FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
REVOLVING LINE OF CREDIT
OF UP TO $175,000,000.00
AMONG
UNION BANK OF CALIFORNIA, N.A.
As Administrative Agent, LC Issuer, Lead Arranger, Fronting Bank and a Bank;
GUARANTY BANK, FSB
As Collateral/Documentation Agent, Co-Arranger and a Bank;
FORTIS CAPITAL CORP.
As Syndication Agent, Co-Arranger and a Bank,
OTHER FINANCIAL
INSTITUTIONS AND BANKS,
As Banks,
AND
CONTINENTAL RESOURCES, INC.
As Borrower
March 28, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS.............................................................2
ARTICLE II.
THE LOANS AND LETTERS OF CREDIT........................................18
2.01 The Commitment.............................................18
2.02 Notice and Manner of Borrowing.............................19
2.03 Payment Procedure..........................................19
2.04 Payments of Interest under the Notes.......................20
2.05 General Provisions Relating to Interest....................21
2.06 Borrowing Base Determination...............................22
2.07 Mandatory Prepayment Due to a Loan Excess..................23
2.08 Other Mandatory Prepayments................................23
2.09 Prepayment and Conversion..................................24
2.10 Increased Cost of Loans....................................24
2.11 Change of Law..............................................26
2.12 Mitigation: Mandatory Assignment...........................26
2.13 Pro Rata Treatment and Payments............................27
2.14 Sharing of Payments and Setoffs............................27
2.15 Commitment Fee.............................................27
2.16 Borrowing Base Increase Fee................................28
2.17 Agent's Fee................................................28
2.18 Addition of Borrowing Base Oil & Gas Properties............28
2.19 Adjustment to Aggregate Commitment Amount..................28
2.20 Facility LCs...............................................29
2.21 Advances to Satisfy Obligations of the Borrower............32
2.22 Assignment of Production...................................33
ARTICLE III.
CONDITIONS.............................................................33
3.01 General Conditions to Closing and to all Disbursements.....33
3.02 Deliveries at the Closing..................................34
3.03 Documents Required for Subsequent Disbursements Involving
Additional Borrowing Base Oil and Gas Properties...........35
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES.........................................35
4.01 Existence..................................................36
4.02 Due Authorization..........................................36
4.03 Valid and Binding Obligations..............................36
4.04 Scope and Accuracy of Financial Statements.................36
4.05 Title to Borrowing Base Oil and Gas Properties.............37
4.06 Oil and Gas Leases.........................................37
4.07 Interest in the Borrowing Base Oil and Gas Properties......37
4.08 Oil and Gas Contracts......................................37
4.09 Producing ▇▇▇▇▇............................................38
4.10 Purchasers of Production...................................38
4.11 Authorizations and Consents................................38
4.12 Environmental Laws.........................................38
4.13 Compliance with Laws, Rules, Regulations and Orders........39
4.14 Liabilities, Litigation and Restrictions...................39
4.15 Existing Indebtedness......................................39
4.16 Material Commitments.......................................40
4.17 Margin Stock...............................................40
4.18 Proper Filing of Tax Returns and Payment of Taxes Due......40
4.19 ERISA......................................................40
4.20 Investment Company Act Compliance..........................41
4.21 Public Utility Holding Company Act Compliance..............41
4.22 Insurance..................................................41
4.23 Material Misstatements and Omissions.......................41
ARTICLE V.
AFFIRMATIVE COVENANTS..................................................41
5.01 Use of Funds...............................................41
5.02 Maintenance and Access to Records..........................41
5.03 Quarterly Unaudited Financial Statements...................42
5.04 Annual Audited Financial Statements........................42
5.05 Compliance Certificate.....................................42
5.06 Statement of Material Adverse Change.......................42
5.07 Title Defects..............................................42
5.08 Additional Information.....................................42
5.09 Compliance with Laws and Payment of Assessments and Charges43
5.10 Maintenance of Existence and Good Standing.................43
5.11 Further Assurances.........................................43
5.12 Initial Expenses of the Bank...............................43
5.13 Subsequent Expenses of the Bank Parties....................43
5.14 Maintenance of Tangible Property...........................44
5.15 Maintenance of Insurance...................................44
5.16 Inspection of Tangible Assets/Right of Audit...............44
5.17 Payment of Note and Performance of Obligations.............44
5.18 Borrowing Base.............................................44
5.19 Compliance with Environmental Laws.........................44
5.20 Hazardous Substances Indemnification.......................45
5.21 Transactions with Affiliates...............................46
5.22 Leases.....................................................46
5.23 Operation of Borrowing Base Oil and Gas Properties.........46
5.24 Assignments................................................46
5.25 Change of Purchasers of Production.........................46
5.26 Payment of Taxes, Etc......................................46
5.27 Notice of Litigation.......................................47
5.28 Notice of Events of Default................................47
5.29 Notice of Change of Principal Offices......................47
5.30 Employee Benefit Plans.....................................47
5.31 Annual Capital Budget......................................47
5.32 Payment of Obligations.....................................48
ARTICLE VI.
NEGATIVE COVENANTS.....................................................48
6.01 Other Indebtedness.........................................48
6.02 Loans or Advances..........................................48
6.03 Mortgages or Pledges of Assets.............................48
6.04 Sales of Assets............................................49
6.05 Dividends..................................................49
6.06 Payment of Accounts Payable................................49
6.07 Cancellation of Insurance..................................49
6.08 Investments................................................49
6.09 Changes in Structure or Business...........................49
6.10 Pooling or Unitization.....................................50
6.11 Hedge Agreements...........................................50
6.12 Capital Stck of Borrower and Guarantors/Redemption of Senior
Subordinated Notes.........................................50
6.13 Margin Stock...............................................50
6.14 Senior Subordinated Debt...................................50
6.15 Current Ratio..............................................50
6.16 Fixed Charge Coverage Ratio................................50
6.17 Total Funded Debt to EBITDA................................51
6.18 Senior Debt to EBITDA......................................51
6.19 Total Funded Debt to Total Capitalization..................51
ARTICLE VII.
EVENTS OF DEFAULT......................................................51
7.01 Enumeration of Events of Default...........................51
7.02 Rights Upon Unmatured Event of Default.....................53
7.03 Rights Upon Default........................................53
7.04 Remedies...................................................54
7.05 Right of Set-off...........................................55
ARTICLE VIII.
THE AGENTS.............................................................55
8.01 Authorization and Action...................................55
8.02 Agent's Reliance, Etc......................................56
8.03 Each Agent and its Affiliates..............................56
8.04 Bank Credit Decision.......................................56
8.05 Agent's Indemnity..........................................57
8.06 Successor Agents...........................................57
8.07 Notice of Default..........................................58
ARTICLE IX.
MISCELLANEOUS..........................................................58
9.01 Security Interests in Deposits and Right of Offset or the
Banker's Lien..............................................58
9.02 Survival of Representations, Warranties and Covenants......58
9.03 Notices and Other Communications...........................58
9.04 Parties in Interest........................................59
9.05 Successors and Assigns; Participation; Purchasing Banks....59
9.06 Renewals and Extensions....................................61
9.07 No Waiver by the Bank Parties..............................61
9.08 Waiver, Release, and Indemnification by the Borrower.......62
9.09 GOVERNING LAW..............................................62
9.10 Incorporation of Exhibits and Schedules....................63
9.11 Survival Upon Unenforceability.............................63
9.12 Rights of Third Parties....................................63
9.13 Amendments or Modifications................................63
9.14 Agreement Construed as an Entirety.........................64
9.15 Number and Gender..........................................64
9.16 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS..................64
9.17 Controlling Provision Upon Conflict........................64
9.18 Time, Place and Method of Payments.........................65
9.19 Termination................................................65
9.20 Non-Application of Chapter 346 of Texas Finance Code.......65
9.21 Counterpart Execution......................................65
9.22 Power of Attorney..........................................65
9.23 Subordination of Intercompany Debt.........................66
9.24 Prior Agreement............................................67
EXHIBITS
EXHIBIT A Borrowing Base Oil and Gas Properties
EXHIBIT B Form of Amended and Restated Replacement Notes
EXHIBIT C Compliance Certificate
EXHIBIT D Security Instruments
EXHIBIT E Request for Advance
SCHEDULES
Schedule 1.01(a) Third Restated Agreement Notes
Schedule 1.01(b) Commitment Amount and Aggregate Commitment
Schedule 2.20(C) Fax Numbers for all Parties
Schedule 4.01 Information Regarding the Borrower and its Subsidiaries
Schedule 4.08 Certain Oil and Gas Contracts
Schedule 4.10 List of Purchasers of Production
Schedule 4.15 Existing Indebtedness
Schedule 4.16 Material Commitments
Schedule 4.22 Insurance Certificates
Schedule 9.05(d) Commitment Transfer Supplement
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
executed March 28, 2002, is by and between CONTINENTAL RESOURCES, INC., an
Oklahoma corporation (the "Borrower"), UNION BANK OF CALIFORNIA, N.A., as LC
Issuer, Bank, Lead Arranger, Fronting Bank and Administrative Agent (in such
latter capacity and together with its successors and permitted assigns in such
capacity the "Administrative Agent"), GUARANTY BANK, FSB, as Co-Arranger, Bank
and Collateral/Documentation Agent (in such latter capacity and together with
its successors and permitted assigns in such capacity the "Collateral Agent"),
FORTIS CAPITAL CORP., as Co-Arranger, Bank and Syndication Agent (in such latter
capacity and together with its successors and permitted assigns in such capacity
the "Syndication Agent"), and the several banks and financial institutions from
time to time parties to this Credit Agreement (the "Banks," such term to include
all undersigned Banks and all other financial institutions which subsequently
become parties to this Agreement in accordance with Section 9.05 hereof).
W I T N E S S E T H
WHEREAS, on August 21, 2000, Borrower and certain of its Affiliates and
certain predecessors to the Banks entered into a certain Restated Credit
Agreement (the "Original Agreement") whereby the Banks' predecessors provided
Borrower and certain of its Affiliates with a $25,000,000.00 revolving credit
facility as evidenced by a $25,000,000.00 revolving note;
WHEREAS, on July 9, 2001, the Original Agreement, as amended through such
date, was amended and restated (the "Second Restated Agreement") in order, among
other things, to increase the then-existing credit facility;
WHEREAS, on January 17, 2002, the Second Restated Agreement was amended and
restated (the "Third Restated Agreement") in order to again, among other things,
further increase the then- existing credit facility;
WHEREAS, the Third Restated Credit Agreement, Borrower's indebtedness and
obligations thereunder, and the various notes evidencing the obligations of the
Borrower and certain of its Affiliates to the Banks' predecessors (collectively
the "Third Restated Agreement Notes"), which are more fully described on
Schedule 1.01(a) attached hereto, were on the date of this Agreement assigned
from the Banks' predecessors to the Banks hereunder;
WHEREAS, Borrower and the Bank Parties desire to amend and restate the
Third Restated Agreement and the Third Restated Agreement Notes to increase the
Aggregate Commitment Amount to a maximum of $175,000,000.00, with an initial
Borrowing Base of $140,000,000.00, as well as to make other modifications
thereto as set forth herein; and
WHEREAS, Borrower and the Bank Parties all desire to hereby document this
Fourth Amended and Restated Credit Agreement, which amends and restates, but
does not extinguish, the Borrower's obligations under the Third Restated
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Bank Parties and the Borrower agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated:
"Administrative Agent" means Union Bank of California, N.A., as
Administrative Agent for the Banks hereunder and under the other Loan Documents,
and each successor Administrative Agent.
"Affiliate" means, as applied to any Person, any other Person, directly or
indirectly, controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by", and "under common control
with"), as applied to any Person, means either: (a) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract, or otherwise, or (b) the legal or beneficial ownership of or voting
rights with respect to twenty percent (20%) or more of the equity interest in
such Person.
"Agent(s)" means, individually and collectively, the Administrative Agent,
the Collateral Agent, and the Syndication Agent, and each successor to each of
such respective positions.
"Aggregate Commitment Amount" means the lesser of: (a) the Borrowing Base
in effect from time to time, or (b) the amount stated as the Aggregate
Commitment Amount on Schedule 1.01(b) attached hereto, as the same may be
amended from time to time as provided in this Agreement.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Banks.
"Agreement" means this Fourth Amended and Restated Credit Agreement, as the
same may be amended or supplemented from time to time.
"Applicable Law" means that law in effect from time to time and applicable
to the Notes which lawfully permits the charging and collection of the highest
permissible lawful, non-usurious rate of interest on the Notes, including laws
of the State of Texas and laws of the United States of America; Chapter 303 of
the Texas Finance Code shall be included in the laws of the State of Texas in
determining Applicable Law; and for the purpose of applying said Chapter 303 to
the Notes, the interest ceiling applicable to the Notes under said Chapter 303
shall be the indicated weekly rate ceiling from time to time in effect.
"Applicable Margin" means the applicable LIBOR Margin or RR Margin provided
for in the Pricing Grid set forth below based upon the Utilization Percentage.
"Arranger" means, individually and collectively, the Lead Arranger and each
Co-Arranger, each such position being held as of the Closing by Union Bank of
California, N.A., Guaranty Bank, FSB and Fortis Capital Corp., respectively.
"Bank(s)" means any of the banks signatory to this Agreement, their
successors and, upon the effective date after registration with the
Administrative Agent pursuant to Section 9.05 of a Commitment Transfer
Supplement executed by a Purchasing Bank, such Purchasing Bank.
"Bank Parties" means the Banks, the Fronting Bank, the LC Issuer, each
Co-Arranger, the Lead Arranger, the Syndication Agent, the Collateral Agent and
the Administrative Agent.
"Borrower" has the meaning stated therefor in the preamble of this
Agreement.
"Borrowing" means a group of Loans made by the Banks to Borrower on a
single date.
"Borrowing Base" means the maximum loan amount supported by the Borrowing
Base Oil and Gas Properties, as determined by the Arrangers and approved by the
Required Banks from time to time in accordance with Section 2.06 of this
Agreement.
"Borrowing Base Oil and Gas Properties" means those Oil and Gas Properties
of the Borrower and/or the Guarantors that are described in Exhibit "A" attached
hereto and made a part hereof, as such Exhibit "A" may be amended from time to
time, together with any other Oil and Gas Properties of the Borrower and/or the
Guarantors that are described in and covered by (or that Collateral Agent and
Borrower or Guarantor have attempted to describe in) any of the Security
Instruments, whether or not such Oil and Gas Properties are described in Exhibit
A attached hereto.
"Breakage Costs" means all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
any Bank to fund its LIBOR Loans but excluding loss of anticipated profit with
respect to any LIBOR Loans) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a borrowing of
LIBOR Loans does not occur on a date specified therefor in a Request for
Advance; (ii) if any repayment or conversion of any LIBOR Loans occurs on a date
which is not the last day of an Interest Period applicable thereto; (iii) if any
prepayment of any LIBOR Loans is not made on any date specified in a notice of
prepayment given by Borrower; or (iv) as a consequence of any default by the
Borrower to repay LIBOR Loans when required by the terms of this Agreement.
"Business Day" means a day other than a Saturday, Sunday or legal holiday
for commercial banks under the laws of the State of Texas or the State of
California, provided that with respect to transactions under this Agreement
relating to LIBOR Loans, such day must also be a Eurodollar Business Day.
"Business Entity" means a company, corporation, limited liability company,
limited partnership, partnership, joint venture, trust, association, or other
entity other than a natural person, that has been formed and exists to conduct
any line of business.
"Cedar Hills Project" means those two certain secondary recovery units in
which Borrower will conduct water flood and high pressure air injection
operations to maximize the recovery of oil from both the Cedar Hills North-Red
River "B" Unit in ▇▇▇▇▇▇ and Slope Counties, North Dakota, and the West Cedar
Hills Unit in Fallon County, Montana.
"Certificate of Formation" means any certificates, articles, or other
instruments that are required or permitted to be filed with any designated
agency of the jurisdiction in which a Business Entity is formed in order to
evidence the legal formation of such Business Entity.
"Change of Control" means any of the following events: (a) any "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) has become, directly or
indirectly, the "beneficial owner" (as defined in Rules 13d- 3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all such shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), by way of merger, consolidation or otherwise, of a majority or more of
the common stock of Borrower on a fully-diluted basis, after giving effect to
the conversion and exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are then currently
convertible or exercisable), (b) during any period of two consecutive calendar
quarters, individuals who at the beginning of such period were officers of the
Borrower and were also members of the Borrower's board of directors cease for
any reason to constitute a majority of the directors of the Borrower then in
office unless (i) such new directors were elected by a majority of the directors
of the Borrower who constituted the board of directors of the Borrower at the
beginning of such period (or by directors so elected) or (ii) the reason for
such directors failing to constitute a majority is a result of retirement by
directors due to age, death or disability, (c) ▇▇▇▇▇▇ ▇▇▇▇ no longer owns a
controlling beneficial interest or ownership in Borrower, (d) ▇▇▇▇▇▇ ▇▇▇▇ is no
longer chief executive officer of Borrower, or (e) Borrower no longer owns 100%
of all the issued and outstanding shares of common stock of Continental Gas,
Inc.
"Closing" has the meaning provided in Section 3.01.
"Collateral Agent" means Guaranty Bank, FSB, as Collateral/Documentation
Agent for the Banks hereunder and under the other Loan Documents, and each
successor Collateral/Documentation Agent.
"Commitment" means, as to any Bank, the obligation of such Bank to make
Loans to, and participate in Facility LCs issued upon the application of, the
Borrower in an aggregate amount at any one time outstanding not to exceed the
lesser of (i) such Bank's Commitment Amount and (ii) such Bank's Percentage
Share of the Borrowing Base then in effect.
"Commitment Amount" means at any time, for any Bank, the amount set forth
opposite such Bank's name on Schedule 1.01(b) under the heading "Commitment
Amount," as such amount may be changed as provided in this Agreement.
"Commitment Transfer Supplement" means a Commitment Transfer Supplement
executed by Administrative Agent and a Purchasing Bank substantially in the form
of Schedule 9.05(d) and registered with the Administrative Agent pursuant to
Section 9.05(d) hereof.
"Compliance Certificate" means the certificate of the President or Chief
Financial Officer of the Borrower submitted to the Administrative Agent from
time to time pursuant to this Agreement and attesting to the financial covenants
and stating, to such officer's knowledge, whether or not an Event of Default or
an Unmatured Event of Default has occurred and is continuing and, if such an
event has occurred, the actions being taken by the Borrower to remedy such
situation and that GAAP has been used in the preparation of the Financial
Statements, which certificate shall be in the form attached hereto as Exhibit
"C".
"▇▇▇▇▇" means the Accounting Procedure Joint Operations recommended by the
Council of Petroleum Accountants, with respect to onshore and offshore
operations, respectively, including the most current versions thereof and any
other recent versions thereof commonly in use.
"Corporate Action" means action taken by the Governing Body of any Business
Entity (not just a corporation) in order to authorize such Business Entity
pursuant to its Governing Documentation to enter into and become bound by the
terms of any particular transaction.
"Corporate Power" means the power and authority of a Business Entity, under
the terms of its Governing Documentation and applicable law, to enter into, and
become bound by, the terms of any particular transaction.
"Credit Extension" means the making of a Loan or the issuance of a Facility
LC hereunder.
"Credit Extension Date" means the date on which a Loan is advanced or a
Facility LC is issued.
"Current Assets" means at any time, all assets, that should in accordance
with GAAP, be classified as current assets on a consolidated balance sheet of
Borrower and the Guarantors, plus the then current availability under the
aggregate Commitments, but excluding any ▇▇▇▇-to-market valuation under
Permitted Hedge Agreements.
"Current Liabilities" means at any time, all liabilities that should in
accordance with GAAP, be classified as current liabilities on a consolidated
balance sheet of Borrower and the Guarantors, but excluding any ▇▇▇▇-to-market
valuation under Permitted Hedge Agreements, minus the amount of Credit
Extensions under this Agreement that is deemed to be current in accordance with
GAAP.
"Current Ratio" means the ratio derived from dividing Current Assets by
Current Liabilities.
"Defensible Title" means good and defensible title, as set forth, qualified
and/or limited on Exhibit "A," free and clear of all mortgages, liens and
encumbrances, except for Permitted Encumbrances.
"EBITDA" means, for any reporting period, Borrower's and Guarantors' Net
Income on a consolidated basis before deductions for interest expense, taxes,
depreciation, depletion and amortization, exploration expenses, including dry
hole costs, and non-cash compensation expense.
"Environmental Laws" means (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, the Toxic Substances Control Act, and the Oil Pollution Act
of 1990; (b) any and all 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 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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which together with the Borrower would be treated as a single employer under
Section 4001 of ERISA.
"Eurodollar Business Day" means a day on which, in the determination of the
Administrative Agent, significant dealings are carried on in the LIBOR Market.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement.
"Facility LC" is defined in Section 2.20(A).
"Facility LC Application" is defined in Section 2.20(C).
"Facility Termination Date" means March 28, 2005.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published by the Federal
Reserve Bank of New York for such day on the next succeeding Business Day or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Statements" means the statements of the financial condition of
the indicated Person, on a consolidated basis, as at the point in time and for
the period indicated and consisting of at least a balance sheet, income
statement and statement of cash flows, and when the foregoing are audited,
accompanied by the certification of such Person's independent certified public
accountants and footnotes to any of the foregoing, all of which shall be
prepared in accordance with GAAP applied on a basis consistent with that of the
preceding year, except for any inconsistency that results from changes in GAAP
from year to year.
"First Restated Agreement" has the meaning stated in the Recitals of this
Agreement.
"Floating Rate" means a per annum interest rate determined by reference to
the following schedule:
o LIBOR + LIBOR Margin at Borrower's option pursuant to Section 2.04, or
RR + RR Margin
o After the occurrence and during the continuation of an Event of
Default, the Floating Rate determined in accordance with the forgoing
schedule shall, in each case, be increased by four percent (4%) per
annum, not to exceed the Maximum Rate.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable as of the date of Closing, except that solely for purposes
of the definition of Financial Statements herein, changes in GAAP from time to
time (if any) shall be applied and reflected in the Financial Statements.
Accounting principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governing Body" means, in the case of a corporation, its board of
directors, in the case of a limited liability company, its members or its
managers, depending on how the management of such Business Entity is allocated
in its Governing Documentation, in the case of a general partnership or joint
venture, the partners or the joint venturers thereof, respectively, in the case
of a limited partnership, the applicable Governing Body of the general partner
thereof, if such general partner is a Business Entity, and in the case of any
other Business Entity not specified herein, the designees thereof that, pursuant
to the Governing Documentation of such Business Entity, fulfill the
responsibilities typically discharged by a board of directors of a corporation.
"Governing Documentation" means, in the case of a corporation, its
certification of incorporation, articles of incorporation and by laws, as
amended, in the case of a limited liability company, its certificate of
formation, its limited liability company agreement, and its operating agreement
or regulations (or similar documentation as denominated under the laws of the
jurisdiction in which it is formed), in the case of a partnership, joint venture
or a limited partnership, the applicable partnership agreement or joint venture
agreement, and the certificate of limited partnership, if applicable, and in the
case of any other Business Entity not specifically enumerated herein, the
applicable documentation typically utilized in the jurisdiction where such
Business Entity has been formed for purposes of initially forming such Business
Entity according to the laws of such jurisdiction and thereafter operating and
managing such Business Entity.
"Guarantor(s)" means, individually and collectively, Continental Gas, Inc.,
Continental Resources of Illinois, Inc., Continental Crude Co. and all other
Subsidiaries of Borrower.
"Guaranty" means the unlimited guaranty agreement, guaranteeing the full
payment and performance of all of Borrower's Obligations to the Bank Parties
under this Agreement and the other Loan Documents, in form and substance
satisfactory to the Administrative Agent, duly executed by each Guarantor.
"Hazardous Substances" means flammables, explosives, radioactive materials,
hazardous wastes, asbestos or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum and petroleum
products and 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 Environmental Laws now or hereafter enacted or promulgated by any
regulatory authority or governmental body, but only to the extent any such law
is or becomes applicable to the Borrower or any of its property.
"Hedge Agreement" means any swap agreement, cap, collar, floor, exchange
transaction, forward agreement or exchange or protection agreement related to
Hydrocarbons or any option with respect to such transaction, as more
specifically provided in those certain master swap agreements on International
Swap Dealers Association forms and the schedules thereto and any confirmations
thereunder entered into by Borrower with any other Person.
"Hydrocarbons" means crude oil, condensate, natural gas, natural gas
liquids and other hydrocarbons.
"Increased Costs" has the meaning stated therefor in Section 2.10 (A) of
this Agreement.
"Indebtedness" means, as to any Person, (a) all items of indebtedness or
liability for borrowed money which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
as at the date as of which Indebtedness is to be determined, (b) indebtedness
secured by (or for which the holder of such indebtedness has a right, contingent
or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien,
security interest, or other charge or encumbrance existing on or encumbering
property owned by the Person whose Indebtedness is being determined, whether or
not the indebtedness secured thereby shall have been assumed, and (c) all
indebtedness of others which such Person has directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business), discounted with recourse, agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, purchase of
securities or capital contribution, through a commitment to pay for property or
services regardless of the nondelivery of such property or the nonfurnishing of
such services or otherwise), or in respect of which such Person has otherwise
become directly or indirectly liable, contingently or otherwise, whether now
existing or hereafter arising.
"Interest Period" means as to any LIBOR Loan the period commencing on and
including the date of such Loan (or on the effective date of the election
pursuant to Section 2.04(B) by which such Loan became a LIBOR Loan) and ending
on and including the day preceding the numerically corresponding day (or if
there is no such numerically corresponding day, the last day) in the 1st, 2nd,
3rd or 6th calendar month after the date of such Loan, as selected by the
Borrower in accordance with Section 2.04(B), and after such selected month, such
period commencing on and including the day immediately following the last day of
the then ending Interest Period for such Loan and ending on and including the
day preceding the day numerically corresponding to the first day of such
Interest Period (or if there is no such numerically corresponding day, the last
day), in the 1st, 2nd, 3rd or 6th calendar month after the first day of such
Interest Period, as so selected by the Borrower; provided, however, that if any
Interest Period would otherwise end on a day immediately prior to a day that is
not a Business Day it shall be extended so as to end on the day immediately
prior to the next succeeding Business Day unless the same would fall in a
different calendar month, in which case such Interest Period shall end on the
day immediately preceding the first Business Day immediately preceding such next
succeeding Business Day.
"Investment" in any Person means any stock, bond, note or other evidence of
Indebtedness or any other security (other than current trade and customer
accounts) of, or loan to, such Person.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LC Fee" is defined in Section 2.20(D).
"LC Issuer" has the meaning set forth in the preamble of this Agreement.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"LC Payment Date" is defined in Section 2.20(E).
"Leases" means oil and gas leases and all oil, gas and mineral leases
constituting any part of the Borrowing Base Oil and Gas Properties.
"LIBOR" means, with respect to each Interest Period, the rate of interest
per annum at which deposits of not less than $1,000,000.00 in United States
dollars are offered in the LIBOR Market for a period of time equal or comparable
to such Interest Period and in an amount equal to or comparable to the principal
amount of the LIBOR Loan to which such Interest Period relates as appearing on
Telerate Page 3750 as of 11:00 AM (London time) two (2) Business Days before the
first day of the applicable Interest Period, as adjusted for maximum statutory
reserves, provided, however, that if such rate is not available on the Telerate,
then within five (5) Business Days of receipt of notification, the
Administrative Agent and the Borrower shall enter into good faith negotiations
for a period of fifteen (15) days (or such shorter period as is required to
agree to the alternative basis) with a view to agreeing on an alternative basis
for determining the rate of interest applicable to LIBOR Loans, and if no
alternative basis is agreed within the fifteen (15) day period, the LIBOR Loan
shall be deemed to have converted to an RR Loan as of the end of the last
Interest Period.
"LIBOR Loan" means any Loan from time to time for which interest thereon is
to be computed at a Floating Rate based on LIBOR plus the LIBOR Margin, as
elected by Borrower pursuant to Section 2.04 hereof.
"LIBOR Margin" means the applicable margin set forth in the Pricing Grid
under the caption, "LIBOR Margin," determined based on the Utilization
Percentage prevailing from time to time.
"LIBOR Market" means the London interbank offered interest rate market
created by major London clearing banks for deposits in United States dollars.
"Limitation Period" means any period while any amount remains owing on the
Notes when interest on such amount, calculated at the applicable rate prescribed
on the Notes, plus any fees payable hereunder and deemed to be interest under
applicable Law, would exceed the Maximum Rate.
"Loan" means, singly, any advance by the Banks to the Borrower pursuant to
this Agreement and "Loans" means, cumulatively, the aggregate sum of all money
advanced by the Banks to the Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Notes, the Facility LC
Applications, the Security Instruments, the Guaranties and all other promissory
notes, security agreements, and other instruments, documents, and agreements
executed and delivered pursuant to or in connection with this Agreement, as such
instruments, documents, and agreements may be amended, modified, renewed,
extended, or supplemented from time to time.
"Loan Excess" means, at any point in time, the amount, if any, by which the
outstanding balance on the Aggregate Outstanding Credit Exposure exceeds the
Aggregate Commitment Amount then in effect.
"Material Adverse Change" means any change in the business, property,
condition (financial or otherwise) or results of operations, or reasonably
foreseeable prospects of Borrower and the Guarantors, considered as a whole,
which has a Material Adverse Effect, excluding any change in prevailing economic
or business conditions that are applicable, generally, to companies engaged in
the domestic oil and gas exploration and production business in the continental
United States, including, without limitation, fluctuations in oil and gas
prices.
"Material Adverse Effect" means a material adverse effect on (i) the
business, property, condition (financial or otherwise), results of operations,
or reasonably foreseeable prospects of Borrower or any Guarantor, (ii) the
ability of Borrower or any Guarantor to perform its obligations under the Loan
Documents to which it is a party, or (iii) the validity or enforceability of any
of the Loan Documents or the rights or remedies of any of the Bank Parties
thereunder.
"Maximum Rate" means the maximum rate of non-usurious interest permitted
from day to day by Applicable Law, including Chapter 303 of the Texas Finance
Code (and as the same may be incorporated by reference in other Texas statutes),
but otherwise without limitation, that rate based upon the "indicated weekly
rate ceiling."
"Modify" and "Modification" are defined in Section 2.20(A).
"Multi-employer Plan" means a plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"Net Income" means, for any period, without duplication, the net income (or
loss) of Borrower and Guarantors on a consolidated basis after allowances for
taxes for such period, determined in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein) the following: (i) the net income of any Person in which the Borrower
or any Guarantor has an interest (which interest does not cause the net income
of such other Person to be consolidated with the net income of the Borrower or
such Guarantor in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower or such Guarantor; (ii) any extraordinary gains or losses,
including gains or losses attributable to property sales not in the ordinary
course of business, (iii) the cumulative effect of a change in accounting
principles, and (iv) any gains or losses attributable to writeups or writedowns
of assets.
"Note" and "Notes" means, individually, a promissory note issued by
Borrower payable to the order of a Bank evidencing the Loans made by that Bank
pursuant to Section 2.01 hereof and being substantially in the form of the note
attached as Exhibit B hereto, together with any and all further renewals,
extensions for any period, increases or rearrangements thereof, and means
collectively all of such Notes.
"Obligations" means all obligations, indebtedness, and liabilities of the
Borrower to the Bank Parties, now existing or hereafter arising under this
Agreement and the other Loan Documents, including, but not limited to, the
Indebtedness evidenced by the Notes and the Reimbursement Obligations, and all
interest accruing thereon and all attorneys' fees and other expenses incurred in
the administration, enforcement or collection thereof.
"Oil and Gas Properties" means 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, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests and mineral fee
interests, and all gathering systems, processing plants, compressors, and
associated facilities of any type relating thereto, together with contracts
executed in connection therewith and all tenements, hereditaments, appurtenances
and properties, real or personal, appertaining, belonging, affixed or incidental
thereto.
"Original Agreement" has the meaning stated in the Recitals of this
Agreement.
"Outstanding Credit Exposure" means, as to any Bank at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Percentage Share of the LC Obligations at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Share" means, as to any Bank, a fraction (expressed as a
percentage), the numerator of which shall be such Bank's Commitment Amount, and
the denominator of which shall be the Aggregate Commitment Amount stated on
Schedule 1.01(b) attached hereto.
"Permitted Asset Sales" means (a) sales, leases, assignments, transfers or
disposals of, in one or any series of related transactions, (i) all or any
portion of Borrower's or any Guarantor's assets (except for items included in
clause (ii) of this definition), whether now owned or hereafter acquired,
including transfers to Subsidiaries, which, in the aggregate, do not exceed
$2,500,000.00 in any rolling four quarter period, and (ii) Borrower's or any
Guarantor's offshore platforms that have been abandoned or dismantled; and (b)
sales of Hydrocarbons in the ordinary course of business.
"Permitted Encumbrances" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Liens of mechanics, materialmen, warehousemen, carriers, or other like
liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(C) Pledges or deposits in connection with or to secure workmen's
compensation, unemployment insurance, pensions or other employee
benefits;
(D) Encumbrances consisting of covenants, zoning restrictions, rights,
easements, liens or other restrictions on the use of real property,
none of which materially impairs the use of such property by the
Borrower or any Guarantor in the operation of its business, and none
of which is violated in any material respect by existing or proposed
operations;
(E) Liens of operators and/or co-working interest owners under joint
operating agreements or similar contractual arrangements with respect
to the Borrower's or any Guarantor's proportionate share of the
expense of exploration, development and operation of oil, gas and
mineral leasehold or fee interests owned jointly with others, to the
extent that same relate to sums not yet due;
(F) Liens securing surety or other bonds required in the normal course of
business not to exceed $2,000,000.00 in the aggregate at any time in
effect;
(G) The following, if the validity or amount thereof is being contested in
good faith by appropriate and lawful proceedings, so long as levy and
execution thereon have been stayed and continue to be stayed and they
do not, in the aggregate, materially detract from the value of the
property of Borrower or any Guarantor, or materially impair the use
thereof in the operation of its business:
(1) Claims or liens for taxes, assessments, or charges due and
payable and subject to interest or penalty;
(2) Claims, liens, and encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal
or real property or other legal process prior to adjudication of
a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal;
(H) Liens securing payment and performance of the Obligations;
(I) Liens securing purchase money obligations included in the definition
of Permitted Indebtedness if such liens encumber only the property for
which such purchase money obligation was incurred; and
(J) Inchoate liens in respect of royalty owners.
"Permitted Hedge Agreement" means any Hedge Agreement which Borrower or any
Guarantor enters into with or through a counterparty that has a credit rating of
at least "A-" by Standard and Poors or "A3" by ▇▇▇▇▇'▇ Investment Service,
together with the confirmations which Borrower may hereafter enter into with or
through such counterparty covering, in the aggregate, among all such Hedge
Agreements, not more than seventy-five percent (75%) of the Proved Reserves that
are (i) attributable to Borrower's or such Guarantor's interest in the Borrowing
Base Oil and Gas Properties and (ii) projected to be produced during the term(s)
of such Hedge Agreement(s), provided that the floor, fixed or strike prices for
oil or gas, respectively, prescribed in any such Hedge Agreement must be at
least equal to or greater than the average of the prices for oil or gas, as
applicable, then being used by the Arrangers in their price decks applicable to
Borrowing Base determinations, which average prices shall be provided to
Borrower and each Guarantor within five (5) Business Days after written request
therefor from Borrower to Arrangers.
"Permitted Indebtedness" means:
(A) The Loans and Facility LCs;
(B) Unsecured current accounts payable incurred in the ordinary course of
business which are (i) not unpaid for more than ninety (90) days after
the date of the invoice therefor, or (ii) being contested in good
faith by appropriate proceedings, or (iii) the subject of usual and
customary review and evaluation;
(C) Extensions of credit from suppliers or contractors who are not
Affiliates of Borrower for the performance of labor or services or the
provision of supplies or materials under applicable contracts or
agreements in connection with Borrower's or any Guarantor's oil and
gas exploration and development activities, which are not overdue or
are being contested in good faith by appropriate proceedings;
(D) Letters of credit or performance bonds required to be obtained by the
Borrower or any Guarantor in the normal course of its business to
assure the proper plugging and abandonment of oil or gas drilling or
production locations or bonds required by any governmental agency or
instrumentality in the normal course of the Borrower's business;
(E) Purchase money obligations of the Borrower and Guarantors of up to
$15,000,000, in the aggregate, at any time for the purchase of
compressors, pipelines, engines and other equipment necessary or
useful for injection plants for use in Borrower's Cedar Hills Project
so long as (i) the purchase money obligations do not exceed the fair
market value of the equipment purchased therewith (ii) Borrower and
Guarantors have no personal liability for such Indebtedness and (iii)
the recourse of the holder thereof is limited to taking possession of
or foreclosing upon such compressors;
(F) Income taxes payable that are not overdue;
(G) Accrued abandonment liabilities for abandonment obligations that are
not in default;
(H) The Indebtedness evidenced by the Senior Subordinated Notes;
(I) Indebtedness arising out of Permitted Hedge Agreements;
(J) Other unsecured indebtedness incurred by the Borrower or any Guarantor
not to exceed, in the aggregate at any time outstanding, One Million
Dollars ($1,000,000.00); and
(K) Any Indebtedness between or among the Borrower and all or any of the
Guarantors, subject to Section 9.23.
"Person" means an individual, company, corporation, partnership, joint
venture, limited liability company, trust, association, unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means, at any time, any employee benefit plan which is covered by
ERISA and in respect of which the Borrower or any ERISA Affiliate 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.
"Pricing Grid" means the following table:
Utilization Percentage LIBOR Margin RR Margin Commitment Fee LC Fee
====================== ============ ========= ============== =======
90% or more 2.50% 0.50% .25% 2.00%
equal to or greater than
68% but less than 90% 2.25% 0.25% .375% 1.75%
equal to or greater than
33% but less than 68% 2.00% 0% .375% 1.50%
less than 33% 1.50% 0% .375% 1.50%
For purposes of determining the applicable LIBOR Margin, RR Margin, Commitment
Fee and/or LC Fee at any time, the applicable Utilization Percentage shall be
determined based on the most recently completed fiscal quarter, as of the end of
such quarter.
"Prior Credit Agreements" means, collectively, the Original Agreement, the
First Restated Agreement, the Second Restated Agreement and the Third Restated
Agreement.
"Prior Security Instruments" means, collectively, all Security Instruments
as defined in, and/or executed pursuant to, any of the Prior Credit Agreements,
except to the extent, and only to the extent, that any of them have been wholly
or partially released of record.
"Production Revenue" means revenues of the Borrower and the Guarantors from
the sale of its oil and gas production minus any applicable oil and gas
production taxes and royalties.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended from time
to time.
"Proved Reserves" means the estimated quantities of crude oil, condensate,
natural gas liquids and natural gas which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs underlying lands or interests therein constituting Oil and Gas
Properties, under existing economic and operating conditions, using the criteria
and parameters required by and acceptable to the Securities and Exchange
Commission, provided that with respect to estimated quantities of crude oil,
condensate, natural gas liquids and natural gas expected to be produced from
secondary recovery operations, such determination shall be made using criteria
and parameters generally utilized by and acceptable to ▇▇▇▇▇ ▇▇▇▇▇ Petroleum
Engineers or other petroleum engineers acceptable to the Arrangers.
"Purchasing Bank" shall have the meaning assigned to that term in Section
9.05 hereof.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.20 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Request for Advance" means the written or verbal (confirmed in writing
within one (1) Business Day) request by the Borrower to the Administrative Agent
for an advance by the Banks pursuant to this Agreement, which Request for
Advance shall be in substantially the form attached hereto as Exhibit "E,"
signed by an authorized officer of the Borrower and which shall include a
statement of the amount requested to be advanced, the date of the requested
advance and such other information as the Administrative Agent in its reasonable
discretion deems necessary.
"Required Banks" means, at any time, Banks holding at least sixty-six and
two-thirds percent (662/3%) of the Aggregate Commitment Amount or, if the
Aggregate Commitment Amount has been terminated, Banks having at least sixty-six
and two-thirds percent (662/3%) of the Aggregate Outstanding Credit Exposure;
subject to the provisions of Section 9.13.
"Required Number" means: in the case of notices hereunder (i) relative to
borrowings, prepayments, elections of LIBOR Loans, selections of Interest
Periods for, or other transactions in respect of, LIBOR Loans: by 10:00 a.m.,
Los Angeles, California time on the third Business Day prior to the proposed
activity; or (ii) relative to all transactions in respect of RR Loans: the same
Business Day by 11:00 a.m., Los Angeles, California time; it being understood,
however, that in the case of notices involving transactions in respect of more
than one type of Loan (such as a change in type of Loan in accordance with
Section 2.04(B)), "Required Number" means that number of days, as indicated
above in respect of the Loans involved, which would constitute the longest
applicable period of time.
"Reserve Report" means a report prepared by an independent petroleum
engineer or firm of engineers acceptable to Administrative Agent or a report
prepared under the supervision of the chief petroleum engineer of Borrower, as
applicable pursuant to Section 2.06, in each case regarding the Proved Reserves
attributable to the Borrowing Base Oil and Gas Properties, using the criteria
and parameters required by and acceptable to the Securities and Exchange
Commission, and incorporating the present cost of appropriate plugging and
abandonment obligations to be incurred in the future, taking into account any
plugging and abandonment fund required to be accrued or established by Borrower
or any Guarantor out of cash flow from the Borrowing Base Oil and Gas Properties
covered by such report with respect to such future obligations.
"RR" means a fluctuating reference rate of interest equal to the higher of
(i) a rate per annum equal to the reference rate of interest announced from time
to time by Administrative Agent (which is not necessarily the lowest rate
charged to any customer), changing when and as said reference rate changes, and
(ii) the sum of the Federal Funds Effective Rate most recently determined by the
Administrative Agent plus one-half percent (1/2%) per annum.
"RR Loan" means any Loan from time to time for which interest thereon is to
be computed on the basis of the RR plus the RR Margin, as elected by Borrower
pursuant to Section 2.04 hereof.
"RR Margin" means the applicable margin set forth in the Pricing Grid under
the caption, "RR Margin," determined based on the Utilization Percentage
prevailing from time to time.
"Second Restated Agreement" has the meaning stated therefor in Recitations
to this Agreement.
"Security Instruments" means the security instruments described on Exhibit
"D," in form and substance satisfactory to the Collateral Agent, to be executed
by Borrower pursuant to Section 3.01, together with all Prior Security
Instruments and any and all other instruments or documents hereafter executed in
connection with or as security for the payment of the Notes and performance of
the Obligations.
"Senior Debts" has the meaning stated therefor in Section 9.23.
"Senior Subordinated Notes" means those certain $150,000,000, 10.25% Senior
Subordinated Notes issued by Borrower due August 2008.
"Stockholders' Equity" means, at any time, the sum of the following
accounts set forth on a consolidated balance sheet of the Borrower and the
Guarantors, prepared in accordance with GAAP: (A) the par or stated value of all
outstanding capital stock (common and preferred); (B) capital surplus including
paid in capital; and (C) retained earnings, excluding any non-cash items.
"Subordinated Intercompany Debt" has the meaning stated therefor in Section
9.23.
"Subsidiary" means, as to any Person, any corporation in which such Person,
directly or indirectly through its Subsidiaries, owns more than fifty percent
(50%) of the stock of any class or classes having by the terms thereof the
ordinary voting power to elect a majority of the directors of such corporation,
and any partnership, limited partnership, association, joint venture, or other
entity in which such Person, directly or indirectly through its Subsidiaries,
has more than a fifty percent (50%) equity interest at the time.
"Super-Majority" means, at any time, Banks holding at least seventy-five
percent (75%) of the Aggregate Commitment Amount or, if the Aggregate Commitment
Amount has been terminated, Banks having at least seventy-five percent (75%) of
the Aggregate Outstanding Credit Exposure; subject to the provisions of Section
9.13.
"Syndication Agent" means Fortis Capital Corp. as Syndication Agent for the
Banks hereunder and under the other Loan Documents, and each successor
Syndication Agent.
"Third Restated Agreement" has the meaning stated therefor in the Recitals
of this Agreement.
"Transfer Order Letters" means the letters in lieu of division or transfer
orders, in form acceptable to the Administrative Agent.
"Unmatured Event of Default" means any event or occurrence which solely
with the lapse of time or the giving of notice or both will ripen into an Event
of Default.
"Utilization Percentage" means the percentage of the Aggregate Commitment
Amount represented by the aggregate principal amount of all Credit Extensions
outstanding from time to time calculated at the end of each fiscal quarter based
on the average daily Aggregate Commitment Amount and the average daily balance
of all outstanding Credit Extensions during such quarter.
Undefined Terms. Undefined financial accounting terms used in this
Agreement shall be defined according to GAAP.
ARTICLE II.
THE LOANS AND LETTERS OF CREDIT
2.01 The Commitment. From and including the date of this Agreement and
prior to the Facility Termination Date, each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to (i) make Loans to the Borrower
and (ii) participate in Facility LCs issued upon the request of the Borrower,
provided that, after giving effect to the making of each Loan and the issuance
of each Facility LC, such Bank's Outstanding Credit Exposure shall not exceed
its Commitment. The Loans advanced by each Bank to the Borrower shall be
evidenced by the Banks' respective Notes from the Borrower. Subject to the terms
of this Agreement, the Borrower may borrow, repay and reborrow up to the
Aggregate Commitment Amount at any time prior to the Facility Termination Date.
All Commitments to extend credit hereunder shall expire on the Facility
Termination Date.
The LC Issuer will issue Facility LCs hereunder on the terms and conditions
set forth in Section 2.20.
2.02 Notice and Manner of Borrowing.
(a) The amount and date of each Credit Extension shall be designated
in a Request for Advance executed by Borrower, to be received by the
Administrative Agent at least the Required Number of, but not more than ten
(10), Business Days prior to the date of such Credit Extension, which date
shall be a Business Day. The Administrative Agent shall promptly advise the
Banks and, if applicable, the LC Issuer, of any Request for Advance given
pursuant to this Section 2.02, of each Bank's Percentage Share of any
requested Borrowing and, if applicable, the amount requested for any
Facility LC by telephone, confirmed promptly in writing, or telecopier.
Upon satisfaction of the applicable conditions set forth in Article III,
each Borrowing shall be made at the office of the Administrative Agent, and
shall be funded prior to 1:00 o'clock p.m., Los Angeles, California time,
on the day so requested in immediately available funds in the amount so
requested.
(b) Each Bank shall make each Loan to be made by it hereunder on the
date of the proposed Borrowing by wire transfer of immediately available
funds to the Administrative Agent in Los Angeles, California, not later
than 10:00 a.m., Los Angeles, California time, and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to Borrower as Borrower shall direct to the
Administrative Agent from time to time or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Banks as
soon as practicable. Unless the Administrative Agent shall have received
notice from a Bank prior to the date of any proposed Borrowing that such
Bank will not make available to the Administrative Agent such Bank's
Percentage Share of such Borrowing, the Administrative Agent may assume
that such Bank has made its Percentage Share available to the
Administrative Agent on the date of such Borrowing in accordance with this
paragraph (b) and the Administrative Agent may, in reliance upon such
assumption, make available to Borrower on such date a corresponding amount.
If, and to the extent that, such Bank shall not have made its Percentage
Share available to the Administrative Agent, such Bank and Borrower
severally agree to repay to the Administrative Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from
the date such amount is made available to Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of
Borrower, the interest rate applicable at the time to the Loans comprising
such Borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate. If such Bank shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part
of such Borrowing for purposes of this Agreement.
2.03 Payment Procedure. All payments and prepayments made by Borrower under
this Agreement shall be made to the Administrative Agent at its office in
Monterey Park, California for the account of the Banks in immediately available
funds before 10:00 a. m., Los Angeles, California time, on the date that such
payment is required to be made. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to such payments or
prepayments ratably to the Banks (and if the payment relates to amounts owed to
a particular Bank only, in like funds to such Bank), in each case, to be applied
in accordance with the terms of this Agreement. Borrower hereby authorizes the
Administrative Agent, if and to the extent payment or prepayment (including
prepayments required pursuant to Section 2.11 hereof) is not made when due
hereunder or under the Notes or any other Loan Document, to charge from time to
time against Borrower's account with the Administrative Agent any amount so due.
Any payment received and accepted by the Administrative Agent (or any branch or
Affiliate thereof) after such time shall be considered for all purposes
(including the calculation of interest, to the extent permitted by law) as
having been made on the next following Business Day.
2.04 Payments of Interest under the Notes. Subject to the terms and
provisions of this Agreement, interest on the Loan, calculated at the Floating
Rate, shall be due and payable as follows:
(A) Interest on RR Loans shall be calculated on the basis of a
365/366-day year, as applicable, and on LIBOR Loans on the basis of a
360-day year, in each case counting the actual number of days elapsed.
Interest on the outstanding principal balance of the Loans shall accrue for
each day at either a Floating Rate based on RR plus the RR Margin for such
day for RR Loans, or a Floating Rate based on LIBOR for the Interest Period
which includes such day plus the LIBOR Margin for such day for LIBOR Loans,
all as elected and specified (including specification as to length of
Interest Period, as permitted by the definition of that term, with respect
to any election of a Floating Rate based on LIBOR) by the Borrower in
accordance with Section 2.04(B); provided that:
(1) In the absence of an election by the Borrower of a Floating
Rate based on LIBOR plus the LIBOR Margin, or, having made such
election, but upon the Required Number of days prior to the end of the
then current Interest Period the Borrower fails or is not entitled
under the terms of this Agreement to elect to continue a Floating Rate
based on LIBOR plus the LIBOR Margin and specify the applicable
Interest Period therefor, then upon the expiration of such then
current Interest Period, interest on the Loans shall accrue for each
day at a Floating Rate based on RR plus the RR Margin for such day,
until the Borrower, pursuant to Section 2.04(B), elects a different
Floating Rate and specifies the Interest Period for the Loans.
(2) Interest accruing on any LIBOR Loan during any Interest
Period shall be payable on the first Business Day after the last day
of such Interest Period except that: (a) with respect to LIBOR Loans
for which Borrower has selected an Interest Period of six (6) months,
interest will be payable on the first Business Day following the
ninetieth (90th) day after the commencement of such Interest Period
and on the first Business Day of the next Interest Period, (b)
interest will be payable on the Facility Termination Date on any LIBOR
Loan with an Interest Period ending on the Facility Termination Date;
and provided that (c) all accrued interest on any LIBOR Loan converted
or prepaid pursuant to Section 2.11 shall be paid immediately upon
such prepayment or conversion.
(B) By at least the Required Number of days prior to the advance of
any Loan hereunder, the Borrower shall select the initial Floating Rate to
be charged on such Loan, and from time to time thereafter the Borrower may
elect, on at least the Required Number of days irrevocable prior written
(or verbal, promptly confirmed by written) notice to the Administrative
Agent, an initial Floating Rate for any additional Loan, or to change the
Floating Rate on any Loan to any other Floating Rate (including, when
applicable, the selection of the Interest Period); provided that; (i) the
Borrower shall not select an Interest Period that extends beyond the
Facility Termination Date; (ii) except as otherwise provided in Section
2.11 no such change from a Floating Rate based on LIBOR plus the LIBOR
Margin to another Floating Rate shall become effective on a day other than
the day, which must be a Business Day, next following the last day of the
Interest Period last effective for such LIBOR Loan; (iii) any elections
made by the Borrower pursuant to this Section 2.04(B) shall be in the
amount of $1,000,000, plus any additional increment of $1,000,000, or such
lesser amount as constitutes the balance of all Loans then outstanding
hereunder; (iv) notwithstanding anything herein to the contrary, the
Borrower may not make any election under this Section 2.04(B) that would
result in Loans outstanding based on more than six (6) different LIBORs
without the consent of the Required Banks to do so; and (v) the first day
of each Interest Period as to a LIBOR Loan shall be a Business Day.
(C) Interest on RR Loans shall be paid monthly in arrears on the first
Business Day of each calendar month (for the immediately preceding month)
commencing with the month following any month during which interest begins
to accrue at a Floating Rate based on RR plus the RR Margin, as elected by
Borrower pursuant to Section 2.04(B), and on the date the principal of such
Loans shall be due (on the stated Facility Termination Date, on
acceleration, or otherwise).
2.05 General Provisions Relating to Interest. It is the intention of the
parties hereto to comply strictly with the usury Laws of the State of Texas and
the United States of America and, in this connection, there shall never be
collected, charged or received on any sums advanced hereunder interest in excess
of the Maximum Rate. For purposes of Chapter 303 of the Texas Finance Code, as
amended, the Borrower agrees that the maximum rate to be charged shall be the
"indicated (weekly) rate ceiling" as defined in said Chapter, provided that the
Bank 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 applicable Laws of the State of Texas or the United States of
America applicable to the Loans, if greater. 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 Maximum Rate and the
obligation of the Borrower for any fees payable hereunder and 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 the United States of America, the interest rate to
be charged hereunder shall remain at the Maximum Rate until such time as there
has been paid to each Bank (a) the amount of interest in excess of the Maximum
Rate that such Bank would have received during the Limitation Period had the
interest rate remained at the relevant rates specified in the Note, and (b) all
interest and fees otherwise due to such Bank but for the effect of such
Limitation Period.
If under any circumstances the aggregate amounts paid on the Notes or under
this Agreement include amounts which by Law are deemed interest and which would
exceed the amount permitted if the Maximum Rate were in effect, the Borrower
stipulates that such payment and collection will have been and will be deemed to
have been, to the extent permitted by applicable Laws of the State of Texas or
the United States of America, the result of mathematical error on the part of
both the Borrower and the Banks, and each Bank shall promptly refund the amount
of such excess (to the extent only of such interest payments above the Maximum
Rate which could lawfully have been collected and retained) upon discovery of
such error by such Bank or notice thereof from the Borrower.
2.06 Borrowing Base Determination. The Borrowing Base in effect as of the
Closing is One Hundred Forty Million Dollars ($140,000,000.00). The Borrowing
Base shall be re-determined semi-annually pursuant to the following provisions
of this Section. On or before October 1, 2002, the Borrower shall furnish to the
Administrative Agent information sufficient to update to an effective date of
July 1, 2002, the most recent Reserve Report provided to the Administrative
Agent prior to Closing relative to the Proved Reserves attributable to the
Borrowing Base Oil and Gas Properties. Upon receipt of such information, the
Arrangers shall, in the normal course of business, make a joint determination of
the Borrowing Base, which shall become effective upon approval by the Required
Banks and subsequent written notification from the Administrative Agent to the
Borrower, and which, subject to the other provisions of this Agreement, shall be
the basis on which the Borrowing Base shall thereafter be calculated until the
effective date of the next redetermination of the Borrowing Base as set forth in
this Section. Thereafter, on or before each April 1 and October 1 until the
Facility Termination Date, beginning April 1, 2003, the Borrower shall furnish
to the Administrative Agent a Reserve Report, in form and substance satisfactory
to the Administrative Agent, which report shall set forth, as of each preceding
January 1 or July 1, as applicable, the Proved Reserves attributable to the
Borrowing Base Oil and Gas Properties. Each Reserve Report that is due to be
submitted to the Administrative Agent on or before each April 1 shall be a
complete report prepared by an independent petroleum engineer or firm of
engineers acceptable to Administrative Agent, and each Reserve Report due to be
submitted on or before October 1 or each year shall be prepared under the
supervision of the chief petroleum engineer of Borrower and shall simply update,
to its effective date, the last complete Reserve Report provided to
Administrative Agent. Upon receipt of each such Reserve Report, the Arrangers
shall, in the normal course of business, make a joint determination of the
Borrowing Base which shall become effective upon approval by the Required Banks
and subsequent written notification from the Administrative Agent to the
Borrower, and which, subject to the other provisions of this Agreement, shall be
the basis on which the Borrowing Base shall thereafter be calculated until the
effective date of the next redetermination of the Borrowing Base as set forth in
this Section 2.06. The Arrangers may, subject to approval of the Required Banks,
and must, upon the request of the Required Banks, redetermine the Borrowing Base
at any time, and from time to time, which redetermination shall become effective
upon approval by the Required Banks and subsequent written notification from the
Administrative Agent to the Borrower and which, subject to the other provisions
of this Agreement, shall be the basis on which the Borrowing Base shall
thereafter be calculated until the effective date of the next redetermination of
the Borrowing Base, as set forth in this Section. Not more often than two times
in any calendar year, the Administrative Agent may request in writing that the
Borrower provide a Reserve Report regarding the Proved Reserves attributable to
the Borrowing Base Oil and Gas Properties with an effective date not more than
ninety (90) days prior to Borrower's delivery of such Reserve Report to
Administrative Agent, and such Reserve Report shall be delivered to
Administrative Agent within ninety (90) days after Borrower's receipt of such
written request.
The Borrower shall have the right to request, by written notice to
Administrative Agent, one unscheduled redetermination of the Borrowing Base
between any two scheduled redeterminations thereof, subject to contemporaneously
providing to Administrative Agent a Reserve Report with an effective date not
more than ninety (90) days prior to the date of such notice.
If at any time the Arrangers cannot otherwise agree on a redetermination of
the Borrowing Base, then the proposed Borrowing Base shall be set on the basis
of the Administrative Agent's calculation of the "weighted arithmetic average"
(as hereinafter calculated) of the Borrowing Base, as determined by each
Arranger and communicated to Administrative Agent in writing, and such Borrowing
Base, calculated by the Administrative Agent based on the "weighted arithmetic
average" of each Borrowing Base proposed by the respective Arrangers, shall then
be subject to the approval of the Required Banks. However, the amount of the
Borrowing Base shall never be increased at any time without the unanimous
consent of the Banks, notwithstanding anything else herein to the contrary. For
purposes of this paragraph, the "weighted arithmetic average" of the Borrowing
Base shall be determined by first multiplying the Borrowing Base proposed in
writing to Administrative Agent by each Arranger by the ratio such Arranger's
Percentage Share over the sum of the Percentage Shares of all Arrangers, and
then adding the results of each such calculation, with the resultant sum being
the Borrowing Base to be submitted to the Banks for approval as provided herein.
The Borrowing Base shall represent the Required Banks' approval of the
Arrangers' determination, in accordance with their customary lending practices,
of the maximum loan amount with respect to the Borrowing Base Oil and Gas
Properties and the Borrower acknowledges, for purposes of this Agreement, such
determination by the Arrangers as being the maximum loan amount that can be
supported by the Borrowing Base Oil and Gas Properties. In making any
redetermination of the Borrowing Base, the Arrangers and the other Banks shall
apply the parameters and other credit factors consistently applied, then
generally being utilized by the Arrangers and each such Bank, respectively, for
Borrowing Base redeterminations for other similarly situated borrowers. The
Borrower, Required Banks and the Arrangers acknowledge that (a) due to the
uncertainties of the oil and gas extraction process, the Borrowing Base Oil and
Gas Properties are not subject to evaluation with a high degree of accuracy and
are subject to potential rapid deterioration in value, and (b) for this reason
and the difficulties and expenses involved in liquidating and collecting against
the Borrowing Base Oil and Gas Properties, the Arrangers' determination of the
maximum loan amount with respect to the Borrowing Base Oil and Gas Properties
contains an equity cushion, which equity cushion is acknowledged by the Borrower
as essential for the adequate protection of the Banks.
2.07 Mandatory Prepayment Due to a Loan Excess. Within thirty (30) days
after receipt of written notice from Administrative Agent that a Loan Excess
exists, including, but not limited to, any notice establishing a redetermined
Borrowing Base that is less than the Aggregate Outstanding Credit Exposure,
Borrower shall either (i) prepay the principal of the Note in an aggregate
amount at least equal to such Loan Excess, or (ii) add to the Borrowing Base Oil
and Gas Properties additional Oil and Gas Properties of the Borrower sufficient
in value, as determined pursuant to Section 2.06, to increase the Borrowing Base
to equal the unpaid principal amount of the Notes.
2.08 Other Mandatory Prepayments.
(A) On each date on which the Borrower or any Guarantor sells any of
its Oil and Gas Properties, the Borrowing Base will be automatically
reduced to the loan value (determined in accordance with the procedures for
determining the Borrowing Base) of the remaining Borrowing Base Oil and Gas
Properties, and the Borrower shall be required to make the prepayment, if
any, required pursuant to Section 2.07.
(B) Nothwithstanding the provisions of Section 2.07, if on any date
the Outstanding Credit Exposure exceeds the amount of the then effective
Aggregate Commitment as a result of a reduction in the Borrowing Base, the
Borrower shall be required to immediately prepay the Loans by the amount of
such excess.
2.09 Prepayment and Conversion. Upon the Required Number of days written
notice to the Administrative Agent, the Borrower may, without the payment of
penalty or premium, prepay the principal of the Loans or voluntarily convert the
applicable Floating Rate of any Loan prior to the termination of the applicable
Interest Period in whole or in part, from time to time. Any partial payment or
conversion of RR Loans shall be made in the sum of not less than $1,000,000, and
any partial payment or conversion of LIBOR Loans shall be made in the sum of not
less than $1,000,000 or any $1,000,000 increment in addition thereto. With
respect to any such prepayment or conversion of any LIBOR Loan the Borrower
agrees to pay to the Banks upon the request of the Administrative Agent such
amount or amounts as will compensate the Banks for Breakage Costs, excluding,
however, any such Breakage Costs resulting from a payment or prepayment made
more than sixty (60) days prior to the Administrative Agent's request for
payment of Breakage Costs. The payment of any such Breakage Costs to the Banks
shall be made within thirty (30) days of a request therefor from Administrative
Agent. If LIBOR cannot be determined on the date of such prepayment, the
Administrative Agent shall calculate LIBOR by interpolating LIBOR in effect
immediately prior to the prepayment and LIBOR in effect immediately after the
prepayment.
2.10 Increased Cost of Loans.
(A) Notwithstanding any other provisions herein, if as a result of any
regulatory change after the date hereof
(1) the basis of taxation of payments to any Bank of the
principal of, or interest on, any LIBOR Loan or any other amounts due
under this Agreement in respect of any such LIBOR Loan (except for
taxes imposed on the overall net income or receipts of such Bank, and
franchise or other taxes imposed generally on such Bank), by the
jurisdiction (or any political subdivision therein) in which the Bank
has its principal office (if such other taxes do not specifically
affect the cost to the Bank of making the Loans) is changed;
(2) any reserve, special deposit, or similar requirement
(including without limitation any reserve requirement under
regulations of the Board of Governors of the Federal Reserve System)
against assets of, deposits with, or for the account of, or credit
extended by such Bank, is imposed, increased, modified, or deemed
applicable; or
(3) any other condition affecting this Agreement or any LIBOR
Loan is imposed on such Bank or (in the case of LIBOR Loans) the LIBOR
Market; and
the result of any of the foregoing is to increase the actual direct cost to
such Bank of making or maintaining any such LIBOR Loan (and such increase
shall not have been compensated by a corresponding increase in the interest
rate applicable to the respective Loans) by an amount deemed by such Bank
to be material (such increases in cost and reductions in amounts receivable
being herein called "Increased Costs"), then the Borrower shall pay such
Bank, within thirty (30) days after its written demand, such additional
amount or amounts as will compensate such Bank for those Increased Costs.
No Bank will demand to be compensated by Borrower for such Increased Costs
unless such Bank generally makes such demands to its other LIBOR Loan
customers who are similarly situated. A certificate of such Bank setting
forth the basis for the determination of such amount necessary to
compensate such Bank as aforesaid (including a representation by such Bank
that it is generally making demands as required by the preceding sentence),
accompanied by documentation showing reasonable support for such increased
costs or reduced sums received by such Bank, shall be delivered to the
Borrower and shall be conclusive, save for manifest error, as to such
determination and such amount. The affected Bank shall notify the Borrower,
as promptly as practicable after such Bank obtains knowledge of any
Increased Costs or other sums payable pursuant to this Section 2.10 and
determines to request compensation therefor, or any event occurring after
the Closing which will entitle such Bank to compensation pursuant to this
Section; provided that, notwithstanding anything herein to the contrary,
the Borrower shall not be obligated for the payment of any Increased Costs
or other sums payable pursuant to this Section 2.10 to the extent such
Increased Costs or other sums accrued more than 90 days prior to the date
upon which the Borrower was given such notice. If the Borrower is required
to indemnify or pay additional amounts pursuant to this Section 2.10, then
the Bank will take such action as in the reasonable judgment of the Bank
(i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise commercially unreasonable. The
Bank shall use its reasonable efforts to obtain in a timely fashion any
refund, deduction or credit of any taxes paid or reimbursed by the Borrower
pursuant to this Section 2.10. If the Bank receives a benefit in the nature
of a refund, deduction or credit (including a refund in the form of a
deduction from or credit against taxes that are otherwise payable by the
Bank) of any taxes with respect to which the Borrower has made a payment
under Section 2.10, the Bank agrees to reimburse the Borrower to the extent
of the benefit of such refund, deduction or credit promptly after the Bank
reasonably determines that such refund deduction or credit has become
final; provided, however, that nothing contained in this paragraph shall
require the Bank to make available its tax returns (or any other
information relating to its taxes which it deems to be confidential) or to
attempt to obtain any such refund, deduction or credit, which attempt would
be inconsistent with any reporting position otherwise taken by the Bank on
its tax returns.
(B) Notwithstanding the foregoing provisions of this Section 2.10, in
the event that by reason of any regulatory change any Bank either (i)
incurs Increased 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 Bank that includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Bank that
includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Bank so elects by written notice to the Borrower, the obligation of such
Bank to make or convert Loans of any other type into LIBOR Loans hereunder
shall be suspended until the earlier of the date such regulatory change
ceases to be in effect or the date the Borrower and such Bank agree upon an
alternative method of determining the interest rate payable by the Borrower
on LIBOR Loans, and all LIBOR Loans of such Bank then outstanding shall be
converted into an RR Loan (if not otherwise prohibited under the terms of
this Agreement) at such Bank's option.
2.11 Change of Law. Notwithstanding any other provision herein, in the
event that any change in any Applicable Law or in the interpretation or
administration thereof shall make it unlawful for the Banks to (i) honor any
commitment it may have hereunder to make any LIBOR Loan, then such commitment
shall terminate, or (ii) maintain any LIBOR Loan, then all LIBOR Loans of the
Banks then outstanding shall be repaid and converted to RR Loans (unless the
Banks' obligations to fund Loans hereunder has been suspended by any other
provisions of this Agreement) at the Borrower's option in accordance with the
election procedures set forth in Section 2.04(B); provided, however, that prior
to the effective date of such election, interest shall be calculated at the RR.
Any remaining commitment of the Banks hereunder to make LIBOR Loans (but not
other Loans) shall be suspended so long as they are prohibited by any applicable
law. Upon the occurrence of any such change, the Administrative Agent shall
promptly notify the Borrower thereof, and shall furnish to the Borrower in
writing evidence thereof certified by the Administrative Agent.
Any repayment or conversion of any LIBOR Loan which is required under this
Section 2.11 or under 2.04(B) shall be effected by payment thereof, together
with accrued interest thereon, on demand, and concurrently there shall occur the
borrowing of the corresponding RR Loan as provided herein.
If any repayment to the Banks of any LIBOR Loan (including conversions
thereof) is made under this Section 2.11 on a day other than a day otherwise
scheduled for a payment of principal of or interest on such Loan, the Borrower
shall pay to the Banks upon the request of the Administrative Agent such amount
or amounts as will compensate the Banks for Breakage Costs, excluding, however,
any such Breakage Costs resulting from a prepayment or conversion made more than
sixty (60) days prior to the Administrative Agent's request for payment of
Breakage Costs. The payment of any such Breakage Costs to the Banks shall be
made within thirty (30) days of a request therefor from Administrative Agent.
2.12 Mitigation: Mandatory Assignment. Each Bank shall use reasonable
efforts to avoid or mitigate any Increased Cost or suspension of the
availability of an interest rate under Sections 2.09 through 2.10 above, to the
greatest extent practicable (including transferring the Loans to another lending
office or Affiliate of a Bank) unless, in the opinion of such Bank, such efforts
would be likely to have an adverse effect upon it. In the event a Bank makes a
request to the Borrower for additional payments in accordance with Sections 2.09
or 2.10, then, provided that no Event of Default or Unmatured Event of Default
has occurred and is continuing at such time, the Borrower may, at its own
expense and in its sole discretion, require such Bank to transfer and assign in
whole (but not in part), without recourse, all of its interests, rights and
obligations under this Agreement to an assignee which shall assume such assigned
obligations (which assignee may be another Bank, if a Bank accepts such
assignment); provided that (a) such assignment shall not conflict with any law,
rule or regulation or order of any court or other governmental authority and (b)
the Borrower or such assignee shall have paid to the Administrative Agent for
the account of the assigning Bank in immediately available funds the principal
of and interest accrued to the date of such payment on the portion of the Loans
hereunder held by such assigning Bank and all other amounts owed to such
assigning Bank hereunder, including amounts owed pursuant to Sections 2.09 and
2.10 hereof, and such assignment shall otherwise comply with Section 9.05,
including without limitation the payment of the assignment fee payable to
Administrative Agent under Section 9.05.
2.13 Pro Rata Treatment and Payments. Each Borrowing by Borrower from the
Banks hereunder, each payment by Borrower on account of any fee hereunder and
any reduction of the Commitments of the Banks shall be made pro rata according
to the respective Percentage Shares of the Banks. Each payment (including each
prepayment) by Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Loans then held by the Banks. The Administrative Agent shall distribute
such payments to the Banks promptly upon receipt in like funds as received.
2.14 Sharing of Payments and Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
Borrower (pursuant to Section 7.05, Section 9.01 or otherwise), including, but
not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, or by similar means, obtain payment
(voluntary or involuntary) in respect of any Loan or Loans (other than pursuant
to Section 2.10) as a result of which the unpaid principal portion of its Loans
shall be proportionately less than the unpaid principal portion of the Loans of
any other Bank, it shall simultaneously purchase from such other Banks at face
value a participation in the Loans of such other Banks, so that the aggregate
unpaid principal amount of Loans and participations in Loans held by each Bank
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff, counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff, counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.14
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest.
2.15 Commitment Fee. As consideration for the commitment of the Banks to
make Credit Extensions to the Borrower through the Facility Termination Date
pursuant to this Agreement, the Borrower agrees to pay to the Administrative
Agent for the account of the Banks within five (5) Business Days after the end
of each quarterly period ending March 31, June 30, September 30 and December 31
of each year (except the first period shall be for a period of time from the
Closing to June 30, 2002) during the period commencing on the date of this
Agreement to and including the Facility Termination Date and at the Facility
Termination Date, a commitment fee equal to the percentage per annum specified
in the Pricing Grid based on the Utilization Percentage (computed on the basis
of a year of 360 days) multiplied by an amount equal to the daily average
excess, if any, of the Aggregate Commitment Amount over the Outstanding Credit
Exposure, throughout the period from the date of this Agreement or previous
calculation date provided above, whichever is later, to the relevant calculation
date or the Facility Termination Date, as the case may be.
2.16 Borrowing Base Increase Fee. To the extent that the Borrowing Base is
increased to an amount that exceeds the largest amount of Borrowing Base in
existence at any time prior to such increase, a fee of one half percent (0.50%)
of the incremental amount of any increases in the Borrowing Base subsequent to
Closing ("Borrowing Base Increase Fee") shall be due upon such increased
Borrowing Base becoming effective. The Borrowing Base Increase Fee shall be paid
by Borrower to Administrative Agent, and Administrative Agent shall promptly
thereafter remit to each Bank such Bank's Percentage Share of such Borrowing
Base Increase Fee.
2.17 Agent's Fee. At Closing and on each anniversary of the Closing,
Borrower shall pay to Administrative Agent a fee (the "Agent's Fee") of
$75,000.00. Administrative Agent shall promptly thereupon remit one-third of
this Agent's Fee to each Arranger.
2.18 Addition of Borrowing Base Oil & Gas Properties. The Borrower may,
from time to time upon written notice to the Administrative Agent, propose to
add Oil and Gas Properties of the Borrower to the Borrowing Base Oil and Gas
Properties. Any such proposal to add Oil and Gas Properties of the Borrower to
the Borrowing Base Oil and Gas Properties shall be accompanied by a Reserve
Report applicable to such properties that conforms to the requirements of
Section 2.06, and evidence sufficient to establish that Borrower (or either of
them) has Defensible Title to such Oil and Gas Properties, and any such addition
shall become effective at such time as: (a) the Arrangers, with the approval of
the Banks, have made a determination of the amount by which the Borrowing Base
would be increased as the result of such addition and (b) the conditions set
forth in Article III hereof, to the extent they are applicable to such
additional Oil and Gas Properties of the Borrower, have been satisfied. In
determining the increase in the Borrowing Base pursuant to this Section, the
Arrangers and the Banks shall apply the parameters and other credit factors
consistently applied then generally being utilized by the Arrangers and each
such Bank, respectively, for Borrowing Base determinations for other similarly
situated borrowers
2.19 Adjustment to Aggregate Commitment Amount. At any time that Borrower
proposes to increase the Borrowing Base by adding additional Oil and Gas
Properties to the Borrowing Base Oil and Gas Properties pursuant to Section
2.18, Borrower may also request that Banks increase the amount of the Aggregate
Commitment Amount. At any time that Borrower makes such a request it shall
promptly provide Administrative Agent with such financial information as
Administrative Agent may request to assist the Administrative Agent in
evaluating such request. Following the receipt of such information from
Borrower, the Arrangers shall, with the unanimous approval of the Banks in each
Bank's sole discretion, make a redetermination of the Aggregate Commitment
Amount, which shall become effective upon written notification from the
Administrative Agent to Borrower of the new Aggregate Commitment Amount. The
Borrower may upon written notice to Administrative Agent, not sooner than one
hundred eighty (180) days subsequent to the last such action by Borrower, amend
the definition of the Aggregate Commitment Amount by reducing the amount set
forth in such definition. Upon such reduction, the Banks shall not be obligated
to make Credit Extensions in excess of such reduced Aggregate Commitment Amount.
If and when the Banks change the Aggregate Commitment Amount at Borrower's
request, the commitment fee, as determined pursuant to Section 2.15 of this
Agreement, shall be calculated using such changed amount for all of the
calculation period in which such Aggregate Commitment Amount was changed.
2.20 Facility LCs.
(A) Issuance. The LC Issuer hereby agrees, on the terms and conditions
set forth in this Agreement, to issue standby letters of credit (each, a
"Facility LC") and to renew, extend, increase, decrease or otherwise modify
each Facility LC ("Modify," and each such action a "Modification"), from
time to time from and including the date of this Agreement and prior to the
Facility Termination Date upon the request of the Borrower; provided that
immediately after each such Facility LC is issued or Modified, (i) the
aggregate amount of the outstanding LC Obligations shall not exceed Seven
Million, Five Hundred Thousand Dollars ($7,500,000.00) and (ii) the
Aggregate Outstanding Credit Exposure shall not exceed the Aggregate
Commitment Amount. Facility LC's issued pursuant to the Original Credit
Agreement or the First Amended Credit Agreement and outstanding as of the
Closing of this Agreement shall also constitute Facility LCs hereunder. No
Facility LC shall have an expiry date later than the earlier of (x) the
thirtieth (30th) day prior to the Facility Termination Date and (y)
eighteen (18) months after its issuance.
(B) Participations. Upon the issuance or Modification by the LC Issuer
of a Facility LC in accordance with this Section 2.20, the LC Issuer shall
be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Bank, and each Bank shall be
deemed, without further action by any party hereto, to have unconditionally
and irrevocably purchased from the LC Issuer, a participation in such
Facility LC (and each Modification thereof) and the related LC Obligations
in proportion to its Percentage Share.
(C) Notice. Subject to Section 2.20(A), the Borrower shall give the LC
Issuer notice prior to 10:00 a.m. (Los Angeles, California time) at least
five Business Days prior to the proposed date of issuance or Modification
of each Facility LC, specifying the beneficiary, the proposed date of
issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC and the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice,
the LC Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Bank, of the contents
thereof and of the amount of such Bank's participation in such proposed
Facility LC. The issuance or Modification by the LC Issuer of any Facility
LC shall, in addition to the conditions precedent set forth in Article III
(the satisfaction of which the LC Issuer shall have no duty to ascertain),
be subject to the conditions precedent that such Facility LC shall be
satisfactory to the LC Issuer and that the Borrower shall have executed and
delivered such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall have
reasonably requested (each, a "Facility LC Application"). In the event of
any conflict between the terms of this Agreement and the terms of any
Facility LC Application, the terms of this Agreement shall control. Each
notice required or permitted to be given under this Section 2.20(C) by any
party to any other party may be given by fax to the fax contact numbers
specified for such party on Schedule 2.20(C) attached hereto.
(D) LC Fees. The Borrower shall pay to the Administrative Agent, for
the account of the Banks ratably in accordance with their respective
Percentage Shares, with respect to each Facility LC, a letter of credit fee
at a rate as specified in the Pricing Grid based on the Utilization
Percentage applicable at the time of issuance of the Facility LC, but not
less than $500.00 per Facility LC per annum, such fee to be payable in
arrears on or before the first Business Day of each calendar month (each
such fee described in this sentence an "LC Fee"). The Borrower shall also
pay to the LC Issuer for its own account (x) at the time of issuance of
each Facility LC, a fronting fee calculated at the rate of twelve and
five-tenths (12.5) basis points per annum pro-rated over the term, and (y)
documentary and processing charges in connection with the issuance or
Modification of and draws under Facility LCs in accordance with the LC
Issuer's standard schedule for such charges as in effect from time to time.
(E) Administration; Reimbursement by Banks. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Administrative Agent and the
Administrative Agent shall promptly notify the Borrower and each other Bank
as to the amount to be paid by the LC Issuer as a result of such demand and
the proposed payment date (the "LC Payment Date"). The responsibility of
the LC Issuer to the Borrower and each Bank shall be only to determine that
the documents (including each demand for payment) delivered under each
Facility LC in connection with such presentment shall be in conformity in
all material respects with such Facility LC. The LC Issuer shall endeavor
to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any
gross negligence or willful misconduct by the LC Issuer, each Bank shall be
unconditionally and irrevocably liable without regard to the occurrence of
any Default or any condition precedent whatsoever, to reimburse the LC
Issuer on demand for (i) such Bank's Percentage Share of the amount of each
payment made by the LC Issuer under each Facility LC to the extent such
amount is not reimbursed by the Borrower pursuant to Section 2.20(F) below,
plus (ii) interest on the foregoing amount to be reimbursed by such Bank,
for each day from the date of the LC Issuer's demand for such reimbursement
(or, if such demand is made after 10:00 a.m. (Los Angeles, California time)
on such date, from the next succeeding Business Day) to the date on which
such Bank pays the amount to be reimbursed by it, at a rate of interest per
annum equal to the Federal Funds Effective Rate for the first three days
and, thereafter, at a rate of interest equal to the Floating Rate based on
RR.
(F) Reimbursement by Borrower. The Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the
applicable LC Payment Date for any amounts to be paid by the LC Issuer upon
any drawing under any Facility LC, without presentment, demand, protest or
other formalities of any kind; provided that neither the Borrower nor any
Bank shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrower or such Bank to the extent,
but only to the extent, caused by (i) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented
under any Facility LC issued by it complied with the terms of such Facility
LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by
it after the presentation to it of a request strictly complying with the
terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the Borrower shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to (x) the rate
applicable to RR Loans for such day if such day falls on or before the
applicable LC Payment Date and (y) the sum of 2% plus the rate applicable
to RR Loans for such day if such day falls after such LC Payment Date. The
LC Issuer will pay to each Bank ratably in accordance with its Percentage
Share all amounts received by it from the Borrower for application in
payment, in whole or in part, of the Reimbursement Obligation in respect of
any Facility LC issued by the LC Issuer, but only to the extent such Bank
has made payment to the LC Issuer in respect of such Facility LC pursuant
to Section 2.20(E). Subject to the terms and conditions of this Agreement
(including without limitation the submission of a Request for Advance in
compliance with Section 2.02 and the satisfaction of the applicable
conditions precedent set forth in Article III), the Borrower may request a
Loan hereunder for the purpose of satisfying any Reimbursement Obligation.
(G) Obligations Absolute. The Borrower's obligations under this
Section 2.20 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the LC Issuer, any
Bank or any beneficiary of a Facility LC. The Borrower further agrees with
the LC Issuer and the Banks that the LC Issuer and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, any of
its Affiliates, the beneficiary of any Facility LC or any financing
institution or other party to whom any Facility LC may be transferred or
any claims or defenses whatsoever of the Borrower or of any of its
Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Facility LC. The
Borrower agrees that any action taken or omitted by the LC Issuer or any
Bank under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct,
shall be binding upon the Borrower and shall not put the LC Issuer or any
Bank under any liability to the Borrower. Nothing in this Section 2.20(G)
is intended to limit the right of the Borrower to make a claim against the
LC Issuer for damages as contemplated by the proviso to the first sentence
of Section 2.20(F).
(H) Actions of LC Issuer. The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document 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, independent accountants and other experts
selected by the LC Issuer. The LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Required Banks as it
reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.20, the LC Issuer shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request
of the Required Banks, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Banks and any future holders
of a participation in any Facility LC.
(I) Indemnification. The Borrower hereby agrees to indemnify and hold
harmless each Bank Party and their respective directors, officers, agents
and employees from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank Party may incur (or which
may be claimed against such Bank Party by any Person whatsoever) by reason
of or in connection with the issuance, execution and delivery or transfer
of or payment or failure to pay under any Facility LC or any actual or
proposed use of any Facility LC, including, without limitation, any claims,
damages, losses, liabilities, costs or expenses which the LC Issuer may
incur by reason of or in connection with (i) the failure of any other Bank
to fulfill or comply with its obligations to the LC Issuer hereunder (but
nothing herein contained shall affect any rights the Borrower may have
against any defaulting Bank) or (ii) by reason of or on account of the LC
Issuer issuing any Facility LC which specifies that the term "Beneficiary"
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify
any Bank Party for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (x) the willful
misconduct or gross negligence of the LC Issuer in determining whether a
request presented under any Facility LC complied with the terms of such
Facility LC or (y) the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of such Facility LC. Nothing in this Section 2.20(I) is
intended to limit the obligations of the Borrower under any other provision
of this Agreement.
(J) Banks' Indemnification. Each Bank shall, ratably in accordance
with its Percentage Share, indemnify the LC Issuer, its affiliates and
their respective directors, officers, agents and employees (to the extent
not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of the Facility LC) that such indemnitees may suffer or
incur in connection with this Section 2.20 or any action taken or omitted
by such indemnitees hereunder.
(K) Rights as a Bank. In its capacity as a Bank, the LC Issuer shall
have the same rights and obligations as any other Bank.
2.21 Advances to Satisfy Obligations of the Borrower. The Administrative
Agent or any Bank may, but shall not be obligated to, make advances hereunder
for the benefit of the Banks and apply same to the satisfaction of any
condition, warranty, representation or covenant of the Borrower contained in
this Agreement, and the funds so advanced and applied shall be part of the Loan
proceeds advanced under this Agreement and evidenced by the Notes.
2.22 Assignment of Production. Certain of the Security Instruments covering
the Borrowing Base Oil and Gas Properties contain an assignment unto and in
favor of Collateral Agent for the benefit of the Banks of all oil, gas and other
minerals produced and to be produced from or attributable to the Borrowing Base
Oil and Gas Properties together with all of the revenues and proceeds
attributable to such production, and such Security Instruments further provide
that all such revenues and proceeds which may be so collected by the Collateral
Agent for the benefit of the Banks pursuant to the assignment shall be applied
to the payment of the Notes and the satisfaction of all other Indebtedness to be
secured by such Security Instruments. The Borrower hereby appoints the
Collateral Agent as its agent and attorney-in-fact until this Agreement has been
terminated in accordance with Section 9.19 hereof for purposes of completing the
Transfer Order Letters delivered to the Collateral Agent pursuant to Section
3.02(B) hereof, which power is coupled with an interest and is not revocable.
ARTICLE III.
CONDITIONS
The obligation of the Banks to make the Credit Extensions is subject to the
following conditions precedent:
3.01 General Conditions to Closing and to all Disbursements. At the time of
the execution and delivery of this Agreement by all parties who are designated
as signatories on the signature pages of this Agreement (the "Closing") and at
each subsequent Credit Extension:
(A) No Event of Default shall have occurred and be continuing, and no
Unmatured Event of Default shall have occurred;
(B) The representations and warranties contained in Article IV of this
Agreement shall be true and correct in all material respects as though such
representations and warranties had been made on such date, except such as
are expressly limited to a prior date, which shall have been true and
correct in all material respects as of such prior date;
(C) The Collateral Agent and the Banks shall have been, and shall
continue to be, satisfied, in their good faith discretion, that the
Borrower (individually or collectively) holds Defensible Title to the
Borrowing Base Oil and Gas Properties, and that such ownership includes
record title to an undivided net revenue interest in the production from
each such Borrowing Base Oil and Gas Property that is not less than, as
well as an undivided working interest in each Borrowing Base Oil and Gas
Property that is not greater than (unless there is a corresponding increase
in the net revenue interest attributed to such party therein), the net
revenue interest therein and the working interest therein, respectively,
attributed to the Borrower on Exhibit "A," subject to the limitations and
qualifications on such exhibit (or attributed to Borrower in any Security
Instrument applicable to any Oil and Gas Property that is added to the
Borrowing Base Oil and Gas Properties in connection with any subsequent
funding after the Closing);
(D) No Material Adverse Change shall have occurred since the date of
the latest audited Financial Statements provided to the Administrative
Agent;
(E) All of the Prior Security Instruments delivered with respect to
the Borrowing Base Oil and Gas Properties shall have remained in full force
and effect; and
(F) All legal matters incidental thereto shall be reasonably
satisfactory to legal counsel designated by the Administrative Agent.
3.02 Deliveries at the Closing. The Borrower shall have duly delivered or
caused to be delivered to the Collateral Agent, prior to or contemporaneously
with the Closing, the following:
(A) The Notes payable to each respective Bank, along with the Security
Instruments covering each of the Borrowing Base Oil and Gas Properties.
(B) Transfer Order Letters applicable to the production of oil and gas
from any Borrowing Base Oil and Gas Properties for which Transfer Order
letters have not previously been delivered to the Administrative Agent.
(C) The results of a Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against the
Borrower in the Offices of the Secretaries of State of the State of Texas,
the State of Delaware, the State of Louisiana and each State in which any
of the Borrowing Base Oil and Gas Properties are located or deemed to be
located, and the counties and/or parishes in which the Borrower maintains
its principal place of business and in which any of the Borrowing Base Oil
and Gas Properties are located, such search to be as of a date no more than
ten (10) days prior to the date of Closing.
(D) A certified (as of the date of the Closing) copy of resolutions of
Borrower's and each Guarantor's Governing Body authorizing the execution,
delivery, and performance of this Agreement, the Notes, and each other
document to be delivered pursuant hereto;
(E) A certificate (dated the date of the Closing) of Borrower's and
each Guarantor's corporate secretary as to the incumbency and signatures of
the officers of the Borrower or such general partner and each Guarantor
signing this Agreement, the Notes, and each other document to be delivered
pursuant hereto;
(F) A copy, certified as of the most recent date practicable by the
Secretary of State of the state in which Borrower and each Guarantor was
formed, of the Borrower's and each Guarantor's Certificate of Formation,
together with a certificate (dated the date of the Closing) of the
Borrower's and each Guarantor's corporate secretary to the effect true and
complete copies of the Borrower's and each Guarantor's Governing
Documentation are attached thereto and that such Governing Documentation
has not been amended except as described therein;
(G) Certificates, as of the most recent dates practicable, of the
aforesaid Secretaries of State, the Secretary of State of each state in
which the Borrower, each general partner thereof and each Guarantor is
qualified as a foreign Business Entity and the department of revenue or
taxation of each of the foregoing states, as to the good standing of the
Borrower, each general partner therein and each Guarantor;
(H) A Compliance Certificate, dated the date of the Closing;
(I) Payment of the Administrative Agent's and Collateral Agent's
attorneys' fees upon receipt of a reasonably detailed invoice pursuant to
Section 5.12 hereof; and
(J) A legal opinion or opinions of outside counsel to the Borrower and
Guarantors, addressed to the Bank Parties, in form and substance reasonably
satisfactory to the Administrative Agent, covering, among other matters
reasonably requested by Administrative Agent or its counsel, the matters
addressed in Sections 4.01, 4.02, 4.03, 4.20 and 4.21 hereof and in Section
4(d) of the Guaranty.
(K) Duly executed counterparts of the Guaranty of each Guarantor.
(L) Duly executed assignments, in form and substance satisfactory to
the Collateral Agent, of the Third Restated Agreement Notes, the Prior
Security Instruments securing same, the Third Restated Agreement and all
rights associated therewith from the holders of the Third Restated
Agreement Notes to the Banks, in accordance with their respective
percentage shares, along with the original Third Restated Agreement Notes
duly endorsed by the holder of each note to the Banks, in their respective
percentage shares.
3.03 Documents Required for Subsequent Disbursements Involving
Additional Borrowing Base Oil and Gas Properties. As of the time of funding
any additional advances to Borrower that have been approved by the Banks
pursuant to Section 2.01 and are made in conjunction with the addition of
Oil and Gas Properties owned by the Borrower or any Guarantor to the
Borrowing Base Oil and Gas Properties, the Borrower or such Guarantor shall
have duly delivered to the Administrative Agent: (i) the Security
Instruments that are necessary or appropriate, in the reasonable opinion of
the Administrative Agent, relating to such additional Oil and Gas
Properties, and (ii) Transfer Order Letters applicable to the production of
oil and gas from the such additional Borrowing Base Oil and Gas Properties.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Banks to enter into this
Agreement and to make the Credit Extensions hereunder, Borrower represents and
warrants to the Administrative Agent and the Banks that:
4.01 Existence. The Borrower is a Business Entity of the type specified for
such Borrower on the signature pages of this Agreement, duly organized, legally
existing, and in good standing under the Laws of the State in which it was
organized; the Borrower has the lawful power to own their properties and to
engage in the businesses it conducts, and it is duly qualified and in good
standing as a foreign Business Entity in the jurisdictions wherein the nature of
the business transacted by it or property owned by it makes such qualification
necessary; the states in which the Borrower is incorporated or organized and
qualified to do business are set forth in Schedule 4.01; the addresses of all
places of business of the Borrower are as set forth in Schedule 4.01; Borrower
has not changed its name, been the surviving company in a merger, acquired any
business, or changed its principal executive office within five (5) years and
one (1) month prior to the date hereof; and Borrower has no Subsidiaries other
than the Guarantors. Borrower and each Guarantor is qualified under applicable
Minerals Management Service regulations to act as the operator of the Leases
where required.
4.02 Due Authorization. Upon execution of the Loan Documents, the execution
and delivery by the Borrower of this Agreement, the Notes, and the borrowings
hereunder; the execution and delivery by the Borrower and each Guarantor of the
Security Instruments and the Transfer Order Letters to which each is a party;
and the repayment by the Borrower of the Indebtedness evidenced by the Notes and
interest and fees provided in the Notes and this Agreement are (a) within the
Corporate Power of the Borrower and each Guarantor, as applicable; (b) have been
duly authorized by all necessary Corporate Action, and (c) do not and will not
(i) require the consent of any regulatory authority or governmental body, (ii)
contravene or conflict with any provision of Law or of the Governing
Documentation of the Borrower or any Guarantor, (iii) contravene or conflict
with any indenture, instrument or other agreement to which the Borrower or any
Guarantor is a party or by which its property may be presently bound or
encumbered, or (iv) result in or require the creation or imposition of any
mortgage, lien, pledge, security interest, charge or other encumbrance in, upon
or of any of the properties or assets of the Borrower or any Guarantor under any
such indenture, instrument or other agreement, other than under any of the
Security Instruments.
4.03 Valid and Binding Obligations. This Agreement, the Notes, the Security
Instruments and the other Loan Documents when duly executed and delivered, will
be legal, valid and binding obligations of and enforceable against the Borrower,
in accordance with their respective terms (subject to any applicable bankruptcy,
insolvency or other Laws of general application affecting creditors' rights,
general equitable principles, whether considered in a proceeding in equity or at
law, and judicial decisions interpreting any of the foregoing).
4.04 Scope and Accuracy of Financial Statements. All Financial Statements
submitted and to be submitted to the Administrative Agent hereunder are and will
be complete and correct in all material respects, are and will be prepared in
accordance with GAAP consistently applied, and do and will fairly reflect the
consolidated financial condition and the results of the operations of the
Borrower and the Guarantors in all material respects as of the dates and for the
period stated therein (subject only to normal year-end audit adjustments with
respect to such unaudited interim statements of the Borrower), and no Material
Adverse Change has occurred since the effective date of the latest audited
Financial Statements of Borrower delivered to Administrative Agent.
4.05 Title to Borrowing Base Oil and Gas Properties. The Borrower and
Guarantors have Defensible Title to the working and net revenue interests in the
Borrowing Base Oil and Gas Properties as set forth on Exhibit "A", free and
clear of all mortgages, liens and encumbrances, except for Permitted
Encumbrances and any other exceptions, limitations or qualifications expressly
disclosed on Exhibit "A."
4.06 Oil and Gas Leases. The Leases which constitute any part of the
Borrowing Base Oil and Gas Properties are in full force and effect as to those
portions within the Borrowing Base Oil and Gas Properties, are valid, subsisting
leases as to those portions within the Borrowing Base Oil and Gas Properties to
which they pertain and all rentals, royalties and other amounts due and payable
in accordance with the terms of the Leases as to those portions within the
Borrowing Base Oil and Gas Properties, overriding royalties, net profits or
other production burdens have been duly paid or provided for; the obligations to
be performed under the Leases as to those portions within the Borrowing Base Oil
and Gas Properties have been duly performed; and the Borrower is not aware of
any default by any third party under any of the Leases with respect to such
third party's obligations.
4.07 Interest in the Borrowing Base Oil and Gas Properties. Except as
otherwise set forth on Exhibit "A" hereto, with respect to each of the Borrowing
Base Oil and Gas Properties, the ownership of the Borrower and Guarantors in
such property will, with respect to the ▇▇▇▇▇, units and/or tracts of land
described in Exhibit "A" hereto in connection with such property, (i) entitle
the Borrower or Guarantors, as applicable, to receive (subject to the terms and
provisions of this Agreement) a decimal share of the oil and gas produced from,
or allocated to, such ▇▇▇▇▇, units and/or tracts equal to not less than the
decimal share set forth in Exhibit "A" in connection with such ▇▇▇▇▇, units
and/or tracts, and (ii) cause the Borrower or Guarantors, as applicable, to be
obligated to bear a decimal share of the cost of exploration, development and
operation of such ▇▇▇▇▇, units and/or tracts of land not greater than the
decimal share set forth in Exhibit "A" in connection with such ▇▇▇▇▇, units
and/or tracts, unless any increase in the Borrower's or Guarantors, as
applicable, share of costs is accompanied by a pro-rata increase in the
Borrower's or Guarantors, as applicable, share of revenue. Except as set forth
in the instrument and agreements, if any, more particularly described in Exhibit
"A" hereto, all such shares of production which the Borrower or Guarantors, as
applicable, is entitled to receive, and shares of expenses which the Borrower or
Guarantors, as applicable, is obligated to bear, are not subject to change,
except for changes attributable to future elections by the Borrower or
Guarantors, as applicable, not to participate in operations proposed pursuant to
customary forms of applicable joint operating agreements, and except for changes
attributable to changes in participating areas under any federal units wherein
participating areas may be formed, enlarged or contracted in accordance with the
rules and regulations of the applicable governmental authority.
4.08 Oil and Gas Contracts. Except as set forth on Schedule 4.08 attached
hereto, neither Borrower nor any Guarantor is obligated, by virtue of any
prepayment under any contract providing for the sale by the Borrower or
Guarantor of Hydrocarbons which contains a "take-or-pay" clause or under any
similar prepayment agreement or arrangement, including, without limitation, "gas
balancing agreements", to deliver a material amount of Hydrocarbons produced
from the Borrowing Base Oil and Gas Properties at some future time without then
or thereafter receiving full payment therefor (i.e., in the case of oil, not in
excess of sixty (60) days, and in the case of gas, not in excess of ninety (90)
days). Except as set forth on Schedule 4.08 attached hereto, the Borrowing Base
Oil and Gas Properties are not subject to any contractual, or other arrangement
for the sale of crude oil which cannot be canceled on ninety (90) days' (or
less) notice, unless the price provided for therein is equal to or greater than
the prevailing market price in the vicinity. The Borrowing Base Oil and Gas
Properties are not subject to any gas sales contract that contains any material
terms which are not customary in the industry within the region in which the
Borrowing Base Oil and Gas Properties affected thereby are located. The
Borrowing Base Oil and Gas Properties are not subject to any regulatory refund
obligation and no facts exist which might cause the same to be imposed.
4.09 Producing ▇▇▇▇▇. All producing ▇▇▇▇▇ located on the Borrowing Base Oil
and Gas Properties have been, during all times that such were under the
direction or control of the Borrower and, to the knowledge of the Borrower, at
all other times, drilled, operated and produced in conformity with all
applicable Laws, rules, regulations and orders of all regulatory authorities
having jurisdiction, are subject to no penalties on account of past production,
and are bottomed under and are producing from, and the well bores are wholly
within, the Borrowing Base Oil and Gas Properties, or on Oil and Gas Properties
which have been pooled, unitized or communitized with the Borrowing Base Oil and
Gas Properties.
4.10 Purchasers of Production. The persons who are purchasing the
Borrower's or any Guarantor's interests in oil and gas produced from the
Borrowing Base Oil and Gas Properties as of the calendar month during which the
initial Loans are made hereunder are identified on Schedule 4.10 attached
hereto.
4.11 Authorizations and Consents. No authorization, consent, approval,
exemption, franchise, permit or license of, or filing with, any governmental or
public authority or any third party is required to authorize, or is otherwise
required in connection with the valid execution and delivery by the Borrower or
any Guarantor of this Agreement, the Notes, and the Security Instruments, or any
other instrument contemplated hereby to which such Person is a party, the
repayment by the Borrower of advances against the Notes and interest and fees
provided in the Notes and this Agreement, or the performance by the Borrower or
any Guarantor of its obligations under any of the foregoing.
4.12 Environmental Laws. Except to the extent that the failure to do so
would not have and would not be expected to have a Material Adverse Effect, the
Borrower and each Guarantor (a) is and has in the past been in compliance with
all Environmental Laws and all permits, requests and notifications relating to
health, safety or the environment applicable to the Borrower or Guarantors or
any of its properties, assets, operations and businesses; (b) has obtained and
adhered to and currently possesses all necessary permits and other approvals,
including interim status under the Federal Resource Conservation and Recovery
Act, necessary to store, dispose of and otherwise handle Hazardous Substances
and to operate its properties, assets and businesses; (c) has reported, to the
extent required by all federal, state and local statutes, Laws, ordinances,
regulations, rules, permits, judgments, orders and decrees, all past and present
sites owned and/or operated by the Borrower or any Guarantor where any Hazardous
Substance has been released, treated, stored or disposed of and (d) has not
used, stored, or Released any Hazardous Substance in excess of amounts allowed
by Environmental Law. There is (x) no location on any property currently or
previously owned or operated by the Borrower where Hazardous Substances are
known to have entered or are likely to enter into the soil or groundwater or
such property, other than immaterial releases of oil or natural gas in the
ordinary course of business none of which releases (i) either individually, or
in the aggregate, has had or may be expected to have a Material Adverse Effect
or (ii) has violated or may be expected to violate any Environmental Laws,
except for any such violation that has not had and would not be expected to have
a Material Adverse Effect, and (y) no on-site or off-site location to which the
Borrower or any Guarantor has released or transported Hazardous Substances or
arranged for the transportation or disposal of Hazardous Substances, which is or
is likely to be the subject of any federal, state, local or foreign enforcement
action or any investigation which could lead to any material claims against any
such entity for any clean-up cost, remedial work, damage to natural resources,
common law or legal liability, including, but not limited to, claims under
Comprehensive Environmental Response, Compensation, and Liability Act. For the
purposes of this Section, references to "the Borrower" and "the Guarantor(s)"
shall include all predecessors, successors-in- interest of the Borrower or any
Guarantor.
4.13 Compliance with Laws, Rules, Regulations and Orders. Except to the
extent that the failure to comply would not materially interfere with the
conduct of the business of the Borrower or Guarantor, Borrower and each
Guarantor has complied with all applicable Laws with respect to: (1) the conduct
of its business; and (2) the use, maintenance, and operation of the Borrowing
Base Oil and Gas Properties and personal properties owned or leased by it in the
conduct of its business; except as expressly set forth on Exhibit "A" hereto,
Borrower and each Guarantor possesses all licenses, approvals, registrations,
permits and other authorizations necessary to enable it to carry on its business
in all material respects as now conducted, and all such licenses, approvals,
registrations, permits and other authorizations are in full force and effect;
and Borrower has no reason to believe that the Borrower or any Guarantor will be
unable to obtain the renewal of any such licenses, approvals, registrations,
permits and other authorizations.
4.14 Liabilities, Litigation and Restrictions. Except as disclosed in the
Financial Statements, Borrower and Guarantors do not have any liabilities,
direct or contingent, which may materially and adversely affect it, its business
or assets. There is no litigation or other action of any nature pending before
any court, governmental instrumentality, regulatory authority or arbitral body
or, to the knowledge of the Borrower threatened against or affecting Borrower or
any Guarantor which might reasonably be expected to result in any material,
adverse change in the Borrower or any Guarantor, or its business or assets. To
the best of the Borrower's knowledge, no unduly burdensome restriction,
restraint or hazard exists by contract or Law that would have a Material Adverse
Effect.
4.15 Existing Indebtedness. All Indebtedness of Borrower and any Guarantor
consisting of liability to repay borrowed money or to pay money to become due on
capital leases as of the Closing is described in Schedule 4.15; and neither
Borrower nor any Guarantor is in default with respect to any of its existing
Indebtedness.
4.16 Material Commitments. Except as described in Schedule 4.16 hereto and
in filings made by Borrower with the Securities Exchange Commission, (a) neither
Borrower nor any Guarantor has any material leases (other than oil and gas
leases), contracts or commitments of any kind (including, without limitation,
employment agreements; collective bargaining agreements; powers of attorney;
distribution arrangements; patent license agreements; contracts for future
purchase or delivery of goods or rendering of services; bonuses, pension and
retirement plans; or accrued vacation pay, insurance and welfare agreements);
(b) to the best of Borrower's knowledge, all parties to all such material
leases, contracts, and other commitments to which Borrower or any Guarantor is a
party have complied with the provisions of such leases, contracts, and other
commitments; and (c) to the best of the Borrower's knowledge, no party is in
default under any thereof and no event has occurred that but for the giving of
notice or the passage of time, or both, would constitute a default, except for
defaults and events that have not had and would not be expected to have a
Material Adverse Effect.
4.17 Margin Stock. The Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T, U, or
X of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any extension of credit under this Agreement will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock. Neither the Borrower nor any
Person acting on its behalf has taken any action that might cause the
transactions contemplated by this Agreement or the Notes to violate Regulations
T, U, or X or to violate the Securities Exchange Act of 1934, as amended.
4.18 Proper Filing of Tax Returns and Payment of Taxes Due. Except as
otherwise permitted herein, the Borrower and each Guarantor has filed all
federal, state, and local tax returns and other reports required by any
applicable Laws to have been filed prior to the date hereof, has paid or caused
to be paid all taxes, assessments, and other governmental charges that are due
and payable prior to the date hereof, and has made adequate provision for the
payment of such taxes, assessments, or other charges accruing but not yet
payable; the Borrower has no knowledge of any material deficiency or additional
assessment in connection with any taxes, assessments, or charges not provided
for on its books.
4.19 ERISA. The Borrower is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any plan; no notice
of intent to terminate a plan has been filed, nor has any plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate a plan, nor has the PBGC instituted any such proceedings;
neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multi-Employer Plan; the
Borrower and each ERISA Affiliate has met its minimum funding requirements under
ERISA with respect to all of its plans and the present value of all vested
benefits under each plan is less than the fair market value of all plan assets
allocable to such benefits, as determined on the most recent valuation date of
the plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of the Borrower or any ERISA
Affiliate to the PBGC or the plan under Title IV of ERISA; and neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA.
4.20 Investment Company Act Compliance. Borrower is not directly or
indirectly controlled by, or acting on behalf of, any, Person which is an
"Investment Company," within the meaning of the Investment Company Act of 1940,
as amended.
4.21 Public Utility Holding Company Act Compliance. 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.
4.22 Insurance. Borrower and each Guarantor maintains insurance with
respect to the properties and business of the Borrower and each Guarantor,
respectively, providing coverage for such liabilities, casualties, risks and
contingencies and in such amounts as is customary in the industry. The insurance
coverage reflected on the Certificate of Insurance attached hereto as Schedule
4.22 is in full force and effect, and all premiums due thereon have been paid or
provided for.
4.23 Material Misstatements and Omissions. No representation or warranty by
or with respect to Borrower or any Guarantor contained herein or in any
certificate or other document furnished by the Borrower pursuant hereto contains
any untrue statement of a material fact or omits to state a material fact
necessary to make such representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE V.
AFFIRMATIVE COVENANTS
Borrower covenants so long as any Indebtedness of the Borrower to any Bank
or the LC Issuer remains unpaid under this Agreement, or any Obligations of the
Borrower or any Guarantor to any Bank Parties remain unsatisfied, or any Bank
remains obligated to make advances hereunder or the LC Issuer is obligated to
issue any Facility LC hereunder, to;
5.01 Use of Funds. Use funds advanced hereunder for the purposes of (A)
refinancing existing debt owed pursuant to the Third Restated Agreement, (B)
funding Borrower's and Guarantors' working capital needs, and (C) funding
Borrower's other lawful corporate purposes.
5.02 Maintenance and Access to Records. Keep adequate records in accordance
with good accounting practices, of all of the transactions of the Borrower and
each Guarantor so that at any time, and from time to time, such records present
fairly the financial condition of the Borrower and each Guarantor which may be
readily determined and, at the Administrative Agent's reasonable request, make
all financial records and records relating to the Borrowing Base Oil and Gas
Properties available for the Administrative Agent's inspection and permit the
Administrative Agent to make and take away copies thereof.
5.03 Quarterly Unaudited Financial Statements. Deliver to the
Administrative Agent, on or before the forty-fifth (45th) day after the end of
each calendar quarter, unaudited consolidated and consolidating Financial
Statements of the Borrower and the Guarantors, as at the end of such period and
from the beginning of such fiscal year to the end of the respective period, as
applicable, which Financial Statements shall be certified by the president or
chief financial officer of the Borrower, as being true and correct, subject to
changes resulting from year-end audit adjustments.
5.04 Annual Audited Financial Statements. Deliver to the Administrative
Agent, on or before the one hundred twentieth (120th) day after the close of
each fiscal year of the Borrower a copy of annual audited consolidated and
consolidating Financial Statements of the Borrower and the Guarantors, together
with the report and opinion thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or such other firm of
independent certified public accountants acceptable to the Administrative Agent
at its reasonable discretion.
5.05 Compliance Certificate. At Closing and at the time of delivery of the
certified but unaudited Financial Statements pursuant to Section 5.03 above, and
the delivery of the annual audited Financial Statements pursuant to Section 5.04
above, deliver to the Administrative Agent a Compliance Certificate.
5.06 Statement of Material Adverse Change. Deliver to the Administrative
Agent, promptly upon any officer of Borrower having knowledge of any Material
Adverse Change (or any event or circumstance that would result in any such
Material Adverse Change), a statement of the President, Chief Financial Officer,
or the Treasurer of the Borrower, setting forth the change in condition or event
or circumstance likely to result in any such change and the steps being taken by
the Borrower with respect to such change in condition or event or circumstance.
5.07 Title Defects. Cure any title defects, and/or to cause any Guarantor
to cure any title defects, to the Borrowing Base Oil and Gas Properties which
cause the title to the Oil and Gas Properties not to be Marketable and which
title defects cause material reduction in value of the Oil and Gas Properties,
considered as a whole, in the reasonable opinion of the Administrative Agent,
and, in the event any such title defects are not cured in a timely manner, pay
all related costs and fees incurred by the Administrative Agent for the account
of the Banks to do so; provided, however, the Borrower may remove any of its or
Guarantor's Oil and Gas Properties from the determination of the Borrowing Base
so long as the Indebtedness evidenced by the Revolving Notes and the LCs is less
than or equal to the Borrowing Base (determined by the Banks in accordance with
Section 2.06 exclusive of such Oil and Gas Properties).
5.08 Additional Information. Furnish to the Administrative Agent copies of
all information, if any, filed with the Securities Exchange Commission by the
Borrower and all information routinely provided by the Borrower to its
shareholders, generally. Furnish to the Administrative Agent, promptly upon the
Administrative Agent's reasonable request, such additional financial or other
information concerning the assets, liabilities, operations, and transactions of
the Borrower, including, without limitation, information concerning title to any
of the Borrowing Base Oil and Gas Properties.
5.09 Compliance with Laws and Payment of Assessments and Charges.
Materially comply, and cause any Guarantor to materially comply, with all
applicable statutes and government regulations, including, without limitation,
ERISA, and pay all taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations which, if unpaid, might become a lien other
than a Permitted Encumbrance against its property, except any of the foregoing
being contested in good faith and as to which accruals satisfactory to the
Administrative Agent, in its reasonable discretion, have been provided.
5.10 Maintenance of Existence and Good Standing. Maintain the Borrower's
and each Guarantor's corporate existence and good standing in the jurisdiction
of its organization, and maintain the Borrower's and any Guarantor's
qualification and good standing in all other jurisdictions wherein the property
now owned or hereafter acquired or business now or hereafter conducted by
Borrower or any Guarantor necessitates same, other than those jurisdictions
wherein the failure to so qualify will not have a Material Adverse Effect on the
Borrower.
5.11 Further Assurances. Promptly cure, and/or to cause any Guarantor to
promptly cure, any defects in the execution and delivery of this Agreement, the
Notes, the Security Instruments, the Transfer Order Letters, or any other
instrument referred to herein or executed in connection with the Notes, and upon
the reasonable request of the Administrative Agent promptly execute and deliver
to the Administrative Agent all such other and further instruments as may be
reasonably required or desired by the Administrative Agent from time to time in
compliance with the covenants and agreements made in this Agreement.
5.12 Initial Expenses of the Bank. Pay prior to or at Closing all
documented reasonable fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., and Hall,
Estill, Hardwick, Goble, Golden & ▇▇▇▇▇▇, A Professional Corporation the special
legal counsel for the Administrative Agent and the Collateral Agent incurred
directly and solely in connection with the preparation of this Agreement, the
Notes, the Security Instruments, the Transfer Order Letters, and any other
instrument referred to herein or executed directly and solely in connection with
the Notes, the satisfaction of the conditions precedent set forth in Article III
of this Agreement and the consummation of the transactions contemplated in this
Agreement.
5.13 Subsequent Expenses of the Bank Parties. Upon request, promptly
reimburse any Bank Party for all documented amounts reasonably expended,
advanced or incurred by such Bank Party to collect the Notes, restructure the
Notes or to enforce the rights of such Bank Party under this Agreement, the
Notes, the Security Instruments, the Transfer Order Letters, or any other
instrument referred to herein or executed in connection with the Notes, which
amounts shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrower by the Administrative Agent and which amounts will
include, but not be limited to, (a) all court costs, (b) reasonable attorneys'
fees, (c) fees of auditors and accountants, (d) investigation expenses, (e)
internal fees of the Administrative Agent's or Collateral Agent's in-house legal
counsel, (f) fees and expenses incurred in connection with any Bank Party's
participation as a member of the creditors committee in a case commenced under
Title 11 of the United States Code or other similar Law of the United States,
the State of Texas or any other jurisdiction, (g) fees and expenses incurred in
connection with lifting the automatic stay prescribed in ss.ss.362 Title 11 of
the United States Code, and (h) fees and expenses incurred in connection with
any action pursuant to ss.ss.1129 Title 11 of the United States Code, reasonably
incurred by any Bank Party in connection with the collection of any sums due
under this Agreement, together with interest at the Floating Rate per annum,
calculated on a basis of a year of three hundred sixty (360) days on each such
amount from the date of notification to the Borrower that the same was expended,
advanced or incurred by any Bank Party until, but not including, the date it is
repaid to such Bank Party, with the obligations under this Section 5.13,
surviving the non-assumption of this Agreement in a case commenced under Title
11 of the United States Code or other similar Law of the United States, the
State of Texas or any other jurisdiction and being binding upon the Borrower or
a trustee, receiver or liquidator of any such party appointed in any such case.
5.14 Maintenance of Tangible Property. Maintain all of its and each
Guarantor's tangible property relating to the Borrowing Base Oil and Gas
Properties in good repair and condition and make all necessary replacements
thereof and operate such property in a good and workmanlike manner in accordance
with standard industry practices, unless the failure to do so would not have a
Material Adverse Effect on the Borrower or the value of any Borrowing Base Oil
and Gas Property.
5.15 Maintenance of Insurance. Continue to maintain, or cause to be
maintained, insurance with respect to the properties and business of the
Borrower and each Guarantor against such liabilities, casualties, risks and
contingencies and in such amounts as is customary in the industry and furnish to
the Collateral Agent annually after the execution of this Agreement certificates
evidencing such insurance.
5.16 Inspection of Tangible Assets/Right of Audit. Permit any authorized
representative of the Administrative Agent or the Collateral Agent to visit and
inspect (at the risk of the Administrative Agent, the Collateral Agent and/or
such representative) any tangible asset of the Borrower and each Guarantor,
and/or to audit the books and records of the Borrower and each Guarantor during
normal business hours, at the expense of the Administrative Agent or the
Collateral Agent following reasonable advance notice.
5.17 Payment of Note and 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 the Obligations provided to be
performed and discharged hereunder.
5.18 Borrowing Base. Maintain a Borrowing Base such that the amount of the
Outstanding Credit Exposure will not, at any time other than during applicable
grace periods expressly set forth elsewhere in this Agreement, exceed the
Aggregate Commitment Amount.
5.19 Compliance with Environmental Laws. To the extent necessary to avoid a
Material Adverse Effect, comply, and/or to cause any Guarantor to comply, with
any and all requirements of Law, including, without limitation, Environmental
Laws, (a) applicable to any natural or environmental resource or media located
on, above, within, in the vicinity of, related to or affected by any Borrowing
Base Oil and Gas Properties or any other property of the Borrower or any
Guarantor, or (b) applicable to the performance or conduct of its operations,
including, without limitation, all permits, licenses, registrations, approvals
and authorizations, and, in this regard, comply with, and require all employees,
crew members, agents, contractors and subcontractors (pursuant to appropriate
contractual provisions) and future lessees (pursuant to appropriate lease
provisions) of the Borrower or any Guarantor while such Persons are acting
within the scope of their relationship with the Borrower or any Guarantor, to so
comply with, all applicable requirements of Law, including, without limitation,
applicable Environmental Laws, and other applicable requirements with respect to
the property of the Borrower or any Guarantor, and the operation thereof
necessary or appropriate to enable the Borrower to fulfill its obligations under
all applicable requirements of Law, including, without limitation, Environmental
Laws, applicable to the use, generation, handling, storage, treatment, transport
and disposal of any Hazardous Substances now or hereafter located or present on
or under any such property.
5.20 Hazardous Substances Indemnification. Indemnify and hold each of the
Bank Parties 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, out of (a) the presence of any Hazardous
Substances on, under or from its property, whether prior to or during the term
hereof, or (b) any activity carried on or undertaken on or off its property,
whether prior to or during the term hereof, and whether by the Borrower, or any
predecessor in title or any employees, agents, contractors or subcontractors of
the Borrower, or any predecessor in title, or any third Persons 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; with the foregoing indemnity further applying to any residual
contamination on or under the property of the Borrower, or any property of any
other Person, or affecting any natural resources, and to any contamination of
any property or natural resources arising in connection with the generation,
use, handling, storage, transportation or disposal of any Hazardous Substances,
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable requirements of Law, including, without limitation,
Environmental Laws, and surviving satisfaction of all Indebtedness of the
Borrower to any of the Bank Parties and the termination of this Agreement,
unless all such Indebtedness has been satisfied wholly in cash from the Borrower
and not by way of realization against any property or the conveyance of any
property of the Borrower in lieu thereof, provided that the claims and other
actions of any kind against any of the Bank Parties which give rise to such
indemnity are not barred by the applicable statute of limitations at the time
such claims or actions are instituted and such indemnity shall not extend to any
act or omission by any of the Bank Parties with respect to the relevant property
subsequent to the Administrative Agent, the Arranger or any Bank becoming the
owner of, taking possession of to the exclusion of the Borrower or assuming
operations of any property previously owned by the Borrower 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, taking possession thereof or assumption of
operations thereon by any of the Bank Parties.
5.21 Transactions with Affiliates. Conduct, and to cause any Guarantor to
conduct, all transactions with any Affiliate of the Borrower on an arm's-length
basis (provided that such transactions are otherwise permitted by the terms of
this Agreement).
5.22 Leases. Keep and continue, and/or to cause any Guarantor to keep and
continue, all Leases comprising the Borrowing Base Oil and Gas Properties and
related contracts and agreements relating thereto in full force and effect in
accordance with the terms thereof and not permit the same to lapse or otherwise
become impaired for failure to comply with the obligations thereof, whether
express or implied; provided, however, that this provision shall not prevent the
Borrower or any Guarantor from abandoning and releasing any such Leases upon
their termination as the result of cessation of production in paying quantities
that did not result from the Borrower's or such Guarantor's failure to maintain
such production as a reasonably prudent operator.
5.23 Operation of Borrowing Base Oil and Gas Properties. Operate or, to the
extent that the right of operation is vested in others, exercise all reasonable
efforts to require the operator to operate the Borrowing Base Oil and Gas
Properties and all ▇▇▇▇▇ drilled thereon and that may hereafter be drilled
thereon, continuously and in a good and workmanlike manner and in accordance
with all Laws of the State in which the Borrowing Base Oil and Gas Properties
are situated and the United States of America, as well as all rules,
regulations, and Laws of any governmental agency having jurisdiction to regulate
the manner in which the operation of the Borrowing Base Oil and Gas Properties
shall be carried on, and comply with all terms and conditions of the Leases it
or any Guarantor now holds, and any assignment or contract obligating the
Borrower or any Guarantor in any way with respect to the Borrowing Base Oil and
Gas Properties; but nothing herein shall be construed to empower the Borrower or
any Guarantor to bind any Bank Party to any contract obligation, or render any
Bank Party in any way responsible or liable for bills or obligations incurred by
the Borrower or any Guarantor.
5.24 Assignments. Upon request of the Administrative Agent or Collateral
Agent, execute and deliver, and/or to cause any Guarantor to execute and
deliver, written notices of assignments to any persons, corporations or other
entities owing or which may in the future owe to the Borrower or any Guarantor
monies or accounts arising in connection with any of the following matters: (a)
any oil, gas or mineral production from the Borrowing Base Oil and Gas
Properties; (b) any gas contracts, processing contracts or other contracts
relating to the Borrowing Base Oil and Gas Properties; or (c) the operation of
or production from any part of the Borrowing Base Oil and Gas Properties.
5.25 Change of Purchasers of Production. On or before each anniversary of
the Closing, and at any other time that the Administrative Agent may so request
in writing, the Borrower shall notify the Administrative Agent in writing of the
identity and address of each then-current purchaser of production from the
Borrowing Base Oil and Gas Properties and, if requested by the Administrative
Agent, shall provide the Administrative Agent or Collateral Agent with Transfer
Order Letters executed by the Borrower or any Guarantor, as applicable, and
addressed to such purchasers of production.
5.26 Payment of Taxes, Etc. Pay or cause to be paid when due, all taxes,
assessments, and charges or levies imposed upon it and/or any of its
Subsidiaries, or on any of their respective property, or which it or they are
required to withhold and pay, except where contested in good faith by
appropriate proceedings with adequate reserves therefor having been set aside on
its books, provided, however, that the Borrower and the Guarantors shall each
pay or cause to be paid all such taxes, assessments, charges, or levies
forthwith whenever foreclosure on any lien that may have attached (or security
therefor) appears imminent.
5.27 Notice of Litigation. Give immediate notice to the Administrative
Agent of: (1) any litigation or proceeding in which it or any of its
Subsidiaries is a party if an adverse decision therein would require it or any
of its Subsidiaries to pay more than One Million Dollars ($1,000,000.00) in the
aggregate or deliver assets the value of which exceeds such sum (whether or not
the claim is considered to be covered by insurance); and (2) the institution of
any other suit or proceeding involving the Borrower or any of the Guarantors
that might materially and adversely affect its operations, financial condition,
property, or business prospects.
5.28 Notice of Events of Default. Notify the Administrative Agent
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition, or event that only with the giving of notice or passage of
time or both, would become an Event of Default or if it becomes aware of any
Material Adverse Change (including, without limitation, proceedings in
bankruptcy, insolvency, reorganization, or the appointment of a receiver or
trustee), or of the failure of the Borrower or any Guarantor to observe any of
its undertakings hereunder or under the Security Instruments.
5.29 Notice of Change of Principal Offices. Notify the Administrative Agent
thirty (30) days in advance of any change in the location of the principal
offices of Borrower or any of its Subsidiaries.
5.30 Employee Benefit Plans. Fund its Plan(s) in accordance with no less
than the minimum funding standards of 29 U.S.C.A. ss. 1082 (Section 302 of
ERISA); furnish the Administrative Agent, promptly after the filing or receiving
of the same, with copies of any reports or other statements filed with, or
notices or other communications received from, the United States Department of
Labor, the PBGC, or the Internal Revenue Service with respect to any such Plan;
promptly advise the Administrative Agent of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan and the action the
Borrower proposes to take with respect thereto; and promptly advise the
Administrative Agent when the Borrower knows or has reason to believe that the
PBGC or the Borrower has instituted or will institute proceedings under Title IV
of ERISA to terminate any such Plan and the action the Borrower proposes to take
with respect thereto.
5.31 Annual Capital Budget. Within thirty (30) days after Closing, Borrower
shall prepare and submit to Arrangers an annual capital budget (the "Budget")
applicable to the activities of Borrower and Guarantors to be conducted: (a)
through the projected completion date of all capital expenditures to be made on
the Cedar Hills Project, and (b) through the fiscal quarter ending March 31,
2003, with respect to all activities of Borrower and Guarantors other than the
Cedar Hills Project, such Budget to be in form and substance satisfactory to
Arrangers, and which shall be sufficient to demonstrate to Arrangers'
satisfaction that Borrower and Guarantors will remain in compliance with this
Agreement and the other Loan Documents during the period covered by the Budget.
Thereafter, an updated Budget shall be submitted to Arrangers within fifteen
(15) days after the close of each fiscal quarter beginning with the quarter
ending June 30, 2002, so that the portion of the Budget applicable to the Cedar
Hills Project activities always covers the period through the projected
completion of all planned capital expenditures on the Cedar Hills Project, and
through the ensuing four (4) calendar quarters with respect to all activities of
Borrower and Guarantors other than the Cedar Hills Project. Each updated Budget
submitted to the Arrangers within fifteen (15) days after the close of each
fiscal quarter shall also include a comparison of Borrower's and Guarantors'
actual capital expenditures during such preceding quarter compared to the
expenditures forecast for such quarter on the most recent Budget that had been
submitted to Arrangers with respect thereto. Such comparison shall separate the
expenditures made on the Cedar Hills Project from expenditures made in
connection with all other activities of Borrower and Guarantors. Borrower shall
conduct, or shall cause Guarantors to conduct, as applicable, the activities
contemplated by the capital expenditures forecast in each current Budget,
substantially as and when contemplated in such Budget.
5.32 Payment of Obligations. Promptly pay (or renew and extend) all of its
Indebtedness as it becomes due, unless payment of such Indebtedness is: (a)
restricted pursuant to Article VI hereof, or (b) being contested in good faith
by appropriate proceedings.
5.33 Compliance with Section 2.06. Comply with Section 2.06, including, but
not limited to, the delivery of the Reserve Reports, as specified therein.
5.34 Notice Regarding Early Termination of Hedge Agreements. Promptly
notify Administrative Agent regarding the occurrence of any early termination or
other unwind of any Hedge Agreement prior to the end of its original, nominal
term, such notification to be given by Borrower as promptly as possible after
Borrower learns of the occurrence or impending occurrence of such early
termination, and in any event not later than two Business Days thereafter.
ARTICLE VI.
NEGATIVE COVENANTS
Without the prior written consent of the Administrative Agent and the
Required Banks and so long as any part of the principal or interest on the Notes
shall remain unpaid or any Bank remains obligated to make advances hereunder,
Borrower covenants that it will not:
6.01 Other Indebtedness. Incur, create, assume or suffer to exist any
Indebtedness, whether by way of loan or the issuance or sale of securities
except Permitted Indebtedness.
6.02 Loans or Advances. Make or agree to make or allow to remain
outstanding any loans or advances to any Person, except: (a) advances or
extensions of credit in the form of accounts receivable incurred in the ordinary
course of business, (b) the intercompany Indebtedness owed by Borrower or any
Guarantor to the other, and (c) other loans or advances not exceeding One
Million Dollars ($1,000,000), in the aggregate, at any time outstanding.
6.03 Mortgages or Pledges of Assets. Create, incur, assume or permit to
exist, any mortgage, pledge, security interest, lien or encumbrance on any of
its or the Guarantors' properties or assets (now owned or hereafter acquired),
except for Permitted Encumbrances.
6.04 Sales of Assets. Except for Permitted Asset Sales, sell, lease,
assign, transfer or otherwise dispose of, in one or any series of related
transactions, all or any portion of its Oil and Gas Properties or other material
assets, whether now owned or hereafter acquired, including transfers to
Subsidiaries, or permit any Guarantor to do so, nor enter or permit any
Guarantor to enter into any arrangement, directly or indirectly, with any Person
to sell and rent or lease back as lessee such property or any part thereof which
is intended to be used for substantially the same purpose or purposes as the
property sold or transferred.
6.05 Dividends. Declare or pay any dividend or distribution on any capital
stock of or other equity interest in Borrower except the foregoing restriction
shall not apply to o Cash dividends paid by the Borrower to its shareholders in
amounts not in excess of each such shareholder's allocable share of federal and
state income taxes attributable to the taxable income of the Borrower, as
substantiated by such documentation as Administrative Agent my reasonably
require, provided that no such payments shall be permitted if an Event of
Default or Unmatured Event of Default involving non-payment of principal,
interest, fees or other monies owed to any of the Bank Parties (a "Cash
Default") has occurred and is continuing or would result from any such
payment(s), and upon the occurrence and during the continuance of any Event of
Default or Unmatured Event of Default that is not a Cash Default, the aggregate
amount of such cash dividends shall not exceed $2,000,000.00 during any calendar
year; and o Dividends payable by any Guarantor to the Borrower.
6.06 Payment of Accounts Payable. Allow or permit any Guarantor to allow
any account payable to remain unpaid more than ninety (90) days after the date
of the invoice therefor, except such as are (i) being contested in good faith
and as to which adequate provision or accrual has been made, or (ii) the subject
of usual and customary review and evaluation.
6.07 Cancellation of Insurance. Allow or permit any Guarantor to allow any
property and casualty insurance policy required to be carried hereunder to be
terminated or lapse or expire without provision for adequate renewal or
replacement thereof.
6.08 Investments. Make Investments in or purchase or otherwise acquire. or
permit any of the Guarantors to make Investments in or purchase or otherwise
acquire, all or substantially all of the assets of any Person, or any shares of
stock of, or similar interest in, any other Person, if the result of such action
would impair the ability of the Borrower to perform any of its Obligations
pursuant to this Agreement, including, without limitation, the obligation to
repay the Indebtedness evidenced by the Notes, except that the Borrower may
invest in instruments that are investment grade, and in short-term commercial
paper.
6.09 Changes in Structure or Business. Consolidate or merge with or
purchase (for cash or securities), or permit any of the Guarantors to
consolidate or merge with or purchase (for cash or securities), all or
substantially all of the assets or capital stock of any corporation, firm,
association or enterprise, or allow any such entity to be merged into the
Borrower or any Guarantor, or change the basic business operations of the
Borrower or any Guarantor, unless all of the following conditions are satisfied:
(a) Borrower has provided Administrative Agent complete and detailed information
relating to such merger or purchase at least fifteen (15) days in advance
thereof, (b) Borrower or the applicable Guarantor is the survivor of such merger
or the acquiror in any such purchase, and (c) such merger or purchase will not
otherwise constitute or result in an Event of Default or Unmatured Event of
Default under any other provisions of this Agreement.
6.10 Pooling or Unitization. Voluntarily pool or unitize, or permit any
Guarantor to voluntarily pool or unitize, all or any part of the Borrowing Base
Oil and Gas Properties where the pooling or unitization would result in the
diminution of the Borrower's or Guarantor's net revenue from production from the
pooled or unitized lands, without the Required Banks' prior consent, which will
not be unreasonably withheld. Any unitization, pooling or communitization or
other action or instrument in violation of this Section 6.10 shall be of no
force or effect against any Bank.
6.11 Hedge Agreements. Except for Permitted Hedge Agreements of which
Borrower has notified Administrative Agent in writing at or prior to the time
that Borrower or any Guarantor becomes party thereto, enter into or become
obligated under any contract for sale for future delivery of Hydrocarbons other
than normal production contracts entered into in the Borrower's or any
Guarantor's normal course of business (whether or not the subject Hydrocarbons
are to be delivered), forward contract, Hedging Agreement, futures contract or
any other similar agreement, without the prior written consent of the Required
Banks, acting in their sole discretion.
6.12 Capital Stock of Borrower and Guarantors/Redemption of Senior
Subordinated Notes. (a) issue, redeem, purchase, retire or otherwise acquire for
value any of its capital stock or Senior Subordinated Notes or grant, issue,
purchase, retire or otherwise acquire for value any warrant, right, or option
pertaining thereto or other security convertible into any of the foregoing, or
permit any Guarantor to do so with regard to its capital stock, the Senior
Subordinated Notes or any warrant, right, option or security pertaining thereto,
or (b) permit any transfer, sale, redemption, retirement, or other change in the
ownership of the outstanding capital stock of the Borrower or any Guarantor
without the prior written consent of the Required Banks, acting in their
discretion; except for (i) issuance, transfer or repurchase of the Borrower's
capital stock which does not result in a Change of Control or otherwise
constitute or result in an Event of Default or an Unmatured Event of Default
under any other provisions of this Agreement, and (ii) the issuance of options
pursuant to the Borrower's stock option plan as in effect at Closing.
6.13 Margin Stock. Directly or indirectly apply any part of the proceeds of
the Loans to the purchasing or carrying of any "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder.
6.14 Senior Subordinated Debt. Make any prepayment of amounts due under the
Senior Subordinated Notes without the prior written consent of the
Super-Majority or amend any of the terms of the Senior Subordinated Notes.
6.15 Current Ratio. Permit as of the end of any fiscal quarter its Current
Ratio to be less than 1.00 to 1.00.
6.16 Fixed Charge Coverage Ratio. Permit, as of the end of any fiscal
quarter, the ratio of EBITDA to Borrower's Total Fixed Charges to be lesser than
1.25 to 1.0, calculated on a rolling four- quarter basis. For purposes of this
Section, the term "Total Fixed Charges" shall include, without limitation, cash
interest charges, capital lease rentals, scheduled and required principal
amortization and cash dividends.
6.17 Total Funded Debt to EBITDA. Permit, as of the end of any fiscal
quarter, the ratio of the Aggregate Outstanding Credit Exposure plus the
outstanding balance of the Senior Subordinated Notes to EBITDA to be greater
than 3.75 to 1.0, calculated on a rolling four-quarter basis.
6.18 Senior Debt to EBITDA. Permit, as of the end of any fiscal quarter,
the ratio of Aggregate Outstanding Credit Exposure to EBITDA to be greater than
2.5 to 1.0, calculated on a rolling four-quarter basis.
6.19 Total Funded Debt to Total Capitalization. Permit, as of the end of
any fiscal quarter, the ratio of: (a) Aggregate Outstanding Credit Exposure plus
the outstanding balance of the Senior Subordinated Notes to (b) Stockholders'
Equity plus Aggregate Outstanding Credit Exposure plus the outstanding balance
of the Senior Subordinated Notes to be greater than .70 to 1.0.
ARTICLE VII.
EVENTS OF DEFAULT
7.01 Enumeration of Events of Default. Any of the following events shall be
considered an Event of Default as that term is used herein:
(a) Default shall be made by the Borrower in the payment of any
installment of principal or interest (including, without
limitation, any mandatory prepayments payable pursuant to either
Section 2.07 or 2.08 of this Agreement) on the Notes, any LC Fee
or any other monetary obligation (other than Reimbursement
Obligations) payable hereunder when due, or any other fee due to
any Bank Party hereunder within five (5) days after such payment
was due, or in the payment of any Reimbursement Obligation within
one Business Day after the same becomes due;
(b) Default shall be made by the Borrower in the due observance or
performance of any affirmative covenant required in this
Agreement, the Notes, the Facility LC Applications or the
Security Instruments and such default continues for more than
thirty (30) days after the earlier of: (i) Borrower having
knowledge thereof, or (ii) Borrower receiving written notice
thereof from the Administrative Agent;
(c) Default shall be made by the Borrower in the due observance or
performance of any negative covenant required in this Agreement,
the Notes, the Facility LC Applications or the Security
Instruments;
(d) Any representation or warranty herein made by the Borrower proves
to have been untrue in any respect material to the Borrower or
any Guarantor, or any representation, statement (including
Financial Statements), certificate or data furnished or made by
the Borrower to the Administrative Agent in connection herewith
proves to have been untrue in any respect material to the
Borrower or any Guarantor as of the date the facts therein set
forth were stated or certified;
(e) Default shall be made by any Borrower or any Guarantor (as
principal or other surety) in payment or performance of any bond,
debenture, note or other evidence of Indebtedness for borrowed
money, or under any credit agreement, loan agreement, indenture,
promissory note or similar agreement or instrument executed in
connection with any of the forgoing, relating to any Indebtedness
in an aggregate amount of One Million Dollars ($1,000,000.00) or
more, and such default shall remain unremedied for in excess of
the period of grace, if any, with respect thereto.
(f) Any Borrower or any Guarantor (i) discontinues its usual business
or applies for or consents to the appointment of a receiver,
trustee or liquidator of it or all or a substantial part of its
assets, or (ii) files a voluntary petition 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,
or (iii) makes a general assignment for the benefit of creditors,
or (iv) is unable, or admits in writing its inability to pay its
debts generally as they become due, or (v) files an answer
admitting the material allegations of a petition filed against it
in any case commenced under Title 11 of the United States Code or
any reorganization, insolvency, conservatorship or similar
proceeding under any bankruptcy, insolvency, debtor's relief or
other similar Law of the United States, the State of Texas or any
other jurisdiction;
(g) An order, judgment or decree shall be entered against any
Borrower or any Guarantor by any court of competent jurisdiction
or by any other duly authorized authority, on the petition of a
creditor or otherwise, granting relief under Title 11 of the
United States Code or under any bankruptcy, insolvency, debtor's
relief or other similar Law of the United States, the State of
Texas or any other jurisdiction, approving a petition seeking
reorganization or an arrangement of its debts or appointing a
receiver, trustee, conservator, custodian or liquidator of it or
all or any substantial part of its assets, and the failure to
have such order, judgment or decree dismissed within thirty (30)
days of its entry;
(h) Any Borrower or any Guarantor has concealed, removed, or
permitted to be concealed or removed, any part of its property,
with intent to hinder, delay or defraud its creditors or any of
them; or has made or suffered a transfer of any of its property
which would be characterized as a fraudulent conveyance under
bankruptcy or similar Laws; or has made any transfer of its
property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid; or has 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 thirty (30) days from the date thereof;
(i) the Liens under the Security Instruments cease to be perfected or
cease to be first priority Liens subject to only Permitted
Encumbrances; or
(j) a Material Adverse Change occurs.
7.02 Rights Upon Unmatured Event of Default. At any time that there exists
an Unmatured Event of Default, any obligation of the Banks and the LC Issuer to
make Credit Extensions shall be suspended unless and until the Administrative
Agent, with the approval of the Super-Majority and the LC Issuer, shall
reinstate the same in writing, the Unmatured Event of Default shall have been
waived by the Administrative Agent, with approval of the Super-Majority and the
LC Issuer or the relevant Unmatured Event of Default shall have been remedied
prior to ripening into an Event of Default.
7.03 Rights Upon Default. Upon the happening of an Event of Default
specified in Subsections 7.01 (f) or (g), the obligations of the Banks and the
LC Issuer to make Credit Extensions hereunder shall automatically terminate and
all Obligations then outstanding hereunder and the interest accrued thereon
shall automatically become immediately due and payable without any election or
action on the part of the Administrative Agent, any Bank or the LC Issuer. Upon
the happening and during the continuation of any other Event of Default, upon
the request of the Super-Majority subject to Section 9.13, the Administrative
Agent shall terminate or suspend the obligations of the Banks and the LC Issuer
to make Credit Extensions hereunder, or declare the Obligations to be
immediately due and payable, or both, and upon such declaration with respect to
the Obligations they shall become immediately due and payable. In either case,
the entire principal and interest shall thereupon become immediately due and
payable, without notice (including, without limitation, notice of intent to
accelerate maturity or notice of acceleration of maturity) and without
presentment, demand, protest, notice of protest or other notice of default or
dishonor of any kind, except as provided to the contrary elsewhere herein, all
of which are hereby expressly waived by the Borrower.
If, within thirty (30) days after acceleration of the maturity of the
Obligations or termination of the obligations of the Banks and LC Issuer to make
Credit Extensions hereunder as the result of any Event of Default (other than
any Event of Default specified in subsections 7.01(f) or (g)) and before any
judgement or decree for the payment of the Obligations due shall have been
obtained or entered, the Super-Majority (in their sole discretion) shall direct
with respect to the Obligations relating to the Loans or the LC Issuer (in its
sole discretion) shall direct with respect to Obligations relating to Facility
LCs, the Administrative Agent shall, by notice to the Borrower, rescind and
annul such acceleration and/or termination.
7.04 Remedies. After any acceleration, as provided for in Section 7.03, the
Bank Parties shall have, in addition to the rights and remedies given them by
this Agreement and the Security Instruments, all those allowed by all applicable
Laws, including, but without limitation, the Uniform Commercial Code as enacted
in any jurisdiction in which any of the Borrowing Base Oil and Gas Properties
may be located. Without limiting the generality of the foregoing, the Collateral
Agent, upon the request of the Super-Majority shall, immediately without demand
of performance and without other notice (except as specifically required by this
Agreement or the Security Instruments) or demand whatsoever to the Borrower, all
of which are hereby expressly waived, and without advertisement, sell at public
or private sale or otherwise realize upon, in Garfield County, Oklahoma, or in
any other place where the Borrowing Base Oil and Gas Properties may be located,
or in such other place or places as the Collateral Agent may designate, the
whole or, from time to time, any part of the Borrowing Base Oil and Gas
Properties, or any interest which the Borrower may have therein. After deducting
from the proceeds of sale or other disposition of the Borrowing Base Oil and Gas
Properties all expenses (including all reasonable expenses for legal services),
the Bank shall apply such proceeds toward the satisfaction of the Obligations.
Any remainder of the proceeds after satisfaction in full of the Obligations
shall be distributed as required by applicable Laws. Notice of any sale or other
disposition shall be given to the Borrower at least five (5) days before the
time of any public sale or of the time after which any intended private sale or
other disposition of the Borrowing Base Oil and Gas Properties is to be made,
which the Borrower hereby agrees shall be reasonable notice of such sale or
other disposition. The Borrower agrees to assemble, or to cause to be assembled,
at its own expense, documents evidencing its ownership of the Borrowing Base Oil
and Gas Properties and such other documents or items as the Collateral Agent may
reasonably request at such place or places as the Collateral Agent shall
designate. At any such sale or other disposition, the Collateral Agent and/or
any Bank, to the extent permissible under applicable Laws, may purchase the
whole or any part of the Borrowing Base Oil and Gas Properties, free from any
right of redemption on the part of the Borrower, which right is hereby waived
and released. Without limiting the generality of any of the rights and remedies
conferred upon the Collateral Agent for the benefit of the Banks under this
paragraph, the Collateral Agent may, to the full extent permitted by the
applicable Laws:
(A) Enter upon the premises of the Borrower (and, to the extent
necessary in the judgment of the Collateral Agent, exclude therefrom the
Borrower or any Affiliate thereof) and take immediate possession of the
Borrowing Base Oil and Gas Properties, either personally or by means of a
receiver appointed by a court of competent jurisdiction, using all
necessary force to do so;
(B) At the Collateral Agent's option, use, operate, manage, and
control the Borrowing Base Oil and Gas Properties in any lawful manner;
(C) Collect and receive all rents, income, revenue, earnings, issues,
and profits therefrom for the benefit of the Banks; and
(D) Maintain, repair, renovate, alter, or remove the Borrowing Base
Oil and Gas Properties as the Banks may determine in their discretion.
7.05 Right of Set-off. Upon the occurrence of any Event of Default, each
Bank may, and is hereby authorized by the Borrower, at any time and from time to
time, to the fullest extent permitted by applicable Laws, without advance notice
to the Borrower (any such notice being expressly waived by the Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by such Bank to or for the credit or the account of the Borrower against
any or all of the Obligations of the Borrower now or hereafter existing, whether
or not such Obligations have matured and irrespective of whether such Bank may
have exercised any other rights that they have or may have with respect to such
Obligations, including, without limitation, any acceleration rights. Each Bank
agrees promptly to notify the Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 7.05
are in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which the Banks may have.
ARTICLE VIII.
THE AGENTS
8.01 Authorization and Action. Each Bank hereby irrevocably appoints and
authorizes each Agent to act on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are specifically delegated to or
required of such Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or the other Loan Documents (including, without
limitation, enforcement or collection of the Notes), no Agent shall be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and, as between such Agent and the Banks, shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Banks, and such instructions shall be binding upon all Banks and all
holders of Notes; provided, however, that no Agent shall be required to take any
action which exposes such Agent to personal liability or which is contrary to
this Agreement, the other Loan Documents or applicable law.
8.02 Agent's Reliance, Etc. Neither any Agent nor any of its directors,
officers, agents or employees shall be liable to any Bank for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
or the other Loan Documents (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its or their own gross negligence or
willful misconduct (it being the express intention of the parties that no Agent
nor its directors, officers, agents and employees shall have any liability for
actions and omissions under this Section 8.02 resulting from their sole ordinary
or contributory negligence). Without limitation of the generality of the
foregoing, each Agent: (i) may treat the payee of each Note as the holder
thereof until such Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to such Agent; (ii) may
consult with legal counsel (including counsel for Borrower or any of its
Subsidiaries), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations made
in or in connection with this Agreement or the other Loan Documents; (iv) except
as otherwise expressly provided herein, shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents or to inspect the
property (including the books and records) of Borrower and its Subsidiaries; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, telecopier, cable or
telex) reasonably believed by it to be genuine and signed or sent by the proper
party or parties; and (vii) the provisions of this Section 8.02 shall survive
the termination of this Agreement and/or the payment or assignment of any of the
Indebtedness under this Agreement.
8.03 Each Agent and its Affiliates. With respect to its Commitment, the
Credit Extensions made by it and the Note issued to it as a Bank, each Agent
shall have the same rights and powers under this Agreement or the other Loan
Documents as any other Bank and may exercise the same as though it were not an
Agent. The term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include each Agent in its individual capacity. Each Agent and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with Borrower, any of its respective
Subsidiaries and any Person who may do business with or own securities of
Borrower, any of its respective Subsidiaries, all as if such Agent were not an
Agent and without any duty to account therefor to the Banks.
8.04 Bank Credit Decision. Each Bank acknowledges and agrees that it has,
independently and without reliance upon the Administrative Agent or any other
Agent and based on the Financial Statements referred to in Section 5.04 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Administrative Agent or any other Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
8.05 Agent's Indemnity. No Agent shall be required to take any action
hereunder or to prosecute or defend any suit in respect of this Agreement or the
other Loan Documents unless indemnified to such Agent's satisfaction by the
Banks against loss, cost, liability and expense. If any indemnity furnished to
such Agent shall become impaired, it may call for additional indemnity and cease
to do the acts indemnified against until such additional indemnity is given. In
addition, the Banks agree to indemnify such Agent (to the extent not reimbursed
by Borrower), ratably according to the respective principal amounts of the Notes
then held by each of them (or if no Notes are at the time outstanding, ratably
according to either (i) the respective amounts of their Commitments, or (ii) if
no Commitments are outstanding, the respective amounts of the Commitments
immediately prior to the time the Commitments ceased to be outstanding), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by such Agent under this Agreement or the other Loan Documents
(including, without limitation, any action taken or omitted under Article II of
this Agreement); provided, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Each Bank agrees, however, that it expressly intends, under
this Section 8.05, to indemnify each Agent ratably as aforesaid for all such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements arising out of or resulting from such Agent's
ordinary or contributory negligence. Without limitation of the foregoing, each
Bank agrees to reimburse such Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel fees) incurred by
such Agent in connection with the preparation, execution, administration, or
enforcement of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Loan Documents to the extent that such Agent is not
reimbursed for such expenses by Borrower. The provisions of this Section 8.05
shall survive the termination of this Agreement and/or the payment or assignment
of any of the Indebtedness under this Agreement.
8.06 Successor Agents. Each Agent may resign at any time by giving written
notice thereof to the Banks and Borrower and may be removed as an Agent under
this Agreement and the other Loan Documents at any time with or without cause by
the Required Banks. Upon any such resignation or removal, the Required Banks
with the concurrence of Borrower shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 calendar days after the
retiring Agent's giving of notice of resignation or the Required Banks' removal
of the retiring Agent, then the retiring Agent may, on behalf of the Banks and
with the concurrence of Borrower, appoint a successor Agent. Upon the acceptance
of any appointment as Agent hereunder and under the other Loan Documents by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation or removal as Agent hereunder and under the other Loan Documents,
the provisions of this Article VIII 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.
8.07 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
hereunder unless such Agent shall have received notice from a Bank or Borrower
referring to this Agreement, describing such Unmatured Event of Default or Event
of Default and stating that such notice is a "notice of default." If any Agent
receives such a notice, such Agent shall give notice thereof to the Banks;
provided, however, if such notice is received from a Bank, such Agent also shall
give notice thereof to Borrower. The Administrative Agent shall be entitled to
take action or refrain from taking action with respect to such Unmatured Event
of Default or Event of Default as provided in Section 8.01 and Section 8.02.
ARTICLE IX.
MISCELLANEOUS
9.01 Security Interests in Deposits and Right of Offset or the Banker's
Lien. The Borrower hereby transfers, assigns, pledges and grants to each Bank a
security interest (as security for the payment and/or performance of the
Obligations of the Borrower, with such interest of each Bank to be
retransferred, reassigned and/or released by such Bank at the expense of the
Borrower upon payment in full and/or complete performance by the Borrower of all
such Obligations) and the right, exercisable at such time as any obligation
hereunder shall mature, whether by acceleration of maturity or otherwise, of
offset or banker's lien against all funds or other property of the Borrower now
or hereafter or from time to time on deposit with or in the possession of such
Bank, including, without limitation, all certificates of deposit and other
depository accounts.
9.02 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 this
Agreement so long as any debt is outstanding under the Notes, or any renewal or
extension of this Agreement or the Notes, or the Banks remain obligated to make
advances hereunder.
9.03 Notices and Other Communications. Notices, requests and communications
hereunder shall be in writing and shall be sufficient in all respects if
delivered to the relevant address indicated below (including delivery by
registered or certified United States mail, facsimile, telex, telegram or hand):
(A) If to
Borrower: CONTINENTAL RESOURCES, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
(B) If to
any of the
Bank Parties: UNION BANK OF CALIFORNIA, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Any party may, by proper written notice hereunder to the other, change the
individuals or addresses to which such notices to it shall thereafter be sent.
9.04 Parties in Interest. All covenants and agreements herein contained by
or on behalf of the Borrower shall be binding upon the Borrower and its
successors and assigns and inure to the benefit of the Bank Parties and their
respective successors and assigns.
9.05 Successors and Assigns; Participation; Purchasing Banks.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and permitted
assigns of such party; and all covenants, promises and agreements by or on
behalf of Borrower, the Administrative Agent or the Banks that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and permitted assigns. Borrower may not assign or
transfer any of its rights or obligations hereunder without the written
consent of all the Banks.
(b) Each Bank may, without the consent of Borrower, sell
participations to one or more banks or other financial institutions in all
or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of
its Commitment, the Loans owing to it, and the Notes held by it); provided,
however, that (i) the selling Bank's obligations under this Agreement and
the other Loan Documents shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) Borrower, the Administrative Agent, and the
other Banks shall continue to deal solely and directly with the selling
Bank in connection with such Bank's rights and obligations under this
Agreement and the other Loan Documents, (iv) the selling Bank shall remain
the holder of its Note(s) for all purposes of this Agreement, and (v) no
participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement or any Note, or
any consent to any departure by the Borrower therefrom, except to the
extent that such amendment, waiver or consent would reduce to the principal
of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or
postpone any regularly scheduled payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation.
(c) With the prior written consent of Borrower and the Administrative
Agent, each Bank may assign to one or more banks or other entities (a
"Purchasing Bank"), all or a portion of its interests, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment and the same portion
of the Loans at the time owing to it and the Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement and the other Loan Documents, (ii) after giving effect
to such assignment, the Purchasing Bank's Commitment must be at least
$5,000,000 (either solely as the result of such assignment or as the result
of multiple assignments from two or more assigning Banks), (iii) the
parties to each such assignment shall execute and deliver to the
Administrative Agent a Commitment Transfer Supplement together with any
Notes subject to such Commitment Transfer Supplement, (iv) the assigning
Bank shall pay to Administrative Agent an assignment fee of $3,500, (v) an
assigning Bank shall not assign a portion of such Bank's Commitment in an
amount less than an amount equal to the lesser of such Bank's Commitment
hereunder and $2,500,000 and (vi) if the assigning Bank has retained any
Commitment hereunder, such assigning Bank's Commitment shall be at least
$5,000,000 after giving effect to such assignment. Upon such execution and
delivery, from and after the effective date specified in each Commitment
Transfer Supplement, which effective date shall be at least five Business
Days after the execution thereof (x) the Purchasing Bank thereunder shall
be a party hereto and, to the extent herein provided in such, have the
rights and obligations of a Bank hereunder and (y) the assignor Bank
thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement and the other Loan Documents
(and, in the case of a Commitment Transfer Supplement covering all of the
remaining portion of an assigning Bank's rights and obligations under this
Agreement and the other Loan Documents, such Bank shall cease to be a party
hereto). Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment of Percentage
Shares arising from the purchase by such Purchasing Bank of all or a
portion of the rights and obligations of such assigning Bank under this
Agreement, the Notes and the other Loan Documents.
(d) The Administrative Agent shall maintain at its office a copy of
each Commitment Transfer Supplement delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitment
Amount of, and principal amount of the Loans owing to, each Bank from time
to time (the "Register"). The entries in the Register shall be conclusive,
in the absence of manifest error, and Borrower, the Administrative Agent,
and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
an assigning Bank and a Purchasing Bank together with any Notes subject to
such Commitment Transfer Supplement and the written consent to such
Commitment Transfer Supplement, the Administrative Agent shall (i) accept
such Commitment Transfer Supplement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Banks
and Borrower. Within five (5) Business Days after receipt of such notice,
Borrower shall, at its own expense, execute and deliver to the
Administrative Agent, in exchange for the surrendered Notes, replacement
Notes dated as of the effective date of such surrendered Notes and
otherwise substantially in the form of the Notes replaced thereby payable
to the order of such Purchasing Bank in an amount equal to the Commitment
assumed by it pursuant to such Commitment Transfer Supplement and, if the
assigning Bank has retained any Commitment hereunder, replacement Notes
dated as of the effective date of the surrendered Notes and otherwise
substantially in the form of the Notes replaced thereby payable to the
order of the assigning Bank in an amount equal to the Commitment of such
assigning Bank retained by it hereunder. Such replacement Notes shall be in
an aggregate principal amount equal to the aggregate principal amount of
such surrendered Notes. Contemporaneously with the delivery of the
replacement Notes, the canceled Notes shall be returned to Borrower marked
"Replaced."
(f) Each Bank agrees to hold any confidential information which it may
receive from the Borrower pursuant to this Agreement in confidence, except
for disclosure (i) to its Affiliates and to other Banks and their
respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Bank, (iii) to regulatory officials, (iv) to
any Person as requested pursuant to or as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to
which such Bank is a party, (vi) to such Bank's direct or indirect
contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, and
(vii) permitted by this Section. Notwithstanding any other provision
herein, any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.05,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower or any other Subsidiary
of Borrower furnished to such Bank by or on behalf of Borrower or any other
Subsidiary of Borrower; provided, that prior to any such disclosure, each
such assignee or participant or proposed assignee or participant shall
agree to preserve the confidentiality of any confidential information
relating to Borrower and any of its Subsidiaries received from such Bank to
the same extent as required by this Section.
(g) Assignment to Federal Reserve Bank or Federal Home Loan Bank.
Notwithstanding any other language in this Agreement, any Bank may at any
time assign all or any portion of its rights under this Agreement and the
Notes to a Federal Reserve Bank or a Federal Home Loan Bank as collateral
in accordance with Regulation A and the applicable operating circular of
such Federal Reserve Bank or Federal Home Loan Bank.
9.06 Renewals and Extensions. All provisions of this Agreement relating to
the Notes shall apply with equal force and effect to each and all promissory
notes hereafter executed which in whole or in part represent a renewal,
extension, amendment, modification or rearrangement of any part of the
Indebtedness originally represented by the Notes.
9.07 No Waiver by the Bank Parties. No course of dealing on the part of the
Bank Parties, their officers or employees, nor any failure or delay by any of
the Bank Parties with respect to exercising any of its rights, powers or
privileges under this Agreement, the Notes, the Facility LC Applications, the
Security Instruments, or any other instrument referred to herein or executed in
connection with the Notes shall operate as a waiver thereof. The rights and
remedies of the Bank Parties under this Agreement, the Notes, the Facility LC
Applications, the Security Instruments, or any other instrument referred to
herein or executed in connection with the Notes shall be cumulative and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.
No Credit Extensions hereunder shall constitute a waiver of any of the
covenants or warranties of the Borrower contained herein or of any of the
conditions to the Banks' or the LC Issuer's obligation to make further Credit
Extensions hereunder. In the event that the Borrower is unable to satisfy any
such covenant, warranty or condition, no such Credit Extension shall have the
effect of precluding the Banks or the LC Issuer from thereafter declaring such
inability to be an Event of Default as hereinabove provided.
9.08 Waiver, Release, and Indemnification by the Borrower. To the maximum
extent permitted by applicable Laws, the Borrower:
(A) Waives (1) protest of all commercial paper at any time held by any
Bank on which the Borrower is in any way liable; (2) except as the same may
herein be specifically granted, notice of acceleration and intention to
accelerate; and (3) notice and opportunity to be heard, after acceleration
in the manner provided in Section 7.03, before exercise by Administrative
Agent, any Bank or the LC Issuer of the remedies of self-help, set-off, or
of other summary procedures permitted by any applicable Laws or by any
agreement with the Borrower, and, except where required hereby or by any
applicable Laws, notice of any other action taken by Administrative Agent,
any Bank or the LC Issuer;
(B) Releases each Agent, each of the Bank Parties and the LC Issuer
and their respective officers, employees, directors, attorneys, and agents
from all claims for loss or damage caused by any act or omission on the
part of any of them except willful misconduct or gross negligence; and
(C) Agrees to indemnify and hold the Bank Parties and the LC Issuer
and their respective officers, employees, directors, attorneys, and agents
harmless from and against all claims, damages, liabilities and expenses,
known or unknown, accrued and unaccrued, unless attributable to the gross
negligence or willful misconduct of the Bank Parties, the LC Issuer or
their respective officers, employees, directors, attorneys, and agents,
that may now or hereafter be asserted against any of the Bank Parties and
the LC Issuer and their respective officers, employees, directors,
attorneys, and agents in connection with or arising out of any
investigation, litigation or proceeding directly or indirectly relating to
or arising out of any of the transactions contemplated by this Agreement.
9.09 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. EACH PARTY HERETO AGREES THAT IN CONNECTION WITH
ANY LITIGATION BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO
SEEKING TO ENFORCE ANY RIGHTS, REMEDIES OR OBLIGATIONS UNDER THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, EACH PARTY CONCLUSIVELY WAIVES IT RIGHT TO
TRIAL BY JURY.
9.10 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
attached to this Agreement are incorporated herein for all purposes and shall be
considered a part of this Agreement.
9.11 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in this Agreement, the Notes, the Security Instruments, or
in any other instrument referred to herein or executed in connection with the
Notes 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 hereof or of any other instrument referred to herein or
executed in connection herewith.
9.12 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Bank Parties and Borrower and no other Person
shall have standing to require satisfaction of such provisions in accordance
with their terms or be entitled to assume that any Bank will refuse to make
advances in the absence of strict compliance with any or all thereof. Any or all
of such provisions may be freely waived in whole or in part by the
Administrative Agent, the Banks and the LC Issuer at any time if in their
discretion they deem it advisable to do so.
9.13 Amendments or Modifications. Subject to the provisions of this
Section, the Required Banks (or the Administrative Agent with the consent in
writing of the Required Banks) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Banks or the Borrower
hereunder or waiving any Event of Default hereunder; provided, however, that:
(a) no such supplemental agreement shall, without the consent of all
of the Banks:
(i) Extend the final maturity of any Loan, postpone any
regularly scheduled payment of principal of any Loan,
forgive all or any portion of the principal amount thereof,
or reduce the rate or extend the time of payment of interest
or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Banks.
(iii)Reduce the percentage specified in the definition of
Super-Majority.
(iv) Extend the Facility Termination Date, or reduce the amount
or extend the payment date for, the mandatory payments
required under Sections 2.07 or 2.08, or increase the
Aggregate Commitment Amount or the Commitment of any Bank
hereunder, or permit the Borrower to assign its rights under
this Agreement.
(v) Amend the requirement that the Borrowing Base may be
increased only with the consent of all Banks.
(vi) Release any guarantor of any Loan or, except as provided in
the Security Instruments, release all or substantially all
of the Borrowing Base Oil and Gas Properties.
(vii) Amend this Section 9.13.
(b) No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent.
9.14 Agreement Construed as an Entirety. This Agreement, for convenience
only, has been divided into Articles and Sections and it is understood that the
rights, powers, privileges, duties and other legal relations of the parties
hereto shall be determined from this Agreement as an entirety and without regard
to the aforesaid division into Articles and Sections and without regard to
headings prefixed to said Articles or Sections.
9.15 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. 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.
9.16 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS AGREEMENT, TOGETHER
WITH THE NOTES, THE FACILITY LC APPLICATIONS, THE SECURITY INSTRUMENTS, AND ANY
OTHER WRITTEN INSTRUMENTS EXECUTED PURSUANT TO THIS AGREEMENT REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF, UNLESS SUCH PRIOR AGREEMENT IS EXPRESSLY
CONTINUED IN EFFECT UNDER THE TERMS HEREOF. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
9.17 Controlling Provision Upon Conflict. In the event of a conflict
between the provisions of this Agreement and those of the Notes, the Facility LC
Applications, the Security Instruments or any other instrument referred to
herein or executed in connection with the Notes, the provisions of this
Agreement shall control; provided if any of the Facility LC Applications or
Security Instruments contain any representations, warranties, or covenants of
the Borrower that are in addition to or are more restrictive on the Borrower
than those set forth in this Agreement, such additional or more restrictive
representations, warranties, and covenants shall control.
9.18 Time, Place and Method of Payments. All payments required pursuant to
this Agreement or the Notes shall be made in immediately available funds; shall
be deemed received by the Administrative Agent on the next Business Day
following receipt if such receipt is after 4:00 p.m. Los Angeles, California
time, on any Business Day, and shall be made at the principal banking quarters
of the Administrative Agent in Monterey Park, California.
9.19 Termination. This Agreement and the Aggregate Commitment Amount may be
canceled by the Borrower without premium or penalty prior to the Facility
Termination Date upon at least thirty (30) days' prior written notice, provided,
that the Obligations that are then due and payable are paid and performed in
full to the satisfaction of the Administrative Agent and the Banks; provided,
however that any such cancellation hereunder shall not terminate any
obligations, representations or warranties of the Borrower to the Administrative
Agent and/or the Banks hereunder and under other Loan Documents that survive
beyond the Facility Termination Date. Upon the earlier to occur of the (i) the
Facility Termination Date, and (ii) cancellation of this Agreement and the
Aggregate Commitment Amount prior thereto in accordance with this Section 9.19
and upon payment and performance in full of the Obligations that are due and
payable to the satisfaction of the Banks, the Administrative Agent agrees, at
the Borrower's request and sole cost and expense, to execute and deliver any
such lien release documents and other documentation reasonably requested by the
Borrower to release or terminate the Administrative Agent's liens and security
interests hereunder and under the other Loan Documents.
9.20 Non-Application of Chapter 346 of Texas Finance Code. The provisions
of Chapter 346 of the Texas Finance Code are specifically declared by the
parties hereto not to be applicable to this Agreement or any of the other
Security Instruments or to the transactions contemplated hereby.
9.21 Counterpart Execution. This Agreement may be executed as one
instrument signed by all parties or in separate counterparts hereof, each of
which counterparts shall be considered an original and all of which shall be
deemed to be one instrument, and any signed counterpart shall be deemed
delivered by the party signing it if sent to any other party hereto by
electronic facsimile transmission.
9.22 Power of Attorney. To the fullest extent permitted by Law and until
this Agreement is terminated in accordance with Section 9.19 hereof, Borrower
hereby appoints Collateral Agent as its attorney-in-fact (without requiring the
Collateral Agent to act as such) to execute any Security Instrument in the name
of the Borrower, and to perform all other acts that the Collateral Agent deems
appropriate to perfect and continue its liens, security interests, and other
rights in, and to protect and preserve, the Borrowing Base Oil and Gas
Properties and other collateral covered by or described in (or, as evidenced by
this Agreement, intended to have been covered by) any of the Security
Instruments, but only to the extent required of Borrower under the terms of this
Agreement.
9.23 Subordination of Intercompany Debt. The term "Subordinated
Intercompany Debt" as used in this Section shall mean and include any and all
indebtedness, liabilities and obligations of Borrower to any Guarantor, absolute
or contingent, direct or indirect, joint, several or independent, now
outstanding or owing or which may hereafter be existing or incurred, arising by
operation of law or otherwise, due or to become due, or held or to be held by
any Guarantor, whether created directly or acquired by assignment, as a
participation, conditionally, as collateral security from another or otherwise,
including indebtedness, obligations and liabilities of Borrower to any Guarantor
as a member of any partnership, syndicate, association or other group, and
whether incurred by Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise, including, without limiting the generality of
the foregoing, all indebtedness, liabilities and obligations of Borrower to any
Guarantor arising out of any operating agreement, management agreement or
similar agreement between Borrowers and any of the Guarantors. The term "Senior
Debts" as used in this Section shall mean and include any and all indebtedness,
liabilities and obligations of Borrower to the Banks or LC Issuer, absolute or
contingent, direct or indirect, joint, several or independent, now outstanding
or owing or which may hereafter be existing or incurred, arising by operation of
law or otherwise, due or to become due, or held or to be held by Banks or LC
Issuer, whether created directly or acquired by assignment, as a participation,
conditionally, as collateral security from another or otherwise, including
indebtedness, obligations and liabilities of Borrower to Banks or LC Issuer as a
member of any partnership, syndicate, association or other group, and whether
incurred by Borrower as principal, surety, endorser, guarantor, accommodation
party or otherwise and including, without limitation, all Obligations, as that
term is defined in this Agreement. During such time as any Senior Debts remain
unpaid and an Event of Default or Unmatured Event of Default has occurred and is
continuing, no Guarantor will ask for, demand, ▇▇▇ for, take, receive or accept
from Borrower, by set off or in any other manner, any payment or distribution on
account of the Subordinated Intercompany Debt, nor present any instrument
evidencing the Subordinated Intercompany Debt for payment (other than such
presentment as may be necessary to prevent discharge of other liable parties on
such instrument), unless the advance written consent or written demand to do so
has been received by such Guarantor from Administrative Agent on behalf of the
Banks. In the event any Guarantor shall receive any payments, distributions,
property, security or proceeds on account of the Subordinated Intercompany Debt,
which such party is not entitled to receive under the provisions this Section,
such party will hold any amount so received in trust for the Banks and LC
Issuer, as applicable, and will forthwith turn over such payment to
Administrative Agent in the form received by such Guarantor (together with any
necessary endorsement) to be applied on the Senior Debts and any such sums paid
to Administrative Agent by such Guarantor shall not be deemed to reduce or
extinguish the Subordinated Intercompany Debt of Borrower to any Guarantor. No
Guarantor shall commence any action or proceeding against Borrower to recover
all or any part of the Subordinated Intercompany Debt or join with any other
creditor, unless Banks and LC Issuer shall also join, in bringing any
proceedings against Borrower under any bankruptcy, reorganization, readjustment
of debt, arrangement of debt, receivership, liquidation or insolvency law or
statute of the Federal or any state government unless and until all Senior Debts
shall have been paid in full. In the event of any receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization or
arrangement with creditors, adjustment of debt, whether or not pursuant to
bankruptcy laws, the sale of all or substantially all of the assets,
dissolution, liquidation, or any other marshaling of the assets and liabilities
of Borrower, any Guarantor will at Bank's request promptly and expeditiously
file any claim, proof of claim, proof of interest or other instrument of similar
character necessary to enforce the obligations of Borrower in respect of the
Subordinated Intercompany Debt and will hold in trust for Banks and LC Issuer,
as applicable, and pay over to Administrative Agent in the form received
(together with any necessary endorsement), to be applied on the Senior Debts,
any and all monies, dividends or other assets received in any such proceedings
on account of the Subordinated Intercompany Debt unless and until the Senior
Debts shall be paid in full. No Guarantor will assign or transfer to others any
claim such Guarantor has or may have against any Borrower as long as any of the
Senior Debts remains outstanding.
9.24 Prior Agreement. This Agreement amends, extends, rearranges and
restates but does not extinguish, the Borrower's obligations under the Third
Restated Agreement. All liens and security interests that exist to secure the
indebtedness evidenced by the Third Restated Agreement shall continue in force
and effect to secure the indebtedness evidenced by the Notes.
[signature pages follow]
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER
CONTINENTAL RESOURCES, INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
ADMINISTRATIVE AGENT, LEAD ARRANGER, LC
ISSUER, FRONTING BANK AND BANK:
UNION BANK OF CALIFORNIA, N.A.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Senior Vice President
By: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇,
Vice President
COLLATERAL/DOCUMENTATION AGENT,
CO-ARRANGER AND BANK:
GUARANTY BANK, FSB
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Vice President
SYNDICATION AGENT, CO-ARRANGER AND BANK:
FORTIS CAPITAL CORP.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Managing Director
By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
The undersigned Guarantors join in the execution of this Agreement for purposes
of agreeing to: (a) be bound by the provisions of Section 9.23 hereof, and (b)
comply with each of the affirmative covenants in Article V hereof and each of
the negative covenants in Article VI hereof, to the same extent that Borrower
has agreed therein to cause Guarantors to comply with such covenants.
CONTINENTAL GAS, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
CONTINENTAL RESOURCES OF
ILLINOIS, INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
and Chief Financial Officer
CONTINENTAL CRUDE CO.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
and Chief Financial Officer
EXHIBIT "A"
BORROWING BASE
OIL AND GAS PROPERTIES
This Exhibit A (together with the Borrowing Base Oil and Gas Properties, as
defined in this Agreement) sets forth the description of the Borrowing Base Oil
& Gas Properties covered by the Agreement to which this Exhibit is attached. All
of the terms defined in the Agreement are used in this Exhibit with the same
meanings given therein.
This Exhibit and the Agreement cover and include the following:
(a) All of Borrower's and each Guarantor's right, title and interest
in and to the oil, gas and mineral leases described herein and/or lands
described in and subject to such oil, gas and mineral leases (regardless,
as to such leases and/or lands, of any surface acreage and/or depth
limitations set forth in any description of any of such oil, gas and
mineral leases), and all of Borrower's and each Guarantor's right, title
and interest in and to any of the oil, gas and minerals in, on or under the
lands, if any, described on this Exhibit, including, without limitation,
all contractual rights, fee interests, leasehold interests, overriding
royalty interests, non-participating royalty interests, mineral interests,
production payments, net profits interests, or any other interest measured
by or payable out of production of oil, gas or other minerals from the oil,
gas and mineral leases and/or lands described herein; and
(b) All of the foregoing interests of the Borrower and each Guarantor
as such interests may be enlarged by the discharge of any payments out of
production or by the removal of any charges or encumbrances together with
the Borrower's and each Guarantor's interests in, to and under or derived
from all renewals and extensions of any oil, gas and mineral leases
described herein, it being specifically intended hereby that any new oil
and gas lease (i) in which an interest is acquired by the Borrower or any
Guarantor after the termination or expiration of any oil and gas lease, the
interests of the Borrower or such Guarantor in, to and under or derived
from which are subject to the lien and security interest hereof, and (ii)
that covers all or any part of the property described in and covered by
such terminated or expired leases, shall, to the extent, and only to the
extent such new oil and gas lease may cover such property, be considered a
renewal or extension of such terminated or expired lease; and
(c) All right, title and interest of Borrower and each Guarantor in,
to and under or derived from any operating, farmout, and bidding
agreements, assignments and subleases, whether or not described in this
Exhibit, to the extent, and only to the extent, that such agreements,
assignments and subleases (i) cover or include any of the Borrower's and
each Guarantor's present right, title and interest in and to the leases
and/or lands described in this Exhibit, or (ii) cover or include any other
undivided interests now or hereafter held by the Borrower and each
Guarantor in, to and under the described leases and/or lands, including,
without limitation, any future operating, farmout and bidding agreements,
assignments, subleases and pooling, unitization and communitization
agreements and the units created thereby (including, without limitation all
units formed under orders, regulations, rules or other official acts of any
governmental body or agency having jurisdiction) to the extent and only to
the extent that such agreements, assignments, subleases, or units cover or
include the described leases and/or lands; and
(d) All right, title, and interest of the Borrower and each Guarantor
in, to and under or derived from all presently existing and future advance
payment agreements, oil, casinghead gas and gas sales, exchange, and
processing contracts and agreements including, without limitation, those
contracts and agreements that are described on this Exhibit to the extent,
and only to the extent, those contracts and agreements cover or include the
described leases and/or lands herein; and
(e) All right, title and interest of the Borrower and each Guarantor
in, to and under or derived from all existing and future permits, licenses,
easements and similar rights and privileges that relate to or are
appurtenant to any of the described leases and/or lands.
Notwithstanding the intention of this Agreement to cover all of the right,
title and interest of Borrower and each Guarantor in and to the described leases
and/or lands, except as expressly set forth herein Borrower hereby specifically
warrants and represents that the interests covered by this Exhibit are not
greater than the working interest nor less than the net revenue interest,
overriding royalty interest, net profit interest, production payment interest or
other interest payable out of or measured by production set forth in connection
with each oil and gas well described in this Exhibit. In the event the Borrower
or any Guarantor owns any other or greater interest, such additional interest
shall also be covered by and included in this Agreement. The designation
"Working Interest" or "W.I." means an interest owned in an oil, gas, and mineral
lease (including operating rights and/or record title interest in oil and gas
leases issued pursuant to the Outer Continental Shelf Lands Act) that determines
the cost bearing percentage of the owner of such interest. The designation "Net
Revenue Interest" or "NRI" means net revenue interest, or that portion of the
production attributable to the owner of a working interest after deduction for
all royalty burdens, overriding royalty burdens, or other burdens on production,
except severance, production, windfall profits and other similar taxes. The
designation "Overriding Royalty Interest" or "ORRI" means an interest in
production which is free of any obligation for the expense of exploration,
development and production, bearing only its pro rata share of severance,
production, windfall profits and other similar taxes.
EXHIBIT "B"
AMENDED AND RESTATED REPLACEMENT NOTE
$[175,000,000] Dallas, Texas March 28, 2002
On the dates hereinafter prescribed, for value received, CONTINENTAL
RESOURCES, INC., an Oklahoma corporation (herein called "Borrower"), having an
address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, promises to pay to the
order of _____________________ (herein called "Bank"), by payment to UNION BANK
OF CALIFORNIA, N.A., the Administrative Agent in the Credit Agreement (defined
below) at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) the principal
amount of U.S. [ONE HUNDRED SEVENTY-FIVE] MILLION DOLLARS ($[175,000,000]) or
the principal amount advanced pursuant to the terms of the Credit Agreement
(defined herein) as of the date of maturity hereof, whether by acceleration or
otherwise, whichever may be the lesser, and (ii) interest on the principal
balance from time to time advanced and remaining unpaid from the date of the
advance until maturity at a rate of interest equal to lesser of (a) the
"Floating Rate" (as defined and calculated in the Credit Agreement), or (b) the
Maximum Rate (as defined and calculated in the Credit Agreement). Any increase
or decrease in interest rate resulting from a change in the Maximum Rate shall
be effective immediately when such change becomes effective, without notice to
the Borrower, unless Applicable Law (as defined in the Credit Agreement)
requires that such increase or decrease not be effective until a later time, in
which event such increase or decrease shall be effective at the earliest time
permitted under the provisions of such law.
Notwithstanding the foregoing, if during any period the Floating Rate
exceeds the Maximum Rate, the rate of interest in effect on this Note shall be
limited to the Maximum Rate during each such period, but at all times thereafter
the rate of interest in effect on this Note shall be the Maximum Rate or, if
there is no Maximum Rate, the Agreed Maximum Rate (as defined below), until the
total amount of interest accrued on this Note equals the total amount of
interest which would have accrued hereon if the Floating Rate had at all times
been in effect.
This Note is a revolving credit note and it is contemplated that by reason
of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrence, this Note shall remain valid and
in full force and effect as to each principal advance made hereunder subsequent
to each such occurrence. Each principal advance and each payment hereof made
pursuant to this Note shall be reflected by the Bank's records and the aggregate
unpaid amounts reflected by such records shall constitute rebuttably presumptive
evidence of the principal and unpaid, accrued interest remaining outstanding on
this Note.
"Agreed Maximum Rate" means a per annum rate of seven and three-fourths
percent (7.75%) plus the Floating Rate from time to time in effect, which Agreed
Maximum Rate shall apply only during any period while there is no Maximum Rate
applicable to this Note.
Other capitalized terms used herein, that are not defined herein, shall
have the meanings prescribed therefor in the Credit Agreement.
The Borrower and the Bank hereby agree that Chapter 346 of the Texas
Finance Code, shall not apply to this Note or the loan transaction evidenced by,
and referenced in, the Credit Agreement (hereinafter defined) in any manner,
including without limitation, to any account or arrangement evidenced or created
by, or provided for in, this Note.
The principal sum of this Note, after giving credit for unadvanced
principal, if any, remaining at final maturity, shall be due and payable on or
before March 28, 2005; interest to accrue upon the principal sum from time to
time owing and unpaid hereunder shall be due and payable as provided in the
Credit Agreement; provided, however, the final installment of interest hereunder
shall be due and payable not later than the maturity of the principal sum
hereof, howsoever such maturity may be brought about.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this Note.
The Bank and the Borrower specifically intend and agree to limit contractually
the interest payable on this Note to not more than an amount determined at the
Maximum Rate. Therefore, none of the terms of this Note or any other instruments
pertaining to or securing this Note shall ever be construed to create a contract
to pay interest at a rate in excess of the Maximum Rate, and neither the
Borrower nor any other party liable herefor shall ever be liable for interest in
excess of that determined at the Maximum Rate, and the provisions of this
paragraph shall control over all provisions of this Note or of any other
instruments pertaining to or securing this Note. If any amount of interest taken
or received by the Bank shall be in excess of the maximum amount of interest
which, under Applicable Law, could lawfully have been collected on this Note,
then the excess shall be deemed to have been the result of a mathematical error
by the parties hereto and shall be refunded promptly to the Borrower. All
amounts paid or agreed to be paid in connection with the indebtedness evidenced
by this Note which would under Applicable Law be deemed "interest" shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout the full term of this Note.
This Note is secured by all security agreements, collateral assignments,
mortgages and lien instruments executed by the Borrower (or by any other party)
in favor of Guaranty Bank, FSB, as Collateral Agent for the Banks, including
those executed simultaneously herewith, those executed heretofore and those
hereafter executed, and including specifically and without limitation the
Security Instruments described and defined in that certain Fourth Amended and
Restated Credit Agreement dated as of the date first stated above among
Borrower, Bank and certain other financial institutions (the "Credit
Agreement").
This Note is issued pursuant to the Credit Agreement. Reference is hereby
made to the Credit Agreement for a statement of the rights and obligations of
the holder of this Note and the duties and obligations of the Borrower in
relation thereto; but neither this reference to the Credit Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay any outstanding and unpaid principal of and
interest on this Note when due, in accordance with the terms of the Credit
Agreement. Each advance and each payment made pursuant to this Note shall be
reflected by notations made by the Bank on its records and the aggregate unpaid
amounts reflected by the notations on the records of the Bank shall be deemed
rebuttably presumptive evidence of the principal amount owing under this Note.
In the event of default in the payment when due of any of the principal of
or any interest on this Note, or in the event of default under the terms of the
Credit Agreement or any of the Security Instruments, or if any event occurs or
condition exists which authorizes the acceleration of the maturity of this Note
under any agreement made by the Borrower, the Bank (or other holder of this
Note) may, at its option, without presentment or demand or any notice to the
Borrower or any other person liable herefor, declare the unpaid principal
balance of and accrued interest on this Note to be immediately due and payable.
If this Note is collected by suit or through the Probate or Bankruptcy
Court, or any judicial proceeding, or if this Note is not paid at maturity,
however such maturity may be brought about, and is placed in the hands of an
attorney for collection, then the Borrower agrees to pay reasonable and
documented attorneys' fees, not to exceed 10% of the full amount of principal
and interest owing hereon at the time this Note is placed in the hands of an
attorney.
The Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, notice of intent to accelerate maturity, notice of acceleration of
maturity, and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, and agree to any substitution,
exchange or release of any such security or the release of any party primarily
or secondarily liable hereon and further agrees that it will not be necessary
for the Bank, in order to enforce payment of this Note by them, to first
institute suit or exhaust its remedies against any Borrower or others liable
herefor, or to enforce its rights against any security herefor, and consent to
any one or more extensions or postponements of time of payment of this Note on
any terms or any other indulgences with respect hereto, without notice thereof
to any of them. The Bank may transfer this Note, and the rights and privileges
of the Bank under this Note shall inure to the benefit of the Bank's
representatives, successors or assigns.
This Note amends, extends, rearranges and restates those certain [describe
each Third Restated Agreement Note] (the "Prior Notes"). All liens and security
interests that exist to secure the indebtedness evidenced by that Prior Notes
shall continue in force and effect to secure the indebtedness evidenced by this
Note.
[signature page follows]
Executed as of the date and year first set forth above.
CONTINENTAL RESOURCES, INC.
Attest:
By:
Secretary
EXHIBIT "C"
COMPLIANCE CERTIFICATE
I, the President of CONTINENTAL RESOURCES, INC. (the "Company"), pursuant
to Section 5.05 of the Revolving Credit Agreement dated as of March 28, 2002, by
and among the Company, UNION BANK OF CALIFORNIA, N.A., as Administrative Agent,
and the other Banks that are party thereto (the "Agreement") do hereby certify,
as of the date hereof, that to my knowledge:
(a) No Event of Default (as defined in the Agreement) has occurred and is
continuing, and no Unmatured Event of Default (as defined in the
Agreement) has occurred and is continuing except for the following
events (include actions taken to cure such situations):
(b) No Material Adverse Change has occurred since the effective date of
the latest audited consolidated Financial Statements of the Company
delivered to the Administrative Agent;
(c) Except as otherwise stated in the Schedule, if any, attached hereto,
each of the representations and warranties of the Company contained in
Article IV of the Agreement is true and correct in all respects; and
(d) The Company's consolidated financial condition for the quarter ending
__________ is as follows:
Actual
Date or Time Required Ratio or Ratio or
Financial Covenant Period Amount Amount
------------------ ------ ------ ------
(a) Current Ratio As of the end of each 1.0 to 1.0
(Current Assets to fiscal quarter
Current Liabilities)
(b) Fixed Charge Coverage As of the end of each 1.25 to 1.0
Ratio (EBITDA to Total fiscal quarter, during
Fixed Charges) the preceding four
quarters
(c) Total Funded Debt to As of the end of each 3.75 to 1.0
EBITDA fiscal quarter
(d) Senior Debt to EBITDA As of the end of each 2.50 to 1.0
fiscal quarter
(e) Total Funded Debt to As of the end of each .70 to 1.0
Total Capitalization fiscal quarter
This certificate is executed this _____ day of_________,_____.
CONTINENTAL RESOURCES, INC.
By:
, President
EXHIBIT "D"
SECURITY INSTRUMENTS
The Security Instruments securing the Borrower's Obligations and
Indebtedness to the Bank shall include the following, each in form and substance
satisfactory to the Bank:
1. ACT(s) OF MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING AND ASSIGNMENT OF
PRODUCTION covering the Borrowing Base Oil and Gas Properties situated in
Louisiana and/or in the Gulf of Mexico Outer Continental Shelf offshore
Louisiana, the personal property and equipment therein and thereon, the
production of oil, gas, and other minerals therefrom, and all of the products
and proceeds thereof, to be duly executed by Borrower or Guarantor, as
applicable, with respect to all of the Borrowing Base Oil and Gas Properties.
2. DEED(S) OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF PRODUCTION covering the Borrowing Base Oil and Gas Properties situated in
Texas or other states and/or in the Gulf of Mexico Outer Continental Shelf
offshore Texas, the personal property and equipment therein and thereon, the
production of oil, gas, and other minerals therefore, and all of the products
and proceeds thereof, to be duly executed by Borrower or Guarantor, as
applicable, with respect to all of the Borrowing Base Oil and Gas Properties.
3. SECURITY AGREEMENT granting the Collateral Agent a first priority
security interest in all of the Borrower's and its Subsidiaries' accounts,
equipment, machinery, fixtures, inventory, chattel paper, documents, instruments
and general intangibles relating to or arising out of the Oil and Borrowing Base
Oil and Gas Properties, and the business of the Borrower, whether now owned or
hereafter acquired, and all products and proceeds thereof.
4. STOCK PLEDGE BY BORROWER covering all of the stock owned by Borrower in
each Guarantor, together with any products and proceeds thereof.
5. FINANCING STATEMENTS in connection with the Security Instruments
described in the preceding paragraphs, in form and number satisfactory to the
Collateral Agent as the Collateral Agent, from to time, may specify (including
additional or supplemental financing statements, amendments thereto, and
continuation statements thereof).
6. OTHER SECURITY INSTRUMENTS. Such other instruments as are necessary or
appropriate from time to time, in the good faith opinion of the Collateral
Agent, to perfect to the satisfaction of the Collateral Agent, its liens,
security interests, and other rights in the Borrowing Base Oil and Gas
Properties and in any and all other collateral covered by or described in (or,
as evidenced by the Agreement, intended to have been covered by) any of the
other Security Instruments described above.
EXHIBIT "E"
REQUEST FOR ADVANCE
I, the undersigned officer of CONTINENTAL RESOURCES, INC. (the "Company"),
pursuant to Section 2.01 of the Revolving Credit Agreement dated as of March 28,
2002, as amended from time to time (the "Agreement"), by and between UNION BANK
OF CALIFORNIA, N.A. ("Administrative Agent"), the banks and other financial
institutions from time to time parties to the Agreement (the "Banks"), and the
Company, do hereby make the requests indicated below on this day of , 200 :
_
|_| 1. Loans:
(a) Amount of new Loan: $
(b) Requested funding date: , 200
(c) $ of such Loan is to be an RR Loan;
$ of such Loan is to be a LIBOR Loan.
Requested Interest Period for LIBOR Loan: months.
_
|_| 2. Continuation or conversion of LIBOR Loan maturing
on , 200 :
(a) Amount to be continued as a LIBOR Loan is $ ,
with an Interest Period of months;
(b) Amount to be converted to an RR Loan is $ .
_
|_| 3. Conversion of Prime Rate Loan:
(a) Requested conversion date: , 200 .
(b) Amount to be converted to a LIBOR Loan is $ ,
with an Interest Period of months.
4. The undersigned certifies that the funds advanced from the
Banks to the Company pursuant to paragraphs 1 through 3
hereof, as applicable, shall be used by the Company solely
for the purposes permitted by the Agreement.
5. The undersigned certifies that to my knowledge after
reasonable inquiry into the applicable facts, as of the date
hereof, the Company is in compliance with all of the
representations, warranties, terms, conditions and covenants
contained in the Agreement and no Event of Default or
Unmatured Event of Default has occurred and is continuing
under the Agreement.
6. The undersigned certifies that to my knowledge after
reasonable inquiry into the applicable facts, as of the date
hereof, no Material Adverse Change has occurred since the
effective date of the latest audited Financial Statements of
the Company delivered to the Administrative Agent;
This certificate is executed this ____ day of ___________, 200 .
CONTINENTAL RESOURCES, INC.
By:
Schedule 1.01(a)
Third Restated Agreement Notes
1. Those three certain Replacement Revolving Notes in the aggregate face
amount of $45,700,000. each dated January 17, 2002, executed by Borrower et
al. and made payable to MidFirst Bank, Local Oklahoma Bank, N.A. and
Guaranty Bank, FSB, respectively.
2. Those three certain Replacement Term Notes in the aggregate face amount of
$24,300,000. each dated January 17, 2002, executed by Borrower et al. and
made payable to MidFirst Bank, Local Oklahoma Bank, N.A. and Guaranty Bank,
FSB, respectively.
Schedule 1.01(b)
Commitment Amounts and Aggregate Commitment Amount
Percentage Commitment
Bank Share Amount
---- ----- ------
Union Bank of California, N.A. 33.33333372% $ 58,333,334.00
Guaranty Bank, FSB 33.33333314% $ 58,333,333.00
Fortis Capital Corp. 33.33333314% $ 58,333,333.00
-----------------
Aggregate Commitment Amount: $ 175,000,000.00
Schedule 2.20(C)
Fax Numbers for all Parties
Union Bank of California, N.A........................▇▇▇-▇▇▇-▇▇▇▇
Guaranty Bank, FSB...................................▇▇▇-▇▇▇-▇▇▇▇
Fortis Capital Corp..................................▇▇▇-▇▇▇-▇▇▇▇
Continental Resources, Inc.,
Continental Gas, Inc.,
Continental Resources of Illinois, Inc, and
Continental Crude Co.................................▇▇▇-▇▇▇-▇▇▇▇
COMMITMENT TRANSFER SUPPLEMENT
THIS COMMITMENT TRANSFER SUPPLEMENT (this "Commitment Transfer Supplement")
dated as of the date set forth in Item 1 of Schedule I hereto, is among the
Transferor Bank set forth in Item 2 of Schedule I hereto (the "Transferor
Bank"), each Purchasing Bank set forth in Item 3 of Schedule 1 (each a
"Purchasing Bank"), and UNION BANK OF CALIFORNIA, N.A., as Administrative Agent
for the Banks under, and as defined in, the Credit Agreement described below (in
such capacity, the "Administrative Agent").
RECITALS
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 9.05(c) of the Revolving Credit Agreement
dated as of March 28, 2002, by and among CONTINENTAL RESOURCES, INC., a Delaware
corporation and certain of its Affiliates ("Borrower"), the Transferor Bank and
the other Banks party thereto and the Administrative Agent (as from time to time
amended, supplemented or otherwise modified in accordance with the terms
thereof, the "Credit Agreement"; terms defined therein being used herein as
therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank party to the
Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each Purchasing
Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
GENERAL TERMS
Section 1. Upon receipt by the Administrative Agent of five counterparts of
this Commitment Transfer Supplement, to each of which is attached a fully
completed Schedule I and Schedule II, and each of which has been executed by the
Transferor Bank, each Purchasing Bank (and any other person required by the
Credit Agreement to execute this Commitment Transfer Supplement), the
Administrative Agent will transmit to the Borrower, the Transferor Bank and each
Purchasing Bank a Transfer Effective Notice, substantially in the form of
Schedule III to this Commitment Transfer Supplement (a "Transfer Effective
Notice"). Such Transfer Effective Notice shall set forth, inter alia, the date
on which the transfer effected by this Commitment Transfer Supplement shall
become effective (the "Transfer Effective Date"), which date shall be at least
five (5) Business Days following the date of such Transfer Effective Notice.
From and after the Transfer Effective Date each Purchasing Bank shall be a Bank
party to the Credit Agreement for all purposes thereof.
Section 2. At or before 12:00 Noon, local time of the Transferor Bank, on
the Transfer Effective Date, each Purchasing Bank shall pay to the Transferor
Bank, in immediately available funds, an amount equal to the purchase price, as
agreed between the Transferor Bank and such Purchasing Bank (the "Purchase
Price"), of the portion being purchased by such Purchasing Bank (such Purchasing
Bank's "Purchased Percentage") of the outstanding Credit Extensions and other
amounts owing to the Transferor Bank under the Credit Agreement and the Notes.
Effective upon receipt by the Transferor Bank of the Purchase Price from a
Purchasing Bank, the Transferor Bank hereby irrevocably sells, assigns and
transfers to such Purchasing Bank, without recourse, representation or warranty,
and each Purchasing Bank hereby irrevocably purchases, takes and assumes from
the Transferor Bank, such Purchasing Bank's Purchased Percentage of the
Commitment of the Transferor Bank and the presently outstanding Credit
Extensions and other amounts owing to the Transferor Bank under the Credit
Agreement and the Notes together with all instruments, documents and collateral
security pertaining thereto.
Section 3. The Transferor Bank has made arrangements with each Purchasing
Bank with respect to (a) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor Bank to such Purchasing Bank of any fees
heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date, and (b) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.
Section 4. (a) All principal payments that would otherwise be payable from
and after the Transfer Effective Date to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Notes shall, instead, be payable
to or for the account of the Transferor Bank and the Purchasing Banks, as the
case may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue for
the account of the Transferor Bank from and after the Transfer Effective Date
pursuant to the Credit Agreement and the Notes shall, instead, accrue for the
account of, and be payable to, the Transferor Bank and the Purchasing Banks, as
the case may be, in accordance with their respective interests as reflected in
this Commitment Transfer Supplement.
(c) In the event that any amount of interest, fees or other amounts
accruing prior to the Transfer Effective Date was included in the Purchase Price
paid by any Purchasing Bank, the Transferor Bank and each Purchasing Bank will
make appropriate arrangements for payment by the Transferor Bank to such
Purchasing Bank of such amount upon receipt thereof from the Borrower.
Section 5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Administrative Agent its Note. Within five (5) Business Days
after Borrower's receipt of notice from Administrative Agent of Administrative
Agent's receipt of this Commitment Transfer Supplement, the Borrower will
deliver to the Administrative Agent, in exchange for the surrendered Note from
the Transferor Bank, a new Note for each Purchasing Bank and the Transferor
Bank, to the extent the Transferor Bank has retained any of its Commitment, in
each case in principal amounts reflecting, in accordance with the Credit
Agreement, their respective Commitment Amounts (as adjusted pursuant to this
Commitment Transfer Supplement). As provided in Section 9.05(e) of the Credit
Agreement, each such new Note shall be dated the date of the original Note
delivered pursuant to the Credit Agreement (the "Effective Date"). Promptly
after the Transfer Effective Date, the Administrative Agent will send to each of
the Transferor Bank and the Purchasing Banks its new Note and will send to the
Borrower the superseded Note of the Transferor Bank, marked "Canceled" or
"Replaced" as appropriate.
Section 6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) conformed copies of all documents in the
Transferor Bank's possession that were delivered to the Administrative Agent on
the Effective Date in satisfaction of the conditions precedent set forth in the
Credit Agreement.
Section 7. Each of the parties to this Commitment Transfer Supplement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Commitment Transfer Supplement.
Section 8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Administrative Agent and the Banks as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Notes, any other Loan Document or any other instrument or
document furnished pursuant thereto; (ii) the Transferor Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any Subsidiary of either of the Borrowers
or the performance or observance by the Borrower or any Subsidiary of either of
the Borrowers of any of their respective obligations under the Credit Agreement,
the Notes, any other Loan Document or any other instrument or document furnished
pursuant hereto; (iii) each Purchasing Bank confirms that it has received a copy
of the Credit Agreement, together with copies of the Financial Statements
referred to in Section 3.1(D), the Financial Statements delivered pursuant to
Sections 5.03 and 5.04, if any, and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Commitment Transfer Supplement; (iv) each Purchasing Bank will,
independently and without reliance upon the Administrative Agent, the Transferor
Bank or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (v) each Purchasing Bank
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, all in
accordance with Article VIII of the Credit Agreement; and (vi) each Purchasing
Bank agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank.
Section 9. Each party hereto represents and warrants to and agrees with the
Administrative Agent that it is aware of and will comply with the provision of
Section 2.16 of the Credit Agreement.
Section 1. Schedule II hereto sets forth the revised Commitment Amounts and
Percentage Shares of the Transferor Bank and each Purchasing Bank as well as
administrative information with respect to each Purchasing Bank.
SECTION 2. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on
Schedule I hereto as of the date set forth in Item I of Schedule I hereto.
Schedule I to
Commitment Transfer Supplement
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Re: Revolving Credit Agreement dated as of March 28, 2002,
among Continental Resources, Inc., and certain of its
Affiliates, the Banks, and Union Bank of California,
N.A., as Administrative Agent for the Banks thereunder.
Item 1 (Date of Commitment Transfer
Supplement): [Insert date of Commitment Transfer
Supplement]
Item 2 (Transferor Bank): [Insert name of Transferor Bank]
Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]]
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement): , as Transferor Bank
By:
Title:___________________________________
, as Purchasing Bank
By:
Title:___________________________________
, as Purchasing Bank
By:
Title:___________________________________
CONSENTED TO AND ACKNOWLEDGED:
CONTINENTAL RESOURCES, INC.
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
as Administrative Agent
By:
Name:
Title:
[Consents Required only when
Purchasing Bank is not already
a Bank or Affiliate thereof]
ACCEPTED FOR RECORDATION
IN REGISTER:
UNION BANK OF CALIFORNIA, N.A.
as Administrative Agent
By:___________________________________
Title:__________________________________
Schedule II to
Commitment Transfer Supplement
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor Bank]
Revised Commitment Amount: $______________
Revised Commitment Percentage: ______________
[Name of Purchasing Bank]
New Commitment Amount: $_____________
New Commitment Percentage: ______________
Address for Notices:
[address]
Attention:
Telex:
Answer back:
Telephone:
Telecopier:
Lending Office:
[Form of Transfer Effective Notice]
Schedule III to
Commitment Transfer Supplement
To: [Insert Name of Borrower, Transferor Bank and each Purchasing Bank]
The undersigned, as Administrative Agent under the Revolving Credit
Agreement dated as of March 28, 2002, among Continental Resources, Inc.
("Borrower"), the Banks and other financial institutions from time to time
parties thereto and Union Bank of California, N.A. as Administrative Agent,
acknowledges receipt of five executed counterparts of a completed Commitment
Transfer Supplement, as described in Schedule I hereto. [Note: attach copy of
Schedule I from Commitment Transfer Supplement.] Terms defined in such
Commitment Transfer Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be [Insert fifth Business Day
following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver its Note to the Administrative Agent on or
before the Transfer Effective Date.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the fifth
(5th) Business Day from its receipt of this notice, in return for the Note
surrendered to the Administrative Agent by the Transferor Bank, the
following Notes [Describe each Note for Transferor Bank and Purchasing Bank
as to principal amount and payee], dated March 28, 2002.
4. Pursuant to such Commitment Transfer Supplement each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or
before 12:00 Noon on the Transfer Effective Date in immediately available
funds.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By:
Title:
