borrowers prior to
the date on which any payment is due to Banks hereunder that the Borrowers
will not make such payment in full, Agent may, but shall not be required
to, assume that the Borrowers has 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
-53-
Agent, each Bank shall repay to Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from
the date such amount is distributed to such Bank until the date such Bank
repays such amount to Agent, at the interest rate applicable to such
portion of the Revolving Loan.
(l) Other Financings. Without limiting the rights to which any Bank
----------------
otherwise is or may become entitled, such Bank shall have no interest, by
virtue of this Agreement or the Loan Documents, in (a) any present or
future loans from, letters of credit issued by, or leasing or other
financial transactions by, any other Bank to, on behalf of, or with the
Borrowers (collectively referred to herein as "Other Financings") other
than the obligations hereunder; (b) any present or future guarantees by or
for the account of the Borrowers which are not contemplated by the Loan
Documents; (c) any present or future property taken as security for any
such Other Financings; or (d) any property now or hereafter in the
possession or control of any other Bank which may be or become security for
the obligations of the Borrowers arising under any loan document by reason
of the general description of indebtedness secured or property contained in
any other agreements, documents or instruments relating to any such Other
Financings.
(m) Interests of Banks. Nothing in this Agreement shall be construed
------------------
to create a partnership or joint venture between Banks for any purpose.
Agent, Banks and the Borrowers recognizes that the respective obligations
of Banks under the Commitments 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 Commitments on a Pro Rata basis. Each Bank shall
perform all duties and obligations of Banks under this Agreement in the
same proportion as its ownership interest in the Loans outstanding at the
date of determination thereof.
(n) Investments. Whenever Agent in good faith determines that it is
-----------
uncertain about how to distribute to Banks any funds which it has received,
or whenever Agent in good faith determines that there is any dispute among
the Banks about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty
or dispute. If Agent in good faith believes that the uncertainty or dispute
will not be promptly resolved, or if Agent is otherwise required to invest
funds pending distribution to the Banks, Agent may invest such funds
pending distribution (at the risk of the Borrowers). All interest on any
such investment shall be distributed upon the distribution of such
investment and in the same proportions and to the same Persons as such
investment. All monies received by Agent for distribution to the Banks
(other than to the
-54-
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 GOTHIC ENERGY CORPORATION, 0000 Xxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000-0000, Attention: Xxxxxxx Xxxxx,
President; and (b) BANKS: x/x XXXXX, XXXX XXX, XXXXX, N.A., 0000 Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000, Facsimile No. 000-000-0000, Attention: Xxxxx X. 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.
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 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.
-55-
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. It is understood and agreed that the foregoing
indemnity and hold harmless shall also apply to the Xxxxx Note and the Rainwater
Note, the Guaranty of the Xxxxx Note and the Rainwater Note by Energy and any
Claim incurred by Bank One, the Banks or the Agent investigating or preparing
for, defending against or providing evidence, producing documents taking any
other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any federal or state statute or
other regulation of common law or otherwise which is alleged to arise out of or
based upon any acts, practices or omissions or alleged acts, practices or
omissions of the Borrowers or their agents or Bank One, the Banks, the Agent or
any other their agents arising in connection with any set of facts relating in
any respect to the Xxxxx Note or the Rainwater Note or theh notes by Energy.
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 Loan 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
-56-
AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT
THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.
20. GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN DALLAS, DALLAS COUNTY, TEXAS, AND THE SUBSTANTIVE
LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
21. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.
22. MAXIMUM INTEREST RATE. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the
Banks shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, of if an acceleration of the maturities of any Notes or if any
prepayment by the Borrowers result in the Borrowers having paid any interest in
excess of the Maximum Rate, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Notes for
which such excess was received, collected or applied, and, if the principal
balance of such Note is paid in full, any remaining excess shall forthwith be
paid to the Borrowers. All sums paid or agreed to be paid to the Banks for the
use, forbearance or detention of the indebtedness evidenced by the Notes and/or
this Agreement shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the Maximum Rate. In determining whether or not
the interest paid or payable under any specific contingency exceeds the Maximum
Rate of interest permitted by law, the Borrowers and the Banks shall, to the
maximum extent permitted under applicable law, (i) characterize any non-
principal payment as an expense, fee or premium, rather than as interest; and
(ii) exclude voluntary prepayments and the effect thereof; and (iii) compare the
total amount of interest contracted for, charged or received with the total
amount of interest which could be contracted for, charged or received throughout
the entire contemplated term of the Note at the Maximum Rate.
-57-
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 the Banks, assign any rights, powers,
duties or obligations hereunder.
28. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Bank shall have the right to sell, assign or transfer all or
any part of its Note or Notes, its Commitments and its rights and
obligations hereunder to one or more Affiliates, Banks, financial
institutions, pension plans, investment funds, or similar Persons or to a
Federal Reserve Bank; provided, that in connection with each sale,
--------
assignment or transfer (other than to an Affiliate, a Bank or a Federal
Reserve Bank), the applicable Bank will consider the opinion and
recommendation of Borrowers, which opinion and recommendation shall in no
way be binding upon such Bank, and each such sale, assignment, or transfer
(other than to an Affiliate, a Bank or a Federal Reserve Bank), shall
require the consent of Agent, which consent will not be unreasonably
withheld, and the assignee, transferee or recipient shall have, to the
extent of such sale, assignment, or transfer, the same rights, benefits and
obligations as it would if it were such Bank and a holder of such Note,
Commitments and rights and obligations, including, without limitation, the
right to vote on decisions requiring consent or approval of all Banks or
Majority Banks and the obligation to fund its Commitments; provided,
further, that (1) each such sale, assignment, or transfer (other than to an
Affiliate, a Bank or a Federal Reserve Bank) shall be in an aggregate
principal amount not less than $5,000,000, (2) each
-58-
remaining Bank shall at all times maintain Commitments then outstanding in
an aggregate principal amount at least equal to $5,000,000; (3) no Bank may
offer to sell its Note or Notes, Commitments, rights and obligations or
interests therein in violation of any securities laws; and (4) no such
assignments (other than to a Federal Reserve Bank) shall become effective
until the assigning Bank and its assignees 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 $2,500 for than to an Affiliate, a Bank or
the Federal Reserve Bank) will be payable to Agent by assignor or assignee.
Within five (5) Business Days after its receipt of copies of the Assignment
and Acceptance and the other documents relating thereto and the Note or
Notes, the Borrowers shall execute and deliver to Agent (for delivery to
the relevant assignee) a new Note or Notes evidencing such assignee's
assigned Commitments and if the assignor Bank has retained a portion of its
Commitments, a replacement Note in the principal amount of the Commitments
retained by the assignor (except as provided in the last sentence of this
paragraph (a) such Note or Notes to be in exchange for, but not in payment
of, the Note or Notes held by such Bank). On and after the effective date
of an assignment hereunder, the assignee shall for all purposes be a Bank,
party to this Agreement and any other Loan Document executed by the Banks
and shall have all the rights and obligations of a Bank under the Loan
Documents, to the same extent as if it were an original party thereto, and
no further consent or action by Borrowers, Banks or the Agent shall be
required to release the transferor Bank with respect to its Commitments
assigned to such assignee and the transferor Bank shall henceforth be so
released.
(b) Each Bank shall have the right to grant participations in all or
any part of such Bank's Notes and Commitments hereunder to one or more
pension plans, investment funds, 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 each Borrower shall
be entitled to deal with the Bank granting a participation in the same
manner as if no participation had been granted; and
-59-
(iii) no participant shall ever have any right by reason of its
participation to exercise any of the rights of Banks hereunder, except
that any Bank may agree with any participant that such Bank will not,
without the consent of such participant (which consent may not be
unreasonably withheld) consent to any amendment or waiver requiring
approval of all Banks.
(c) It is understood and agreed that any Bank may provide to
assignees and participants and prospective assignees and participants
financial information and reports and data concerning Borrowers' properties
and operations which was provided to such Bank pursuant to this Agreement.
(d) Upon the reasonable request of either Agent or any Borrower, 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. OTHER AGREEMENTS. THIS WRITTEN LOAN 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.
30. FINANCIAL TERMS. All accounting terms used in this Agreement which
are not specifically defined herein shall be construed 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:
GOTHIC ENERGY CORPORATION
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
-60-
GOTHIC ENERGY OF TEXAS, INC.
an Oklahoma corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
GOTHIC GAS CORPORATION
an Oklahoma corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
BANKS:
BANK ONE, TEXAS, N.A.,
a national banking association
By:
-------------------------------------
Xxxxx X. Xxxxxxx
Vice President
AGENT:
BANK ONE, TEXAS, N.A.,
a national banking association
By:
-------------------------------------
Xxxxx X. Xxxxxxx
Vice President
-61-
EXHIBIT "A"
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ___________________ of
GOTHIC ENERGY CORPORATION, a Delaware corporation, and that as such he is
authorized execute this Notice of Borrowing on behalf of the Borrowers (as such
term is defined in the Agreement). With reference to that certain Restated Loan
Agreement dated as of February __, 1997 (as same may be amended, modified,
increased, supplemented and/or restated from time to time, the "Agreement")
entered into by and between Borrower and BANK ONE, TEXAS, N.A. ("Bank One"), as
Agent, for itself and the financial institutions party thereto (the "Banks"),
the undersigned further certifies, represents and warrants on behalf of the
Borrowers that all of the foregoing statements are true and correct (each
capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) Borrowers request that the Banks advance Borrowers on the
Revolving Loan _____________ the aggregate sum of $________________ by no
later than __________________. Immediately following such Advance, the
aggregate outstanding balance of Advances shall equal $_________________ on
the Revolving Loan.
(b) This Advance shall be a: Base Rate Loan ____________, or a
Eurodollar Loan ______________,(if Eurodollar please state requested
Interest Period ________ months).
(c) As of the date hereof, and as a result of the making of the
requested Advance, there does not and will not exist any Default or Event
of Default.
(d) Borrowers have performed and complied with all agreements and
conditions contained in the Agreement which are required to be performed or
complied with by Borrowers before or on the date hereof.
(e) The representations and warranties contained in the Agreement are
true and correct in all material respects as of the date hereof and shall
be true and correct upon the making of the Advance, with the same force and
effect as though made on and as of the date hereof and thereof.
(f) No change that would cause a Material Adverse Effect to the
condition, financial or otherwise, of Borrowers have occurred since the
most recent Financial Statement provided to the Banks.
EXECUTED AND DELIVERED this _____ day of ___________ 199__.
GOTHIC ENERGY CORPORATION,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
-2-
EXHIBIT "B"
REVOLVING NOTE
$_____________ Dallas, Texas ___________, 1997
FOR VALUE RECEIVED, the undersigned GOTHIC ENERGY CORPORATION, an Oklahoma
corporation, GOTHIC ENERGY OF TEXAS, INC., an Oklahoma corporation and GOTHIC
GAS CORPORATION, an Oklahoma corporation (hereinafter referred to as the
"Borrowers") hereby unconditionally, jointly and severally, promise to pay to
the order of _____________________ (the "Bank") at the offices of BANK ONE,
TEXAS, N.A. (the "Agent") in Dallas County, Texas, the principal sum of
_____________________ AND __/100 DOLLARS ($______________), in lawful money of
the United States of America together with interest from the date hereof until
paid at the rates specified in the Loan Agreement (as hereinafter defined). All
payments of principal and interest due hereunder are payable at the offices of
Agent at 0000 Xxxx Xxxxxx, 0xx Xxxxx, Bank Xxx Xxxxxx, X.X. Xxx 000000, Xxxxxx,
Xxxxx 00000-0000, attention: Energy Department, or at such other address as
Bank shall designate in writing to Borrowers.
Notwithstanding anything to the contrary contained in this Note or any
other Loan Document executed in connection herewith, the liability of Gothic Gas
Corporation hereunder, when combined with Gas' obligations under all other Notes
issued pursuant to the Loan Agreement shall never exceed the maximum amount of
liability that can be incurred by Gas without rendering this Note and the other
Notes voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer.
The principal and all accrued interest on this Note shall be due and
payable in accordance with the terms and provisions of the Loan Agreement.
This Note is executed pursuant to that certain Restated Loan Agreement
dated February 17, 1997 between Borrowers and Banks (the "Loan Agreement"), and
is one of the Notes referred to therein. Reference is made to the Loan
Agreement and the Loan Documents (as that term is defined in the Loan Agreement)
for a statement of prepayment, rights and obligations of Borrowers, for a
statement of the terms and conditions under which the due date of this Note may
be accelerated and for statements regarding other matters affecting this Note
(including without limitation the obligations of the holder hereof to advance
funds hereunder, principal and interest payment due dates, voluntary and
mandatory prepayments, exercise of rights and remedies, payment of attorneys'
fees, court costs and other costs of collection and certain waivers by Borrowers
and others now or hereafter obligated for payment of any sums due hereunder).
Upon the occurrence of an Event of Default, as that term is defined in the Loan
Agreement and Loan Documents, the holder hereof (i) may declare forthwith to be
entirely and immediately due and payable the principal balance hereof and the
interest accrued hereon, and (ii) shall have all rights and remedies of the Bank
under the Loan Agreement and Loan Documents. This Note may be prepaid in
accordance with the terms and provisions of the Loan Agreement.
Regardless of any provision contained in this Note, the holder hereof shall
never be entitled to receive, collect or apply, as interest on this Note, any
amount in excess of the Maximum Rate (as such term is defined in the Loan
Agreement), and, if the holder hereof ever receives, collects, or applies as
interest, any such amount which would be excessive interest, it shall be deemed
a partial prepayment of principal and treated hereunder as such; and, if the
indebtedness evidenced hereby is paid in full, any remaining excess shall
forthwith be paid to Borrowers. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Rate, Borrowers
and the holder hereof shall, to the maximum extent permitted under applicable
law (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) spread the total amount of interest throughout the entire
contemplated term of the obligations evidenced by this Note and/or referred to
in the Loan Agreement so that the interest rate is uniform throughout the entire
term of this Note; provided that, if this Note is paid and performed in full
prior to the end of the full contemplated term thereof; and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate,
the holder hereof shall refund to Borrowers the amount of such excess or credit
the amount of such excess against the indebtedness evidenced hereby, and, in
such event, the holder hereof shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving or receiving interest
in excess of the Maximum Rate.
If any payment of principal or interest on this Note shall become due on a
day other than a Business Day (as such term is defined in the Loan Agreement),
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
If this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceeding at law or in equity or in bankruptcy,
receivership or other court proceedings, Borrowers agree to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys'
fees.
Borrowers and each surety, endorser, guarantor and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive presentment and demand for payment, notice of intention to accelerate the
maturity, protest, notice of protest and nonpayment, as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any indulgences, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes.
This Note shall be governed by and construed in accordance with the
applicable laws of the United States of America and the laws of the State of
Texas.
THIS WRITTEN NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND
-2-
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.
EXECUTED as of the date and year first above written.
BORROWERS:
---------
GOTHIC ENERGY CORPORATION
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
GOTHIC ENERGY OF TEXAS, INC.
an Oklahoma corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
GOTHIC GAS CORPORATION
an Oklahoma corporation
By:
------------------------------------
Xxxxxxx Xxxxx
President
-0-
XXXXXXX "X"
XXXXXX NOTE
$_____________ Dallas, Texas ___________, 1997
FOR VALUE RECEIVED, the undersigned GOTHIC ENERGY CORPORATION, an Oklahoma
corporation, GOTHIC ENERGY OF TEXAS, INC., an Oklahoma corporation and GOTHIC
GAS CORPORATION, an Oklahoma corporation (hereinafter referred to as the
"Borrowers") hereby unconditionally, jointly and severally, promise to pay to
the order of _____________________ (the "Bank") at the offices of BANK ONE,
TEXAS, N.A. (the "Agent") in Dallas County, Texas, the principal sum of
___________________ AND __/100 DOLLARS ($_____________), in lawful money of the
United States of America together with interest from the date hereof until paid
at the rates specified in the Loan Agreement (as hereinafter defined). All
payments of principal and interest due hereunder are payable at the offices of
Agent at 0000 Xxxx Xxxxxx, 0xx Xxxxx, Bank Xxx Xxxxxx, X.X. Xxx 000000, Xxxxxx,
Xxxxx 00000-0000, attention: Energy Department, or at such other address as
Bank shall designate in writing to Borrowers.
Notwithstanding anything to the contrary contained in this Note or any
other Loan Document executed in connection herewith, the liability of Gothic Gas
Corporation hereunder, when combined with Gas' obligations under all other Notes
issued pursuant to the Loan Agreement shall never exceed the maximum amount of
liability that can be incurred by Gas without rendering this Note and the other
Notes voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer.
The principal and all accrued interest on this Note shall be due and
payable in accordance with the terms and provisions of the Loan Agreement.
This Note is executed pursuant to that certain Restated Loan Agreement
dated February 17, 1997 between Borrowers and Banks (the "Loan Agreement"), and
is one of the Notes referred to therein. Reference is made to the Loan
Agreement and the Loan Documents (as that term is defined in the Loan Agreement)
for a statement of prepayment, rights and obligations of Borrowers, for a
statement of the terms and conditions under which the due date of this Note may
be accelerated and for statements regarding other matters affecting this Note
(including without limitation the obligations of the holder hereof to advance
funds hereunder, principal and interest payment due dates, voluntary and
mandatory prepayments, exercise of rights and remedies, payment of attorneys'
fees, court costs and other costs of collection and certain waivers by Borrowers
and others now or hereafter obligated for payment of any sums due hereunder).
Upon the occurrence of an Event of Default, as that term is defined in the Loan
Agreement and Loan Documents, the holder hereof (i) may declare forthwith to be
entirely and immediately due and payable the principal balance hereof and the
interest accrued hereon, and (ii) shall have all rights and remedies of the Bank
under the Loan Agreement and Loan Documents. This Note may be prepaid in
accordance with the terms and provisions of the Loan Agreement.
Regardless of any provision contained in this Note, the holder hereof shall
never be entitled to receive, collect or apply, as interest on this Note, any
amount in excess of the Maximum Rate (as such term is defined in the Loan
Agreement), and, if the holder hereof ever receives, collects, or applies as
interest, any such amount which would be excessive interest, it shall be deemed
a partial prepayment of principal and treated hereunder as such; and, if the
indebtedness evidenced hereby is paid in full, any remaining excess shall
forthwith be paid to Borrowers. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Rate, Borrowers
and the holder hereof shall, to the maximum extent permitted under applicable
law (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) spread the total amount of interest throughout the entire
contemplated term of the obligations evidenced by this Note and/or referred to
in the Loan Agreement so that the interest rate is uniform throughout the entire
term of this Note; provided that, if this Note is paid and performed in full
prior to the end of the full contemplated term thereof; and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate,
the holder hereof shall refund to Borrowers the amount of such excess or credit
the amount of such excess against the indebtedness evidenced hereby, and, in
such event, the holder hereof shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving or receiving interest
in excess of the Maximum Rate.
If any payment of principal or interest on this Note shall become due on a
day other than a Business Day (as such term is defined in the Loan Agreement),
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
If this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceeding at law or in equity or in bankruptcy,
receivership or other court proceedings, Borrowers agree to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys'
fees.
Borrowers and each surety, endorser, guarantor and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive presentment and demand for payment, notice of intention to accelerate the
maturity, protest, notice of protest and nonpayment, as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any indulgences, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes.
This Note shall be governed by and construed in accordance with the
applicable laws of the United States of America and the laws of the State of
Texas.
THIS WRITTEN NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND
-2-
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.
EXECUTED as of the date and year first above written.
BORROWERS:
---------
GOTHIC ENERGY CORPORATION
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
GOTHIC ENERGY OF TEXAS, INC.
an Oklahoma corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
GOTHIC GAS CORPORATION
an Oklahoma corporation
By:
-------------------------------------
Xxxxxxx Xxxxx
President
-3-
EXHIBIT "D"
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he is the ___________________ of
GOTHIC ENERGY CORPORATION, an Oklahoma corporation, the
_____________________________ of GOTHIC ENERGY OF TEXAS, INC., an Oklahoma
corporation and GOTHIC GAS CORPORATION, an Oklahoma corporation (collectively,
the "Borrowers"), and that as such he is authorized to execute this Certificate
of Compliance on behalf of the Borrowers and the other Borrowers. With
reference to that certain Restated Loan Agreement, dated as of February ___,
1997, (as same may be amended, modified, increased, supplemented and/or restated
from time to time, the "Agreement") entered into between the Borrowers and BANK
ONE, TEXAS, N.A. as "Agent" for itself and the Banks signatory thereto (the
"Banks"), the undersigned further certifies, represents and warrants on behalf
of the Borrowers that all of the following statements are true and correct (each
capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) The Borrowers have fulfilled in all material respects its
obligations under the Notes and Security Instruments, including the Loan
Agreement, and 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 [if the representations and
warranties are not true and correct, the party signing this certificate
shall except from the foregoing statement the matters for which such
representations and warranties are no longer true specifying the nature of
any such change.]
(b) No Event of Default has occurred under the Security Instruments,
including the Loan Agreement [if an Event of Default has occurred, the
party certifying hereto shall specify the facts constituting the Event of
Default and the nature and status thereof].
(c) To the extent requested from time to time by the Agent, the
certifying party shall specifically affirm compliance of the Borrowers in
all material respects with any of its representations and warranties
(except to the extent they relate solely to an earlier date) or obligations
under said instruments.
(d) Financial Computations for the period ending ________________
(provide calculations on a consolidated basis):
(i) Current Ratio;
(ii) Debt Service Coverage Ratio;
(iii) General and Administrative Expenses; and
(iv) Tangible Net Worth.
EXECUTED, DELIVERED AND CERTIFIED TO this ______ day of
____________________, 19__.
GOTHIC ENERGY CORPORATION
a Delaware corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
GOTHIC ENERGY OF TEXAS, INC.
an Oklahoma corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
GOTHIC GAS CORPORATION
an Oklahoma corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
-2-
EXHIBIT "E"
-----------
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
--------------
Acceptance") dated as of __________, 199_ is made between ____________________
----------
(the "Assignor") and ____________________ (the "Assignee").
--------- --------
RECITALS
--------
WHEREAS, the Assignor is party to that certain Amended and Restated
Loan Agreement dated as of February 17, 1997 (as extended, renewed, amended or
restated from time to time, the "Loan Agreement") by and among Gothic Energy
--------------
Corporation, an Oklahoma corporation ("Gothic"), Gothic Energy of Texas, Inc.,
an Oklahoma corporation ("Texas") and Gothic Gas Corporation, an Oklahoma
corporation ("Gas") (Gothic, Texas, and Gas are hereinafter collectively
referred to as the "Company"), the Banks signatory thereto (the "Banks") and
-------
Bank One, Texas, N.A., as Agent (in such capacity, the "Agent") (unless
-----
otherwise defined herein, capitalized terms used herein have the respective
meanings assigned to them in the Loan Agreement);
WHEREAS, as provided under the Loan Agreement, the Assignor has
committed to make Loans (the "Committed Loans") to the Company in aggregate
---------------
amounts not to exceed (i) $_______ on the Revolving Loan (the "Revolving
---------
Commitment"), such Revolving Commitment being evidenced by a Revolving Note in
----------
the face amount of $____________ (the "Revolving Note") and (ii) $___________ on
the Bridge Loan (the "Bridge Loan Commitment"), such Bridge Loan Commitment
----------------------
being evidenced by a Bridge Note in the face amount of $___________ (the "Bridge
Note") (the Revolving Note and the Bridge Note are herein collectively referred
to as the "Notes"); the Revolving Commitment and the Bridge Loan Commitment are
hereinafter collectively referred to as (the "Commitment");
----------
WHEREAS, [the Assignor has made Committed Loans to the Company in the
aggregate principal amount of (i) $________ on the Revolving Commitment and
$_______ on the Bridge Loan Commitment] [no Committed Loans are outstanding
under the Loan Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part] [all] of
the rights and obligations of the Assignor under the Loan Agreement in respect
of its Commitment, in an amount equal to $_______ on the Revolving Commitment
and $_______ on the Bridge Loan Commitment, for a total of $_______ for the
total Commitment (the "Assigned Amount") on the terms and subject to the
---------------
conditions set forth herein and the Assignee wishes to accept assignment of such
rights and assume such obligations from the Assignor on such terms and subject
to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
-------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance , (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
---------------------
Share") of (A) the Commitment [and the Committed Loans] of the Assignor, (B) the
-----
Notes, and (C) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Loan Agreement and
the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with respect
to, Committed Loans assigned.]
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignee shall be a party to the Loan Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Bank
under the Loan Agreement, including the requirements concerning confidentiality
and the payment of indemnification, with a Commitment in an amount equal to the
Assigned Amount. The Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Agreement are
required to be performed by it as a Bank. It is the intent of the parties
hereto that the Commitment of the Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Amount and the Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by the Assignee.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignee's Commitment will be $_______, of which
$_______ is on the Revolving Commitment and $_______ is on the Bridge Loan
Commitment.
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignor's Commitment will be $_______, of which
$_______ is on the Revolving Commitment and $________ is on the Bridge Loan
Commitment.
2. Payments.
--------
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $_______, representing the
Assignee's Pro Rate Share of the principal amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 28 of the Loan Agreement.
-2-
3. Reallocation of Payments. Any interest, fees and other payments
------------------------
accrued to the Effective Date with respect to the Commitment, the Committed
Loans and the Notes shall be for the account of the Assignor. Any interest, fees
and other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agrees that it will hold in trust for the other party any
interest, fees and other amounts which it may receive to which the other party
is entitled pursuant to the preceding sentence and pay to the other party any
such amounts which it may receive promptly upon receipt.
4. Independent Credit Decision. The Assignee (a) acknowledges that it has
---------------------------
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements referred to in
Section 12 of the Loan Agreement, and such other documents and information as it
has deemed appropriate to make its own credit and legal analysis and decision to
enter into this Assignment and Acceptance; and (b) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit and legal decisions in taking or not
taking action under the Loan Agreement.
5. Effective Date; Notices.
-----------------------
(a) As between the Assignor and the Assignee, the effective date for this
Assignment and Acceptance shall be _________, 199__ (the "Effective Date");
--------------
provided that the following conditions precedent have been satisfied on or
--------
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered by
the Assignor and the Assignee, together with the Notes;
(ii) the consent of the Agent required for an effective assignment of
the Assigned Amount by the Assignor to the Assignee under Section 28 of the
Loan Agreement shall have been duly obtained and shall be in full force and
effective as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Assignment and Acceptance;
(iv) the processing fee referred to in Section 2(b) hereof and in
Section 28 of the Loan Agreement shall have been paid to the Agent; and
(v) the Assignor shall have assigned and the Assignee shall have
assumed a percentage equal to the Assignee's Percentage Share of the rights
and obligations of the Assignor under the Loan Agreement (if such agreement
exists).
-3-
(b) Promptly following the execution of this Assignment and Acceptance, the
Assignor shall deliver to the Company and the Agent for acknowledgement by the
Agent and the Company, a Notice of Assignment substantially in the form attached
hereto as Schedule 1.
----------
[6. Agent. [INCLUDES ONLY IF ASSIGNOR IS AGENT]
-----
(a) The Assignee hereby appoints and authorizes the Assignor to take such
action as agent on its behalf and to exercise such powers under the Loan
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Loan Agreement.
(b) The Assignee shall assume no duties or obligations held by the Assignor
in its capacity as Agent under the Loan Agreement.]
7. Withholding Tax. The Assignee (a) represents and warrants to the
---------------
Bank, the Agent and the Company that under applicable law and treaties no tax
will be required to be withheld by the Bank with respect to any payments to be
made to the Assignee hereunder, (b) agrees to furnish (if it is organized under
the laws of any jurisdiction other than the United States or any State thereof)
to the Agent and the Company prior to the time that the Agent or Company is
required to make any payment of principal, interest or fees hereunder, duplicate
executed originals of either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 101 (wherein the Assignee claims entitlement to
the benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
8. Representations and Warranties.
------------------------------
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) on notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Loan Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency,
-4-
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective obligations under the Loan Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance; and apart from any
agreements or undertakings or flings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of the Assignee, enforceable against the Assignee in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is an Eligible Assignee.
9. Further Assurances. The Assignor and the Assignee each hereby agree
------------------
to execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to the Company or the Agent, which may
be required in connection with the assignment and assumption contemplated
hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
-5-
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS. The Assignor and the Assignee
each irrevocably submits to the non-exclusive jurisdiction of any State or
Federal court sitting in Texas over any suit, action or proceeding arising out
of or relating to this Assignment and Acceptance and irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such Texas State or Federal court. Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the Assignor and
the Assignee, provided that such provisions are not inconsistent with the Loan
Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the data first above written.
[ASSIGNOR]
By:
-----------------------------
Title:
--------------------------
By:
----------------------------
-6-
Title:
--------------------------
Address:
------------------------
[ASSIGNEE]
By:
-----------------------------
Title:
--------------------------
By:
-----------------------------
Title:
--------------------------
Address:
------------------------
-7-
SCHEDULE 1 TO
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
______________, 0000
Xxxx Xxx, Xxxxx, N.A.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Vice President
Gothic Energy Corporation
Gothic Energy of Texas, Inc.
Gothic Gas Corporation
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, President
Ladies and Gentlemen:
We refer to that certain Restated Loan Agreement dated as of February 17,
1997 (as extended, renewed, amended or restated from time to time, the "Loan
----
Agreement") by and among Gothic Energy Corporation, an Oklahoma corporation
---------
("Gothic"), Gothic Energy of Texas, Inc., an Oklahoma corporation ("Texas") and
Gothic Gas Corporation, an Oklahoma corporation ("Gas")(Gothic, Texas, and Gas
are hereinafter collectively referred to as the "Company"), the Banks signatory
-------
thereto (the "Banks") and Bank One, Texas, N.A., as Agent (in such capacity, the
"Agent"). Unless otherwise defined herein, capitalized terms used herein have
-----
the respective meaning assigned to them in the Loan Agreement.
1. We hereby give you notice of the assignment by ___________ (the
"Assignor") to ____________________ (the "Assignee") of _____% of the right,
--------- --------
title and interest of the Assignor in and to the Loan Agreement, including,
without limitation, the right, title and interest of the Assignor in and to the
commitments of the Assignor, and all outstanding Loans made by the Assignor
pursuant to the Assignment and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). The aforesaid assignment is subject to the
--------------------------
consent of the Agent, which consent is hereby requested. Before giving effect
to such assignment, the Assignor's Revolving Commitment is $_____________ and
its Bridge Loan Commitment is $_________, for an aggregate commitment of
$____________, and the aggregate amount of its outstanding Revolving Loans is
$___________ and its outstanding Bridge Loans with $_____________, for total
outstandings of $____________.
-1-
2. The Assignee agreed that upon receiving the consent of the Agent to
such assignment, the Assignee will be bound by the terms of the Loan Agreement
as fully and to the same extent as if the Assignee were the Bank originally
holding such interest in the Loan Agreement.
3. Tendered herewith are the Notes executed in connection with the Loan
Agreement representing the commitments of the Assignor.
4. The following administrative details apply to the Assignee:
(A) Notice Address:
---------------------------------------------
Assignee name:
----------------------------------------------
Address:
----------------------------------------------
----------------------------------------------
Attention:
----------------------------------------------
Telephone:( )
-----------------------
Telecopier:( )
-------------------
Telex (Answerback):
--------------------
(B) Payment Instructions:
Account No.:
------------------------------------------------
At:
------------------------------------------------
------------------------------------------------
Reference:
--------------------------------------------------
Attention:
--------------------------------------------------
5. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
-2-
By:
-----------------------------------------------
Title:
--------------------------------------------
By:
-----------------------------------------------
Title:
--------------------------------------------
[NAME OF ASSIGNEE]
By:
-----------------------------------------------
Title:
--------------------------------------------
By:
-----------------------------------------------
Title:
--------------------------------------------
ACKNOWLEDGED:
GOTHIC ENERGY CORPORATION
By:
----------------------------
Xxxxxxx Xxxxx, President
GOTHIC ENERGY OF TEXAS, INC.
By:
----------------------------
Xxxxxxx Xxxxx, President
GOTHIC GAS CORPORATION
By:
----------------------------
Xxxxxxx Xxxxx, President
ACKNOWLEDGED AND
CONSENTED TO:
-0-
XXXX XXX, XXXXX, N.A.,
as Agent
By:
------------------------------------
Xxxxx X. Xxxxxxx, Vice President
-4-
SCHEDULE 1
LIENS
NONE
SCHEDULE 2
LIST OF XXXXX TO BE DRILLED
WITH SPECIAL DRILLING FACILITY
1. Six (6) xxxxx in the Springer Field, Xxxxxx County, Oklahoma.
2. One (1) well in the Xxxxxxx Ranch Field, Loving County, Texas.
SCHEDULE 3
FINANCIAL CONDITION
NONE
-1-
SCHEDULE 4
LIABILITIES
Liabilities incurred in connection with the Fifth Amendment to Loan Agreement
dated December 27, 1996 among Gothic, Texas and Bank One and other liabilities
incurred in the ordinary course of Borrowers' businesses.
SCHEDULE 5
LITIGATION
Claim by Xxxxx X. Xxxxx, former Chief Financial Officer of the Borrowers in
which he claims an aggregate of $383,750.00 for breach of an employment
agreement.
SCHEDULE 6
SUBSIDIARIES
1. Gothic Energy of Texas, Inc. and Gothic Gas Corporation are wholly-owned
subsidiaries of Gothic Energy Corporation.
2. Sycamore Pipeline, Inc. will be a wholly-owned subsidiary of Gothic Gas
Corporation on the Effective Date.
SCHEDULE 7
ENVIRONMENTAL MATTERS
NONE
SCHEDULE 8
TITLE MATTERS
1. Barbie 0-00, Xxxxxx Xxxxxx, Xxxxxxxx;
0. Xxxxxxxx 0-00, Xxxxxx Xxxxxx, Xxxxxxxx;
3. Xxxxxxx #1, Xxxxxx County, Oklahoma;
4. Markham #1, Xxxxxx County, Oklahoma;
5. Xxxxxxxx Unit, Xxxxx County, Oklahoma;
6. Xxxxxxx #2, Xxxxxx County, Oklahoma;
7. Xxxxx A-127, Kingfisher County, Oklahoma;
8. Xxxxxxxx, Major County, Oklahoma;
9. Jan, Major County, Oklahoma;
10. RM #1, Major County, Oklahoma;
11. Mamie Lou #1, Major County, Oklahoma;
12. Xxxxxx 1-11, Major County, Oklahoma;
13. Xxxxx Trust 1-16, XxXxxxx County, Oklahoma;
14. Xxxxxx Stock 1-20, Xxxxx County, Oklahoma;
15. Xxxxxx 6-1, Loving County, Texas.
SCHEDULE 9
CURATIVE MATTERS
Provide the following curative information within the time specified in Section
12(t):
1. The Xxxxxxx-B, Xxxxxx County, Oklahoma. This opinion indicates that
--------------------------------------
approximately .1303 of the working interest and .1210 of the net revenue
interest is attributable to your seller as a result of certain contractual
rights and requires that evidence of such contractual rights be provided.
Please provide this information so that we can confirm the interest being
conveyed both of record and contractually.
2. The Xxxxxxx-E, Xxxxxx County, Oklahoma. The Pray Xxxxxx opinion covering
--------------------------------------
this property indicates that there were unsatisfied requirements of old
opinions. Please provide information with regard to the nature and status
of these old requirements as reflected in Requirement #5 of the title
opinion.
3. The Xxxxxxxx, Xxxxxx County, Oklahoma. This opinion also has a requirement
-------------------------------------
with regard to outstanding requirements of old opinions. Please provide
information as to the nature and status of these requirements as reflected
in Requirement #5 of the title opinion.
4. The Xxxxxxx, Xxxxxx County, Oklahoma. There were two xxxxx by this name on
------------------------------------
the mortgage list provided by the Bank. I identified the separate Xxxxxxx
xxxxx by comparing the interests shown to those shown on the opinion and
concluded that this was Item 38 on the Bank's list. The Pray Xxxxxx
opinion indicates that part of the interest shown is a contractual right
only and that right is to a .1368 working interest and a .1197 net revenue
interest. Please provide the source of the contractual rights so that we
can confirm the total interest being conveyed, both record and contractual.
5. The Xxxxxxx 1-9, Kingfisher County, Oklahoma. This opinion also has a
--------------------------------------------
requirement with regard to outstanding requirements of old opinions.
Please provide information as to the nature and status of these
requirements as reflected in Requirement #5 of the title opinion.
6. The Xxxxxxx Unit Well 2, Major County, Oklahoma. The record interest in
-----------------------------------------------
this property is less than that represented by the seller and less than
that shown on the mortgage list provided by the Bank. The record working
interest in this well is a .875 and the record net revenue interest is a
.8564. In addition, the well has a different record title interest for gas
which is a .8496. Please provide information as to the true interest to be
owned in this well.
7. The Xxxxxxx, Major County, Oklahoma. The record title interest in this
-----------------------------------
well is less than the interest represented by the seller and included on
the mortgage and title list. The actual record interest is .75 working
interest and a .6563 net revenue interest while the represented
interest is a .8883 working interest and a .7773 net revenue interest.
Please provide information with regard to the correct interest.
8. The Xxxxxx A, Major County, Oklahoma. Please provide a copy of the
------------------------------------
agreement referred to in Requirement 5 of the Pray Xxxxxx opinion covering
this property. That agreement is apparently between Shell and Pan American
and is dated April 6, 1960.
9. The Xxxxxx C, Major and Xxxxxx Counties, Oklahoma. This well is in both
-------------------------------------------------
counties although the mortgage list indicates it is only in Major County.
The title review on this property was performed only in Major County
although part of the leases are in Xxxxxx County. Requirement 4 of the
Pray Xxxxxx opinion requires that a title review of the Xxxxxx County
records be performed to cover the remaining title. Please provide a
supplemental or amended opinion covering the Xxxxxx County leases.
10. The Xxxxx, Xxxxxx County, Oklahoma. This property is mortgaged on eight
----------------------------------
separate mortgages which all apparently attach to the interest being
conveyed. These mortgages must be released. In addition, the record
interest is less than represented by the seller and, at least with regard
to the working interest, less than shown on the engineering list. The
record interest is a .4984 working interest and a .3913 net revenue
interest. The mortgage list indicates there should be a .5693 working
interest and a .0965 net revenue interest. It appears that the net revenue
interest shown on the mortgage list is clearly incorrect as the record
title is considerably more than that and the seller's represented net
revenue interest is .4856. Please provide information as to the correct
interest being conveyed.
11. The Xxxxxxxx, Xxxxxx County, Oklahoma. This property is subject to the
-------------------------------------
same eight mortgages that the Xxxxx well referred to above was subject to.
These mortgages must be released. The record title interest in this
property is also less than that represented by the seller and shown on the
mortgage list. The record title is a .4828 working interest and a .3798
net revenue interest while the represented interest is a .663 working
interest and a .4842 net revenue interest and the mortgage list shows a
.5686 working interest and a .4379 net revenue interest. Please provide
information with regard to the correct interest on this well.
12. The City of Ardmore, Xxxxxx County, Oklahoma. The opinion furnished for
--------------------------------------------
this property does not reflect that Norse Exploration, Inc. and/or X.
Xxxxxxx & Co., the Sellers in the transaction with Gothic, had any record
net revenue interest in this property. The record working interest is
substantially less than the working interest represented by the Sellers.
Apparently a significant amount of the represented interest is supposedly
held as a result of unrecorded agreements. This property is apparently
subject to eight separate mortgages which must be released. Please provide
information with regard to the correct interests owned or to be owned in
this well.
-2-
13. The Xxxxxx 1-12, Beaver County, Oklahoma. The interest shown in the Pray
----------------------------------------
Xxxxxx opinion is the before payout interest. The after payout interest for
this well is .8875 working interest and a .6925 net revenue interest. This
property is also still burdened by a mortgage from Triumph Resources, Inc.
to State Bank and Trust N.A. The interest covered by that mortgage is now
owned by Gothic. That mortgage must be released.
14. The Highland 1-11, Beaver County, Oklahoma. The Pray Xxxxxx opinion
------------------------------------------
indicates that this property is also subject to a mortgage from Triumph
Resources, Inc. to State Bank and Trust N.A. which encumbers part of the
interest now owned by Gothic. This mortgage must be released. In
addition, there are four UCC-1s filed by State Bank and Trust Co. in Beaver
County which encumber the personalty on this well. There are three
additional UCC-1s filed by Liberty Bank and Trust Co. which also encumber
the personalty. All 7 UCC-1s were granted Triumph Resources, Inc. All of
the UCC-1s must be released. In addition to the foregoing, the lease in
question requires the approval of the Oklahoma State Land Office for the
assignment into Gothic of the interest in this well. That consent must be
obtained. In addition, there is outstanding an old production payment on
this property from First Transportation Gas Corporation to Transwestern
Pipeline which has not been released. Please obtain the release of this
production payment or some indication that it has been paid in full. Last,
there is an outstanding preferential right to purchase held by Xxxxxxxx
Petroleum dating back to 1986. Since this preferential right was in
existence when the property was sold to Gothic, please obtain a waiver from
Xxxxxxxx of their preferential right in this property.
15. The Xxxx Xxxxxx 1-5, Caddo County, Oklahoma. There are two old mortgages
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encumbering this property which need to be released. The first was granted
by Xxxxxxxx to Chemical Bank and the second was granted by Triumph
Resources, Inc. to State Bank and Trust N.A. The interest shown of record
for this property is less than that represented by Gothic. The net revenue
interest is approximately 4% less than represented. Please provide
information about the correct interest owned in this property.
16. The Xxxxxxxx Nos. 1 and 2, Canadian County, Oklahoma. There are a number
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of old mortgages granted by Xxxxxxx Petroleum Corporation et al. to
Continental Illinois and/or Continental Bank which need to be released.
17. The Xxxxx #7-1, Xxxxx County, Oklahoma. The opinion indicates that there
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is filed of record in Xxxxx County the UCC-1 granted by Triumph Resources,
Inc. to State Bank and Trust which needs to be released.
18. The Xxxxxxx #1-32, Xxxxx County, Oklahoma. The opinion indicates that the
-----------------------------------------
net revenue interest of record is approximately 4% less than that
represented by Gothic. Please explain or provide information with regard
to the difference in the net revenue interest. The opinion
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also indicates that there are requirements from old opinions which remain
unsatisfied and should be satisfied. Please provide information with regard
to those requirements.
19. The Xxxxx 1-1, Xxxxx County, Oklahoma. The opinion indicates that part of
-------------------------------------
Gothic's interest in this property is encumbered by a mortgage from Triumph
Resources, Inc. to State Bank and Trust N.A. and by a UCC-1 on the
personalty. Both the mortgage and the UCC-1 must be released.
20. The Xxxxxxxxx 1-4, Xxxxx County, Oklahoma. The opinion indicates that
-----------------------------------------
there is of record in Xxxxx County a UCC-1 filed in 1993 by State Bank and
Trust Company on Triumph Resources, Inc. The UCC attaches to the
personalty now owned by Gothic and must be released.
21. The Wayland #1-5, Xxxxx County, Oklahoma. There is a UCC-1 of record
----------------------------------------
encumbering personalty owned by Gothic in this well which was filed by
State Bank and Trust N.A. on Triumph Resources, Inc. This UCC-1 must be
released. The opinion also indicates that there are unsatisfied
requirements from prior opinions which should be satisfied. Please provide
information with regard to these requirements.
22. Xxxxx Xxxxx 1-27 and 2-27, Xxxxx County, Oklahoma. The opinion indicates
-------------------------------------------------
that there is a UCC filed for record in Xxxxx County by State Bank and
Trust Company which encumbers the personalty now owned by Gothic. These
UCC-1s must be released.
23. The Xxxxxxxx Trust 1-32, Xxxxx County, Oklahoma. The opinion indicates
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that the net revenue interest represented by Gothic is for gas only. The
net revenue interest for oil on this property is .8340. This is another of
the properties that has a UCC filed by State Bank and Trust N.A. against
Triumph Resources which must be released. It is also another one of the
properties where the opinion indicates that there are unsatisfied
requirements on prior opinions. Please provide information with regard to
those requirements.
24. The Xxxxxxxx 2-14, Xxxxxx County, Oklahoma. The opinion on this property
------------------------------------------
indicates that there are outstanding requirements on prior opinions which
should be satisfied. Please provide information with regard to these
requirements.
25. The Xxxxxxxxxx 1-11, Xxxxxx County, Oklahoma. The opinion on this property
--------------------------------------------
indicates that there are outstanding requirements on prior opinions which
should be satisfied. Please provide information with regard to these
requirements.
26. The State 1-27, Xxxxxx County, Oklahoma. The opinion on this property
---------------------------------------
indicates that there are outstanding requirements on prior opinions which
should be satisfied. Please provide information with regard to these
requirements.
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27. The Richmond 1-31, Xxxxxxxx County, Oklahoma. This is another property
--------------------------------------------
where part of Gothic's interest is encumbered by a mortgage and a UCC-1
from Triumph Resources to State Bank and Trust N.A. The mortgage and the
UCC-1 must be released.
28. The Xxxxxxxx 1-27, Beaver County, Oklahoma. The opinion indicates there is
------------------------------------------
a mortgage from Triumph Resources, Inc. to State Bank and Trust and two
UCC-1s filed by State Bank and Trust in Beaver County which encumber the
interests of Gothic in this property. The mortgage and the UCC-1s must be
released.
29. The Xxxxxx 1-28, Xxxxx County, Oklahoma. The opinion indicates there is a
---------------------------------------
UCC filed by State Bank and Trust covering the Gothic interest. The UCC
must be released.
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