EXHIBIT 10.4.1
RESTATED CREDIT AGREEMENT
AMONG
GREAT LAKES ENERGY PARTNERS, L.L.C., AS BORROWER
AND
BANK ONE, NA
AND THE INSTITUTIONS NAMED HEREIN
AS LENDERS
AND
BANK ONE, NA,
AS ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK
AS SYNDICATION AGENT,
CREDIT LYONNAIS NEW YORK BRANCH
AS DOCUMENTATION AGENT
THE BANK OF NOVA SCOTIA
AS MANAGING AGENT
BANC ONE CAPITAL MARKETS, INC.,
AS CO-LEAD ARRANGER
AND
X.X. XXXXXX SECURITIES INC.,
AS CO-LEAD ARRANGER
MAY 3, 2002
TABLE OF CONTENTS
Page No.
1. Definitions...................................................................................... 1
2. Commitments of the Lenders....................................................................... 12
(a) Terms of Commitment......................................................................... 12
(b) Procedure for Borrowing..................................................................... 13
(c) Letters of Credit........................................................................... 13
(d) Procedure for Obtaining Letters of Credit................................................... 14
(e) Voluntary Reduction of Commitment........................................................... 15
(f) Several Obligations......................................................................... 15
(g) Type and Number of Advances................................................................. 15
3. Notes Evidencing Loans........................................................................... 15
(a) Form of Notes............................................................................... 15
(b) Issuance of Additional Notes................................................................ 16
(c) Interest Rates.............................................................................. 16
(d) Payment of Interest......................................................................... 16
(e) Payment of Principal........................................................................ 16
(f) Payment to Lenders.......................................................................... 16
(g) Sharing of Payments, Etc.................................................................... 17
(h) Non-Receipt of Funds by the Administrative Agent............................................ 17
4. Interest Rates................................................................................... 17
(a) Options..................................................................................... 17
(b) Interest Rate Determination................................................................. 18
(c) Conversion Option........................................................................... 18
(d) Recoupment.................................................................................. 19
(e) Interest Rates Applicable After Default..................................................... 19
5. Special Provisions Relating to Loans............................................................. 19
(a) Unavailability of Funds or Inadequacy of Pricing............................................ 19
(b) Change in Laws.............................................................................. 20
(c) Increased Cost or Reduced Return............................................................ 20
(d) Discretion of Lender as to Manner of Funding................................................ 22
(e) Breakage Fees............................................................................... 22
6. Collateral Security.............................................................................. 23
7. Borrowing Base................................................................................... 24
(a) Initial Borrowing Base and Monthly Commitment Reduction..................................... 24
(b) Subsequent Determinations of Borrowing Base................................................. 24
8. Fees............................................................................................. 25
(a) Unused Commitment Fee....................................................................... 25
(b) The Letter of Credit Fee.................................................................... 26
(c) Agency Fees................................................................................. 26
9. Prepayments...................................................................................... 26
(a) Voluntary Prepayments....................................................................... 26
(b) Mandatory Prepayments....................................................................... 26
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10. Representations and Warranties................................................................... 27
(a) Creation and Existence...................................................................... 27
(b) Power and Authority......................................................................... 27
(c) Binding Obligations......................................................................... 28
(d) No Legal Bar or Resultant Lien.............................................................. 28
(e) No Consent.................................................................................. 28
(f) Financial Condition......................................................................... 28
(g) Liabilities................................................................................. 28
(h) Litigation.................................................................................. 28
(i) Titles, Etc................................................................................. 29
(j) Defaults.................................................................................... 29
(k) Casualties; Taking of Properties............................................................ 29
(l) Use of Proceeds; Margin Stock............................................................... 29
(m) Location of Business and Offices............................................................ 29
(n) Compliance with the Law..................................................................... 30
(o) No Material Misstatements................................................................... 30
(p) Not A Utility............................................................................... 30
(q) ERISA....................................................................................... 30
(r) Public Utility Holding Company Act.......................................................... 30
(s) Subsidiaries................................................................................ 30
(t) Environmental Matters....................................................................... 31
(u) Liens....................................................................................... 31
(v) Assets...................................................................................... 31
11. Conditions of Lending............................................................................ 31
12. Affirmative Covenants............................................................................ 33
(a) Financial Statements and Reports............................................................ 33
(b) Certificates of Compliance.................................................................. 34
(c) Accountants' Certificate.................................................................... 34
(d) Taxes and Other Liens....................................................................... 34
(e) Compliance with Laws........................................................................ 35
(f) Further Assurances.......................................................................... 35
(g) Performance of Obligations.................................................................. 35
(h) Insurance................................................................................... 35
(i) Accounts and Records........................................................................ 36
(j) Right of Inspection......................................................................... 36
(k) Notice of Certain Events.................................................................... 37
(l) ERISA Information and Compliance............................................................ 37
(m) Environmental Reports and Notices........................................................... 37
(n) Compliance and Maintenance.................................................................. 38
(o) Operation of Properties..................................................................... 38
(p) Compliance with Leases and Other Instruments................................................ 39
(q) Certain Additional Assurances Regarding Maintenance and Operations of Properties............ 39
(r) Sale of Certain Assets/Prepayment of Proceeds............................................... 39
ii
(s) Title Matters............................................................................... 39
(t) Curative Matters............................................................................ 40
(u) Change of Principal Place of Business....................................................... 40
(v) Sale of Equity.............................................................................. 40
(w) New Guarantors.............................................................................. 40
13. Negative Covenants............................................................................... 40
(a) Negative Pledge............................................................................. 40
(b) Current Ratio............................................................................... 41
(c) Total Debt to EBITDAX....................................................................... 41
(d) Consolidations and Mergers.................................................................. 41
(e) Debts, Guaranties and Other Obligations..................................................... 41
(f) Distributions or Dividends.................................................................. 42
(g) Loans and Advances.......................................................................... 42
(h) Sale or Discount of Receivables............................................................. 42
(i) Nature of Business.......................................................................... 43
(j) Transactions with Affiliates................................................................ 43
(k) Rate Management Transactions................................................................ 43
(l) Investments................................................................................. 43
(m) Amendment to Certificate of Formation or Limited Liability Company Agreement................ 43
(n) Payment or Pre-Payment of Other Indebtedness................................................ 43
14. Events of Default................................................................................ 44
15. The Agents and the Lenders....................................................................... 46
(a) Appointment and Authorization............................................................... 46
(b) Note Holders................................................................................ 47
(c) Consultation with Counsel................................................................... 47
(d) Documents................................................................................... 47
(e) Resignation or Removal of Administrative Agent.............................................. 47
(f) Responsibility of Administrative Agent...................................................... 48
(g) Independent Investigation................................................................... 50
(h) Indemnification............................................................................. 50
(i) Benefit of Section 15....................................................................... 50
(j) Pro Rata Treatment.......................................................................... 50
(k) Assumption as to Payments................................................................... 51
(l) Other Financings............................................................................ 51
(m) Interests of Lenders........................................................................ 51
(n) Investments................................................................................. 52
16. Exercise of Rights............................................................................... 52
17. Notices.......................................................................................... 52
18. Expenses......................................................................................... 53
19. Indemnity........................................................................................ 53
20. Governing Law.................................................................................... 54
21. Invalid Provisions............................................................................... 54
22. Maximum Interest Rate............................................................................ 54
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23. Amendments....................................................................................... 55
24. Multiple Counterparts............................................................................ 55
25. Conflict......................................................................................... 55
26. Survival......................................................................................... 55
27. Parties Bound.................................................................................... 55
28. Assignments and Participations................................................................... 55
29. Choice of Forum; Consent to Service of Process and Jurisdiction.................................. 57
30. Waiver of Jury Trial............................................................................. 58
31. Other Agreements................................................................................. 58
32. Financial Terms.................................................................................. 58
33. Joinder of Guarantors............................................................................ 58
EXHIBITS
Exhibit "A" - Notice of Borrowing
Exhibit "B" - Note
Exhibit "C" - Unlimited Guaranty
Exhibit "D" - Certificate of Compliance
Exhibit "E" - Assignment and Acceptance Agreement
Exhibit "F" - Pre-Approved Hedging Counterparties
SCHEDULES
Schedule 1 - Liens
Schedule 2 - Financial Condition
Schedule 3 - Liabilities
Schedule 4 - Litigation
Schedule 5 - Subsidiaries' Addresses
Schedule 6 - Owners
Schedule 7 - Environmental Matters
Schedule 8 - Title Matters
Schedule 9 - Curative Matters
Schedule 10 - Allocations
iv
RESTATED CREDIT AGREEMENT
THIS RESTATED CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 3rd day of May, 2002, by and among GREAT LAKES
ENERGY PARTNERS, L.L.C., a Delaware limited liability company (hereinafter
referred to as "Borrower") and BANK ONE, NA (successor by merger to Bank One,
Texas, N.A.) ("Bank One"), JPMORGAN CHASE BANK ("Chase"), THE BANK OF NOVA
SCOTIA ("Scotiabank"), BANK OF SCOTLAND ("BOS"), CREDIT LYONNAIS NEW YORK BRANCH
("CL"), FORTIS CAPITAL CORP. ("Fortis") and THE FROST NATIONAL BANK ("Frost")
and UNION BANK OF CALIFORNIA, N.A. ("Union") and each of the financial
institutions which is a party hereto (as evidenced by the signature pages to
this Agreement) or which may from time to time become a party hereto pursuant to
the provisions of Section 28 hereof or any successor or assignee thereof
(hereinafter collectively referred to as "Lenders", and individually, "Lender"),
Bank One, as Administrative Agent, Chase, as Syndication Agent, CL, as
Documentation Agent and Scotiabank, as Managing Agent.
W I T N E S S E T H:
WHEREAS, Borrower, certain of Lenders and Agents entered into a
Restated Credit Agreement dated as of September 27, 2001 (as amended, restated
and renewed from time-to-time, the "Credit Agreement") pursuant to which the
Lenders agreed to make a revolving loan to the Borrower in amounts up to
$275,000,000; and
WHEREAS, Borrower, Lenders and Agents have agreed to restate the Credit
Agreement to make certain amendments thereto as set forth herein and Union has
agreed to purchase an interest in the Loans concurrently with the closing of
such restatement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. Definitions. When used herein the terms "Administrative
Agent", "Agreement", "Bank One", "Borrower", "Chase", "Documentation Agent",
"Frost", "Lender", "Lenders", "Syndication Agent" and "Union" shall have the
meanings indicated above. When used herein the following terms shall have the
following meanings:
Administrative Agent means Bank One, NA or any successor
Administrative Agent.
Advance or Advances means a loan or loans hereunder.
Affiliate means any Person which, directly or indirectly,
controls, is controlled by or is under common control with the relevant
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean a member
of the board of directors, a partner or an officer of such Person, or
any other Person with
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the
ownership (of record, as trustee, or by proxy) of voting shares,
partnership interests or voting rights, through a management contract
or otherwise. Any Person owning or controlling, directly or indirectly,
ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be
deemed to be an Affiliate of such Person.
Agents means the Administrative Agent, the Syndication Agent
and the Documentation Agent.
Alternate Base Rate shall mean, as of any date, a rate of
interest per annum equal to the higher of (i) the Corporate Base Rate
for such date, and (ii) the sum of the Federal Funds Effective Rate for
such date plus one-half of one percent (.50%) per annum.
Assignment and Acceptance means a document substantially in
the form of Exhibit "E" hereto.
Base Rate shall mean, as of any date, the sum of the Alternate
Base Rate plus the Base Rate Margin.
Base Rate Loans shall mean any loan during any period which
bears interest based upon the Alternate Base Rate or which would bear
interest based upon the Alternate Base Rate if the Maximum Rate ceiling
was not in effect at that particular time.
Base Rate Margin shall be:
(i) three-quarters of one percent (.75%) per
annum whenever the Borrowing Base Usage is equal to or greater
than 90%;
(ii) five-eighths of one percent (.625%) per
annum whenever the Borrowing Base Usage is equal to or greater
than 75%, but less than 90%;
(iii) one-half of one percent (.50%) per annum
whenever the Borrowing Base Usage is equal to or greater than
50% but less than 75%; or
(iv) one-quarter of one percent (.25%) per annum
whenever the Borrowing Base Usage is less than 50%.
Borrowing Base means the value assigned by the Lenders from
time to time 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 $205,000,000.
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Borrowing Base Assets shall mean, as of any date, (i) Oil and
Gas Properties either (A) given economic value in the most recent
engineering report provided to the Lenders pursuant to Section 6
hereof, or (B) other material proved producing Oil and Gas Properties,
and (ii) gas pipelines and gas gathering systems which are owned by the
Borrower and its subsidiaries.
Borrowing Base Usage shall mean, as of any date, all amounts
outstanding on the Loan plus all outstanding Letters of Credit, divided
by the Borrowing Base.
Borrowing Date means the date elected by Borrower pursuant to
Section 2(b) hereof for an Advance on the Loan.
Business Day shall mean (i) with respect to any borrowing,
payment or note selection of Eurodollar Loans, a day (other than
Saturdays or Sundays) on which banks are legally open for business in
Dallas, Texas and New York, New York and on which dealings in United
States dollars are carried on in the London interbank market, and (ii)
for all other purposes a day (other than Saturdays and Sundays) on
which banks are legally open for business in Dallas, Texas.
Change of Control shall occur if Marbel HoldCo, Inc. and Range
HoldCo, Inc. or their Affiliates cease to beneficially own and control
at least sixty-six and two-thirds (66-2/3%) of the membership interests
of Borrower.
Commitment shall mean (A) for all Lenders, the lesser of (i)
$275,000,000 or (ii) the Borrowing Base, as reduced or increased from
time to time pursuant to Sections 2 and 7 hereof, and (B) as to any
Lender, its obligation to make Advances hereunder on the Loans and
purchase participations in Letters of Credit issued hereunder by the
Administrative Agent in amounts not exceeding, in the aggregate, an
amount equal to such Lender's Commitment Percentage times the total
Commitment as of any date. The Commitment of each Lender hereunder
shall be adjusted from time to time to reflect assignments made by such
Lender pursuant to Section 28 hereof. Each reduction in the Commitment
shall result in a Pro Rata reduction in each Lender's Commitment.
Commitment Percentage shall mean, for each Lender, the
percentage derived by dividing its Commitment at the time of the
determination by the Commitment of all Lenders at the time of
determination. The Commitment Percentage of each Lender hereunder as of
the Effective Date set forth in Schedule 10 and shall be adjusted from
time to time to reflect assignments made by such Lender pursuant to
Section 28 hereof.
Consolidated Current Assets means the total of the
consolidated current assets determined in accordance with GAAP, plus,
as of any date, the unused availability on the Commitment, less any
amount required to be included in Consolidated Current Assets as a
result of the application of FASB Statement 133.
3
Consolidated Current Liabilities means the total of
consolidated current obligations as determined in accordance with GAAP,
excluding therefrom, as of any date, current maturities due on the
Loans, less any amount required to be included in Consolidated Current
Liabilities as a result of application of FASB Statement 133.
Consolidated EBITDAX shall mean Consolidated Net Income
(excluding gains and losses from asset sales, extraordinary and
non-recurring gains and losses and non-recurring formation costs) plus
the sum of (i) income tax expense (but excluding income tax expense
relating to the sales or other disposition of assets, including capital
stock, the gains and losses from which are excluded in the
determination of Consolidated Net Income), plus (ii) Consolidated
Interest Expense, plus (iii) depreciation, depletion, impairment and
amortization expense, plus (iv) exploration expenses.
Consolidated Interest Expense shall mean the aggregate amount
of cash and non-cash interest expense (including capitalized interest)
of Borrower as determined on a consolidated basis in accordance with
GAAP in respect of all indebtedness, excluding (i) accrued and unpaid
interest to intercompany indebtedness and (ii) amortization of deferred
financing costs.
Consolidated Net Income shall mean Borrower's consolidated net
income after income taxes calculated in accordance with GAAP, but
excluding any non-cash gains or losses as a result of the application
of FASB Statement 133.
Consolidated Total Debt means, as of any date, without
duplication, (i) all obligations for borrowed money or for the purchase
price of property, (ii) all obligations evidenced by bonds, debentures,
notes, or other similar instruments, (iii) all other indebtedness
(including obligations under capital leases, other than usual and
customary oil and gas leases) on which interest charges are customarily
paid or accrued, (iv) all guarantees, (v) the unfunded or unreimbursed
portion of all letters of credit, (vi) any indebtedness or other
obligation secured by a Lien on assets, whether or not assumed, and
(vii) all liability as a general partner of a partnership for
obligations of that partnership of the nature described in (i) through
(vii) preceding, but excluding any liabilities required to be included
as balance sheet liabilities as a result of the application of FASB
Statement 133.
Corporate Base Rate means a rate per annum equal to the
Corporate Base Rate announced by Administrative Agent from time to
time, changing when and as said Corporate Base Rate changes.
Default means all the events specified in Section 14 hereof,
regardless of whether there shall have occurred any passage of time or
giving of notice, or both, that would be necessary in order to
constitute such event as an Event of Default.
4
Default Rate shall mean a default rate of interest determined
in accordance with Section 4(e) hereof.
Defaulting Lender is used herein as defined in Section 3(f)
hereof.
Documentation Agent means Credit Lyonnais New York Branch or
any successor Documentation Agent.
Effective Date means the date of this Agreement.
Eligible Assignee means any of (i) a Lender or any Affiliate
of a Lender; (ii) a commercial bank organized under the laws of the
United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000; (iii) a commercial bank organized
under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of any such country, and having a combined capital and
surplus of at least $100,000,000.00, provided that such bank is acting
through a branch or agency located in the United States; (iv) a Person
that is primarily engaged in the business of commercial lending and
that (A) is a subsidiary of a Lender, (B) a subsidiary of a Person of
which a Lender is a subsidiary, or (C) a Person of which a Lender is a
subsidiary; (v) any other entity (other than a natural person) which is
an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its
businesses, including, but not limited to, insurance companies, mutual
funds, and lease financing companies; and (vi) with respect to any
Lender that is a fund that invests in loans, any other fund that
invests in loans and is managed by the same investment advisor of such
Lender or by an Affiliate of such investment advisor (and treating all
such funds so managed as a single Eligible Assignee); provided,
however, that any Affiliate of Borrower that acquires an interest in
any of the Commitment Loans shall not be entitled to vote as a Lender.
Engineered Value is used herein as defined in Section 6
hereof.
Environmental Laws means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A.
Section 9601, et seq., the Resource Conservation and Recovery Act, as
amended by the Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A.
Section 6901, et seq., the Clean Water Act, 33 U.S.C.A. Section 1251,
et seq., the Clean Air Act, 42 U.S.C.A. Section 1251, et seq., the
Toxic Substances Control Act, 15 U.S.C.A. Section 2601, et seq., The
Oil Pollution Act of 1990, 33 U.S.G. Section 2701, et seq., and all
other laws, statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, orders, permits and
restrictions of any federal, state, county, municipal and other
governments, departments, commissions, boards, agencies, courts,
authorities, officials and officers, domestic or foreign, relating to
oil pollution, air pollution, water pollution, noise control and/or the
handling, discharge, disposal or recovery of on-site or off-site
asbestos, radioactive materials, spilled or leaked petroleum products,
distillates or
5
fractions and industrial solid waste or "hazardous substances" as
defined by 42 U.S.C. Section 9601, et seq., as amended, as each of the
foregoing may be amended from time to time.
Environmental Liability means any claim, demand, obligation,
cause of action, order, violation, damage, injury, judgment, penalty or
fine, cost of enforcement, cost of remedial action or any other costs
or expense whatsoever, including reasonable attorneys' fees and
disbursements, resulting from the violation or alleged violation of any
Environmental Law or the release of any substance into the environment
which is required to be remediated by a regulatory agency or
governmental authority or the imposition of any Environmental Lien (as
hereinafter defined) which could reasonably be expected to individually
or in the aggregate have a Material Adverse Effect.
Environmental Lien means a Lien in favor of any court,
governmental agency or instrumentality or any other Person (i) for any
Environmental Liability or (ii) for damages arising from or cost
incurred by such court or governmental agency or instrumentality or
other person in response to a release or threatened release of asbestos
or "hazardous substance" into the environment, the imposition of which
Lien could reasonably be expected to have a Material Adverse Effect.
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
Eurodollar Base Rate shall mean, with respect to any
Eurodollar Loan for the relevant Interest Period, the rate determined
by the Administrative Agent to be the rate at which the Administrative
Agent offers to place deposits in U.S. dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London
time) two (2) Business Days prior to the first date of such Interest
Period, in the approximate amount of the Administrative Agent's
relevant Eurodollar Loan and having a maturity equal to such Interest
Period.
Eurodollar Loans mean any Advance 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.
Eurodollar Margin shall be:
(i) two percent (2%) per annum whenever the
Borrowing Base Usage is equal to or greater than 90%;
(ii) one and seven-eighths percent (1.875%) per
annum whenever the Borrowing Base Usage is equal to or greater
than 75%, but less than 90%;
(iii) one and three-quarters percent (1.75%) per
annum whenever the Borrowing Base Usage is equal to or greater
than 50%, but less than 75%; or
6
(iv) one and one-half percent (1.50%) per annum
whenever the Borrowing Base Usage is less than 50%.
Eurodollar Rate means, with respect to a Eurodollar Loan for
the relevant Interest Period, the sum of (i) the quotient of (A) the
Eurodollar Base Rate applicable to such Interest Period, divided by (B)
one minus the Reserve Requirement (expressed as a decimal) applicable
to such Interest Period, plus the Eurodollar Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16th of one
percent if the rate is not such a multiple.
Federal Funds Effective Rate shall mean, for any day, an
interest rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m.
(Dallas, Texas time) on such day on such transactions received by the
Administrative Agent from three (3) Federal funds brokers of recognized
standing selected by the Administrative Agent in its sole discretion.
Financial Statements means balance sheets, income statements,
statements of cash flow and appropriate footnotes and schedules,
prepared in accordance with GAAP.
GAAP means generally accepted accounting principles,
consistently applied.
Guarantors means all Subsidiaries of Borrower.
Guaranties means unlimited guaranties of the Guarantors in the
form of Exhibit "C" hereto.
Interest Payment Date shall mean the last Business Day of each
calendar month in the case of Base Rate Loans and, in the case of
Eurodollar Loans, the last day of the applicable Interest Period, and
if such Interest Period is longer than three (3) months, at three-month
intervals following the first day of such Interest Periods.
Interest Period shall mean 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), three (3), six (6), or nine (9)
months thereafter as selected by the Borrower 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), three (3), six
(6), or nine (9) months thereafter, as selected by the Borrower
pursuant to Section 4(a)(ii); provided, however, that (i) if any
Interest Period would otherwise expire on a day which is not a Business
Day, such Interest Period shall
7
expire on the next succeeding Business Day unless the result of such
extension would be to extend such Interest Period into the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day, (ii) if any Interest Period begins
on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) such Interest Period shall end on the last
Business Day of a calendar month, and (iii) any Interest Period which
would otherwise expire after the Maturity Date shall end on such
Maturity Date.
Letters of Credit is used herein as defined in Section 2(c)
hereof.
Lien means any mortgage, deed of trust, pledge, security
interest, assignment, encumbrance or lien (statutory or otherwise) of
every kind and character.
Loans means an Advance or Advances made under the Commitment.
Loan Documents means this Agreement, the Notes, the Security
Instruments and all other documents executed in connection with the
transaction described in this Agreement.
Majority Lenders means Lenders holding 66-2/3% or more of the
Commitments or if the Commitments have been terminated, Lenders holding
66-2/3% of the outstanding Loans.
Managing Agent means the Bank of Nova Scotia and any successor
Managing Agent.
Material Adverse Effect shall mean a material adverse effect
on (i) the assets or properties, liabilities, financial condition,
business, operations, affairs or circumstances of the Borrower, (ii)
the ability of the Borrower to carry out its businesses as of the date
of this Agreement or as proposed at the date of this Agreement to be
conducted, (iii) the ability of Borrower to perform fully and on a
timely basis its obligations under any of the Loan Documents, or (iv)
the validity or enforceability of any of the Loan Documents or the
rights and remedies of the Administrative Agent or the Lenders
thereunder.
Maturity Date shall mean January 1, 2005.
Maximum Rate means 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 Borrower from time to
time as the effective date of each change in such Maximum Rate.
8
Notes means the Notes described in Section 3 hereof,
substantially in the form of Exhibit "B" hereto issued or to be issued
hereunder to each Lender, respectively, to evidence the indebtedness to
such Lender arising by reason of the Advances on the Loan, together
with all modifications, renewals and extensions thereof or any part
thereof.
Oil and Gas Properties means all oil, gas and mineral
properties and interests, related personal properties (excluding gas
pipelines and gas gathering systems), in which Borrower grants to the
Lenders a first and prior lien and security interest pursuant to
Section 6 hereof.
Other Financing is used herein as defined in Section 15(l)
hereof.
Payor is used herein as defined in Section 3(h)hereof.
Permitted Liens shall mean (i) royalties, overriding
royalties, reversionary interests, production payments and similar
burdens; (ii) 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 Borrower of any material right
in respect of 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 Borrower has set aside
on its books adequate reserves in accordance with GAAP); (iv)
easements, rights of way, servitudes, permits, surface leases and other
rights in respect to surface operations, pipelines, grazing, logging,
canals, ditches, reservoirs or the like, conditions, covenants and
other restrictions, and easements of streets, alleys, highways,
pipelines, telephone lines, power lines, railways and other easements
and rights of way on, over or in respect of 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 Borrower in connection with the
construction, maintenance, development, transportation, storage or
operation of 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 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 Borrower's assets and properties which were in
existence at the time Borrower's assets and properties were originally
acquired by 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,
9
value or use of 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 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
Lenders in Schedule "1" hereto.
Person means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
Plan means any plan subject to Title IV of ERISA and
maintained by Borrower, or any such plan to which Borrower is required
to contribute on behalf of its employees.
Pre-Approved Contracts as used herein shall mean any contracts
or agreements entered into in connection with any Rate Management
Transaction designed (i) to hedge, forward, sell or swap crude oil or
natural gas or otherwise sell up to 80% of the Borrower's anticipated
production from proved, developed producing reserves of crude oil,
and/or 80% of the Borrower's anticipated production from proved,
developed producing reserves of natural gas, during the period from the
immediately preceding settlement date (or the commencement of the term
of such hedge transactions if there is no prior settlement date) to
such settlement date, and (ii) with one or more of the Lenders or
counterparties to the hedging agreement listed on Exhibit "F" hereto.
Pro Rata or Pro Rata Part means for each Lender, (i) for all
purposes where no Loan is outstanding, such Lender's Commitment
Percentage and (ii) otherwise, the proportion which the portion of the
outstanding Loans owed to such Lender bears to the aggregate
outstanding Loans owed to all Lenders at the time in question.
Rate Management Transaction means any transaction (including
an agreement with respect thereto) now existing or hereafter entered
into between Borrower and Administrative Agent or the Lenders or the
counterparties listed on Exhibit "F" hereto which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond
option, interest rate option, forward exchange transaction, cap
transaction, floor transaction, collar transaction, forward
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or any
combination thereof, whether linked to one or
10
more interest rates, foreign currencies, commodity prices, equity
prices or other financial measures.
Regulation D shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor thereto and other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to
member banks of the Federal Reserve System.
Reimbursement Obligations means, at any time, the obligations
of the Borrower in respect of all Letters of Credit then outstanding to
reimburse amounts paid by any Lender in respect of any drawing or
drawings under a Letter of Credit.
Release Price is used herein as defined in Section 12(r)
hereof.
Required Lenders means Lenders holding 75% or more of the
Commitments or if the Commitments have been terminated, Lenders holding
75% of the outstanding Loans.
Required Payment is used herein as defined in Section 3(h)
hereof.
Reserve Requirement means, with respect to any Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under
Regulation D or Eurocurrency liabilities.
Security Instruments is used collectively herein to mean this
Agreement, all Deeds of Trust, Mortgages, Security Agreements,
Assignments of Production and Financing Statements and other collateral
documents covering the Oil and Gas Properties and related personal
property, equipment, oil and gas inventory and proceeds of the
foregoing, all such documents to be in form and substance satisfactory
to Administrative Agent.
Subsidiary means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by
Borrower or another subsidiary.
Syndication Agent means JPMorgan Chase Bank or any successor
Syndication Agent.
Total Outstandings means, 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.
Tranche means a set of Eurodollar Loans made by the Lenders at
the same time and for the same Interest Period.
11
Unscheduled Redeterminations means a redetermination of the
Borrowing Base made at any time other than on the dates set for the
regular semi-annual redetermination of the Borrowing Base which are
made (A) at the request of Borrower (but only one between Borrowing
Base redeterminations) (B) at the request of Majority Lenders (but only
once between Borrowing Base redeterminations), provided, however, that
(i) Majority Lenders may require an Unscheduled Redetermination at any
time it appears to Administrative Agent or Majority Lenders, in the
exercise of their reasonable discretion, that either (a) there has been
a material decrease in the value of the Oil and Gas Properties, or (b)
an event has occurred which is reasonably expected to have a Material
Adverse Effect, or (ii) Majority Lenders may require an Unscheduled
Redetermination if Borrower terminates any material agreements entered
into in connection with a Rate Management Transaction used by Lenders
in determining the Borrowing Base or if the counterparty to any such
material agreement commences, or has commenced against it any
proceeding under any bankruptcy, insolvency or similar law now or
hereafter in effect.
Unused Commitment Fee Rate shall be:
(i) one-half of one percent (.50%) per annum
whenever the Borrowing Base Usage is equal to or greater than
75%;
(ii) three-eighths of one percent (.375%) per
annum whenever the Borrowing Base Usage is equal to or greater
than 50% but less than 75% and
(iii) one-fourth of one percent (.25%) per annum
whenever the Borrowing Base Usage is less than 50%.
2. Commitments of the Lenders.
(a) Terms of Commitment. On the terms and conditions
hereinafter set forth, each Lender agrees severally to make Advances to
the Borrower from time to time during the period beginning on the
Effective Date and ending on the Maturity Date in such amounts as the
Borrower may request up to an amount not to exceed, in the aggregate
principal amount outstanding at any time, the Commitment less Total
Outstandings. The obligation of the Borrower hereunder shall be
evidenced by this Agreement and the Notes issued in connection
herewith, said Notes to be as described in Section 3 hereof.
Notwithstanding any other provision of this Agreement, no Advance shall
be required to be made hereunder if any Default or Event of Default (as
hereinafter defined) has occurred and is continuing. Each Advance under
the Commitment shall be an aggregate amount of at least $1,000,000 or
any whole multiples of $100,000 in excess thereof. Irrespective of the
face amount of the Note or Notes, the Lenders shall never have the
obligation to Advance any amount or amounts in excess of the Commitment
or to increase the Commitment.
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(b) Procedure for Borrowing. Whenever the Borrower
desires an Advance hereunder, it shall give Administrative 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 Administrative Agent not later than 12:00 noon 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 shall be a
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,
Administrative Agent shall advise each Lender thereof; provided, that
if the Lenders have received at least one (1) day's notice of such
Advance prior to funding of a Base Rate Loan, or at least three (3)
days' notice of each Advance prior to funding in the case of a
Eurodollar Loan, each Lender shall provide Administrative Agent at its
office at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, not later than 1:00
p.m., Dallas, Texas time, on the Borrowing Date, in immediately
available funds, its pro rata share of the requested Advance, but the
aggregate of all such fundings by each Lender shall never exceed such
Lender's Commitment. Not later than 2:00 p.m., Dallas, Texas time, on
the Borrowing Date, Administrative Agent shall make available to the
Borrower at the same office, in like funds, the aggregate amount of
such requested Advance. Neither Administrative Agent nor any Lender
shall incur any liability to the Borrower in acting upon any Notice
referred to above which Administrative Agent or such Lender believes in
good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Borrower or for otherwise
acting in good faith under this Section 2(b). Upon funding of Advances
by Lenders in accordance with this Agreement, pursuant to any such
Notice, the Borrower shall have effected Advances hereunder.
(c) Letters of Credit. On the terms and conditions
hereinafter set forth, the Administrative Agent shall from time to time
during the period beginning on the Effective Date and ending on the
Maturity Date upon request of Borrower issue standby and/or commercial
Letters of Credit for the account of Borrower (the "Letters of Credit")
in such face amounts as Borrower may request, but not to exceed in the
aggregate face amount at any time outstanding the sum of Twenty Million
Dollars ($20,000,000.00). The face amount of all Letters of Credit
issued and outstanding hereunder shall be considered as Advances on the
Commitment for Borrowing Base purposes and all payments made by the
Administrative Agent on such Letters of Credit shall be considered as
Advances under the Notes. Each Letter of Credit issued for the account
of Borrower hereunder shall (i) be in favor of such beneficiaries as
specifically requested by Borrower, (ii) have an expiration date not
exceeding the earlier of (a) one year or (b) the Maturity Date, and
(iii) contain such other terms and provisions as may be required by
13
issuing Lender. Each Lender (other than Administrative Agent) agrees
that, upon issuance of any Letter of Credit hereunder, it shall
automatically acquire a participation in the Administrative Agent's
liability under such Letter of Credit in an amount equal to such
Lender's Commitment Percentage of such liability, and each Lender
(other than Administrative Agent) thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to Administrative Agent
to pay and discharge when due, its Commitment Percentage of
Administrative Agent's liability under such Letter of Credit. The
Borrower hereby unconditionally agrees to pay and reimburse the
Administrative 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 Administrative 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 Administrative Agent shall promptly notify the Borrower of the
demand and the date upon which such payment is to be made by the
Administrative Agent to such beneficiary in respect of such demand.
Forthwith upon receipt of such notice from the Administrative Agent,
Borrower shall advise the Administrative Agent whether or not it
intends to borrow hereunder to finance its obligations to reimburse the
Administrative Agent, and if so, submit a Notice of Borrowing as
provided in Section 2(b) hereof. If Borrower fails to so advise
Administrative Agent and thereafter fails to reimburse Administrative
Agent, the Administrative Agent shall notify each Lender of the demand
and the failure of the Borrower to reimburse the Administrative Agent,
and each Lender shall reimburse the Administrative Agent for its
Commitment Percentage of each such draw paid by the Administrative
Agent and unreimbursed by the Borrower. All such amounts paid by
Administrative Agent and/or reimbursed by the Lenders shall be treated
as an Advance or Advances under the Commitment, which Advances shall be
immediately due and payable and shall bear interest at the Maximum
Rate.
(d) Procedure for Obtaining Letters of Credit. The amount
and date of issuance, renewal, extension or reissuance of a Letter of
Credit pursuant to the Commitments shall be designated by Borrower's
written request delivered to Administrative 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, Borrower shall execute and deliver to
the Administrative Agent an application and agreement with respect to
the Letters of Credit, said application and agreement to be in the form
used by the Administrative Agent. The Administrative Agent shall not be
obligated to issue, renew, extend or reissue such Letters of Credit if
(A) the amount thereon when added to the face amount of the outstanding
Letters of Credit plus any Reimbursement Obligations exceeds Twenty
Million Dollars ($20,000,000.00) or (B) the amount thereof when added
to the Total Outstandings would exceed the Commitment. Borrower agrees
to pay the Administrative Agent for the benefit of the Lenders
commissions for issuing the Letters of Credit (calculated separately
for each Letter of Credit) in an amount equal to the Eurodollar
14
Margin multiplied by the maximum face amount of the Letter of Credit.
Borrower further agrees to pay Administrative Agent for its own account
an additional fronting fee equal to one-quarter of one percent (.25%)
per annum multiplied times the maximum face amount of each Letter of
Credit. Such commissions shall be payable prior to the issuance of each
Letter of Credit and thereafter on each anniversary date of such
issuance while such Letter of Credit is outstanding. Such commissions
and fronting fee will be calculated based on the basis of a year
consisting of 360 days.
(e) Voluntary Reduction of Commitment. The Borrower may
at any time, or from time to time, upon not less than three (3)
Business Days' prior written notice to Administrative Agent, reduce or
terminate the Commitment; provided, however, that (i) each reduction in
the Commitment must be in the amount of $1,000,000 or more, in
increments of $1,000,000 and (ii) each reduction must be accompanied by
a prepayment of the Notes in the amount by which the outstanding
principal balance of the Notes exceeds the Commitment as reduced
pursuant to this Section 2.
(f) Several Obligations. The obligations of the Lenders
under the Commitments are several and not joint. The failure of any
Lender to make an Advance required to be made by it shall not relieve
any other Lender of its obligation to make its Advance, and no Lender
shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender. No Lender shall be required to
lend hereunder any amount in excess of its legal lending limit.
(g) Type and Number of Advances. Any Advance under the
Commitment may be a Base Rate Loan or a Eurodollar Loan, or a
combination thereof, as selected by the Borrower pursuant to Section 4
hereof. The total number of Tranches which may be outstanding at any
time shall never exceed eight (8).
3. Notes Evidencing Loans. The loans described above in Section 2
shall be evidenced by promissory notes of Borrower as follows:
(a) Form of Notes. The Loans shall be evidenced by a Note
or Notes in the aggregate face amount of $275,000,000, and shall be in
the form of Exhibit "B" hereto with appropriate insertions (each a
"Note"). Notwithstanding the face amount of the Notes, the actual
principal amount due from the Borrower to Lenders 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 Lenders 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 Borrower's obligation to pay the principal amount thereof,
only to the extent of the unpaid principal amount of the Loans.
Irrespective of the face amount of the Notes, no Lender shall ever be
obligated to advance on the Commitment any amount in excess of its
Commitment then in effect.
15
(b) Issuance of Additional Notes. At the Effective Date
there shall be outstanding Notes in the aggregate face amount of
$275,000,000. From time to time new Notes may issued to other Lenders
as such Lenders become parties to this Agreement. Upon request from
Administrative Agent, the Borrower shall execute and deliver to
Administrative Agent any such new or additional Notes. From time to
time as new Notes are issued the Administrative Agent shall require
that each Lender exchange its Note(s) for newly issued Note(s) to
better reflect the extent of each Lender's Commitments hereunder.
(c) Interest Rates. The unpaid principal balance of the
Notes shall bear interest from time to time as set forth in Section 4
hereof.
(d) Payment of Interest. Interest on the Notes shall be
payable on each Interest Payment Date.
(e) Payment of Principal. Principal of the Note or Notes
shall be due and payable to the Administrative Agent for the ratable
benefit of the Lenders on the Maturity Date unless earlier due in whole
or in part as a result of an acceleration of the amount due or pursuant
to the mandatory prepayment provisions of Section 9(b) hereof.
(f) Payment to Lenders. Each Lender's Pro Rata Part of
payment or prepayment of the Loans shall be directed by wire transfer
to such Lender by the Administrative Agent at the address provided to
the Administrative Agent for such Lender for payments no later than
2:00 p.m., Dallas, Texas, time on the Business Day such payments or
prepayments are deemed hereunder to have been received by
Administrative Agent; provided, however, in the event that any Lender
shall have failed to make an Advance as contemplated under Section 2
hereof (a "Defaulting Lender") and the Administrative Agent or another
Lender or Lenders shall have made such Advance, payment received by
Administrative Agent for the account of such Defaulting Lender or
Lenders shall not be distributed to such Defaulting Lender or Lenders
until such Advance or Advances shall have been repaid in full to the
Lender or Lenders who funded such Advance or Advances. Any payment or
prepayment received by Administrative 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 Administrative Agent. If Administrative Agent fails to
transfer any principal amount to any Lender as provided above, then
Administrative Agent shall promptly direct such principal amount by
wire transfer to such Lender together with interest thereon with
respect of the period commencing on the date one (1) day after such
amount was made available to the Administrative Agent until the date
the Administrative Agent pays such principal amount to the Lender at
the rate applicable to such portion of the applicable loan.
16
(g) Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, or otherwise) on account
of the Loans, (including, without limitation, any set-off) which is in
excess of its Pro Rata Part of payments on either of the Loans, as the
case may be, obtained by all Lenders, such Lender shall purchase from
the other Lenders such participation as shall be necessary to cause
such purchasing Lender to share the excess payment pro rata with each
of them; provided that, if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of the
recovery. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of offset) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the
amount of such participation.
(h) Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender or
the Borrower (the "Payor") prior to the date on which such Lender is to
make payment to the Administrative Agent of the proceeds of a Loan to
be made by it hereunder or the Borrower is to make a payment to the
Administrative Agent for the account of one or more of the Lenders, as
the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor
does not intend to make the Required Payment to the Administrative
Agent, the Administrative 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 Administrative Agent, the recipient of such
payment shall, on demand, pay to the Administrative Agent the amount
made available to it together with interest thereon in respect of the
period commencing on the date such amount was made available by the
Administrative Agent until the date the Administrative Agent recovers
such amount at the rate applicable to such portion of the applicable
Loan.
4. Interest Rates.
(a) Options.
(i) Base Rate Loans. On all Base Rate Loans the
Borrower agrees to pay interest on the Notes calculated on the
basis of the actual days elapsed in a year consisting of 360
days with respect to the unpaid principal amount of each Base
Rate Loan from the date the proceeds thereof are made
available to Borrower 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
17
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. On all Eurodollar Loans
the Borrower agrees 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 are made available to Borrower 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)
Business Days' written notice prior to the making by the
Lenders 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), Borrower shall have the option, subject to
compliance by Borrower with all of the provisions of this
Agreement, as long as no Event of Default exists, to specify
whether the Interest Period commencing on any such date shall
be a one (1), two (2), three (3), six (6) or nine (9) month
period. If Administrative Agent shall not have received timely
notice of a designation of such Interest Period as herein
provided, Borrower shall be deemed to have elected to convert
all maturing Eurodollar Loans to Base Rate Loans.
(b) Interest Rate Determination. The Administrative Agent
shall determine each interest rate applicable to the Loans hereunder.
The Administrative Agent shall give prompt notice to the Borrower and
the Lenders of each rate of interest so determined and its
determination thereof shall be conclusive absent error.
(c) Conversion Option. Borrower may elect from time to
time (i) to convert all or any part of its Eurodollar Loans to Base
Rate Loans by giving Administrative 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 a 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 Administrative Agent
irrevocable written notice of such election three (3) Business Days
prior to the proposed conversion and such conversion shall be made on
the requested conversion date or, if such requested conversion date is
not a Business Day, on the next succeeding
18
Business Day. 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 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.
(e) Interest Rates Applicable After Default.
Notwithstanding anything to the contrary contained in this Section 4,
during the continuance of a Default or an Event of Default the Majority
Lenders may, at their option, by notice from Administrative Agent to
the Borrower (which notice may be revoked at the option of the Majority
Lenders notwithstanding the provisions of Section 15 hereof, which
requires all Lenders to consent to changes in interest rates) declare
that no Advance may be made as, converted into, or continued as a
Eurodollar Loan. During the continuance of an Event of Default, the
Majority Lenders, may, at their option, by notice from Administrative
Agent to the Borrower (which notice may be revoked at the option of
Majority Lenders notwithstanding the provisions of Section 15 hereof,
which requires all Lenders to consent to changes in interest rates)
declare that (i) each Eurodollar Loan shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus two percent (2%) per annum and
(ii) each Base Rate Loan shall bear interest at the rate otherwise
applicable to such Interest Period plus two percent (2%), provided
that, during the continuance of an Event of Default under Section 14(f)
or 14(g), the interest rate set forth in clauses (i) and (ii) above
shall be applicable to all outstanding Loans without any election or
action on the part of the Administrative Agent or any Lender.
5. Special Provisions Relating to Loans.
(a) Unavailability of Funds or Inadequacy of Pricing. In
the event that, in connection with any proposed Eurodollar Loan, the
Administrative Agent determines, which determination shall, absent
manifest error, be final, conclusive and binding upon all parties, due
to changes in circumstances since the date hereof, adequate and fair
means do not exist for determining the Eurodollar Rate or such rate
will not accurately reflect the costs to the Lenders of funding
Eurodollar Loan for such Eurodollar Interest Period, the Administrative
Agent shall give notice of such determination to the Borrower and the
Lenders, whereupon, until the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such
suspension no longer exist, the obligations of the Lenders to make,
continue or convert a Loan into a Eurodollar Loan
19
shall be suspended, and all loans to Borrower shall be Base Rate Loans
during the period of suspension.
(b) Change in Laws. If at any time any new law or any
change in existing laws or in the interpretation of any new or existing
laws shall make it unlawful for any Lender to make or continue to
maintain or fund a Eurodollar Loan hereunder, then such Lender shall
promptly notify Borrower in writing and such Lender's obligation to
make, continue or convert Loans into Eurodollar Loans under this
Agreement shall be suspended until it is no longer unlawful for such
Lender to make or maintain Eurodollar Loans. Upon receipt of such
notice, Borrower shall either repay the outstanding Eurodollar Loan
owed to the Lenders, without penalty, on the last day of the current
Interest Periods (or, if any Lender may not lawfully continue to
maintain and fund such Eurodollar Loan, immediately), or Borrower may
convert such Eurodollar Loan at such appropriate time to Base Rate
Loan.
(c) Increased Cost or Reduced Return.
(i) If, after the date hereof, the adoption of
any applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender with any request or directive (whether or not having
the force of law) of any such governmental authority, central
bank, or comparable agency:
(A) shall subject such Lender to any
tax, duty, or other charge with respect to any
Eurodollar Loan, its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of
any amounts payable to such Lender under this
Agreement or its Notes in respect of any Eurodollar
Loan (other than franchise taxes and taxes imposed on
the overall net income of such Lender);
(B) shall impose, modify, or deem
applicable any reserve, special deposit, assessment,
or similar requirement (other than reserve
requirements, if any, taken into account in the
determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of,
such Lender, including the Commitment of such Lender
hereunder; or
(C) shall impose on such Lender or on
the London interbank market any other condition
affecting this Agreement or its Notes or any of such
extensions of credit or liabilities or commitments;
20
and the result of any of the foregoing is to increase the cost
to such Lender of making, converting into, continuing, or
maintaining any Eurodollar Loan or to reduce any sum received
or receivable by such Lender under this Agreement or its Notes
with respect to any Eurodollar Loan, then Borrower shall pay
to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction.
If any Lender requests compensation by Borrower under this
Section 5(c), Borrower may, by notice to such Lender (with a
copy to Administrative Agent), suspend the obligation of such
Lender to make or continue Eurodollar Loans, or to convert all
or part of the Base Rate Loan owing to such Lender to a
Eurodollar Loan, until the event or condition giving rise to
such request ceases to be in effect (in which case the
provisions of Section 5(c) shall be applicable); provided that
such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(ii) If, after the date hereof, any Lender shall
have determined that the adoption of any applicable law, rule,
or regulation regarding capital adequacy or any change therein
or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether
or not having the force of law) of any such governmental
authority, central bank, or comparable agency, has or would
have the effect of reducing the rate of return on the capital
of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level
below that which such Lender or such corporation could have
achieved but for such adoption, change, request, or directive
(taking into consideration its policies with respect to
capital adequacy), then from time to time upon demand Borrower
shall pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(iii) Each Lender shall promptly notify Borrower
and Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle
such Lender to compensation pursuant to this Section 5(c) and
will designate a separate lending office, if applicable, if
such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section 5(c) shall furnish to
Borrower and Administrative Agent a statement setting forth
the additional amount or amounts to be paid to it hereunder
which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable
averaging and attribution methods.
(iv) Any Lender giving notice to the Borrower
through the Administrative Agent, pursuant to Sections 3(k) or
5(c) shall give to the Borrower a statement signed by an
officer of such Lender setting forth in reasonable detail
21
the basis for, and the calculation of such additional cost,
reduced payments or capital requirements, as the case may be,
and the additional amounts required to compensate such Lender
therefor.
(v) Within five (5) Business Days after receipt
by the Borrower of any notice referred to in Sections 3(k) or
5(c), the Borrower shall pay to the Administrative Agent for
the account of the Lender issuing such notice such additional
amounts as are required to compensate such Lender for the
increased cost, reduce payments or increase capital
requirements identified therein, as the case may be.
(d) Discretion of Lender as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each
Lender shall be entitled to fund and maintain its funding of all or any
part of its Loan in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all determinations
hereunder shall be made as if each Lender had actually funded and
maintained each Eurodollar Loan through the purchase of deposits having
a maturity corresponding to the last day of the Eurodollar Interest
Period applicable to such Eurodollar Loan and bearing an interest rate
to the applicable interest rate for such Eurodollar Period.
(e) Breakage Fees. Without duplication under any other
provision hereof, if any Lender incurs any loss, cost or expense
including, without limitation, any loss of profit and loss, cost,
expense or premium reasonably incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to
fund or maintain any Eurodollar Loan or the relending or reinvesting of
such deposits or amounts paid or prepaid to the Lenders as a result of
any of the following events other than any such occurrence as a result
in the change of circumstances described in Sections 5(a) and (b):
(i) any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of its
Eurodollar Interest Period (whether by acceleration,
prepayment or otherwise);
(ii) any failure to make a principal payment of a
Eurodollar Loan on the due date thereof; or
(iii) any failure by the Borrower to borrow,
continue, prepay or convert to a Eurodollar Loan on the dates
specified in a notice given pursuant to Section 2(c) or 4(c)
hereof;
then the Borrower shall pay to such Lender such amount as will
reimburse such Lender for such loss, cost or expense. If any Lender
makes such a claim for compensation, it shall furnish to Borrower and
Administrative Agent a statement setting forth the amount of such loss,
cost or expense in reasonable detail (including an explanation of the
basis
22
for and the computation of such loss, cost or expense) and the amounts
shown on such statement shall be conclusive and binding absent manifest
error.
6. Collateral Security. To secure the performance by Borrower and
the Guarantors of their respective obligations hereunder, and under the Notes,
the Guaranties 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, Borrower and each Guarantor have heretofore granted
and assigned to Administrative Agent for the ratable benefit of the Lenders a
first and prior Lien on certain of its Oil and Gas Properties, certain related
equipment, oil and gas inventory, stock and membership interest in Borrower's
subsidiaries, and proceeds of the foregoing. The Oil and Gas Properties
heretofore or hereafter mortgaged to the Administrative Agent shall represent
not less than 80% of the Engineered Value (as hereinafter defined) of Borrower's
and Guarantors' oil and gas properties as of the Effective Date. All Rate
Management Agreements shall be secured by the Collateral and repaid on a pari
passu basis with the indebtedness and obligations of the Borrower and the
Guarantors under the Loan Documents. All Oil and Gas Properties and other
collateral in which Borrower and the Guarantors herewith grant or hereafter
grants to Administrative Agent for the ratable benefit of the Lenders a first
and prior Lien (to the satisfaction of the Administrative 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
Borrower and the Guarantors shall be pursuant to Security Instruments in form
and substance reasonably satisfactory to the Administrative Agent. Concurrently
with the delivery of each of the Security Instruments or within a reasonable
time thereafter, Borrower and the Guarantors shall furnish to the Administrative
Agent mortgage and title opinions and other title information satisfactory to
Administrative Agent with respect to the title and Lien status of Borrower's and
Guarantors' interests in not less than 80% of the Engineered Value of the Oil
and Gas Properties covered by the Security Instruments as Administrative Agent
shall have designated. "Engineered Value" for this purpose shall mean future net
revenues discounted at the discount rate being used by the Administrative Agent
as of the date of any such determination utilizing the pricing parameters used
in the engineering report furnished to the Administrative Agent for the ratable
benefit of the Lenders, pursuant to Sections 7 and 12 hereof. Borrower and the
Guarantors will cause to be executed and delivered to the Administrative Agent,
in the future, additional Security Instruments if the Administrative Agent
reasonably deems such are necessary to insure perfection or maintenance of
Lenders' security interests and Liens in the Oil and Gas Properties or any part
thereof.
23
7. Borrowing Base.
(a) Initial Borrowing Base and Monthly Commitment
Reduction. At the Effective Date, the Borrowing Base shall be
$205,000,000.
(b) Subsequent Determinations of Borrowing Base.
Subsequent determinations of the Borrowing Base shall be made by the
Lenders at least semi-annually on April 1 and October 1 of each year
beginning October 1, 2002 or as Unscheduled Redeterminations. The
Borrower shall furnish to the Lenders as soon as possible but in any
event no later than March 1 of each year, beginning March 1, 2003, with
(i) an engineering report in form and substance satisfactory to the
Administrative Agent prepared by Xxxxxx & Company or another
independent petroleum engineering firm acceptable to Administrative
Agent covering at least 80% of the Oil and Gas Properties and (ii) an
engineering report in form and substance acceptable to Administrative
Agent prepared by Borrower's in-house engineering staff covering the
remaining 20% of the Oil and Gas Properties, both of said engineering
reports to utilize economic and pricing parameters used by
Administrative Agent as established from time to time, together with
such other information concerning the value of the Oil and Gas
Properties as the Administrative Agent shall deem necessary to
determine the value of the Oil and Gas Properties. Each such
engineering report required to be furnished by March 1 of each year
shall be dated as of December 31 of the preceding year. By September 1
of each year, or within thirty (30) days after either (i) receipt of
notice from Administrative Agent that the Lenders require an
Unscheduled Redetermination, or (ii) the Borrower gives notice to
Administrative Agent of its desire to have an Unscheduled
Redetermination performed, the Borrower shall furnish to the Lenders an
engineering report in form and substance satisfactory to Administrative
Agent prepared by Borrower's in-house engineering staff valuing all of
the Oil and Gas Properties utilizing economic and pricing parameters
used by the Administrative 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 Administrative Agent shall deem
reasonably necessary to determine the value of such Oil and Gas
Properties. Each such engineering report required to furnished by
September 1 of each year, shall be dated as of the preceding June 30.
Administrative Agent shall by notice to the Borrower no later than
April 1 and October 1 of each year, or within a reasonable time
thereafter (herein called the "Determination Date"), notify the
Borrower of the designation by the Lenders of the new Borrowing Base
for the period beginning on such Determination Date and continuing
until, but not including, the next Determination Date. If an
Unscheduled Redetermination is made by the Lenders, the Administrative
Agent shall notify the Borrower within a reasonable time after receipt
of all requested information of the new Borrowing Base, and such new
Borrowing Base shall continue until the next Determination Date. If the
Borrower does not furnish all such information, reports and data by any
date specified in this Section 7(b), unless such failure is of no fault
of the Borrower, the Lenders may nonetheless designate the Borrowing
Base at such amount which the Lenders in their discretion determine and
may redesignate the Borrowing Base
24
from time to time thereafter until the Lenders receive all such
information, reports and data, whereupon the Lenders shall designate a
new Borrowing Base as described above. The procedure for determining
the Borrowing Base at each redetermination shall be that the Agents
shall determine the Borrowing Base and submit the same to the Lenders.
If, at any time, the Agents cannot otherwise agree upon the Borrowing
Base to be recommended, the Borrowing Base to be recommended by the
Agents shall be determined based upon the weighted arithmetic average
of the amounts proposed by each Agent. Said proposals to be weighted
according to each Agent's Commitment. Increases in the Borrowing Base
will require approval of all Lenders, but all other changes to the
Borrowing Base will be subject to approval by Required Lenders. If any
redetermined Borrowing Base is not approved by the required percentage
of Lenders within twenty (20) days after it is submitted to the Lenders
by the Agents, the Administrative Agent shall notify each of the
Lenders that the proposed Borrowing Base has not been approved and each
Lender will submit within ten (10) days thereafter its proposed
Borrowing Base. The redetermined Borrowing Base shall be then
determined based upon the weighted arithmetic average of the proposed
amounts submitted by each Lender, said proposals to be weighted
according to each Lender's Commitment. Each Lender shall determine the
amount of its proposed Borrowing Base based upon the loan collateral
value which such Lender in its discretion (using such methodology,
assumptions and discounts rates as such Lender customarily uses in
assigning collateral value to oil and gas properties, oil and gas
gathering systems, gas processing and plant operations) assigns to such
Oil and Gas Properties of the Borrower 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 Borrower and its
affiliates) as such Lender customarily considers in evaluating similar
oil and gas credits, but such Lender 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
Lender 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 at any
time any of the Oil and Gas Properties are sold, the Borrowing Base
then in effect shall automatically be reduced by a sum equal to the
amount of prepayment required to be made pursuant to Section 12(r)
hereof. The Borrowing Base shall be additionally reduced from time to
time pursuant to the provisions of Section 2(e) hereof. It is expressly
understood that the Lenders have no obligation to designate the
Borrowing Base at any particular amount, except in the exercise of
their discretion, whether in relation to the Commitment or otherwise.
Provided, however, that the Lenders shall not have the obligation to
designate a Borrowing Base in an amount in excess of the Commitment.
8. Fees.
(a) Unused Commitment Fee. The Borrower shall pay to
Administrative Agent for the ratable benefit of the Lenders an unused
commitment fee (the "Unused Commitment Fee") equivalent to the Unused
Commitment Fee Rate times the daily
25
average of the unadvanced amount of the Commitment. Such Unused
Commitment Fee shall be calculated on the basis of a year consisting of
360 days. The Unused Commitment Fee shall be payable in arrears on the
last Business Day of each calendar quarter beginning June 28, 2002 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 Commitment terminates on any date
prior to the end of any such monthly period, the Borrower shall pay to
the Administrative Agent for the ratable benefit of the Lenders, on the
date of such termination, the total Unused Commitment Fee due for the
period in which such termination occurs.
(b) The Letter of Credit Fee. Borrower shall pay to the
Administrative Agent the Letter of Credit fees required above in
Section 2(d).
(c) Agency Fees. The Borrower shall pay to the
Administrative Agent certain fees for acting as Administrative Agent
hereunder in amounts to be negotiated between the Borrower and the
Administrative Agent.
9. Prepayments.
(a) Voluntary Prepayments. Subject to the provisions of
Section 5(g) hereof, the Borrower may at any time and from time to
time, without penalty or premium, prepay the Notes, in whole or in
part. Each such prepayment shall be made on at least three (3) Business
Days' notice to Administrative Agent in the case of Eurodollar Loans
and not later than 11:00 a.m., Dallas, Texas time, in the case of Base
Rate Loans and shall be in a minimum amount of (i) $500,000 or any
whole multiples of $100,000 in excess thereof (or the unpaid balance of
the Notes, whichever is less), for Base Rate Loans, and (ii) $1,000,000
or any whole multiple of $100,000 in excess thereof (or the unpaid
balance of the Notes, whichever is less), on Eurodollars Loans, plus
accrued interest thereon to the date of prepayment.
(b) Mandatory Prepayments.
(i) Borrowing Base Deficiency. In the event the
Total Outstandings ever exceed the Borrowing Base as
determined by Lenders pursuant to Section 7(b) hereof, the
Borrower shall either (A) within ninety (90) days after
notification from the Administrative Agent, by instruments
reasonably satisfactory in form and substance to the Lender,
provide the Administrative Agent with collateral with value
and quality in amounts satisfactory to all of the Lenders in
their discretion in order to increase the Borrowing Base by an
amount at least equal to such excess, or (B) prepay, without
premium or penalty, the principal amount of the Notes in an
amount, of 50% of such excess plus accrued interest thereon to
the date of prepayment within ninety (90) days after such
notification, and the remaining amount of such excess plus
accrued interest thereon within one hundred eighty (180) days
after such notification. If the Total
26
Outstandings ever exceed the Commitment as a result of a
Monthly Commitment Reduction or any other required reduction
in the Commitment, then in such event, Borrower shall
immediately prepay the principal amount of the Notes in an
amount at least equal to such excess plus accrued interest to
the date of prepayment.
(ii) Sale of Assets and/or Equity. The
prepayments required to be made pursuant to the provisions of
Sections 12(r) and 12(v) hereof.
(iii) Rate Management Transactions. In the event
the Borrower terminates or cancels any agreement entered into
in connection with a Rate Management Transaction which was
used by Lenders in determining the Borrowing Base, the
Borrower or any Subsidiary will immediately pay over to the
Administrative Agent for the ratable benefit of Lenders as a
prepayment of principal on the Notes, an amount equal to 100%
of the "Release Price" received by Borrower or any Subsidiary
from the termination or cancellation of such agreement. The
term "Release Price" as used herein shall mean the Borrowing
Base value assigned to the Borrowing Base asset covered by the
agreement which was terminated or cancelled as of the last
Borrowing Base determination.
10. Representations and Warranties. In order to induce the Lenders
to enter into this Agreement, the Borrower hereby represents and warrants to the
Lenders (which representations and warranties will survive the delivery of the
Notes) that:
(a) Creation and Existence. Borrower and Oceana
Exploration Company, L.C. are both limited liability companies duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which they were formed and are duly qualified in all
jurisdictions wherein failure to qualify may result in a Material
Adverse Effect. Ohio Intrastate Gas Transmission Company is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which is was formed and is duly
qualified in all jurisdictions wherein failure to qualify may result in
a Material Adverse Effect. Borrower and each of its Subsidiaries has
all power and authority to own their respective properties and assets
and to transact the business in which they are engaged.
(b) Power and Authority. Borrower is duly authorized and
empowered to create and issue the Notes; and Borrower and each of its
Subsidiaries is duly authorized and empowered to execute, deliver and
perform their respective Loan Documents, including this Agreement; and
all action on Borrower's part requisite for the due creation and
issuance of the Notes on Borrower's and each Subsidiary's part for the
due execution, delivery and performance of their respective Loan
Documents, including this Agreement, has been duly and effectively
taken.
27
(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
Borrower, enforceable in accordance with their 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). The Guaranties, upon their execution and delivery will
constitute valid and binding obligations of the Guarantors, enforceable
in accordance with their 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 the Borrower's knowledge violate any provisions of any
contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which Borrower or any Subsidiary is subject, or
result in the creation or imposition of any lien or other encumbrance
upon any assets or properties of Borrower or any Subsidiary, other than
those contemplated by this Agreement.
(e) No Consent. The execution, delivery and performance
by Borrower of the Notes and the Loan Documents, including this
Agreement, and the execution, delivery and performance by the
Guarantors of their respective Guaranties, do 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, which consents have been
obtained by the Borrower or its Subsidiaries, as the case may be.
(f) Financial Condition. No change from the December 31,
2001 Financial Statements furnished by Borrower to the Agents has
occurred which is reasonably expected to have a Material Adverse
Effect, except as disclosed to the Lenders in Schedule "2" attached
hereto.
(g) Liabilities. Neither Borrower nor any Subsidiary has
any material liability, direct or contingent, except as disclosed to
the Lenders in the Financial Statements and on Schedule "3" attached
hereto. No unusual or unduly burdensome restrictions, restraint, or
hazard exists by contract, law or governmental regulation or otherwise
relative to the business, assets or properties of Borrower or any
Subsidiary which is reasonably expected to have a Material Adverse
Effect.
(h) Litigation. Except as described in the Financial
Statements, or as otherwise disclosed to the Lenders in Schedule "4"
attached hereto, there is no litigation, legal or administrative
proceeding, investigation or other action of any nature pending or, to
the knowledge of the officers of Borrower threatened against or
affecting Borrower or
28
any Subsidiary 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) Titles, Etc. Borrower and each Subsidiary has good
and defensible title to their respective assets, including without
limitation, the Oil and Gas Properties, free and clear of all liens or
other encumbrances except Permitted Liens.
(j) Defaults. Neither Borrower nor any Subsidiary 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
Borrower or any Subsidiary is a party in any respect that would be
reasonably expected to have a Material Adverse Effect. No Default or
Event of Default hereunder has occurred and is continuing.
(k) Casualties; Taking of Properties. Since the dates of
the pro forma financial statements of the Borrower delivered to
Lenders, neither the business nor the assets or properties of Borrower
or any Subsidiary has 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.
(l) Use of Proceeds; Margin Stock. The proceeds of the
Commitment may be used by the Borrower for the purposes of (i) working
capital, (ii) Letters of Credit, and (iii) general corporate purposes.
Borrower is not engaged principally or as one of its important
activities in the business of extending credit for the purpose of
purchasing or carrying any "margin stock " as defined in Regulation U
of the Board of Governors of the Federal Reserve System (12 C.F.R. Part
221), or for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry a margin stock or for any
other purpose which might constitute this transaction a "purpose
credit" within the meaning of said Regulation U.
Neither Borrower, any Subsidiary nor any other Person or
entity acting on behalf of Borrower or any Subsidiary 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.
(m) Location of Business and Offices. The principal place
of business and chief executive offices of the Borrower is located at
the address stated in Section 17
29
hereof. The principal place of business and chief executive office of
each of the Subsidiaries is located at the addresses shown on Schedule
"5" hereto.
(n) Compliance with the Law. To the best of Borrower's
knowledge, neither Borrower or any Subsidiary:
(i) is in violation of any law, judgment,
decree, order, ordinance, or governmental rule or regulation
to which 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.
(o) No Material Misstatements. No information, exhibit or
report furnished by Borrower to the Lenders in connection with the
negotiation of this Agreement or in the preparation of the offering
memo 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.
(p) Not A Utility. Borrower is not an entity engaged in
the State of Texas in the (i) generation, transmission, or distribution
and sale of electric power; (ii) transportation, distribution and sale
through a local distribution system of natural or other gas for
domestic, commercial, industrial, or other use; (iii) provision of
telephone or telegraph service to others; (iv) production,
transmission, or distribution and sale of steam or water; (v) operation
of a railroad; or (vii) provision of sewer service to others.
(q) ERISA. Borrower and each Subsidiary 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 Borrower or any Subsidiary.
(r) Public Utility Holding Company Act. Borrower is not 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" subject to the registration
requirements of the Public Utility Holding Company Act of 1935, as
amended.
(s) Subsidiaries. Ohio Intrastate Gas Transmission
Company and Oceana Exploration Company, L.C. are the only Subsidiaries
of Borrower as of the Effective Date. Borrower is owned by the parties
shown on Schedule "6" hereto.
30
(t) Environmental Matters. Except as disclosed on
Schedule "7", neither Borrower nor any Subsidiary (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 Borrower or any Subsidiary is or may be liable
which may reasonably be expected to result in a Material Adverse
Effect.
(u) Liens. Except (i) as disclosed on Schedule "1" hereto
and (ii) for Permitted Liens, the assets and properties of the Borrower
and each Subsidiary are free and clear of all liens and encumbrances.
(v) Assets. All assets, including, but not limited to the
Collateral indicated in the Borrower's Financial Statement or other
information furnished to the Administrative Agent and the Lenders are
to be owned by Borrower and its Subsidiaries are, in fact, owned by
Borrower or one of its Subsidiaries as of the Effective Date.
11. Conditions of Lending.
(a) The effectiveness of this Agreement, and the
obligation to make the initial Advance or issue any initial Letter of
Credit under the Commitment shall be subject to satisfaction of the
following conditions precedent:
(i) Execution and Delivery. The Borrower has
executed and delivered the Agreement, the Notes and other
required Loan Documents, all in form and substance
satisfactory to the Administrative Agent;
(ii) Resolutions. The Administrative Agent shall
have received appropriate certified resolutions of Borrower
and each Guarantor;
(iii) Good Standing. The Administrative Agent
shall have received evidence of existence and good standing
for Borrower and each Guarantor;
(iv) Incumbency. The Administrative Agent shall
have received a signed certificate of Borrower and each
Guarantor, certifying the names of the officers of Borrower
and each Guarantor authorized to sign loan documents on behalf
of Borrower and each Guarantor, together with the true
signatures of each such officer. The Administrative Agent may
conclusively rely on such certificate
31
until the Administrative Agent receives a further certificate
of Borrower or any Guarantor canceling or amending the prior
certificate and submitting signatures of the officers named in
such further certificate;
(v) Corporate and Limited Liability Company
Documents. The Administrative Agent shall have received copies
of (i) the Certificates of Formation of Borrower and any
limited liability company Subsidiary and all amendments
thereto, certified by the Secretary of State of the State of
its organization, and a copy of the Limited Liability Company
Agreements of Borrower and any limited liability company
Subsidiary and all amendments thereto, certified by one or
more officers of Borrower as being true, correct and complete
and (ii) Articles of Incorporation of any corporate Subsidiary
and all amendments thereto, certified by the Secretary of
State of the State of its organization, and a copy of the
Bylaws of such Subsidiaries, and all amendments thereto,
certified by one or more officers of such Subsidiary as being
true, correct and complete;
(vi) Representation and Warranties. The
representations and warranties of Borrower under this
Agreement are true and correct in all material respects as of
such date, as if then made (except to the extent that such
representations and warranties related solely to an earlier
date);
(vii) 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;
(viii) Other Documents. Administrative Agent shall
have received such other instruments and documents incidental
and appropriate to the transaction provided for herein as
Administrative Agent or its counsel may reasonably request,
and all such documents shall be in form and substance
reasonably satisfactory to the Administrative Agent; and
(ix) Legal Matters Satisfactory. All legal
matters incident to the consummation of the transactions
contemplated hereby shall be reasonably satisfactory to
special counsel for Administrative Agent retained at the
expense of the Borrower.
(b) The obligation of the Lenders to make any Advance or
issue any Letter of Credit under the 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 Borrower under this
Agreement are true and correct in all material
32
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. Administrative Agent shall
have received such other instruments and documents incidental
and appropriate to the transaction provided for herein as
Administrative Agent or its counsel may reasonably request,
and all such documents shall be in form and substance
reasonably satisfactory to the Administrative 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 Administrative Agent retained at the
expense of Borrower.
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 Majority Lenders prior to the date of
deviation. The Borrower will at all times comply with the covenants contained in
this Section 12 from the date hereof and for so long as the Commitments are in
existence or any amount is owed to the Administrative Agent or the Lenders under
this Agreement or the other Loan Documents.
(a) Financial Statements and Reports. Borrower shall
promptly furnish to the Administrative Agent from time to time upon
request such information regarding the business and affairs and
financial condition of Borrower, as the Administrative Agent may
reasonably request, and will furnish to the Administrative 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, 2002, the annual audited consolidated and
consolidating Financial Statements of Borrower, prepared in
accordance with GAAP accompanied by an unqualified opinion
rendered by an independent accounting firm reasonably
acceptable to the Administrative Agent;
(ii) Quarterly Financial Statements. As soon as
available, and in any event within forty-five (45) days after
the end of each fiscal quarter of each year, beginning with
the fiscal quarter ended March 31, 2002, the quarterly
unaudited, consolidated and consolidating Financial Statements
of Borrower prepared in accordance with GAAP;
33
(iii) Report on Properties. As soon as available
and in any event on or before March 1 and September 1 of each
calendar year, and at such other times as any Lender, in
accordance with Section 7 hereof, may request, the engineering
reports required to be furnished to the Administrative Agent
under such Section 7 on the Oil and Gas Properties;
(iv) Additional Information. Promptly upon
request of the Administrative Agent from time to time any
additional financial information or other information that the
Administrative 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
Administrative 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, Borrower will furnish
or cause to be furnished to the Administrative Agent a certificate in
the form of Exhibit "D" attached hereto, signed by the President, Chief
Financial Officer, Treasurer or Controller of Borrower, (i) stating
that Borrower has fulfilled in all material respects its obligations
under the Notes and the Loan Documents, including this Agreement, and
that all representations and warranties made herein and therein
continue (except to the extent they relate solely to an earlier date)
to be true and correct in all material respects (or specifying the
nature of any change), or if a Default has occurred, specifying the
Default and the nature and status thereof; (ii) to the extent requested
from time to time by the Administrative Agent, specifically affirming
compliance of 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) and (c); and
(iv) containing or accompanied by such financial or other details,
information and material as the Administrative 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, Borrower 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 Borrower's compliance
with Sections 13(b) and (c) of this Agreement.
(d) Taxes and Other Liens. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge,
promptly all taxes, assessments and
34
governmental charges or levies imposed upon the Borrower or any
Subsidiary, or upon the income or any assets or property of Borrower or
any Subsidiary, 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
Borrower or any Subsidiary and which could reasonably be expected to
result in a Material Adverse Effect; provided, however, that neither
Borrower nor any Subsidiary 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 Borrower or
such Subsidiary shall have set up adequate reserves therefor, if
required, under GAAP.
(e) Compliance with Laws. Borrower will observe and
comply, and will cause each of its Subsidiaries to 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 Borrower will cure promptly
any defects in the creation and issuance of the Notes and the execution
and delivery of the Notes and the Loan Documents, including this
Agreement. The Borrower will cause the Guarantors to promptly cure any
defects in the issuance of the Guaranties. The Borrower at its sole
expense will promptly execute and deliver, and will cause its
Subsidiaries to execute and deliver, to Administrative Agent upon its
reasonable request all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and
agreements in this Agreement, or to correct any omissions in the Notes
or more fully to state the obligations set out herein. The Borrower
shall cause each existing Subsidiary and each new Subsidiary to execute
and deliver Guaranties to Administrative Agent. The Borrower shall and
shall cause each of its Subsidiaries to pledge to Administrative Agent,
for the ratable benefit of the Lenders, as security for the obligations
under the Loan Documents, any interest in a Subsidiary.
(g) Performance of Obligations. The Borrower will pay the
Notes and other obligations incurred by it hereunder according to the
reading, tenor and effect thereof and hereof; and Borrower will, and
will cause each of its Subsidiaries to, do and perform every act and
discharge all of the obligations provided to be performed and
discharged by the Borrower under the Loan Documents, including this
Agreement, at the time or times and in the manner specified.
(h) Insurance. The Borrower and each Subsidiary will have
in force as of the Effective Date and will continue to maintain
insurance with financially sound and reputable insurers with respect to
its assets against such liabilities, fires, casualties, risks
35
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 Administrative Agent, the Borrower will
furnish or cause to be furnished to the Administrative Agent from time
to time a summary of the insurance coverage of Borrower and each
Subsidiary in form and substance satisfactory to the Administrative
Agent, and, if requested, will furnish the Administrative Agent copies
of the applicable policies. Upon demand by Administrative 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
Administrative 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 Administrative Agent may reasonably require. The
Borrower shall at all times maintain, and shall cause each Subsidiary
to maintain, adequate insurance with respect to all of its assets,
including but not limited to, the Oil and Gas Properties or any
collateral against its liability for injury to persons or property,
which insurance shall be by financially sound and reputable insurers
and shall without limitation provide the following coverages:
comprehensive general liability (including coverage for damage to
underground resources and equipment, damage caused by blowouts or
cratering, damage caused by explosion, damage to underground minerals
or resources caused by saline substances, broad form property damage
coverage, broad form coverage for contractually assumed liabilities and
broad form coverage for acts of independent contractors), worker's
compensation and automobile liability. The Borrower shall at all times
maintain, and shall cause each Subsidiary owning Oil and Gas
Properties, to maintain cost of control of well insurance with respect
to the Oil and Gas Properties which shall insure the Borrower and such
Subsidiary 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 Borrower and such
Subsidiary. Additionally, the Borrower shall at all times maintain, and
cause its Subsidiaries to maintain, adequate insurance with respect to
all of its other assets and xxxxx in accordance with prudent business
practices.
(i) Accounts and Records. Borrower will keep books,
records and accounts and will cause each Subsidiary to 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 Borrower's or any Subsidiary's auditors.
(j) Right of Inspection. Borrower will permit, and will
cause each Subsidiary to permit, any officer, employee or agent of the
Lenders to examine Borrower's or any Subsidiary's books, records and
accounts, and take copies and extracts therefrom, all at such
reasonable times during normal business hours and as often as the
Lenders may reasonably request. The Lenders will use best efforts to
keep all Confidential
36
Information (as herein defined) confidential and will not disclose or
reveal the Confidential Information or any part thereof other than (i)
as required by law, and (ii) to the Lenders', and the Lenders'
subsidiaries', Affiliates, officers, employees, legal counsel and
regulatory authorities or advisors to whom it is necessary to reveal
such information for the purpose of effectuating the agreements and
undertakings specified herein or as otherwise required in connection
with the enforcement of the Lenders' and the Administrative Agent's
rights and remedies under the Notes, this Agreement and the other Loan
Documents. As used herein, "Confidential Information" means information
about the Borrower or any Subsidiary furnished by the Borrower or any
Subsidiary to the Lenders, but does not include information (i) which
was publicly known, or otherwise known to the Lenders (except not in
violation of any confidentiality agreement), at the time of the
disclosure, (ii) which subsequently becomes publicly known through no
act or omission by the Lenders (except not in violation of any
confidentiality agreement), or (iii) which otherwise becomes known to
the Lenders, other than through disclosure by the Borrower.
(k) Notice of Certain Events. The Borrower shall, and
shall cause each Subsidiary to, promptly notify the Administrative
Agent if Borrower or any Subsidiary learns of the occurrence of (i) any
event which constitutes an Event of Default together with a detailed
statement by Borrower of the steps being taken to cure such Event of
Default; (ii) any legal, judicial or regulatory proceedings affecting
Borrower or any Subsidiary, or any of the assets or properties of
Borrower or any Subsidiary which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect; (iii) any
dispute between Borrower, any Subsidiary and any governmental or
regulatory body or any other Person or entity which, if adversely
determined, might reasonably be expected to cause a Material Adverse
Effect; (iv) any other matter which in Borrower's reasonable opinion
could have a Material Adverse Effect.
(l) ERISA Information and Compliance. The Borrower will,\
and will cause each Subsidiary to, promptly furnish to the
Administrative 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 Borrower or such
Subsidiary specifying the nature thereof, what action Borrower or any
such Subsidiary 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 Borrower will,
and will cause each Subsidiary to, deliver to the Administrative Agent
(i) promptly upon its becoming available, one copy of each report sent
by Borrower or any Subsidiary to any court, governmental agency or
instrumentality pursuant to any Environmental Law, (ii) notice, in
writing, promptly upon Borrower's or any Subsidiary's receipt of notice
or otherwise learning of any claim, demand, action, event, condition,
report or investigation indicating
37
any potential or actual liability arising in connection with (x) the
non-compliance with or violation of the requirements of any
Environmental Law which reasonably could be expected to have a Material
Adverse Effect; (y) the release or threatened release of any toxic or
hazardous waste into the environment which reasonably could be expected
to have a Material Adverse Effect or which release Borrower or any
Subsidiary 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 Borrower or any Subsidiary, and
Borrower shall immediately deliver, and shall cause any such Subsidiary
to immediately deliver, a copy of any such notice to Administrative
Agent.
(n) Compliance and Maintenance. The Borrower will, and
will cause each Subsidiary to, (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 Borrower or any Subsidiary 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
Borrower or any Subsidiary 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 Administrative Agent upon
request evidence satisfactory to Administrative 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 Borrower will and will cause each
Subsidiary to, 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 Borrower and any such Subsidiary
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.
38
(p) Compliance with Leases and Other Instruments. The
Borrower will, and will cause each Subsidiary to, pay or cause to be
paid and discharge all rentals, delay rentals, royalties, production
payment, and indebtedness required to be paid by Borrower or any
Subsidiary (or required to keep unimpaired in all material respects the
rights of Borrower or any Subsidiary in the Oil and Gas Properties)
accruing under, and perform or cause to be performed in all material
respects each and every act, matter, or thing required of Borrower or
any Subsidiary by each and all of the assignments, deeds, leases,
subleases, contracts, and agreements in any way relating to Borrower or
any Subsidiary or any of the Oil and Gas Properties and do all other
things necessary of Borrower or any Subsidiary to keep unimpaired in
all material respects the rights of Borrower or any Subsidiary
thereunder and to prevent the forfeiture thereof or default thereunder;
provided, however, that nothing in this Agreement shall be deemed to
require Borrower or any Subsidiary 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 Borrower or
any Subsidiary 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 Borrower or any Subsidiary exercised in good faith, it is not in the
best interest of the Borrower or such Subsidiary 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
Borrower or its Subsidiaries, the Borrower or its Subsidiaries 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 Borrower or its Subsidiaries; however, the Borrower agrees to
promptly take, and cause each Subsidiary to 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
Borrower or any Subsidiary will immediately pay over to the
Administrative Agent for the ratable benefit of the Lenders as a
prepayment of principal on the Notes, an amount equal to 100% of the
"Release Price" received by Borrower or any Subsidiary from the sale of
Borrowing Base Assets. The term "Release Price" as used herein shall
mean the Borrowing Base value assigned to the Borrowing Base Assets
sold as of the last Borrowing Base determination. Any such prepayment
of principal on the Notes required by this Section 12(r), shall not be
in lieu of, but shall be in addition to, any mandatory prepayment of
principal required to be paid pursuant to Section 9(b) hereof.
(s) Title Matters. As to any Oil and Gas Properties
hereafter mortgaged to Administrative Agent, Borrower will, and will
cause each Subsidiary to, promptly (but in no event more than thirty
(30) days following such mortgaging), furnish Administrative Agent with
title opinions and/or title information reasonably satisfactory to
39
Administrative Agent showing good and defensible title of Borrower or
any such Subsidiary to such Oil and Gas Properties subject only to
Permitted Liens.
(t) Curative Matters. Within sixty (60) days after the
Effective Date with respect to matters listed on Schedule "9" and,
thereafter, within sixty (60) days after receipt by Borrower from
Administrative Agent or its counsel of written notice of title defects
the Administrative Agent reasonably requires to be cured, Borrower
shall, and shall cause each Subsidiary to, either (i) provide such
curative information, in form and substance satisfactory to
Administrative Agent, or (ii) substitute Oil and Gas Properties of
value and quality satisfactory to the Administrative Agent for all of
Oil and Gas Properties for which such title curative was requested but
upon which Borrower or any Subsidiary 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
Administrative Agent covering the Oil and Gas Properties so
substituted. If the Borrower or any Subsidiary fails to satisfy (i) or
(ii) above within the time specified, the loan collateral value
assigned by the Lenders to the Oil and Gas Properties for which such
curative information was requested shall be deducted from the Borrowing
Base resulting in a reduction thereof.
(u) Change of Principal Place of Business. Borrower
shall, and shall cause each Subsidiary to, give Administrative Agent at
least thirty (30) days prior written notice of its intention to move
its principal place of business from the address set forth in Section
17 hereof.
(v) Sale of Equity. The Borrower or any Subsidiary will
immediately pay over to the Administrative Agent for the ratable
benefit of the Lenders as a prepayment of principal on the Notes, an
amount equal to 50% of the cash proceeds (net of direct costs of sale)
received by Borrower or any Subsidiary from the sale of any equity
interest in, or securities of, the Borrower or any such Subsidiary.
(w) New Guarantors. The Borrower shall cause any new
Subsidiary to execute and deliver a Guaranty in the form of Exhibit "C"
hereto within ten (10) days of its formation or acquisition by
Borrower.
13. Negative Covenants. A deviation from the provisions of this
Section 13 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Lenders prior to the date of
deviation. The Borrower will at all times comply with the covenants contained in
this Section 13 from the date hereof and for so long as the Commitment is in
existence or any amount is owed to the Administrative Agent or the Lenders under
this Agreement or the other Loan Documents.
(a) Negative Pledge. Borrower shall not, and shall not
allow its Subsidiaries to, without the prior written consent of the
Lenders:
40
(i) create, incur, assume or permit to exist any
Lien, security interest or other encumbrance on any of its
assets or properties except Permitted Liens; or
(ii) sell, lease, transfer or otherwise dispose
of, in any fiscal year, any of its assets except for (A)
sales, leases, transfers or other dispositions made in the
ordinary course of Borrower's oil and gas businesses, (B)
sales made with the consent of Majority Lenders which are made
pursuant to, and in full compliance with, Section 12(r)
hereof; and (C) sales, leases or transfers or other
dispositions (including those referred to in Section
13(a)(ii)(B)) made by Borrower and its Subsidiaries which do
not exceed $10,000,000 in the aggregate during any fiscal
year.
(b) Current Ratio. Borrower shall not allow its ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be
less than 1.0 to 1.0 as of the end of any fiscal quarter.
(c) Total Debt to EBITDAX. The Borrower will not allow
its ratio of Consolidated Total Debt to Consolidated EBITDAX to be in
excess of 4.0 to 1.0 as of the end of any calendar quarter beginning
with the calendar quarter ending March 31, 2002, calculated on a
trailing four-quarter basis.
(d) Consolidations and Mergers. Borrower will not, and
will not allow any of its Subsidiaries to, consolidate or merge with or
into any other Person, except that Borrower or any such Subsidiary may
merge with another Person if Borrower or such Subsidiary is the
surviving entity in a non-hostile merger and if, after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing.
(e) Debts, Guaranties and Other Obligations. Without the
consent of Majority Lenders, Borrower will not, and will not allow any
of its Subsidiaries to, incur, create, assume or in any manner become
or be liable in respect of any indebtedness, nor will Borrower or any
Subsidiary guarantee or otherwise in any manner become or be liable in
respect of any indebtedness, liabilities or other obligations of any
other person or entity, whether by agreement to purchase the
indebtedness of any other person or entity or agreement for the
furnishing of funds to any other person or entity through the purchase
or lease of goods, supplies or services (or by way of stock purchase,
capital contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of any other person or entity, or
otherwise, except that the foregoing restrictions shall not apply to:
(i) the Notes and any renewal or increase
thereof, or other indebtedness of the Borrower and any
Subsidiary heretofore disclosed to Lenders in the Borrower's
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
41
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 not exceeding in the aggregate
outstanding at any time the sum of $10,000,000; or
(iv) any renewals or extensions of any of the
foregoing.
(f) Distributions or Dividends. Borrower will not (i)
declare or pay any cash distribution, or dividend; (ii) purchase,
redeem or otherwise acquire for value any of its stock now or hereafter
outstanding; (iii) return any capital to its stockholders, or (iv) make
any distribution of its assets to its stockholders as such, except the
foregoing shall not apply to cash distributions or dividends paid to
its owners or used to purchase, redeem or otherwise acquire for value
any of its stock now or hereafter outstanding in amounts not exceeding
in the aggregate (measured cumulatively from January 1, 2002) the sum
of (i) $10,000,000 plus (ii) 50% of net proceeds (net of direct costs
of sale only) received by Borrower from the sale of any equity interest
in, or securities of, the Borrower or any Subsidiary completed after
January 1, 2002, plus (iii) 50% of Consolidated Net Income earned after
January 1, 2002; provided, however, that immediately before and after
giving effect thereto no (A) Default or Event of Default or (B)
Borrowing Base deficiency or requirement to make any mandatory
prepayment of principal pursuant to Section 9(b) hereof, shall exist.
For the purposes of this Section 13(f) only, Consolidated Net Income
shall exclude non-cash charges and credits as prescribed under
Financial Accounting Standards Board Statements Nos. 19, 121 and 133.
(g) Loans and Advances. Borrower shall not, and shall not
allow any Subsidiary to, 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 Borrower or any Subsidiary heretofore
furnished to Lenders; or
(ii) loans or advances not exceeding $1,000,000 a
year in the aggregate.
(h) Sale or Discount of Receivables. Borrower will not,
nor will Borrower allow any of its Subsidiaries to, 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.
42
(i) Nature of Business. Borrower will not, nor will
Borrower allow any of its Subsidiaries to, permit any material change
to be made in the character of its business as carried on at the date
hereof.
(j) Transactions with Affiliates. Borrower will not, nor
will Borrower allow any of its Subsidiaries to, 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.
(k) Rate Management Transactions. Borrower will not, and\
will not permit any Subsidiary to, enter into any Rate Management
Transaction, except the foregoing prohibitions shall not apply to (x)
non-speculative transactions consented to in writing by the
Administrative Agent, or (y) Pre-Approved Contracts. Once Borrower
enters into a Rate Management Transaction, the terms and conditions of
such Rate Management Transaction may not be amended or modified, nor
may such Rate Management Transaction be terminated or cancelled without
Borrower having given the Agent written notice of such amendment,
modification, cancellation or termination within three (3) Business
Days from the date such action takes place. Borrower further agrees to
give Agent written notice immediately upon learning that any
counterparty to any such agreement has commenced, or had commenced,
against it, any bankruptcy, insolvency or similar proceeding.
(l) Investments. Borrower shall not make, nor will
Borrower allow any of its Subsidiaries to make, any investments in any
person or entity, except such restriction shall not apply to
investments not exceeding $3,000,000 in the aggregate per year for
Borrower and all of its Subsidiaries.
(m) Amendment to Certificate of Formation or Limited
Liability Company Agreement. Without the consent of the Administrative
Agent, Borrower will not permit any material amendment to, or any
material alteration of, its Certificate of Formation or Limited
Liability Company Agreement. Borrower will not allow any Subsidiary to
make any material amendment or alteration to any of their Certificates
of Formation, Articles of Incorporation, Limited Liability Company
Agreements or Bylaws. Borrower shall provide a copy of any such
amendment, whether the same requires consent or not pursuant to this
Section 13(l), to the Administrative Agent as soon as reasonably
possible after adoption thereof.
(n) Payment or Pre-Payment of Other Indebtedness. Except
as otherwise provided for in this Agreement, Borrower shall not make,
nor allow any of its Subsidiaries to make, any unscheduled principal
payments or redeem any of its indebtedness (other than indebtedness
owed the Lenders hereunder), or redeem any of its equity unless such
payment, prepayment, redemption or purchase is made in compliance with
Section 13(f) hereof, or is approved by Majority Lenders.
43
Sale of Interests in Subsidiaries. Other than as may be
permitted under Section 13(d) hereof, Borrower will not sell or
otherwise transfer any its ownership interests in any of its
Subsidiaries.
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 Borrower 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 Borrower incurred pursuant to this Agreement
or any other Loan Document; or
(b) Any representation or warranty made by Borrower under
this Agreement, or in any certificate or statement furnished or made to
the Lenders pursuant hereto, or in connection herewith, or in
connection with any document furnished hereunder, shall prove to be
untrue in any material respect as of the date on which such
representation or warranty is made (or deemed made), or any
representation, statement (including financial statements),
certificate, report or other data furnished or to be furnished or made
by 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 Borrower or
any Subsidiary contained in the Loan Documents, including this
Agreement (excluding covenants contained in Section 12(m) or Section 13
of the Agreement for which there is no 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 Borrower contained in Section 12(m) or
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 Borrower or any of
its Subsidiaries 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 Borrower or any of its Subsidiaries or in
respect of any agreement relating to any such obligations unless
Borrower or any of its Subsidiaries 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) Borrower or any of its Subsidiaries shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking an appointment of a trustee, receiver, liquidator, custodian
or other
44
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action authorizing the
foregoing; or
(g) An involuntary case or other proceeding, shall be
commenced against Borrower or any of its Subsidiaries 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 Borrower or
any of its Subsidiaries under the federal bankruptcy laws as now or
hereinafter in effect; or
(h) A final judgment or order for the payment of money in
excess of $1,500,000 (or judgments or orders aggregating in excess of
$1,500,000) shall be rendered against Borrower or any of its
Subsidiaries and such judgments or orders shall continue unsatisfied
and unstayed for a period of thirty (30) days; or
(i) In the event the Total Outstandings shall at any time
exceed the Borrowing Base established for the Notes, and the Borrower
shall fail to comply with the provisions of Section 9(b) hereof; or
(j) A Change of Control shall occur; or
(k) An Event of Default shall have occurred under any
agreement entered into in connection with a Rate Management
Transaction.
Upon occurrence of any Event of Default specified in Subsections 14(f)
and (g) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of the Borrower 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 Borrower.
Notwithstanding any other provision of this Agreement or any provision of the
Notes, in any other Event of Default, the Administrative Agent, upon request of
Majority Lenders, shall by notice to the Borrower declare the principal of, and
all interest then accrued on, the Notes and any other liabilities hereunder to
be forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which the Borrower
hereby expressly waives, anything contained herein or in the Notes 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
Notes, or any other document executed in connection with the transaction
contemplated herein.
45
Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrower or any of its Subsidiaries, (any such notice being
expressly waived by the Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by any of the Lenders to or for the credit
or the account of the Borrower or any of its Subsidiaries against any and all of
the indebtedness of the Borrower or any Subsidiaries under the Notes and the
Loan Documents, including this Agreement, irrespective of whether or not the
Lenders shall have made any demand under the Loan Documents, including this
Agreement or the Notes and although such indebtedness may be unmatured. Any
amount set-off by any of the Lenders shall be applied against the indebtedness
owed the Lenders by the Borrower pursuant to this Agreement and the Notes. The
Lenders agree promptly to notify the Borrower and the affected Subsidiary after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lenders may
have.
15. The Agents and the Lenders.
(a) Appointment and Authorization. Each Lender hereby
appoints Administrative Agent as its nominee and Administrative Agent,
in its name and on its behalf: (i) to act as nominee for and on behalf
of such Lender in and under all Loan Documents; (ii) to arrange the
means whereby the funds of Lenders are to be made available to the
Borrower under the Loan Documents; (iii) to take such action as may be
requested by any Lender under the Loan Documents (when such Lender is
entitled to make such request under the Loan Documents); (iv) to
receive all documents and items to be furnished to Lenders under the
Loan Documents; (v) to be the secured party, mortgagee, beneficiary,
and similar party in respect of, and to receive, as the case may be,
any collateral for the benefit of Lenders; (vi) to promptly distribute
to each Lender all material information, requests, documents and items
received from the Borrower under the Loan Documents; (vii) to promptly
distribute to each Lender such Lender's Pro Rata Part of each payment
or prepayment (whether voluntary, as proceeds of insurance thereon, or
otherwise) in accordance with the terms of the Loan Documents and
(viii) to deliver to the appropriate Persons requests, demands,
approvals and consents received from Lenders. Each Lender hereby
authorizes Administrative Agent to take all actions and to exercise
such powers under the Loan Documents as are specifically delegated to
Administrative 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, Administrative Agent
and any successor Administrative Agent shall have the same rights under
the Loan Documents as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include
Administrative Agent and any successor Administrative Agent in its
capacity as a Lender. Administrative Agent and any successor
Administrative Agent and its Affiliates may accept deposits from, lend
money
46
to, act as trustee under indentures of and generally engage in any kind
of business with the Borrower and any person which may do business with
the Borrower, all as if Administrative Agent and any successor
Administrative Agent was not Administrative Agent hereunder and without
any duty to account therefor to the Lenders; provided that, if any
payments in respect of any property (or the proceeds thereof) now or
hereafter in the possession or control of Administrative Agent which
may be or become security for the obligations of the Borrower 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 Borrower arising under
the Loan Documents, then each Lender shall be entitled to share in such
application according to its pro rata part thereof. Each Lender, upon
request of any other Lender, shall disclose to all other Lenders all
indebtedness and liabilities, direct and contingent, of the Borrower to
such Lender as of the time of such request.
(b) Note Holders. From time to time as other Lenders
become a party to this Agreement, Administrative Agent shall obtain
execution by the Borrower of additional Notes in amounts representing
the Commitment of each such new Lender, up to an aggregate face amount
of all Notes not exceeding $275,000,000. The obligation of such Lender
shall be governed by the provisions of this Agreement, including but
not limited to, the obligations specified in Section 2 hereof. From
time to time, Administrative Agent may require that the Lenders
exchange their Notes for newly issued Notes to better reflect the
Commitments of the Lenders. Administrative 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
Administrative Agent.
(c) Consultation with Counsel. Lenders agree that
Administrative Agent may consult with legal counsel selected by
Administrative Agent and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such
counsel. LENDERS ACKNOWLEDGE THAT GARDERE XXXXX XXXXXX LLP IS COUNSEL
FOR BANK ONE, BOTH AS ADMINISTRATIVE AGENT AND AS A LENDER, AND THAT
SUCH FIRM DOES NOT REPRESENT ANY OF THE OTHER LENDERS IN CONNECTION
WITH THIS TRANSACTION.
(d) Documents. Administrative 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 Administrative 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 Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, Administrative Agent may resign at any time by
giving written notice thereof to Lenders and the Borrower, and
Administrative Agent may be removed at any time with or without cause
by all Lenders (other than Administrative Agent). If no successor
Administrative
47
Agent has been so appointed by Majority Lenders (and approved by the
Borrower) and has accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or
removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of Lenders, appoint a successor
Administrative Agent. Any successor Administrative Agent must be
approved by Borrower, which approval will not be unreasonably withheld.
Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent, and the
retiring Administrative Agent, as the case may be, shall be discharged
from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation or removal hereunder as
Administrative 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 Administrative Agent. To be
eligible to be an Administrative Agent hereunder the party serving, or
to serve, in such capacity must own a Pro Rata Part of the Commitments
equal to the level of Commitment required to be held by any Lender
pursuant to Section 28 hereof.
(f) Responsibility of Administrative Agent. It is
expressly understood and agreed that the obligations of Administrative
Agent under the Loan Documents are only those expressly set forth in
the Loan Documents as to each and that Administrative Agent, shall be
entitled to assume that no Default or Event of Default has occurred and
is continuing, unless Administrative Agent has actual knowledge of such
fact or has received notice from a Lender or the Borrower that such
Lender or the Borrower considers that a Default or an Event of Default
has occurred and is continuing and specifying the nature thereof.
Neither Administrative Agent nor any of its directors, officers,
attorneys or employees shall be liable for any action taken or omitted
to be taken by them under or in connection with the Loan Documents,
except for its or their own gross negligence or willful misconduct.
Administrative Agent shall not incur liability under or in respect of
any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or
with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be
necessary or desirable.
Administrative Agent shall not be responsible to Lenders for
any of the Borrower's recitals, statements, representations or
warranties contained in any of the Loan Documents, or in any
certificate or other document referred to or provided for in, or
received by any Lender under, the Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
or any of the Loan Documents or for any failure by the Borrower to
perform any of its obligations hereunder or thereunder. Administrative
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
48
the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
The relationship between Administrative Agent and each Lender
is only that of Administrative Agent and principal and has no fiduciary
aspects. Nothing in the Loan Documents or elsewhere shall be construed
to impose on Administrative Agent any duties or responsibilities other
than those for which express provision is therein made. In performing
its duties and functions hereunder, Administrative Agent does not
assume and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation or responsibility toward or any relationship
of agency or trust with or for the Borrower or any of its beneficiaries
or other creditors. As to any matters not expressly provided for by the
Loan Documents, Administrative Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of all Lenders and such
instructions shall be binding upon all Lenders and all holders of the
Notes; provided, however, that Administrative Agent shall not be
required to take any action which is contrary to the Loan Documents or
applicable law.
Administrative Agent shall have the right to exercise or
refrain from exercising, without notice or liability to the Lenders,
any and all rights afforded to Administrative Agent by the Loan
Documents or which Administrative Agent may have as a matter of law;
provided, however, Administrative Agent shall not (i) except as
provided in Section 7(b) hereof, without the consent of Required
Lenders designate the amount of the Borrowing Base (except for increase
thereof) or (ii) without the consent of Majority Lenders, take any
other action with regard to amending the Loan Documents, waiving any
default under the Loan Documents or taking any other action with
respect to the Loan Documents which requires consent of Majority
Lenders. Provided further, however, that no amendment, waiver, or other
action shall be effected pursuant to the preceding clause (ii) without
the consent of all Lenders which: (i) would increase the Borrowing Base
or decrease the Monthly Commitment Reduction, (ii) would reduce any
fees hereunder, or the principal of, or the interest on, any Lender's
Note or Notes, (iii) would postpone any date fixed for any payment of
any fees hereunder, or any principal or interest of any Lender's Note
or Notes, (iv) would materially increase any Lender's obligations
hereunder or would materially alter Administrative Agent's obligations
to any Lender hereunder, (v) would release Borrower from its obligation
to pay any Lender's Note or Notes, (vi) would change the definition of
Majority or Required Lenders, (vii) would amend, modify or change any
provision of this Agreement requiring the consent of all the Lenders,
(viii) would waive any of the conditions precedent to the Effective
Date or the making of any Loan or issuance of any Letter of Credit or
(ix) would extend the Maturity Date or (x) would amend this sentence or
the previous sentence. Administrative Agent shall not have liability to
Lenders for failure or delay in exercising any right or power possessed
by Administrative Agent pursuant to the Loan Documents or otherwise
unless such failure or delay is caused by the gross negligence of
49
the Administrative Agent, in which case only the Administrative
Agent responsible for such gross negligence shall have liability
therefor to the Lenders.
(g) Independent Investigation. Each Lender severally
represents and warrants to the Agents that it has made its own
independent investigation and assessment of the financial condition and
affairs of the Borrower in connection with the making and continuation
of its participation hereunder and has not relied exclusively on any
information provided to such Lender by the Agents in connection
herewith, and each Lender represents, warrants and undertakes to Agents
that it shall continue to make its own independent appraisal of the
credit worthiness of the Borrower while the Notes are outstanding or
its commitments hereunder are in force. The Agents shall not be
required to keep themselves informed as to the performance or
observance by the Borrower of this Agreement or any other document
referred to or provided for herein or to inspect the properties or
books of the Borrower. Other than as provided in this Agreement, the
Agents shall not have any duty, responsibility or liability to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower which may come into the
possession of Administrative Agent.
(h) Indemnification. Lenders agree to indemnify the '
Agents, 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 any of the
Agents in any way relating to or arising out of the Loan Documents or
any action taken or omitted by Administrative Agent under the Loan
Documents, provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from any
of the Agent's gross negligence or willful misconduct. Each Lender
shall be entitled to be reimbursed by the Agents for any amount such
Lender paid to the Agents under this Section 15(h) to the extent the
Agents have been reimbursed for such payments by the Borrower or any
other Person. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO
APPLY TO AND PROTECT THE AGENTS FROM THE CONSEQUENCES OF ANY LIABILITY
INCLUDING STRICT LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON THE
AGENTS 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 Administrative Agent and
the Lenders and are not for the benefit of, or to be relied upon by,
the Borrower, any affiliate of the Borrower or any other person.
(j) Pro Rata Treatment. Subject to the provisions of this
Agreement, each payment (including each prepayment) by the Borrower and
collection by Lenders (including offsets) on account of the principal
of and interest on the Notes and fees
50
provided for in this Agreement, payable by the Borrower shall be made
Pro Rata; provided, however, in the event that any Defaulting Lender
shall have failed to make an Advance as contemplated under Section 3
hereof and Administrative Agent or another Lender or Lenders shall have
made such Advance, payment received by Administrative Agent for the
account of such Defaulting Lender or Lenders shall not be distributed
to such Defaulting Lender or Lenders until such Advance or Advances
shall have been repaid in full to the Lender or Lenders who funded such
Advance or Advances.
(k) Assumption as to Payments. Except as specifically
provided herein, unless Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to
Lenders hereunder that the Borrower will not make such payment in full,
Administrative Agent may, but shall not be required to, assume that the
Borrower has made such payment in full to Administrative Agent on such
date and Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to Administrative Agent,
each Lender shall repay to Administrative Agent forthwith on demand
such amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender
until the date such Lender repays such amount to Administrative Agent,
at the interest rate applicable to such portion of the Loan.
(l) Other Financings. Without limiting the rights to
which any Lender otherwise is or may become entitled, such Lender shall
have no interest, by virtue of this Agreement or the Loan Documents, in
(a) any present or future loans from, letters of credit issued by, or
leasing or other financial transactions by, any other Lender to, on
behalf of, or with the Borrower (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 Borrower
which are not contemplated by the Loan Documents; (c) any present or
future property taken as security for any such Other Financings; or (d)
any property now or hereafter in the possession or control of any other
Lender which may be or become security for the obligations of the
Borrower arising under any loan document by reason of the general
description of indebtedness secured or property contained in any other
agreements, documents or instruments relating to any such Other
Financings.
(m) Interests of Lenders. Nothing in this Agreement shall
be construed to create a partnership or joint venture between Lenders
for any purpose. The Agents, Lenders and the Borrower recognize that
the respective obligations of Lenders under the Commitments shall be
several and not joint and that neither the Agents nor any of Lenders
shall be responsible or liable to perform any of the obligations of the
other under this Agreement. Each Lender is deemed to be the owner of an
undivided interest in and to all rights, titles, benefits and interests
belonging and accruing to Administrative Agent under the Security
Instruments, including, without limitation, liens and security
interests in any collateral, fees and payments of principal and
interest by the Borrower under the
51
Commitments on a Pro Rata basis. Each Lender shall perform all duties
and obligations of Lenders under this Agreement in the same proportion
as its ownership interest in the Loans outstanding at the date of
determination thereof.
(n) Investments. Whenever Administrative Agent in good
faith determines that it is uncertain about how to distribute to
Lenders any funds which it has received, or whenever Administrative
Agent in good faith determines that there is any dispute among the
Lenders about how such funds should be distributed, Administrative
Agent may choose to defer distribution of the funds which are the
subject of such uncertainty or dispute. If Administrative Agent in good
faith believes that the uncertainty or dispute will not be promptly
resolved, or if Administrative Agent is otherwise required to invest
funds pending distribution to the Lenders, Administrative Agent may
invest such funds pending distribution (at the risk of the Borrower).
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 Administrative
Agent for distribution to the Lenders (other than to the Person who is
Administrative Agent in its separate capacity as a Lender) shall be
held by the Administrative Agent pending such distribution solely as
Administrative Agent for such Lenders, and Administrative 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 Administrative Agent or the Lenders, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. The rights of the Administrative Agent and the Lenders
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 Notes 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) BORROWER: GREAT LAKES ENERGY PARTNERS,
L.L.C., 000 Xxxxx Xxxxx 00, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. Xxxxxx,
Chief Financial Officer, Facsimile No. (000) 000-0000; (b) Administrative Agent:
BANK ONE, NA, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, Facsimile No. (214)
290-2332, Attention: Wm. Xxxx Xxxxxxx, Director, Capital Markets. Any such
notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered or delivered by
facsimile as aforesaid or, if mailed, on the third day after it is mailed as
aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other party pursuant to this Section 17. Any
notice required to be given to the
52
Lenders shall be given to the Administrative Agent and distributed to all
Lenders by the Administrative Agent.
18. Expenses. The Borrower shall pay (i) all reasonable and
necessary out-of-pocket expenses of the Administrative Agent, including
reasonable fees and disbursements of special counsel for the Administrative
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 Administrative Agent, including reasonable fees
and disbursements of special counsel for the Administrative Agent in connection
with the preparation of any participation agreement for a participant or
participants requested by the Borrower or any amendment thereof and (iii) if an
Event of Default occurs and is continuing, all reasonable and necessary
out-of-pocket expenses incurred by the Lenders, including fees and disbursements
of counsel, in connection with such default and Event of Default and collection
and other enforcement proceedings resulting therefrom. THE BORROWER HEREBY
ACKNOWLEDGES THAT GARDERE XXXXX XXXXXX LLP IS SPECIAL COUNSEL TO BANK ONE, AS
ADMINISTRATIVE AGENT AND AS A LENDER, UNDER THIS AGREEMENT AND THAT IT IS NOT
COUNSEL TO, NOR DOES IT REPRESENT THE BORROWER IN CONNECTION WITH THE
TRANSACTIONS DESCRIBED IN THIS AGREEMENT. The Borrower is relying on separate
counsel in the transaction described herein. The Borrower shall indemnify the
Lenders against any transfer taxes, document taxes, assessments or charges made
by any governmental authority by reason of the execution, delivery and filing of
the Loan Documents. The obligations of this Section 18 shall survive any
termination of this Agreement, the expiration of the Loans and the payment of
all indebtedness of the Borrower to the Lenders hereunder and under the Notes.
19. Indemnity. The Borrower agrees to indemnify and hold harmless
the Agents and the Lenders and their respective officers, employees, agents,
attorneys and representatives (singularly, an "Indemnified Party", and
collectively, the "Indemnified Parties") from and against any loss, cost,
liability, damage or expense (including the reasonable fees and out-of-pocket
expenses of counsel to the Lenders, including all local counsel hired by such
counsel) ("Claim") incurred by the Lenders in investigating or preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law,
federal or state environmental law, or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged to arise out of
or is based upon any acts, practices or omissions or alleged acts, practices or
omissions of the Borrower or its agents or arises in connection with the duties,
obligations or performance of the Indemnified Parties in negotiating, preparing,
executing, accepting, keeping, completing, countersigning, issuing, selling,
delivering, releasing, assigning, handling, certifying, processing or receiving
or taking any other action with respect to the Loan Documents and all documents,
items and materials contemplated thereby even if any of the foregoing arises out
of an Indemnified Party's ordinary negligence. The indemnity set forth herein
shall be in addition to any other obligations or liabilities of the Borrower to
the Agents and the Lenders hereunder or at common law or otherwise, and shall
survive any termination of this Agreement, the expiration of the Loans and
53
the payment of all indebtedness of the Borrower to the Lenders hereunder and
under the Notes, provided that the Borrower shall have no obligation under this
Section to the Lenders with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of the Lenders. If any Claim is asserted
against any Indemnified Party, the Indemnified Party shall endeavor to notify
the Borrower 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
Borrower's expense, counsel of the Indemnified Parties' choosing and to control
the defense of the Claim. The Borrower may at its 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 ADMINISTRATIVE AGENT AS WELL AS FROM THE
CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE,
CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.
20. Governing Law. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED,
AND IS INTENDED TO BE PERFORMED, IN DALLAS, DALLAS COUNTY, TEXAS, AND THE
SUBSTANTIVE LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
21. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.
22. Maximum Interest Rate. Regardless of any provisions contained
in this Agreement or in any other documents and instruments referred to herein,
the Lenders shall never be deemed to have contracted for or be entitled to
receive, collect or apply as interest on the Notes any amount in excess of the
Maximum Rate, and in the event any Lender ever receives, collects or applies as
interest any such excess, or if an acceleration of the maturities of any Notes
or if any prepayment by the Borrower results in the Borrower 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 Borrower. All sums paid or agreed to be paid to the
Lenders for the use, forbearance or detention of the indebtedness evidenced by
the Notes and/or this Agreement shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the rate or
54
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
Borrower and the Lenders shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium,
rather than as interest; and (ii) exclude voluntary prepayments and the effect
thereof; and (iii) compare the total amount of interest contracted for, charged
or received with the total amount of interest which could be contracted for,
charged or received throughout the entire contemplated term of the Note at the
Maximum Rate.
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 Borrower
may not, without the prior written consent of all of the Lenders, assign any
rights, powers, duties or obligations hereunder.
28. Assignments and Participations.
(a) Assignments. Each Lender shall have the right to
sell, assign or transfer all or any part of its Note or Notes, its
Commitment and its rights and obligations hereunder to one or more
Affiliates, banks, financial institutions, pension plans, insurance
companies, investment funds, or similar Persons who are Eligible
Assignees or to a Federal Reserve Bank; provided, that in connection
with each sale, assignment or transfer (other than to an Affiliate, a
Lender or a Federal Reserve Bank), shall require the consent of
Administrative Agent and the Borrower, which consents will not be
unreasonably withheld; provided, however, that if an Event of Default
has occurred and is continuing, the consent of the Borrower shall not
be required. Any such assignee, transferee or recipient shall have, to
the extent of such sale, assignment, or transfer, the same rights,
benefits and obligations as it would if it were such Lender and a
holder of such Note,
55
Commitment and rights and obligations, including, without limitation,
the right to vote on decisions requiring consent or approval of all
Lenders, Required Lenders or Majority Lenders and the obligation to
fund its Commitment; provided, that (1) each such sale, assignment, or
transfer (other than to an Affiliate, a Lender or a Federal Reserve
Bank) shall be in an aggregate principal amount not less than
$5,000,000, (2) each remaining Lender shall at all times maintain
Commitment then outstanding in an aggregate principal amount at least
equal to $5,000,000; (3) each such sale, assignment or transfer shall
be of a Pro Rata portion of such Lender's Commitment, (4) no Lender may
offer to sell its Note or Notes, Commitment, rights and obligations or
interests therein in violation of any securities laws; and (5) no such
assignments (other than to a Federal Reserve Bank) shall become
effective until the assigning Lender and its assignee delivers to
Administrative Agent and Borrower an Assignment and Acceptance and the
Note or Notes subject to such assignment and other documents evidencing
any such assignment. An assignment fee in the amount of $3,500 for each
such assignment (other than to an Affiliate, a Lender or the Federal
Reserve Bank) will be payable to Administrative 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 Borrower shall execute and deliver to
Administrative Agent (for delivery to the relevant assignee) a new Note
or Notes evidencing such assignee's assigned Commitment and if the
assignor Lender has retained a portion of its Commitment, a replacement
Note in the principal amount of the Commitment retained by the assignor
(except as provided in the last sentence of this paragraph (a) such
Note or Notes to be in exchange for, but not in payment of, the Note or
Notes held by such Lender). On and after the effective date of an
assignment hereunder, the assignee shall for all purposes be a Lender,
party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party
thereto (except that an Affiliate of Borrower shall not have the right
to vote as a Lender on matters that other Lenders have the right to
vote on under the provisions of the Agreement), and no further consent
or action by Borrower, Lenders or the Administrative Agent shall be
required to release the transferor Lender with respect to its
Commitment assigned to such assignee and the transferor Lender shall
henceforth be so released.
(b) Participations. Each Lender shall have the right to
grant participations in all or any part of such Lender's Notes and
Commitment hereunder to one or more pension plans, investment funds,
insurance companies, financial institutions or other Persons, provided,
that:
(i) each Lender granting a participation shall
retain the right to vote hereunder, and no participant shall
be entitled to vote hereunder on decisions requiring consent
or approval of Lenders, Required Lenders or Majority Lenders
(except as set forth in (iii) below);
56
(ii) in the event any Lender grants a
participation hereunder, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the
holder of any such Note or Notes for all purposes under the
Loan Documents, and Administrative Agent, each Lender and
Borrower shall be entitled to deal with the Lender granting a
participation in the same manner as if no participation had
been granted; and
(iii) no participant shall ever have any right by
reason of its participation to exercise any of the rights of
Lenders hereunder, except that any Lender may agree with any
participant that such Lender will not, without the consent of
such participant (which consent may not be unreasonably
withheld) consent to any amendment or waiver requiring
approval of all Lenders.
(c) Financial Information. It is understood and agreed
that any Lender may provide to assignees and participants and
prospective assignees and participants financial information and
reports and data concerning Borrower's properties and operations which
was provided to such Lender pursuant to this Agreement.
(d) Assignees' and Participants' Indemnity. Upon the
reasonable request of either Administrative Agent or Borrower, each
Lender will identify those to whom it has assigned or participated any
part of its Notes and Commitment, and provide the amounts so assigned
or participated.
29. Choice of Forum; Consent to Service of Process and
Jurisdiction. THE OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST THE
BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT
IN RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY
OF DALLAS, OR IN THE UNITED STATES COURTS LOCATED IN DALLAS COUNTY, TEXAS AND
THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN
SAID COURT BY THE MAILING THEREOF BY LENDER BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS
PROVIDED IN SECTION 17. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS
LOCATED IN THE STATE OF TEXAS, COUNTY OF DALLAS, AND HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM
57
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
30. Waiver of Jury Trial. THE BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
31. Other Agreements. THIS WRITTEN CREDIT AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
32. Financial Terms. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance with
GAAP.
33. Joinder of Guarantors. The Guarantors are executing this
Restated Credit Agreement to (i) consent and agree to the execution of this
Restated Credit Agreement and the other documents to be executed in connection
herewith, (ii) acknowledge and agree to the provisions of this Restated Credit
Agreement, (iii) ratify and confirm their respective Guaranties, and (iv) agree
that their respective Guaranties shall remain in full force and effect and shall
continue to be the legal, valid and binding obligation of each such Guarantor
enforceable against each such Guarantor in accordance with the terms of each
such Guaranty.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
GREAT LAKES ENERGY PARTNERS, L.L.C.,
a Delaware limited liability company
By: ____________________________________
Name: __________________________________
Title: _________________________________
GUARANTORS:
OCEANA EXPLORATION COMPANY, L.C.
By: Great Lakes Energy Partners, L.L.C.,
managing member
By: ________________________________
Name: ______________________________
Title: _____________________________
OHIO INTRASTATE GAS TRANSMISSION
COMPANY
By: ____________________________________
Name: __________________________________
Title: _________________________________
59
LENDERS AND AGENTS:
BANK ONE, NA
(Main Office Chicago)
as a Lender and as Administrative Agent
By: ____________________________________
Wm. Xxxx Xxxxxxx, Director,
Capital Markets
JPMORGAN CHASE BANK
as a Lender and as Syndication Agent
(successor by merger to Chase Bank of
Texas National Association)
By: ____________________________________
Name: __________________________________
Title: _________________________________
CREDIT LYONNAIS NEW YORK BRANCH
as a Lender and as Documentation Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
BANK OF SCOTLAND
By: ____________________________________
Name: __________________________________
Title: _________________________________
THE BANK OF NOVA SCOTIA
as a Lender and as Managing Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
60
FORTIS CAPITAL CORP.
By: ____________________________________
Name: __________________________________
Title: _________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
THE FROST NATIONAL BANK
By: ____________________________________
Name: __________________________________
Title: _________________________________
UNION BANK OF CALIFORNIA, N.A.
By: ____________________________________
Name: __________________________________
Title: _________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
61
