AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into
this 1st day of April, 1998, by and between EDGE PETROLEUM CORPORATION, a
Delaware corporation, and EDGE PETROLEUM EXPLORATION COMPANY, a Delaware
corporation (collectively, the "BORROWER", but with such entities constituting
the Borrower being jointly and severally liable for the Obligations and each
reference herein to the Borrower being applicable to each of such entities) and
COMPASS BANK, a Texas state chartered banking institution ("COMPASS"), The First
National Bank of Chicago, a national banking association ("FIRST CHICAGO"), and
each other lender that becomes a signatory hereto as provided in Section 9.1
(Compass, First Chicago and each such other lender, together with its successors
and assigns, individually a "Lender" and collectively, the "Lenders"), and
Compass, as agent for the Lenders pursuant to the terms hereof (in such
capacity, together with its successors in such capacity pursuant to the terms
hereof, (the "AGENT").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows, amending and restating in
its entirety the Credit Agreement dated as of July 11, 1995, by and between Edge
Joint Venture II, and Compass (as the same may have been amended, supplemented,
restated or otherwise modified to the time of execution of this Amended and
Restated Credit Agreement, the "EXISTING CREDIT AGREEMENT").
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.1 TERMS DEFINED ABOVE. As used in this Amended and Restated
Credit Agreement, each of the terms "AGENT", "AGREEMENT", "BORROWER", "COMPASS",
"EXISTING CREDIT AGREEMENT", "FIRST CHICAGO", "LENDER" and "LENDERS" shall have
the meaning assigned to such term hereinabove.
I.2 ADDITIONAL DEFINED TERMS. As used in this Agreement, each of
the following terms shall have the meaning assigned thereto in this Section,
unless the context otherwise requires:
"ADDITIONAL COSTS" shall mean costs which the Agent or any Lender
determines are attributable to its obligation to make or its making or
maintaining any LIBO Rate Loan or issuing or participating in Letters of
Credit, or any reduction in any amount receivable by the Agent or any
Lender in respect of any such obligation or any LIBO Rate Loan or Letter of
Credit, resulting from any Regulatory Change
which (a) changes the basis of taxation of any amounts payable to the Agent
or such Lender under this Agreement or any Note in respect of any LIBO Rate
Loan or Letter of Credit (other than taxes imposed on the overall net
income of the Agent or such Lender or its Applicable Lending Office for any
such LIBO Rate Loan by the jurisdiction in which the Agent or such Lender
has its principal office or Applicable Lending Office), (b) imposes or
modifies any reserve, special deposit, minimum capital, capital ratio, or
similar requirements (other than the Reserve Requirement utilized in the
determination of the Adjusted LIBO Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, the Agent or such Lender (including LIBO Rate Loans and
Dollar deposits in the London interbank market in connection with LIBO Rate
Loans), or the Commitment of the Agent or such Lender, or the London
interbank market, or (c) imposes any other condition affecting this
Agreement or any Note or any of such extensions of credit, liabilities, or
Commitments.
"ADJUSTED LIBO RATE" shall mean, for any LIBO Rate Loan, an interest
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the sum of the LIBO Rate for such
Loan plus the Applicable Margin, but in no event exceeding the Highest
Lawful Rate.
"AFFILIATE" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of
the Borrower and any "affiliate" of the Borrower within the meaning of Reg.
Section 240.12b-2 of the Securities Exchange Act of 1934, as amended, with
"control," as used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.
"AGENCY FEE LETTER" shall mean the letter agreement dated April 1,
1998, between Compass and the Borrower concerning certain fees in
connection with the transactions contemplated hereby, and any agreements or
instruments executed in connection therewith, as amended, restated, or
supplemented from time to time.
"AGREEMENT" shall mean this Amended and Restated Credit Agreement, as
it may be amended, supplemented, restated or otherwise modified from time
to time.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and type of
Loan, the lending office of such Lender (or an affiliate of such Lender)
designated for such type of Loan on the signature pages hereof or such
other office of such Lender (or an affiliate of such Lender) as such Lender
may from time to time specify to the Agent
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and the Borrower as the office by which Loans of such type are to be made
and maintained.
"APPLICABLE MARGIN" shall mean as to each LIBO Rate Loan, the
following:
Borrowing Base LIBO Rate Loan
Utilization Applicable Margin
----------------------------------------------------
equal to or greater than 75% two percent (2%)
of Borrowing Base
less than 75% but greater one and three-fourths
than 50% of Borrowing percent (1-3/4%)
Base
less than or equal to one and one-half
50% of Borrowing Base percent (1-1/2%),
with the Borrowing Base Utilization and the corresponding LIBO Rate being
set at the close of each calendar quarter for the next calendar quarter.
The Borrower shall furnish to the Agent, within five (5) days of the end of
each calendar quarter, a Borrowing Base Utilization Certificate,
substantially in the form attached as Exhibit IV to this Agreement, which
shall stipulate the Borrowing Base Utilization level at the end of such
quarter.
"ASSIGNMENT" shall mean that certain Assignment of Note, Liens and
Other Rights assigning the Existing Note and rights under the Existing
Credit Agreement to Compass and First Chicago ratably on the basis of their
Percentage Shares and the Existing Liens to the Agent for the benefit of
the Lenders.
"AVAILABLE COMMITMENT" shall mean, at any time, an amount equal to the
remainder, if any, of (a) the Borrowing Base in effect at such time MINUS
(b) the sum of the Loan Balance at such time and the L/C Exposure at such
time.
"BORROWING BASE" shall mean, at any time, the amount determined by the
Lenders in accordance with Section 2.9 and then in effect.
"BORROWING BASE UTILIZATION" shall mean, at any time, the Loan
Balance, plus any L/C Exposure hereunder, expressed as a percentage of the
Borrowing Base.
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"BORROWING REQUEST" shall mean each written request, in substantially
the form attached hereto as Exhibit II, by the Borrower to the Agent for a
borrowing or conversion pursuant to Sections 2.1 or 2.11, each of which
shall:
(a)be signed by a Responsible Officer of the Borrower;
(b)specify the amount and type of Loan requested, and, as
applicable, the Loan to be converted and the date of the borrowing or
conversion (which shall be a Business Day);
(c)when requesting a Floating Rate Loan, be delivered to the
Agent no later than 10:00 a.m., Central Standard or Daylight Savings
Time, as the case may be, on the Business Day of the requested
borrowing or conversion, and
(d)when requesting a LIBO Rate Loan, be delivered to the Agent
no later than 10:00 a.m., Central Standard or Daylight Savings Time,
as the case may be, two Business Days preceding the requested
borrowing or conversion and designate the Interest Period requested
with respect to such Loan.
"BUSINESS DAY" shall mean (a) for all purposes other than as covered
by clause (b) of this definition, a day other than a Saturday, Sunday,
legal holiday for commercial banks under the laws of the State of Texas, or
any other day when banking is suspended in the State of Texas, and (b) with
respect to all requests, notices, and determinations in connection with,
and payments of principal and interest on, LIBO Rate Loans, a day which is
a Business Day described in clause (a) of this definition and which is a
day for trading by and between banks for Dollar deposits in the London
interbank market.
"CASH FLOW" shall mean, for any relevant accounting period, Net Income
for such period plus, cash generated from project sales which under the
full cost method of accounting would be treated as a reduction of the full
cost pool, plus without duplication and to the extent deducted from
revenues in determining Net Income for the relevant period, depreciation,
amortization, depletion, and other non-cash expenses less, without
duplication and to the extent added to revenues in determining Net Income
for the relevant period, all non-cash revenue and non-recurring gains of
the Borrower for the relevant period.
"CHANGE IN CONTROL" shall mean (i) the acquisition by any Person, or
two or more Persons acting in concert (other than members of the senior
management of Edge Petroleum Corporation), of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange
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Act of 1934) of 35% or more of the outstanding shares of voting stock of
Edge Petroleum Corporation; or (ii) members of the senior management of
Edge Petroleum Corporation ceasing to own, free and clear of all Liens or
other encumbrances, at least 5% of the outstanding shares of voting stock
of Edge Petroleum Corporation on a fully diluted basis.
"CLOSING DATE" shall mean the date of this Agreement.
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" shall mean the Mortgaged Properties and any other
Property now or at any time used or intended as security for the payment or
performance of all or any portion of the Obligations (subject to the
provisions of Section 7.3) of the Borrower or any Subsidiary or other
Affiliate of the Borrower owing to the Agent or any Lender or any branch,
Subsidiary or other Affiliate of the Agent or any Lender which is subject
to a Security Instrument.
"COMMITMENTS" shall mean the several obligations of the Lenders,
subject to applicable provisions of this Agreement, to make Loans to or for
the benefit of the Borrower pursuant to Section 2.1 or participate in the
issuance of Letters of Credit pursuant to Section 2.2.
"COMMITMENT AMOUNT" shall mean $11,231,250 as to Compass and
$3,743,750 as to First Chicago, in each case as of the Closing Date.
"COMMITMENT FEE" shall mean each fee payable to the Agent for the
benefit of the Lenders by the Borrower pursuant to Section 2.12.
"COMMITMENT PERIOD" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"COMMITMENT TERMINATION DATE" shall mean March 1, 2001.
"COMMODITY HEDGE AGREEMENT" shall mean any agreement, device or
arrangement entered into by one Person with another Person providing for
payments which are related to fluctuations in the price of petroleum (or
any fraction thereof), natural gas, or natural gas liquids (including, but
not limited to, swaps, caps, collars, options, puts, calls, futures and
forward contracts).
"COMMODITY HEDGE OBLIGATIONS" means any and all existing and future
indebtedness, obligation and liability of every kind, nature and character,
direct or indirect, absolute or contingent and howsoever and whensoever
created, arising,
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evidenced or acquired (including, but not limited to, all renewals,
extensions and modifications thereof, substitutions therefor and all fees,
costs and expenses incurred by the other Person or counterparty in
connection with the documentation, administration, collection or
enforcement thereof), of the original Person or party, under (a) any and
all Commodity Hedge Agreements, and (b) any and all cancellations, buy
backs, reversals, terminations or assignments of any Commodity Hedge
Agreement.
"COMMONLY CONTROLLED ENTITY" shall mean any Person which is under
common control with the Borrower within the meaning of Section 4001 of
ERISA.
"COMPLIANCE CERTIFICATE" shall mean each certificate, substantially in
the form attached hereto as Exhibit III, executed by a Responsible Officer
of the Borrower and furnished to the Agent from time to time in accordance
with Section 5.2.
"CONTINGENT OBLIGATION" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "PRIMARY OBLIGATION") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
Person, regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any primary obligation, or (ii) to maintain working
or equity capital of any other Person in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"DEBT SERVICE" shall mean, for each relevant accounting period, an
amount equal to actual principal amounts paid by the Borrower and its
consolidated Subsidiaries on a consolidated basis on Indebtedness of the
Borrower and its consolidated Subsidiaries during each fiscal quarter of
the Borrower.
"DEFAULT" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
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"DEFAULT RATE" shall mean a per annum interest rate equal to the Index
Rate plus five percent (5%), but in no event exceeding the Highest Lawful
Rate.
"DOLLARS" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBIT" shall mean, for any relevant accounting period, consolidated
Net Income for that period, plus, without duplication and to the extent
deducted from revenues in determining consolidated Net Income for the
period, (a) the aggregate amount of consolidated Interest Expense for that
period, (b) the aggregate amount of Letter of Credit fees paid during that
period, (c) the aggregate amount of income tax expense for that period, and
(d) all non-cash, extraordinary expenses during that period, and minus,
without duplication and to the extent added to revenues in determining
consolidated Net Income for that period, all non-cash extraordinary income
during that period, in each case determined in accordance with GAAP.
"ENVIRONMENTAL COMPLAINT" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority with respect
to (a) air emissions, (b) spills, releases, or discharges to soils, any
improvements located thereon, surface water, groundwater, or the sewer,
septic, waste treatment, storage, or disposal systems servicing any
Property of the Borrower, (c) solid or liquid waste disposal, (d) the use,
generation, storage, transportation, or disposal of any Hazardous
Substance, or (e) other environmental, health, or safety matters affecting
any Property of the Borrower or the business conducted thereon.
"ENVIRONMENTAL LAWS" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air
Act, the Clean Water Act, the Safe Drinking Water Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Endangered
Species Act, the Resource Conservation and Recovery Act, the Occupational
Safety and Health Act, the Hazardous Materials Transportation Act, the
Superfund Amendments and Reauthorization Act, and the Toxic Substances
Control Act; (b) any and all equivalent environmental statutes of any state
in which Property of the Borrower is situated, as they may be cited,
referenced and amended from time to time; (c) any rules or regulations
promulgated under or adopted pursuant to the above federal and state laws;
and (d) any other equivalent foreign, federal, state, or local statute or
any requirement, rule, regulation, code, ordinance, or order adopted
pursuant thereto, including, without limitation, those relating to the
generation, transportation, treatment, storage, recycling, disposal,
handling, or release of Hazardous Substances.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"EVENT OF DEFAULT" shall mean any of the events specified in Section
7.1.
"EXISTING INDEBTEDNESS" shall mean the Obligations as defined under
the Existing Credit Agreement outstanding as of the Closing Date.
"EXISTING LETTERS OF CREDIT" shall mean the Letters of Credit
outstanding under the Existing Credit Agreement.
"EXISTING NOTE" shall mean that certain promissory note dated July 11,
1995, in the amount of $20,000,000 made by Edge Joint Venture II and
payable to the order of Compass.
"EXISTING LIENS" shall mean the Liens securing the Existing
Indebtedness in effect as of the Closing Date, which are to be assigned to
the Agent for the benefit of the Lenders pursuant to the Assignment.
"FACILITY FEE" shall mean the fee payable to the Agent for the benefit
of the Lenders by the Borrower pursuant to Section 2.13.
"FINAL MATURITY" shall mean March 1, 2001.
"FINANCIAL STATEMENTS" shall mean statements of the financial
condition of the Borrower and its consolidated Subsidiaries on a
consolidated and consolidating basis as at the point in time and for the
period indicated and consisting of at least a balance sheet and related
statements of operations, common stock and other stockholders' equity, and
cash flows, and when such statements prepared on a consolidated basis are
required by applicable provisions of this Agreement to be audited,
accompanied by the unqualified certification of a nationally-recognized
firm of independent certified public accountants or other independent
certified public accountants acceptable to the Agent and footnotes to any
of the foregoing, all of which shall be prepared in accordance with GAAP
consistently applied and in comparative form with respect to the
corresponding period of the preceding fiscal period.
"FIXED RATE LOAN" shall mean any LIBO Rate Loan.
"FLOATING RATE" shall mean an interest rate per annum equal to the
Index Rate from time to time in effect, but in no event exceeding the
Highest Lawful Rate.
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"FLOATING RATE LOAN" shall mean any Loan and any portion of the Loan
Balance which the Borrower has requested, in the initial Borrowing Request
for such Loan or a subsequent Borrowing Request for such portion of the
Loan Balance, bear interest at the Floating Rate, or which pursuant to the
terms hereof is otherwise required to bear interest at the Floating Rate.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time
to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other
political subdivision and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"HAZARDOUS SUBSTANCES" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Toxic
Substances Control Act, as amended, or any other law or regulation now or
hereafter enacted or promulgated by any Governmental Authority.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of Texas
or the United States of America, whichever authorizes the greater rate, as
such laws are presently in effect or, to the extent allowed by applicable
law, as such laws may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than such laws now allow.
"INDEBTEDNESS" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet, (b) all obligations of
such Person evidenced by bonds, debentures, promissory notes, or similar
evidences of indebtedness, (c) all other indebtedness of such Person for
borrowed money, (d) all obligations issued, undertaken or assumed
9
as the deferred purchase price of property or services (other than trade
payables, which include amounts owed to drilling contractors, entered into
in the ordinary course of business on ordinary terms); (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property) including, without limitation,
production payments, net profit interests and other hydrocarbon interests
subject to repayment out of future oil and gas production; (f) all
obligations with respect to capital leases; (g) all Commodity Hedge
Obligations; and (h) all obligations, including Contingent Obligations of
others, to the extent any such obligation is secured by a Lien on the
assets of such Person (whether or not such Person has assumed or become
liable for the obligation secured by such Lien).
"INDEX RATE" shall mean the prime rate established in THE WALL STREET
JOURNAL'S "MONEY RATES" or similar table. If multiple prime rates are
quoted in the table, then the highest prime rate will be the Index Rate.
In the event that the prime rate is no longer published by THE WALL STREET
JOURNAL in the "MONEY RATES" or similar table, then Agent may select an
alternative published index based upon comparable information as a
substitute Index Rate. Upon the selection of a substitute Index Rate, the
applicable interest rate shall thereafter vary in relation to the
substitute index. Such substitute index shall be the same index that is
generally used as a substitute by Agent on all Index Rate loans.
"INSOLVENCY PROCEEDING" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the United
States, the State of Texas, or any other jurisdiction.
"INTELLECTUAL PROPERTY" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"INTEREST EXPENSE" shall mean, for any relevant accounting period, the
sum of (a) gross interest expense (including all cash and accrued interest
expense) of the Borrower and its consolidated Subsidiaries on a
consolidated basis for that period, including (i) the amortization of debt
discounts, (ii) the amortization of all fees payable in connection with the
issuance of debt, to the extent included in interest expense, and (iii) the
portion of any payments or accruals with respect to capital
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leases allocable to interest expense and (b) capitalized interest of the
Borrower and its consolidated Subsidiaries on a consolidated basis.
"INTEREST PERIOD" shall mean, subject to the limitations set forth in
Section 2.23, and with respect to any LIBO Rate Loan, a period commencing
on the date such Loan is made or converted from a Loan of another type
pursuant to this Agreement or the last day of the next preceding Interest
Period with respect to such Loan and ending on the numerically
corresponding day in the calendar month that is one, two, three, or,
subject to availability, six months thereafter, as the Borrower may request
in the Borrowing Request for such Loan.
"INVESTMENT" in any Person shall mean any stock, bond, note, or other
evidence of Indebtedness, or any other security (other than current trade
and customer accounts) of, investment or partnership interest in or loan
to, such Person.
"L/C EXPOSURE" shall mean, at any time, the aggregate maximum amount
available to be drawn under outstanding Letters of Credit at such time.
"LETTER OF CREDIT" shall mean any standby letter of credit issued by
the Agent for the account of the Borrower pursuant to Section 2.2.
"LETTER OF CREDIT APPLICATION" shall mean the standard letter of
credit application employed by the Agent as the issuer of the Letters of
Credit, from time to time, in connection with Letters of Credit.
"LETTER OF CREDIT FEE" shall mean each fee payable by the Borrower to
the Agent for the account of the Lenders pursuant to Section 2.14 upon or
in connection with the issuance or renewal of each Letter of Credit.
"LETTER OF CREDIT PAYMENT" shall mean any payment made by the Agent on
behalf of the Lenders under a Letter of Credit, to the extent that such
payment has not been repaid by the Borrower.
"LIBO RATE" shall mean, with respect to any Interest Period for any
LIBO Rate Loan, the lesser of (a) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the average of the offered
quotations appearing on Telerate Page 3750 (or if such Telerate Page shall
not be available, any successor or similar service selected by the Agent
and the Borrower) as of approximately 11:00 a.m., Central Standard or
Daylight Savings Time, as the case may be, on the day two Business Days
prior to the first day of such Interest Period for Dollar deposits in an
amount comparable to the principal amount of such LIBO Rate Loan and having
a term comparable to the Interest Period for such LIBO Rate Loan, or (b)
the Highest Lawful Rate. If neither such Telerate Page 3750 nor any
successor or similar service
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is available, the term "LIBO Rate" shall mean, with respect to any Interest
Period for any LIBO Rate Loan, the lesser of (a) the rate per annum
(rounded upwards if necessary, to the nearest 1/100 of 1%) quoted by the
Agent at approximately 11:00 a.m., London time (or as soon thereafter as
practicable) two Business Days prior to the first day of the Interest
Period for such LIBO Rate Loan for the offering by the Agent to leading
banks in the London interbank market of Dollar deposits in an amount
comparable to the principal amount of such LIBO Rate Loan and having a term
comparable to the Interest Period for such LIBO Rate Loan, or (b) the
Highest Lawful Rate.
"LIBO RATE LOAN" shall mean any Loan and any portion of the Loan
Balance which the Borrower has requested, in the initial Borrowing Request
for such Loan or a subsequent Borrowing Request for such portion of the
Loan Balance, bearing interest at the Adjusted LIBO Rate and which is
permitted by the terms hereof to bear interest at the Adjusted LIBO Rate.
"LIEN" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of such Property, whether
such interest is based on common law, statute, or contract, and including,
but not limited to, the lien or security interest arising from a mortgage,
ship mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt, or a lease, consignment, or bailment for security purposes
(other than true leases or true consignments), liens of mechanics,
materialmen, and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property which secure an obligation owed to, or a claim by, a Person other
than the owner of such Property (for the purpose of this Agreement, the
Borrower shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security instrument
in any public office.
"LIMITATION PERIOD" shall mean any period while any amount remains
owing on the Notes and interest on such amount, calculated at the
applicable interest rate, plus any fees or other sums payable under any
Loan Document and deemed to be interest under applicable law, would exceed
the amount of interest which would accrue at the Highest Lawful Rate.
"LOAN" shall mean any loan made by any Lender to or for the benefit of
the Borrower pursuant to this Agreement and any payment made by the Agent
or any Lender under a Letter of Credit.
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"LOAN BALANCE" shall mean, at any time, the outstanding principal
balance of the Notes at such time.
"LOAN DOCUMENTS" shall mean the Assignment, this Agreement, the Notes,
any Letter of Credit Applications, any Letters of Credit, the Security
Instruments, and all other documents and instruments now or hereafter
delivered pursuant to the terms of or in connection with the Assignment,
this Agreement, the Notes, any Letter of Credit Applications, any Letters
of Credit, or the Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of the
foregoing from time to time in effect.
"MATERIAL ADVERSE EFFECT" shall mean (a) any material adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower taken as a whole, or (b) any
adverse effect upon the Collateral taken as a whole.
"MAXIMUM COMMITMENT AMOUNT" shall mean the sum of the Commitment
Amounts of all Lenders.
"MORTGAGED PROPERTIES" shall mean all Oil and Gas Properties of the
Borrower subject to a perfected first-priority Lien in favor of the Agent
for the benefit of the Lenders, subject only to Permitted Liens, as
security for the Obligations owing to the Agent or any Lender (subject to
the provisions of Section 7.3).
"NET INCOME" shall mean, for any relevant accounting period, the net
income of the Borrower and its consolidated Subsidiaries on a consolidated
basis for such period, determined in accordance with GAAP.
"NOTES" shall mean, collectively, each of the promissory notes of the
Borrower, each of which shall be in part a renewal, extension and
modification, but not a discharge or novation, of the Existing Note and
shall be in the form attached hereto as Exhibit I, together with all
renewals, extensions for any period, increases, and rearrangements thereof.
"OBLIGATIONS" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the undrawn, unexpired amount of all
outstanding Letters of Credit, (c) the obligation of the Borrower for the
payment of Commitment Fees, Facility Fees and Letter of Credit Fees, (e)
any Commodity Hedge Obligations of the Borrower to the Agent and/or the
Lenders, and (f) all other obligations and liabilities of the Borrower to
the Agent and/or the Lenders, now existing or hereafter incurred, under,
arising out of or in connection with any Loan Document, and to the extent
that any of the foregoing includes or refers to the payment of amounts
deemed or
13
constituting interest, only so much thereof as shall have accrued, been
earned and which remains unpaid at each relevant time of determination.
"OIL AND GAS PROPERTIES" shall mean fee, leasehold, or other interests
in or under mineral estates or oil, gas, and other liquid or gaseous
hydrocarbon leases with respect to Properties situated in the United States
or offshore from any State of the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests, and mineral
fee interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances and Properties appertaining,
belonging, affixed, or incidental thereto.
"PERCENTAGE SHARE" shall mean, as to each Lender, the percentage such
Lender's Commitment Amount constitutes of the Maximum Commitment Amount.
"PERMITTED INDEBTEDNESS" shall mean (a) the Obligations, (b)
Indebtedness arising from endorsing negotiable instruments for deposit or
collection in the ordinary course of business, (c) current liabilities
incurred in the ordinary course of business, (d) purchase money
Indebtedness which does not exceed an aggregate principal amount of
$250,000 during the term of this Agreement, and (e) Indebtedness existing
on the Closing Date hereof by virtue of the requirements of GAAP or
obligations existing on the Closing Date which may at any time hereafter
become Indebtedness by virtue of any changes in the requirements of GAAP.
"PERMITTED LIENS" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(c) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business of the Borrower
to secure amounts owing, which amounts are not yet due or are being
contested in good faith by appropriate proceedings, if such reserve as may
be required by GAAP shall have been made therefor, (e) Liens under
production sales agreements, division orders,
14
operating agreements, and other agreements customary in the oil and gas
business for processing, producing, and selling hydrocarbons securing
obligations not constituting Indebtedness and provided that such Liens do
not secure obligations to deliver hydrocarbons at some future date without
receiving full payment therefor within 90 days of delivery, (f) easements,
rights of way, restrictions, and other similar encumbrances, and minor
defects in the chain of title which are customarily accepted in the oil and
gas financing industry, none of which materially interfere with the
ordinary conduct of the business of the Borrower or materially detract from
the value or use of the Property to which they apply, (g) liens granted to
secure purchase money indebtedness which does not exceed the amount
described in the definition of Permitted Indebtedness, and (h) Liens in
favor of the Agent for the benefit of the Lenders and other Liens expressly
permitted under the Security Instruments.
"PERSON" shall mean an individual, corporation, limited liability
company, partnership, trust, unincorporated organization, government, any
agency or political subdivision of any government, or any other form of
entity.
"PLAN" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or any Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PRINCIPAL OFFICE" shall mean the principal office of the Agent in
Houston, Texas, presently located at 00 Xxxxxxxx Xxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxx 00000.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from
time to time.
"REGULATORY CHANGE" shall mean the passage, adoption, institution, or
amendment of any federal, state, local, or foreign Requirement of Law
(including, without limitation, Regulation D), or any interpretation,
directive, or request of any Governmental Authority or monetary authority
charged with the enforcement, interpretation, or administration thereof,
occurring after the Closing Date and applying to a class of banks including
any Lender or its Applicable Lending Office.
"RELEASE OF HAZARDOUS SUBSTANCES" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with the Requirement
of Law, a valid permit, license, certificate, or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon (a) the
air, (b) soils or any improvements
15
located thereon, (c) surface water or groundwater, or (d) the sewer or
septic system, or the waste treatment, storage, or disposal system
servicing any Property of the Borrower.
"REQUIRED LENDERS" shall mean, Lenders (including the Agent) holding
at least 80% of the then Loan Balance, or, if there is no Loan Balance,
Lenders (including the Agent) having at least 80% of the aggregate amount
of the Commitments.
"REQUIREMENT OF LAW" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any applicable law, treaty, ordinance, order,
judgment, rule, decree, regulation, or determination of an arbitrator,
court, or other Governmental Authority, including, without limitation,
rules, regulations, orders, and requirements for permits, licenses,
registrations, approvals, or authorizations, in each case as such now exist
or may be hereafter amended and are applicable to or binding upon such
Person or any of its Property or to which such Person or any of its
Property is subject.
"RESERVE REPORT" shall mean each report delivered to the Agent and
each Lender pursuant to Section 5.4.
"RESPONSIBLE OFFICER" shall mean, as to any Person, its President,
Chief Executive Officer, Chief Financial Officer or any Vice President.
"SCHEDULED REDUCTION AMOUNT" shall mean the amount by which the
Borrowing Base shall be reduced each calendar month as determined by the
Lenders under Section 2.9(b) from time to time.
"SECURITY INSTRUMENTS" shall mean the security instruments executed
and delivered in satisfaction of the condition set forth in Section 3.1(f),
and all other documents and instruments at any time executed as security
for all or any portion of the Obligations (subject to the provisions of
Section 7.3) of the Borrower or any Subsidiary or other Affiliate of the
Borrower owing to the Agent or any Lender or any branch, Subsidiary or
other Affiliate of the Agent or any Lender, as such instruments may be
amended, restated, or supplemented from time to time.
"SUBSIDIARY" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
16
"SUPERFUND SITE" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"TANGIBLE NET WORTH" shall mean, at any point in time, (a) total
assets, as would be reflected on a balance sheet of the Borrower and its
consolidated Subsidiaries prepared on a consolidated basis and in
accordance with GAAP, exclusive of Intellectual Property, experimental or
organization expenses, franchises, licenses, permits, and other intangible
assets, treasury stock, unamortized underwriters' debt discount and
expenses, and goodwill minus (b) total liabilities, as would be reflected
on a balance sheet of the Borrower and its consolidated Subsidiaries
prepared on a consolidated basis and in accordance with GAAP.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
I.3 UNDEFINED FINANCIAL ACCOUNTING TERMS. Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.
I.4 REFERENCES. References in this Agreement to Schedule,
Exhibit, Article, or Section numbers shall be to Schedules, Exhibits, Articles,
or Sections of this Agreement, unless expressly stated to the contrary.
References in this Agreement to "hereby," "herein," "hereinafter,"
"hereinabove," "hereinbelow," "hereof," "hereunder" and words of similar import
shall be to this Agreement in its entirety and not only to the particular
Schedule, Exhibit, Article, or Section in which such reference appears.
I.5 ARTICLES AND SECTIONS. This Agreement, for convenience only,
has been divided into Articles and Sections; and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
I.6 NUMBER AND GENDER. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions
of terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
I.7 INCORPORATION OF SCHEDULES AND EXHIBITS. The Exhibits
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for all purposes.
17
ARTICLE II
TERMS OF FACILITY
II.1 REVOLVING LINE OF CREDIT. (a) Upon the terms and conditions
and relying on the representations and warranties contained in this Agreement,
the Lenders severally agree, during the Commitment Period, to make Loans, in
immediately available funds at the Applicable Lending Office or the Principal
Office, to or for the benefit of the Borrower, from time to time on any Business
Day designated by the Borrower following receipt by the Agent of a Borrowing
Request; provided, however, no Loan at the time it is made shall exceed the then
existing Available Commitment.
(b) Subject to the terms of this Agreement, during the Commitment
Period, the Borrower may borrow, repay, and reborrow and convert Loans of one
type or with one Interest Period into Loans of another type or with a different
Interest Period. Except for prepayments made pursuant to Section 2.10, each
borrowing, conversion, and prepayment of principal of Loans shall be in an
aggregate amount at least equal to $100,000. Each borrowing, prepayment, or
conversion of or into a Loan of a different type or, in the case of a Fixed Rate
Loan, having a different Interest Period, shall be deemed a separate borrowing,
conversion, or prepayment for purposes of the foregoing, one for each type of
Loan or Interest Period. Anything in this Agreement to the contrary
notwithstanding, the aggregate principal amount of LIBO Rate Loans having the
same Interest Period shall be at least equal to $100,000; and if any LIBO Rate
Loan would otherwise be in a lesser aggregate principal amount for any period,
such Loan shall be a Floating Rate Loan during such period.
(c) The Loans shall be made and maintained at the Applicable Lending
Office or the Principal Office and shall be evidenced by the Notes.
(d) Not later than 3:00 p.m., Central Standard or Daylight Savings
Time, as the case may be, on the date specified for each borrowing, each Lender
shall make available an amount equal to its Percentage Share of the borrowing to
be made on such date to the Agent, at an account designated by the Agent, in
immediately available funds, for the account of the Borrower. The amount so
received by the Agent shall, subject to the terms and conditions hereof, be made
available to the Borrower in immediately available funds at the Principal
Office. All Loans by each Lender shall be maintained at the Applicable Lending
Office of such Lender and shall be evidenced by the Note of such Lender.
(e) The failure of any Lender to make any Loan required to be made by
it hereunder shall not relieve any other Lender of its obligation to make any
Loan required to be made by it, and no Lender shall be responsible for the
failure of any other Lender to make any Loan.
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(f) The face amounts of the Notes have been established as an
administrative convenience and do not commit any Lender to advance funds
hereunder in excess of the then current Borrowing Base.
II.2 LETTER OF CREDIT FACILITY. (a) Upon the terms and conditions
and relying on the representations and warranties contained in this Agreement,
the Agent, as issuing bank for the Lenders, agrees from the date of this
Agreement until the date which is thirty days prior to the Commitment
Termination Date, to issue on behalf of the Lenders in their respective
Percentage Shares Letters of Credit for the account of the Borrower and to renew
and extend such Letters of Credit. Letters of Credit shall be issued, renewed,
or extended from time to time on any Business Day designated by the Borrower
following the receipt in accordance with the terms hereof by the Agent of the
written (or oral, confirmed promptly in writing) request by a Responsible
Officer of the Borrower therefor and a Letter of Credit Application. Letters of
Credit shall be issued in such amounts as the Borrower may request; provided,
however, that (i) no Letter of Credit shall have an expiration date which is
more than 365 days after the issuance thereof or subsequent to the Final
Maturity, (ii) each automatically renewable Letter of Credit shall provide that
it may be terminated by the Agent at its then current expiry date by not less
than 30 days' written notice by the Agent to the beneficiary of such Letter of
Credit, and (iii) the Agent shall not be obligated to issue any Letter of Credit
if (A) the face amount thereof would exceed the Available Commitment, or (B)
after giving effect to the issuance thereof, (I) the L/C Exposure, when added to
the Loan Balance then outstanding, would exceed the lesser of the Maximum
Commitment Amount or the Borrowing Base, or (II) the L/C Exposure would exceed
$5,000,000.
(b) Prior to any Letter of Credit Payment in respect of any Letter
of Credit, each Lender shall be deemed to be a participant through the Agent
with respect to the relevant Letter of Credit in the obligation of the Agent, as
the issuer of such Letter of Credit, in an amount equal to the Percentage Share
of such Lender of the maximum amount which is or at any time may become
available to be drawn thereunder. Upon delivery by such Lender of funds
requested pursuant to Section 2.2(c), such Lender shall be treated as having
purchased a participating interest in an amount equal to such funds delivered by
such Lender to the Agent in the obligation of the Borrower to reimburse the
Agent, as the issuer of such Letter of Credit, for any amounts payable, paid, or
incurred by the Agent, as the issuer of such Letter of Credit, with respect to
such Letter of Credit.
(c) Each Lender shall be unconditionally and irrevocably liable,
without regard to the occurrence of any Default or Event of Default, to the
extent of the Percentage Share of such Lender at the time of issuance of each
Letter of Credit, to reimburse, on demand, the Agent, as the issuer of such
Letter of Credit, for the amount of each Letter of Credit Payment under such
Letter of Credit. Each Letter of Credit Payment shall be deemed to be a
Floating Rate Loan by each Lender to the extent of funds delivered by such
Lender to the Agent with respect to such Letter of Credit Payment and shall to
such extent be deemed a Floating Rate Loan under and shall be evidenced by the
Note of such Lender and shall be payable by the Borrower upon demand by the
Agent.
19
(d) EACH LENDER AGREES TO SEVERALLY INDEMNIFY THE AGENT, AS THE
ISSUER OF EACH LETTER OF CREDIT, AND THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES OF THE AGENT (TO THE EXTENT NOT REIMBURSED BY
THE BORROWER AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWER TO DO SO),
RATABLY ACCORDING TO THE PERCENTAGE SHARE OF SUCH LENDER AT THE TIME OF ISSUANCE
OF SUCH LETTER OF CREDIT, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING, WITHOUT LIMITATION, ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE
OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR SUCH
LETTER OF CREDIT OR ANY ACTION TAKEN OR OMITTED BY THE AGENT AS THE ISSUER OF
SUCH LETTER OF CREDIT OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH ANY OF THE
FOREGOING, INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES, CLAIMS, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND
DISBURSEMENTS IMPOSED, INCURRED OR ASSERTED AS A RESULT OF THE NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, OF THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES; PROVIDED THAT NO LENDER (OTHER THAN THE AGENT AS THE ISSUER OF A
LETTER OF CREDIT) SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE GROSS NEGLIGENCE WHETHER
SOLE OR CONCURRENT OR WILLFUL MISCONDUCT OF THE AGENT AS THE ISSUER OF A LETTER
OF CREDIT. THE AGREEMENTS IN THIS SECTION 2.2(D) SHALL SURVIVE THE PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
II.3 USE OF LOAN PROCEEDS AND LETTERS OF CREDIT. (a) on the
Closing Date, each of the Lenders shall pay to Compass an amount equal to the
outstanding principal balance under the Existing Credit Agreement times such
Lender's Percentage Share. Such Existing Indebtedness under the Existing Credit
Agreement shall be assigned, renewed, extended, and rearranged pursuant to the
terms of this Agreement and the Notes and shall, for all purposes, be deemed a
borrowing hereunder;
20
(b) proceeds of all subsequent Loans shall be used for
general corporate purposes of the Borrower, including, without limitation, costs
of acquiring, exploring on and developing Oil and Gas Properties and general
working capital needs; and
(c) Letters of Credit shall be used solely for general
corporate purposes of the Borrower; provided, however, no Letter of Credit may
be used in lieu or in support of stay or appeal bonds. Letters of Credit shall
include Existing Letters of Credit.
II.4 INTEREST. Subject to the terms of this Agreement (including,
without limitation, Section 2.18), interest on the Loans shall accrue and be
payable at a rate per annum equal to the Floating Rate for each Floating Rate
Loan and the Adjusted LIBO Rate for each LIBO Rate Loan. Interest on all
Floating Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable. Interest on all
LIBO Rate Loans shall be computed on the basis of a year of 360 days, and actual
days elapsed (including the first day but excluding the last day) during the
period for which payable. Notwithstanding the foregoing, interest on past-due
principal and, to the extent permitted by applicable law, past-due interest,
shall accrue at the Default Rate, computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable, and shall be
payable upon demand by the Lender at any time as to all or any portion of such
interest. In the event that the Borrower fails to select the duration of any
Interest Period for any Fixed Rate Loan within the time period and otherwise as
provided herein, such Loan (if outstanding as a Fixed Rate Loan) will be
automatically converted into a Floating Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Floating Rate
Loan) will remain as, or (if not then outstanding) will be made as, a Floating
Rate Loan. Interest provided for herein shall be calculated on unpaid sums
actually advanced and outstanding pursuant to the terms of this Agreement and
only for the period from the date or dates of such advances until repayment.
II.5 REPAYMENT OF LOANS AND INTEREST. Accrued and unpaid interest
on each outstanding Floating Rate Loan shall be due and payable monthly
commencing on the first day of May, 1998, and continuing on the first day of
each calendar month thereafter while any Floating Rate Loan remains outstanding,
the payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. Accrued and unpaid interest on
each outstanding Fixed Rate Loan shall be due and payable on the last day of the
Interest Period for such Fixed Rate Loan and, in the case of any Interest Period
in excess of three months, on the day of the third calendar month following the
commencement of such Interest Period corresponding to the day of the calendar
month on which such Interest Period commenced, the payment in each instance to
be the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The Loan Balance, together with all accrued and unpaid interest
thereon, shall be due and payable at Final Maturity. At the time of making each
payment hereunder or under the Notes, the Borrower shall specify to the Agent
the Loans or other amounts payable by the Borrower hereunder to which such
payment is to be applied. In the event the Borrower fails to so specify, or if
an Event of Default
21
has occurred and is continuing, the Agent may apply such payment as it may elect
in its sole discretion.
II.6 OUTSTANDING AMOUNTS. The Loan Balance reflected by the
notations by the Lenders on their records shall be deemed rebuttably presumptive
evidence of the Loan Balance. The liability for payment of principal and
interest evidenced by the Notes shall be limited to principal amounts actually
advanced and outstanding pursuant to this Agreement and interest on such amounts
calculated in accordance with this Agreement.
II.7 TIME, PLACE, AND METHOD OF PAYMENTS. All payments required
pursuant to this Agreement or the Notes shall be made in lawful money of the
United States of America and in immediately available funds, shall be deemed
received by the Lenders on the next Business Day following receipt if such
receipt is after 2:00 p.m., Central Standard or Daylight Savings Time, as the
case may be, on any Business Day, and shall be made to the Agent at the
Principal Office. Except as provided to the contrary herein, if the due date of
any payment hereunder or under the Notes would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding Business
Day, and interest shall be payable for any principal so extended for the period
of such extension.
II.8 PRO RATA TREATMENT; ADJUSTMENTS. (a) Except to the extent
otherwise expressly provided herein, (i) each borrowing made pursuant to this
Agreement shall be from the Lenders pro rata in accordance with their Percentage
Shares, (ii) each payment by the Borrower of Commitment Fees shall be made for
the account of the Lenders pro rata in accordance with their respective
Percentage Shares, (iii) Facility Fees and Letter of Credit Fees shall be made
for the account of the Lenders in accordance with each Lender's Percentage Share
of any increase in the Commitment Amount or Letter of Credit issued, (iv) each
payment of principal of Loans shall be made for the account of the Lenders pro
rata in accordance with their respective Percentage Shares of the Loan Balance,
and (v) each payment of interest on Loans shall be made for the account of the
Lenders pro rata in accordance with their Percentage Shares of the aggregate
amount of interest due and payable to the Lenders.
(b) The Agent shall distribute all payments with respect to the
Obligations to the Lenders promptly upon receipt in like funds as received. In
the event that any payments made hereunder by the Borrower at any particular
time are insufficient to satisfy in full the Obligations due and payable at such
time, such payments shall be applied (a) first, to fees and expenses due
pursuant to the terms of this Agreement or any other Loan Document, (b) second,
to accrued interest, (c) third, to the Loan Balance, and (d) last, to any other
Obligations.
(c) If any Lender (for purposes of this Section, a "BENEFITTED
LENDER") shall at any time receive any payment of all or part of its portion of
the Obligations, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Sections 7.1(f) or 7.1(g), or otherwise) in an amount
greater than such Lender was entitled to receive pursuant to the terms hereof,
such benefitted Lender shall purchase
22
for cash from the other Lenders such portion of the Obligations of such other
Lenders or shall provide such other Lenders with the benefits of any such
Collateral or the proceeds thereof as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds with each of the Lenders according to the terms hereof. If all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded and the purchase price and
benefits returned by such Lender, to the extent of such recovery, but without
interest. The Borrower agrees that each such Lender so purchasing a portion of
the Obligations of another Lender may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Lender were the direct holder of such portion. If any Lender ever
receives, by voluntary payment, exercise of rights of set-off or banker's lien,
counterclaim, cross-action or otherwise, any funds of the Borrower to be applied
to the Obligations, or receives any proceeds by realization on or with respect
to any Collateral, all such funds and proceeds shall be immediately forwarded to
the Agent for distribution in accordance with the terms of this Agreement.
II.9 BORROWING BASE DETERMINATIONS. (a) The Borrowing Base as of
the Closing Date is acknowledged by the Borrower and the Lenders to be
$14,975,000. Commencing on May 1, 1998, and continuing thereafter on the first
day of each calendar month until the earlier of the date such amount is
redetermined or the Commitment Termination Date, the Scheduled Reduction Amount
shall be $525,000.
(b) The Borrowing Base and the Scheduled Reduction Amount shall be
redetermined semi-annually by unanimous consent of the Lenders beginning
September 1, 1998, on the basis of information supplied by the Borrower in
compliance with the provisions of this Agreement, including, without limitation,
Reserve Reports, and all other information available to the Lenders. In
addition, the Lenders shall, in the normal course of business following a
request of the Borrower, redetermine the Borrowing Base; provided, however, the
Lenders shall not be obligated to respond to more than four such requests during
any calendar year, and in no event shall the Lenders be required to redetermine
the Borrowing Base more than once in any three-month period, including, without
limitation, each scheduled semi-annual redetermination provided for above.
Notwithstanding the foregoing, the Lenders may at their discretion and by
unanimous consent redetermine the Borrowing Base and the Scheduled Reduction
Amount at any time and from time to time.
(c) Upon each determination of the Borrowing Base and the Scheduled
Reduction Amount by the Lenders, the Agent shall notify the Borrower orally
(confirming such notice promptly in writing) of such determination, and the
Borrowing Base and the Scheduled Reduction Amount shall become effective upon
such written notification and shall remain in effect until the next subsequent
determination of the Borrowing Base.
(d) The Borrowing Base shall represent the determination by the
Lenders, in accordance with the applicable definitions and provisions herein
contained and their customary lending practices for loans of this nature, of the
value, for loan purposes, of the Mortgaged
23
Properties, plus certain other oil and gas properties to be determined in sole
discretion of the Lenders subject, in the case of any increase in the Borrowing
Base, to the credit approval process of the Lenders. Furthermore, the Borrower
acknowledges that the determination of the Borrowing Base contains an equity
cushion (market value in excess of loan value), which is acknowledged by the
Borrower to be essential for the adequate protection of the Lenders. The
Borrowing Base shall be determined in the sole discretion of the Lenders by
using the Lenders' then current engineering and credit standards.
II.10 MANDATORY PREPAYMENTS. If at any time the sum of the Loan
Balance and the L/C Exposure exceeds the Borrowing Base then in effect, the
Borrower shall, within 60 days of notice from the Agent of such occurrence, (a)
prepay, or make arrangements acceptable to the Lenders for the prepayment of,
the amount of such excess for application on the Loan Balance, (b) provide
additional Collateral, of character and value satisfactory to the Lenders in
their sole discretion, to secure the amount of such excess by the execution and
delivery to the Lenders of Security Instruments in form and substance
satisfactory to the Lenders, or (c) effect any combination of the alternatives
described in clauses (a) and (b) of this Section and acceptable to the Lenders
in their sole discretion. In the event that a mandatory prepayment is required
under this Section and the Loan Balance is less than the amount required to be
prepaid, the Borrower shall repay the entire Loan Balance and, in accordance
with the provisions of the relevant Letter of Credit Applications executed by
the Borrower or otherwise to the satisfaction of the Lenders, deposit with the
Agent for the benefit of the Lenders, as additional collateral securing the
Obligations, an amount of cash, in immediately available funds, equal to the L/C
Exposure minus the lesser of the aggregate Commitment Amounts or the Borrowing
Base. The cash deposited with the Agent for the benefit of the Lenders in
satisfaction of the requirement provided in this Section may be invested, at the
sole discretion of the Lenders and then only at the express direction of the
Borrower as to investment vehicle and maturity (which shall be no later than the
latest expiry date of any then outstanding Letter of Credit), for the account of
the Borrower in cash or cash equivalent investments offered by or through the
Lenders.
II.11 VOLUNTARY PREPAYMENTS AND CONVERSIONS OF LOANS. Subject to
applicable provisions of this Agreement, the Borrower shall have the right at
any time or from time to time to prepay Loans and to convert Loans of one type
or with one Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (a) the Borrower shall give the Agent
notice of each such prepayment or conversion of all or any portion of a Fixed
Rate Loan no less than two Business Days prior to prepayment or conversion, (b)
any Fixed Rate Loan may be prepaid or converted only on the last day of an
Interest Period for such Loan, (c) the Borrower shall pay all accrued and unpaid
interest on the amounts prepaid or converted, and (d) no such prepayment or
conversion shall serve to postpone the repayment when due of any Obligation.
II.12 COMMITMENT FEE. In addition to interest on the Notes as
provided herein and other fees payable hereunder and to compensate the Lenders
for maintaining funds available, the Borrower shall pay to the Agent, for the
account of the Lenders, in immediately available funds, on the first day of
July, 1998, and on the first day of each third calendar month thereafter during
the
24
Commitment Period and on the Commitment Termination Date, a fee in the amount
per annum as set forth below, calculated on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day), on the average daily amount of the Available Commitment
during the preceding quarterly period as follows:
Borrowing Base
Utilization Commitment Fee
-------------------------------------------------
greater than 50% one-half percent (1/2%)
of Borrowing Base
less than or equal to 50% three-eighths percent (3/8%)
of Borrowing Base
The Borrowing Base Utilization and the corresponding Commitment Fee
shall be set at the close of each calendar quarter for the next such quarter.
II.13 FACILITY FEE. In addition to interest on the Notes as
provided herein and other fees payable hereunder and to compensate the Lenders
for the costs of the extension of credit hereunder, the Borrower shall pay to
the Agent for the account of the Lenders, in immediately available funds, an
initial facility fee in the amount of $58,125. Such fee shall be paid on the
Closing Date. In addition, the Borrower shall pay to the Agent for the account
of the Lenders one-quarter percent (1/4%) on any future increase in the
Borrowing Base at the time of such increase.
II.14 LETTER OF CREDIT FEE. In addition to interest on the Notes as
provided herein and Commitment Fees and Facility Fees payable hereunder, the
Borrower agrees to pay to the Agent, for the account of the Lenders, on the date
of issuance or renewal of each Letter of Credit, a fee equal to the greater of
(a) $500 or (b) the Applicable Margin in effect at the date of issuance or
renewal, calculated on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed (including the first day but excluding the last
day), on the face amount of such Letter of Credit and for the period for which
such Letter of Credit is issued or renewed; provided, however, in the event such
Letter of Credit is canceled prior to its original expiry date or a payment is
made by the Agent for the account of the Lenders with respect to such Letter of
Credit, the Agent and the Lenders shall, within 30 days after such cancellation
or the making of such payment, rebate to the Borrower the unearned portion of
any such fee. The Borrower also agrees to pay on demand to the Agent, for its
own account as the issuer of the Letters of Credit, its customary letter of
credit transactional fees, including, without limitation, amendment fees,
payable with respect to each Letter of Credit.
II.15 AGENCY FEE. The Borrower shall pay to the Agent, for its own
account, all fees owing or which may become owing under the Agency Fee Letter as
provided therein.
II.16 LOANS TO SATISFY OBLIGATIONS OF BORROWER. The Lenders may, by
unanimous consent, but shall not be obligated to, make Loans for the benefit of
the Borrower and apply proceeds
25
thereof to the satisfaction of any condition, warranty, representation, or
covenant of the Borrower contained in this Agreement or any other Loan Document.
Any such Loan shall be evidenced by the Notes and shall be made as a Floating
Rate Loan.
II.17 SECURITY INTEREST IN ACCOUNTS; RIGHT OF OFFSET. As security
for the payment and performance of the Obligations, the Borrower hereby
transfers, assigns, and pledges to the Agent, for the benefit of the Lenders,
and grants to the Agent, for the benefit of the Lenders, a security interest in
all funds of the Borrower now or hereafter or from time to time on deposit with
the Agent or any Lender, with such interest of the Lenders to be retransferred,
reassigned, and/or released by the Agent and each Lender, as the case may be, at
the expense of the Borrower upon payment in full and complete performance by the
Borrower of all Obligations. All remedies as secured party or assignee of such
funds shall be exercisable by the Agent and each Lender upon the occurrence of
any Event of Default, regardless of whether the exercise of any such remedy
would result in any penalty or loss of interest or profit with respect to any
withdrawal of funds deposited in a time deposit account prior to the maturity
thereof. Furthermore, the Borrower hereby grants to the Agent and each Lender
the right, exercisable at such time as any Obligation shall mature, whether by
acceleration of maturity or otherwise, of offset or banker's lien against all
funds of the Borrower now or hereafter or from time to time on deposit with the
Agent and each Lender, regardless of whether the exercise of any such remedy
would result in any penalty or loss of interest or profit with respect to any
withdrawal of funds deposited in a time deposit account prior to the maturity
thereof.
II.18 GENERAL PROVISIONS RELATING TO INTEREST. (a) It is the
intention of the parties hereto to comply strictly with the usury laws of the
State of Texas to the extent applicable to each Lender and the United States of
America. In this connection, there shall never be collected, charged, or
received on the sums advanced hereunder interest in excess of that which would
accrue at the Highest Lawful Rate. For purposes of Tex. Fin. Code Xxx. Section
303.301 (Xxxxxx 1998), the Borrower agrees that the Highest Lawful Rate shall be
the "indicated (weekly) rate ceiling" as defined in such Article, provided that
the Agent and the Lenders may also rely, to the extent permitted by applicable
laws of the State of Texas or the United States of America, on alternative
maximum rates of interest under other laws of the State of Texas or other states
or the United States of America applicable to the Agent and/or such Lender, if
greater.
(b) Notwithstanding anything herein or in the Notes to the contrary,
during any Limitation Period, the interest rate to be charged on amounts
evidenced by the Notes shall be the Highest Lawful Rate, and the obligation, if
any, of the Borrower for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended. During any period or periods
of time following a Limitation Period, to the extent permitted by applicable
laws of the State of Texas or other states or the United States of America, the
interest rate to be charged hereunder shall remain at the Highest Lawful Rate
until such time as there has been paid to the Agent for the account of each
Lender (i) the amount of interest in excess of that accruing at the Highest
Lawful Rate that the Agent and the Lenders would have received during the
Limitation Period had the interest rate
26
remained at the otherwise applicable rate, and (ii) all interest and fees
otherwise payable to the Agent and the Lenders but for the effect of such
Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on the
Notes or under this Agreement or any other Loan Document include amounts which
by law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrower stipulates that such payment
and collection will have been and will be deemed to have been, to the greatest
extent permitted by applicable laws of the State of Texas any other applicable
states' laws or the United States of America, the result of mathematical error
on the part of the Borrower and the Agent and the Lenders; and the Agent and the
Lenders shall promptly refund the amount of such excess (to the extent only of
such interest payments in excess of that which would have accrued and been
payable on the basis of the Highest Lawful Rate) upon discovery of such error by
the Agent and the Lenders or notice thereof from the Borrower. In the event
that the maturity of any Obligation is accelerated, by reason of an election by
the Agent and the Lenders or otherwise, or in the event of any required or
permitted prepayment, then the consideration constituting interest under
applicable laws may never exceed the Highest Lawful Rate; and excess amounts
paid which by law are deemed interest, if any, shall be credited by the Lenders
on the principal amount of the Obligations, or if the principal amount of the
Obligations shall have been paid in full, refunded to the Borrower.
(d) All sums paid, or agreed to be paid, to the Agent and the Lenders
for the use, forbearance and detention of the proceeds of any advance hereunder
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full term hereof until paid in full so that
the actual rate of interest is uniform but does not exceed the Highest Lawful
Rate throughout the full term hereof.
II.19 YIELD PROTECTION. (a) Without limiting the effect of the
other provisions of this Section (but without duplication), the Borrower shall
pay to the Agent and each Lender from time to time such amounts as the Agent and
such Lender may determine are necessary to compensate it for any Additional
Costs incurred by the Agent and such Lender.
(b) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to each Lender from
time to time on request such amounts as each Lender may determine are necessary
to compensate each Lender for any costs attributable to the maintenance by each
Lender (or any Applicable Lending Office), pursuant to any Regulatory Change, of
capital in respect of the Commitment, such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets or
equity of each Lender (or any Applicable Lending Office) to a level below that
which each Lender (or any Applicable Lending Office) could have achieved but for
such Regulatory Change.
(c) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to each Lender the
administrative and re-employment costs customarily charged by Lenders as a
result of:
27
(i) any payment, prepayment, or conversion by the Borrower of a
Fixed Rate Loan on a date other than the last day of an Interest
Period for such Loan; or
(ii) any failure by the Borrower to borrow a Fixed Rate Loan from
the Lenders on the date for such borrowing specified in the relevant
Borrowing Request;
such compensation to include, without limitation, with respect to any LIBO Rate
Loan, an amount equal to the excess, if any and only to the extent actually
incurred by such Lender, of (A) the amount of interest which would have accrued
on the principal amount so paid, prepaid, converted, or not borrowed for the
period from the date of such payment, prepayment, conversion, or failure to
borrow to the last day of the then current Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date of such failure to borrow) at the applicable rate of
interest for such Loan provided for herein over (B) the interest component (as
reasonably determined by the Lenders) of the amount (as reasonably determined by
the Agent and such Lender) the Agent and such Lender would have bid in the
London interbank market for Dollar deposits of amounts comparable to such
principal amount and maturities comparable to such period.
(d) Determinations by the Agent and any Lender for purposes of this
Section of the effect of any Regulatory Change on capital maintained, their
costs or rate of return, maintaining Loans, their obligation to make Loans or on
amounts receivable by it in respect of Loans or such obligations, and the
additional amounts required to compensate the Agent and the Lenders under this
Section shall be conclusive, absent manifest error, provided that such
determinations are made on a reasonable basis. The Agent and such Lender shall
furnish the Borrower with a certificate setting forth in reasonable detail the
basis and amount of increased costs incurred or reduced amounts receivable as a
result of any such event, and the statements set forth therein shall be
conclusive, absent manifest error. The Agent and such Lender shall (i) notify
the Borrower, as promptly as practicable after the Lenders obtain knowledge of
any Additional Costs or other sums payable pursuant to this Section and
determine to request compensation therefor, of any event occurring after the
Closing Date which will entitle the Agent and such Lender to compensation
pursuant to this Section; provided that the Borrower shall not be obligated for
the payment of any Additional Costs or other sums payable pursuant to this
Section to the extent such Additional Costs or other sums accrued more than 30
days prior to the date upon which the Borrower was given such notice; and (ii)
designate a different Applicable Lending Office for the Loans of the Lenders
affected by such event if such designation will avoid the need for or reduce the
amount of such compensation. If the Agent or any Lender requests compensation
from the Borrower under this Section, the Borrower may, by notice to the Agent
and any Lender, require that the Loans by the Lenders of the type with respect
to which such compensation is requested be converted into Floating Rate Loans in
accordance with Section 2.11. Any compensation requested by the Lenders
pursuant to this Section shall be due and payable to the Lenders within five
days of delivery of any such notice by the Lenders to the Borrower.
28
(e) Each Lender agrees that it shall not request, and the Borrower
shall not be obligated to pay, any Additional Costs or other sums payable
pursuant to this Section unless similar additional costs and other sums payable
are also generally assessed by the Lenders against other customers of such
Lenders similarly situated where such customers are subject to documents
providing for such assessment.
II.20 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, no more than six separate Loans shall be outstanding at any one
time, with, for purposes of this Section, all Floating Rate Loans constituting
one Loan and all LIBO Rate Loans for the same Interest Period constituting one
Loan. Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any interest rate for any LIBO Rate Loan for any Interest
Period therefor:
(a) the Agent determines (which determination shall be conclusive)
that quotations of interest rates for the deposits referred to in the
definition of "LIBO Rate" in Section 1.2 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
the rate of interest for such Loan as provided in this Agreement; or
(b) the Agent determines (which determination shall be conclusive)
that the rates of interest referred to in the definition of "LIBO Rate" in
Section 1.2 upon the basis of which the rate of interest for such Loan for
such Interest Period is to be determined do not accurately reflect the cost
to the Lender of making or maintaining such Loan for such Interest Period,
then the Agent shall give the Borrower prompt notice thereof; and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make LIBO Rate Loans or to convert Loans of any other type into LIBO Rate Loans,
and the Borrower shall, on the last day of the then current Interest Period for
each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or convert
such Loan into another type of Loan in accordance with Section 2.11. Before
giving such notice pursuant to this Section, the Agent will designate a
different available Applicable Lending Office for LIBO Rate Loans or take such
other action as the Borrower may request if such designation or action will
avoid the need to suspend the obligation of the Lenders to make LIBO Rate Loans
hereunder and will not, in the unanimous opinion of the Lenders, be
disadvantageous to the Lenders.
II.21 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make any type of Fixed
Rate Loans hereunder, or (b) maintain any type of Fixed Rate Loans hereunder,
then such Lender shall promptly notify the Agent and the Borrower thereof; and
the obligation of such Lender hereunder to make such type of Fixed Rate Loans
and to convert other types of Loans into Fixed Rate Loans of such type shall be
suspended until such time as such Lender may again make and maintain Fixed Rate
Loans of such type, and the outstanding Fixed Rate Loans of such type shall be
converted into Floating Rate Loans in accordance with Section 2.11. Before
29
giving such notice pursuant to this Section, such Lender will designate a
different available Applicable Lending Office for Fixed Rate Loans or take such
other action as the Borrower may request if such designation or action will
avoid the need to suspend the obligation of the Lenders to make Fixed Rate Loans
and will not, in the opinion of any Lender, be disadvantageous to the Lenders.
II.22 REGULATORY CHANGE. In the event that by reason of any
Regulatory Change, any Lender (a) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to which
the interest rate on any Fixed Rate Loan is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
which includes any Fixed Rate Loan, or (b) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may hold, then,
at the election of such Lender with notice to the Agent and the Borrower, the
obligation of the Lender to make such Fixed Rate Loans and to convert Floating
Rate Loans into such Fixed Rate Loans shall be suspended until such time as such
Regulatory Change ceases to be in effect, and all such outstanding Fixed Rate
Loans shall be converted into Floating Rate Loans in accordance with Section
2.11.
II.23 LIMITATIONS ON INTEREST PERIODS. Each Interest Period
selected by the Borrower (a) which commences on the last Business Day of a
calendar month (or, with respect to any LIBO Rate Loan, any day for which there
is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month, (b) which would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, if such next succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day), (c) which would otherwise commence before and end after Final Maturity
shall end on Final Maturity, and (d) shall have a duration of not less than one
month, as to any LIBO Rate Loan, and, if any Interest Period would otherwise be
a shorter period, the relevant Loan shall be a Floating Rate Loan during such
period.
II.24 LETTERS IN LIEU OF TRANSFER ORDERS. The Agent agrees that
none of the letters in lieu of transfer or division orders provided by the
Borrower pursuant to Section 3.1(f)(iii) or Section 5.7 will be sent to the
addressees thereof prior to the occurrence of an Event of Default, at which time
the Agent may, at its option and in addition to the exercise of any of its other
rights and remedies, send any or all of such letters.
II.25 POWER OF ATTORNEY. The Borrower hereby designates the Agent
as its agent and attorney-in-fact, to act in its name, place, and stead for the
purpose of completing and, upon the occurrence of an Event of Default,
delivering any and all of the letters in lieu of transfer orders delivered by
the Borrower to the Agent pursuant to Section 3.1(f)(iii) or Section 5.7,
including, without limitation, completing any blanks contained in such letters
and attaching exhibits thereto describing the relevant Collateral. The Borrower
hereby ratifies and confirms all that the Agent shall lawfully do or cause to be
done by virtue of this power of attorney and the rights granted with respect to
such power of attorney. This power of attorney is coupled with the interests of
the Agent in the
30
Collateral, shall commence and be in full force and effect as of the Closing
Date and shall remain in full force and effect and shall be irrevocable so long
as any Obligation remains outstanding or unpaid or any Commitment exists. The
powers conferred on the Agent by this appointment are solely to protect the
interests of the Agent and the Lenders under the Loan Documents and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and shall not be responsible to the Borrower or any
other Person for any act or failure to act with respect to such powers, except
for gross negligence or willful misconduct.
ARTICLE III
CONDITIONS
The obligations of the Lenders to enter into this Agreement and to
make Loans or participate in the issuance of Letters of Credit are subject to
the satisfaction of the following conditions precedent:
III.1 RECEIPT OF LOAN DOCUMENTS AND OTHER ITEMS. The Lenders shall
have no obligation under this Agreement unless and until all matters incident to
the consummation of the transactions contemplated herein, including, without
limitation, the review by the Agent or its counsel of the title of the Borrower
shall be satisfactory to the Agent, and the Agent shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and, where applicable, acknowledged by one or more authorized
officers of the Borrower all in form and substance satisfactory to the Agent and
dated, where applicable, of even date herewith or a date prior thereto and
acceptable to the Agent:
(a) multiple counterparts of this Agreement as requested by the
Lenders;
(b) the Notes;
(c) copies of the Certificate of Incorporation and all amendments
thereto and the bylaws and all amendments thereto of the Borrower
accompanied by a certificate issued by the secretary or an assistant
secretary of the Borrower as the case may be, to the effect that each such
copy is correct and complete;
(d) a certificate of incumbency and signatures of all officers of the
Borrower who are authorized to execute Loan Documents on behalf of the
Borrower, each such certificate being executed by the secretary or an
assistant secretary of the Borrower;
(e) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted
by the boards of directors of the Borrower accompanied by a certificate of
the secretary or
31
an assistant secretary of the Borrower to the effect that such copies are
true and correct copies of resolutions duly adopted at a meeting or by
unanimous consent of the board of directors of the Borrower and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect,
and are in full force and effect as of the date of such certificate;
(f) multiple counterparts, as requested by the Lenders, of the
following Security Instruments creating, evidencing, perfecting, and
otherwise establishing Liens in favor of the Agent for the benefit of the
Lenders in and to the Collateral as security for the Obligations (subject
to the provisions of Section 7.3) of the Borrower or any Subsidiary or
other Affiliate of the Borrower owing to the Agent or any Lender or any
branch, Subsidiary or other Affiliate of the Agent or any Lender:
(i) Ratification of and Amendment to Mortgage, Deed of Trust,
Indenture, Security Agreement, Assignment of Production, and Financing
Statement from the Borrower to or for the benefit of the Agent
covering the Oil and Gas Properties of the Borrower subject to the
Existing Liens and all improvements, personal property, and fixtures
related thereto;
(ii) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement from the Borrower to
or for the benefit of the Agent covering certain Oil and Gas
Properties of the Borrower designated by the Agent and all
improvements, personal property, and fixtures related thereto;
(iii) Financing Statements from the Borrower, as debtor, in favor
of the Agent, as secured party, constituent to the instruments
described in clause (i) or clause (ii) above;
(iv) undated letters, in form and substance satisfactory to the
Agent, from the Borrower to each purchaser of production and disburser
of the proceeds of production from or attributable to the Mortgaged
Properties, together with additional letters with the addressees left
blank, authorizing and directing the addressees to make future
payments attributable to production from the Mortgaged Properties
directly to the Agent;
(v) Security Agreement (Stock Pledge) by Edge Petroleum
Corporation in favor of the Agent and covering all of the issued and
outstanding capital stock of Edge Petroleum Exploration Company;
32
(vi) Security Agreement by the Borrower and all presently
existing Subsidiaries and other Affiliates of the Borrower in favor of
the Agent covering all rights, but not obligations, of the Borrower
and all presently existing Subsidiaries and other Affiliates of the
Borrower under Commodity Hedge Agreements, whether now existing or
hereafter arising; and
(vii) Financing Statement from the Borrower and all presently
existing Subsidiaries and other Affiliates of the Borrower, as
debtors, in favor of the Agent, as secured party, constituent to the
instrument described in clause (vi) above.
(g) audited Financial Statements of the Borrower as of December 31,
1997;
(h) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of the Borrower in its jurisdiction of
incorporation and in any other jurisdiction in which it conducts business;
(i) results of searches of the UCC Records of the Secretary of State
of the States of Alabama, Louisiana, Mississippi, and Texas from a source
acceptable to the Agent and reflecting no Liens, other than Permitted
Liens, against any of the Collateral as to which perfection of a Lien is
accomplished by the filing of a financing statement;
(j) confirmation, acceptable to the Agent, of the title of the
Borrower to the Mortgaged Properties, free and clear of Liens other than
Permitted Liens;
(k) copies of all operating, lease, sublease, royalty, sales,
exchange, processing, farmout, bidding, pooling, unitization,
communitization, and other agreements relating to the Mortgaged Properties
requested by the Agent;
(l) engineering reports covering the Mortgaged Properties;
(m) the opinion of Xxxxxx Xxxxxx, counsel to the Borrower,
substantially in the form attached hereto as Exhibit V, with such changes
thereto as may be approved by the Agent and Lenders;
(n) certificates evidencing the insurance coverage required pursuant
to Section 5.18; and
(o) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent or any Lender
may reasonably request.
33
III.2 EXECUTION OF ASSIGNMENT. Neither Compass nor First Chicago
shall have any obligation under this Agreement unless and until it has received
from the other and reviewed and approved the following documents, appropriately
executed and, where applicable, acknowledged by one or more authorized officers
of First Chicago or Compass, as the case may be, both in form and substance
satisfactory to the party receiving such documents and dated of even date
herewith or a date prior thereto:
(a) multiple counterparts of the Assignment; and
(b) the Existing Note as endorsed by Compass to Compass and First
Chicago in their respective Percentage Shares.
III.3 EACH LOAN. In addition to the conditions precedent stated
elsewhere herein, the Lenders shall not be obligated to make any Loan unless:
(a) the Borrower shall have delivered to the Agent a Borrowing Request at
least the requisite time prior to the requested date for the relevant Loan, and
each statement or certification made in such Borrowing Request shall be true and
correct in all material respects on the requested date for such Loan;
(b) no Event of Default or Default shall exist or will occur as a result of
the making of the requested Loan;
(c) if requested by the Agent or any Lender, the Borrower shall have
delivered evidence satisfactory to the Agent or such Lender substantiating any
of the matters contained in this Agreement which are necessary to enable the
Borrower to qualify for such Loan;
(d) the Agent shall have received, reviewed, and approved such additional
documents and items as described in Section 3.1 as may be requested by any
Lender with respect to such Loan;
(e) no event shall have occurred which, in the reasonable opinion of any
Lender, could have a Material Adverse Effect;
(f) each of the representations and warranties contained in this Agreement
shall be true and correct and shall be deemed to be repeated by the Borrower as
if made on the requested date for such Loan;
(g) the Security Instruments shall be in full force and effect and provide
to the Lenders the security intended thereby;
(h) neither the consummation of the transactions contemplated hereby nor
the making of such Loan shall contravene, violate, or conflict with any
Requirement of Law;
34
(i) the Borrower shall hold full legal title to the Collateral pledged by
such entities and be the sole beneficial owners thereof except for Permitted
Liens and title defects which do not materially interfere with the ordinary
conduct of business of the Borrower or materially detract from the value or use
of the Properties to which they apply.
(j) the Agent and/or each Lender shall have received payment of all
Facility Fees, Letter of Credit Fees, and other fees payable to the Agent and/or
each Lender hereunder and reimbursement from the Borrower, or special legal
counsel for the Agent shall have received payment from the Borrower, for (i) all
reasonable fees and expenses of counsel to the Agent for which the Borrower is
responsible pursuant to applicable provisions of this Agreement and for which
invoices have been presented as of or prior to the date of the relevant Loan,
and (ii) estimated fees charged by filing officers and other public officials
incurred or to be incurred in connection with the filing and recordation of any
Security Instruments, for which invoices have been presented as of or prior to
the date of the requested Loan; and
(k) all matters incident to the consummation of the transactions hereby
contemplated shall be satisfactory to the Agent and each Lender.
III.4 EACH LETTER OF CREDIT. The obligation of the Agent, as the
issuer of the Letters of Credit, to issue, renew, or extend any Letter of Credit
is subject to the satisfaction of the following additional conditions precedent:
(a) the Borrower shall have delivered to the Agent a written (or
oral, confirmed promptly in writing) request for the issuance, renewal, or
extension of a Letter of Credit at least two Business Days prior to the
requested issuance, renewal, or extension date and a Letter of Credit
Application at least two Business Days prior to the requested issuance
date; and each statement or certification made in such Letter of Credit
Application shall be true and correct in all material respects on the
requested date for the issuance of such Letter of Credit;
(b) no Default or Event of Default shall exist or will occur as a
result of the issuance, renewal, or extension of such Letter of Credit; and
(c) the terms, provisions, and beneficiary of the Letter of Credit
or such renewal or extension shall be satisfactory to the Agent, as the
issuer of the Letters of Credit, in its sole discretion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
35
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue, or participate in the issuance of, Letters of
Credit, the Borrower represents and warrants to the Agent and the Lenders (which
representations and warranties shall survive the delivery of the Notes) that:
IV.1 DUE AUTHORIZATION. The execution and delivery by the Borrower
of this Agreement and the borrowings hereunder, the execution and delivery by
the Borrower of the Notes, the repayment of the Notes and interest and fees
provided for in the Notes and this Agreement, the execution and delivery of the
Security Instruments by the Borrower and the performance of all obligations of
the Borrower under the Loan Documents are within the power of the Borrower, have
been duly authorized by all necessary corporate action by the Borrower, and do
not and will not to our knowledge, (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law, (c)
contravene or conflict with any indenture, instrument, or other agreement to
which the Borrower is a party or by which any Property of the Borrower may be
presently bound or encumbered, or (d) result in or require the creation or
imposition of any Lien in, upon or of any Property of the Borrower under any
such indenture, instrument, or other agreement, other than the Loan Documents.
IV.2 CORPORATE EXISTENCE. The Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and are in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
IV.3 VALID AND BINDING OBLIGATIONS. All Loan Documents, when duly
executed and delivered by the Borrower, will be the legal, valid, and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms.
IV.4 SECURITY INSTRUMENTS. The provisions of each Security
Instrument are effective to create in favor of the Agent for the benefit of the
Lenders, a legal, valid, and enforceable Lien in all right, title, and interest
of the Borrower in the Collateral described therein, which Liens, assuming the
accomplishment of recording and filing in accordance with applicable laws prior
to the intervention of rights of other Persons, shall constitute fully perfected
first-priority Liens on all right, title, and interest of the Borrower in the
Collateral described therein. The Existing Liens, as assigned by Compass to the
Agent for the benefit of the Lenders, continue to constitute good and valid
first-priority Liens as of the original date of recordation thereof.
IV.5 TITLE TO ASSETS. The Borrower has good and defensible title
except for Permitted Liens and title defects which do not materially interfere
with the ordinary conduct of business of the Borrower or materially detract from
the value or use of the Properties to which they apply.
36
IV.6 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS. The Financial
Statements of the Borrower as of December 31, 1997, present fairly the financial
position and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries in accordance with GAAP as at the relevant point in
time or for the period indicated, as applicable. No event or circumstance has
occurred since December 31, 1997, which could reasonably be expected to have a
Material Adverse Effect.
IV.7 NO MATERIAL MISSTATEMENTS. To the knowledge of the Borrower,
no information, exhibit, statement, or report furnished to the Lenders by or at
the direction of the Borrower in connection with this Agreement contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading as of the date
made or deemed made.
IV.8 LIABILITIES, LITIGATION, AND RESTRICTIONS. Other than as
reflected in the Financial Statements referred to in Section 4.6 or as listed on
Schedule 4.8 attached hereto, the Borrower has no liabilities, direct, or
contingent, which may materially and adversely affect its business or operations
or its ownership of the Collateral and no litigation or other action of any
nature affecting the Borrower is pending before any Governmental Authority or,
to the best knowledge of the Borrower, threatened against or affecting the
Borrower which might reasonably be expected to result in any impairment of its
ownership of any Collateral or have a Material Adverse Effect. No unusual or
unduly burdensome restriction, restraint or hazard exists by contract,
Requirement of Law, or otherwise relative to the business or operations of the
Borrower or the ownership and operation of the Collateral other than such as
relate generally to Persons engaged in business activities similar to those
conducted by the Borrower.
IV.9 COMPLIANCE WITH LAWS. The Borrower and its Property,
including, without limitation, the Mortgaged Property, are in compliance with
all applicable Requirements of Law, including, without limitation, Environmental
Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA, except to the
extent non-compliance with any such Requirements of Law could not reasonably be
expected to have a Material Adverse Effect.
IV.10 ERISA. The Borrower does not maintain nor has it maintained
any Plan. The Borrower does not currently contribute to or have any obligation
to contribute to or otherwise have any liability with respect to any Plan.
IV.11 ENVIRONMENTAL LAWS. To the best knowledge and belief of the
Borrower, except as would not have a Material Adverse Effect or as described on
Schedule 4.11 attached hereto:
(a) no Property of the Borrower is currently on or has ever been on,
or is adjacent to any Property which is on or has ever been on, any federal
or state list of Superfund Sites;
37
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by the Borrower at a site which was, at the time of such
generation, transportation, and/or disposal, or has since become, a
Superfund Site;
(c) except in accordance with applicable Requirements of Law or the
terms of a valid permit, license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous Substances by the Borrower
or from, affecting, or related to any Property of the Borrower or adjacent
to any Property of the Borrower has occurred; and
(d) no Environmental Complaint has been received by the Borrower.
IV.12 COMPLIANCE WITH FEDERAL RESERVE REGULATIONS. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, T, U, or X.
IV.13 INVESTMENT COMPANY ACT COMPLIANCE. The Borrower is not, nor
is the Borrower directly or indirectly controlled by or acting on behalf of any
Person which is, an "investment company" or an "affiliated person" of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
IV.14 PUBLIC UTILITY HOLDING COMPANY ACT COMPLIANCE. The Borrower
is not a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
IV.15 PROPER FILING OF TAX RETURNS; PAYMENT OF TAXES DUE. The
Borrower has duly and properly filed a United States income tax return and all
other tax returns which are required to be filed and has paid all taxes due
except such as are being contested in good faith and as to which adequate
provisions and disclosures have been made. The respective charges and reserves
on the books of the Borrower with respect to taxes and other governmental
charges are adequate.
IV.16 REFUNDS. Except as described on Schedule 4.16 attached
hereto, no orders of, proceedings pending before, or other requirements of the
Minerals Management Service, Bureau of Land Management, the Federal Energy
Regulatory Commission, the Texas Railroad Commission, or any Governmental
Authority exist which could result in the Borrower being required to refund any
material portion of the proceeds received or to be received from the sale of
hydrocarbons constituting part of the Mortgaged Property.
IV.17 GAS CONTRACTS. Except as described on Schedule 4.17 attached
hereto, the Borrower (a) is not obligated in any material respect by virtue of
any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Mortgaged Property at some future
38
date without receiving full payment therefor within 90 days of delivery, and (b)
has not produced gas, in any material amount, subject to, and neither the
Borrower nor any of the Mortgaged Properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements or
joint operating agreements, except as to such matters for which the Borrower has
established monetary reserves adequate in amount to satisfy such obligations and
have segregated such reserves from other accounts.
IV.18 INTELLECTUAL PROPERTY. The Borrower owns or is licensed to
use all Intellectual Property necessary to conduct all business material to its
condition (financial or otherwise), business, or operations as such business is
currently conducted. No claim has been asserted or is pending by any Person
with respect to the use of any such Intellectual Property or challenging or
questioning the validity or effectiveness of any such Intellectual Property; and
the Borrower knows of no valid basis for any such claim. The use of such
Intellectual Property by the Borrower does not infringe on the rights of any
Person, except for such claims and infringements as do not, in the aggregate,
give rise to any material liability on the part of the Borrower.
IV.19 CASUALTIES OR TAKING OF PROPERTY. Except as disclosed on
Schedule 4.19 attached hereto, since September 30, 1997, neither the business
nor any Property of the Borrower has been materially adversely affected 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 Governmental
Authority, riot, activities of armed forces, or acts of God.
IV.20 LOCATIONS OF BORROWER. The principal place of business and
chief executive office of the Borrower is located at the address of the Borrower
set forth in Section 9.3 or at such other location as the Borrower may have, by
proper written notice hereunder, advised the Agent and the Lenders, provided
that such other location is within a state in which appropriate financing
statements from the Borrower in favor of the Agent have been filed.
IV.21 SUBSIDIARIES. The Borrower has no Subsidiaries other than as
listed on Schedule 4.21 attached hereto.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower shall:
V.1 MAINTENANCE AND ACCESS TO RECORDS. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and within two Business Days following the
39
reasonable request of the Agent or any Lender, make such records available for
inspection by the Agent or any Lender and, at the expense of the Borrower, allow
the Agent or any Lender to make and take away copies thereof.
V.2 QUARTERLY FINANCIAL STATEMENTS; COMPLIANCE
CERTIFICATES. Deliver to the Agent and each Lender, (a) on or before the 45th
day after the close of each of the first three quarterly periods of each fiscal
year of the Borrower, a copy of the unaudited consolidated and consolidating
Financial Statements of the Borrower and its consolidated Subsidiaries as at the
close of such quarterly period and from the beginning of such fiscal year to the
end of such period, such Financial Statements to be certified by a Responsible
Officer of the Borrower as having been prepared in accordance with GAAP
consistently applied and as a fair presentation of the condition of the
Borrower, subject to changes resulting from normal year-end audit adjustments,
and (b) on or before the 45th day after the close of each fiscal quarter and on
or before the 120th day after the close of each fiscal year, a Compliance
Certificate in the form of Exhibit III hereto signed by a Responsible Officer of
the Borrower.
V.3 ANNUAL FINANCIAL STATEMENTS. Deliver to the Agent and each
Lender, on or before the 120th day after the close of each fiscal year of the
Borrower, a copy of the annual audited consolidated and unaudited consolidating
Financial Statements of the Borrower.
V.4 OIL AND GAS RESERVE REPORTS. (a) Deliver to the Agent and
each Lender, no later than March 1 of each year during the term of this
Agreement, engineering reports in form and substance satisfactory to the Agent
and the Lenders, certified by any nationally or regionally recognized
independent consulting petroleum engineers acceptable to the Agent and the
Lenders as fairly and accurately setting forth (i) the proven and producing,
shut-in, behind-pipe, and undeveloped oil and gas reserves (separately
classified as such) attributable to the Mortgaged Properties, plus certain other
oil and gas properties to be determined in the sole discretion of the Agent and
the Lenders, as of January 1 of the year for which such reserve reports are
furnished, (ii) the aggregate present value of the future net income with
respect to such Mortgaged Properties, plus certain other oil and gas properties
to be determined in the sole discretion of the Agent and the Lenders, discounted
at a stated per annum discount rate of proven and producing reserves, (iii)
projections of the annual rate of production, gross income, and net income with
respect to such proven and producing reserves, and (iv) information with respect
to the "take-or-pay," "prepayment," and gas-balancing liabilities of the
Borrower.
(b) Deliver to the Agent and each Lender no later than September 1 of
each year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Agent and the Lenders prepared by or under the
supervision of the chief petroleum engineer of the Borrower evaluating the
Mortgaged Properties, plus certain other oil and gas properties to be determined
in the sole discretion of the Agent and the Lenders, as of July 1 of the year
for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section shall be
submitted to the Agent and each Lender together with additional data concerning
pricing, quantities of production from the Mortgaged Properties, plus certain
other oil and gas properties to be determined in sole
40
discretion of the Agent and the Lenders, volumes of production sold, purchasers
of production, gross revenues, expenses, and such other information and
engineering and geological data with respect thereto as the Agent and the
Lenders may reasonably request.
V.5 TITLE OPINIONS; TITLE DEFECTS. Promptly upon the request of
the Agent or any Lender, furnish to the Agent title opinions, in form and
substance and by counsel satisfactory to the Agent, or other confirmation of
title acceptable to the Lenders, covering not less than 80% of the present
value, determined by the Agent and the Lenders in their sole discretion, of the
Oil and Gas Properties of the Borrower, and promptly, but in any event within 60
days after notice by the Agent of any defect, material in the opinion of the
Agent and the Lenders in value, in the title of the Borrower to any of its Oil
and Gas Properties, clear such title defects, and, in the event any such title
defects are not cured in a timely manner, pay all related costs and fees
incurred by the Agent to do so. Provided, however, to the extent it is
determined by the Lenders that such title defects cannot be cured or the
Borrower so notifies the Lenders, the Lenders may reduce the Borrowing Base by
the amount equal to the value of the Oil and Gas Property affected by such title
defect.
V.6 NOTICES OF CERTAIN EVENTS. Deliver to the Agent and each
Lender, immediately upon having knowledge of the occurrence of any of the
following events or circumstances, a written statement with respect thereto,
signed by a Responsible Officer of the Borrower and setting forth the relevant
event or circumstance and the steps being taken by the Borrower with respect to
such event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Borrower, or any litigation, investigation, or proceeding between
the Borrower and any Governmental Authority which, in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower as a defendant
or in which any Property of the Borrower is subject to a claim and in which
the amount involved is $100,000 or more and which is not covered by
insurance or in which injunctive or similar relief is sought;
(d) the receipt by the Borrower of any Environmental Complaint;
(e) any actual, proposed, or threatened testing or other investigation
by any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any Property of the Borrower or adjacent to
any Property of the Borrower following any allegation of a violation of any
Requirement of Law;
41
(f) any Release of Hazardous Substances by the Borrower or from,
affecting, or related to any Property of the Borrower or adjacent to any
Property of the Borrower except in accordance with applicable Requirements
of Law or the terms of a valid permit, license, certificate, or approval of
the relevant Governmental Authority, or the violation of any Environmental
Law, or the revocation, suspension, or forfeiture of or failure to renew,
any permit, license, registration, approval, or authorization which could
reasonably be expected to have a Material Adverse Effect;
(g) upon the request of any Lender, the change in identity or address
of any Person remitting to the Borrower proceeds from the sale of
hydrocarbon production from or attributable to any Mortgaged Property;
(h) any change in the senior management of the Borrower; and
(i) any other event or condition which could reasonably be expected to
have a Material Adverse Effect.
V.7 LETTERS IN LIEU OF TRANSFER ORDERS; DIVISION ORDERS. Promptly
upon request by the Agent at any time and from time to time, execute such
letters in lieu of transfer orders, in addition to the letters signed by the
Borrower and delivered to the Agent in satisfaction of the condition set forth
in Section 3.1 (f)(iii) and/or division and/or transfer orders as are necessary
or appropriate to transfer and deliver to the Agent proceeds from or
attributable to any Mortgaged Property.
V.8 ADDITIONAL INFORMATION. Furnish to the Agent and each Lender,
promptly upon the request of the Agent or any Lender, such additional financial
or other information concerning the assets, liabilities, operations, and
transactions of the Borrower as the Agent or any Lender may from time to time
request; and notify the Agent and each Lender not less than ten Business Days
prior to the occurrence of any condition or event that may change the proper
location for the filing of any financing statement or other public notice or
recording for the purpose of perfecting a Lien in any Collateral, including,
without limitation, any change in its name or the location of its principal
place of business or chief executive office; and upon the request of the Agent
or any Lender, execute such additional Security Instruments as may be necessary
or appropriate in connection therewith.
V.9 COMPLIANCE WITH LAWS. Comply with all material applicable
Requirements of Law, including, without limitation, (a) the Natural Gas Policy
Act of 1978, as amended, (b) ERISA, (c) Environmental Laws, and (d) all permits,
licenses, registrations, approvals, and authorizations issued to it or of which
it has knowledge (i) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Borrower, (ii) required for the performance of the operations of
the Borrower, or (iii) applicable to the use, generation, handling, storage,
treatment, transport, or disposal of any Hazardous Substances; and instruct all
employees, crew members, agents, contractors,
42
subcontractors, and future lessees (pursuant to appropriate lease provisions) of
the Borrower, while such Persons are acting within the scope of their
relationship with the Borrower, to comply with all such Requirements of Law as
may be necessary or appropriate to enable the Borrower to so comply.
V.10 PAYMENT OF ASSESSMENTS AND CHARGES. Pay all taxes,
assessments, governmental charges, rent, and other Indebtedness which, if
unpaid, might become a Lien against the Property of the Borrower, except any of
the foregoing being contested in good faith and as to which adequate reserve in
accordance with GAAP has been established or unless failure to pay would not
have a Material Adverse Effect.
V.11 MAINTENANCE OF CORPORATE EXISTENCE AND GOOD
STANDING. Maintain its corporate existence or qualification and good standing
in its jurisdiction of incorporation and in all jurisdictions wherein the
Property now owned or hereafter acquired or business now or hereafter conducted
necessitates same, unless the failure to do so would not have a Material Adverse
Effect.
V.12 PAYMENT OF NOTES; PERFORMANCE OF OBLIGATIONS. Pay the Notes
according to the reading, tenor, and effect thereof, as modified hereby, and do
and perform every act and discharge all of its other Obligations.
V.13 FURTHER ASSURANCES. Upon the Agent's written request,
promptly cure any defects in the execution and delivery of any of the Loan
Documents and all agreements contemplated thereby, and execute, acknowledge, and
deliver such other assurances and instruments as shall, in the opinion of the
Agent, be necessary to fulfill the terms of the Loan Documents.
V.14 INITIAL FEES AND EXPENSES OF COUNSEL TO AGENT. Upon request
by the Agent, promptly reimburse the Agent for all reasonable fees and expenses
of Xxxxxxx Xxxxxx L.L.P., special counsel to the Agent, in connection with the
preparation of this Agreement and all documentation contemplated hereby, the
satisfaction of the conditions precedent set forth herein, the filing and
recordation of Security Instruments, and the consummation of the transactions
contemplated in this Agreement.
V.15 SUBSEQUENT FEES AND EXPENSES OF AGENT AND LENDERS. Upon
request by the Agent, promptly reimburse the Agent (to the fullest extent
permitted by law) for all amounts reasonably expended, advanced, or incurred by
or on behalf of the Agent to ratify, amend, restate, or prepare additional Loan
Documents, as the case may be and for the filing and recordation of Security
Instruments. Promptly reimburse the Agent and each Lender for all amounts
reasonably expended, advanced, or incurred to satisfy any obligation of the
Borrower under any of the Loan Documents; to collect the Obligations; to enforce
the rights of the Agent and each Lender under any of the Loan Documents; and to
protect the Properties or business of the Borrower, including, without
limitation, the Collateral, which amounts shall be deemed compensatory in nature
and liquidated as to amount upon notice to the Borrower by the Agent and each
Lender and which amounts shall include, but not be limited to (a) all court
costs, (b) reasonable attorneys' fees, (c) reasonable fees and expenses of
auditors and accountants incurred to protect the interests of the Agent and each
43
Lender, (d) fees and expenses incurred in connection with the participation by
the Agent and each Lender as a member of the creditors' committee in a case
commenced under any Insolvency Proceeding, (e) fees and expenses incurred in
connection with lifting the automatic stay prescribed in Section 362 Title 11 of
the United States Code, and (f) fees and expenses incurred in connection with
any action pursuant to Section 1129 Title 11 of the United States Code all
reasonably incurred by the Agent and each Lender in connection with the
collection of any sums due under the Loan Documents, together with interest at
the per annum interest rate equal to the Floating Rate, calculated on a basis of
a calendar year of 365 or 366 days, as the case may be, counting the actual
number of days elapsed, on each such amount from the date of notification that
the same was expended, advanced, or incurred by the Agent and each Lender until
the date it is repaid to the Agent and each Lender, with the obligations under
this Section surviving the non-assumption of this Agreement in a case commenced
under any Insolvency Proceeding and being binding upon the Borrower and/or a
trustee, receiver, custodian, or liquidator of the Borrower appointed in any
such case.
V.16 OPERATION OF OIL AND GAS PROPERTIES. Develop, maintain, and
operate its Oil and Gas Properties in a prudent and workmanlike manner in
accordance with industry standards.
V.17 MAINTENANCE AND INSPECTION OF PROPERTIES. Maintain all of its
tangible Properties in good repair and condition, ordinary wear and tear
excepted; make all necessary replacements thereof and operate such Properties in
a good and workmanlike manner; and permit on two Business Days prior notice any
authorized representative of the Agent or any Lender to visit and inspect any
tangible Property of the Borrower.
V.18 MAINTENANCE OF INSURANCE. Maintain insurance with respect to
its Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Lenders and, within 60 days of the Closing Date for property
damage insurance covering Collateral and business interruption insurance, if
any, maintained by Borrower, naming the Agent as loss payee, and, upon any
renewal of any such insurance and at other times upon request by the Agent or
any Lender, furnish to the Agent or any Lender evidence, satisfactory to the
Agent and each Lender of the maintenance of such insurance. The Agent shall
have the right to collect, and the Borrower hereby assigns to the Agent for the
benefit of the Lenders, any and all monies that may become payable under any
policies of insurance relating to business interruption or by reason of damage,
loss, or destruction of any of the Collateral. In the event of any damage,
loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $100,000, the Agent for the benefit of the
Lenders may, at its option, apply all such sums or any part thereof received by
it toward the payment of the Obligations, whether matured or unmatured,
application to be made first to interest and then to principal, and shall
deliver to the Borrower the balance, if any, after such application has been
made. In the event of any such damage, loss, or destruction for which insurance
proceeds are $100,000 or less, provided that no Default or Event of Default has
occurred and is continuing, the Agent shall deliver any such proceeds received
by it to the Borrower. In the event the Agent receives insurance proceeds not
44
attributable to Collateral or business interruption, the Agent shall deliver any
such proceeds to the Borrower.
V.19 INDEMNIFICATION. INDEMNIFY AND HOLD THE AGENT AND EACH LENDER
AND THEIR SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT
AND EACH LENDER UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED
ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER, , WHETHER PRIOR TO OR
DURING THE TERM HEREOF, AND WHETHER BY THE BORROWER OR ANY PREDECESSOR IN TITLE,
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING
IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER OR ANY EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER WHILE SUCH PERSONS ARE ACTING
WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER, IRRESPECTIVE OF
WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE OF ANY LOAN DOCUMENT, ANY
ALLEGATION BY ANY BENEFICIARY OF A LETTER OF CREDIT OF A WRONGFUL DISHONOR BY
THE AGENT OR ANY LENDER OF A CLAIM OR DRAFT PRESENTED THEREUNDER, OR ANY OTHER
ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY OF THE
FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE, OTHER THAN GROSS NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF THE AGENT OR ANY LENDER OR ANY OF
THEIR SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT,
OR AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE AGENT OR ANY LENDER UNDER
ANY SECURITY INSTRUMENT; WITH THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF
ALL OBLIGATIONS
45
AND THE TERMINATION OF THIS AGREEMENT, UNLESS ALL SUCH OBLIGATIONS HAVE BEEN
SATISFIED WHOLLY IN CASH FROM THE BORROWER AND NOT BY WAY OF REALIZATION AGAINST
ANY COLLATERAL OR THE CONVEYANCE OF ANY PROPERTY IN LIEU THEREOF, PROVIDED THAT
SUCH INDEMNITY SHALL NOT EXTEND TO ANY ACT OR OMISSION BY THE AGENT OR ANY
LENDER WITH RESPECT TO ANY PROPERTY SUBSEQUENT TO THE AGENT OR ANY LENDER
BECOMING THE OWNER OF SUCH PROPERTY AND WITH RESPECT TO WHICH PROPERTY SUCH
CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE, PROCEEDING, ORDER,
JUDGMENT, ACTION, OR REQUIREMENT ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE
THERETO BY THE AGENT OR ANY LENDER.
V.20 SUBSIDIARY AND AFFILIATE SECURITY INSTRUMENTS. Cause each
Subsidiary or other Affiliate of the Borrower not already a party to a necessary
Security Instrument which enters into, subsequent to the Closing Date, a
Commodity Hedge Agreement not prohibited by Section 6.1 to execute and deliver
to the Agent such Security Instruments as may be reasonably required by the
Agent to establish and perfect in favor of the Agent, for the benefit of the
Lenders and any branch, Subsidiary or other Affiliate of the Agent or any
Lender, a Lien against the rights of such Subsidiary or other Affiliate of the
Borrower under each Commodity Hedge Agreement into which it enters, whether then
existing or thereafter arising.
V.21 PAYMENT OF COMMODITY HEDGE OBLIGATIONS. Pay, and cause each
Subsidiary or other Affiliate of the Borrower which is a party to a Commodity
Hedge Agreement to pay, all Commodity Hedge Obligations as they become due and
in any event within sixty (60) days from the date the relevant Commodity Hedge
Obligation becomes due.
V.22 (A) OBLIGATIONS JOINT AND SEVERAL AND UNCONDITIONAL. The
obligations of each Borrower under this Agreement and the Notes that are stated
to be obligations of both Borrowers are joint and several and absolute and
unconditional irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the other Borrower under this Agreement,
the Notes or any other agreement or instrument referred to herein or therein
(collectively, the "OTHER BORROWER OBLIGATIONS"), or any substitution, release
or exchange of any other guarantee of or security for any of the Other Borrower
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 5.22 that the obligations of each Borrower
hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not affect the liability of
either Borrower under this Agreement, the Notes or any other agreement referred
to herein or therein:
(a) at any time or from time to time, without notice to either Borrower,
the time for any performance of or compliance with any of the Other
Borrower Obligations shall be extended, or such performance or compliance
shall be waived;
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(b) any of the acts mentioned in any of the provisions of this Agreement
or the Notes or any other agreement or instrument referred to herein or
therein shall be done or omitted;
(c) the maturity of any of the Other Borrower Obligations shall be
accelerated, or any of the Other Borrower Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or the Notes or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Other Borrower
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(d) any lien or security interest granted to, or in favor of, the Agent or
any Lender or Lenders as security for any of the Other Borrower Obligations
shall fail to be perfected.
Each Borrower hereby expressly waives, with respect to the Other Borrower
Obligations diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against the other Borrower under this Agreement or
the Notes or any other agreement or instrument referred to herein or therein, or
against any other Person under any other guarantee of, or security for, any of
the Other Borrower Obligations.
(B) REINSTATEMENT. The obligations of a Borrower under this Section 5.22
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the other Borrower in respect of the Other Borrower
Obligations is rescinded or must be otherwise restored by any holder of any of
the Other Borrower Obligations, whether as a result of any proceedings in a
bankruptcy or reorganization or otherwise, and each Borrower agrees that it will
indemnify the Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the Agent
or such Lender in connection with such rescission or restoration.
(C) SUBROGATION. Each Borrower hereby agrees that until the payment and
satisfaction in full of all Other Borrower Obligations and the expiration and
termination of the Commitments of the Lenders under this Agreement it shall not
exercise any right or remedy arising by reason of any performance by it of any
of its obligations hereunder, whether by subrogation or otherwise, against the
Other Borrower Obligations or any security for any of the Other Borrower
Obligations.
(D) REMEDIES. Each Borrower agrees that, as between such Borrower and the
Lenders, the obligations of the other Borrower under this Agreement and the
Notes may be declared to be forthwith due and payable as provided in Article VII
hereof (and shall be deemed to have become automatically due and payable in the
circumstances provided in Article VII) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from being
47
deemed to have become automatically due and payable), such obligations (whether
or not due and payable by such other Borrower) shall forthwith become due and
payable by such Borrower.
(E) Notwithstanding any provision to the contrary contained herein, in any
of the Notes or any other agreement or instrument referred to herein or therein,
to the extent the joint obligations of the Borrowers would be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of applicable state or federal law relating to fraudulent conveyances or
transfers) then the aggregate obligations of each Borrower hereunder and under
the Notes and all other agreements and instruments referred to herein or therein
shall be limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, with limitation, the federal Bankruptcy
Code).
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower will not and will not allow any of its
Subsidiaries or other Affiliates to:
VI.1 INDEBTEDNESS. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) Permitted
Indebtedness, (c) unsecured accounts payable incurred in the ordinary course of
business, which are not unpaid in excess of 75 days beyond invoice date or are
being contested in good faith and as to which such reserve as is required by
GAAP has been made, and (d) Commodity Hedge Agreements, entered into with the
Agent, any Lender, any branch, Subsidiary or other Affiliate of the Agent or any
Lender or another Person approved by the Lenders in writing, so long as (i) such
agreements are not entered into with respect to Mortgaged Properties
constituting more than 75% of the monthly production of proven producing
reserves as forecast in the Lenders' most recent engineering evaluation, (ii)
the Borrower shall have notified the Lenders, within five days of the
establishment of each such agreement of the strike price, the volume of
production committed, and the term under the relevant agreement, and (iii) no
such agreement shall have a term in excess of eighteen months.
VI.2 CONTINGENT OBLIGATIONS. Create, incur, assume, or suffer to
exist any Contingent Obligation not otherwise prohibited by Section 6.1;
provided, however, the foregoing restriction shall not apply to (a) performance
guarantees and performance surety or other bonds provided in the ordinary course
of business, or (b) trade credit incurred or operating leases entered into in
the ordinary course of business.
VI.3 LIENS. Create, incur, assume, or suffer to exist any Lien on
any of its Oil and Gas Properties or any other Property, whether now owned or
hereafter acquired; provided, however, the foregoing restrictions shall not
apply to Permitted Liens.
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VI.4 SALES OF ASSETS. Without the prior written consent of the
Agent and the Lenders, sell, transfer, or otherwise dispose of any assets, if
such assets are material to the operations of Borrower, other than (a) sales of
inventory in the ordinary course of business, (b) occasional sales, leases or
other dispositions of immaterial assets for consideration not less than fair
market value, (c) sales, leases or other dispositions of assets that are
obsolete or have negligible fair market value, (d) sales of equipment for fair
and adequate consideration, and (e) sales of interests in exploration prospects
in the ordinary course of business. The Agent and the Lenders will consent to
sales of assets representing up to 10% in the aggregate of the net present value
of the Oil and Gas Properties which comprise the Borrowing Base, as calculated
by the Agent and the Lenders pursuant to the terms of this Agreement, provided
that the Borrowing Base shall be reduced, and if necessary, proceeds from such
sale shall be applied to amounts outstanding in an amount equal to the loan
value attributable to such assets sold.
VI.5 LEASEBACKS. Enter into any agreement to sell or transfer any
Property and thereafter rent or lease as lessee such Property or other Property
intended for the same use or purpose as the Property sold or transferred.
VI.6 LOANS OR ADVANCES. Make or agree to make or allow to remain
outstanding any loans or advances to any Person, other than to the other entity
also constituting a Borrower in excess of $100,000 in the aggregate; provided,
however, the foregoing restrictions shall not apply to (a) advances or
extensions of credit in the form of accounts receivable incurred in the ordinary
course of business and upon terms common in the industry for such accounts
receivable, or (b) advances to employees of the Borrower for the payment of
expenses in the ordinary course of business.
VI.7 INVESTMENTS. Acquire Investments in, or purchase or otherwise
acquire all or substantially all of the assets of, any Person; provided,
however, such restriction shall not apply to the following Investments:
(a) marketable obligations with maturities of 180 days or less
issued or unconditionally guaranteed by the United States
Government or issued by any of its agencies and backed by the
full faith and credit of the United States of America;
(b) time deposits that are fully insured by the Federal Deposit
Insurance Corporation or certificates of deposit issued by any
bank or trust company having capital, surplus and undivided
profits of not less than $1,000,000,000 and having long term
unsecured and unguaranteed debt rated "A2" or better by
Xxxxx'x Investors Services, Inc. or "A" or better by Standard
& Poors Corporation, and maturing not more than 180 days from
the date of acquisition thereof;
49
(c) commercial paper and similar obligations rated "P-1" or better
by Xxxxx'x Investors Services, Inc. or "A-1" or better by
Standard & Poors Corporation and maturing not more than 180
days from the date of acquisition thereof;
(d) intercompany loans to, advances to or investments in, wholly
owned Subsidiaries;
(e) readily marketable tax-free municipal bonds with maturities of
180 days of less of a domestic issuer or rated "aaa" or better
by Xxxxx'x Investors Services, Inc. or "AAA" by Standard &
Poors Corporation;
(f) demand deposit accounts maintained in the ordinary course of
business deposited in any commercial bank which is a member of
the Federal Reserve System and has combined capital and
surplus and undivided profits of not less than $1,000,000,000;
(g) repurchase agreements and reverse repurchase agreements with
any bank having combined capital and surplus in an amount of
not less than $1,000,000,000, or any primary dealer of United
States government securities, in each case having long term
unsecured and unguaranteed debt rated "A" or better or "A2" or
better by Standard & Poors Corporation, or Xxxxx'x Investors
Services, Inc., respectively, relating to marketable direct
obligations issued or unconditionally guaranteed or insured by
the United States of America or any agency or instrumentality
thereof and backed by the full faith and credit of the United
States of America, in each case maturing within 90 days from
the date of acquisition thereof; in each case so long as the
same (x) provide for the payment of principal and interest
(and not principal alone or interest alone) and (y) are not
subject to any contingency regarding the payment of principal
or interest; and
(h) the convertible preferred stock of Frontera Resources
Corporation owned by Edge Petroleum Corporation as of the
Closing Date.
VI.8 DIVIDENDS AND DISTRIBUTIONS. Declare, pay, or make, any cash
dividend or distribution on, or purchase, redeem, or otherwise acquire for
value, any share of any class of its capital stock at a point in time when there
exists a Default or Event of Default or if a Default or Event of Default would
exist after giving effect thereto.
VI.9 ISSUANCE OF STOCK; CHANGES IN CORPORATE STRUCTURE. Issue or
agree to issue additional shares of capital stock, except to officers, directors
or employees of the Borrower as part of their compensation; or enter into any
transaction of consolidation, merger, or amalgamation; or liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
50
VI.10 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter
into any transaction (including the sale, lease, or exchange of Property or the
rendering of service) with any of its Affiliates, other than upon fair and
reasonable terms no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate.
VI.11 LINES OF BUSINESS. Expand, on their own or through any
Subsidiary, into any line of business other than those in which the Borrower is
engaged as of the date hereof.
VI.12 PLAN OBLIGATIONS. Assume or otherwise become subject to an
obligation to contribute to or maintain any Plan not set forth in Schedule 6.12
or acquire any Person which has at any time had an obligation to contribute to
or maintain any Plan.
VI.13 NEW SUBSIDIARIES. Form any new Subsidiaries without the prior
written consent of the Lenders.
VI.14 TANGIBLE NET WORTH. Permit Tangible Net Worth as of the close
of any fiscal quarter of Edge Petroleum Corporation to be less than $43,000,000
plus 50% of positive Net Income and 100% of other increases in equity for all
fiscal quarters ending subsequent to December 31, 1997.
VI.15 CASH FLOW COVERAGE. Permit, as of the close of any fiscal
quarter of Edge Petroleum Corporation, the ratio of Cash Flow to Debt Service to
be less than 1.25 to 1.00.
VI.16 EBIT TO INTEREST EXPENSE RATIO. Permit, as of the close of
any fiscal quarter of Edge Petroleum Corporation, the ratio of EBIT to Interest
Expense, in each case determined for the 12-month period ended as of the close
of the relevant fiscal quarter of the Borrower, to be less than 4.5 to 1.0.
ARTICLE VII
EVENTS OF DEFAULT
VII.1 ENUMERATION OF EVENTS OF DEFAULT. Any of the following events
shall constitute an Event of Default:
(a) default shall be made in the payment when due of any installment
of principal or interest under this Agreement or the Notes or in the
payment when due of any fee or other sum payable under any Loan Document;
(b) default shall be made by the Borrower in the due observance or
performance of any obligation of the Borrower under the Loan Documents, and
such
51
default shall continue for 30 days after the earlier of notice thereof to
the Borrower by the Agent or actual knowledge thereof by the Borrower;
(c) any representation or warranty made by the Borrower in any of the
Loan Documents proves to have been untrue in any material respect or any
representation, statement (including Financial Statements), certificate, or
data furnished or made to the Agent and/or the Lenders in connection
herewith proves to have been untrue in any material respect as of the date
the facts therein set forth were stated or certified;
(d) default shall be made by the Borrower (as principal or guarantor
or other surety) in the payment or performance of any Indebtedness in
excess of $100,000 and such default shall remain unremedied for in excess
of the period of grace, if any, with respect thereto;
(e) the Borrower shall be unable to satisfy any condition or cure any
circumstance specified in Article III, the satisfaction or curing of which
is a condition precedent to the right of the Borrower to obtain a Loan or
for the issuance of a Letter of Credit, and such inability shall continue
for a period in excess of 30 days;
(f) the Borrower shall (i) apply for or consent to the appointment of
a receiver, trustee, or liquidator of their or all or a substantial part of
its assets, (ii) file a voluntary petition commencing an Insolvency
Proceeding, (iii) make a general assignment for the benefit of creditors,
(iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(g) a final non-appealable order, judgment, or decree shall be entered
against the Borrower by any court of competent jurisdiction or by any other
duly authorized authority, on the petition of a creditor or otherwise,
granting relief in any Insolvency Proceeding or approving a petition
seeking reorganization or an arrangement of its debts or appointing a
receiver, trustee, conservator, custodian, or liquidator of their or all or
any substantial part of its assets, and such order, judgment, or decree
shall not be dismissed or stayed within 90 days;
(h) the levy against any significant portion of the Property of the
Borrower or any execution, garnishment, attachment, sequestration, or other
writ or similar proceeding which is not permanently dismissed or discharged
within 30 days after the levy;
(i) a final and non-appealable order, judgment, or decree shall be
entered against the Borrower for money damages and/or Indebtedness due in
an amount in
52
excess of $100,000, and such order, judgment, or decree shall not be
dismissed or stayed within 30 days;
(j) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against the Borrower under the
Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. Section
1961 ET SEQ.), the result of which could be the forfeiture or transfer of
any material Property of the Borrower subject to a Lien in favor of the
Agent for the benefit of the Lenders without (i) satisfaction or provision
for satisfaction of such Lien, or (ii) such forfeiture or transfer of such
Property being expressly made subject to such Lien, but only where such
action or proceeding is not being contested by Borrower in good faith;
(k) the Borrower shall have (i) concealed, removed, or diverted, or
permitted to be concealed, removed, or diverted, any part of their
Property, with intent to hinder, delay, or defraud its creditors or any of
them, (ii) made or suffered a transfer of any of its Property which may be
fraudulent under any bankruptcy, fraudulent conveyance, or similar law, or
(iii) shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its Property through legal proceedings or
distraint which is not vacated within 30 days from the date thereof;
(l) any Security Instrument shall for any reason (other than the
Agent's or the Lender's fault or negligence) not, or cease to, create valid
and perfected first-priority Liens against the Collateral purportedly
covered thereby;
(m) the Borrower shall suffer a Change in Control; or
(n) the occurrence of a Material Adverse Effect and the same shall
remain unremedied for in excess of 30 days after notice given by the Agent.
VII.2 REMEDIES. (a) Upon the occurrence of an Event of Default
specified in Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower; (ii) the Commitments
shall immediately cease and terminate unless and until reinstated by the Agent
and the Lenders in writing; and (iii) to the extent permitted by and in
compliance with applicable law, the Agent and the Lenders may set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
held by the Agent and the Lenders and any and all other indebtedness at any time
owing by the Agent and the Lenders to or for the credit or account of the
Borrower against any and all of the Obligations although such Obligations may be
unmatured.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Agent and the Lenders may, by
notice to the Borrower, declare all
53
Obligations immediately due and payable, without presentment, demand, protest,
notice of protest, default, or dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, or other notice of any kind,
except as may be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by the Borrower; (ii) the Commitments shall immediately
cease and terminate unless and until reinstated by the Agent and the Lenders in
writing; and (iii) to the extent permitted by and in compliance with applicable
law, the Agent and the Lenders may set-off and apply any and all deposits
(general or special, time or demand, provisional or final) held by the Agent and
the Lenders and any and all other indebtedness at any time owing by the Agent
and the Lenders to or for the credit or account of the Borrower against any and
all of the Obligations although such Obligations may be unmatured.
(c) Upon the occurrence of any Event of Default, the Agent and the
Lenders may, in addition to the foregoing in this Section, exercise any or all
of their rights and remedies provided by law or pursuant to the Loan Documents.
7.3 APPLICATION OF PROCEEDS UPON DEFAULT. From and during the
continuance of any Event of Default, any monies or property actually received by
the Agent pursuant to the Credit Agreement, the exercise of any rights or
remedies under any security agreement, mortgage or any other agreement with the
Borrower or any of its respective subsidiaries or affiliates which secures any
of the Obligations, shall be applied in the following order:
FIRST, to the payment of all amounts due to the Agent under any of the
expense reimbursement or indemnity provisions of the Credit Agreement, any
security agreement, mortgage or other collateral documents, and any
applicable law;
SECOND, ratably, according to the then unpaid amounts thereof, without
preference or priority of any kind among them, to each of the following:
(a) ratably, according to the then unpaid amounts thereof, without
preference or priority of any kind among them, to the payment of the
Obligations then due and payable with the exception of Commodity Hedge
Obligations, and (b) ratably, according to the then unpaid amounts thereof,
without preference or priority of any kind among them, to the payment of
not more than $5,000,000 of the Commodity Hedge Obligations then due and
payable;
THIRD, ratably, according to the then unpaid amounts thereof, without
preference or priority of any kind among them, to the payment of all
Commodity Hedge Obligations, if any, then due and payable which shall not
have been paid pursuant to clause Second of this Section 7.3;
FOURTH, the remainder, if any, to whichever of the Borrower, or its
respective successors or assigns, as may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
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ARTICLE VIII
THE AGENT
VIII.1 APPOINTMENT. Each Lender hereby designates and appoints the
Agent as the agent of such Lender under this Agreement and the other Loan
Documents. Each Lender authorizes the Agent, as the agent for such Lender, to
take such action on behalf of such Lender under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities except those expressly set forth herein or in any
other Loan Document or any fiduciary relationship with any Lender; and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities on the part of the Agent shall be read into this Agreement or any
other Loan Document or otherwise exist against the Agent.
VIII.2 WAIVERS, AMENDMENTS. The provisions of this Agreement and
of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification, or waiver is in writing and consented
to by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver would: (a) modify any requirement hereunder
that any particular action be taken by all of the Lenders or by the Required
Lenders unless consented to by each Lender; (b) modify this Section 8.2, change
the definition of "Required Lenders", or change the Commitment Amount or
Percentage Share of any Lender, reduce the fees described in Article II, extend
the Commitment Termination Date or Final Maturity, release any Security
Instrument or Lien, or initiate any foreclosure, enforcement or collection
procedure without the consent of each Lender; (c) extend the due date for, (or
reduce the amount of any scheduled repayment or prepayment of principal of or
interest on any Loan) without the consent of the holder of that Note evidencing
such Loan; (d) affect, adversely the interests, rights, or obligations of the
Agent without the consent of the Agent; or (e) to modify the Borrowing Base or
modify the Scheduled Reduction Amount.
VIII.3 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
VIII.4 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(a) required to initiate or conduct any litigation or collection proceedings
hereunder, except with the concurrence of the Lenders and contribution by each
Lender of its Percentage Share of costs reasonably expected by the Agent to be
incurred in connection therewith, (b) liable for any action lawfully taken or
omitted to be taken
55
by it or such Person under or in connection with this Agreement or any other
Loan Document (except for gross negligence or willful misconduct of the Agent or
such Person), or (c) responsible in any manner to any Lender for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or for the sufficiency, accuracy, or completeness of any
materials provided by the Agent, or the failure of the Agent to provide any
materials or disclose any matter to any Lender except as may be expressly
required herein, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
VIII.5 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless and until an executed Lender
Assignment Agreement shall have been received by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Lenders as it deems appropriate and contribution by each
Lender of its Percentage Share of costs reasonably expected by the Agent to be
incurred in connection therewith. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Lenders. Such request
and any action taken or failure to act pursuant thereto shall be binding upon
the Lenders and all future holders of the Notes. In no event shall the Agent be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable Requirement of Law.
VIII.6 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall promptly give written notice thereof to the Lenders.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Lenders; provided that unless and
until the Agent shall have received such directions, subject to the provisions
of Section 7.2, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders. In the
event that the officer of the Agent primarily responsible
56
for the lending relationship with the Borrower or the officer of any Lender
primarily responsible for the lending relationship with the Borrower becomes
aware that a Default or Event of Default has occurred and is continuing, the
Agent or such Lender, as the case may be, shall use its good faith efforts to
inform the other Lenders and/or the Agent, as the case may be, promptly of such
occurrence. Notwithstanding the preceding sentence, failure to comply with the
preceding sentence shall not result in any liability to the Agent or any Lender.
VIII.7 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agent nor any other Lender nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to such Lender and that no
act by the Agent or any other Lender hereafter taken, including any review of
the affairs of the Borrower, shall be deemed to constitute any representation or
warranty by the Agent or any Lender to any other Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, condition (financial and otherwise) and creditworthiness
of the Borrower and the value of the Collateral and other Properties of the
Borrower and has made its own decision to enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, condition (financial
and otherwise) and creditworthiness of the Borrower and the value of the
Collateral and other Properties of the Borrower. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Agent hereunder, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition (financial and otherwise), or creditworthiness
of the Borrower or the value of the Collateral or other Properties of the
Borrower which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
57
VIII.8 INDEMNIFICATION. EACH LENDER AGREES TO SEVERALLY INDEMNIFY
THE AGENT AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT AND
AFFILIATES (TO THE EXTENT NOT REIMBURSED BY THE BORROWER AND WITHOUT LIMITING
THE OBLIGATION OF THE BORROWER TO DO SO), RATABLY AND ACCORDING TO THE
PERCENTAGE SHARE OF SUCH LENDER, FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING, WITHOUT LIMITATION, ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE
OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE AGENT OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER DOCUMENT
CONTEMPLATED OR REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
ANY ACTION TAKEN OR OMITTED BY THE AGENT OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH
ANY OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS IMPOSED, INCURRED OR ASSERTED AS A RESULT OF THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES; PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS RESULTING FROM THE GROSS NEGLIGENCE, SOLE OR
CONCURRENT OR WILLFUL MISCONDUCT OF THE AGENT OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES. THE AGREEMENTS IN THIS
SECTION SHALL SURVIVE THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT.
VIII.9 RESTITUTION. Should the right of the Agent or any Lender to
realize funds with respect to the Obligations be challenged and any application
of such funds to the Obligations be reversed, whether by Governmental Authority
or otherwise, or should the Borrower otherwise be entitled to a refund or return
of funds distributed to the Lenders in connection with the Obligations, the
Agent or such Lender, as the case may be, shall promptly notify the Lenders of
such fact. Not later than Noon, Central Standard or Daylight Savings Time, as
the case may be, of the Business Day following such notice, each Lender shall
pay to the Agent an amount equal to the ratable share of such Lender of the
funds required to be returned to the Borrower. The ratable share of each Lender
shall be determined on the basis of the percentage of the payment all or a
portion of which is
58
required to be refunded originally distributed to such Lender, if such
percentage can be determined, or, if such percentage cannot be determined, on
the basis of the Percentage Share of such Lender. The Agent shall forward such
funds to the Borrower or to the Lender required to return such funds. If any
such amount due to the Agent is made available by any Lender after Noon, Central
Standard or Daylight Savings Time, as the case may be, of the Business Day
following such notice, such Lender shall pay to the Agent (or the Lender
required to return funds to the Borrower, as the case may be) for its own
account interest on such amount at a rate equal to the Federal Funds Rate for
the period from and including the date on which restitution to the Borrower is
made by the Agent (or the Lender required to return funds to the Borrower, as
the case may be) to but not including the date on which such Lender failing to
timely forward its share of funds required to be returned to the Borrower shall
have made its ratable share of such funds available.
VIII.10 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the agent
hereunder. With respect to any Note issued to the Lender serving as the Agent,
the Agent shall have the same rights and powers under this Agreement as a Lender
and may exercise such rights and powers as though it were not the Agent. The
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
VIII.11 SUCCESSOR AGENT. The Agent may resign as Agent upon thirty
days' notice to the Lenders and the Borrower. If the Agent shall resign as
Agent under this Agreement and the other Loan Documents, or if the Agent shall
assign all of its obligations, then the Lenders shall appoint from among the
Lenders a successor agent for the Lenders, whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent. The term "Agent" shall
mean such successor agent effective upon its appointment. The rights, powers,
and duties of the former Agent as Agent shall be terminated, without any other
or further act or deed on the part of such former Agent or any of the parties to
this Agreement or any holders of the Notes. After the removal or resignation of
any Agent hereunder as Agent, the provisions of this Article VIII and Sections
5.16 and 5.19, shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
VIII.12 APPLICABLE PARTIES. The provisions of this Article are
solely for the benefit of the Agent and the Lenders, and the Borrower shall not
have any rights as a third party beneficiary or otherwise under any of the
provisions of this Article. In performing functions and duties hereunder and
under the other Loan Documents, the Agent shall act solely as the agent of the
Lenders and does not assume, nor shall it be deemed to have assumed, any
obligation or relationship of trust or agency with or for the Borrower or any
legal representative, successor, and assign of the Borrower.
ARTICLE IX
MISCELLANEOUS
59
IX.1 ASSIGNMENTS; PARTICIPATIONS. Each Lender may assign or sell
participations in its Loans and Commitments to one or more other Persons in
accordance with this Section 9.1.
(a) ASSIGNMENTS. Any Lender:
(i) with the written consent of both the Borrower and the Agent (which
consent shall not be unreasonably delayed or withheld), may at any
time, assign and delegate to one or more commercial banks or other
financial institutions, and
(ii) with notice to the Borrower and the Agent, but without the
consent of the Borrower or the Agent, may assign and delegate to any
of its affiliates or to any other Lender
(each Person described in (i) or (ii) above as being the Person to whom such
assignment and delegation is to be made, being hereinafter referred to as an
"ASSIGNEE LENDER"), all or any fraction of such Lender's total Loans and
Commitments (which assignment and delegation shall be of a constant, and not a
varying percentage, of all the assigning Lender's Loans and Commitments), in a
minimum aggregate amount of $1,000,000 of such Lender's Percentage Share of the
Maximum Commitment Amount, if less; provided, however, that such Assignee Lender
will comply with all the provisions of this Agreement, and further, provided,
however, that the Borrower and the Agent shall be entitled to continue to deal
solely and directly with such assigning Lender in connection with the interests
so assigned and delegated to an Assignee Lender until:
(iii) written notice of such assignment and delegation together with
payment instructions, addresses and related information with respect
to such Assignee Lender, shall have been given to the Borrower and the
Agent by such Lender and such Assignee Lender,
(iv) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent a Lender Assignment Agreement, accepted by the
Borrower and the Agent, and substantially in the form attached hereto
as Exhibit VI, and
(v) the processing fees described below shall have been paid.
From and after the date that the Borrower and the Agent accept such
Lender Assignment Agreement, (a) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (b)
the Assignor Lender, to the extent that rights and obligations hereunder have
been assigned and
60
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, replacement Notes
in the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (such Notes to be in exchange for, but not in payment of, those
Notes then held by such assignor Lender). Each such Note shall be dated the
date of the predecessor Notes. The assignor Lender shall xxxx the predecessor
Notes "exchanged" and deliver them to the Borrower. Accrued interest on that
part of the predecessor Notes evidenced by the new Notes, and accrued fees,
shall be paid as provided in the Lender Assignment Agreement. Accrued interest
on that part of the predecessor Notes evidenced by the replacement Notes shall
be paid to the assignor Lender. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Notes and in this
Agreement. Such Assignor Lender or such Assignee Lender must also pay a
processing fee in the amount of $3,000 to the Agent upon delivery of any Lender
Assignment Agreement. Any attempted assignment and delegation not made in
accordance with this Section 9.1 shall be null and void.
(b) PARTICIPATIONS. Any Lender may, at any time and without necessity
for the consent of the Agent or the Borrower, sell to one or more commercial
banks (each of such commercial banks being herein called a "PARTICIPANT")
participating interests in any of the Loans, Commitments, or other interests of
such Lender hereunder; provided, however, that (a) no participation contemplated
in this Section 9.1 shall relieve such Lender from its Commitments or its other
obligations hereunder or under any other Loan Document, (b) such Lender shall
remain solely responsible for the performance of its Commitments and such other
obligations, (c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents, (d) no
Participant shall be entitled to require such Lender to take or refrain from
taking any action hereunder or under any other Loan Document.
IX.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Notes and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding or any Commitment exists.
IX.3 NOTICES AND OTHER COMMUNICATIONS. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
when deposited in the mail if concurrent telecopy notice is also given, or, if
no concurrent telecopy notice is given, three Business Days after deposited in
the mail, certified mail, return receipt requested, postage
61
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:
(a) if to the Agent or Compass in its capacity as a Lender:
Compass Bank
00 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending Group
Telecopy: (000) 000-0000
(b) if to First Chicago in its capacity as a Lender:
The First National Bank of Chicago
One First Xxxxxxxx Xxxxx
00xx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
The First National Bank of Chicago
Houston Regional Xxxxxx
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
(c) if to the Borrower:
Edge Petroleum Corporation
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
IX.4 PARTIES IN INTEREST. Subject to the restrictions on changes
in corporate structure set forth in Section 6.9 and other applicable
restrictions contained herein, all covenants and agreements herein contained by
or on behalf of the Borrower or the Agent and each Lender shall be
62
binding upon and inure to the benefit of the Borrower or the Agent and each
Lender, as the case may be, and their respective legal representatives,
successors, and assigns.
IX.5 RIGHTS OF THIRD PARTIES. All provisions herein are imposed
solely and exclusively for the benefit of the Agent and each Lender and the
Borrower. No other Person shall have any right, benefit, priority, or interest
hereunder or as a result hereof or have standing to require satisfaction of
provisions hereof in accordance with their terms, and any or all of such
provisions may be freely waived in whole or in part by the Agent or the Lenders
at any time if in their sole discretion they deem it advisable to do so.
IX.6 RENEWALS; EXTENSIONS. All provisions of this Agreement
relating to the Notes shall apply with equal force and effect to each promissory
note hereafter executed which in whole or in part represents a renewal or
extension of any part of the Indebtedness of the Borrower under this Agreement,
the Notes, or any other Loan Document.
IX.7 NO WAIVER; RIGHTS CUMULATIVE. No course of dealing on the
part of the Agent or the Lenders, their officers or employees, nor any failure
or delay by the Agent or the Lenders with respect to exercising any of their
rights under any Loan Document shall operate as a waiver thereof. The rights of
the Agent and each Lender under the Loan Documents shall be cumulative and the
exercise or partial exercise of any such right shall not preclude the exercise
of any other right. The making of any Loan shall not constitute a waiver of any
of the covenants, warranties, or conditions of the Borrower contained herein.
In the event the Borrower is unable to satisfy any such covenant, warranty, or
condition, the making of any Loan shall not have the effect of precluding the
Agent and each Lender from thereafter declaring such inability to be an Event of
Default as hereinabove provided.
IX.8 SURVIVAL UPON UNENFORCEABILITY. In the event any one or more
of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of any Loan Document or of any other instrument referred to
herein or executed in connection with such Obligations.
IX.9 AMENDMENTS; WAIVERS. Neither this Agreement nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
IX.10 CONTROLLING AGREEMENT. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
63
IX.11 DISPOSITION OF COLLATERAL. Notwithstanding any term or
provision, express or implied, in any of the Security Instruments, the
realization, liquidation, foreclosure, or any other disposition on or of any or
all of the Collateral shall be in the order and manner and determined in the
sole discretion of the Agent and the Lenders; provided, however, that in no
event shall the Agent or any Lender violate applicable law or exercise rights
and remedies other than those provided in such Security Instruments or otherwise
existing at law or in equity.
IX.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE DEEMED TO
BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL
STATUTES, ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT
LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY.
IX.13 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE
SOLE DISCRETION AND ELECTION OF THE LENDERS, IN COURTS HAVING SITUS IN HOUSTON,
XXXXXX COUNTY, TEXAS. THE BORROWER HEREBY SUBMIT TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, XXXXXX COUNTY, TEXAS, AND
HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST THEM BY THE LENDERS IN ACCORDANCE WITH
THIS SECTION.
IX.14 WAIVER OF RIGHTS TO JURY TRIAL. THE BORROWER, THE AGENT AND
THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF
ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE
AGENT OR ANY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE
PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS ENTERING INTO THIS AGREEMENT.
IX.15 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER WRITTEN LOAN
DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN
THE PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT HEREOF.
64
FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES.
IX.16 COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is deemed executed effective as of
the date first above written.
BORROWER:
EDGE PETROLEUM CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
EDGE PETROLEUM EXPLORATION
COMPANY
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
65
LENDER AND AGENT:
COMPASS BANK
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
Vice President
LENDER:
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
Vice President
66
SCHEDULE 4.8
LIABILITIES AND LITIGATION
SCHEDULE 4.11
ENVIRONMENTAL MATTERS
SCHEDULE 4.16
REFUNDS
SCHEDULE 4.17
GAS CONTRACTS
SCHEDULE 4.19
CASUALTIES
SCHEDULE 4.21
SUBSIDIARIES
SCHEDULE 6.12
PLAN OBLIGATIONS
EXHIBIT I
[FORM OF NOTE]
PROMISSORY NOTE
$75,000,000 Houston, Texas April 1, 1998
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("MAKER",
whether one or more, and if more than one, with the obligation of such parties
hereunder being joint and several in all respects) promises to pay to the order
of COMPASS BANK ("PAYEE"), at the banking quarters of Compass Bank in Houston,
Xxxxxx County, Texas, the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000), or
so much thereof as may be advanced against this Note pursuant to the Amended and
Restated Credit Agreement dated April 1, 1998 by and between Maker and Payee and
others (as amended, supplemented, restated or otherwise modified from time to
time, the "CREDIT AGREEMENT"), together with interest at the rates and
calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the respective
meanings assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is a "Note" under, and is payable as
provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
Without being limited thereto or thereby, this Note is secured by the
Security Instruments.
This Note is given in part in renewal, extension, and modification,
but not in discharge or novation, of that certain Promissory Note dated July 11,
1995 in the face amount of up to $20,000,000 made by Edge Joint Venture II,
predecessor to Edge Petroleum Exploration Company, and payable to Compass Bank.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY
ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
I-i
MAKER:
EDGE PETROLEUM CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
EDGE PETROLEUM EXPLORATION COMPANY
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
I-ii
EXHIBIT I
[FORM OF NOTE]
PROMISSORY NOTE
$25,000,000 Houston, Texas April 1, 1998
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("MAKER",
whether one or more, and if more than one, with the obligation of such parties
hereunder being joint and several in all respects) promises to pay to the order
of THE FIRST NATIONAL BANK OF CHICAGO ("PAYEE"), at the principal banking
quarters of The First National Bank of Chicago in Chicago, Xxxx County,
Illinois, the sum of TWENTY-FIVE MILLION DOLLARS ($25,000,000), or so much
thereof as may be advanced against this Note pursuant to the Amended and
Restated Credit Agreement dated April 1, 1998 by and between Maker and Payee and
others (as amended, supplemented, restated or otherwise modified from time to
time, the "CREDIT AGREEMENT"), together with interest at the rates and
calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the respective
meanings assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is a "Note" under, and is payable as
provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
Without being limited thereto or thereby, this Note is secured by the
Security Instruments.
This Note is given in part in renewal, extension, and modification,
but not in discharge or novation, of that certain Promissory Note dated July 11,
1995 in the face amount of up to $20,000,000 made by Edge Joint Venture II,
predecessor to Edge Petroleum Exploration Company, and payable to Compass Bank.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15
(WHICH REGULATES
I-iii
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.
MAKER:
EDGE PETROLEUM CORPORATION
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
EDGE PETROLEUM EXPLORATION COMPANY
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer
I-iv
EXHIBIT II
[FORM OF BORROWING REQUEST]
_________________, _______
Compass Bank, Agent
00 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending Group
Re: Amended and Restated Credit Agreement dated as of April 1, 1998, by
and among Edge Petroleum Corporation and Edge Petroleum Exploration
Company, as Borrower, Compass Bank, as Agent and a Lender, The First
National Bank of Chicago, as a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented, restated or
otherwise modified from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes the
requests indicated below:
/ / 1. Loans
(a) Amount of new Loan: $__________
(b) Requested funding date:___________, 19__
(c) $________________ of such Loan is to be a Floating Rate Loan;
$________________ of such Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
/ / 2. Continuation or conversion of LIBO Rate Loan maturing on___________:
(a) Amount to be continued as a LIBO Rate Loan is $_____________________,
with an Interest Period of ____ months;
II-i
(b) Amount to be converted to a Floating Rate Loan is $________________;
and
/ / 3. Conversion of Floating Rate Loan:
(a) Requested conversion date:___________, 19__.
(b) Amount to be converted to a LIBO Rate Loan is $________, with an
Interest Period of _____ months.
The undersigned certifies that [s]he is the [__________] of the
Borrower, has obtained all consents necessary, and as such [s]he is authorized
to execute this request on behalf of the Borrower. The undersigned further
certifies, represents, and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested borrowing, continuation, or conversion
under the terms and conditions of the Credit Agreement.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
EDGE PETROLEUM EXPLORATION
COMPANY
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
II-ii
EXHIBIT III
[FORM OF COMPLIANCE CERTIFICATE]
_______, 19__
Compass Bank, Agent
00 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending Group
Re: Amended and Restated Credit Agreement dated as of April 1, 1998, by
and among Edge Petroleum Corporation and Edge Petroleum Exploration
Company, as Borrower, Compass Bank, as Agent and a Lender, The First
National Bank of Chicago, as a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented, restated or
otherwise modified from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of the Borrower hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
[1. To the best of the knowledge of the undersigned, no Default or Event
of Default exists as of the date hereof or has occurred since the date of
our previous certification to you, if any.]
[1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have occurred
since the date of our previous certification to you, if any, and the
actions set forth below are being taken to remedy such circumstances:]
2. The compliance of the Borrower with the financial covenants of the
Credit Agreement, as of the close of business on ___________________, is
evidenced by the following:
[SET FORTH IN REASONABLE DETAIL THE CALCULATIONS REQUIRED TO ESTABLISH THAT
BORROWER WAS IN COMPLIANCE WITH THE FOLLOWING SECTIONS].
(a) Section 6.14 TANGIBLE NET WORTH. The Borrower will not and will not
allow any of its Subsidiaries or other Affiliates to permit Tangible Net
Worth, as of the close of any fiscal quarter of Edge Petroleum Corporation
to be less than $43,000,000 plus 50% of positive Net
III-i
Income and 100% of other increases in equity for all fiscal quarters ending
subsequent to December 31, 1997.
REQUIRED ACTUAL
Required as of the last quarter,
Plus 100% of equity raised,
Plus 50% of Net Income equals
current Required Tangible Net Worth
(b) Section 6.15 CASH FLOW COVERAGE. The Borrower will not and will not
allow any of its Subsidiaries or other Affiliates to permit, as of the
close of any fiscal quarter of Edge Petroleum Corporation, the ratio of
Cash Flow to Debt Service to be less than 1.25 to 1.00.
ACTUAL:
(c) Section 6.16 EBIT TO INTEREST EXPENSE RATIO. The Borrower will not
and will not allow any of its Subsidiaries or other Affiliates to permit, as of
the close of any fiscal quarter of Edge Petroleum Corporation, the ratio of EBIT
to Interest Expense to be less than 4.5 to 1.0.
ACTUAL:
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of ______________.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
III-ii
EDGE PETROLEUM EXPLORATION
COMPANY
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
III-iii
EXHIBIT IV
[FORM OF BORROWING BASE UTILIZATION CERTIFICATE]
______________________, _________
Compass Bank, Agent
00 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending
Re: Amended and Restated Credit Agreement dated as of April 1, 1998, by
and among Edge Petroleum Corporation and Edge Petroleum Exploration
Company, as Borrower, Compass Bank, as Agent and a Lender, The First
National Bank of Chicago, as a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented, restated or
otherwise modified from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of the Borrower, hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
To the best knowledge of the undersigned, the Borrowing Base Utilization,
as described in the definition of Applicable Margin, for the quarter ending
__________, 19__, was as follows, and the LIBO Rate Loan Applicable Margin for
the following quarter is as follows:
Borrowing Base LIBO Rate Loan
Utilization Applicable Margin
----------------------------------------------------
equal to or greater than 75% two percent (2%)
of Borrowing Base
less than 75% one and three-fourths
and greater than 50% percent (1-3/4%)
of Borrowing Base
less than or equal to
50% of Borrowing Base percent (1-1/2%)
[ONLY ONE OF THE ABOVE CATEGORIES TO BE SHOWN]
IV-i
To the best knowledge of the undersigned, the Borrowing Base Utilization
for the quarter ending __________, 19__, was as follows and the Commitment Fee,
as described in Section 2.10 of the Credit Agreement for the following quarter
is as follows:
Borrowing Base
Utilization Commitment Fee
-------------------------------------------------
greater than 50% one-half percent (1/2%)
of Borrowing Base
less than or equal to 50% three-eighths percent (3/8%)
of Borrowing Base
[ONLY ONE OF THE ABOVE CATEGORIES TO BE SHOWN]
Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
EDGE PETROLEUM EXPLORATION
COMPANY
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
IV-ii
EXHIBIT V
[FORM OF OPINION OF COUNSEL]
[Closing Date]
Compass Bank, Agent
00 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending Group
Re: Amended and Restated Credit Agreement dated as of April 1, 1998, by
and among Edge Petroleum Corporation and Edge Petroleum Exploration
Company, as Borrower, Compass Bank, as Agent and a Lender, The First
National Bank of Chicago, as a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented, restated or
otherwise modified from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
We have acted as counsel to Edge Petroleum Corporation, a Delaware
corporation ("EDGE"), and Edge Petroleum Exploration Company, a Delaware
corporation ("EDGE EXPLORATION" and Edge and Edge Exploration being,
collectively, the "BORROWERS"), in connection with the transactions contemplated
in the Credit Agreement. This Opinion is delivered pursuant to Section 3.1(__)
of the Credit Agreement, and the Agent and each Lender is hereby authorized to
rely upon this Opinion in connection with the transactions contemplated in the
Credit Agreement. Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Credit Agreement, unless expressly
provided to the contrary herein.
In our representation of the Borrowers, we have examined an executed
counterpart of each of the following (the "LOAN DOCUMENTS"):
(a) the Credit Agreement;
(b) the Notes;
[Add listing of Security Instruments executed on the Closing Date]
We have also examined the originals, or copies certified to our
satisfaction, of such other records of the Borrowers and, certificates of public
officials and officers of the Borrowers, and
V-i
agreements, instruments, and documents as we have deemed necessary as a basis
for the opinions hereinafter expressed.
In making such examinations, we have, with your permission, assumed:
(a) the genuineness of all signatures to the Loan Documents other
than those of the Borrowers;
(b) the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies;
(c) that the Agent and the Lenders are authorized and have the power
to enter into and perform their obligations under the Credit Agreement;
(d) the due authorization, execution, and delivery of all Loan
Documents by each party thereto other than the Borrowers; and
(e) that the Borrowers have title to all Property covered or affected
by the Security Instruments.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
1. Each of the Borrowers is a corporation duly organized, legally
existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all jurisdictions wherein the ownership of its Property or the
operation of its businesses necessitates same.
2. The execution and delivery by the Borrowers of the Credit
Agreement and the borrowings thereunder, the execution and delivery by the
Borrowers of the other Loan Documents to which either is a party, and the
payment and performance of all Obligations and Commodity Hedge Obligations
of the Borrowers thereunder are within the power of the Borrowers, have
been duly authorized by all necessary corporate action, and do not (a)
require the consent of any Governmental Authority, (b) contravene or
conflict with any Requirement of Law, (c) to our knowledge after due
inquiry, contravene or conflict with any indenture, instrument, or other
agreement to which either of the Borrowers is a party or by which any
Property of either of the Borrowers may be presently bound or encumbered,
or (d) result in or require the creation or imposition of any Lien upon any
Property of either of the Borrowers other than as contemplated by the Loan
Documents.
V-ii
3. The Loan Documents to which either of the Borrowers is a party
constitute legal, valid, and binding obligations of such Borrowers,
enforceable against such Borrower in accordance with their respective
terms.
__. To our knowledge after due inquiry, except as disclosed in
Financial Statements of the Borrowers provided to the Agent and the Lenders
or in Schedule 4.8 to the Credit Agreement, no litigation or other action
of any nature affecting either of the Borrowers is pending before any
Governmental Authority or is threatened against either of the Borrowers.
To our knowledge after due inquiry, no unusual or unduly burdensome
restriction, restraint, or hazard exists by contract, Requirement of Law,
or otherwise relative to the business or operations of either of the
Borrowers or ownership and operation of any Property of either of the
Borrowers other than such as relate generally to Persons engaged in
business activities similar to those conducted by the relevant Borrowers.
__. No authorization, consent, approval, exemption, franchise, permit
or license of, or filing (other than filing of Security Instruments in
appropriate filing offices) with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection with
the valid execution and delivery by the Borrowers of the Loan Documents or
any instrument contemplated thereby, or the payment and performance by the
Borrowers of the Obligations and the Commodity Hedge Obligations.
__. No transaction contemplated by the Loan Documents is in violation
of any regulations promulgated by the Board of Governors of the Federal
Reserve System, including, without limitation, Regulations G, T, U, or X.
__. Neither of the Borrowers is, nor is it directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" or an "affiliated person" of an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
__. Neither of the Borrowers is a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
The opinions expressed herein are subject to the following qualifications and
limitations:
A. We are licensed to practice law only in the State of Texas [and
other jurisdictions whose laws are not applicable to the opinions expressed
herein]; accordingly, the foregoing opinions are limited solely to the laws
of the State of Texas, applicable United States federal law, and the
General Corporation Law of the State of Delaware.
V-iii
B. The validity, binding effect, and enforceability of the Loan
Documents may be limited or affected by bankruptcy, insolvency, moratorium,
reorganization, or other similar laws affecting rights of creditors
generally, including, without limitation, statutes or rules of law which
limit the effect of waivers of rights by a debtor or grantor; provided,
however, that the limitations and other effects of such statutes or rules
of law upon the validity and binding effect of the Loan Documents should
not differ materially from the limitations and other effects of such
statutes or rules of law upon the validity and binding effect of credit
agreements, promissory notes and security instruments generally.
C. The enforceability of the respective obligations of the Borrowers
under the Loan Documents is subject to general principles of equity
(whether such enforceability is considered in a suit in equity or at law).
This Opinion is furnished by us solely for the benefit of the Agent
and the Lenders in connection with the transactions contemplated by the Loan
Documents and is not to be quoted in whole or in part or otherwise referred to
or disclosed in any other transaction.
Very truly yours,
V-iv
EXHIBIT VI
[FORM OF LENDER ASSIGNMENT AGREEMENT]
______________, 19__
To: Edge Petroleum Corporation
Edge Petroleum Exploration Company
and Compass Bank, as the Agent
Ladies and Gentlemen:
We refer to clause (iv) of Section 9.1 of the Amended and Restated Credit
Agreement, dated as of April 1, 1998, (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "CREDIT
AGREEMENT"), among Edge Petroleum Corporation and Edge Petroleum Exploration
Company (collectively, the "BORROWER"), the various financial institutions (the
"LENDERS") as are, or shall from time to time become, parties thereto, and
Compass Bank, as agent (the "AGENT") for the Lenders. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
This Agreement is delivered to you pursuant to clause (iv) of Section 9.1
of the Credit Agreement and also constitutes notice to each of you, pursuant to
clause (iv) of Section 9.1 of the Credit Agreement, of the assignment and
delegation to _____________ (the "ASSIGNEE") of ___% of the Loans, liability
under outstanding Letters of Credit, and the Commitment of _____________ (the
"ASSIGNOR") outstanding under the Credit Agreement on the date hereof. After
giving effect to the foregoing assignment and delegation, the Assignor's and the
Assignee's Percentage Shares for the purposes of the Credit Agreement are set
forth opposite such Person's name on the signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to Loans
assigned.]
The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Loans and the issuance of Letters of Credit
thereunder. The Assignee further confirms and agrees that in becoming a Lender
and in making its Commitment and Loans and participating in Letters of Credit
under the Credit Agreement, such actions have and will be made without recourse
to, or representation or warranty by the Agent.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent
VI-i
(a) the Assignee
(i) shall be deemed automatically to have become a party to the Credit
Agreement, have all the rights and obligations of a "Lender" under the
Credit Agreement and the other Loan Documents as if it were an original
signatory thereto to the extent specified in the second paragraph hereof;
and
(ii) agrees to be bound by the terms and conditions set forth in the
Credit Agreement and the other Loan Documents as if it were an original
signatory thereto; and
(b) the Assignor shall be released from its obligations under the Credit
Agreement and the other Loan Documents to the extent specified in the second
paragraph hereof.
The Assignor and the Assignee hereby agree that the (Assignor) (Assignee)
will pay to the Agent the processing fee referred to in Section 9.1 of the
Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans, liability under outstanding Letters
of Credit and Commitment and requests the Agent to acknowledge receipt of this
document:
(A) Address for Notices:
Institution Name:
Attention:
Address:
Telephone:
Facsimile:
(B) Payment Instructions:
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
ASSIGNOR ADJUSTED PERCENTAGE SHARE ASSIGNOR:
VI-ii
----------------------------------------
% By:
---- -------
Printed Name:
---------------------------
Title:
----------------------------------
ASSIGNEE PERCENTAGE SHARES ASSIGNEE:
----------------------------------------
% By:
---- -------
Printed Name:
---------------------------
Title:
----------------------------------
Accepted and Acknowledged this
_____ day of _________, ______.
COMPASS BANK, as Agent
By:
-----------------------------------
Title:
--------------------------------
VI-iii
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
EDGE PETROLEUM CORPORATION
AND
EDGE PETROLEUM EXPLORATION COMPANY,
AS BORROWER
AND
COMPASS BANK, AS AGENT AND A LENDER
AND
THE FIRST NATIONAL BANK OF CHICAGO, AS A LENDER
AND
THE OTHER LENDERS SIGNATORY HERETO
APRIL 1, 1998
------------------------------------
REVOLVING LINE OF CREDIT OF UP TO $100,000,000
------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. . . . . . . . . . . . . . . . . . . 1
1.2 Additional Defined Terms . . . . . . . . . . . . . . . . 1
1.3 Undefined Financial Accounting Terms . . . . . . . . . .17
1.4 References . . . . . . . . . . . . . . . . . . . . . . .17
1.5 Articles and Sections. . . . . . . . . . . . . . . . . .17
1.6 Number and Gender. . . . . . . . . . . . . . . . . . . .17
1.7 Incorporation of Schedules and Exhibits. . . . . . . . .17
ARTICLE II TERMS OF FACILITY
2.1 Revolving Line of Credit . . . . . . . . . . . . . . . .18
2.2 Letter of Credit Facility. . . . . . . . . . . . . . . .19
2.3 Use of Loan Proceeds and Letters of Credit. . . . . . .20
2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . .21
2.5 Repayment of Loans and Interest. . . . . . . . . . . . .21
2.6 Outstanding Amounts. . . . . . . . . . . . . . . . . . .22
2.7 Time, Place, and Method of Payments. . . . . . . . . . .22
2.8 Pro Rata Treatment; Adjustments. . . . . . . . . . . . .22
2.9 Borrowing Base Determinations. . . . . . . . . . . . . .23
2.10 Mandatory Prepayments. . . . . . . . . . . . . . . . . .24
2.11 Voluntary Prepayments and Conversions of Loans . . . . .24
2.12 Commitment Fee . . . . . . . . . . . . . . . . . . . . .24
2.13 Facility Fee . . . . . . . . . . . . . . . . . . . . . .25
2.14 Letter of Credit Fee . . . . . . . . . . . . . . . . . .25
2.15 Agency Fee . . . . . . . . . . . . . . . . . . . . . . .25
2.16 Loans to Satisfy Obligations of Borrower . . . . . . . .25
2.17 Security Interest in Accounts; Right of Offset . . . . .26
2.18 General Provisions Relating to Interest. . . . . . . . .26
2.19 Yield Protection . . . . . . . . . . . . . . . . . . . .27
2.20 Limitation on Types of Loans . . . . . . . . . . . . . .29
2.21 Illegality . . . . . . . . . . . . . . . . . . . . . . .29
2.22 Regulatory Change. . . . . . . . . . . . . . . . . . . .30
2.23 Limitations on Interest Periods. . . . . . . . . . . . .30
2.24 Letters in Lieu of Transfer Orders . . . . . . . . . . .30
2.25 Power of Attorney. . . . . . . . . . . . . . . . . . . .30
-i-
ARTICLE III CONDITIONS
3.1 Receipt of Loan Documents and Other Items. . . . . . . .31
3.2 Execution of Assignment. . . . . . . . . . . . . . . . .34
3.3 Each Loan. . . . . . . . . . . . . . . . . . . . . . . .34
3.4 Each Letter of Credit. . . . . . . . . . . . . . . . . .35
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization. . . . . . . . . . . . . . . . . . . .36
4.2 Corporate Existence. . . . . . . . . . . . . . . . . . .36
4.3 Valid and Binding Obligations. . . . . . . . . . . . . .36
4.4 Security Instruments . . . . . . . . . . . . . . . . . .36
4.5 Title to Assets. . . . . . . . . . . . . . . . . . . . .36
4.6 Scope and Accuracy of Financial Statements . . . . . . .37
4.7 No Material Misstatements. . . . . . . . . . . . . . . .37
4.8 Liabilities, Litigation, and Restrictions. . . . . . . .37
4.9 Compliance with Laws . . . . . . . . . . . . . . . . . .37
4.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . .37
4.11 Environmental Laws . . . . . . . . . . . . . . . . . . .37
4.12 Compliance with Federal Reserve Regulations. . . . . . .38
4.13 Investment Company Act Compliance. . . . . . . . . . . .38
4.14 Public Utility Holding Company Act Compliance. . . . . .38
4.15 Proper Filing of Tax Returns; Payment of Taxes Due . . .38
4.16 Refunds. . . . . . . . . . . . . . . . . . . . . . . . .38
4.17 Gas Contracts. . . . . . . . . . . . . . . . . . . . . .38
4.18 Intellectual Property. . . . . . . . . . . . . . . . . .39
4.19 Casualties or Taking of Property . . . . . . . . . . . .39
4.20 Locations of Borrower. . . . . . . . . . . . . . . . . .39
4.21 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records. . . . . . . . . . . .39
5.2 Quarterly Financial Statements; Compliance Certificates.40
5.3 Annual Financial Statements. . . . . . . . . . . . . . .40
5.4 Oil and Gas Reserve Reports. . . . . . . . . . . . . . .40
5.5 Title Opinions; Title Defects. . . . . . . . . . . . . .41
5.6 Notices of Certain Events. . . . . . . . . . . . . . . .41
5.7 Letters in Lieu of Transfer Orders; Division Orders. . .42
5.8 Additional Information . . . . . . . . . . . . . . . . .42
5.9 Compliance with Laws . . . . . . . . . . . . . . . . . .42
5.10 Payment of Assessments and Charges . . . . . . . . . . .43
5.11 Maintenance of Corporate Existence and Good Standing . .43
5.12 Payment of Notes; Performance of Obligations . . . . . .43
5.13 Further Assurances . . . . . . . . . . . . . . . . . . .43
-ii-
5.14 Initial Fees and Expenses of Counsel to Agent. . . . . .43
5.15 Subsequent Fees and Expenses of Agent and Lenders. . . .43
5.16 Operation of Oil and Gas Properties. . . . . . . . . . .44
5.17 Maintenance and Inspection of Properties . . . . . . . .44
5.18 Maintenance of Insurance . . . . . . . . . . . . . . . .44
5.19 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . .45
5.20 Subsidiary and Affiliate Security Instruments. . . . . .46
5.21 Payment of Commodity Hedge Obligations . . . . . . . . .46
ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . .46
6.2 Contingent Obligations . . . . . . . . . . . . . . . . .47
6.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . . .47
6.4 Sales of Assets. . . . . . . . . . . . . . . . . . . . .47
6.5 Leasebacks . . . . . . . . . . . . . . . . . . . . . . .47
6.6 Loans or Advances. . . . . . . . . . . . . . . . . . . .47
6.7 Investments. . . . . . . . . . . . . . . . . . . . . . .48
6.8 Dividends and Distributions. . . . . . . . . . . . . . .48
6.9 Issuance of Stock; Changes in Corporate Structure. . . .48
6.10 Transactions with Affiliates . . . . . . . . . . . . . .48
6.11 Lines of Business. . . . . . . . . . . . . . . . . . . .49
6.12 Plan Obligations.. . . . . . . . . . . . . . . . . . . .49
6.13 New Subsidiaries . . . . . . . . . . . . . . . . . . . .49
6.14 Tangible Net Worth . . . . . . . . . . . . . . . . . . .49
6.15 Cash Flow Coverage . . . . . . . . . . . . . . . . . . .49
6.16 EBIT to Interest Expense Ratio . . . . . . . . . . . . .49
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default . . . . . . . . . . . .49
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . .51
ARTICLE VIII THE AGENT
8.1 Appointment. . . . . . . . . . . . . . . . . . . . . . .52
8.2 Waivers, Amendments. . . . . . . . . . . . . . . . . . .52
8.3 Delegation of Duties . . . . . . . . . . . . . . . . . .53
8.4 Exculpatory Provisions . . . . . . . . . . . . . . . . .53
8.5 Reliance by Agent. . . . . . . . . . . . . . . . . . . .53
8.6 Notice of Default. . . . . . . . . . . . . . . . . . . .54
8.7 Non-Reliance on Agent and Other Lenders. . . . . . . . .54
8.8 Indemnification. . . . . . . . . . . . . . . . . . . . .55
8.9 Restitution. . . . . . . . . . . . . . . . . . . . . . .55
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8.10 Agent in Its Individual Capacity . . . . . . . . . . . .56
8.11 Successor Agent. . . . . . . . . . . . . . . . . . . . .56
8.12 Applicable Parties . . . . . . . . . . . . . . . . . . .56
ARTICLE IX MISCELLANEOUS
9.1 Assignments; Participations. . . . . . . . . . . . . . .57
9.2 Survival of Representations, Warranties, and Covenants .58
9.3 Notices and Other Communications . . . . . . . . . . . .58
9.4 Parties in Interest. . . . . . . . . . . . . . . . . . .59
9.5 Rights of Third Parties. . . . . . . . . . . . . . . . .60
9.6 Renewals; Extensions . . . . . . . . . . . . . . . . . .60
9.7 No Waiver; Rights Cumulative . . . . . . . . . . . . . .60
9.8 Survival Upon Unenforceability . . . . . . . . . . . . .60
9.9 Amendments; Waivers. . . . . . . . . . . . . . . . . . .60
9.10 Controlling Agreement. . . . . . . . . . . . . . . . . .60
9.11 Disposition of Collateral. . . . . . . . . . . . . . . .61
9.12 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . .61
9.13 JURISDICTION AND VENUE . . . . . . . . . . . . . . . . .61
9.14 WAIVER OF RIGHTS TO JURY TRIAL . . . . . . . . . . . . .61
9.15 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . .61
9.16 Counterparts . . . . . . . . . . . . . . . . . . . . . .62
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LIST OF SCHEDULES
Schedule 4.8 - Liabilities and Litigation
Schedule 4.11 - Environmental Matters
Schedule 4.16 - Refunds
Schedule 4.17 - Gas Contracts
Schedule 4.19 - Casualties
Schedule 4.21 - Subsidiaries
Schedule 6.12 - Plan Obligations
LIST OF EXHIBITS
Exhibit I - Form of Notes
Exhibit II - Form of Borrowing Request
Exhibit III - Form of Compliance Certificate
Exhibit IV - Form of Borrowing Base Utilization Certificate
Exhibit V - Form of Opinion of Counsel
Exhibit VI - Form of Lender Assignment Agreement
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