EXHIBIT 10.1
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
among
QUICKSILVER RESOURCES INC.,
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent,
and
The Financial Institutions Listed on Schedule 1 Hereto,
as Banks
$225,000,000
dated as of
March 31, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ SECURITIES LLC,
as Sole Lead Arranger and Book Manager
PARIBAS, as Syndication Agent
MEESPIERSON CAPITAL CORP., as Documentation Agent
TABLE OF CONTENTS
Page No.
ARTICLE I
AMENDMENT AND RESTATEMENT
ARTICLE II
TERMS DEFINED
SECTION 2.1. Definitions....................................................2
SECTION 2.2. Accounting Terms and Determinations...........................29
SECTION 2.3. Petroleum Terms...............................................29
SECTION 2.4. Money.........................................................29
ARTICLE III
THE CREDIT
SECTION 3.1. Commitments...................................................29
SECTION 3.2. Notes.........................................................34
SECTION 3.3. Interest Rates; Payments......................................34
SECTION 3.4. Mandatory Prepayments Resulting From Borrowing Base
Deficiency....................................................36
SECTION 3.5. ..............................................................36
SECTION 3.6. Voluntary Prepayments.........................................36
SECTION 3.7. Voluntary Reduction of Commitments............................36
SECTION 3.8. Termination of Commitments; Final Maturity....................37
SECTION 3.9. Unused Commitment Fee.........................................37
SECTION 3.10. Agency and other Fees.........................................37
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Delivery and Endorsement of Notes.............................37
SECTION 4.2. General Provisions as to Payments.............................38
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ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1. Increased Cost and Reduced Return.............................39
SECTION 5.2. Limitation on Types of Loans..................................40
SECTION 5.3. Illegality....................................................40
SECTION 5.4. Treatment of Affected Loans...................................41
SECTION 5.5. Compensation..................................................41
SECTION 5.6. Taxes.........................................................42
SECTION 5.7. Discretion of Banks as to Manner of Funding...................43
ARTICLE VI
BORROWING BASE
SECTION 6.1. Reserve Report; Proposed Borrowing Base.......................43
SECTION 6.2. Scheduled Redeterminations of the Borrowing Base; Procedures and
Standards.....................................................44
SECTION 6.3. Special Redetermination.......................................44
SECTION 6.4. CMS Redetermination...........................................45
SECTION 6.5. Post-Closing Redetermination..................................45
SECTION 6.6. Post-Closing Redetermination..................................45
SECTION 6.7. Borrowing Base Deficiency.....................................45
SECTION 6.8. Initial Borrowing Base........................................45
ARTICLE VII
COLLATERAL AND GUARANTEES
SECTION 7.1. Security......................................................46
SECTION 7.2. Guarantees....................................................47
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. Conditions to Amendment and Restatement and Initial Borrowing
and Participation in Letter of Credit Exposure................47
SECTION 8.2. Conditions to Each Borrowing and each Letter of Credit........52
SECTION 8.3. Post-Closing Deliveries.......................................53
SECTION 8.4. Materiality of Conditions.....................................53
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ARTICLE IX
REPRESENTATIONS AND WARRANTIES
SECTION 9.1. Existence and Power...........................................53
SECTION 9.2. Credit Party and Governmental Authorization; Contravention....53
SECTION 9.3. Binding Effect................................................53
SECTION 9.4. Financial Information.........................................54
SECTION 9.5. Litigation....................................................54
SECTION 9.6. ERISA.........................................................54
SECTION 9.7. Taxes and Filing of Tax Returns...............................55
SECTION 9.8. Ownership of Properties Generally.............................55
SECTION 9.9. Mineral.......................................................55
SECTION 9.10. Licenses, Permits, Etc........................................56
SECTION 9.11. Compliance with Law...........................................56
SECTION 9.12. Full Disclosure...............................................56
SECTION 9.13. Organizational Structure; Nature of Business..................56
SECTION 9.14. Environmental Matters.........................................56
SECTION 9.15. Burdensome Obligations........................................57
SECTION 9.16. Fiscal Year...................................................58
SECTION 9.17. No Default....................................................58
SECTION 9.18. Government Regulation.........................................58
SECTION 9.19. Insider.......................................................58
SECTION 9.20. Gas Balancing Agreements and Advance Payment Contracts........58
SECTION 9.21. Closing Documents; Management Agreement.......................58
SECTION 9.22. Year 2000 Matters.............................................58
SECTION 9.23. Cinnabar......................................................59
SECTION 9.24. Commodity Price R.............................................59
ARTICLE X
AFFIRMATIVE COVENANTS
SECTION 10.1. Information...................................................59
SECTION 10.2. Business of Borrower..........................................61
SECTION 10.3. Maintenance of Existence......................................61
SECTION 10.4. Title Data....................................................61
SECTION 10.5. Right of Inspection...........................................62
SECTION 10.6. Maintenance of Insurance......................................62
SECTION 10.7. Payment of Taxes and Claims...................................62
SECTION 10.8. Compliance with Laws and Documents............................62
SECTION 10.9. Operation of Properties and Equipment.........................63
SECTION 10.10. Environmental Law Compliance..................................63
SECTION 10.11. ERISA Reporting Requirements..................................63
SECTION 10.12. Additional Documents..........................................64
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SECTION 10.13. Environmental Review..........................................64
SECTION 10.14. Year 2000 Compatibility.......................................64
SECTION 10.15. Commodity Price Risk Policy...................................64
ARTICLE XI
NEGATIVE COVENANTS
SECTION 11.1. Incurrence of Debt............................................65
SECTION 11.2. Restricted Payments...........................................65
SECTION 11.3. Negative Pledge...............................................65
SECTION 11.4. Consolidations and Mergers....................................65
SECTION 11.5. Asset Dispositions............................................66
SECTION 11.6. Amendments to Organizational Documents; Other Material
Agreements....................................................66
SECTION 11.7. Use of Proceeds..............................................66
SECTION 11.8. Investments...................................................67
SECTION 11.9. Transactions with Affiliates..................................67
SECTION 11.10. ERISA.........................................................67
SECTION 11.11. Hedge Transactions............................................67
SECTION 11.12. Fiscal Year...................................................67
SECTION 11.13. Change in Business............................................68
SECTION 11.14. Subordinate Debt..............................................68
SECTION 11.15. Cinnabar......................................................68
ARTICLE XII
FINANCIAL COVENANTS
ARTICLE XIII
DEFAULTS
SECTION 13.1. Events of Default.............................................68
ARTICLE XIV
AGENTS
SECTION 14.1. Appointment, Powers, and Immunities...........................71
SECTION 14.2. Reliance by Agents............................................71
SECTION 14.3. Defaults......................................................72
SECTION 14.4. Rights as Bank................................................72
SECTION 14.5. Indemnification...............................................72
SECTION 14.6. Non-Reliance on Agents and Other Banks........................72
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SECTION 14.7. Resignation of Agents.........................................73
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices.......................................................73
SECTION 15.2. No Waivers....................................................73
SECTION 15.3. Expenses; Indemnification.....................................74
SECTION 15.4. Right of Set-off; Adjustments.................................74
SECTION 15.5. Amendments and Waivers........................................75
SECTION 15.6. Survival......................................................75
SECTION 15.7. Limitation on Interest........................................76
SECTION 15.8. Invalid Provisions............................................76
SECTION 15.9. Waiver of Consumer Credit Laws................................76
SECTION 15.10. Assignments and Participations................................76
SECTION 15.11. TEXAS LAW.....................................................78
SECTION 15.12. Consent to Jurisdiction; Waiver of Immunities.................78
SECTION 15.13. Counterparts; Effectiveness...................................79
SECTION 15.14. No Third Party Beneficiaries..................................79
SECTION 15.15. COMPLETE AGREEMENT............................................79
SECTION 15.16. WAIVER OF JURY TRIAL..........................................79
SECTION 15.17. Confidentiality...............................................79
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EXHIBITS
--------
EXHIBIT A FORM OF PLEDGE AGREEMENT
EXHIBIT B FORM OF NOTE
EXHIBIT C FORM OF GUARANTY
EXHIBIT D FORM OF REQUEST FOR BORROWING
EXHIBIT E FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT G FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT H FORM OF CERTIFICATE OF FINANCIAL OFFICER
EXHIBIT I FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT J FORM OF CERTIFICATE OF EFFECTIVENESS
EXHIBIT K FORM OF SUBORDINATION AGREEMENT
EXHIBIT L COMMODITY PRICE RISK POLICY
SCHEDULES
---------
SCHEDULE 1 FINANCIAL INSTITUTIONS
SCHEDULE 2 INVESTMENTS
SCHEDULE 3 LITIGATION
SCHEDULE 4 CAPITALIZATION
SCHEDULE 5 ENVIRONMENTAL DISCLOSURE
vi
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
entered into as of the 31st day of March, 2000, among QUICKSILVER RESOURCES
INC., a Delaware corporation ("Borrower"), BANK OF AMERICA, N.A., successor by
merger to NationsBank, N.A., successor by merger to NationsBank of Texas, N.A.,
as Administrative Agent ("Administrative Agent"), and the financial institutions
listed on Schedule 1 hereto as Banks (individually a "Bank" and collectively
"Banks").
W I T N E S S E T H:
-------------------
WHEREAS, Borrower, Administrative Agent and the other financial
institutions named and defined therein as Banks (the "Existing Banks") and
Agents are parties to that certain Second Amended and Restated Credit Agreement
dated as of March 1, 1999, pursuant to which Existing Banks provided certain
loans and other extensions of credit to Borrower (the "Existing Credit
Agreement"); and
WHEREAS, after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the terms hereof, the Commitment
Percentage (as herein defined) of each Bank (including each Existing Bank)
hereunder will be as set forth on Schedule 1 hereto; and
WHEREAS, upon the consummation of the Closing Transactions (as hereinafter
defined), or contemporaneously therewith, the parties hereto desire to amend and
restate the Existing Credit Agreement in the form of this Agreement and Borrower
desires to obtain Borrowings (as herein defined) (a) to refinance the
indebtedness under the Existing Credit Agreement, (b) to finance in part the CMS
Acquisition, (c) to increase from $200,000,000 to $225,000,000 the aggregate
Commitments of Banks, and (d) for other purposes permitted herein; and
WHEREAS, subject to and upon the terms and conditions herein contained,
Banks are willing to provide the credit facility described herein; and
WHEREAS, pursuant to Article XIV of this Agreement, Bank of America, N.A.
has been appointed Administrative Agent for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among Bank of America,
N.A., Banc of America Securities LLC ("BAS") and Borrower, BAS has been
appointed Sole Lead Arranger and Book Manager for the credit facility provided
herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent, and Banks agree as follows:
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ARTICLE I
AMENDMENT AND RESTATEMENT
Subject to the satisfaction of each condition precedent contained in
Section 8.1 hereof, the satisfaction of which shall be evidenced by the
execution by Borrower and Administrative Agent of the Certificate of
Effectiveness (as hereinafter defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date in the form of this Agreement.
ARTICLE II
TERMS DEFINED
SECTION 2.1 Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Administrative Agent" means Bank of America, N.A., successor by merger to
NationsBank, N.A., successor by merger to NationsBank of Texas, N.A., in its
capacity as administrative agent for Banks hereunder or any successor thereto.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment of
the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is, or is to be,
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
standard "take or pay" provision in any gas sales or purchase contract or any
other similar contract shall not, in and of itself, constitute such contract as
an Advance Payment Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or any
other Person which, directly or indirectly, controls, is controlled by, or is
under common control with, such Person and, with respect to any Credit Party,
means, any director, executive officer, general partner or manager of such
Credit Party and any Person who holds five percent (5%) or more of the voting
stock, partnership interests, membership interests or other ownership interests
of such Credit Party.
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For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, membership
interests or partnership interests, or by contract or otherwise.
"Agent" means Administrative Agent, Sole Lead Arranger or Book Manager and
"Agents" means Administrative Agent, Sole Lead Arranger and Book Manager,
collectively.
"Agreement" means this Third Amended and Restated Credit Agreement as the
same may hereafter be modified, amended or supplemented from time to time.
"Applicable Environmental Law" means any federal, state or local law,
common law, ordinance, regulation or policy, as well as order, decree, permit,
judgment or injunction issued, promulgated, approved, or entered thereunder,
relating to the environment, health and safety, or Hazardous Substances
(including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) or to industrial hygiene or the
environmental conditions on, under, or about any real property owned, leased or
operated at any time by any Credit Party or any real property owned, leased or
operated by any other party including, without limitation, soil, groundwater,
and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of Loan,
the "Lending Office" of such Bank (or of an affiliate of such Bank) designated
for such Type of Loan on the signature pages hereof or such other office of such
Bank (or an affiliate of such Bank) as such Bank may from time to time specify
to Administrative Agent and Borrower by written notice in accordance with the
terms hereof as the office by which Loans of such Type are to be made and
maintained.
"Applicable Margin" means, on any date, with respect to each Eurodollar
Loan, an amount determined by reference to the ratio of Outstanding Credit to
the Borrowing Base on such date in accordance with the table below:
=============================================================================
Ratio of Outstanding Applicable Margin for
Credit to Borrowing Base Eurodollar Tranches
-----------------------------------------------------------------------------
less than or equal to .50 to 1 1.500%
-----------------------------------------------------------------------------
greater than .50 to 1
less than or equal to .75 to 1 1.750%
-----------------------------------------------------------------------------
greater than .75 to 1
less than or equal to .90 to 1 2.125%
-----------------------------------------------------------------------------
greater than .90 to 1 2.500%
=============================================================================
Notwithstanding the foregoing or anything else to the contrary contained
herein or in any other Loan Paper, in the event Borrower consummates the Post-
Closing Debt Issuance on or prior to the Post-Closing Debt Issuance Trigger
Date, then, from and after such date, the Applicable Margin for Eurodollar
Tranches will decrease by .250% at all levels in the table shown above.
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"Approved Petroleum Engineer" means Schlumberger Holditch-Reservoir
Technologies Consulting Services, or any other reputable firm of independent
petroleum engineers as shall be selected by Borrower and approved by Required
Banks, such approval not to be unreasonably withheld.
"Assignment and Acceptance Agreement" has the meaning given such term in
Section 15.10(a).
"Authorized Officer" means, as to any Person, its Chief Executive Officer,
its President, its Chief Financial Officer, any of its Vice Presidents, its
Treasurer or its corporate Secretary.
"Availability" means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.
"Bank" means any financial institution reflected on Schedule 1 hereto as
having a Commitment and its successors and permitted Assignees, and "Banks"
-----
shall mean all Banks.
"Bank of America" means Bank of America, N.A., a national banking
association, in its capacity as a Bank.
"BAS" means Banc of America Securities LLC.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective automatically and
without notice to Borrower or any Bank on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means the portion of the principal of the Loan bearing
interest with reference to the Base Rate.
"Book Manager" means Banc of America Securities LLC in its capacity as book
manager for the credit facility hereunder or any successor thereto.
"Borrower" means Quicksilver Resources Inc., a Delaware corporation.
"Borrower Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit A hereto (with applicable conforming changes) to be executed by
Borrower pursuant to which Borrower shall pledge to Administrative Agent, for
the ratable benefit of Banks, all of the issued and outstanding Equity owned by
Borrower of each existing or hereafter acquired Subsidiary of Borrower to secure
the Obligations.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base
4
Rate Loan is referred to herein as a "Base Rate Borrowing," and any Borrowing
which will constitute a Eurodollar Loan is referred to herein as a "Eurodollar
Borrowing."
"Borrowing Base" means the loan value attributable to certain of Borrower's
and Terra's Mineral Interests as determined in accordance with Article VI
----------
hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any, by
which the Outstanding Credit on such date exceeds the Borrowing Base in effect
on such date; provided, that, for purposes of determining the existence and
amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not be
deemed to be outstanding to the extent it is secured by cash in the manner
contemplated by Section 3.1(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by Banks
for purposes of establishing the Borrowing Base. The Borrowing Base Properties
on the Closing Date are described in the Property Description and constitute all
of the Mineral Interests described in the Existing Reserve Report and the CMS
Reserve Report.
"Borrowing Date" means the Eurodollar Business Day or the Domestic Business
Day, as the case may be, upon which the proceeds of any Borrowing are made
available to Borrower or to satisfy any obligation of any Credit Party.
"Certificate of Effectiveness" means a Certificate of Effectiveness in the
form of Exhibit J attached hereto to be executed by Borrower and Administrative
Agent upon the satisfaction of each of the conditions precedent contained in
Section 8.1 hereof.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit G attached hereto to be executed and delivered
by an Authorized Officer of Borrower pursuant to Section 8.1(a)(xvi) hereof.
"Change of Control" means that, for any reason, either (a) any Person or
group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) other
than the ▇▇▇▇▇▇ Group shall become the legal and beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of greater than thirty percent (30%) of the
outstanding voting power of all classes of capital stock then outstanding of
Borrower entitled (without regard to the occurrence of any contingency) to vote
in elections of directors of Borrower, or (b) the ▇▇▇▇▇▇ Group shall cease to be
the legal and beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of more than twenty percent (20%) of the outstanding voting power of all classes
of capital stock then outstanding of Borrower entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of Borrower.
"Cinnabar" means Cinnabar Energy Services and Trading, L.L.C., a Michigan
limited liability company.
"Cinnabar Marketing Obligations" means obligations of Cinnabar to pay (a)
to third party producers or marketers of Hydrocarbons the purchase price of any
Hydrocarbons purchased by Cinnabar from such third parties and then aggregated
for resale with Hydrocarbons produced by
5
Borrower and its Subsidiaries, and (b) to third party providers the costs of
storage, pipeline and processing services with respect to such aggregated
Hydrocarbons.
"Closing Date" means the date upon which all of the conditions precedent
set forth in Section 8.1 have been satisfied, and Borrower and Administrative
Agent have executed and delivered the Certificate of Effectiveness; provided,
that, in no event shall such date be later than March 31, 2000.
"Closing Documents" means the CMS Acquisition Documents, the Mariner
Section 29 Documents, the Subordinate Note Documents and all other material
documents, instruments and agreements executed or delivered by Borrower or any
other Credit Party in connection with or otherwise pertaining to the Closing
Transactions.
"Closing Title Review Requirement" means with respect to any requirement
contained herein for delivery to Administrative Agent or its counsel of title
opinions or other evidence of title to Mineral Interests purported to be owned
by Borrower, a requirement that such title opinions be delivered in form and
substance acceptable to Administrative Agent and its counsel with respect to CMS
Properties with an aggregate Recognized Value at least equal to thirty three
percent (33%) of the Recognized Value of all CMS Properties.
"Closing Transactions" means the transactions to occur on the Closing Date
pursuant to the Closing Documents and this Agreement, including, without
limitation, (a) the completion of the CMS Acquisition pursuant to the terms of
the CMS Acquisition Documents, (b) the completion of the Mariner Section 29 Sale
pursuant to the terms of the Mariner Section 29 Documents and the application of
approximately $25,000,000 of the proceeds thereof to finance in part the CMS
Acquisition, (c) the completion of the transactions contemplated by the
Subordinate Note Documents pursuant to the terms of such Subordinate Note
Documents, and the receipt by Borrower of not less than $43,000,000 from the
issuance and sale of Subordinate Notes and the application thereof to finance in
part the CMS Acquisition, (d) the amendment and restatement of the Existing
Credit Agreement, including, without limitation, the refinancing of all Debt of
Borrower under the Existing Credit Agreement with proceeds of the Loan, and (e)
the payment of all fees and expenses of Agents and their Affiliates in
connection with the credit facility provided herein.
"CMS" means CMS Oil and Gas Company, a Michigan corporation.
"CMS Acquisition" means the purchase by Borrower of the CMS Properties
pursuant to the CMS Acquisition Agreement, which purchase shall be on terms and
conditions reasonably acceptable to Administrative Agent and Required Banks,
which shall include, without limitation, the purchase by Borrower of all of the
outstanding Equity of Terra.
"CMS Acquisition Agreement" means that certain Purchase and Sale Agreement
dated as of March 4, 2000, by and between Borrower and CMS, which Purchase and
Sale Agreement shall expressly provide for and permit the assignment of all of
Borrower's rights thereunder (including, without limitation, indemnification
rights) to Administrative Agent for the benefit of Banks.
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"CMS Acquisition Documents" means the CMS Acquisition Agreement and all
agreements, assignments, deeds, conveyances, certificates and other documents
and instruments now or hereafter executed and delivered by or between Borrower
and CMS pursuant to the CMS Acquisition Agreement or in connection with the CMS
Acquisition.
"CMS Properties" means, collectively, the "Assets" and the "Terra Assets"
as each such term is defined in the CMS Acquisition Agreement.
"CMS Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 6.4. Notwithstanding anything to the contrary contained
herein, no CMS Redetermination shall be deemed or construed to be a Special
Redetermination hereunder.
"CMS Redetermination Date" means any date on which either (a) any Borrowing
Base Property (or any interest therein) is excluded from the CMS Acquisition
pursuant to the terms of the CMS Acquisition Agreement, including, without
limitation, pursuant to the terms of Sections 12.2, 13.10 and Article XX of the
CMS Acquisition Agreement, or (b) the Purchase Price or the Final Settlement
Statement (as each such term is defined in the CMS Acquisition Agreement) is
adjusted downward pursuant to the terms of the CMS Acquisition Agreement,
including, without limitation, pursuant to the terms of Sections 13.3, 13.4,
13.9, 13.10, 16.1 and Article XX of the CMS Acquisition Agreement.
"CMS Reserve Report" means an engineering and economic analysis of the CMS
Properties prepared as of January 1, 2000 by Schlumberger Holditch-Reservoir
Technologies Consulting Services.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Assignment" means, collectively, that certain (i) Third Amended
and Restated Collateral Assignment of Promissory Notes and Contract Rights dated
as of the Closing Date executed by Borrower in favor of Administrative Agent,
pursuant to which Borrower assigns to Administrative Agent and grants
Administrative Agent a security interest in certain of the Existing Section 29
Documents, (ii) Second Amended and Restated Collateral Assignment of Promissory
Notes and Contract Rights dated as of the Closing Date executed by Borrower in
favor of Administrative Agent, pursuant to which Borrower assigns to
Administrative Agent and grants Administrative Agent a security interest in
certain of the Existing Section 29 Documents, and (iii) Collateral Assignment of
Promissory Notes and Contract Rights dated as of the Closing Date executed by
Borrower in favor of Administrative Agent, pursuant to which Borrower assigns to
Administrative Agent and grants Administrative Agent a security interest in
certain of the Mariner Section 29 Documents.
"Commitment" means, with respect to any Bank, the commitment of such Bank
to lend its Commitment Percentage of the Total Commitment to Borrower pursuant
to Section 3.1 hereof, as such Commitment may be terminated and reduced from
time to time in accordance with the provisions hereof. On the Closing Date the
amount of each Bank's Commitment is the amount set forth opposite such Bank's
name on Schedule 1 hereto; provided, that, after giving effect to any
7
Assignment and Acceptance Agreement, the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative Agent pursuant to
Section 15.10(b).
"Commitment Percentage" means, with respect to each Bank, the Commitment
Percentage for such Bank set forth on Schedule 1 hereto; provided, that, after
giving effect to any Assignment and Acceptance Agreement, the Commitment of each
Bank shall be the amount set forth in the Register maintained by Administrative
Agent pursuant to Section 15.10(b).
"Commodity Price Risk Policy" has the meaning set forth in Section 9.24.
"Consolidated Current Assets" means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time.
"Consolidated Current Liabilities" means, for any Person at any time, the
current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of Borrower, excluding current maturities of Long Term
Debt of Borrower and its Consolidated Subsidiaries outstanding at such time.
"Consolidated EBITDAX" means, for any Person for any period, the
Consolidated Net Income of such Person for such period, plus each of the
following determined for such Person and its Consolidated Subsidiaries on a
consolidated basis for such period: (a) any provision for (or less any benefit
from) income or franchise Taxes included in determining Consolidated Net Income;
(b) Consolidated Net Interest Expense deducted in determining Consolidated Net
Income; (c) depreciation, depletion and amortization expense deducted in
determining Consolidated Net Income; (d) other noncash charges deducted in
determining Consolidated Net Income to the extent not already included in
clauses (b) and (c) of this definition; and (e) costs and expenses associated
with seismic, geological and geophysical services performed in connection with,
and attributable to, oil and gas exploration, to the extent deducted in
determining Consolidated Net Income.
"Consolidated Net Income" means, for any Person as of any period, the net
income (or loss) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with GAAP, but excluding: (a) the income of any
other Person (other than its Consolidated Subsidiaries) in which such Person or
any of its Subsidiaries has an ownership interest, unless received by such
Person or its Consolidated Subsidiaries in a cash distribution; (b) any after-
tax gains attributable to asset dispositions; and (c) to the extent not included
in clauses (a) and (b) above, any after-tax (i) extraordinary gains (net of
extraordinary losses) or (ii) non-cash nonrecurring gains.
"Consolidated Net Interest Expense" means, for any Person for any period,
the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense, minus (b) interest income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
8
"Continue," "Continuation," and "Continued" shall refer to the continuation
pursuant to Section 3.3(c) and/or Article V hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion
pursuant to Section 3.3(c) and/or Article V hereof of one Type of Loan into
another Type of Loan.
"Credit Parties" means, collectively, Borrower and each Subsidiary of
Borrower, and "Credit Party" means any one of the foregoing.
------------
"▇▇▇▇▇▇ Group" means, collectively, Mercury, QELC, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ Self, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and their respective designees,
heirs and estates.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued for the account
of such Person, (f) any amount owed by such Person representing the deferred
purchase price of property or services other than accounts payable incurred in
the ordinary course of business and in accordance with customary trade terms and
which have not been outstanding for more than ninety (90) days past the invoice
date, (g) all obligations of such Person secured by a Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person, and (h) all liability of such Person as a general partner
of a partnership for obligations of such partnership of the nature described in
(a) through (g) preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Default Rate" means, in respect of any principal of the Loan or any other
amount payable by Borrower under any Loan Paper which is not paid when due
(whether at stated maturity, by acceleration, or otherwise), a rate per annum
during the period commencing on the due date until such amount is paid in full
equal to the sum of (i) three percent (3%), plus (ii) the Base Rate as in effect
from time to time (provided, that if such amount in default is principal of a
Eurodollar Borrowing and the due date is a day other than the last day of an
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day of
the Interest Period therefor, (a) three percent (3%), plus (b) the Applicable
Margin, plus (c) the Eurodollar Rate for such Borrowing for such Interest Period
as provided in Section 3.3 hereof, and thereafter, the rate provided for above
in this definition).
"Distribution" by any Person, means (a) with respect to any stock issued by
such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or
9
partnership, joint venture, limited liability company, membership or other
interest, (b) the declaration or payment of any dividend or other distribution
on or with respect to any stock, partnership, joint venture, limited liability
company, membership or other interest of any Person, and (c) any other payment
by such Person with respect to such stock, partnership, joint venture, limited
liability company, membership or other interest of such Person.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Dallas, Texas, are authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, (a) its office located at
its address identified on Schedule 1 hereto as its Domestic Lending Office, (b)
its office located at its address identified on the Register (as defined in
Section 15.10(b)) as its Domestic Lending Office, or (c) such other office as
such Bank may hereafter designate as its Domestic Lending Office by notice to
Borrower and Administrative Agent.
"EAO" means Energy Acquisition Operating Corporation, a Michigan
corporation, and a wholly owned Subsidiary of Terra.
"Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) any other Person approved by Administrative Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected in
accordance with Section 15.10, Borrower, such approval not to be unreasonably
withheld or delayed by Borrower and such approval to be deemed given by Borrower
if no objection is received by the assigning Bank and Administrative Agent from
Borrower within two (2) Domestic Business Days after notice of such proposed
assignment has been provided by the assigning Bank to Borrower; provided,
however, that neither Borrower nor an Affiliate of Borrower shall qualify as an
Eligible Assignee.
"Environmental Complaint" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Credit Party involving (a) a Hazardous Discharge from,
onto or about any real property owned, leased or operated at any time by any
Credit Party, (b) a Hazardous Discharge caused, in whole or in part, by any
Credit Party or by any Person acting on behalf of or at the instruction of any
Credit Party, or (c) any violation of any Applicable Environmental Law by any
Credit Party.
"Equity" means shares of capital stock or a partnership, profits, capital,
member or other equity interest, or options, warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under common
control with any Credit Party as determined under section 4001(a)(14) of ERISA.
10
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, (a) its office, branch
or affiliate located at its address identified on Schedule 1 hereto as its
Eurodollar Lending Office, (b) its office, branch or affiliate located at its
address identified on the Register (as defined in Section 15.10(b)) as its
Eurodollar Lending Office, or (c) such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"Eurodollar Loans" means Loans that bear interest at rates based upon the
Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Loan which is the subject of a Eurodollar
Tranche for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for deposits in Dollars
at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "Eurodollar Rate"
shall mean, for the principal amount of the Loan which is the subject of a
Eurodollar Tranche for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Events of Default" has the meaning set forth in Section 13.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Accounts" means, collectively, all accounts receivable or other
Debt which are owed to Borrower by its directors, Affiliates, employees or
shareholders (each a "Related Party") other than those which arise in the
ordinary course of business as a result of sales of goods to, or rendering of
services to, a Related Party who has the ability to pay, and is expected to pay,
the same.
"Exhibit" refers to an exhibit attached to this Agreement and incorporated
herein by reference, unless specifically provided otherwise.
"Existing Credit Agreement" has the meaning assigned to such term in the
recitals hereto.
"Existing Reserve Report" means an engineering and economic analysis of
certain of the Borrowing Base Properties prepared as of January 1, 2000 by
Schlumberger Holditch-Reservoir Technologies Consulting Services.
11
"Existing Section 29 Documents" means each of the following documents,
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Assignment, dated as of December 1, 1997, by and between Mercury,
as assignor, and MA Gas LLC ("MAG"), as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 477, Page 1232, (ii) ▇▇▇▇▇▇▇▇ County, Michigan, December 23, 1997,
under Liber 444, Page 01, (iii) Montmorency County, Michigan, December 22,
1997, under Liber 405, Page 01, and (iv) Otsego County, Michigan, December
22, 1997, under Liber 662, Page 579;
(b) Assignment by and between Mercury, as assignor, and Borrower, as
assignee, and recorded in the county records of (i) Antrim County,
Michigan, April 15, 1998, under Liber 485, Page 1046, and Liber 485, Page
1087, (ii) ▇▇▇▇▇▇▇▇ County, Michigan, April 15, 1998, under Liber 451, Page
251, (iii) Montmorency County, Michigan, April 15, 1998, under Liber 408,
Page 0008, and (iv) Otsego County, Michigan, April 15, 1998, under Liber
675, Page 217;
(c) Partial Assignment of Reversionary Interest, dated effective as of
December 1, 1997, by and between Borrower, as assignor, and MAG, as
assignee, and recorded in the county records of Antrim, Crawford,
Montmorency and Otsego Counties, Michigan;
(d) Conveyance of Production Payment, dated as of December 1, 1997, by
and between MAG, as assignor, and Mercury, as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 477, Page 1273, (ii) ▇▇▇▇▇▇▇▇ County, Michigan, December 23, 1997,
under Liber 444, Page 42, (iii) Montmorency County, Michigan, December 22,
1997, under Liber 405, Page 42, and (iv) Otsego County, Michigan, December
22, 1997, under Liber 662, Page 620;
(e) Amendment to Conveyance of Production Payment, dated effective as
of December 1, 1997, by and between MAG, as assignor, and Borrower, as
assignee, and recorded in the county records of Antrim, Crawford,
Montmorency and Otsego Counties, Michigan;
(f) Second Amendment to Conveyance of Production Payment, dated
effective as of March 1, 1997, by and between MAG and Borrower, and
recorded in the county records of Antrim, Crawford, Montmorency and Otsego
Counties, Michigan;
(g) Mortgage, dated as of December 1, 1997, by and between MAG, as
mortgagor, and Mercury, as mortgagee, and recorded in the county records of
(i) Antrim County, Michigan, December 23, 1997, under Liber 477, Page 1413,
(ii) ▇▇▇▇▇▇▇▇ County, Michigan, December 23, 1997, under Liber 444, Page
182, (iii) Montmorency County, Michigan, December 22, 1997, under Liber
134, Page 528, and (iv) Otsego County, Michigan, December 22, 1997, under
Liber 662, Page 760;
12
(h) Assignment, dated as of December 1, 1997 by and between MGP, as
assignor, and MGP Gas L.L.C. ("MGPG"), as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 478, Page 1, and (ii) Otsego County, Michigan, December 22, 1997,
under Liber 662, Page 802;
(i) Partial Assignment of Reversionary Interest, dated effective as of
December 1, 1997, by and between Borrower, as assignor, and MGPG, as
assignee, and recorded in the county records of Antrim and Otsego Counties,
Michigan;
(j) Conveyance of Production Payment, dated as of December 1, 1997, by
and between MGPG, as assignor, and MGP, as assignee, and recorded in the
county records of (i) Antrim County, Michigan, December 23, 1997, under
Liber 478, Page 9, and (ii) Otsego County, Michigan, December 22, 1997,
under Liber 662, Page 810;
(k) Amendment to Conveyance of Production Payment, dated effective as
of December 1, 1997, by and between MGPG, as assignor, and Borrower, as
assignee, and recorded in the county records of Antrim and Otsego Counties,
Michigan;
(l) Mortgage, dated as of December 1, 1997, by and between MGPG, as
mortgagor, and MGP, as mortgagee, and recorded in the county records of (i)
Antrim County, Michigan, December 23, 1997, under Liber 478, Page 37, and
(ii) Otsego County, Michigan, December 22, 1997, under Liber 662, Page 838;
(m) Purchase and Sale Agreement, dated as of December 1, 1997, by and
between Mercury, as Seller, and MAG, as buyer;
(n) Amendment of Purchase and Sale Agreement, dated effective as of
December 1, 1997, by and among Mercury, Borrower and MAG;
(o) Second Amendment to Purchase Agreement, dated as of March 31,
2000, by and between Borrower and MAG;
(p) Credit Payment Note, dated December 1, 1997, executed by MAG, as
maker, payable to the order of Mercury, as payee;
(q) Amended and Restated Credit Payment Note, dated as of December 1,
1997, executed by MAG, as maker, payable to the order of Borrower, as
payee;
(r) Fixed Payment Note, dated December 1, 1997, executed by MAG, as
maker, payable to the order of Mercury, as payee, in the original principal
amount of $5,092,721;
(s) Amended and Restated Fixed Payment Note, dated as of December 1,
1997, executed by MAG, as maker, payable to the order of Borrower, as
payee;
13
(t) Assignment of Enforcement Rights, dated effective December 1,
1997, by and between MAG and Mercury, and acknowledged and consented to by
State Street and Antrim Corporation;
(u) Management Agreement, dated as of December 1, 1997, by and between
MAG and Mercury, as manager;
(v) Purchase and Sale Agreement, dated as of December 1, 1997, by and
between MGP, as seller, and MGPG, as buyer;
(w) Credit Payment Note, dated December 1, 1997, executed by MGPG, as
maker, payable to the order of MGP, as payee;
(x) Fixed Payment Note, dated December 1, 1997, executed by MGPG, as
maker, payable to the order of MGP, as payee, in the original principal
amount of $2,017,373;
(y) Assignment of Enforcement Rights, dated effective December 1,
1997, by and between MGPG and MGP, and acknowledged and consented to by
State Street and Antrim Corporation; and
(z) Management Agreement, dated as of December 1, 1997, by and between
MGPG and MGP, as manager.
"Existing Section 29 Mortgages" means each of the following documents,
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Mortgage, dated as of December 1, 1997, by and between Mercury, as
mortgagor, and MAG, as mortgagee, and recorded in the county records of (i)
Antrim County, Michigan, December 23, 1997, under Liber 477, Page 1370,
(ii) ▇▇▇▇▇▇▇▇ County, Michigan, December 23, 1997, under Liber 444, Page
139, (iii) Montmorency County, Michigan, December 22, 1997, under Liber
134, Page 485, and (iv) Otsego County, Michigan, December 22, 1997, under
Liber 662, Page 717; and
(b) Mortgage, dated as of December 1, 1997, by and between MGPG, as
mortgagor, and MGP, as mortgagee, and recorded in the county records of (i)
Antrim County, Michigan, December 23, 1997, under Liber 478, Page 37, and
(ii) Otsego County, Michigan, December 22, 1997, under Liber 662, Page 838.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (a) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic
14
Business Day, and (b) if such rate is not so published on such next succeeding
Domestic Business Day, the Federal Funds Rate for any day shall be the average
rate charged to Administrative Agent on such day on such transactions as
determined by Administrative Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer" shall
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the Closing
Date so as to properly reflect the financial condition, and the results of
operations and changes in financial position, of a Person and its Consolidated
Subsidiaries, except that any accounting principle or practice required to be
changed by the said Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of the said Boards) in
order to continue as a generally accepted accounting principle or practice may
be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest, has
a right to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by "comfort letter"
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
15
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law or is required
to be investigated and/or remediated by or pursuant to any Applicable
Environmental Law.
"Hedge Agreements" means, collectively, any agreement, instrument,
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.
"Hedge Transaction" means any commodity, interest rate, currency or other
swap, option, collar, futures contract or other contract pursuant to which a
Person ▇▇▇▇▇▇ risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products, by-
products and all other substances derived therefrom or the processing thereof,
and all other minerals and substances, including, but not limited to, sulphur,
lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide,
helium, and any and all other minerals, ores, or substances of value, and the
products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
"Initial Borrowing Base" means a Borrowing Base in the amount of
$200,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and each
Continuation of Eurodollar Loans and each Conversion of all or part of the Base
Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), three (3)
and, if available to all Banks, six (6) months thereafter, as Borrower may elect
in the applicable Request for Borrowing or Notice of Continuation or Conversion;
provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end
on the next preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in
16
the calendar month at the end of such Interest Period) shall, subject
to clause (c) below, end on the last Eurodollar Business Day of a
calendar month;
(c) if any Interest Period includes a date on which any payment of
principal of the Eurodollar Loans which are the subject of such
Borrowing, Continuation or Conversion is required to be made
hereunder, but does not end on such date, then (i) the principal
amount of such Eurodollar Loans required to be repaid on such date
shall have an Interest Period ending on such date, and (ii) the
remainder of each such Eurodollar Loans shall have an Interest Period
determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that
"Investment" shall not include customer and trade accounts which are payable in
accordance with customary trade terms.
"▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ Corporation, a Michigan corporation, and a wholly
owned Subsidiary of Terra.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or its
Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit issued
hereunder, a fee in an amount equal to a percentage of the stated amount of such
Letter of Credit (calculated on a per annum basis based on the stated term of
such Letter of Credit) determined by reference to the ratio of the Outstanding
Credit to the Borrowing Base in effect on the date such Letter of Credit is
issued in accordance with the table below:
=============================================================================
Ratio of Outstanding Per Annum Letter of
Credit to Borrowing Base Credit Fee
-----------------------------------------------------------------------------
less than or equal to.50 to 1 1.500%
----------------------------------------------------------------------------
greater than .50 to 1
less than or equal to .75 to 1 1.750%
-----------------------------------------------------------------------------
greater than .75 to 1
less than or equal to .90 to 1 2.125%
-----------------------------------------------------------------------------
greater than .90 to 1 2.500%
=============================================================================
17
Notwithstanding the foregoing or anything else to the contrary contained
herein or in any other Loan Paper, in the event Borrower consummates the Post-
Closing Debt Issuance on or prior to the Post-Closing Debt Issuance Trigger
Date, then, from and after such date, the Letter of Credit Fee will decrease by
.250% at all levels in the table shown above.
"Letter of Credit Fronting Fee" means, with respect to any Letter of Credit
issued hereunder, a fee equal to one hundred twenty five one thousandths of one
percent (.125%) per annum of the stated amount of such Letter of Credit.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 3.1(b).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means the revolving credit loan in an amount outstanding at any time
not to exceed the amount of the Total Commitment then in effect less the amount
of the Letter of Credit Exposure then outstanding to be made by Banks to
Borrower in accordance with Section 3.1 hereof. The Loan may be comprised of
the Base Rate Loan and one or more Eurodollar Loans as Borrower may select in a
Request for Borrowing or a Notice of Continuation and Conversion.
"Loan Papers" means this Agreement, the Notes, any Subsidiary Guaranty
(which may hereafter be executed), all Mortgages now or at any time hereafter
delivered pursuant to Section 7.1, the Collateral Assignments, any Borrower
Pledge Agreement (which may hereafter be executed), any Subsidiary Pledge
Agreement (which may hereafter be executed), the Subordination Agreements and
all other certificates, documents or instruments delivered in connection with
this Agreement, as the foregoing may be amended from time to time.
"Long Term Debt" means Debt which matures more than one year from the date
it is incurred, or which can be extended at the option of the obligor(s) to a
date more than one year from the date it is incurred.
"Management Agreement" means that certain Management Agreement dated
September 1, 1998, to be effective on the Closing Date, by and between Mercury
and Borrower, pursuant to which Mercury shall operate all of Borrower's Mineral
Interests (other than the CMS Properties) and provide certain general and
administrative services necessary for the operation of Borrower's business and
properties (other than the CMS Properties). Borrower shall operate and be the
named and listed operator of, and shall retain all ▇▇▇▇▇ reimbursements
associated with, all of the CMS Properties to which it is entitled to operate.
18
"Mandatory Redetermination" means any reduction of the Borrowing Base
pursuant to Section 6.5. Notwithstanding anything to the contrary contained
herein, no Mandatory Redetermination shall be deemed or construed to be a
Special Redetermination hereunder.
"Margin Regulations" means Regulations T, U and X of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Mariner" means Mariner Gas LLC, a Massachusetts limited liability company.
"Mariner Purchase and Sale Agreement" means that certain Purchase and Sale
Agreement, dated as of March 31, 2000, by and between Borrower, as Seller, and
Mariner, as buyer.
"Mariner Section 29 Documents" means each of the following documents,
instruments and agreements (as the same may have been amended, modified,
extended or supplemented):
(a) Assignment, dated effective as of April 1, 2000, by and between
Borrower, as assignor, and Mariner, as assignee, and recorded in the county
records of (i) Antrim County, Michigan, (ii) Oscoda County, Michigan, (iii)
Montmorency County, Michigan, and (iv) Otsego County, Michigan;
(b) Conveyance of Production Payment, dated as of March 31, 2000, by
and between Mariner, as assignor, and Borrower, as assignee, and recorded
in the county records of (i) Antrim County, (ii) Oscoda County, Michigan,
(iii) Montmorency County, Michigan, and (iv) Otsego County, Michigan;
(c) Mortgage, dated as of March 31, 2000, by and between Mariner, as
mortgagor, and Borrower, as mortgagee, and recorded in the county records
of (i) Antrim County, Michigan, (ii) Oscoda County, Michigan, (iii)
Montmorency County, Michigan, and (iv) Otsego County, Michigan;
(d) the Mariner Purchase and Sale Agreement;
(e) Fixed Payment Note, dated April 1, 2000, executed by Mariner, as
maker, payable to the order of Borrower, as payee, in the original
principal amount of $22,803,169;
(f) Assignment of Enforcement Rights, dated effective March 31, 2000,
by and between Mariner and Borrower, and acknowledged and consented to by
State Street;
(g) Management Agreement, dated as of March 31, 2000, by and between
Mariner and Borrower, as manager; and
(h) Intercreditor Agreement, dated as of March 31, 2000, by and among
Administrative Agent, TCW Agent and Mariner.
19
"Mariner Section 29 Mortgage" means that certain Mortgage, dated as of
March 31, 2000, by and between Borrower, as mortgagor, and Mariner, as
mortgagee, and recorded in the county records of (i) Antrim County, Michigan,
(ii) Oscoda County, Michigan, (iii) Montmorency County, Michigan, and (iv)
Otsego County, Michigan (as the same may have been amended, modified, extended
or supplemented).
"Mariner Section 29 Sale" means the purchase by Mariner of 99.5% of (i) the
interests to be acquired by Borrower from CMS pursuant to the CMS Acquisition
Agreement, and (ii) the interests owned by Terra, in Devonian shale gas
production from certain gas ▇▇▇▇▇ located in Michigan and described in the
Mariner Section 29 Documents, together with certain other rights and interests
described in, and all pursuant to the terms and conditions contained in, the
Mariner Section 29 Documents, which sale shall be on terms and conditions
acceptable to Administrative Agent and Banks.
"Material Adverse Change" means any circumstance or event that has had or
would reasonably be expected to have (a) a material and adverse effect on the
financial condition, business operations, prospects, properties or assets of any
Credit Party, (b) an adverse effect on (i) the validity and enforceability of
any Loan Paper, or (ii) the perfection or priority of any Lien purported to be
created thereby, or (c) a material adverse effect on the right or ability of any
Credit Party to fully, completely and timely pay and perform its obligations
under the Loan Papers.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net negative gas imbalance to any Credit
Party in excess of $250,000.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Loan owed to such Bank at such time to exceed the maximum amount
which such Bank would be allowed to contract for, charge, take, reserve, or
receive under applicable Laws after taking into account, to the extent required
by applicable Laws, any and all relevant payments or charges under the Loan
Papers. To the extent the Laws of the State of Texas are applicable for
purposes of determining the "Maximum Lawful Rate," such term shall mean the
"indicated rate ceiling" from time to time in effect under Chapter 303 of the
Texas Finance Code, as amended, substituted for or restated, or, if permitted by
applicable Law and effective upon the giving of the notices required by such
Chapter 303 (or effective upon any other date otherwise specified by applicable
Law), the "quarterly ceiling" or "annualized ceiling" from time to time in
effect under such Chapter 303, whichever Administrative Agent (with the approval
of Required Banks) shall elect to substitute for the "indicated rate ceiling,"
and vice versa, each such substitution to have the effect provided in such
Chapter 303, and Administrative Agent (with the approval of Required Banks)
shall be entitled to make such election from time to time and
20
one or more times and, without notice to Borrower, to leave any such substitute
rate in effect for subsequent periods in accordance with such Chapter 303.
"Mercury" means Mercury Exploration Company, a Texas corporation.
"MGP" means Michigan Gas Partners, Limited Partnership, formerly a Texas
limited partnership prior to its merger with and into Borrower.
"MGV" means MGV Energy Inc., a corporation organized under the laws of
Canada.
"MGV Investment" means the investment by Borrower of approximately
$1,500,000 to purchase approximately ninety percent (90%) of the ownership
interests of MGV.
"Mineral Interests" means rights, estates, titles, and interests in and to
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest, production payment, net profits interests, oil and gas fee interests,
and other rights therein, including, without limitation, any reversionary or
carried interests relating to the foregoing, together with rights, titles, and
interests created by or arising under the terms of any unitization,
communization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of Laws, which now or hereafter include all or any part of the
foregoing. Without limiting the foregoing, in the case of Borrower, "Mineral
Interests" also includes all rights of Borrower under the Section 29 Documents.
"Monthly Date" means the fifteenth day of each calendar month.
"Mortgages" means all mortgages, deeds of trusts, amendments to mortgages,
security agreements, amendments to security agreements, assignments of
production, amendments to assignments of production, pledge agreements,
collateral mortgages, collateral chattel mortgages, collateral assignments,
financing statements and other documents, instruments and agreements evidencing,
creating, perfecting or otherwise establishing the Liens required by Section 7.1
-----------
hereof. All Mortgages shall be in form and substance satisfactory to
Administrative Agent in its sole discretion.
"Non-Recourse Debt" means indebtedness (a) secured solely by the assets
acquired with the proceeds of such indebtedness, (b) with respect to which no
Credit Party shall have any liability for repayment beyond the assets pledged,
and (c) with respect to which Borrower has delivered to Banks an opinion in a
form satisfactory to Required Banks of counsel acceptable to Administrative
Agent stating that such indebtedness meets the criteria set forth in (a) and (b)
preceding.
"Note" means a promissory note of Borrower payable to the order of a Bank,
in substantially the form of Exhibit B hereto, in the amount of such Bank's
Commitment, evidencing the obligation of Borrower to repay to such Bank its
Commitment Percentage of the Loan, together with all modifications, extensions,
renewals, and rearrangements thereof, and "Notes" means all of such Notes
collectively.
21
"Notice of Continuation or Conversion" has the meaning set forth in Section
3.3(c).
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of any
Bank arising pursuant to the Loan Papers or pursuant to any Hedge Agreement or
Hedge Transaction entered into with any Bank or any Affiliate of any Bank, and
all interest accrued thereon and costs, expenses, and attorneys' fees incurred
in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.
"Oil & Gas Hedge Transaction" means a Hedge Transaction pursuant to which
any Person ▇▇▇▇▇▇ the price to be received by it for future production of
Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date, including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Loan on such date,
including the amount of any Borrowing to be made on such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted CMS Title Defects" means "Title Defects" as defined in the CMS
Acquisition Agreement with respect to which Borrower has the right to obtain
title adjustment payments from CMS that fairly represent the reduction in value
of such CMS Properties due to such Title Defects.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) securing the Notes in favor of Banks;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the operation of
the subject property, and for the purposes of this Agreement, a minor defect in
title shall include, but not be limited to, easements, rights-of-way,
servitudes, permits, surface leases and other similar rights in respect of
surface operations, and easements for pipelines, streets, alleys, highways,
telephone lines, power lines, railways and other easements and rights-of-way,
on, over or in respect of any of the properties of any Credit Party that are
customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests which are
not delinquent (except to the extent permitted by Section 10.7);
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's Liens and other similar Liens arising by operation of Law in the
ordinary course of business which are not delinquent (except to the extent
permitted by Section 10.7);
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(e) Liens for Taxes or assessments not yet due or not yet delinquent,
or, if delinquent, that are being contested in good faith in the normal course
of business by appropriate action, as permitted by Section 10.7;
(f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including, without
limitation, any royalty, overriding royalty, net profits interest, production
payment, carried interest or reversionary working interest;
(g) the Section 29 Mortgages;
(h) the TCW Royalty Documents;
(i) Liens in favor of TCW Agent and the Subordinate Noteholders to
secure the Subordinate Debt which are junior, subordinate and inferior to the
Liens of the Mortgages;
(j) until, but excluding, June 30, 2000, Permitted CMS Title Defects;
and
(k) Liens perfected or purportedly perfected under the following
financing statements: (i) file #C975864, naming Terra, as debtor, filed with the
Secretary of State of Michigan on May 30, 1995; (ii) file #C982828, naming
Terra, as debtor, filed with the Secretary of State of Michigan on June 16,
1995; (iii) file #C971103, naming Guardian Energy Management Corporation and
Terra, as debtors, filed with the Secretary of State of Michigan on May 17,
1995; (iv) file #C998172, naming Guardian Energy Management Corporation and
Terra, as debtors, filed with the Secretary of State of Michigan on August 1,
1995; (v) file #C998173, naming Guardian Energy Management Corporation and
Terra, as debtors, filed with the Secretary of State of Michigan on August 1,
1995; (vi) file #C971101, naming Guardian Energy Management Corporation and
Terra, as debtors, filed with the Secretary of State of Michigan on May 17,
1995; and (vii) file #D4D2038, naming Guardian Energy Management Corporation and
Terra, as debtors, filed with the Secretary of State of Michigan on July 23,
1998.
"Permitted Investments" means (a) readily marketable direct obligations of
the United States of America (or investments in mutual funds or similar funds
which invest solely in such obligations), (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$500,000,000, (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest ratings categories of
Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, (d) Investments
described on Schedule 2 hereto, (e) Investments by any Credit Party in a
Subsidiary of Borrower that has provided a Subsidiary Guaranty and the Equity of
which has been pledged to Administrative Agent pursuant to a Borrower Pledge
Agreement or a Subsidiary Pledge Agreement, and (f) other Investments; provided
that, the aggregate amount of all other Investments made pursuant to this clause
(f) outstanding at any time shall not exceed $500,000 (measured on a cost
basis).
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"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a Government Authority.
"Plan" means an employee benefit plan within the meaning of section 3(3) of
ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which any Credit Party or an ERISA Affiliate of a Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's dependents or beneficiaries, has any current
or future right to benefits resulting from the present or former employee's
employment relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.
"Post-Closing Debt Issuance" means the incurrence by Borrower of additional
Subordinate Debt in connection with the issuance and sale of Subordinate Notes
(and the receipt by Borrower of the proceeds thereof) in an amount not less than
$7,000,000 but not in excess of $10,000,000; provided, that, the Subordinate
Debt shall not, at any time, exceed $53,000,000.
"Post-Closing Debt Issuance Trigger Date" means May 31, 2000.
"Post-Closing Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 6.6. Notwithstanding anything to the contrary
contained herein, the Post-Closing Redetermination shall not be deemed or
construed to be a Special Redetermination.
"Post-Closing Title Review Requirement" means with respect to any
requirement contained herein for delivery to Administrative Agent or its counsel
of title opinions or other evidence of title to Mineral Interests purported to
be owned by Borrower, a requirement that such title opinions be delivered in
form and substance acceptable to Administrative Agent and its counsel with
respect to CMS Properties with an aggregate Recognized Value at least equal to
eighty percent (80%) of the Recognized Value of all CMS Properties.
"Prime Rate" means the per annum rate of interest established from time to
time by Bank of America as its prime rate, which rate may not be the lowest rate
of interest charged by Bank of America to its customers.
"Property Description" means the legal description of Mineral Interests
attached to the Certificate of Ownership Interests.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
24
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"QELC" means Quicksilver Energy, L.C., a Michigan limited liability
company.
"Quarterly Date" means the last day of each March, June, September and
December.
"Recognized Value" means, with respect to Mineral Interests, the discounted
present value of the estimated net cash flow to be realized from the production
of Hydrocarbons from such Mineral Interests as determined by Bank of America for
purposes of determining the portion of the Borrowing Base which it attributes to
such Mineral Interests in accordance with Article VI hereof.
"Redetermination" means (i) any Scheduled Redetermination, (ii) any Special
Redetermination, (iii) any CMS Redetermination, (iv) any Mandatory
Redetermination, and (v) the Post-Closing Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each May1 and November 1, commencing November 1, 2000, (b) with
respect to any Special Redetermination, the first day of the first month which
is not less than twenty (20) Domestic Business Days following the date of a
request for a Special Redetermination, (c) with respect to each CMS
Redetermination, each CMS Redetermination Date, (d) with respect to each
Mandatory Redetermination, the date upon which Borrower consummates any Post-
Closing Debt Issuance in accordance with the terms of Section 6.5, and (e) with
respect to the Post-Closing Redetermination, June 1, 2000.
"Regulation A" means Regulation A of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Request for Borrowing" has the meaning set forth in Section 3.1(d).
"Request for Letter of Credit" has the meaning set forth in Section 3.1(e).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Required Reserve Value" means Proved Mineral Interests that have a
Recognized Value of not less than eighty percent (80%) of the Recognized Value
of all Proved Mineral Interests held by Borrower and its Subsidiaries.
"Reserve Report" means an unsuperseded engineering analysis of the Mineral
Interests owned by Borrower, in form and substance reasonably acceptable to
Required Banks, prepared in accordance with customary and prudent practices in
the petroleum engineering industry and Financial Accounting Standards Board
Statement 69. Each Reserve Report required to be delivered by March 31 of each
year pursuant to Section 6.1 shall be prepared by the Approved Petroleum
Engineer. Each other Reserve Report shall be prepared by Borrower's in-house
staff.
25
Notwithstanding the foregoing, in connection with any Special Redetermination
requested by Borrower, the Reserve Report shall be in form and scope mutually
acceptable to Borrower and Required Banks. Until superseded, each of the
Existing Reserve Report and the CMS Reserve Report shall be considered a Reserve
Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person, (b) the retirement, redemption or prepayment prior
to scheduled maturity by such Person or any Affiliate of such Person of any Debt
of such Person, (c) the retirement, redemption or payment by Borrower or any
affiliate of Borrower of any part of the principal of the Subordinate Debt at
any time prior to the termination of all Commitments and the payment and
performance in full of the Obligations, or (d) upon the occurrence and during
the continuance of a Default, Event of Default or Borrowing Base Deficiency, and
to the extent not otherwise prohibited pursuant to the terms hereof or the terms
of the Subordination Agreements, the payment by Borrower or any affiliate of
Borrower in cash of any interest on the Subordinate Debt in excess of ten
percent (10%).
"Schedule" means a "schedule" attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 6.2.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Section 29 Documents" means, collectively, the Existing Section 29
Documents and the Mariner Section 29 Documents.
"Section 29 Mortgages" means, collectively, the Existing Section 29
Mortgages and the Mariner Section 29 Mortgages.
"Sole Lead Arranger" means Banc of America Securities LLC in its capacity
as sole lead arranger for the credit facility hereunder or any successor
thereto.
26
"Solvent" means, with respect to any Person on a particular date, the
condition that, on such date, (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair saleable value of
the assets of such Person is not less than the amount that will be required to
pay the liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and such Person does not believe that it will, incur debts or liabilities beyond
its ability to pay as such debts and liabilities mature, and (v) such Person is
not engaged in a business or transaction, and such Person is not about to engage
in a business or transaction for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged.
"Special Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 6.3.
"State Street" means State Street Bank and Trust Company, a Massachusetts
trust company.
"Subordinate Debt" means all Debt of Borrower outstanding under the
Subordinate Note Agreement, including all renewals and extensions thereof to the
extent permitted hereunder; provided, that, the Subordinate Debt shall not, at
any time, exceed $53,000,000. As of the Closing Date, the aggregate principal
amount of Subordinate Debt is $43,000,000.
"Subordinate Note Agreement" means that certain Note Purchase Agreement
dated as of March 31, 2000, by and among Borrower, TCW Agent and Subordinate
Noteholders, as the same may be modified, amended, renewed, extended or restated
from time to time to the extent permitted hereunder and under the Subordination
Agreements.
"Subordinate Note Documents" means the Subordinate Note Agreement, the
Subordinate Notes, and all promissory notes, security agreements, deeds of
trust, assignments, guarantees and other documents, instruments and agreements
executed and delivered pursuant to the Subordinate Note Agreement evidencing,
securing, guaranteeing or otherwise pertaining to the Subordinate Debt and the
other obligations arising under the Subordinate Note Agreement, as the foregoing
may be amended, renewed, extended, supplemented, increased or otherwise modified
from time to time to the extent permitted hereunder and under the Subordination
Agreements.
"Subordinate Noteholders" means each holder of Subordinate Notes, and their
successors and assigns.
"Subordinate Notes" means, collectively, each of Borrower's 14.75% Second
Mortgage Notes due March 30, 2009.
"Subordination Agreements" means one or more Subordination Agreements in
the form of Exhibit K attached hereto to be executed by Administrative Agent,
each Bank, TCW Collateral Agent and each Subordinate Noteholder.
27
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so
on). Unless otherwise expressly stated herein, Terra is, and shall be deemed, a
Subsidiary of Borrower, and MGV, EAO, ▇▇▇▇▇▇▇ and TPC shall not be deemed
Subsidiaries of Borrower.
"Subsidiary Guaranty" means a Guaranty substantially in the form of Exhibit
C hereto to be executed by each existing and future Subsidiary of Borrower in
favor of Banks pursuant to which each Subsidiary of Borrower guaranties payment
and performance in full of the Obligations.
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit A attached hereto (with applicable conforming changes) to be
executed by each existing and future Subsidiary of Borrower (for purposes of
this definition and Section 7.1(d) hereof, such Subsidiary is referred to herein
and therein as a "First Tier Subsidiary "), pursuant to which such First Tier
Subsidiary shall pledge to Administrative Agent, for the ratable benefit of
Banks, all of the issued and outstanding Equity owned by such First Tier
Subsidiary of each existing or hereafter created Subsidiary of such First Tier
Subsidiary to secure the Obligations.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.
"TCW Agent" means TCW Asset Management Company, a California corporation,
as collateral agent for the Subordinate Noteholders under the Subordinate Note
Agreement.
"TCW Royalty Documents" means, collectively, (a) the Royalty Agreement
dated November 14, 1996 by and between QELC and TCW Portfolio No. 1555 DR V Sub-
Custody Partnership, L.P., as amended by a First Amendment to Royalty Agreement
dated as of April 9, 1998, and (b) the Conveyance of Adjustable Overriding
Royalty Interest dated November 14, 1996 granted by QELC to TCW Portfolio No.
1555 DR V Sub-Custody Partnership, L.P., as amended by an Amendment to
Conveyance of Overriding Royalty Interest dated as of April 9, 1998.
"Termination Date" means March 31, 2003.
"Terra" means Terra Energy Ltd., a Michigan corporation.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $225,000,000 as such amount may be reduced from time to time
pursuant to Section 3.7.
"TPC" means Terra Pipeline Company, a Michigan corporation, and a wholly
owned Subsidiary of Terra.
28
"Tranche" means the Base Rate Loan or a Eurodollar Loan and "Tranches"
means the Base Rate Loan or Eurodollar Loans or any combination thereof.
"Type" means with reference to a Loan, the characterization of such Loan as
the Base Rate Loan or a Eurodollar Loan based on the method by which the accrual
of interest on such Tranche is calculated.
"Unused Commitment Fee Percentage" means, for any day, the percentage
determined pursuant to the table below based on the ratio of the Outstanding
Credit on such date to the Borrowing Base in effect on such date:
Ratio of Outstanding Unused Commitment
Credit to Borrowing Base Fee Percentage
less than or equal to .50 to 1 .250%
greater than .50 to 1 less than or equal to .75 to 1 .375%
greater than .75 to 1 less than or equal to .90 to 1 .375%
greater than .90 to 1 .500%
"Working Capital" means Borrower's Consolidated Current Assets minus
Borrower's Consolidated Current Liabilities; provided, that, for purposes of
determining Working Capital, Consolidated Current Assets will be calculated (a)
by including the Availability, and (b) without including any accounts
receivables or other rights to payment arising from (i) the sale of gas
production, unless the same are due and payable (and reasonably expected by
Borrower to be paid) within sixty (60) days after the month in which gas is
produced; (ii) the sale of oil production, unless the same are due and payable
(and reasonably expected by Borrower to be paid) within thirty (30) days after
the month in which oil is produced; or (iii) Excluded Accounts.
SECTION 2.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of Borrower and its Consolidated Subsidiaries delivered to
Banks prior to the date hereof except for changes concurred in by Borrower's
independent certified public accountants and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to Banks pursuant to Section 10.1.
SECTION 2.3 Petroleum Terms. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves" have
the meaning given such terms from time to time and at the time in question by
the Society of Petroleum Engineers of the American Institute of Mining
Engineers.
29
SECTION 2.4 Money. Unless expressly stipulated otherwise, all
references herein to "dollars," "money," "funds," "payments," "prepayments" or
other similar financial or monetary terms, are references to currency of the
United States of America.
ARTICLE III
THE CREDIT
SECTION 3.1 Commitments. (a) Each Bank severally agrees, subject to
Sections 3.1(c), 8.1 and 8.2 and the other terms and conditions set forth in
this Agreement, to lend to Borrower from time to time prior to the Termination
Date amounts requested by Borrower not to exceed in the aggregate at any one
time outstanding, the amount of such Bank's Commitment reduced by an amount
equal to such Bank's Letter of Credit Exposure. Each Borrowing shall be in an
aggregate principal amount of $1,000,000 or any larger integral multiple of
$100,000 (except that any Base Rate Borrowing may be in an amount equal to the
Availability at such time), and (ii) shall be made from Banks ratably in
accordance with their respective Commitment Percentages. Subject to the
foregoing limitations and the other provisions of this Agreement, prior to the
Termination Date Borrower may borrow under this Section 3.1(a), repay amounts
borrowed and request new Borrowings to be made under this Section 3.1(a).
(b) Administrative Agent will, from time to time prior to the
Termination Date, upon request by Borrower, issue Letters of Credit for the
account of Borrower, so long as (i) the sum of (A) the total Letter of Credit
Exposure then existing, and (B) the amount of the requested Letter of Credit
does not exceed ten percent (10%) of the Borrowing Base, and (ii) Borrower would
be entitled to a Borrowing under Sections 3.1(a) and 3.1(c) in the amount of the
requested Letter of Credit. Not less than three (3) Domestic Business Days
prior to the requested date of issuance of any such Letter of Credit, Borrower
shall execute and deliver to Administrative Agent, Administrative Agent's
customary letter of credit application. Each Letter of Credit shall be in the
minimum amount of $10,000 and shall be in form and substance acceptable to
Administrative Agent. No Letter of Credit shall have an expiration date later
than the Termination Date. Upon the date of issuance of a Letter of Credit,
Administrative Agent shall be deemed to have sold to each other Bank, and each
other Bank shall be deemed to have unconditionally and irrevocably purchased
from Administrative Agent, a non-recourse participation in the related Letter of
Credit and Letter of Credit Exposure equal to such Bank's Commitment Percentage
of such Letter of Credit and Letter of Credit Exposure. Upon request of any
Bank, but not less often than quarterly, Administrative Agent shall provide
notice to each Bank by telephone, teletransmission or telex setting forth each
Letter of Credit issued and outstanding pursuant to the terms hereof and
specifying the beneficiary and expiration date of each such Letter of Credit,
each Bank's percentage of each such Letter of Credit and the actual dollar
amount of each Bank's participation held by Administrative Agent thereof for
such Bank's account and risk. At the time of issuance of each Letter of Credit,
Borrower shall pay to Administrative Agent in respect of such Letter of Credit
(a) the applicable Letter of Credit Fee, and (b) the applicable Letter of Credit
Fronting Fee. Administrative Agent shall distribute the Letter of Credit Fee
payable upon the issuance of each Letter of Credit to Banks in accordance with
their respective Commitment Percentages, and Administrative Agent shall retain
the Letter of Credit
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Fronting Fee for its own account. Any (y) material amendment or modification, or
(z) renewal or extension of any Letter of Credit shall be deemed to be the
issuance of a new Letter of Credit for purposes of this Section 3.1(b).
Notwithstanding anything to the contrary contained herein, Borrower shall pay to
Administrative Agent in connection with any amendment or modification of any
nature, Administrative Agent's usual and customary fees for amendments or
modifications to, and processing of, Letters of Credit.
Immediately upon the occurrence of an Event of Default, Borrower shall
deposit with Administrative Agent cash in such amounts as Administrative Agent
may request, up to a maximum amount equal to the aggregate existing Letter of
Credit Exposure of all Banks. Any amounts so deposited shall be held by
Administrative Agent for the ratable benefit of all Banks as security for the
outstanding Letter of Credit Exposure and the other Obligations, and Borrower
will, in connection therewith, execute and deliver such security agreements in
form and substance satisfactory to Administrative Agent which Administrative
Agent may, in its discretion, require. As drafts or demands for payment are
presented under any Letter of Credit, Administrative Agent shall apply such cash
to satisfy such drafts or demands. When all Letters of Credit have expired and
the Obligations have been repaid in full (and no Bank has any obligation to lend
or issue Letters of Credit hereunder) or such Event of Default has been cured to
the satisfaction of Required Banks, Administrative Agent shall release to
Borrower any remaining cash deposited under this Section 3.1(b). Whenever
Borrower is required to make deposits under this Section 3.1(b) and fails to do
so on the day such deposit is due, Administrative Agent or any Bank may, without
notice to Borrower, make such deposit (whether by application of proceeds of any
collateral for the Obligations, by transfers from other accounts maintained with
any Bank or otherwise) using any funds then available to any Bank of any Credit
Party, any guarantor, or any other party liable for repayment of the
Obligations.
Notwithstanding anything to the contrary contained herein, Borrower hereby
agrees to reimburse Administrative Agent immediately upon demand by
Administrative Agent, and in immediately available funds, for any payment or
disbursement made by Administrative Agent under any Letter of Credit issued by
it. Payment shall be made by Borrower with interest on the amount so paid or
disbursed by Administrative Agent from and including the date payment is made
under any Letter of Credit to and including the date of payment, at the lesser
of (i) the Maximum Lawful Rate, or (ii) the Default Rate. The obligations of
Borrower under this paragraph will continue until all Letters of Credit have
expired and all reimbursement obligations with respect thereto have been paid in
full by Borrower and until all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Administrative Agent upon demand
for all amounts paid under Letters of Credit as set forth in the immediately
preceding paragraph hereof; provided, however, if Borrower for any reason fails
to reimburse Administrative Agent in full upon demand, Banks shall reimburse
Administrative Agent in accordance with each Banks' Commitment Percentage for
amounts due and unpaid from Borrower as set forth hereinbelow; provided,
however, that no such reimbursement made by Banks shall discharge Borrower's
obligations to reimburse Administrative Agent. All reimbursement amounts
payable by any Bank under this Section 3.1(b) shall include interest thereon at
the Federal Funds Rate, from the date of the payment of such amounts by
Administrative Agent to the date of reimbursement by such Bank. No Bank shall
be
31
liable for the performance or nonperformance of the obligations of any other
Bank under this paragraph. The reimbursement obligations of Banks under this
paragraph shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Papers.
Borrower shall indemnify and hold Administrative Agent and each Bank, and
their respective officers, directors, representatives and employees harmless
from loss for any claim, demand or liability which may be asserted against any
or such indemnified party in connection with actions taken under Letters of
Credit or in connection therewith (including losses resulting from the
negligence of any or such indemnified party), and shall pay each indemnified
party for reasonable fees of attorneys and legal costs paid or incurred by each
indemnified party in connection with any matter related to Letters of Credit,
except for losses and liabilities incurred as a direct result of the gross
negligence or willful misconduct of such indemnified party, IT BEING THE EXPRESS
INTENTION OF THE PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR
THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for any reason
fails to indemnify or pay such indemnified party as set forth herein in full,
Banks shall indemnify and pay such indemnified party upon demand, in accordance
with each Bank's Commitment Percentage of such amounts due and unpaid from
Borrower. The provisions of this paragraph shall survive the termination of
this Agreement.
Administrative Agent does not make any representation or warranty, and does
not assume any responsibility with respect to the validity, legality,
sufficiency or enforceability of any letter of credit application executed and
delivered in connection with any Letter of Credit issued hereunder or any
document relative thereto or to the collectibility thereunder. Administrative
Agent does not assume any responsibility for the financial condition of Borrower
or for the performance of any obligation of Borrower. Administrative Agent may
use its discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in it
or which it may be entitled to take or assert with respect to any Letter of
Credit or any letter of credit application. FURTHERMORE, EXCEPT AS SET FORTH
HEREIN, ADMINISTRATIVE AGENT SHALL BE UNDER NO LIABILITY TO ANY BANK, WITH
RESPECT TO ANYTHING ADMINISTRATIVE AGENT MAY DO OR REFRAIN FROM DOING IN THE
EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND RESPONSIBILITY OF
ADMINISTRATIVE AGENT BEING TO HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS
AS ADMINISTRATIVE AGENT HANDLES ITS OWN SHARE. ADMINISTRATIVE AGENT SHALL NOT
HAVE ANY DUTIES OR RESPONSIBILITIES EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND
THOSE DUTIES AND LIABILITIES SHALL BE SUBJECT TO THE LIMITATIONS AND
QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE, NEITHER ADMINISTRATIVE AGENT, NOR
ANY OF ITS DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE LIABLE FOR ANY ACTION
TAKEN OR OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR OMITTED IS EXPRESSLY SET
FORTH HEREIN) UNDER OR IN CONNECTION HEREWITH OR UNDER ANY OTHER INSTRUMENT OR
DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Administrative Agent shall not incur any liability to any Bank,
Borrower, or any Affiliate of any Bank or Borrower, in acting upon any notice,
32
document, order, consent, certificate, warrant or other instrument reasonably
believed by Administrative Agent to be genuine or authentic and to be signed by
the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur
Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder, in an amount which would cause
the Outstanding Credit to exceed the Borrowing Base then in effect. No Bank
shall be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency. Nothing in this Section 3.1(c) shall be deemed to limit any Bank's
obligation to reimburse Administrative Agent with respect to its participation
in Letters of Credit as a result of the drawing under any Letter of Credit
pursuant to Section 3.1(b).
(d) In order to request any Borrowing under this Section 3.1, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly completed
Request for Borrowing (herein so called) prior to 12:00 noon (Dallas, Texas
time), (i) at least one (1) Domestic Business Day before the Borrowing Date
specified for a proposed Base Rate Borrowing, and (ii) at least three (3)
Eurodollar Business Days before the Borrowing Date of a proposed Eurodollar
Borrowing. Each such Request for Borrowing shall be substantially in the form
of Exhibit D hereto, and shall specify:
(i) the Borrowing Date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a
Eurodollar Business Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
Upon receipt of a Request for Borrowing, Administrative Agent shall promptly
notify each Bank of the contents thereof and the amount of the Borrowing to be
loaned by such Bank pursuant thereto, and such Request for Borrowing shall not
thereafter be revocable by Borrower. Not later than 12:00 noon (Dallas, Texas
time) on the date of each Borrowing, each Bank shall make available its
Commitment Percentage of such Borrowing, in Federal or other funds immediately
available in Dallas, Texas to Administrative Agent at its address set forth on
Schedule 1 hereto. Notwithstanding the foregoing, if Borrower delivers to
Administrative Agent a Request for Borrowing prior to 10:00 a.m. (Dallas, Texas
time) on a Domestic Business Day requesting a Base Rate Borrowing on such day,
each Bank shall use its best efforts to make available to Administrative Agent
its Commitment Percentage of such Borrowing by 1:00 p.m. (Dallas, Texas time) on
the same day. Unless Administrative Agent determines that any applicable
condition specified in Section 8.2 has not been satisfied, Administrative Agent
will make the funds so received from Banks available to Borrower at
Administrative Agent's aforesaid address.
33
(e) In order to request any Letter of Credit hereunder, Borrower shall
hand deliver, telex or telecopy to Administrative Agent a duly completed Request
for Letter of Credit (herein so called) prior to 12:00 noon (Dallas, Texas time)
at least three (3) Domestic Business Days before the date specified for issuance
of such Letter of Credit. Each Request for Letter of Credit shall be
substantially in the form of Exhibit E hereto, shall be accompanied by
Administrative Agent's duly completed and executed letter of credit application
and agreement and shall specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including the
name and address of the beneficiary, the stated amount, the expiration
date and the conditions under which drafts under such Letter of Credit
are to be available; and
(iii) the purpose of such Letter of Credit.
Upon receipt of a Request for Letter of Credit, Administrative Agent shall
promptly notify each Bank of the contents thereof, including the amount of the
requested Letter of Credit, and such Request for Letter of Credit shall not
thereafter be revocable by Borrower. No later than 12:00 noon (Dallas, Texas
time) on the date each Letter of Credit is requested, unless Administrative
Agent determines that any applicable condition precedent set forth in Section
8.2 hereof has not been satisfied, Administrative Agent will issue and deliver
such Letter of Credit pursuant to the instructions of Borrower.
SECTION 3.2 Notes. Each Bank's Commitment Percentage of the Loan shall
be evidenced by a single Note payable to the order of such Bank in an amount
equal to such Bank's Commitment.
SECTION 3.3 Interest Rates; Payments. (a) The principal amount of the
Base Rate Loan outstanding from day to day shall bear interest at a rate per
annum equal to the Base Rate in effect from day to day; provided that in no
event shall the rate charged hereunder or under the Notes exceed the Maximum
Lawful Rate. Interest on the Base Rate Loan shall be payable as it accrues on
each Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding from day to
day shall bear interest for the Interest Period applicable thereto at a rate per
annum equal to the sum of (i) the Applicable Margin plus (ii) the applicable
Adjusted Eurodollar Rate; provided that in no event shall the rate charged
hereunder or under the Notes exceed the Maximum Lawful Rate. Interest on any
portion of the principal of each Eurodollar Loan subject to an Interest Period
of one (1), two (2) or three (3) months shall be payable on the last day of the
Interest Period applicable thereto. Interest on any portion of the principal of
each Eurodollar Loan having an Interest Period of six (6) months shall be
payable on the last day of the Interest Period applicable thereto and on each
Quarterly Date.
(c) So long as no Default or Event of Default shall be continuing, subject
to the provisions of this Section 3.3, Borrower shall have the option of having
all or any portion of the principal outstanding under the Loan be a Base Rate
Loan or one (1) or more Eurodollar Loans,
34
which shall bear interest at rates determined by reference to the Base Rate and
the Adjusted Eurodollar Rate, respectively; provided, that each Eurodollar Loan
shall be in a minimum amount of $1,000,000 and shall be in an amount which is an
integral multiple of $100,000. Prior to the termination of each Interest Period
with respect to each Eurodollar Loan, Borrower shall give written notice (a
"Notice of Continuation or Conversion") in the form of Exhibit F attached hereto
to Administrative Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest Period.
Such Notice of Continuation or Conversion shall be given to Administrative Agent
at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection, and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then expiring.
If Borrower shall specify a Eurodollar Loan, such Notice of Continuation or
Conversion shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definition of such term) selected by Borrower.
Each Notice of Continuation or Conversion shall be irrevocable and effective
upon notification thereof to Administrative Agent. If the required Notice of
Continuation or Conversion shall not have been timely received by Administrative
Agent, Borrower shall be deemed to have elected that the principal of the
Eurodollar Loan subject to the Interest Period then expiring be Converted to the
Base Rate Loan upon the expiration of such Interest Period and Borrower will be
deemed to have given Administrative Agent notice of such election. Subject to
the limitations set forth in this Section 3.3(c) on the amount and number of
Eurodollar Loans, Borrower shall have the right to Convert all or any part of
the Base Rate Loan to a Eurodollar Loan by giving Administrative Agent a Notice
of Continuation or Conversion of such election at least three (3) Eurodollar
Business Days prior to the date on which Borrower elects to make such Conversion
(a "Conversion Date"). The Conversion Date selected by Borrower shall be a
Eurodollar Business Day. Notwithstanding anything in this Section 3.3 to the
contrary, no portion of the principal of the Base Rate Loan may be Converted to
a Eurodollar Loan and no Eurodollar Loan may be Continued as such when any
Default or Event of Default has occurred and is continuing, but each such
Eurodollar Loan shall be automatically Converted to the Base Rate Loan on the
last day of each applicable Interest Period. Borrower shall not be permitted to
have more than five (5) Eurodollar Loans in effect at any time.
(d) Notwithstanding anything to the contrary set forth in Section 3.3(a) or
(b) above, after the occurrence of an Event of Default, interest shall accrue on
the outstanding principal balance of the Loan, and to the extent permitted by
Law, on the accrued but unpaid interest on the Loan and all other Obligations
from the period from and including the occurrence of such Event of Default to
but excluding the date the same is remedied at a rate per annum equal to the
lesser of (a) the Default Rate, and (b) the Maximum Lawful Rate.
(e) Administrative Agent shall determine each interest rate applicable to
the Loan in accordance with the terms hereof. Administrative Agent shall
promptly notify Borrower and Banks by telex, telecopy or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder (the
"contract rate") is limited to the Maximum Lawful Rate, any subsequent
reductions in the contract rate shall not reduce the rate of
35
interest on the Loan below the Maximum Lawful Rate until the total amount of
interest accrued equals the amount of interest which would have accrued if the
contract rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of any Note, the total amount
of interest paid or accrued on such Note is less than the amount of interest
which would have accrued if the contract rate had at all times been in effect
with respect thereto, then at such time, to the extent permitted by law,
Borrower shall pay to the holder of such Note an amount equal to the difference
between (i) the lesser of the amount of interest which would have accrued if the
contract rate had at all times been in effect and the amount of interest which
would have accrued if the Maximum Lawful Rate had at all times been in effect,
and (ii) the amount of interest actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be computed
based on the number of actual days elapsed assuming that each calendar year
consisted of 360 days. Interest payable hereunder on the Base Rate Loan shall
be computed based on the actual number of days elapsed assuming that each
calendar year consisted of 365 days.
SECTION 3.4 Mandatory Prepayments Resulting From Borrowing Base
Deficiency. Except with respect to a CMS Redetermination pursuant to Section 6.4
hereof, a Mandatory Redetermination pursuant to Section 6.5 hereof, or a Post-
Closing Redetermination pursuant to Section 6.6 hereof, in the event a Borrowing
Base Deficiency exists after giving effect to any Redetermination, Borrower
shall, at its option, either (a) eliminate such Borrowing Base Deficiency by
making a single mandatory prepayment of principal on the Loan in an amount equal
to the entire amount of such Borrowing Base Deficiency on the first Monthly Date
following the date on which such Borrowing Base Deficiency is determined to
exist, or (b) eliminate such deficiency by making six (6) consecutive mandatory
prepayments of principal on the Loan each of which shall be in the amount of one
sixth (1/6th) of the amount of such Borrowing Base Deficiency commencing on the
first Monthly Date following the date on which such Borrowing Base Deficiency is
determined to exist and continuing on each Monthly Date thereafter. If a
Borrowing Base Deficiency cannot be eliminated pursuant to this Section 3.4 by
prepayment of the Loan in full (as a result of outstanding Letter of Credit
Exposure) on each Monthly Date, Borrower shall also deposit cash with
Administrative Agent, to be held by Administrative Agent to secure outstanding
Letter of Credit Exposure in the manner contemplated by Section 3.1(b), in an
amount at least equal to one sixth (1/6th) of the balance of such Borrowing Base
Deficiency (i.e., one-sixth (1/6th) of the difference between the Borrowing Base
Deficiency and the remaining outstanding principal under the Loan on the date
such Borrowing Base Deficiency is first determined to occur). In the event a
Borrowing Base Deficiency shall occur (or an increase in any pre-existing
Borrowing Base Deficiency shall occur) as a result of a CMS Redetermination
pursuant to Section 6.4, a Mandatory Redetermination pursuant to Section 6.5, or
a Post-Closing Redetermination pursuant to Section 6.6, Borrower shall
immediately make a single mandatory prepayment of principal on the Loan in an
amount equal to the entire amount of such Borrowing Base Deficiency.
SECTION 3.5 Mandatory Prepayment Following Debt Issuance. Immediately
upon the consummation by Borrower of any Post-Closing Debt Issuance, Borrower
shall make a mandatory prepayment in the amount of such Post-Closing Debt
Issuance to the principal of the Loan.
36
SECTION 3.6 Voluntary Prepayments. Borrower may, subject to Section 5.5
and the other provisions of this Agreement, upon three (3) Domestic Business
Days advance notice to Administrative Agent, prepay the principal of the Loan in
whole or in part. Any partial prepayment shall be in a minimum amount of
$1,000,000 and shall be in an integral multiple of $100,000.
SECTION 3.7 Voluntary Reduction of Commitments. Borrower may, by notice
to Administrative Agent five (5) Domestic Business Days prior to the effective
date of any such reduction, reduce the Total Commitment (and thereby reduce the
Commitment of each Bank ratably) in amounts not less than $5,000,000 and in an
amount which is an integral multiple of $1,000,000. On the effective date of any
such reduction, Borrower shall, to the extent required as a result of such
reduction, make a principal payment on the Loan in an amount sufficient to cause
the principal balance of the Loan then outstanding to be equal to or less than
the Total Commitment as thereby reduced. Notwithstanding the foregoing,
Borrower shall not be permitted to voluntarily reduce the Total Commitment to an
amount less than the aggregate Letter of Credit Exposure of all Banks.
SECTION 3.8 Termination of Commitments; Final Maturity of Loan. The
Total Commitment (and the Commitment of each Bank) shall terminate, and the
entire outstanding principal balance of the Loan, all interest accrued thereon,
all accrued but unpaid fees hereunder and all other outstanding Obligations
shall be due and payable in full on the Termination Date.
SECTION 3.9 Unused Commitment Fee. On the Termination Date, on each
Quarterly Date prior to the Termination Date, and, in the event the Commitments
are terminated in their entirety prior to the Termination Date, on the date of
such termination, Borrower shall pay to Administrative Agent, for the ratable
benefit of each Bank based on each Bank's Commitment Percentage, a commitment
fee equal to the Unused Commitment Fee Percentage in effect from day to day
(applied on a per annum basis and computed on the basis of actual days elapsed
and as if each calendar year consisted of 365 days) of the average daily
Availability for the Fiscal Quarter (or portion thereof) ending on the date such
payment is due.
SECTION 3.10 Agency and other Fees. Borrower shall pay to Administrative
Agent and its Affiliates such other fees and amounts as Borrower shall be
required to pay to Administrative Agent and its Affiliates from time to time
pursuant to any separate agreement between Borrower and Administrative Agent or
such Affiliates. Such fees and other amounts shall be retained by
Administrative Agent and its Affiliates, and no Bank (other than Administrative
Agent) shall have any interest therein. Administrative Agent may disburse any
fees paid to Administrative Agent and its Affiliates pursuant to this Section
3.10 in any manner Administrative Agent desires in its sole discretion
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1 Delivery and Endorsement of Notes. On the Closing Date,
Administrative Agent shall deliver to each Bank the Note payable to such Bank.
Each Bank may
37
endorse (and prior to any transfer of its Note shall endorse) on the schedules
attached and forming a part thereof appropriate notations to evidence the date
and amount of its Commitment Percentage of each Borrowing, the Interest Period
applicable thereto, and the date and amount of each payment of principal made by
Borrower with respect thereto; provided that the failure by any Bank to so
endorse its Note shall not affect the liability of Borrower for the repayment of
all amounts outstanding under such Note together with interest thereon. Each
Bank is hereby irrevocably authorized by Borrower to endorse its Note and to
attach to and make a part of any such Note a continuation of any such schedule
as required.
SECTION 4.2 General Provisions as to Payments. (a) Borrower shall make
each payment of principal of, and interest on, the Loan, and all fees payable
hereunder shall be paid, not later than 12:00 noon (Dallas, Texas time) on the
date when due, in Federal or other funds immediately available in Dallas, Texas,
to Administrative Agent at its address set forth on Schedule 1 hereto.
Administrative Agent will promptly (and if such payment is received by
Administrative Agent by 10:00 a.m., and otherwise if reasonably possible, on the
same Domestic Business Day) distribute to each Bank its Commitment Percentage of
each such payment received by Administrative Agent for the account of Banks.
Whenever any payment of principal of, or interest on, any portion of the Loan
subject to a Base Rate Tranche or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, any portion of the Loan subject to a Eurodollar Tranche shall be
due on a day which is not a Eurodollar Business Day, the date for payment
thereof shall be extended to the next succeeding Eurodollar Business Day
(subject to the provisions of the definition of Interest Period). If the date
for any payment of principal is extended by operation of Law or otherwise,
interest thereon shall be payable for such extended time. Borrower hereby
authorizes Administrative Agent to charge from time to time against Borrower's
accounts with Administrative Agent any amount then due.
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Loan shall be applied first to
Eurodollar Tranches outstanding with Interest Periods ending on the date of such
payment, then to Base Rate Tranches, and then to Eurodollar Tranches next
maturing until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts collected
or received by Administrative Agent or any Bank shall be applied first to the
payment of all proper costs incurred by Administrative Agent in connection with
the collection thereof (including reasonable expenses and disbursements of
Administrative Agent), second to the payment of all proper costs incurred by
Banks in connection with the collection thereof (including reasonable expenses
and disbursements of Banks), third to the reimbursement of any advances made by
Banks to effect performance of any unperformed covenants of any Credit Party
under any of the Loan Papers, fourth to the payment of any unpaid fees required
pursuant to Section 3.10, fifth to the payment of any unpaid fees required
pursuant to Sections 3.1(b) and 3.9, sixth, to payment to each Bank of its
Commitment Percentage of the outstanding principal of the Loan and accrued but
unpaid interest thereon, and seventh to establish the deposits required in
Section 3.1(b). All payments received by a Bank after the occurrence of an
Event of Default for application to the principal of the Loan shall be applied
by such Bank in the manner provided in Section 4.2(b).
38
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Loans,
its Note, or its obligation to make Eurodollar Loans, or change the
basis of taxation of any amounts payable to such Bank (or its
Applicable Lending Office) under this Agreement or its Note in respect
of any Eurodollar Loans (other than taxes imposed on the overall net
income of such Bank or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, compulsory loan, or similar requirement (other
than the Reserve Requirement utilized in the determination of the
Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Bank (or its Applicable Lending Office),
including the Commitment of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable Lending Office) or
on the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or its Note
with respect to any Eurodollar Loans, then Borrower shall pay to such Bank on
demand such amount or amounts as will compensate such Bank for such increased
cost or reduction. If any Bank requests compensation by Borrower under this
Section 5.1(a), Borrower may, by notice to such Bank (with a copy to
Administrative Agent), suspend the obligation of such Bank to make or Continue
Eurodollar Loans or to Convert all or part of the Base Rate Loan owing to such
Bank into Eurodollar Loans, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 5.4
shall be applicable); provided that such suspension shall not affect the right
of such Bank to receive the compensation so requested.
39
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Bank or any
corporation controlling such Bank as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such corporation could have
achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then, from time to
time upon demand, Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
(c) Each Bank shall promptly notify Borrower and Administrative Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section 5.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to it. Any Bank claiming
compensation under this Section 5.1 shall furnish to Borrower and Administrative
Agent a statement setting forth the additional amount or amounts to be paid to
it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 5.2 Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or
(b) Required Banks determine (which determination shall be conclusive)
and notify Administrative Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to Banks of funding Eurodollar Loans for
such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Loans and the relevant amounts or periods, and so long as
such condition remains in effect, Banks shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and Borrower shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Loans of the affected
Type, either prepay such Loans or Convert such Loans into another Type of Loan
in accordance with the terms of this Agreement.
SECTION 5.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Loans hereunder, then such
Bank shall promptly notify Borrower thereof and such Bank's obligation to make
or Continue Eurodollar Loans and to Convert other Types of Loans into Eurodollar
Loans shall be suspended until such time as such Bank may again
40
make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 5.4 shall be applicable).
SECTION 5.4 Treatment of Affected Loans. If the obligation of any Bank
to make particular Eurodollar Loans or to Continue Loans, or to Convert Loans of
another Type into Loans of a particular Type shall be suspended pursuant to
Section 5.1 or 5.3 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Bank's
Affected Loans shall be automatically Converted into the Base Rate Loan on the
last day(s) of the then current Interest Period(s) for Affected Loans (or, in
the case of a Conversion required by Section 5.3 hereof, on such earlier date as
such Bank may specify to Borrower with a copy to Administrative Agent) and,
unless and until such Bank gives notice as provided below that the circumstances
specified in Section 5.1 or 5.3 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to the Base Rate
Loan; and
(b) all Loans that would otherwise be made or Continued by such Bank
as Loans of the Affected Type shall be made or Continued instead as part of the
Base Rate Loan, and all Loans of such Bank that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall
remain) as part of the Base Rate Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
Conversion of such Bank's Affected Loans pursuant to this Section 5.4 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type made by other Banks are
outstanding, such Bank's portion of the Base Rate Loan shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type to the extent necessary so that,
after giving effect thereto, all Loans held by Banks holding Loans of the
Affected Type and by such Bank are held pro rata (as to principal amounts, Types
and Interest Periods) in accordance with their respective Commitments.
SECTION 5.5 Compensation. Upon the request of any Bank, Borrower shall
pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loan) on a
date other than the last day of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VIII to
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the
date for such Borrowing, Conversion, Continuation, or prepayment
41
specified in the relevant Request for Borrowing, Notice of Continuation or
Conversion, or other notice of Borrowing, prepayment, Continuation, or
Conversion under this Agreement.
SECTION 5.6 Taxes. (a) Any and all payments by Borrower to or for the
account of any Bank or Administrative Agent hereunder or under any other Loan
Paper shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by any relevant taxation authority (all such non-
excluded taxes, duties, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to in this Section 5.6 as "Non-Excluded
Taxes"). If Borrower shall be required by law to deduct any Non-Excluded Taxes
from or in respect of any sum payable under this Agreement or any other Loan
Paper to any Bank or Administrative Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 5.6) such
Bank or Administrative Agent receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law, and
(iv) Borrower shall furnish to Administrative Agent, at its address set forth in
Schedule 1 hereto, the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future stamp
or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Paper or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Loan Paper (hereinafter referred to as "Other
Taxes").
(c) Borrower agrees to indemnify each Bank and Administrative Agent for the
full amount of Non-Excluded Taxes and Other Taxes (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 5.6) paid by such Bank or
Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Bank organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Agreement
in the case of each Bank listed on Schedule 1 hereto and on or prior to the date
on which it becomes a Bank in the case of each other Bank, and from time to time
thereafter if requested in writing by Borrower or Administrative Agent (but only
so long as such Bank remains lawfully able to do so), shall provide Borrower and
Administrative Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and (iii) any other form or certificate required by any taxing authority
42
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Bank is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this Agreement or any of
the other Loan Papers.
(e) For any period with respect to which a Bank has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to Section
5.6(d) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
5.6(a) or 5.6(b) with respect to Non-Excluded Taxes imposed by the United
States; provided, however, that should a Bank, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Non-Excluded
Taxes because of its failure to deliver a form required hereunder, Borrower
shall take such steps as such Bank shall reasonably request to assist such Bank
to recover such Non-Excluded Taxes.
(f) If Borrower is required to pay additional amounts to or for the account
of any Bank pursuant to this Section 5.6, then such Bank will agree to use
reasonable efforts to change the jurisdiction of its Applicable Lending Office
so as to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of Non-Excluded
Taxes, Borrower shall furnish to Administrative Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
5.6 shall survive the termination of the Commitments and the payment in full of
the Notes.
SECTION 5.7 Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained each Eurodollar Loan during the Interest
Period for such Eurodollar Loan through the purchase of deposits having a
maturity corresponding to the last day of such Interest Period and bearing an
interest rate equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE VI
BORROWING BASE
SECTION 6.1 Reserve Report; Proposed Borrowing Base. As soon as
available and in any event by March 31 and September 30 of each year commencing
September 30, 2000, Borrower shall deliver to Administrative Agent and each Bank
a Reserve Report prepared as of the immediately preceding December 31 and June
30 respectively. Simultaneously with the delivery
43
to Administrative Agent and each Bank of each Reserve Report, Borrower shall
notify Administrative Agent and each Bank of the amount of the Borrowing Base
which Borrower requests become effective on the next Redetermination Date (or
such date promptly following such Redetermination Date as Required Banks shall
elect).
SECTION 6.2 Scheduled Redeterminations of the Borrowing Base; Procedures
and Standards. Based in part on the Reserve Reports made available to Banks
pursuant to Section 6.1, Banks shall redetermine the Borrowing Base on or prior
to the next Redetermination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Banks).
Any Borrowing Base which becomes effective as a result of any Redetermination of
the Borrowing Base shall be subject to the following restrictions: (a) such
Borrowing Base shall not exceed the Borrowing Base requested by Borrower
pursuant to Sections 6.1 or 6.3 (as applicable), (b) such Borrowing Base shall
not exceed the Total Commitment then in effect, (c) to the extent such Borrowing
Base represents an increase from the Borrowing Base in effect prior to such
Redetermination, such Borrowing Base shall be approved by all Banks, and (d) to
the extent such Borrowing Base represents a decrease in the Borrowing Base in
effect prior to such Redetermination, or a reaffirmation of such prior Borrowing
Base, such Borrowing Base shall be approved by Required Banks. Each
Redetermination shall be made by Banks in their sole discretion. Without
limiting such discretion, Borrower acknowledges and agrees that Banks (i) may
make such assumptions regarding appropriate existing and projected pricing for
Hydrocarbons as they deem appropriate in their sole discretion, (ii) may make
such assumptions regarding projected rates and quantities of future production
of Hydrocarbons from the Mineral Interests owned by Borrower as they deem
appropriate in their sole discretion, (iii) may consider the projected cash
requirements of the Credit Parties, (iv) except with respect to the Initial
Borrowing Base, are not required to consider any asset other than Proved Mineral
Interests owned by Borrower which are subject to first and prior Liens in favor
of Administrative Agent for the ratable benefit of Banks to the extent required
by Section 7.1 hereof, and (v) may make such other assumptions, considerations
and exclusions as Banks deem appropriate in the exercise of their sole
discretion. It is further acknowledged and agreed that each Bank may consider
such other credit factors as it deems appropriate in the exercise of its sole
discretion and shall have no obligation in connection with any Redetermination
to approve any increase from the Borrowing Base in effect prior to such
Redetermination. Promptly following any Redetermination of the Borrowing Base,
Administrative Agent shall notify Borrower of the amount of the Borrowing Base
as redetermined, which Borrowing Base shall be effective as of the date
specified in such notice, and shall remain in effect for all purposes of this
Agreement until the next Redetermination.
SECTION 6.3 Special Redetermination. (a) In addition to Scheduled
Redeterminations, Required Banks shall be permitted to make a Special
Redetermination of the Borrowing Base once in each period between Scheduled
Redeterminations. Any request by Required Banks pursuant to this Section 6.3(a)
shall be submitted to Administrative Agent and Borrower.
(b) In addition to Scheduled Redeterminations, Borrower shall be
permitted to request a Special Redetermination of the Borrowing Base once in
each Fiscal Year. Such request shall be submitted to Administrative Agent and
Required Banks and at the time of such request
44
Borrower shall deliver to Administrative Agent and each Bank a Reserve Report.
Together with such request, Borrower shall also notify Administrative Agent and
each Bank of the Borrowing Base requested by Borrower in connection with such
Special Redetermination.
(c) Any Special Redetermination shall be made by Banks in accordance
with the procedures and standards set forth in Section 6.2; provided, that, no
Reserve Report will be required to be delivered to Administrative Agent and
Banks in connection with any Special Redetermination requested by Required Banks
pursuant to clause (a) above.
SECTION 6.4 CMS Redetermination. In addition to Scheduled
Redeterminations, Special Redeterminations, Mandatory Redeterminations and the
Post-Closing Redetermination, Required Banks shall be permitted to make an
additional Redetermination of the Borrowing Base on each CMS Redetermination
Date (or as of a date shortly thereafter to be designated by Administrative
Agent in a notice to Borrower), pursuant to which Required Banks may reduce the
Borrowing Base by such amount as Required Banks shall determine in their sole
discretion as a result of (a) the existence of any uncured title, environmental
or other defect with respect to the CMS Properties, and any downward adjustment
to the Purchase Price or Final Settlement Statement (as each such term is
defined in the CMS Acquisition Agreement), and (b) the exclusion from the CMS
Acquisition of any Borrowing Base Properties (or any interest therein) pursuant
to the terms of the CMS Acquisition Agreement, including, without limitation,
pursuant to the terms of Sections 12.2, 13.3, 13.4, 13.9, 13.10, 16.1 and
Article XX of the CMS Acquisition Agreement.
SECTION 6.5 Mandatory Redetermination; Mandatory Reduction of Borrowing
Base. Notwithstanding anything to the contrary contained herein, the Borrowing
Base shall reduce immediately upon the consummation by Borrower of any Post-
Closing Debt Issuance to an amount equal to $195,000,000 (unless the Borrowing
Base has previously been reduced to an amount less than $195,000,000 pursuant to
any other Redetermination).
SECTION 6.6 Post-Closing Redetermination. In addition to Scheduled
Redeterminations, Special Redeterminations, CMS Redeterminations and Mandatory
Redeterminations, in the event Borrower does not consummate the Post-Closing
Debt Issuance on or prior to the Post-Closing Debt Issuance Trigger Date,
Required Banks shall be permitted to make an additional Redetermination of the
Borrowing Base on June 1, 2000 (or as of a date shortly thereafter to be
designated by Administrative Agent in a notice to Borrower).
SECTION 6.7 Borrowing Base Deficiency. If a Borrowing Base Deficiency
exists after giving effect to any Redetermination, Borrower shall be obligated
to eliminate such Borrowing Base Deficiency by making the mandatory prepayments
of the Loan required by Section 3.4.
SECTION 6.8 Initial Borrowing Base. Notwithstanding anything to the
contrary contained herein, the Borrowing Base in effect during the period
commencing on the Closing Date and ending on the effective date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.
45
ARTICLE VII
COLLATERAL AND GUARANTEES
SECTION 7.1 Security. (a) The Obligations shall be secured by first and
prior Liens (subject only to Permitted Encumbrances) covering and encumbering
(i) one hundred percent (100%) of all Borrowing Base Properties, (ii) all of the
issued and outstanding Equity owned by Borrower of each existing and future
Subsidiary of Borrower (including, without limitation, Terra), and (iii) all
right, title and interest of Borrower under the Management Agreement. On the
Closing Date, Borrower shall deliver to Administrative Agent for the ratable
benefit of each Bank, (A) a Borrower Pledge Agreement together with (i) all
certificates evidencing the issued and outstanding Equity owned by Borrower of
each existing Subsidiary of Borrower (including, without limitation, Terra) of
every class which shall be duly endorsed or accompanied by stock powers executed
in blank, and (ii) such UCC-1 financing statements (each duly authorized and
executed) as Administrative Agent shall deem necessary or appropriate to grant,
evidence and perfect first and prior Liens in all of the issued and outstanding
Equity owned by Borrower of each existing Subsidiary of Borrower (including,
without limitation, Terra), and (B) the Mortgages in form and substance
acceptable to Administrative Agent and duly executed by Borrower or Terra (as
applicable), together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 and UCC-3
financing statements (each duly authorized and executed) as Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect first and
prior Liens in all Borrowing Base Properties and other interests of Borrower and
Terra (as applicable) required by this Section 7.1(a).
(b) On or before each Redetermination Date after the Closing Date and
at such other times as Administrative Agent or Required Banks shall request,
Borrower and its Subsidiaries (which shall, from and after January 1, 2001,
include, for purposes of this Section 7.1(b), 7.1(c), 7.1(d) and 7.2, EAO,
▇▇▇▇▇▇▇ and TPC) shall execute and deliver to Administrative Agent, for the
ratable benefit of each Bank, Mortgages in form and substance acceptable to
Administrative Agent and duly executed by Borrower and any such Subsidiary (as
applicable) together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements (each duly authorized and executed) as Administrative Agent shall
deem necessary or appropriate to grant, evidence and perfect the Liens required
by Section 7.1(a) preceding with respect to Borrowing Base Properties acquired
by Borrower and its Subsidiaries subsequent to the last date on which Borrower
or any such Subsidiary was required to execute and deliver Mortgages pursuant to
this Section 7.1(b), or which, for any other reason are not the subject of
valid, enforceable, perfected first priority Liens (subject only to Permitted
Encumbrances) in favor of Administrative Agent for the ratable benefit of Banks.
(c) At any time Borrower or any of its Subsidiaries is required to
execute and deliver Mortgages to Administrative Agent pursuant to this Section
7.1, Borrower shall also deliver to Administrative Agent such opinions of
counsel (including, if so requested, title opinions, and in each case addressed
to Administrative Agent) and other evidence of title as Administrative Agent
shall deem necessary or appropriate to verify (i) Borrower's or such
Subsidiary's title to the Required Reserve Value of the Proved Mineral Interests
which are subject to such Mortgages, and (ii) the
46
validity, perfection and priority of the Liens created by such Mortgages and
such other matters regarding such Mortgages as Administrative Agent shall
reasonably request.
(d) On the date of the creation or acquisition by Borrower of any
Subsidiary, or on the date of creation or acquisition by any First Tier
Subsidiary of any Subsidiary, Borrower or such First Tier Subsidiary (as
applicable) shall execute and deliver to Administrative Agent a Borrower Pledge
Agreement or a Subsidiary Pledge Agreement (as applicable) together with (i) all
certificates (or other evidence acceptable to Administrative Agent) evidencing
the issued and outstanding Equity of any such Subsidiary of every class owned by
Borrower or such First Tier Subsidiary (as applicable) which shall be duly
endorsed or accompanied by stock powers executed in blank (as applicable), and
(ii) such UCC-1 financing statements as Administrative Agent shall deem
necessary or appropriate to grant, evidence and perfect the Liens required by
Section 7.1(a)(ii) in the issued and outstanding Equity of each such Subsidiary.
SECTION 7.2 Guarantees. Payment and performance of the Obligations
shall be fully guaranteed by each existing or hereafter created or acquired
Subsidiary of Borrower pursuant to a Subsidiary Guaranty. On the date of
creation or acquisition by Borrower of any Subsidiary, Borrower shall cause such
Subsidiary to execute and deliver to Administrative Agent a Subsidiary Guaranty.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 8.1 Conditions to Amendment and Restatement and Initial
Borrowing and Participation in Letter of Credit Exposure. The obligation of
each Bank to amend and restate the Existing Credit Agreement in the form of this
Agreement and the obligation of each Bank to loan its Commitment Percentage of
the initial Borrowing made hereunder, and the obligation of Administrative Agent
to issue (or cause another Bank to issue) the initial Letter of Credit issued
hereunder is subject to the satisfaction of each of the following conditions:
(a) Closing Deliveries. Administrative Agent shall have received each
of the following documents, instruments and agreements, each of which shall be
in form and substance and executed in such counterparts as shall be acceptable
to Administrative Agent and each Bank and each of which shall, unless otherwise
indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the amount of
such Bank's Commitment, duly executed by Borrower;
(ii) a Borrower Pledge Agreement duly executed and delivered by
Borrower together with (A) certificates evidencing one-hundred percent
(100%) of the issued and outstanding Equity of Terra (and all of the
issued and outstanding Equity owned by Borrower of each other
Subsidiary of Borrower, as applicable) of every class, which
certificates shall be duly endorsed or accompanied by stock powers
executed in blank, and (B) such financing statements executed by
Borrower as Administrative
47
Agent shall request to evidence and perfect the Liens granted pursuant
to such Borrower Pledge Agreement;
(iii) the Mortgages to be executed on the Closing Date pursuant to
Section 7.1(a), duly executed and delivered by Borrower and Terra (as
applicable), together with such other assignments, conveyances,
amendments, agreements and other writings, including, without
limitation, UCC-1 and UCC-3 financing statements, in form and
substance satisfactory to Administrative Agent, creating first and
prior Liens in all Borrowing Base Properties;
(iv) the Collateral Assignments duly executed by Borrower, together
with such financing statements executed by Borrower as Administrative
Agent shall request to evidence and perfect the Liens granted pursuant
to such Collateral Assignments;
(v) the Subordination Agreements duly executed and delivered by
Administrative Agent, Banks and Subordinate Noteholders;
(vi) such financing statements (including, without limitation, the
financing statements referenced in subclauses (ii), (iii) and (iv)
above) in form and substance acceptable to Administrative Agent and
executed by each Credit Party as Administrative Agent shall specify to
fully evidence and perfect all Liens contemplated by the Loan Papers,
all of which shall be filed of record in such jurisdictions as
Administrative Agent shall require in its sole direction;
(vii) a copy of the articles or certificate of incorporation,
certificate of limited partnership, articles of organization or
comparable charter documents, and all amendments thereto, of each
Credit Party accompanied by a certificate that such copy is true,
correct and complete, and dated within ten (10) days of the Closing
Date (or within such other period as acceptable to Administrative
Agent), issued by the appropriate Governmental Authority of the
jurisdiction of incorporation or organization of each Credit Party,
and accompanied by a certificate of the Secretary or comparable
Authorized Officer of each Credit Party that such copy is true,
correct and complete on the Closing Date;
(viii) a copy of the bylaws, partnership agreement, regulations,
operating agreement or comparable charter documents, and all
amendments thereto, of each Credit Party accompanied by a certificate
of the Secretary or comparable Authorized Officer of each Credit Party
that such copy is true, correct and complete as of the Closing Date;
(ix) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence of each
Credit Party and to the effect that each Credit Party is in good
standing with respect to the payment of franchise and similar Taxes
and is duly qualified to transact business in such jurisdictions;
48
(x) a certificate of incumbency of all officers of each Credit
Party who will be authorized to execute or attest to any Loan Paper,
dated the Closing Date, executed by the Secretary or comparable
Authorized Officer of each Credit Party;
(xi) copies of resolutions or comparable authorizations approving
the Loan Papers and authorizing the transactions contemplated by this
Agreement and the other Loan Papers, duly adopted by the Board of
Directors or comparable authority of each Credit Party accompanied by
certificates of the Secretary or comparable officer of each Credit
Party that such copies are true and correct copies of resolutions duly
adopted at a meeting of or (if permitted by applicable Law and, if
required by such Law, by the bylaws or other charter documents of such
Credit Party) by the unanimous written consent of the Board of
Directors of each Credit Party, and that such resolutions constitute
all the resolutions adopted with respect to such transactions, have
not been amended, modified, or revoked in any respect, and are in full
force and effect as of the Closing Date;
(xii) an opinion of ▇▇▇▇▇▇ & Hanger, L.L.P., special counsel for
Borrower, dated the Closing Date, favorably opining as to the
enforceability of each of the Loan Papers and otherwise in form and
substance satisfactory to Administrative Agent;
(xiii) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special Michigan
counsel for Administrative Agent, dated the Closing Date, favorably
opining as to the enforceability of the Mortgages in Michigan and
otherwise in form and substance satisfactory to Administrative Agent;
(xiv) an opinion of Herschler, Freudenthal, Salzburg, Bonds & ▇▇▇▇▇,
P.C., special Wyoming counsel for Administrative Agent, dated the
Closing Date, favorably opining as to the enforceability of the
Mortgages in Wyoming and otherwise in form and substance satisfactory
to Administrative Agent;
(xv) opinion of ▇▇▇▇▇▇▇, Haughey, Hanson, Toole & ▇▇▇▇▇▇▇▇, special
Montana counsel for Administrative Agent, dated the Closing Date,
favorably opining as to the enforceability of the Mortgages in Montana
and otherwise in form and substance satisfactory to Administrative
Agent;
(xvi) a certificate signed by an Authorized Officer of Borrower
stating that (a) the representations and warranties contained in this
Agreement and the other Loan Papers are true and correct in all
respects, (b) no Default or Event of Default has occurred and is
continuing, (c) all conditions set forth in this Section 8.1 and
Section 8.2 have been satisfied, and (d) after giving effect to the
Closing Transactions, Borrower, Terra and each other Credit Party are
Solvent;
(xvii) a Certificate of Ownership Interests executed by an Authorized
Officer of Borrower in the form of Exhibit G attached hereto;
49
(xviii) certificates from Borrower's insurance broker setting forth
the insurance maintained by Borrower, stating that such insurance is
in full force and effect, that all premiums due have been paid and
stating that such insurance is adequate and complies with the
requirements of Section 10.6;
(xix) a copy of each of the Closing Documents accompanied by a
certificate executed by an Authorized Officer of Borrower certifying
that (A) such copies are accurate and complete and represent the
complete understanding and agreement of the parties thereto, (B) no
material right or obligation of any party thereto has been modified,
amended or waived, and (C) subject only to funding the initial
Borrowing to be made hereunder, the Closing Transactions have been
consummated on the terms set forth in such Closing Documents;
(xx) a report or reports in form, scope and detail acceptable to
Administrative Agent and Banks setting forth the results of a review
of Borrower's Mineral Interests (after giving effect to the Closing
Transactions) and other operations, which report(s) shall not reflect
the existence of facts or circumstances which would constitute a
material violation of any Applicable Environmental Law or which are
likely to result in a material liability to any Credit Party, and/or
otherwise reveal any condition or circumstance which would reflect
that the representations and warranties contained in Section 9.14
hereof are inaccurate in any respect;
(xxi) a letter executed by CMS consenting to the assignment by
Borrower to Administrative Agent of all of Borrower's rights and
interests under the CMS Acquisition Agreement;
(xxii) to the extent an opinion is delivered by counsel to CMS and
Terra in connection with the CMS Acquisition, a letter from such
counsel (or a provision in such opinion) permitting Administrative
Agent, each Bank and their counsel to rely on the opinions provided by
such counsel in connection with the consummation of the CMS
Acquisition; and
(xxiii) a copy of each Hedge Agreement to which Borrower or any other
Credit Party is a party accompanied by a certificate executed by an
Authorized Officer of Borrower certifying that such copies are
accurate and complete and represent the complete understanding and
agreement of the parties thereto.
(b) Closing Transactions. Subject only to disbursement and
application of the initial Borrowing, the Closing Transactions shall have
occurred (or Administrative Agent shall be satisfied that such transactions will
occur simultaneously therewith). Without limiting the foregoing, each of the
following shall have occurred (or Administrative Agent shall be satisfied that
each of the following shall occur simultaneously therewith):
(i) the CMS Acquisition shall have been completed pursuant to the
terms of the CMS Acquisition Documents;
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(ii) the Mariner Section 29 Sale shall have been completed pursuant
to the terms of the Mariner Section 29 Documents, and approximately
$25,000,000 of the proceeds of such sale shall have been applied to
finance in part the CMS Acquisition;
(ii) the transactions contemplated by the Subordinate Note Documents
shall have been completed pursuant to the terms of such Subordinate
Note Documents, and Borrower shall have received not less than
$43,000,000 from the issuance and sale of Subordinate Notes and
applied such proceeds to finance in part the CMS Acquisition; and
(iv) all fees and expenses of Agents and their Affiliates in
connection with the credit facility provided herein shall have been
paid.
(c) Title Review. Administrative Agent or its counsel shall have
completed a review of title (including opinions of title) with respect to that
portion of the CMS Properties which is necessary to satisfy the Closing Title
Review Requirement, and such review shall not have revealed any condition or
circumstance which would reflect that the representations and warranties
contained in Section 9.9 hereof are inaccurate in any respect.
(d) No Material Adverse Change. In the sole discretion of each Bank,
no Material Adverse Change shall have occurred since December 31, 1999 with
respect to Borrower or its Subsidiaries (including, without limitation, no
Material Adverse Change with respect to any facts or information regarding such
Persons as represented to any Agent or any Bank on or prior to the Closing
Date).
(e) No Legal Prohibition. The transactions contemplated by this
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent, any Bank, or any Credit Party to any Material Adverse Change.
(f) No Litigation. No litigation, arbitration or similar proceeding
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
(g) Hedge Transactions. In addition to existing Hedge Transactions
currently in place under the Existing Credit Agreement, Borrower shall have
additionally entered into Hedge Transactions with respect to production from the
CMS Properties which shall in all events provide Borrower a fixed NYMEX price
that equals or exceeds $2.60 per thousand cubic feet covering not less than
thirty million cubic feet per day of Borrower's and its Subsidiaries' production
of natural gas for a period of not less than five (5) years (such period shall
be measured from the effective date of each separate Hedge Transaction), and
such Hedge Transactions to otherwise be on terms and conditions satisfactory to
Administrative Agent and Banks.
(h) Closing Fees. Borrower shall have paid to Administrative Agent
for the ratable benefit of each Bank, and shall have paid to Administrative
Agent and its Affiliates (for its own account), the fees to be paid on the
Closing Date pursuant to Section 3.10.
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(i) Other Matters. All matters related to this Agreement, the other
Loan Papers, the Closing Documents, the Closing Transactions and the Credit
Parties shall be acceptable to each Bank in its sole discretion, and each Credit
Party shall have delivered to Administrative Agent and each Bank such evidence
as they shall request to substantiate any matters related to this Agreement and
the other Loan Papers, as Administrative Agent or any Bank shall request.
Upon satisfaction of each of the conditions set forth in this Section 8.1,
Borrower and Administrative Agent shall execute the Certificate of
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and completely
be amended and restated on the terms set forth herein without necessity of any
other action on the part of any Bank, any Agent or Borrower. Until execution
and delivery of the Certificate of Effectiveness, the Existing Credit Agreement
shall remain in full force and effect in accordance with its terms. Each Bank
hereby authorizes Administrative Agent to execute the Certificate of
Effectiveness on its behalf and acknowledges and agrees that the execution of
the Certificate of Effectiveness by Administrative Agent shall be binding on
each such Bank.
SECTION 8.2 Conditions to Each Borrowing and each Letter of Credit. The
obligation of each Bank to loan its Commitment Percentage of each Borrowing and
the obligation of Administrative Agent to issue a Letter of Credit on the date
such Letter of Credit is to be issued is subject to the further satisfaction of
the following conditions:
(a) timely receipt by Administrative Agent of a Request for Borrowing
or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall have
occurred and be continuing and the funding of such Borrowing or the issuance of
the requested Letter of Credit (as applicable) shall not cause a Default or
Event of Default;
(c) the representations and warranties of each Credit Party contained
in this Agreement and the other Loan Papers shall be true and correct on and as
of the date of such Borrowing or issuance of such Letter of Credit (as
applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in Sections 8.2(b) through (f).
52
SECTION 8.3 Post-Closing Deliveries. As soon as available, and in any
event on or prior to June 30, 2000, Borrower shall deliver opinions of title and
other evidence of title in form and substance acceptable to Administrative Agent
and its counsel regarding that portion of the CMS Properties which is necessary
to satisfy the Post-Closing Title Review Requirement.
SECTION 8.4 Materiality of Conditions. Each condition precedent herein
is material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank that
each of the following statements is true and correct on the date hereof, will be
true and correct on the Closing Date after giving effect to the Closing
Transactions, and will be true and correct on the occasion of each Borrowing and
the issuance of each Letter of Credit:
SECTION 9.1 Existence and Power. Each Credit Party (a) is a
corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, (b) has all corporate,
partnership or limited liability company power (as applicable) and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation, partnership or
limited liability company in each jurisdiction where a failure to be so
qualified could result in a Material Adverse Change.
SECTION 9.2 Credit Party and Governmental Authorization; Contravention.
The execution, delivery and performance of this Agreement and the other Loan
Papers by each Credit Party (to the extent each Credit Party is a party to this
Agreement and such Loan Papers) are within such Credit Party's corporate,
partnership or limited liability company powers, when executed will be duly
authorized by all necessary corporate, partnership or limited liability company
action, require no action by or in respect of, or filing with, any Governmental
Authority and do not contravene, or constitute a default under, any provision of
applicable Law (including, without limitation, the Margin Regulations) or of the
articles or certificate of incorporation, bylaws, regulations, partnership
agreement or comparable charter documents of any Credit Party or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
any Credit Party or result in the creation or imposition of any Lien on any
asset of any Credit Party other than the Liens securing the Obligations.
SECTION 9.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of Borrower; the other Loan Papers when executed and delivered
in accordance with this Agreement, will constitute valid and binding obligations
of each Credit Party executing the same; and each Loan Paper is, or when
executed and delivered will be, enforceable against each Credit Party which
executes the same in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar Laws affecting
creditors rights generally, and
53
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 9.4 Financial Information. (a) The most recent annual audited
consolidated balance sheet of Borrower and the related consolidated statements
of operations and cash flows for the Fiscal Year then ended, copies of which
have been delivered to each Bank, fairly present, in conformity with GAAP, the
consolidated financial position of Borrower as of the end of such Fiscal Year
and its consolidated results of operations and cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated balance sheet of
Borrower delivered to Banks, and the related unaudited consolidated statements
of operations and cash flows for the portion of Borrower's Fiscal Year then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in Section 9.4(a), the consolidated
financial position of Borrower as of such date and its consolidated results of
operations and cash flows for such portion of Borrower's Fiscal Year.
(c) Except as disclosed in writing to Banks prior to the execution and
delivery of this Agreement, since December 31, 1999, no Material Adverse Change
has occurred with respect to Borrower or its Subsidiaries (including, without
limitation, no Material Adverse Change with respect to any facts or information
regarding such Persons as represented to any Agent or any Bank on or prior to
the Closing Date).
(d) After giving effect to the transactions contemplated by this
Agreement (including the Closing Transactions), each Credit Party is Solvent.
SECTION 9.5 Litigation. Except for matters disclosed on Schedule 3
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could result in a Material Adverse
Change or which could in any manner draw into question the validity of the Loan
Papers.
SECTION 9.6 ERISA. No Credit Party nor any ERISA Affiliate of any
Credit Party maintains or has ever maintained or been obligated to contribute to
any Plan covered by Title IV of ERISA or subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA. Each Plan maintained by any
Credit Party or any ERISA Affiliate of any Credit Party is in compliance in all
material respects with all applicable Laws. Except in such instances where an
omission or failure would not result in a Material Adverse Change, (a) all
returns, reports and notices required to be filed with any regulatory agency
with respect to any Plan have been filed timely, and (b) no Credit Party nor any
ERISA Affiliate of any Credit Party has failed to make any contribution or pay
any amount due or owing as required by the terms of any Plan. There are not
pending or, to the best of Borrower's knowledge, threatened claims, lawsuits,
investigations or actions (other than routine claims for benefits in the
ordinary course) asserted or instituted against, and no Credit Party nor any
ERISA Affiliate of any Credit Party has knowledge of any threatened litigation
or claims against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan that are likely
to result in liability of any Credit Party resulting in a Material Adverse
Change. Except in such instances where an omission or failure would not result
in a Material Adverse Change, each Plan that is intended to be "qualified"
within the meaning of section 401(a) of the Code is, and has been during the
period from its adoption to date, so qualified, both as to form and operation
and all necessary governmental approvals, including a favorable determination as
to the qualification under the Code of such Plan and each amendment thereto,
have been or will be timely obtained. No Credit Party nor any ERISA Affiliate
of any Credit Party has engaged in any prohibited transactions, within the
meaning of section 406 of ERISA or section 4975 of the Code, in connection with
any Plan which would result in liability of any Credit Party resulting in a
54
Material Adverse Change. No Credit Party nor any ERISA Affiliate of any Credit
Party maintains or contributes to any Plan that provides a post-employment
health benefit, other than a benefit required under Section 601 of ERISA, or
maintains or contributes to a Plan that provides health benefits that is not
fully funded except where the failure to fully fund such Plan would not result
in a Material Adverse Change. No Credit Party nor any ERISA Affiliate of any
Credit Party maintains, has established or has ever participated in a multiple
employer welfare benefit arrangement within the meaning of section 3(40)(A) of
ERISA.
SECTION 9.7 Taxes and Filing of Tax Returns. Each Credit Party has
filed all tax returns required to have been filed and has paid all Taxes shown
to be due and payable on such returns, including interest and penalties, and all
other Taxes which are payable by such party, to the extent the same have become
due and payable. No Credit Party knows of any proposed material Tax assessment
against it and all Tax liabilities of each Credit Party are adequately provided
for. Except as disclosed in writing to Banks prior to the date hereof, no
income tax liability of any Credit Party has been asserted by the Internal
Revenue Service or other Governmental Authority for Taxes in excess of those
already paid. The production from the ▇▇▇▇▇ subject to the Section 29 Documents
is, to the extent represented by Borrower in those documents, entitled to the
benefits of tax credits under Section 29 of the Code.
SECTION 9.8 Ownership of Properties Generally. Each Credit Party has
good and valid fee simple or leasehold title to all material properties and
assets purported to be owned by it, including, without limitation, all assets
reflected in the balance sheets referred to in Section 9.4 (a) and all assets
which are used by the Credit Parties in the operation of their respective
businesses, and none of such properties or assets is subject to any Lien other
than Permitted Encumbrances.
SECTION 9.9 Mineral Interests. The Property Description is an accurate
and complete description of all Borrowing Base Properties on the Closing Date.
Subject only to Immaterial Title Deficiencies (as herein defined), after giving
effect to the Closing Transactions, Borrower and/or Terra (as applicable) will
have good and defensible title to all Mineral Interests described in the Reserve
Report, including, without limitation, all Borrowing Base Properties, free and
clear of all Liens except for Permitted Encumbrances. Subject only to Permitted
CMS Title Defects and Immaterial Title Deficiencies, all Mineral Interests
described in the Reserve Report are valid, subsisting, and in full force and
effect, and all rentals, royalties, and other amounts due and payable in respect
thereof have been duly paid. Without regard to any consent or non-consent
provisions of any joint operating agreement covering any of Borrower's or
Terra's (as applicable) Proved Mineral Interests, after giving effect to the
Closing Transactions, but subject to Permitted CMS Title Defects and Immaterial
Title Deficiencies, Borrower's and/or Terra's (as applicable) share
55
of (a) the costs for each Proved Mineral Interest described in the Reserve
Report is not greater than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
respective designations "working interests," "WI," "gross working interest,"
"GWI," or similar terms, and (b) production from, allocated to, or attributed to
each such Proved Mineral Interest is not less than the decimal fraction set
forth in the Reserve Report, before and after payout, as the case may be, and
described therein by the designations "net revenue interest," "NRI," or similar
terms. As used herein, the term "Immaterial Title Deficiencies" means minor
defects or deficiencies in title which do not effect, in the aggregate, more
than two percent (2%) (by value) of all Borrowing Base Properties. Each well
drilled in respect of each Proved Producing Mineral Interest described in the
Reserve Report (y) is capable of, and is presently, producing Hydrocarbons in
commercially profitable quantities, and after giving effect to the Closing
Transactions, Borrower and/or Terra (as applicable) will receive payments on a
current basis for its share of production, with no funds in respect of any
thereof held in suspense, other than any such funds held in suspense pending
delivery of appropriate division orders, and (z) has been drilled, bottomed,
completed, and operated in compliance with all applicable Laws and no such well
which is currently producing Hydrocarbons is subject to any penalty in
production by reason of such well having produced in excess of its allowable
production.
SECTION 9.10. Licenses, Permits, Etc. Each Credit Party possesses such
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities, as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not result in a Material Adverse Change.
SECTION 9.11. Compliance with Law. The business and operations of the
Credit Parties have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which do not (either individually
or collectively) result in a Material Adverse Change.
SECTION 9.12. Full Disclosure. All information heretofore furnished by
each Credit Party to Administrative Agent or any Bank for purposes of or in
connection with this Agreement, any Loan Paper or any transaction contemplated
hereby or thereby is, and all such information hereafter furnished by or on
behalf of any Credit Party to Administrative Agent or any Bank will be, true,
complete and accurate in every material respect. The Credit Parties have
disclosed or have caused to be disclosed to Banks in writing any and all facts
(other than facts of general public knowledge) which might reasonably be
expected to result in a Material Adverse Change.
SECTION 9.13. Organizational Structure; Nature of Business. The Credit
Parties are engaged only in the business of acquiring, exploring, developing and
operating Mineral Interests and the production, marketing, processing and
transporting of Hydrocarbons therefrom. After giving effect to the Closing
Transactions, Schedule 4 hereto accurately reflects (i) the jurisdiction of
incorporation or organization of each Credit Party, (ii) each jurisdiction in
which each Credit Party is qualified to transact business as a foreign
corporation, foreign partnership or foreign limited liability company, and (iii)
the authorized, issued and outstanding Equity of each Credit Party.
56
SECTION 9.14. Environmental Matters. Except for matters disclosed on
Schedule 5 hereto, and after giving effect to the Closing Transactions, no
operation conducted by any Credit Party and no real or personal property now or
previously owned or leased by any Credit Party (including, without limitation,
Mineral Interests) and no operations conducted thereon, and to any Credit
Parties' knowledge, no operations of any prior owner, lessee or operator of any
such properties, is or has been in violation of any Applicable Environmental Law
other than violations which neither individually nor in the aggregate could
result in a Material Adverse Change. Except for matters disclosed on Schedule 5
hereto, and after giving effect to the Closing Transactions, no Credit Party,
nor any such property nor operation is the subject of any existing, pending or,
to any Credit Parties' knowledge, threatened Environmental Complaint which
could, individually or in the aggregate, result in a Material Adverse Change.
All notices, permits, licenses, and similar authorizations, required to be
obtained or filed (after giving effect to the Closing Transactions) in
connection with the ownership of each tract of real property or operations of
any Credit Party thereon and each item of personal property owned, leased or
operated by any Credit Party, including, without limitation, notices, licenses,
permits and authorizations required in connection with any past or present
treatment, storage, disposal, or release of Hazardous Substances into the
environment, have been duly obtained or filed except to the extent the failure
to obtain or file such notices, licenses, permits and authorizations would not
result in a Material Adverse Change. All Hazardous Substances, generated at
each tract of real property and by each item of personal property owned, leased
or operated by any Credit Party (after giving effect to the Closing
Transactions) have been transported, treated, and disposed of only by carriers
or facilities maintaining valid permits under RCRA (as hereinafter defined) and
all other Applicable Environmental Laws for the conduct of such activities
except in such cases where the failure to obtain such permits could not,
individually or in the aggregate, result in a Material Adverse Change. Except
for matters disclosed on Schedule 5 hereto, and after giving effect to the
Closing Transactions, there have been no Hazardous Discharges which were not in
compliance with Applicable Environmental Laws other than Hazardous Discharges
which would not, individually or in the aggregate, result in a Material Adverse
Change. Except for matters disclosed on Schedule 5 hereto, and after giving
effect to the Closing Transactions, no Credit Party nor any Subsidiary of any
Credit Party has any contingent liability in connection with any Hazardous
Discharge which could reasonably be expected to result in a Material Adverse
Change. As used in this Section 9.14, the term "RCRA" shall mean the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Recovery Act of 1976, as amended by the Solid Waste
Disposal Act of 1980, and the Hazardous and Solid Waste Amendments of 1984, as
the same may be further amended and in effect from time to time.
SECTION 9.15. Burdensome Obligations. No Credit Party, nor any of the
properties of any Credit Party is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of their properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to result in a Material Adverse Change. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement or subject to
any order of any Governmental Authority which prohibits or restricts in any way
the right of such Credit Party to make Distributions.
57
SECTION 9.16. Fiscal Year. Borrower's Fiscal Year is January 1 through
December 31.
SECTION 9.17. No Default. Neither a Default nor an Event of Default has
occurred or will exist after giving effect to the transactions contemplated by
this Agreement or the other Loan Papers.
SECTION 9.18. Government Regulation. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Credit Party of Debt, including, but not limited to Laws
relating to common contract carriers or the sale of electricity, gas, stream,
water or other public utility services.
SECTION 9.19. Insider. No Credit Party is, and no Person having "control"
(as that term is defined in 12 U.S.C. Section 375(b) or regulations promulgated
thereunder) of any Credit Party is an "executive officer," "director" or
"shareholder" of any Bank or any bank holding company of which any Bank is a
Subsidiary or of any Subsidiary of such bank holding company.
SECTION 9.20. Gas Balancing Agreements and Advance Payment Contracts. On
the date of this Agreement and on the Closing Date, (a) there is no Material Gas
Imbalance, and (b) the aggregate amount of all Advance Payments received by any
Credit Party under Advance Payment Contracts which have not been satisfied by
delivery of production does not exceed $250,000.
SECTION 9.21. Closing Documents; Management Agreement. Borrower has
provided (or on the Closing Date Borrower will provide) Administrative Agent
with a true and correct copy of each of the Closing Documents and the Management
Agreement including all amendments and modifications thereto. No material
rights or obligations of any party to any of such Closing Documents or the
Management Agreement have been (or will be on the Closing Date) waived, and no
Credit Party, nor to the best knowledge of Borrower, any other party to any of
such Closing Documents or the Management Agreement, is (or will be on the
Closing Date) in default of its obligations thereunder. Each of the Closing
Documents and the Management Agreement is (or will be on the Closing Date) a
valid, binding and enforceable obligation of the parties thereto in accordance
with its terms and is (or will be on the Closing Date) in full force and effect.
Each representation and warranty made by each Credit Party, and to the best
knowledge of Borrower, by each other party to the Closing Documents and the
Management Agreement, in the Closing Documents and the Management Agreement (a)
was true and correct when made, and (b) will be true and correct on the Closing
Date.
SECTION 9.22. Year 2000 Matters. Borrower has (a) completed a review and
assessment of all areas within its and each other Credit Party's business and
operations (including those affected by customers and vendors) that would be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by any Credit
Party (or their respective customers and vendors) may be unable to recognize and
perform properly date - sensitive functions involving certain dates prior to and
any
58
date after December 31, 1999), (b) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis, and (c) substantially completed
implementation of that plan in accordance with that timetable. The Year 2000
Problem has not resulted in, and Borrower reasonably believes that the Year 2000
Problem will not result in, a Material Adverse Change.
SECTION 9.23. Cinnabar. Borrower owns a fifty percent (50%) membership or
other equity interest in Cinnabar, and Cinnabar's business is presently being
carried out in compliance with Section 11.15, and Cinnabar has no Debt other
than as permitted in such Section 11.15.
SECTION 9.24. Commodity Price Risk Policy. Borrower's policy with respect
to commodity price risk as presently in effect, addressing Borrower's policies
with respect to Hedge Agreements for Hydrocarbons, is attached hereto as Exhibit
L (as such policy is adopted by Borrower's Board of Directors in accordance with
Section 10.15, the "Commodity Price Risk Policy"). The Commodity Price Risk
Policy has not been rescinded, revoked, modified or amended in any respect, and
is in full force and effect.
ARTICLE X
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any commitment
to lend or participate in Letter of Credit Exposure hereunder or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 10.1. Information. Borrower will deliver, or cause to be
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90) days
after the end of each Fiscal Year, a consolidated and consolidating balance
sheet of Borrower and each other Credit Party as of the end of such Fiscal Year
and the related consolidated and consolidating statements of income and
statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by such
Credit Party in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing and acceptable to Administrative
Agent;
(b) (i) as soon as available and in any event within forty-five
(45) days after the end of each of the first three (3) Fiscal Quarters of each
Fiscal Year, consolidated and consolidating balance sheets of Borrower and each
other Credit Party as of the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income and statements of cash flow
for such quarter and for the portion of such Credit Party's Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of such
Credit Party's previous Fiscal Year;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 10.1(a) and (b), a certificate of a Financial
Officer of Borrower in the form of
59
Exhibit H attached hereto, (i) setting forth in reasonable detail the
calculations required to establish whether Borrower was in compliance with the
requirements of Article XII on the date of such financial statements, (ii)
stating whether there exists on the date of such certificate any Default and, if
any Default then exists, setting forth the details thereof and the action which
Borrower is taking or proposes to take with respect thereto, (iii) stating
whether or not such financial statements fairly reflect in all material respects
the results of operations and financial condition of Borrower and each other
Credit Party as of the date of the delivery of such financial statements and for
the period covered thereby, (iv) setting forth (A) whether as of such date there
is a Material Gas Imbalance and, if so, setting forth the amount of net gas
imbalances under Gas Balancing Agreements to which any Credit Party is a party
or by which any Mineral Interests owned by Borrower is bound, and (B) the
aggregate amount of all Advance Payments received under Advance Payment
Contracts to which any Credit Party is a party or by which any Mineral Interests
owned by Borrower is bound which have not been satisfied by delivery of
production, if any, and (v) setting forth a summary of the Hedge Transactions to
which each Credit Party is a party on such date and attaching a copy of each
Hedge Agreement evidencing such Hedge Transactions (or a statement certifying
that Borrower has previously delivered to Administrative Agent true and correct
copies of all such Hedge Agreements, the same have not been modified or amended
in any respect, and such Hedge Agreements represent the valid, binding and
enforceable obligations of the Credit Party a party thereto);
(d) promptly upon the mailing thereof to the stockholders of any
Credit Party generally, copies of all financial statements, reports and proxy
statements so mailed;
(e) promptly upon the filing thereof, copies of all final
registration statements post effective amendments thereto and annual, quarterly
or special reports which any Credit Party shall have filed with the Securities
and Exchange Commission; provided, that Borrower must deliver, or cause to be
delivered, any annual reports which any Credit Party shall have filed with the
Securities and Exchange Commission, within ninety (90) days after the end of
each Fiscal Year of such Credit Party, and any quarterly reports which any
Credit Party shall have filed with the Securities and Exchange Commission,
within forty-five (45) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year of such Credit Party;
(f) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating (i) any potential, actual or alleged
non-compliance with or violation of the requirements of any Applicable
Environmental Law which could result in liability to any Credit Party for fines,
clean up or any other remediation obligations or any other liability in excess
of $50,000 in the aggregate; (ii) any threatened Hazardous Discharge which
Hazardous Discharge would impose on any Credit Party a duty to report to a
Governmental Authority or to pay cleanup costs or to take remedial action under
any Applicable Environmental Law which could result in liability to any Credit
Party for fines, clean up and other remediation obligations or any other
liability in excess of $50,000 in the aggregate; or (iii) the existence of any
Lien arising under any Applicable Environmental Law securing any obligation to
pay fines, clean up or other remediation costs or any other liability in excess
of $50,000 in the aggregate. Without limiting the foregoing, each Credit Party
shall provide to Banks promptly upon receipt of same by any Credit Party copies
of all environmental consultants or engineers reports received by any Credit
Party which would
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render the representations and warranties (or any of them) contained in Section
9.14 untrue or inaccurate in any respect;
(g) in the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 10.1(f) hereof or Administrative Agent
or any Bank otherwise learns of any event or condition under which any such
notice would be required, then, upon request of Required Banks, Borrower shall
within thirty (30) days of such request, cause to be furnished to Administrative
Agent and each Bank a report by an environmental consulting firm acceptable to
Administrative Agent and Required Banks, stating that a review of such event,
condition or circumstance has been undertaken (the scope of which shall be
acceptable to Administrative Agent and Required Banks) and detailing the
findings, conclusions and recommendations of such consultant; Borrower shall
bear all expenses and costs associated with such review and updates thereof;
(h) immediately upon any Authorized Officer becoming aware of the
occurrence of any Default, a certificate of an Authorized Officer setting forth
the details thereof and the action which Borrower is taking or proposes to take
with respect thereto;
(i) no later than March 31 and September 30 of each year, commencing
September 30, 2000, reports of production volumes, revenue, expenses and product
prices for all Mineral Interests owned by Borrower for the periods of six (6)
months ending the preceding December 31 and June 30, respectively. Such reports
shall be prepared on an accrual basis and shall be reported on a field by field
basis;
(j) promptly notify Banks of any Material Adverse Change; and
(k) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent, at
the request of any Bank, may reasonably request.
SECTION 10.2. Business of Borrower. The sole business of Borrower shall
be the acquisition, exploration, development and operation of Mineral Interests
and the production, marketing, processing and transportation of Hydrocarbons
therefrom.
SECTION 10.3. Maintenance of Existence. Borrower shall, and shall cause
each other Credit Party to, at all times (a) maintain its corporate, partnership
or limited liability company existence in its state of incorporation or
organization, and (b) maintain its good standing and qualification to transact
business in all jurisdictions where the failure to maintain good standing or
qualification to transact business could result in a Material Adverse Change.
SECTION 10.4. Title Data. Borrower shall, upon the request of Required
Banks, cause to be delivered to Administrative Agent such title opinions and
other information regarding title to Mineral Interests owned by Borrower and the
perfection and priority of Administrative Agent's Liens therein as are
appropriate to determine the status thereof.
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SECTION 10.5. Right of Inspection. Borrower will permit, and will cause
each other Credit Party to permit, any officer, employee or agent of
Administrative Agent or of any Bank to visit and inspect any of the assets of
any Credit Party, examine each Credit Party's books of record and accounts, take
copies and extracts therefrom, and discuss the affairs, finances and accounts of
each Credit Party with such Credit Party's officers, accountants and auditors,
all at such reasonable times and as often as Administrative Agent or any Bank
may desire, and upon and during the continuance of an Event of Default all at
the expense of Borrower.
SECTION 10.6. Maintenance of Insurance. Borrower will, and will cause
each other Credit Party to, at all times maintain or cause to be maintained
insurance covering such risks as are customarily carried by businesses similarly
situated, including, without limitation, the following: (a) workmen's
compensation insurance; (b) employer's liability insurance; (c) comprehensive
general public liability and property damage insurance; (d) insurance against
losses customarily insured against as a result of damage by fire, lightning,
hail, tornado, explosion and other similar risk; and (e) comprehensive
automobile liability insurance. All loss payable clauses or provisions in all
policies of insurance maintained by Borrower pursuant to this Section 10.6 shall
be endorsed in favor of and made payable to Administrative Agent for the ratable
benefit of Banks, as their interests may appear. Administrative Agent shall
have the right, for the ratable benefit of Banks, to collect, and Borrower
hereby assigns to Administrative Agent for the ratable benefit of Banks, any and
all monies that may become payable under any such policies of insurance by
reason of damage, loss or destruction of any property which stands as security
for the Obligations or any part thereof, and Administrative Agent may, at its
election, either apply for the ratable benefit of Banks all or any part of the
sums so collected toward payment of the Obligations, whether or not such
Obligations are then due and payable, in such manner as Administrative Agent may
elect, or release same to the applicable Credit Party.
SECTION 10.7. Payment of Taxes and Claims. Borrower will, and will cause
each other Credit Party to, pay (a) all Taxes imposed upon it or any of its
assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material part of the property or
assets of any Credit Party is subject to any pending levy or execution, (ii) the
Credit Parties, as and to the extent required in accordance with GAAP, shall
have set aside on their books reserves (segregated to the extent required by
GAAP) deemed by them to be adequate with respect thereto, and (iii) the Credit
Parties have notified Administrative Agent of such circumstances, in detail
satisfactory to Administrative Agent.
SECTION 10.8. Compliance with Laws and Documents. Borrower will, and will
cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles) of incorporation, bylaws, regulations and similar
organizational documents and all Material
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Agreements to which any Credit Party is a party, if a violation, alone or when
combined with all other such violations, could result in a Material Adverse
Change.
SECTION 10.9. Operation of Properties and Equipment. (a) Borrower will,
and will cause each of its Subsidiaries to, maintain, develop and operate (or
use its best efforts to cause the operator to maintain and operate to the extent
Borrower is not the operator) its Mineral Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express or
implied, of all oil and gas leases relating to such Mineral Interests so long as
such Mineral Interests are capable of producing Hydrocarbons and accompanying
elements in paying quantities. Borrower will operate, and be the named and
listed operator of, and shall retain all ▇▇▇▇▇ reimbursements associated with,
all of the CMS Properties to which it is entitled to operate.
(b) Borrower will, and will cause each of its Subsidiaries to, comply
in all respects with all contracts and agreements applicable to or relating to
its Mineral Interest or the production and sale of Hydrocarbons and accompanying
elements therefrom.
(c) Borrower will, and will cause each of its Subsidiaries to, at all
times maintain, preserve and keep all operating equipment used with respect to
its Mineral Interests in proper repair, working order and condition, and make
all necessary or appropriate repairs, renewals, replacements, additions and
improvements thereto so that the efficiency of such operating equipment shall at
all times be properly preserved and maintained; provided further that no item of
operating equipment need be so repaired, renewed, replaced, added to or
improved, if Borrower shall in good faith determine that such action is not
necessary or desirable for the continued efficient and profitable operation of
the business of such Credit Party.
SECTION 10.10. Environmental Law Compliance. Borrower will, and will
cause each other Credit Party to, comply with all Applicable Environmental Laws,
including, without limitation, (a) all licensing, permitting, notification and
similar requirements of Applicable Environmental Laws, and (b) all provisions of
all Applicable Environmental Laws regarding storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. Borrower will,
and will cause each other Credit Party to, promptly pay and discharge when due
all legal debts, claims, liabilities and obligations with respect to any clean-
up or remediation measures necessary to comply with Applicable Environmental
Laws.
SECTION 10.11. ERISA Reporting Requirements. Borrower shall furnish, or
cause to be furnished, to Administrative Agent:
(a) promptly and in any event (i) within thirty (30) days after Borrower
or any ERISA Affiliate receives notice from any regulatory agency of the
commencement of an audit, investigation or similar proceeding with respect to a
Plan, and (ii) within ten (10) days after Borrower or any ERISA Affiliate
contacts the Internal Revenue Service for the purpose of participation in a
closing agreement or any voluntary resolution program with respect to a Plan or
knows or has reason to know that any event with respect to any Plan of Borrower
or any ERISA Affiliate has occurred, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect
thereto, together with a copy of any notice of event that is given to the PBGC;
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(b) promptly and in any event within thirty (30) days after the receipt by
Borrower of a request therefor by a Bank, copies of any annual and other report
(including Schedule B thereto) with respect to a Plan filed by Borrower or any
ERISA Affiliate with the United States Department of Labor, the Internal Revenue
Service or the PBGC;
(c) notification within thirty (30) days of the effective date thereof of
any material increases in the benefits, or material change in the funding
method, of any existing Plan which is not a multiemployer plan (as defined in
section 4001(a)(3) of ERISA), or the establishment of any material new Plans, or
the commencement of contributions to any Plan to which Borrower or any ERISA
Affiliate was not previously contributing; and
(d) promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Plan and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not result in a Material Adverse Change.
SECTION 10.12. Additional Documents. Borrower will, and will cause each
other Credit Party (to the extent each is party thereto) to, cure promptly any
defects in the creation and issuance of each Note, and the execution and
delivery of this Agreement and the other Loan Papers and, at Borrower's expense,
Borrower shall promptly and duly execute and deliver to each Bank, and cause
each other Credit Party to promptly and duly execute and deliver to each Bank,
upon reasonable request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
of the Credit Parties in this Agreement and the other Loan Papers as may be
reasonably necessary or appropriate in connection therewith.
SECTION 10.13. Environmental Review. Not later than thirty (30) days
prior to the date of any acquisition by any Credit Party of Mineral Interests or
related assets, other than an acquisition of additional interests in Mineral
Interests in which a Credit Party previously held an interest, Borrower shall
deliver to Administrative Agent a report in form, scope and detail acceptable to
Administrative Agent from environmental engineering firms acceptable to
Administrative Agent, which report or reports shall set forth the results of a
Phase I environmental review of such Mineral Interests and related assets.
SECTION 10.14. Year 2000 Compatibility. Borrower will promptly notify
Administrative Agent and each Bank in the event Borrower discovers or determines
that the "Year 2000 Problem" (that is, the risk that computer applications and
devices containing imbedded computer chips used by any Credit Party (or their
respective customers and vendors) may be unable to recognize and perform
properly date - sensitive functions involving certain dates prior to and any
date after December 31, 1999) has resulted in, or is reasonably expected to
result in, a Material Adverse Change.
SECTION 10.15. Commodity Price Risk Policy. On or before June 30, 2000,
Borrower's Board of Directors will adopt, as the stated policy of Borrower with
respect to
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commodity price risk, either the policy attached hereto as Exhibit L or a policy
with similar terms that is acceptable to Required Banks. In the event Borrower's
Board of Directors adopts a policy different than the policy attached hereto as
Exhibit L, Borrower shall promptly deliver such new policy to Administrative
Agent and execute and deliver an amendment to this Agreement substituting such
policy for the policy attached hereto as Exhibit L as of the Closing Date.
ARTICLE XI
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION 11.1. Incurrence of Debt. Borrower will not, nor will Borrower
permit any other Credit Party to, incur, become or remain liable for any Debt
other than (i) the Obligations, (ii the Subordinate Debt, (iii) Debt of Terra
(but not guarantees of such Debt by Borrower) that exists on the Closing Date in
the amount of approximately $2,100,000 which Debt is expressly being retained by
CMS pursuant to the terms of the CMS Acquisition Agreement because it pertains
to an asset excluded from the CMS Acquisition, and (iv) the guarantee by
Borrower of a percentage of the Cinnabar Marketing Obligations; provided, that
the percentage referred to in any such guaranty shall not exceed the percentage
of Cinnabar's common equity owned by Borrower at the time such guaranty is
executed; provided, further that, in the event no Default, Event of Default or
Borrowing Base Deficiency has occurred which is continuing, (a) Borrower may
incur and remain liable for Non-Recourse Debt to the extent such Non-Recourse
Debt has been specifically approved in writing by Required Banks, and (b)
Borrower and its Subsidiaries may incur and remain liable for other Debt in an
aggregate amount outstanding at any time not to exceed $2,000,000.
SECTION 11.2. Restricted Payments. Borrower will not, nor will Borrower
permit any other Credit Party to, directly or indirectly, declare or pay, or
incur any liability to declare or pay, any Restricted Payment; provided, that,
any Subsidiary of Borrower that has provided a Subsidiary Guaranty, and all of
the Equity of which owned by Borrower has been pledged to Administrative Agent
pursuant to a Borrower Pledge Agreement, may make Distributions to Borrower.
SECTION 11.3. Negative Pledge. Except in connection with the MGV
Investment, and except with respect to the shareholders' agreement executed and
entered into in connection therewith, Borrower will not, nor will Borrower
permit any other Credit Party to, create, assume or suffer to exist any Lien on
any of their respective assets other than Permitted Encumbrances. Borrower will
not, nor will Borrower permit any other Credit Party to, enter into or become
bound by any agreement (other than this Agreement) that prohibits or otherwise
restricts the right of Borrower or any other Credit Party to create, assume or
suffer to exist any Lien on any of their respective assets in favor of
Administrative Agent for the ratable benefit of Banks.
SECTION 11.4. Consolidations and Mergers. Borrower will not, nor will
Borrower permit any other Credit Party to, consolidate or merge with or into any
other Person; provided, that,
65
so long as no Default or Event of Default exists or will result (a) Borrower may
merge or consolidate with another Person so long as Borrower is the surviving
corporation, and (b) any wholly owned Subsidiary of Borrower may merge or
consolidate with any other Person so long as a wholly owned Subsidiary of
Borrower is the surviving Person.
SECTION 11.5. Asset Dispositions, etc. Borrower will not, nor will
Borrower permit any other Credit Party to, sell, lease, transfer, abandon or
otherwise dispose of any asset other than the sale in the ordinary course of
business of Hydrocarbons produced from Borrower's and any other Credit Party's
Mineral Interests (and not pursuant to Advance Payment Contracts); provided,
that, so long as no Default or Event of Default has occurred which is
continuing, Borrower shall be permitted to sell or dispose of (a) machinery and
equipment which is obsolete or otherwise not necessary or useful in the
operation of Borrower's business, (b) Mineral Interests during any period
between Scheduled Redeterminations with an aggregate Recognized Value (measured
at the time of such sale or disposition) not in excess of three percent (3%) of
the Borrowing Base in effect during such period, and (c) the Seller's Interests
(as defined in the Mariner Purchase and Sale Agreement) pursuant to the terms of
the Buyer's Option (as defined in the Mariner Purchase and Sale Agreement) and
in accordance with Article X of the Mariner Purchase and Sale Agreement;
provided, however, and without limiting the foregoing, Borrower will not, nor
will Borrower permit any other Credit Party to, (i) sell any Hydrocarbons under
Advance Payment Contracts, (ii) sell or securitize any of their accounts
receivable (other than those deemed doubtful or uncollectible), (iii) sell any
production payment or other term royalty, (iv) purchase property subject to any
production payment or term royalty created within 180 days prior to such
purchase, or (v) sell assets and then lease them back (or commit to lease them
back) within 180 days after such sale. Borrower will not sell, transfer or
dispose of, or permit any other Credit Party to sell, transfer or dispose of,
any capital stock or other equity interest in any Subsidiary of Borrower.
SECTION 11.6. Amendments to Organizational Documents; Other Material
Agreements. Borrower will not, nor will Borrower permit any other Credit Party
to, enter into or permit any modification or amendment of, or waive any material
right or obligation of any Person under, (a) its certificate or articles of
incorporation, bylaws, partnership agreement, regulations or other
organizational documents other than amendments, modifications and waivers which
could not, individually or in the aggregate, result in a Material Adverse
Change, (b) the Closing Documents, (c) the Subordinate Note Documents, (d) the
Section 29 Documents, or (e) the Management Agreement; provided, that, Borrower
may enter into amendments to the Subordinate Note Documents which do not provide
for or have any of the following effects: (i) increases the overall principal
amount of the Subordinate Debt beyond the $53,000,000 presently outstanding (as
reduced by any principal payments hereafter made with the express written
consent of Required Banks); (ii) increases the amount of any scheduled payment
of principal or interest on the Subordinate Debt; (iii) hastens or accelerates
the date upon which any installment of principal or interest of any Subordinate
Debt is due or otherwise accelerates the amortization schedule with respect to
such Subordinate Debt; (iv) increases the rate of interest accruing on the
Subordinate Debt; (v) provides for the payment of additional fees or for any
increase in existing fees in connection with any Subordinate Debt; or (vi)
amends, modifies or adds any performance obligation of Borrower to any
Subordinate Noteholder in a manner which requires Borrower to comply with more
restrictive financial ratios or is otherwise more onerous or more restrictive to
Borrower.
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SECTION 11.7. Use of Proceeds. The proceeds of Borrowings will not be
used for any purpose other than (a) working capital, (b) to finance the
acquisition, exploration and development of Mineral Interests and related
capital assets, and (c) to refinance the obligations outstanding under the
Existing Credit Agreement. None of such proceeds (including, without
limitation, proceeds of Letters of Credit issued hereunder) will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, and none of such proceeds
will be used in violation of applicable Law (including, without limitation, the
Margin Regulations). Letters of Credit will be issued hereunder only for the
purpose of securing bids, tenders, bonds, contracts and other obligations
entered into in the ordinary course of Borrower's business. Without limiting
the foregoing, no Letters of Credit will be issued hereunder for the purpose of
providing credit enhancement with respect to any Debt or equity security of any
Credit Party or to secure any Credit Party's obligations with respect to Hedge
Transactions other than Hedge Transactions with a Bank.
SECTION 11.8. Investments. Except for the MGV Investment, Borrower will
not, nor will Borrower permit any other Credit Party to, directly or indirectly,
make or have outstanding any Investment other than Permitted Investments.
SECTION 11.9. Transactions with Affiliates. Borrower will not, nor will
Borrower permit any other Credit Party to, engage in any transaction with an
Affiliate unless such transaction is as favorable to such party as could be
obtained in an arm's length transaction with an unaffiliated Person in
accordance with prevailing industry customs and practices.
SECTION 11.10. ERISA. Except in such instances where an omission or
failure would not result in a Material Adverse Change, Borrower will not, nor
will Borrower permit any other Credit Party to (a) take any action or fail to
take any action which would result in a violation of ERISA, the Code or other
Laws applicable to the Plans maintained or contributed to by it or any ERISA
Affiliate, or (b) modify the term of, or the funding obligations or contribution
requirements under any existing Plan, establish a new Plan, or become obligated
or incur any liability under a Plan that is not maintained or contributed to by
Borrower or any ERISA Affiliate as of the Closing Date.
SECTION 11.11. Hedge Transactions. With the exception of Oil and Gas
Hedge Transactions entered into pursuant to Section 8.1(g), Borrower will not,
nor will Borrower permit any other Credit Party to, enter into Oil and Gas Hedge
Transactions which would cause the volume of Hydrocarbons with respect to which
a settlement payment is calculated under such Oil and Gas Hedge Transactions to
exceed seventy-five percent (75%) of the aggregate of (a) Borrower's anticipated
production from Proved Mineral Interests plus (b) associated royalty owners' gas
produced from the same ▇▇▇▇▇, and which gas Borrower has the authority to market
and sell, during the period from the immediately preceding settlement date (or
the commencement of such Hedge Transaction if there is no prior settlement date)
to such settlement date. Borrower will not materially amend the Commodity Price
Risk Policy after the same is adopted pursuant to the terms of Section 10.15.
SECTION 11.12. Fiscal Year. Borrower will not, and Borrower will not
permit any other Credit Party to, change its Fiscal Year.
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SECTION 11.13. Change in Business. Borrower will not, nor will Borrower
permit any other Credit Party to, engage in any business other than the
businesses engaged in by such parties on the date hereof as described in Section
9.13 hereof.
SECTION 11.14. Subordinate Debt. Borrower will not make any payment on or
with respect to any Subordinate Debt except as expressly permitted by the terms
hereof and by the terms of the Subordination Agreements.
SECTION 11.15. Cinnabar. In marketing the Hydrocarbons of Borrower and
its Subsidiaries, Cinnabar shall act as their marketing agent, and Borrower will
not, nor will Borrower permit any other Credit Party to, claim or take title to
any Hydrocarbons which Cinnabar markets on their behalf or to claim or take
title to any accounts receivable resulting from the sale of such Hydrocarbons,
and all payments for the sale of such Hydrocarbons by the purchasers obtained by
Cinnabar shall be made directly to Borrower or to the Subsidiary of Borrower
selling such Hydrocarbons. So long as any guaranty by Borrower of any Cinnabar
Marketing Obligations is in effect, Borrower will not permit Cinnabar to (a)
incur Debt, or (b) ▇▇▇▇▇ ▇ ▇▇▇▇ on its accounts receivable or other assets to
any Person other than Borrower (provided, that, Cinnabar may grant such a Lien
to any other guarantor of Cinnabar Marketing Obligations in proportion to the
amount guaranteed by such other guarantor).
ARTICLE XII
FINANCIAL COVENANTS
Borrower agrees that so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
(a) Borrower will not permit its Working Capital to be less than
$3,000,000 at any time.
(b) As of the end of any Fiscal Quarter, commencing with the Fiscal
Quarter ending June 30, 2000, Borrower will not permit its ratio of (i)
Consolidated EBITDAX (for the four (4) Fiscal Quarters ending on such date) to
(ii) Consolidated Net Interest Expense (for the four (4) Fiscal Quarters ending
on such date) to be less than 2.50 to 1.
ARTICLE XII
DEFAULTS
SECTION 13.1. Events of Default. If one or more of the following events
(collectively "Events of Default" and individually an "Event of Default") shall
have occurred and be continuing:
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(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any Note
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Article XI or Article XII of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or any other Loan Paper (other than those
referenced in Sections 13.1(a), (b) and (c)) and such failure continues for a
period of twenty (20) days after the earlier of (i) the date any Authorized
Officer of any Credit Party acquires knowledge of such failure, or (ii) written
notice of such failure has been given to any Credit Party by Administrative
Agent or any Bank;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove to
have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on any
Debt of such Person in a principal amount equal to or greater than $250,000 or
any other event or condition shall occur which (i) results in the acceleration
of the maturity of any such Debt, or (ii) entitles the holder of such Debt to
accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar Law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate, partnership or limited liability company
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against any Credit Party under the federal
bankruptcy Laws as now or hereafter in effect;
69
(i) one (1) or more final judgments or orders for the payment of
money aggregating in excess of $250,000 shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied or unstayed for
thirty (30) days;
(j) any event occurs with respect to any Plan or Plans pursuant to
which any Credit Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for benefit
payments under such Plan or Plans in excess of $250,000; or (ii) any Credit
Party, any ERISA Affiliate, or any other "party-in-interest" or "disqualified
person," as such terms are defined in section 3(14) of ERISA and section
4975(e)(2) of the Code, shall engage in transactions which in the aggregate
would reasonably result in a direct or indirect liability to any Credit Party or
any ERISA Affiliate in excess of $250,000 under section 409 or 502 of ERISA or
section 4975 of the Code;
(k) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party, or
any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Papers to which it is a party, or any Lien created by the
Loan Papers shall for any reason (other than the release thereof in accordance
with the Loan Papers) cease to be a valid, first priority, perfected Lien upon
any of the Proved Mineral Interests purported to be covered thereby;
(l) a Material Adverse Change shall occur with respect to any Credit
Party;
(m) a Change of Control shall occur;
(n) a default or event of default shall occur under any Subordinate
Note Document; or
(o) Borrower, any Subordinate Noteholder or TCW Agent shall (i)
default in the observance or performance of any obligation to be observed or
performed by such party under any Subordination Agreement, (ii) breach any
representation or warranty made by such party in any Subordination Agreement in
any material respect, or (iii) repudiate any Subordination Agreement or assert
in writing that any Subordination Agreement or any provision thereof is not
valid, binding and enforceable against any such party;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (i) if requested by Required Banks, terminate the
Commitments and they shall thereupon terminate, and (ii) if requested by
Required Banks, take such other actions as may be permitted by the Loan Papers
including, declaring the Notes (together with accrued interest thereon) to be,
and the Notes shall thereupon become, immediately due and payable; provided
that, in the case of any of the Events of Default specified in Sections 13.1(g)
or (h), without any notice to any Credit Party or any other act by
Administrative Agent or Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable.
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ARTICLE XIV
AGENTS
SECTION 14.1. Appointment, Powers, and Immunities. Each Bank hereby
irrevocably appoints and authorizes each Agent to act as its agent under this
Agreement and the other Loan Papers with such powers and discretion as are
specifically delegated to each such Agent by the terms of this Agreement and the
other Loan Papers, together with such other powers as are reasonably incidental
thereto. No Agent (which term as used in this sentence and in Section 14.5 and
the first sentence of Section 14.6 hereof shall include their Affiliates and
their own and their Affiliates' officers, directors, employees, and agents):
(a) shall have any duties or responsibilities except those expressly set forth
in this Agreement and the other Loan Papers and no Agent shall be a trustee or
fiduciary for any Bank; (b) shall be responsible to Banks for any recital,
statement, representation, or warranty (whether written or oral) made in or in
connection with any Loan Paper or any certificate or other document referred to
or provided for in, or received by any of them under, any Loan Paper, or for the
value, validity, effectiveness, genuineness, enforceability, or sufficiency of
any Loan Paper, or any other document referred to or provided for therein or for
any failure by any Credit Party or any other Person to perform any of its
obligations thereunder; (c) shall be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any condition
or to inspect the property (including the books and records) of any Credit Party
or any of their Subsidiaries or Affiliates; (d) shall be required to initiate or
conduct any litigation or collection proceedings under any Loan Paper; and (e)
shall be responsible for any action taken or omitted to be taken by it under or
in connection with any Loan Paper, except for its own gross negligence or
willful misconduct. Each Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by any such Agent with reasonable care. Each Bank
hereby authorizes Administrative Agent to execute an Intercreditor Agreement
with TCW Agent and Mariner. Banks identified as either the Syndication Agent or
the Documentation Agent under this Agreement shall not have any right, power,
obligation, liability, responsibility or duty under this Agreement in such
capacity. Each Bank acknowledges that it has not relied, and will not rely, on
any Bank identified as either the Syndication Agent or the Documentation Agent
in deciding to enter into this Agreement or in taking or not taking action
hereunder.
SECTION 14.2. Reliance by Agents. Each Agent shall be entitled to rely
upon any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Credit Party), independent accountants, and
other experts selected by any such Agent. Each Agent may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
Administrative Agent receives and accepts an Assignment and Acceptance Agreement
executed in accordance with Section 15.10 hereof. As to any matters not
expressly provided for by this Agreement, 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 shall be fully protected in so acting or refraining from
acting) upon the instructions of Required Banks, and such
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instructions shall be binding on Banks; provided, however, that no Agent shall
be required to take any action that exposes such Agent to personal liability or
that is contrary to any Loan Paper or applicable Law unless it shall first be
indemnified to its satisfaction by Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.
SECTION 14.3. Defaults. No Agent shall be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless such Agent has
received written notice from a Bank or Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the event
that Administrative Agent receives such a notice of the occurrence of a Default
or Event of Default, Administrative Agent shall give prompt notice thereof to
Banks. Administrative Agent shall (subject to Section 14.2 hereof) take such
action with respect to such Default or Event of Default as shall reasonably be
directed by Required Banks; provided that, unless and until Administrative Agent
shall have received such directions, Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of Banks.
SECTION 14.4. Rights as Bank. With respect to its Commitment and the
Loans made by it, Bank of America (and any successor acting as Administrative
Agent) in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as Administrative Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Administrative Agent in its individual
capacity. Bank of America (and any successor acting as Administrative Agent),
each other Agent and their Affiliates may (without having to account therefor to
any Bank) accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust, or other
business with Borrower or any of its Subsidiaries or Affiliates as if it were
not acting as Agent, and Bank of America (and any successor acting as
Administrative Agent), each other Agent and their Affiliates may accept fees and
other consideration from Borrower or any of its Subsidiaries or Affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to Banks.
SECTION 14.5. Indemnification. Banks agree to indemnify each Agent (to
the extent not reimbursed by Borrower or any Subsidiary of Borrower hereof, but
without limiting the obligations of any Credit Party to so reimburse) ratably in
accordance with their respective Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against any such
Agent (including by any Bank) in any way relating to or arising out of any Loan
Paper or the transactions contemplated thereby or any action taken or omitted by
any Agent under any Loan Paper (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF ANY AGENT); provided that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Bank agrees to reimburse each Agent promptly upon demand for its
ratable share of any costs or expenses payable by Borrower hereunder, to the
extent that any such Agent is not promptly reimbursed for such costs and
expenses by Borrower. The agreements contained in this Section 14.5 shall
survive
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payment and performance in full of the Obligations and all other amounts
payable under this Agreement.
SECTION 14.6. Non-Reliance on Agents and Other Banks. Each Bank agrees
that it has, independently and without reliance on any Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of each Credit Party and decision to enter into this
Agreement and that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under the Loan Papers. Except for notices, reports,
and other documents and information expressly required to be furnished to Banks
by Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of any Credit Party or
their Affiliates that may come into the possession of any such Agent or any of
their Affiliates.
SECTION 14.7. Resignation of Agents. Any Agent may resign at any time
by giving notice thereof to Banks and Borrower. Upon any such resignation,
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by Required Banks and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of
Banks, appoint a successor Agent which shall be a commercial bank organized
under the Laws of the United States of America having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XIV shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank, at
its address or telecopier number set forth on Schedule 1 hereto, and if given to
Borrower, at its address or telecopy number set forth on the signature pages
hereof (or in either case, at such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 15.1 and the appropriate answerback is received or
receipt is otherwise confirmed, (b) if given by mail, three (3) Domestic
Business Days after deposit in the mails with first class postage prepaid,
addressed as aforesaid or (c) if given by any other means,
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when delivered at the address specified in this Section 15.1; provided that
notices to Administrative Agent under Article III or IV shall not be effective
until received.
SECTION 15.2. No Waivers. No failure or delay by Administrative Agent
or any Bank in exercising any right, power or privilege hereunder or under any
Note or other Loan Paper shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by Law or in any of the other Loan Papers.
SECTION 15.3. Expenses; Indemnification. (a) Borrower agrees to pay on
demand all reasonable costs and expenses of each Agent in connection with the
syndication, preparation, execution, delivery, modification, and amendment of
this Agreement, the other Loan Papers, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for Administrative Agent (including the cost of internal counsel) with
respect thereto and with respect to advising Administrative Agent as to its
rights and responsibilities under the Loan Papers. Borrower further agrees to
pay on demand all reasonable costs and expenses of Administrative Agent and
Banks, if any (including, without limitation, reasonable attorneys' fees and
expenses and the cost of internal counsel), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Loan
Papers and the other documents to be delivered hereunder.
(b) Borrower agrees to indemnify and hold harmless each Agent and each Bank
and each of their Affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Loan Papers, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loan
(INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED
PARTY), except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 15.3 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. Borrower agrees not to assert any claim against any Agent, any
Bank, any of their Affiliates, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of liability, for
special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Loan Papers, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loan.
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(c) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
15.3 shall survive the payment in full of the Loans and all other amounts
payable under this Agreement.
SECTION 15.4. Right of Set-off; Adjustments. (a) Upon the occurrence
and during the continuance of any Event of Default, each Bank (and each of its
Affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank (or any of its Affiliates) to
or for the credit or the account of Borrower against any and all of the
Obligations, irrespective of whether such Bank shall have made any demand under
this Agreement or Note held by such and although such obligations may be
unmatured. Each Bank agrees promptly to notify Borrower after any such set-off
and application made by such Bank; provided, however, 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 15.4 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such Bank
may have.
(b) If any Bank (a "benefitted Bank") shall at any time receive any payment
of all or part of the Loans owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Bank, if any, in respect of such other Bank's Loans owing
to it, or interest thereon, such benefitted Bank shall purchase for cash from
the other Banks a participating interest in such portion of each such other
Bank's Loans owing to it, or shall provide such other Banks with the benefits of
any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each other Bank; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
Borrower agrees that any Bank so purchasing a participation from a Bank pursuant
to this Section 15.4 may, to the fullest extent permitted by Law, exercise all
of its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Person were the direct creditor of Borrower in
the amount of such participation.
SECTION 15.5. Amendments and Waivers. Any provision of this Agreement
or any other Loan Paper may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by Borrower and Required Banks (and, if
Article XIV or the rights or duties of any Agent are affected thereby, by such
Agent); provided that no such amendment or waiver shall, unless signed by each
Bank directly affected thereby, (i) increase the Commitments of Banks, (ii)
reduce the principal of or rate of interest on any Loan or any fees or other
amounts payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable hereunder or for termination of any Commitment, (iv)
change the percentage of the Commitments or of the unpaid principal amount of
the Notes, or the number of Banks, which shall be required for Banks or any of
them to take any action under this Section 15.5 or any other provision of this
Agreement, or (v) release any guarantor of the Obligations or all or
substantially all of the collateral securing the Obligations.
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SECTION 15.6. Survival. All representations, warranties and covenants
made by any Credit Party herein or in any certificate or other instrument
delivered by it or in its behalf under the Loan Papers shall be considered to
have been relied upon by Banks and shall survive the delivery to Banks of such
Loan Papers or the extension of the Loan (or any part thereof), regardless of
any investigation made by or on behalf of Banks. The indemnity provided in
Section 15.3(b) herein shall survive the repayment of all credit advances
hereunder and/or the discharge or release of any Lien granted hereunder or in
any other Loan Paper, contract or agreement between Borrower or any other Credit
Party and any Agent or any Bank.
SECTION 15.7. Limitation on Interest. Regardless of any provision
contained in the Loan Papers, Banks shall never be entitled to receive, collect,
or apply, as interest on the Loan, any amount in excess of the Maximum Lawful
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, such amount which would be deemed excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such; and if
the Loan is paid in full, any remaining excess shall promptly be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Lawful Rate, Borrower and Banks shall,
to the extent permitted under applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided, however,
that if the unpaid principal balance thereof is paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Lawful Rate,
Banks shall refund to Borrower the amount of such excess and, in such event,
Banks shall not be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of the Maximum
Lawful Rate.
SECTION 15.8. Invalid Provisions. If any provision of the Loan Papers
is held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 15.9. Waiver of Consumer Credit Laws. Pursuant to Chapter 346
of the Texas Finance Code, as amended, Borrower agrees that such Chapter 346
shall not govern or in any manner apply to the Loan.
SECTION 15.10. Assignments and Participations. (a) Each Bank may assign
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
interest in the Loan, its Note, and its Commitment); provided, however, that,
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(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this Agreement, any
such partial assignment shall be in an amount at least equal to $5,000,000 or an
integral multiple of $100,000 in excess thereof;
(iii) each such assignment by a Bank shall be of a constant, and not
varying, percentage of all of its rights and obligations under this Agreement
and its Note; and
(iv) the parties to such assignment shall execute and deliver to
Administrative Agent for its acceptance an Assignment and Acceptance Agreement
(herein so called) in the form of Exhibit I hereto, together with any Notes
subject to such assignment and a processing fee to be paid by the assigning Bank
of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Bank hereunder
and the assigning Bank shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section 15.10(a), the assignor,
Administrative Agent and Borrower shall make appropriate arrangements so that,
if required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the Laws of the United States of America or a
state thereof, it shall deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 5.6.
(b) Administrative Agent shall maintain at its address set forth on
Schedule 1 hereto, a copy of each Assignment and Acceptance Agreement delivered
to and accepted by it and a register for the recordation of the names and
addresses of Banks and the Commitment of, and principal amount of the Loan owing
to, each Bank and the Commitment Percentage of each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and Borrower, Administrative Agent and
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.
(c) Upon its receipt of an Assignment and Acceptance Agreement executed by
the parties thereto, together with any Notes subject to such assignment and
payment of the processing fee, Administrative Agent shall, if such Assignment
and Acceptance Agreement has been completed and is in substantially the form of
Exhibit I hereto, (i) accept such Assignment and Acceptance Agreement, (ii)
record the information contained therein in the Register, and (iii) give prompt
notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its interest in the Loan); provided, however, that
(i) such Bank's obligations under this Agreement shall
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remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions contained in
Article V and the right of set-off contained in Section 15.4, and (iv) Borrower
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement, and such Bank shall
retain the sole right to enforce the obligations of Borrower relating to its
interest in the Loan and its Note and to approve any amendment, modification, or
waiver of any provision of this Agreement (other than amendments, modifications,
or waivers decreasing the amount of principal of or the rate at which interest
is payable on the Loan or the Notes, extending any scheduled principal payment
date or date fixed for the payment of interest on the Loan or the Notes, or
extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time assign and pledge all or any portion of its interest in the
Loan and its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Bank from its obligations hereunder.
(f) Any Bank may furnish any information concerning Borrower or any of its
Subsidiaries in the possession of such Bank from time to time to assignees and
participants (including prospective assignees and participants).
(g) Borrower shall not assign or transfer any rights or obligations under
any Loan Paper or permit any Credit Party to assign or transfer any rights or
obligations under any Loan Paper without first obtaining all Banks' consent, and
any purported assignment or transfer without all Banks' consent is void.
SECTION 15.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS
LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN FAVOR
OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B) THE
EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH PROPERTY.
SECTION 15.12. Consent to Jurisdiction; Waiver of Immunities. (a)
Borrower hereby irrevocably submits to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas over any action or
proceeding arising out of or relating to this Agreement or any other Loan
Papers, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court. As an alternative, Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to such Person at its address specified in Section 15.1.
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Borrower agrees that a final judgment on any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law.
(b) Nothing in this Section 15.12 shall affect any right of Banks to
serve legal process in any other manner permitted by Law or affect the right of
any Bank to bring any action or proceeding against any Credit Party or their
properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Person hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the other Loan Papers.
SECTION 15.13. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the terms and conditions herein set forth, this Agreement
shall become effective when Administrative Agent shall have received
counterparts hereof signed by all of the parties hereto or, in the case of any
Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
SECTION 15.14. No Third Party Beneficiaries. Except for the provisions
hereof inuring to the benefit of Agents not a party to this Agreement, it is
expressly intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained other than
third party beneficiaries permitted pursuant to Section 15.10.
SECTION 15.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS,
ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS,
ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG BANKS, ADMINISTRATIVE AGENT, AND THE CREDIT PARTIES.
SECTION 15.16. WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT,
AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 15.17 Confidentiality. Administrative Agent and each Bank
(each, a "Lending Party") agrees to keep confidential any information furnished
or made available to it by Borrower pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending
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Party or Affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any Law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Paper, and (i) subject to provisions
substantially similar to those contained in this Section 15.17, to any actual or
proposed participant or assignee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year first
above written.
[Signature pages follow]
80
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
BORROWER:
QUICKSILVER RESOURCES INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇▇▇▇▇▇,
President
Address for Notice prior to May 1, 2000:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Address for Notice on and after May 1, 2000:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
BANKS:
BANK OF AMERICA, N.A.
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
PARIBAS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇▇▇ ▇. FINZAT
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. Finzat
Title: Vice President
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
MEESPIERSON CAPITAL CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
THE FUJI BANK, LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President & Manager
Signature Page
SIGNATURE PAGE
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
QUICKSILVER RESOURCES INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AS BANKS
CIBC INC.
By: /s/ M. ▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
Signature Page