TERM AND REVOLVING CREDIT AGREEMENT
TERM LOAN FACILITY OF UP TO $25,000,000.00
and
REVOLVING CREDIT FACILITY
OF UP TO $10,000,000.00
AMONG
UNION BANK OF CALIFORNIA, N.A.
As Administrative Agent, LC Issuer, Lead Arranger, Fronting Bank and a Bank;
FORTIS CAPITAL CORP.
As Syndication Agent, Co-Arranger and a Bank,
▇▇▇▇▇ FARGO BANK TEXAS, N.A.
As Documentation Agent, Co-Arranger and a Bank,
OTHER FINANCIAL
INSTITUTIONS AND BANKS,
As Banks,
and
CONTINENTAL GAS, INC.
As Borrower
October 22, 2003
TABLE OF CONTENTS
Page
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Article I. DEFINITIONS.................................................................................1
Article II. THE LOANS AND LETTERS OF CREDIT...........................................................21
2.01 The Commitment..........................................................................21
2.02 Notice and Manner of Borrowing..........................................................21
2.03 Payment Procedure.......................................................................22
2.04 Payments of Interest under the Notes....................................................22
2.05 General Provisions Relating to Interest.................................................24
2.06 Availability Amount Determination.......................................................24
2.07 Mandatory Prepayment Due to a Revolving Loan Deficiency.................................26
2.08 Other Mandatory Payments and Prepayments................................................27
2.09 Prepayment and Conversion...............................................................27
2.10 Increased Cost of Loans.................................................................27
2.11 Change of Law...........................................................................29
2.12 Mitigation: Mandatory Assignment........................................................29
2.13 Pro Rata Treatment and Payments.........................................................30
2.14 Sharing of Payments and Setoffs.........................................................30
2.15 Commitment Fee..........................................................................30
2.16 Availability Amount Increase Fee........................................................31
2.17 Up-Front Fee............................................................................31
2.18 Addition of Collateral Assets...........................................................31
2.19 Adjustment to Aggregate Commitment Amount...............................................31
2.20 Facility LCs............................................................................32
2.21 Advances to Satisfy Obligations of the Borrower.........................................36
2.22 Assignment of Production................................................................36
2.23 Facility Termination Date...............................................................36
Article III. CONDITIONS...............................................................................36
3.01 General Conditions to Closing and to all Disbursements..................................36
3.02 Deliveries at the Closing...............................................................37
3.03 Documents Required for Subsequent Disbursements Involving Additional Collateral Assets..39
Article IV. REPRESENTATIONS AND WARRANTIES............................................................39
4.01 Existence...............................................................................39
4.02 Due Authorization.......................................................................39
4.03 Valid and Binding Obligations...........................................................40
4.04 Scope and Accuracy of Financial Statements..............................................40
4.05 Title to Collateral Assets..............................................................40
4.06 Oil and Gas Leases......................................................................40
4.07 Interest in the Collateral Assets.......................................................40
4.08 Oil and Gas Contracts...................................................................41
4.09 Producing ▇▇▇▇▇.........................................................................41
4.10 Purchasers of Production................................................................41
4.11 Authorizations and Consents.............................................................41
4.12 Environmental Laws......................................................................42
4.13 Compliance with Laws, Rules, Regulations and Orders.....................................42
4.14 Liabilities, Litigation and Restrictions................................................43
4.15 Existing Indebtedness...................................................................43
4.16 Material Contracts......................................................................43
4.17 Margin Stock............................................................................43
4.18 Proper Filing of Tax Returns and Payment of Taxes Due...................................43
4.19 ERISA 44
4.20 Investment Company Act Compliance.......................................................44
4.21 Public Utility Holding Company Act Compliance...........................................44
4.22 Insurance...............................................................................44
4.23 Borrower's Shareholders and Directors...................................................44
4.24 Material Misstatements and Omissions....................................................44
Article V. AFFIRMATIVE COVENANTS......................................................................45
5.01 Use of Funds............................................................................45
5.02 Maintenance and Access to Records.......................................................45
5.03 Quarterly Unaudited Financial Statements................................................45
5.04 Annual Audited Financial Statements.....................................................45
5.05 Compliance Certificate..................................................................45
5.06 Statement of Material Adverse Change....................................................45
5.07 Title Defects...........................................................................46
5.08 Additional Information..................................................................46
5.09 Compliance with Laws and Payment of Assessments and Charges.............................46
5.10 Maintenance of Existence and Good Standing..............................................46
5.11 Further Assurances......................................................................46
5.12 Initial Expenses of the Bank............................................................46
5.13 Subsequent Expenses of the Bank Parties.................................................46
5.14 Maintenance of Tangible Property........................................................47
5.15 Maintenance of Insurance................................................................47
5.16 Inspection of Tangible Assets/Right of Audit............................................47
5.17 Payment of Note and Performance of Obligations..........................................47
5.18 Availability Amount.....................................................................47
5.19 Compliance with Environmental Laws......................................................48
5.20 Hazardous Substances Indemnification....................................................48
5.21 Transactions with Affiliates............................................................49
5.22 Leases 49
5.23 Operation of Collateral Assets..........................................................49
5.24 Assignments.............................................................................49
5.25 Change of Purchasers of Production......................................................49
5.26 Payment of Taxes, Etc...................................................................49
5.27 Notice of Litigation....................................................................50
5.28 Notice of Events of Default.............................................................50
5.29 Notice of Change of Principal Offices...................................................50
5.30 Employee Benefit Plans..................................................................50
5.31 Annual Capital Budget...................................................................50
5.32 Payment of Obligations..................................................................51
5.33 Compliance with Section 2.06............................................................51
5.34 Notice Regarding Early Termination of Hedge Agreements..................................51
5.35 Accounts Receivable Aging Reports.......................................................51
5.36 Accruals for Personal Tax Distributions.................................................51
5.37 Collateral Audit........................................................................52
Article VI. NEGATIVE COVENANTS........................................................................53
6.01 Other Indebtedness......................................................................53
6.02 Loans or Advances.......................................................................53
6.03 Mortgages or Pledges of Assets..........................................................53
6.04 Sales of Assets.........................................................................53
6.05 Payment of Accounts Payable.............................................................53
6.06 Cancellation of Insurance...............................................................53
6.07 Investments.............................................................................53
6.08 Changes in Structure or Business........................................................54
6.09 Pooling or Unitization..................................................................54
6.10 Hedge Agreements........................................................................54
6.11 Capital Stock of Borrower/Redemption of Senior Subordinated Notes.......................54
6.12 Margin Stock............................................................................54
6.13 Amendment, Termination or Waiver of Material Contracts..................................54
6.14 Current Ratio...........................................................................55
6.15 Interest Charge Coverage Ratio..........................................................55
6.16 Fixed Charge Coverage Ratio.............................................................55
6.17 Senior Debt to EBITDA...................................................................55
6.18 Rolling Four-Quarter Basis..............................................................55
Article VII. EVENTS OF DEFAULT........................................................................55
7.01 Enumeration of Events of Default........................................................55
7.02 Rights Upon Unmatured Event of Default..................................................57
7.03 Rights Upon Default.....................................................................57
7.04 Remedies................................................................................58
7.05 Right of Set-off........................................................................58
Article VIII. THE AGENTS..............................................................................59
8.01 Authorization and Action................................................................59
8.02 Agent's Reliance, Etc...................................................................59
8.03 Each Agent and its Affiliates...........................................................60
8.04 Bank Credit Decision....................................................................60
8.05 Agent's Indemnity.......................................................................60
8.06 Successor Agents........................................................................61
8.07 Notice of Default.......................................................................61
Article IX. MISCELLANEOUS.............................................................................62
9.01 Security Interests in Deposits and Right of Offset or the Banker's Lien.................62
9.02 Survival of Representations, Warranties and Covenants...................................62
9.03 Notices and Other Communications........................................................62
9.04 Parties in Interest.....................................................................62
9.05 Successors and Assigns; Participation; Purchasing Banks.................................62
9.06 Renewals and Extensions.................................................................65
9.07 No Waiver by the Bank Parties...........................................................65
9.08 Waiver, Release, and Indemnification by the Borrower....................................65
9.09 GOVERNING LAW...........................................................................66
9.10 Incorporation of Exhibits and Schedules.................................................66
9.11 Survival Upon Unenforceability..........................................................66
9.12 Rights of Third Parties.................................................................66
9.13 Amendments or Modifications.............................................................66
9.14 Agreement Construed as an Entirety......................................................67
9.15 Number and Gender.......................................................................67
9.16 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS...............................................67
9.17 Controlling Provision Upon Conflict.....................................................68
9.18 Time, Place and Method of Payments......................................................68
9.19 Termination.............................................................................68
9.20 Non-Application of Chapter 346 of Texas Finance Code....................................68
9.21 Counterpart Execution...................................................................68
9.22 Power of Attorney.......................................................................69
9.23 Borrower's CRI Security Instruments.....................................................69
9.24 Confidentiality.........................................................................69
EXHIBITS
EXHIBIT A Collateral Assets
EXHIBIT B-1 Form of Term Notes
EXHIBIT B-2 Form of Revolving Notes
EXHIBIT C Compliance Certificate
EXHIBIT D Security Instruments
EXHIBIT E Request for Advance
EXHIBIT F Availability Amount Certificate
SCHEDULES
Schedule 1.01(b) Commitment Amount and Aggregate Commitment
Schedule 2.20(C) Fax Numbers for all Parties
Schedule 4.01 Information Regarding the Borrower and
its Subsidiaries
Schedule 4.08 Certain Oil and Gas Contracts
Schedule 4.10 List of Purchasers of Production
Schedule 4.15 Existing Indebtedness
Schedule 4.16 Material Contracts
Schedule 4.22 Insurance Certificates
Schedule 4.23 Borrower's Shareholders and Directors
Schedule 9.05(d) Commitment Transfer Supplement
TERM AND REVOLVING CREDIT AGREEMENT
THIS TERM AND REVOLVING CREDIT AGREEMENT (this "Agreement"), executed as of
October 22, 2003, is by and between CONTINENTAL GAS, INC., an Oklahoma
corporation (the "Borrower"), UNION BANK OF CALIFORNIA, N.A., as LC Issuer,
Bank, Lead Arranger, Fronting Bank and Administrative Agent (in such latter
capacity and together with its successors and permitted assigns in such capacity
the "Administrative Agent"), FORTIS CAPITAL CORP., as Co-Arranger, Bank and
Syndication Agent (in such latter capacity and together with its successors and
permitted assigns in such capacity the "Syndication Agent"), ▇▇▇▇▇ FARGO BANK
TEXAS, N.A., as Co-Arranger, Bank and Documentation Agent (in such latter
capacity and together with its successors and permitted assigns in such capacity
the "Documentation Agent"), and the several banks and financial institutions
from time to time parties to this Credit Agreement (the "Banks," such term to
include all undersigned Banks and all other financial institutions which
subsequently become parties to this Agreement in accordance with Section 9.05
hereof).
W I T N E S S E T H
WHEREAS, Borrower is one of the guarantors of the Indebtedness of its
parent company, Continental Resources, Inc., an Oklahoma corporation ("CRI"),
pursuant to that certain Fourth Amended and Restated Credit Agreement dated
March 28, 2002, among Union Bank of California, N.A., as Administrative Agent
and in other capacities, together with other financial institutions and banks,
and CRI, as Borrower (the "CRI Credit Agreement");
WHEREAS, Borrower desires to obtain a term loan and a line of credit from
the Banks who are party to this Agreement, in accordance with the terms set
forth herein, and to use a portion of the advances under this facility to
distribute to CRI, which distribution will be used by CRI for prepayment of a
portion of the Indebtedness outstanding under the CRI Credit Agreement;
WHEREAS, in consideration for Borrower's distribution to CRI and CRI's use
of that distribution to prepay a portion of the Indebtedness under the CRI
Credit Agreement, the lenders under the CRI Credit Agreement are willing to
release Borrower from its guaranty of the obligations of CRI thereunder; and
WHEREAS, Borrower and the Bank Parties desire to enter into this Agreement
in accordance with the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Bank Parties and the Borrower agree as follows:
Article I.
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated:
"Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment,"
"Fixtures," "General Intangibles," "Goods," "Instruments," and "Inventory" shall
have the same respective meanings as are given to those terms in the Uniform
Commercial Code as presently adopted and in effect in the State of Oklahoma.
"Administrative Agent" means Union Bank of California, N.A., as
Administrative Agent for the Banks hereunder and under the other Loan Documents,
and each successor Administrative Agent.
"Affiliate" means, as applied to any Person, any other Person, directly or
indirectly, controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by", and "under common control
with"), as applied to any Person, means either: (a) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract, or otherwise, or (b) the legal or beneficial ownership of or voting
rights with respect to one-third (1/3) or more of the equity interest in such
Person.
"Agent(s)" means, individually and collectively, the Administrative Agent,
the Syndication Agent, and the Documentation Agent, and each successor to each
of such respective positions.
"Aggregate Commitment Amount" means the lesser of: (a) the Availability
Amount in effect from time to time, or (b) the amount stated as the Aggregate
Commitment Amount on Schedule 1.01(b) attached hereto, as the same may be
amended from time to time as provided in this Agreement.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Banks.
"Agreement" means this Term and Revolving Credit Agreement, as the same may
be amended or supplemented from time to time.
"Annual Tax Rate" has the meaning stated in Section 5.35.
"Applicable Law" means that law in effect from time to time and applicable
to the Notes which lawfully permits the charging and collection of the highest
permissible lawful, non-usurious rate of interest on the Notes, including laws
of the State of Texas and laws of the United States of America; Chapter 303 of
the Texas Finance Code shall be included in the laws of the State of Texas in
determining Applicable Law; and for the purpose of applying said Chapter 303 to
the Notes, the interest ceiling applicable to the Notes under said Chapter 303
shall be the indicated weekly rate ceiling from time to time in effect.
"Applicable Margin" means the applicable LIBOR Margin or RR Margin provided
for in the Pricing Grid set forth below based upon the Senior Debt to EBITDA
Ratio.
"Arranger" means, individually and collectively, the Lead Arranger and each
Co-Arranger, each such position being held as of the Closing by Union Bank of
California, N.A., Fortis Capital Corp., and ▇▇▇▇▇ Fargo Bank Texas, N.A.,
respectively.
"Availability Amount" means the sum of: (a) the Term Loan Availability
Amount, plus (b) the Revolving Loan Availability Amount, as each is determined
and in effect from time to time pursuant to Section 2.06.
"Availability Amount Certificate" means a fully completed certificate in
the form of Exhibit F to this Agreement, certified by the chief financial
officer of the Borrower to be correct and delivered to, and accepted by, the
Banks pursuant to Section 2.06.
"Bank(s)" means any of the banks signatory to this Agreement, their
successors and, upon the effective date after registration with the
Administrative Agent pursuant to Section 9.05 of a Commitment Transfer
Supplement executed by a Purchasing Bank, such Purchasing Bank.
"Bank Parties" means the Banks, the Fronting Bank, the LC Issuer, each
Co-Arranger, the Lead Arranger, the Syndication Agent, the Documentation Agent
and the Administrative Agent.
"Borrower" has the meaning stated therefor in the preamble of this
Agreement.
"Borrower Guaranty" means that certain Guaranty Agreement dated March 28,
2002, pursuant to which Borrower guaranteed full payment and performance of all
of CRI's obligations under the CRI Credit Agreement.
"Borrower's CRI Security Instruments" means, collectively, all documents
executed by Borrower pursuant to the CRI Credit Agreement creating liens and
security interests on assets of Borrower to secure CRI's obligations under the
CRI Credit Agreement, as heretofore or hereafter amended.
"Borrower's Percentage Share" has the meaning stated in Section 5.35.
"Borrowing" means a group of Loans made by the Banks to Borrower on a
single date.
"Breakage Costs" means all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
any Bank to fund its LIBOR Loans but excluding loss of anticipated profit with
respect to any LIBOR Loans) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a borrowing of
LIBOR Loans does not occur on a date specified therefor in a Request for
Advance; (ii) if any repayment or conversion of any LIBOR Loans occurs on a date
which is not the last day of an Interest Period applicable thereto; (iii) if any
prepayment of any LIBOR Loans is not made on any date specified in a notice of
prepayment given by Borrower; or (iv) as a consequence of any default by the
Borrower to repay LIBOR Loans when required by the terms of this Agreement.
"Business Day" means a day other than a Saturday, Sunday or legal holiday
for commercial banks under the laws of the State of Texas or the State of
California, provided that with respect to transactions under this Agreement
relating to LIBOR Loans, such day must also be a Eurodollar Business Day.
"Business Entity" means a company, corporation, limited liability company,
limited partnership, partnership, joint venture, trust, association, or other
entity other than a natural person, that has been formed and exists to conduct
any line of business.
"Certificate of Formation" means any certificates, articles, or other
instruments that are required or permitted to be filed with any designated
agency of the jurisdiction in which a Business Entity is formed in order to
evidence the legal formation of such Business Entity.
"Change of Control" means any of the following events: (a) any "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than the persons or groups
who are the beneficial owners of the outstanding capital stock of Borrower on
the date of this Agreement, has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all such shares that
any such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), by way of merger, consolidation
or otherwise, of a majority or more of the common stock of Borrower on a
fully-diluted basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Borrower (whether or
not such securities are then currently convertible or exercisable), (b) during
any period of two consecutive calendar quarters, individuals who at the
beginning of such period were members of the Borrower's board of directors cease
for any reason to constitute a majority of the directors of the Borrower then in
office unless (i) such new directors were elected by a majority of the directors
of the Borrower who constituted the board of directors of the Borrower at the
beginning of such period (or by directors so elected) or (ii) the reason for
such directors failing to constitute a majority is a result of retirement by
directors due to age, death or disability, (c) ▇▇▇▇▇▇ ▇▇▇▇ no longer owns,
directly or indirectly, a controlling beneficial interest or ownership in
Borrower, (d) neither ▇▇▇▇▇▇ ▇▇▇▇ nor ▇▇▇▇▇ ▇▇▇▇▇▇ continues to be the chief
executive officer of Borrower, or (e) CRI and/or ▇▇▇▇▇▇ ▇▇▇▇ no longer
beneficially own, in the aggregate, at least 60% of all the issued and
outstanding shares of common stock of Borrower.
"Closing" has the meaning provided in Section 3.01.
"Co-Arranger" means each of Fortis Capital Corp. and ▇▇▇▇▇ Fargo Bank
Texas, N.A., and each successor to such position.
"Collateral Assets" means all Oil and Gas Properties and Pipeline
Properties of the Borrower, including, but not limited to, those that are
described in Exhibit "A" attached hereto and made a part hereof, as such Exhibit
"A" may be amended from time to time, together with any other Oil and Gas
Properties and Pipeline Properties of the Borrower that are described in and
covered by (or that Administrative Agent and Borrower have attempted to describe
in) any of the Security Instruments, whether or not such Oil and Gas Properties
or Pipeline Properties are described in Exhibit A attached hereto.
"Collateral Audit" has the meaning provided in Section 5.37.
"Commitment" means, as to any Bank, the obligation of such Bank to make
Loans to, and participate in Facility LCs issued upon the application of, the
Borrower in an aggregate amount at any one time outstanding not to exceed the
lesser of (i) such Bank's Commitment Amount and (ii) such Bank's Percentage
Share of the Availability Amount then in effect.
"Commitment Amount" means at any time, for any Bank, the amount set forth
opposite such Bank's name on Schedule 1.01(b) under the heading "Commitment
Amount," as such amount may be changed as provided in this Agreement.
"Commitment Transfer Supplement" means a Commitment Transfer Supplement
executed by Administrative Agent and a Purchasing Bank substantially in the form
of Schedule 9.05(d) and registered with the Administrative Agent pursuant to
Section 9.05(d) hereof.
"Compliance Certificate" means the certificate of the President or Chief
Financial Officer of the Borrower submitted to the Administrative Agent from
time to time pursuant to this Agreement and attesting to the financial covenants
and stating, to such officer's knowledge, whether or not an Event of Default or
an Unmatured Event of Default has occurred and is continuing and, if such an
event has occurred, the actions being taken by the Borrower to remedy such
situation and that GAAP has been used in the preparation of the Financial
Statements, which certificate shall be in the form attached hereto as Exhibit
"C".
"▇▇▇▇▇" means the Accounting Procedure Joint Operations recommended by the
Council of Petroleum Accountants, with respect to onshore and offshore
operations, respectively, including the most current versions thereof and any
other recent versions thereof commonly in use.
"Corporate Action" means action taken by the Governing Body of any Business
Entity (not just a corporation) in order to authorize such Business Entity
pursuant to its Governing Documentation to enter into and become bound by the
terms of any particular transaction.
"Corporate Power" means the power and authority of a Business Entity, under
the terms of its Governing Documentation and applicable law, to enter into, and
become bound by, the terms of any particular transaction.
"Credit Extension" means the making of a Loan or the issuance of a Facility
LC hereunder.
"Credit Extension Date" means the date on which a Loan is advanced or a
Facility LC is issued.
"CRI" has the meaning stated therefor in the Recitals to this Agreement.
"CRI Credit Agreement" has the meaning stated therefor in the recitations
to this Agreement.
"Current Assets" means at any time, all assets, that should in accordance
with GAAP, be classified as current assets on a balance sheet of Borrower, plus
the then current availability under the aggregate Commitments, but excluding any
▇▇▇▇-to-market valuation under Permitted Hedge Agreements.
"Current Liabilities" means at any time, all liabilities that should in
accordance with GAAP, be classified as current liabilities on a balance sheet of
Borrower, but excluding any ▇▇▇▇-to-market valuation under Permitted Hedge
Agreements, and excluding the amount of Credit Extensions under this Agreement
that is deemed to be current in accordance with GAAP.
"Current Ratio" means the ratio derived from dividing Current Assets by
Current Liabilities.
"Defensible Title" means good and defensible title, as set forth, qualified
and/or limited on Exhibit "A," free and clear of all mortgages, liens and
encumbrances, except for Permitted Encumbrances.
"Documentation Agent" means ▇▇▇▇▇ Fargo Bank Texas, N.A., Documentation
Agent for the Banks hereunder and under the other Loan Documents, and each
successor Documentation Agent.
"EBITDA" means, for any reporting period, Borrower's Net Income on a
consolidated basis before deductions for interest expense, taxes, depreciation,
depletion and amortization, exploration expenses, including dry hole costs, and
non-cash compensation expense.
"Eligible Account" means, at any time, an Account that conforms and
continues to conform to the following conditions:
(A) The Account arose from a bona fide sale of Hydrocarbons by the
Borrower in the ordinary course of business or from gas gathering,
compression, processing, treatment, or other handling services
performed by the Borrower, and such Hydrocarbons have been shipped to
the appropriate account debtors or their designees (or the sale has
otherwise been consummated), or the services have been performed for
the appropriate account debtors;
(B) The Account is based upon an enforceable order or contract, written or
oral, for Hydrocarbons shipped or held or for services performed, and
the same were shipped, held, or performed in accordance with such
order or contract;
(C) The title of the Borrower to the Account and, except as to the account
debtor, to any Hydrocarbons is absolute and is not subject to any
prior assignment, claim, lien, or security interest, except Permitted
Liens;
(D) The amount shown on the books of the Borrower and on any invoice or
statement delivered to the Administrative Agent is owing to the
Borrower, less any partial payment that has been made thereon by
anyone;
(E) The Account shall be eligible only to the extent that it is not
subject to any claim of reduction, counterclaim, set-off, recoupment,
or any claim for credits, allowances, or adjustments by the account
debtor because of nonconforming Hydrocarbons or unsatisfactory
services, or for any other reason, except for customary discounts, not
to exceed five per cent (5%), allowed for prompt payment;
(F) The account debtor has not returned or refused to retain, or otherwise
notified the Borrower of any dispute concerning, or claimed
nonconformity of, any of the Hydrocarbons or services from the sale of
which the Account arose;
(G) The Account is due and payable not more than thirty (30) days from the
date of the invoice therefor;
(H) The Account is not more than thirty (30) days past due nor outstanding
more than sixty (60) days from the date of the invoice therefor;
(I) The Account does not arise out of a contract with, or order from, an
account debtor that, by its terms, forbids or makes void or
unenforceable the assignment by the Borrower to the Administrative
Agent of the Account arising with respect thereto;
(J) The Borrower has not received any note, trade acceptance, draft, or
other Instrument with respect to, or in payment of, the Account, nor
any Chattel Paper with respect to the Hydrocarbons giving rise to the
Account, unless, if any such Instrument or Chattel Paper has been
received, the Borrower immediately notifies the Bank and, at the
latter's request, endorses or assigns and delivers the same to the
Bank;
(K) The Borrower has not received any notice of the death of the account
debtor or a partner thereof nor of the dissolution, termination of
existence, insolvency, business failure, appointment of a receiver for
any part of the property of, assignment for the benefit of creditors
by, or the filing of a petition in bankruptcy or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against,
the account debtor. Upon the receipt by the Borrower of any such
notice, it will immediately give the Administrative Agent written
advice thereof; and
(L) The account debtor is not a Subsidiary or other Affiliate of the
Borrower, other than CRI.
"Engineering Report" means: (a) when used in regard to Collateral Assets
that are Oil and Gas Properties, a report prepared by an independent petroleum
engineer or firm of engineers acceptable to Administrative Agent regarding the
Proved Reserves attributable to such Collateral Assets , using the criteria and
parameters required by and acceptable to the Securities and Exchange Commission,
and incorporating the present cost of appropriate plugging and abandonment
obligations to be incurred in the future, taking into account any plugging and
abandonment fund required to be accrued or established by Borrower out of cash
flow from the Collateral Assets covered by such report with respect to such
future obligations; and (b) when used in regard to Collateral Assets that are
Pipeline Properties, a report in form and substance reasonably satisfactory to
all the Banks, similar to the form and components of such reports provided by
Borrower to the Banks in connection with the Banks' determination of the initial
Revolving Loan Availability Amount prior to the Closing pursuant to Section
3.02(N), each such report to be sufficient for the Banks to estimate to their
reasonable satisfaction the future net income to be derived by Borrower from the
Collateral Assets that are Pipeline Properties and to support with summary
engineering information regarding the gas reserves that are committed to such
Pipeline Properties and the estimated throughput volumes of gas attributed to
such Pipeline Properties.
"Environmental Laws" means (a) the following federal laws as they may be
cited, referenced and amended from time to time: the Clean Air Act, the Clean
Water Act, the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Endangered Species Act, the
Resource Conservation and Recovery Act, the Occupational Safety and Health Act,
the Hazardous Materials Transportation Act, the Superfund Amendments and
Reauthorization Act, the Toxic Substances Control Act, and the Oil Pollution Act
of 1990; (b) any and all environmental statutes of any state in which property
of the Borrower is situated, as they may be cited, referenced and amended from
time to time; (c) any rules or regulations promulgated under or adopted pursuant
to the above federal and state laws; and (d) any other federal, state or local
statute or any requirement, rule, regulation, code, ordinance or order adopted
pursuant thereto, including, without limitation, those relating to the
generation, transportation, treatment, storage, recycling, disposal, handling or
release of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which together with the Borrower would be treated as a single employer under
Section 4001 of ERISA.
"Eurodollar Business Day" means a day on which, in the determination of the
Administrative Agent, significant dealings are carried on in the LIBOR Market.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement.
"Excess Cash Flow" means, during any calendar quarter, without duplication,
net income after cash taxes due and paid during such quarter, plus non-cash
charges, depreciation, depletion and amortization, minus non-cash credits,
Permitted Capital Expenditures, any Personal Tax Distribution paid by Borrower
in cash during such quarter and any cash deposited by Borrower during such
quarter into the Tax Accrual Account pursuant to Section 5.36, any cash payment
required to be made and actually paid by Borrower during such quarter pursuant
to its Senior Subordinated Note Guaranty, required principal payments on the
Term Loan pursuant to Section 2.08(A), and interest paid on the Loans for such
quarter.
"Facility LC" is defined in Section 2.20(A).
"Facility LC Application" is defined in Section 2.20(C).
"Facility Termination Date" means September 30, 2006, as the same may
subsequently be amended pursuant to Section 2.23.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published by the Federal
Reserve Bank of New York for such day on the next succeeding Business Day or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Statements" means the statements of the financial condition of
the indicated Person, on a consolidated basis, as at the point in time and for
the period indicated and consisting of at least a balance sheet, income
statement and statement of cash flows, and when the foregoing are audited,
accompanied by the certification of such Person's independent certified public
accountants and footnotes to any of the foregoing, all of which shall be
prepared in accordance with GAAP applied on a basis consistent with that of the
preceding year, except for any inconsistency that results from changes in GAAP
from year to year.
"Floating Rate" means a per annum interest rate determined by reference to
the following schedule:
o LIBOR + LIBOR Margin at Borrower's option pursuant to Section 2.04, or
RR + RR Margin
o After the occurrence and during the continuation of an Event of
Default, the Floating Rate determined in accordance with the forgoing
schedule shall, in each case, be increased by three percent (3%) per
annum, not to exceed the Maximum Rate.
"Fronting Bank" means Union Bank of California, N.A., and each successor to
such position.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable as of the date of Closing, except that solely for purposes
of the definition of Financial Statements herein, changes in GAAP from time to
time (if any) shall be applied and reflected in the Financial Statements.
Accounting principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governing Body" means, in the case of a corporation, its board of
directors, in the case of a limited liability company, its members or its
managers, depending on how the management of such Business Entity is allocated
in its Governing Documentation, in the case of a general partnership or joint
venture, the partners or the joint venturers thereof, respectively, in the case
of a limited partnership, the applicable Governing Body of the general partner
thereof, if such general partner is a Business Entity, and in the case of any
other Business Entity not specified herein, the designees thereof that, pursuant
to the Governing Documentation of such Business Entity, fulfill the
responsibilities typically discharged by a board of directors of a corporation.
"Governing Documentation" means, in the case of a corporation, its
certification of incorporation, articles of incorporation and by laws, as
amended, in the case of a limited liability company, its certificate of
formation, its limited liability company agreement, and its operating agreement
or regulations (or similar documentation as denominated under the laws of the
jurisdiction in which it is formed), in the case of a partnership, joint venture
or a limited partnership, the applicable partnership agreement or joint venture
agreement, and the certificate of limited partnership, if applicable, and in the
case of any other Business Entity not specifically enumerated herein, the
applicable documentation typically utilized in the jurisdiction where such
Business Entity has been formed for purposes of initially forming such Business
Entity according to the laws of such jurisdiction and thereafter operating and
managing such Business Entity.
"Great Plains Pipeline System" means those certain Pipeline Properties
acquired by Borrower pursuant to that Purchase and Sale Agreement dated July 18,
2003, by and between Great Plains Pipeline Company and Borrower.
"Hazardous Substances" means flammables, explosives, radioactive materials,
hazardous wastes, asbestos or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum and petroleum
products and associated oil or natural gas exploration, production and
development wastes or any substances defined as "hazardous substances",
"hazardous materials", "hazardous wastes" or "toxic substances" under the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Toxic Substances Control Act, as amended, or
any other Environmental Laws now or hereafter enacted or promulgated by any
regulatory authority or governmental body, but only to the extent any such law
is or becomes applicable to the Borrower or any of its property.
"Hedge Agreement" means any swap agreement, cap, collar, floor, exchange
transaction, forward agreement or exchange or protection agreement related to
Hydrocarbons or any option with respect to such transaction, as more
specifically provided in those certain master swap agreements on International
Swap Dealers Association forms and the schedules thereto and any confirmations
thereunder entered into by Borrower with any other Person.
"Hydrocarbons" means crude oil, condensate, natural gas, natural gas
liquids and other hydrocarbons.
"Increased Costs" has the meaning stated therefor in Section 2.10 (A) of
this Agreement.
"Indebtedness" means, as to any Person, (a) all items of indebtedness or
liability for borrowed money which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
as at the date as of which Indebtedness is to be determined, (b) indebtedness
secured by (or for which the holder of such indebtedness has a right, contingent
or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien,
security interest, or other charge or encumbrance existing on or encumbering
property owned by the Person whose Indebtedness is being determined, whether or
not the indebtedness secured thereby shall have been assumed, and (c) all
indebtedness of others which such Person has directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business), discounted with recourse, agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, purchase of
securities or capital contribution, through a commitment to pay for property or
services regardless of the nondelivery of such property or the nonfurnishing of
such services or otherwise), or in respect of which such Person has otherwise
become directly or indirectly liable, contingently or otherwise, whether now
existing or hereafter arising.
"Interest Period" means as to any LIBOR Loan the period commencing on and
including the date of such Loan (or on the effective date of the election
pursuant to Section 2.04(B) by which such Loan became a LIBOR Loan) and ending
on and including the day preceding the numerically corresponding day (or if
there is no such numerically corresponding day, the last day) in the 1st, 2nd,
3rd or 6th calendar month after the date of such Loan, as selected by the
Borrower in accordance with Section 2.04(B), and after such selected month, such
period commencing on and including the day immediately following the last day of
the then ending Interest Period for such Loan and ending on and including the
day preceding the day numerically corresponding to the first day of such
Interest Period (or if there is no such numerically corresponding day, the last
day), in the 1st, 2nd, 3rd or 6th calendar month after the first day of such
Interest Period, as so selected by the Borrower; provided, however, that if any
Interest Period would otherwise end on a day immediately prior to a day that is
not a Business Day it shall be extended so as to end on the day immediately
prior to the next succeeding Business Day unless the same would fall in a
different calendar month, in which case such Interest Period shall end on the
day immediately preceding the first Business Day immediately preceding such next
succeeding Business Day.
"Investment" in any Person means any stock, bond, note or other evidence of
Indebtedness or any other security (other than current trade and customer
accounts) of, or loan to, such Person.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"Lead Arranger" means Union Bank of California, N.A., and each successor to
such position.
"LC Fee" is defined in Section 2.20(D).
"LC Issuer" has the meaning set forth in the preamble of this Agreement.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"LC Payment Date" is defined in Section 2.20(E).
"Leases" means oil and gas leases and all oil, gas and mineral leases
constituting any part of the Collateral Assets.
"LIBOR" means, with respect to each Interest Period, the rate of interest
per annum at which deposits of not less than $1,000,000.00 in United States
dollars are offered in the LIBOR Market for a period of time equal or comparable
to such Interest Period and in an amount equal to or comparable to the principal
amount of the LIBOR Loan to which such Interest Period relates as appearing on
Telerate Page 3750 as of 11:00 AM (London time) two (2) Business Days before the
first day of the applicable Interest Period, as adjusted for maximum statutory
reserves, provided, however, that if such rate is not available on the Telerate,
then within five (5) Business Days of receipt of notification, the
Administrative Agent and the Borrower shall enter into good faith negotiations
for a period of fifteen (15) days (or such shorter period as is required to
agree to the alternative basis) with a view to agreeing on an alternative basis
for determining the rate of interest applicable to LIBOR Loans, and if no
alternative basis is agreed within the fifteen (15) day period, the LIBOR Loan
shall be deemed to have converted to an RR Loan as of the end of the last
Interest Period.
"LIBOR Loan" means any Loan from time to time for which interest thereon is
to be computed at a Floating Rate based on LIBOR plus the LIBOR Margin, as
elected by Borrower pursuant to Section 2.04 hereof.
"LIBOR Margin" means the applicable margin set forth in the Pricing Grid
under the caption, "LIBOR Margin," determined based on the Senior Debt to EBITDA
Ratio prevailing from time to time.
"LIBOR Market" means the London interbank offered interest rate market
created by major London clearing banks for deposits in United States dollars.
"Limitation Period" means any period while any amount remains owing on the
Notes when interest on such amount, calculated at the applicable rate prescribed
on the Notes, plus any fees payable hereunder and deemed to be interest under
applicable Law, would exceed the Maximum Rate.
"Loan" means, singly, any advance by the Banks to the Borrower pursuant to
this Agreement and "Loans" means, cumulatively, the aggregate sum of all money
advanced by the Banks to the Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Notes, the Facility LC
Applications, the Security Instruments, and all other promissory notes, security
agreements, and other instruments, documents, and agreements executed and
delivered pursuant to or in connection with this Agreement, as such instruments,
documents, and agreements may be amended, modified, renewed, extended, or
supplemented from time to time.
"Material Adverse Change" means any change in the business, property,
condition (financial or otherwise) or results of operations, or reasonably
foreseeable prospects of Borrower which has a Material Adverse Effect, excluding
any change in prevailing economic or business conditions that are applicable,
generally, to companies engaged in the gas gathering, compression, purchase and
sale business in the continental United States, including, without limitation,
fluctuations in gathering and compression fees and the resale margin realized by
the reseller in its purchase and resale of natural gas.
"Material Adverse Effect" means a material adverse effect on (i) the
business, property, condition (financial or otherwise), results of operations,
or reasonably foreseeable prospects of Borrower, (ii) the ability of Borrower to
perform its obligations under the Loan Documents to which it is a party, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of any of the Bank Parties thereunder.
"Material Contracts" is defined in Section 4.16.
"Maximum Rate" means the maximum rate of non-usurious interest permitted
from day to day by Applicable Law, including Chapter 303 of the Texas Finance
Code (and as the same may be incorporated by reference in other Texas statutes),
but otherwise without limitation, that rate based upon the "indicated weekly
rate ceiling."
"Modify" and "Modification" are defined in Section 2.20(A).
"Multi-employer Plan" means a plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"Net Income" means, for any period, without duplication, the net income (or
loss) of Borrower after allowances for taxes for such period, determined in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (i) the net income of
any Person in which the Borrower has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
the Borrower in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower; (ii) any extraordinary gains or losses, including gains or losses
attributable to property sales not in the ordinary course of business, (iii) the
cumulative effect of a change in accounting principles, and (iv) any gains or
losses attributable to writeups or writedowns of assets.
"Note" and "Notes" means, individually, a Term Note or a Revolving Note,
together with any and all further renewals, extensions for any period, increases
or rearrangements thereof, and means collectively all of such Term Notes and
Revolving Notes.
"Obligations" means all obligations, indebtedness, and liabilities of the
Borrower to the Bank Parties, now existing or hereafter arising under this
Agreement and the other Loan Documents, including, but not limited to, the
Indebtedness evidenced by the Notes and the Reimbursement Obligations, and all
interest accruing thereon and all attorneys' fees and other expenses incurred in
the administration, enforcement or collection thereof.
"Oil and Gas Properties" means fee, leasehold or other interests in or
under mineral estates or oil, gas and other liquid or gaseous hydrocarbon leases
with respect to properties situated in the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests and mineral fee
interests, and all gathering systems, processing plants, compressors, and
associated facilities of any type relating thereto, together with contracts
executed in connection therewith and all tenements, hereditaments, appurtenances
and properties, real or personal, appertaining, belonging, affixed or incidental
thereto.
"Outstanding Credit Exposure" means, as to any Bank at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Percentage Share of the LC Obligations at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Share" means, as to any Bank, a fraction (expressed as a
percentage), the numerator of which shall be such Bank's Commitment Amount, and
the denominator of which shall be the Aggregate Commitment Amount stated on
Schedule 1.01(b) attached hereto.
"Permitted Asset Sales" means (a) sales, leases, assignments, transfers or
disposals, in one or any series of related transactions, of (i) all or any
portion of Borrower's assets (except for items included in clause (ii) of this
definition), whether now owned or hereafter acquired, including transfers to
Subsidiaries, which, in the aggregate, do not exceed $400,000.00 in any rolling
four quarter period, and (ii) Borrower's excess equipment that is not necessary
to facilitate Borrower's ongoing compliance with its representations,
warranties, and covenants set forth in this Agreement; and (b) sales of
Hydrocarbons in the ordinary course of business.
"Permitted Capital Expenditures" means the average quarterly capital
expenditure amount approved by the Required Banks based on Borrower's most
recent Budget submitted pursuant to Section 5.31 hereof.
"Permitted Encumbrances" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Liens of mechanics, materialmen, warehousemen, carriers, or other like
liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(C) Pledges or deposits in connection with or to secure workmen's
compensation, unemployment insurance, pensions or other employee
benefits;
(D) Encumbrances consisting of covenants, zoning restrictions, rights,
easements, liens or other restrictions on the use of real property,
none of which materially impairs the use of such property by the
Borrower in the operation of its business, and none of which is
violated in any material respect by existing or proposed operations;
(E) Liens of operators and/or co-working interest owners under joint
operating agreements or similar contractual arrangements with respect
to the Borrower's proportionate share of the expense of exploration,
development and operation of oil, gas and mineral leasehold or fee
interests owned jointly with others, to the extent that same relate to
sums not yet due;
(F) Statutory or contractual claims, liens, or encumbrances to secure the
payment or performance of the day to day obligations of Borrower that
arise in the normal course of Borrower's gas gathering business, to
the extent that the same relate to sums not yet due;
(G) The following, if the validity or amount thereof is being contested in
good faith by appropriate and lawful proceedings, so long as levy and
execution thereon have been stayed and continue to be stayed and they
do not, in the aggregate, materially detract from the value of the
property of Borrower, or materially impair the use thereof in the
operation of its business:
(1) Claims or liens for taxes, assessments, or charges due and
payable and subject to interest or penalty;
(2) Claims, liens, and encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal
or real property or other legal process prior to adjudication of
a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal;
(H) Liens securing payment and performance of the Obligations;
(I) Liens securing purchase money obligations included in the definition
of Permitted Indebtedness if such liens encumber only the property for
which such purchase money obligation was incurred; and
(J) Inchoate liens in respect of royalty owners.
"Permitted Hedge Agreement" means any Hedge Agreement which Borrower enters
into with or through a counterparty that has a credit rating of at least "A-" by
Standard and Poors or "A3" by ▇▇▇▇▇'▇ Investment Service, together with the
confirmations which Borrower may hereafter enter into with or through such
counterparty covering, in the aggregate, among all such Hedge Agreements, not
more than seventy-five percent (75%) of (i) the Proved Reserves that are
attributable to Borrower's interest in the Collateral Assets and projected to be
produced during the term(s) of such Hedge Agreement(s), and (ii) seventy-five
percent of the residue gas to be sold by the Borrower at the tailgate of its
processing plants; provided that the floor, fixed or strike prices for oil or
gas, respectively, prescribed in any such Hedge Agreement must be at least equal
to or greater than the average of the prices for oil or gas, as applicable, then
being used by the Arrangers in their price decks applicable to Availability
Amount determinations, which average prices shall be provided to Borrower within
five (5) Business Days after written request therefor from Borrower to
Arrangers.
"Permitted Indebtedness" means:
(A) The Loans and Facility LCs;
(B) Unsecured current accounts payable incurred in the ordinary course of
business which are (i) not unpaid for more than ninety (90) days after
the date of the invoice therefor, or (ii) being contested in good
faith by appropriate proceedings, or (iii) the subject of usual and
customary review and evaluation;
(C) Extensions of credit from suppliers or contractors who are not
Affiliates of Borrower for the performance of labor or services or the
provision of supplies or materials under applicable contracts or
agreements in connection with Borrower's customary business
activities, which are not overdue or are being contested in good faith
by appropriate proceedings;
(D) Letters of credit or performance bonds required to be obtained by the
Borrower in the normal course of its business to assure the proper
plugging and abandonment of oil or gas drilling or production
locations or bonds required by any governmental agency or
instrumentality in the normal course of the Borrower's business;
(E) Income taxes payable that are not overdue or that are being contested
in good faith by appropriate and lawful proceedings provided that
Borrower is maintaining adequate cash reserves for the payment of all
such asserted income tax liability;
(F) Accrued abandonment liabilities for abandonment obligations that are
not in default;
(G) The Senior Subordinated Note Guaranty; and
(H) Indebtedness arising out of Permitted Hedge Agreements.
"Person" means an individual, company, corporation, partnership, joint
venture, limited liability company, trust, association, unincorporated
organization or a government or any agency or political subdivision thereof.
"Personal Tax Distribution" means during any calendar quarter that portion,
and only that portion, of the CRI shareholders' or Borrower's shareholders', as
applicable, allocable share of federal and state income taxes that are payable
during such quarter to the corresponding taxing authority, as calculated
pursuant to Section 5.36 and as substantiated by such documentation as
Administrative Agent may reasonably require.
"Pipeline Properties" means natural gas transmission and gathering lines
and associated rights-of-way, easements, permits, licenses, surface leases, fee
acreage, and all pipeline facilities, fixtures, and appurtenances thereto, and
all processing plants, compressors, and associated facilities of any type
relating thereto, including, without limitation, all gathering, transportation,
processing, purchase and sale, and other contracts associated therewith, and all
tenements, hereditaments, appurtenances and properties, real or personal,
tangible or intangible appertaining, belonging, affixed or incidental thereto.
"Plan" means, at any time, any employee benefit plan which is covered by
ERISA and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pricing Grid" means the following table:
=========================== ============ ========= ============== ======
Senior Debt to EBITDA Ratio LIBOR Margin RR Margin Commitment Fee LC Fee
--------------------------- ------------ --------- -------------- ------
>3.00 3.00% 0.75% .500% 2.00%
--------------------------- ------------ --------- -------------- ------
>2.50 and is less than or
equal to 3.00 2.75% 0.50% .500% 2.00%
--------------------------- ------------ --------- -------------- ------
>2.00 and is less than or
equal to 2.50 2.50% 0.25% .500% 2.00%
--------------------------- ------------ --------- -------------- ------
is less than or equal
to 2.00 2.25% 0.00% .375% 2.00%
=========================== ============ ========= ============== ======
For purposes of determining the applicable LIBOR Margin, RR Margin,
Commitment Fee and/or LC Fee at any time, the applicable Senior Debt to EBITDA
Ratio shall be determined based on the most recently completed fiscal quarter,
as of the end of such quarter, provided that until the first such calculation
can be made as of December 31, 2003, such determinations shall be made as if
such Ratio were >2.00 and is less than or equal to 2.50.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended from time
to time.
"Proved Reserves" means the estimated quantities of crude oil, condensate,
natural gas liquids and natural gas which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs underlying lands or interests therein constituting Oil and Gas
Properties, under existing economic and operating conditions, using the criteria
and parameters required by and acceptable to the Securities and Exchange
Commission, provided that with respect to estimated quantities of crude oil,
condensate, natural gas liquids and natural gas expected to be produced from
secondary recovery operations, such determination shall be made using criteria
and parameters generally utilized by and acceptable to ▇▇▇▇▇ ▇▇▇▇▇ Petroleum
Engineers, ▇▇▇▇▇▇ & Click, Inc. or other petroleum engineers acceptable to the
Arrangers.
"Purchasing Bank" shall have the meaning assigned to that term in Section
9.05 hereof.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.20 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Request for Advance" means the written or verbal (confirmed in writing
within one (1) Business Day) request by the Borrower to the Administrative Agent
for an advance by the Banks pursuant to this Agreement, which Request for
Advance shall be in substantially the form attached hereto as Exhibit "E,"
signed by an authorized officer of the Borrower and which shall include a
statement of the amount requested to be advanced, the date of the requested
advance and such other information as the Administrative Agent in its reasonable
discretion deems necessary.
"Required Banks" means, at any time, Banks holding at least sixty-six and
two-thirds percent (66-2/3%) of the Aggregate Commitment Amount or, if the
Aggregate Commitment Amount has been terminated, Banks having at least sixty-six
and two-thirds percent (66-2/3%) of the Aggregate Outstanding Credit Exposure;
subject to the provisions of Section 9.13.
"Required Number" means: in the case of notices hereunder (i) relative to
borrowings, prepayments, elections of LIBOR Loans, selections of Interest
Periods for, or other transactions in respect of, LIBOR Loans: by 10:00 a.m.,
Los Angeles, California time on the third Business Day prior to the proposed
activity; or (ii) relative to all transactions in respect of RR Loans: the same
Business Day by 11:00 a.m., Los Angeles, California time; it being understood,
however, that in the case of notices involving transactions in respect of more
than one type of Loan (such as a change in type of Loan in accordance with
Section 2.04(B)), "Required Number" means that number of days, as indicated
above in respect of the Loans involved, which would constitute the longest
applicable period of time.
"Revolving Loan" means the Loan(s) advanced by Banks to Borrower from time
to time pursuant to Section 2.01(b) of this Agreement.
"Revolving Loan Availability Amount" means, at any time, the lesser of:
(A) $5,000,000 or such greater amount as is established from time to time
pursuant to Section 2.6; or
(B) The amount computed pursuant to Section 2.6 on the Availability Amount
Certificate most recently delivered to, and accepted by, the Banks in
accordance with this Agreement and equal to the aggregate of (1)
eighty percent (80%) of Eligible Accounts of the Borrower; plus (2)
fifty percent (50%) of the book value of the Inventory of the
Borrower; provided, however, that the Banks may exclude from the
Revolving Loan Availability Amount all or a proportionate part of any
particular portion of the Borrower's Inventory which the Banks
reasonably deem ineligible because its market value has declined or
because the Banks otherwise reasonably consider the collateral value
thereof to the Banks to be impaired or their ability to realize such
value to be insecure.
"Revolving Loan Deficiency" means, at any point in time, the amount, if
any, by which the sum of: (a) the outstanding balance of the Revolving Loans,
plus (b) the LC Obligations; exceeds the Revolving Loan Availability Amount then
in effect.
"Revolving Note" and "Revolving Notes" means, individually, a promissory
note issued by Borrower payable to the order of a Bank evidencing the Revolving
Loans made by that Bank pursuant to Section 2.01 hereof and being substantially
in the form of the note attached as Exhibit B-2 hereto, together with any and
all further renewals, extensions for any period, increases or rearrangements
thereof, and means collectively all of such Revolving Notes.
"RR" means a fluctuating reference rate of interest equal to the higher of
(i) a rate per annum equal to the reference rate of interest of the
Administrative Agent announced from time to time by Administrative Agent (which
is not necessarily the lowest rate charged to any customer), changing when and
as said reference rate changes, and (ii) the sum of the Federal Funds Effective
Rate most recently determined by the Administrative Agent plus one-half percent
(1/2%) per annum.
"RR Loan" means any Loan from time to time for which interest thereon is to
be computed on the basis of the RR plus the RR Margin, as elected by Borrower
pursuant to Section 2.04 hereof.
"RR Margin" means the applicable margin set forth in the Pricing Grid under
the caption, "RR Margin," determined based on the Senior Debt to EBITDA Ratio
prevailing from time to time.
"Security Instruments" means the security instruments described on Exhibit
"D," in form and substance satisfactory to the Administrative Agent, to be
executed by Borrower pursuant to Section 3.01, together with all Borrower's CRI
Security Instruments and any and all other instruments or documents hereafter
executed in connection with or as security for the payment of the Notes and
performance of the Obligations.
"Senior Debt to EBITDA Ratio" means, at any time, the ratio of: (a) the
Aggregate Outstanding Credit Exposure as of such time, to (b) EBITDA for the
most recent rolling four quarter period, determined as of the end of the most
recently completed fiscal quarter.
"Senior Subordinated Notes" means those certain $150,000,000, 10.25% Senior
Subordinated Notes issued by CRI due August 2008.
"Senior Subordinated Note Guaranty" means Borrower's guaranty agreement
dated July 24, 1998, pursuant to which Borrower guaranteed the payment of the
Indebtedness evidenced by the Senior Subordinated Notes.
"Stockholders' Equity" means, at any time, the sum of the following
accounts set forth on a consolidated balance sheet of the Borrower, prepared in
accordance with GAAP: (A) the par or stated value of all outstanding capital
stock (common and preferred); (B) capital surplus including paid in capital; and
(C) retained earnings, excluding any non-cash items.
"Subsidiary" means, as to any Person, any corporation in which such Person,
directly or indirectly through its Subsidiaries, owns more than fifty percent
(50%) of the stock of any class or classes having by the terms thereof the
ordinary voting power to elect a majority of the directors of such corporation,
and any partnership, limited partnership, association, joint venture, or other
entity in which such Person, directly or indirectly through its Subsidiaries,
has more than a fifty percent (50%) equity interest at the time.
"Super-Majority" means, at any time, Banks holding at least seventy-five
percent (75%) of the Aggregate Commitment Amount or, if the Aggregate Commitment
Amount has been terminated, Banks having at least seventy-five percent (75%) of
the Aggregate Outstanding Credit Exposure; subject to the provisions of Section
9.13.
"Syndication Agent" means Fortis Capital Corp. as Syndication Agent for the
Banks hereunder and under the other Loan Documents, and each successor
Syndication Agent.
"Tax Accrual Account" has the meaning stated in Section 5.35.
"Term Loan" means the Loan to be advanced by Banks to Borrower pursuant to
Section 2.01(a) of this Agreement.
"Term Loan Availability Amount" means $17,000,000, as such amount may be
redetermined from time to time pursuant to Section 2.06, not to exceed at any
time $25,000,000.
"Term Note" and "Term Notes" means, individually, a promissory note issued
by Borrower payable to the order of a Bank evidencing the Term Loans made by
that Bank pursuant to Section 2.01 hereof and being substantially in the form of
the note attached as Exhibit B-1 hereto, together with any and all further
renewals, extensions for any period, increases or rearrangements thereof, and
means collectively all of such Term Notes.
"Transfer Order Letters" means the letters in lieu of division or transfer
orders, in form acceptable to the Administrative Agent.
"Unmatured Event of Default" means any event or occurrence which solely
with the lapse of time or the giving of notice or both will ripen into an Event
of Default.
Undefined Terms. Undefined financial accounting terms used in this
Agreement shall be defined according to GAAP.
Article II.
THE LOANS AND LETTERS OF CREDIT
2.01 The Commitment.
(a) At the Closing, subject to satisfaction of the applicable conditions to
funding set forth in Article III, each Bank will advance to the Borrower its
respective Percentage Share of a Loan in the amount of Seventeen Million Dollars
($17,000,000.00) (the "Term Loan"). Thereafter, the Borrower may request and the
Banks may make additional advances under the Term Loan not to exceed aggregate
advances (inclusive of the Term Loan advanced at Closing) equal to the Term Loan
Availability Amount determined in accordance with Section 2.06. Amounts that are
advanced as a Term Loan and repaid may not be reborrowed.
(b) From and including the date of this Agreement and prior to the Facility
Termination Date, each Bank severally agrees, on the terms and conditions set
forth in this Agreement, that in addition to the Term Loan(s) to be made
pursuant to Section 2.01(a), such Bank will (i) make Loans to the Borrower
("Revolving Loans") and (ii) participate in Facility LCs issued upon the request
of the Borrower, provided that, after giving effect to the making of each Loan
and the issuance of each Facility LC, such Bank's Outstanding Credit Exposure
shall not exceed its Commitment. The Term Loans advanced by each Bank to the
Borrower shall be evidenced by such Bank's respective Term Note from the
Borrower, and the Revolving Loans advanced by each Bank to Borrower shall be
evidenced by such Bank's respective Revolving Note from the Borrower. Subject to
the terms of this Agreement, the Borrower may borrow, repay and reborrow up to
the Revolving Loan Availability Amount at any time prior to the Facility
Termination Date. All Commitments to extend credit hereunder shall expire on the
Facility Termination Date.
(c) The LC Issuer will issue Facility LCs hereunder on the terms and
conditions set forth in Section 2.20.
2.02 Notice and Manner of Borrowing.
(a) The amount and date of each Credit Extension shall be designated in a
Request for Advance executed by Borrower, to be received by the Administrative
Agent at least the Required Number of, but not more than ten (10), Business Days
prior to the date of such Credit Extension, which date shall be a Business Day.
The Administrative Agent shall promptly advise the Banks and, if applicable, the
LC Issuer, of any Request for Advance given pursuant to this Section 2.02, of
each Bank's Percentage Share of any requested Borrowing and, if applicable, the
amount requested for any Facility LC by telephone, confirmed promptly in
writing, or telecopier. Upon satisfaction of the applicable conditions set forth
in Article III, each Borrowing shall be made at the office of the Administrative
Agent, and shall be funded prior to 1:00 o'clock p.m., Los Angeles, California
time, on the day so requested in immediately available funds in the amount so
requested.
(b) Each Bank shall make each Loan to be made by it hereunder on the date
of the proposed Borrowing by wire transfer of immediately available funds to the
Administrative Agent in Los Angeles, California, not later than 10:00 a.m., Los
Angeles, California time, and upon fulfillment of the applicable conditions set
forth in Article III, the Administrative Agent will make such funds available to
Borrower as Borrower shall direct to the Administrative Agent from time to time
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Banks as soon as practicable. Unless the Administrative Agent shall
have received notice from a Bank prior to the date of any proposed Borrowing
that such Bank will not make available to the Administrative Agent such Bank's
Percentage Share of such Borrowing, the Administrative Agent may assume that
such Bank has made its Percentage Share available to the Administrative Agent on
the date of such Borrowing in accordance with this paragraph (b) and the
Administrative Agent may, in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If, and to the extent that, such
Bank shall not have made its Percentage Share available to the Administrative
Agent, such Bank and Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to Borrower
until the date such amount is repaid to the Administrative Agent at (i) in the
case of Borrower, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate. If such Bank shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part of
such Borrowing for purposes of this Agreement.
2.03 Payment Procedure. All payments and prepayments made by Borrower under
this Agreement shall be made to the Administrative Agent at its office in
Monterey Park, California for the account of the Banks in immediately available
funds before 10:00 a.m., Los Angeles, California time, on the date that such
payment is required to be made. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to such payments or
prepayments ratably to the Banks (and if the payment relates to amounts owed to
a particular Bank only, in like funds to such Bank), in each case, to be applied
in accordance with the terms of this Agreement. Borrower hereby authorizes the
Administrative Agent, if and to the extent payment or prepayment (including
prepayments required pursuant to Section 2.11 hereof) is not made when due
hereunder or under the Notes or any other Loan Document, to charge from time to
time against Borrower's account with the Administrative Agent any amount so due.
Any payment received and accepted by the Administrative Agent (or any branch or
Affiliate thereof) after such time shall be considered for all purposes
(including the calculation of interest, to the extent permitted by law) as
having been made on the next following Business Day.
2.04 Payments of Interest under the Notes. Subject to the terms and
provisions of this Agreement, interest on the Loan, calculated at the Floating
Rate, shall be due and payable as follows:
(A) Interest on RR Loans shall be calculated on the basis of a
365/366-day year, as applicable, and on LIBOR Loans on the basis of a
360-day year, in each case counting the actual number of days elapsed.
Interest on the outstanding principal balance of the Loans shall accrue for
each day at either a Floating Rate based on RR plus the RR Margin for such
day for RR Loans, or a Floating Rate based on LIBOR for the Interest Period
which includes such day plus the LIBOR Margin for such day for LIBOR Loans,
all as elected and specified (including specification as to length of
Interest Period, as permitted by the definition of that term, with respect
to any election of a Floating Rate based on LIBOR) by the Borrower in
accordance with Section 2.04(B); provided that:
(1) In the absence of an election by the Borrower of a Floating
Rate based on LIBOR plus the LIBOR Margin, or, having made such
election, but upon the Required Number of days prior to the end of the
then current Interest Period the Borrower fails or is not entitled
under the terms of this Agreement to elect to continue a Floating Rate
based on LIBOR plus the LIBOR Margin and specify the applicable
Interest Period therefor, then upon the expiration of such then
current Interest Period, interest on the Loans shall accrue for each
day at a Floating Rate based on RR plus the RR Margin for such day,
until the Borrower, pursuant to Section 2.04(B), elects a different
Floating Rate and specifies the Interest Period for the Loans.
(2) Interest accruing on any LIBOR Loan during any Interest
Period shall be payable on the first Business Day after the last day
of such Interest Period except that: (a) with respect to LIBOR Loans
for which Borrower has selected an Interest Period of six (6) months,
interest will be payable on the first Business Day following the
ninetieth (90th) day after the commencement of such Interest Period
and on the first Business Day of the next Interest Period, (b)
interest will be payable on the Facility Termination Date on any LIBOR
Loan with an Interest Period ending on the Facility Termination Date;
and provided that (c) all accrued interest on any LIBOR Loan converted
or prepaid pursuant to Section 2.11 shall be paid immediately upon
such prepayment or conversion.
(B) By at least the Required Number of days prior to the advance of
any Loan hereunder, the Borrower shall select the initial Floating Rate to
be charged on such Loan, and from time to time thereafter the Borrower may
elect, on at least the Required Number of days irrevocable prior written
(or verbal, promptly confirmed by written) notice to the Administrative
Agent, an initial Floating Rate for any additional Loan, or to change the
Floating Rate on any Loan to any other Floating Rate (including, when
applicable, the selection of the Interest Period); provided that; (i) the
Borrower shall not select an Interest Period that extends beyond the
Facility Termination Date; (ii) except as otherwise provided in Section
2.11 no such change from a Floating Rate based on LIBOR plus the LIBOR
Margin to another Floating Rate shall become effective on a day other than
the day, which must be a Business Day, next following the last day of the
Interest Period last effective for such LIBOR Loan; (iii) any elections
made by the Borrower pursuant to this Section 2.04(B) shall be in the
amount of $1,000,000, plus any additional increment of $1,000,000, or such
lesser amount as constitutes the balance of all Loans then outstanding
hereunder; (iv) notwithstanding anything herein to the contrary, the
Borrower may not make any election under this Section 2.04(B) that would
result in Loans outstanding based on more than six (6) different LIBORs
without the consent of the Required Banks to do so; and (v) the first day
of each Interest Period as to a LIBOR Loan shall be a Business Day.
(C) Interest on RR Loans shall be paid monthly in arrears on the first
Business Day of each calendar month (for the immediately preceding month)
commencing with the month following any month during which interest begins
to accrue at a Floating Rate based on RR plus the RR Margin, as elected by
Borrower pursuant to Section 2.04(B), and on the date the principal of such
Loans shall be due (on the stated Facility Termination Date, on
acceleration, or otherwise).
2.05 General Provisions Relating to Interest. It is the intention of the
parties hereto to comply strictly with the usury Laws of the State of Texas and
the United States of America and, in this connection, there shall never be
collected, charged or received on any sums advanced hereunder interest in excess
of the Maximum Rate. For purposes of Chapter 303 of the Texas Finance Code, as
amended, the Borrower agrees that the maximum rate to be charged shall be the
"indicated (weekly) rate ceiling" as defined in said Chapter, provided that the
Bank may also rely to the extent permitted by applicable Laws of the State of
Texas or the United States of America, on alternative maximum rates of interest
under other applicable Laws of the State of Texas or the United States of
America applicable to the Loans, if greater. Notwithstanding anything herein or
in the Notes to the contrary, during any Limitation Period, the interest rate to
be charged on amounts evidenced by the Notes shall be the Maximum Rate and the
obligation of the Borrower for any fees payable hereunder and deemed to be
interest under applicable Law shall be suspended. During any period or periods
of time following a Limitation Period, to the extent permitted by applicable
Laws of the State of Texas or the United States of America, the interest rate to
be charged hereunder shall remain at the Maximum Rate until such time as there
has been paid to each Bank (a) the amount of interest in excess of the Maximum
Rate that such Bank would have received during the Limitation Period had the
interest rate remained at the relevant rates specified in the Note, and (b) all
interest and fees otherwise due to such Bank but for the effect of such
Limitation Period.
If under any circumstances the aggregate amounts paid on the Notes or under
this Agreement include amounts which by Law are deemed interest and which would
exceed the amount permitted if the Maximum Rate were in effect, the Borrower
stipulates that such payment and collection will have been and will be deemed to
have been, to the extent permitted by applicable Laws of the State of Texas or
the United States of America, the result of mathematical error on the part of
both the Borrower and the Banks, and each Bank shall promptly refund the amount
of such excess (to the extent only of such interest payments above the Maximum
Rate which could lawfully have been collected and retained) upon discovery of
such error by such Bank or notice thereof from the Borrower.
2.06 Availability Amount Determination. The Availability Amount in effect
as of the Closing is Twenty-Two Million Dollars ($22,000,000.00), $17,000,000.00
of which is the Term Loan Availability Amount and $5,000,000.00 of which is the
Revolving Loan Availability Amount. The Term Loan Availability Amount shall be
redetermined annually, or more often as provided hereinafter, and the Revolving
Loan Availability Amount shall be redetermined monthly pursuant to the following
provisions of this Section.
(a) Term Loan Availability Amount. The Term Loan Availability Amount
shall be automatically reduced by the amount of any payments of principal
that are due to be paid thereon, as and when such payments are due pursuant
to Sections 2.08 and 5.36 hereof. The Term Loan Availability Amount shall
be redetermined annually after Administrative Agent's receipt from Borrower
of the Engineering Report and all other appropriate information requested
by the Administrative Agent, pursuant to the following provisions of this
Section. Notwithstanding anything in this Section 2.06(a) or elsewhere in
this Agreement to the contrary, upon any redetermination of the Term Loan
Availability Amount (other than automatic reductions pursuant to the first
sentence of this Section 2.06(a)), such Term Loan Availability Amount may
be increased or maintained at its then-current level, but it may not be
decreased. On or before each September 1 until the Facility Termination
Date, beginning September 1, 2004, the Borrower shall furnish to the
Administrative Agent information sufficient to update to an effective date
of the immediately preceding July 1, the most recent Engineering Report
previously provided to the Administrative Agent relative to the Proved
Reserves attributable to the Oil and Gas Properties and the discounted
present value of future cash flows estimated to be derived from the
Pipeline Properties. The Borrower shall also provide to the Administrative
Agent, along with each Engineering Report, such information as
Administrative Agent may request in its sole discretion regarding
historical and pro forma cash flow of the Borrower, margin and fee analysis
of the Borrower's Collateral Assets including any contractual agreements of
the Borrower, and additional information as requested in the Administrative
Agent's sole discretion (collectively, the "Requested Credit Information").
Upon receipt of such Engineering Report and the Requested Credit
Information, the Administrative Agent shall, in the normal course of
business, make a determination of the Term Loan Availability Amount, which
shall become effective upon unanimous approval by the Banks and subsequent
written notification from the Administrative Agent to the Borrower, and
which, subject to the other provisions of this Agreement, shall be the Term
Loan Availability Amount until the effective date of the next
redetermination of the Term Loan Availability Amount as set forth in this
Section. The Administrative Agent may, subject to approval of the Required
Banks, and must, upon the request of the Required Banks, require the
delivery of an updated Engineering Report and Requested Credit Information
within thirty (30) days after written request to Borrower therefor and may
redetermine the Term Loan Availability Amount one additional time between
any two scheduled redeterminations, which unscheduled redetermination shall
become effective upon unanimous approval by the Banks and subsequent
written notification from the Administrative Agent to the Borrower and
which, subject to the other provisions of this Agreement. Likewise, the
Borrower may, not more often than once between any two scheduled
redeterminations of the Term Loan Availability Amount, provide an updated
Engineering Report and any Requested Credit Information to the
Administrative Agent and request in writing a redetermination of the Term
Loan Availability Amount, and upon receipt of such Engineering Report and
the Requested Credit Information, the Administrative Agent shall, in the
normal course of business, make a determination of the Term Loan
Availability Amount, which shall become effective upon unanimous approval
by the Banks and subsequent written notification from the Administrative
Agent to the Borrower.
The Term Loan Availability Amount shall represent the Required Banks'
approval of the Administrative Agent's determination, in accordance with
their customary lending practices, of the maximum loan amount that can be
supported by the Collateral Assets and the Borrower acknowledges, for
purposes of this Agreement, such determination by the Administrative Agent
as being the maximum Term Loan amount that can be supported by the
Collateral Assets. In making any redetermination of the Term Loan
Availability Amount, the Administrative Agent and the other Banks shall
apply the parameters and other credit factors consistently applied, then
generally being utilized by the Administrative Agent and each such Bank,
respectively, for Term Loan Availability Amount redeterminations for other
similarly situated borrowers. The Borrower, Banks and the Administrative
Agent acknowledge that (a) due to the uncertainties of the oil and gas
extraction process, the Collateral Assets are not subject to evaluation
with a high degree of accuracy and are subject to potential rapid
deterioration in value, and (b) for this reason and the difficulties and
expenses involved in liquidating and collecting against the Collateral
Assets, the Administrative Agent's determination of the maximum Term Loan
amount that can be supported by the Collateral Assets contains an equity
cushion, which equity cushion is acknowledged by the Borrower as essential
for the adequate protection of the Banks.
(b) Revolving Loan Availability Amount. Within fifteen (15) days after
the end of each calendar month Borrower shall submit to Administrative
Agent in such form and detail as shall be satisfactory to the
Administrative Agent, an aging, as of the end of such month, of (a) the
then Eligible Accounts, (b) all other Accounts of the Borrower certified by
the president or chief financial officer of the Borrower to be complete and
correct. Within fifteen (15) days after the end of each calendar month (and
at any additional time in the discretion of the Borrower or if any material
deterioration in the Revolving Loan Availability Amount would be disclosed
thereby) Borrower shall also submit to Administrative Agent an Availability
Amount Certificate as of the end of such month (or as of a date not more
than three (3) days prior to the date of any such additional Availability
Amount Certificate). Each Availability Amount Certificate shall be
effective only as accepted by the Administrative Agent with the approval of
the Required Banks (and with such revisions, if any, as the Administrative
Agent may require as a condition to such acceptance), such acceptance to be
presumed by the Borrower after delivery of such Availability Amount
Certificate, unless the Administrative Agent otherwise notifies the
Borrower within five (5) Business Days next following receipt of such
Availability Amount Certificate, whether thereafter, theretofore, or
contemporaneously therewith, that such Availability Amount Certificate has
not been accepted by the Administrative Agent or approved by the Required
Banks.
2.07 Mandatory Prepayment Due to a Revolving Loan Deficiency. Within ten
(10) days after receipt of written notice from Administrative Agent that a
Revolving Loan Deficiency exists or upon the completion of Borrower's
calculations with respect to an Availability Amount Certificate that would
establish a Revolving Loan Availability Amount that would result in a Revolving
Loan Deficiency, Borrower shall either (i) prepay the principal of the Revolving
Note in an aggregate amount at least equal to such Revolving Loan Deficiency, or
(ii) elect within such period by written notice to Administrative Agent to repay
the Revolving Loan Deficiency in six equal consecutive monthly installments,
which shall be in addition to all other principal payments due pursuant to the
Agreement, the first such monthly installment to be due contemporaneously with
Borrower's delivery of such election to Administrative Agent, with each
successive installment due on or before the same numerical day of each of the
five successive calendar months. If during any such five-month payment period
the Revolving Loan Availability amount determined in accordance with Section
2.06(b) shall be of such an amount that no Revolving Loan Deficiency exists, the
Borrower's obligation to make any further payment of the amounts otherwise to be
paid during the remainder of such five-month period shall terminate and cease.
2.08 Other Mandatory Payments and Prepayments. The principal balance of the
Term Loan will be repaid on or before the last day of each calendar quarter in
quarterly installments of at least $607,143.00 per quarter, commencing on March
31, 2004, through and including June 30, 2006, with a final payment equal to all
unpaid principal and accrued, unpaid interest due and payable on the Facility
Termination Date. Additional quarterly payments on the Term Loan will be made on
or before the twentieth (20th) Business Day following the last day of each
calendar quarter in an amount equal to 75% of Borrower's Excess Cash Flow during
such quarter. Such additional quarterly payments out of Excess Cash Flow shall
be applied to the outstanding principal balance of the Term Loan in the inverse
order of maturity.
2.09 Prepayment and Conversion. Upon the Required Number of days written
notice to the Administrative Agent, the Borrower may, without the payment of
penalty or premium, prepay the principal of the Loans or voluntarily convert the
applicable Floating Rate of any Loan prior to the termination of the applicable
Interest Period in whole or in part, from time to time. Any partial payment or
conversion of RR Loans, other than as set forth in Section 2.08 above, shall be
made in the sum of not less than $1,000,000, and any partial payment or
conversion of LIBOR Loans, other than as set forth in Section 2.08 above, shall
be made in the sum of not less than $1,000,000 or any $1,000,000 increment in
addition thereto. With respect to any such prepayment or conversion of any LIBOR
Loan the Borrower agrees to pay to the Banks upon the request of the
Administrative Agent such amount or amounts as will compensate the Banks for
Breakage Costs, excluding, however, any such Breakage Costs resulting from a
payment or prepayment made more than sixty (60) days prior to the Administrative
Agent's request for payment of Breakage Costs. The payment of any such Breakage
Costs to the Banks shall be made within thirty (30) days of a request therefor
from Administrative Agent. If LIBOR cannot be determined on the date of such
prepayment, the Administrative Agent shall calculate LIBOR by interpolating
LIBOR in effect immediately prior to the prepayment and LIBOR in effect
immediately after the prepayment.
2.10 Increased Cost of Loans.
(A) Notwithstanding any other provisions herein, if as a result of any
regulatory change after the date hereof:
(1) the basis of taxation of payments to any Bank of the
principal of, or interest on, any LIBOR Loan or any other amounts due
under this Agreement in respect of any such LIBOR Loan (except for
taxes imposed on the overall net income or receipts of such Bank, and
franchise or other taxes imposed generally on such Bank), by the
jurisdiction (or any political subdivision therein) in which the Bank
has its principal office (if such other taxes do not specifically
affect the cost to the Bank of making the Loans) is changed;
(2) any reserve, special deposit, or similar requirement
(including without limitation any reserve requirement under
regulations of the Board of Governors of the Federal Reserve System)
against assets of, deposits with, or for the account of, or credit
extended by such Bank, is imposed, increased, modified, or deemed
applicable; or
(3) any other condition affecting this Agreement or any LIBOR
Loan is imposed on such Bank or (in the case of LIBOR Loans) the LIBOR
Market; and
the result of any of the foregoing is to increase the actual direct cost to
such Bank of making or maintaining any such LIBOR Loan (and such increase
shall not have been compensated by a corresponding increase in the interest
rate applicable to the respective Loans) by an amount deemed by such Bank
to be material (such increases in cost and reductions in amounts receivable
being herein called "Increased Costs"), then the Borrower shall pay such
Bank, within thirty (30) days after its written demand, such additional
amount or amounts as will compensate such Bank for those Increased Costs.
No Bank will demand to be compensated by Borrower for such Increased Costs
unless such Bank generally makes such demands to its other LIBOR Loan
customers who are similarly situated. A certificate of such Bank setting
forth the basis for the determination of such amount necessary to
compensate such Bank as aforesaid (including a representation by such Bank
that it is generally making demands as required by the preceding sentence),
accompanied by documentation showing reasonable support for such increased
costs or reduced sums received by such Bank, shall be delivered to the
Borrower and shall be conclusive, save for manifest error, as to such
determination and such amount. The affected Bank shall notify the Borrower,
as promptly as practicable after such Bank obtains knowledge of any
Increased Costs or other sums payable pursuant to this Section 2.10 and
determines to request compensation therefor, or any event occurring after
the Closing which will entitle such Bank to compensation pursuant to this
Section; provided that, notwithstanding anything herein to the contrary,
the Borrower shall not be obligated for the payment of any Increased Costs
or other sums payable pursuant to this Section 2.10 to the extent such
Increased Costs or other sums accrued more than 90 days prior to the date
upon which the Borrower was given such notice. If the Borrower is required
to indemnify or pay additional amounts pursuant to this Section 2.10, then
the Bank will take such action as in the reasonable judgment of the Bank
(i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise commercially unreasonable. The
Bank shall use its reasonable efforts to obtain in a timely fashion any
refund, deduction or credit of any taxes paid or reimbursed by the Borrower
pursuant to this Section 2.10. If the Bank receives a benefit in the nature
of a refund, deduction or credit (including a refund in the form of a
deduction from or credit against taxes that are otherwise payable by the
Bank) of any taxes with respect to which the Borrower has made a payment
under Section 2.10, the Bank agrees to reimburse the Borrower to the extent
of the benefit of such refund, deduction or credit promptly after the Bank
reasonably determines that such refund deduction or credit has become
final; provided, however, that nothing contained in this paragraph shall
require the Bank to make available its tax returns (or any other
information relating to its taxes which it deems to be confidential) or to
attempt to obtain any such refund, deduction or credit, which attempt would
be inconsistent with any reporting position otherwise taken by the Bank on
its tax returns.
(B) Notwithstanding the foregoing provisions of this Section 2.10, in
the event that by reason of any regulatory change any Bank either (i)
incurs Increased Costs based on, or measured by, the excess above a
specified level of the amount of a category of deposits or other
liabilities of such Bank that includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Bank that
includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Bank so elects by written notice to the Borrower, the obligation of such
Bank to make or convert Loans of any other type into LIBOR Loans hereunder
shall be suspended until the earlier of the date such regulatory change
ceases to be in effect or the date the Borrower and such Bank agree upon an
alternative method of determining the interest rate payable by the Borrower
on LIBOR Loans, and all LIBOR Loans of such Bank then outstanding shall be
converted into an RR Loan (if not otherwise prohibited under the terms of
this Agreement) at such Bank's option.
2.11 Change of Law. Notwithstanding any other provision herein, in the
event that any change in any Applicable Law or in the interpretation or
administration thereof shall make it unlawful for the Banks to (i) honor any
commitment it may have hereunder to make any LIBOR Loan, then such commitment
shall terminate, or (ii) maintain any LIBOR Loan, then all LIBOR Loans of the
Banks then outstanding shall be repaid and converted to RR Loans (unless the
Banks' obligations to fund Loans hereunder has been suspended by any other
provisions of this Agreement) at the Borrower's option in accordance with the
election procedures set forth in Section 2.04(B); provided, however, that prior
to the effective date of such election, interest shall be calculated at the RR.
Any remaining commitment of the Banks hereunder to make LIBOR Loans (but not
other Loans) shall be suspended so long as they are prohibited by any applicable
law. Upon the occurrence of any such change, the Administrative Agent shall
promptly notify the Borrower thereof, and shall furnish to the Borrower in
writing evidence thereof certified by the Administrative Agent.
Any repayment or conversion of any LIBOR Loan which is required under this
Section 2.11 or under 2.04(B) shall be effected by payment thereof, together
with accrued interest thereon, on demand, and concurrently there shall occur the
borrowing of the corresponding RR Loan as provided herein.
If any repayment to the Banks of any LIBOR Loan (including conversions
thereof) is made under this Section 2.11 on a day other than a day otherwise
scheduled for a payment of principal of or interest on such Loan, the Borrower
shall pay to the Banks upon the request of the Administrative Agent such amount
or amounts as will compensate the Banks for Breakage Costs, excluding, however,
any such Breakage Costs resulting from a prepayment or conversion made more than
sixty (60) days prior to the Administrative Agent's request for payment of
Breakage Costs. The payment of any such Breakage Costs to the Banks shall be
made within thirty (30) days of a request therefor from Administrative Agent.
2.12 Mitigation: Mandatory Assignment. Each Bank shall use reasonable
efforts to avoid or mitigate any Increased Cost or suspension of the
availability of an interest rate under Sections 2.09 through 2.10 above, to the
greatest extent practicable (including transferring the Loans to another lending
office or Affiliate of a Bank) unless, in the opinion of such Bank, such efforts
would be likely to have an adverse effect upon it. In the event a Bank makes a
request to the Borrower for additional payments in accordance with Sections 2.09
or 2.10, then, provided that no Event of Default or Unmatured Event of Default
has occurred and is continuing at such time, the Borrower may, at its own
expense and in its sole discretion, require such Bank to transfer and assign in
whole (but not in part), without recourse, all of its interests, rights and
obligations under this Agreement to an assignee which shall assume such assigned
obligations (which assignee may be another Bank, if a Bank accepts such
assignment); provided that (a) such assignment shall not conflict with any law,
rule or regulation or order of any court or other governmental authority and (b)
the Borrower or such assignee shall have paid to the Administrative Agent for
the account of the assigning Bank in immediately available funds the principal
of and interest accrued to the date of such payment on the portion of the Loans
hereunder held by such assigning Bank and all other amounts owed to such
assigning Bank hereunder, including amounts owed pursuant to Sections 2.09 and
2.10 hereof, and such assignment shall otherwise comply with Section 9.05,
including without limitation the payment of the assignment fee payable to
Administrative Agent under Section 9.05.
2.13 Pro Rata Treatment and Payments. Each Borrowing by Borrower from the
Banks hereunder, each payment by Borrower on account of any fee hereunder and
any reduction of the Commitments of the Banks shall be made pro rata according
to the respective Percentage Shares of the Banks. Each payment (including each
prepayment) by Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Loans then held by the Banks. The Administrative Agent shall distribute
such payments to the Banks promptly upon receipt in like funds as received.
2.14 Sharing of Payments and Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
Borrower (pursuant to Section 7.05, Section 9.01 or otherwise), including, but
not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, or by similar means, obtain payment
(voluntary or involuntary) in respect of any Loan or Loans (other than pursuant
to Section 2.10) as a result of which the unpaid principal portion of its Loans
shall be proportionately less than the unpaid principal portion of the Loans of
any other Bank, it shall simultaneously purchase from such other Banks at face
value a participation in the Loans of such other Banks, so that the aggregate
unpaid principal amount of Loans and participations in Loans held by each Bank
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff, counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff, counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.14
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest.
2.15 Commitment Fee. As consideration for the commitment of the Banks to
make Credit Extensions to the Borrower through the Facility Termination Date
pursuant to this Agreement, the Borrower agrees to pay to the Administrative
Agent for the account of the Banks within five (5) Business Days after the end
of each quarterly period ending March 31, June 30, September 30 and December 31
of each year (except the first period shall be for a period of time from the
Closing to December 31, 2003) during the period commencing on the date of this
Agreement to and including the Facility Termination Date and at the Facility
Termination Date, a commitment fee equal to the percentage per annum specified
in the Pricing Grid based on the Senior Debt to EBITDA Ratio (computed on the
basis of a year of 360 days) multiplied by an amount equal to the daily average
excess, if any, of the Aggregate Commitment Amount over the Outstanding Credit
Exposure, throughout the period from the date of this Agreement or previous
calculation date provided above, whichever is later, to the relevant calculation
date or the Facility Termination Date, as the case may be.
2.16 Availability Amount Increase Fee. To the extent that the Availability
Amount is increased to an amount that exceeds the largest amount of Availability
Amount in existence at any time prior to such increase, a fee of one half
percent (0.50%) of the incremental amount of any increases in the Availability
Amount subsequent to Closing ("Availability Amount Increase Fee") shall be due
upon such increased Availability Amount becoming effective. The Availability
Amount Increase Fee shall be paid by Borrower to Administrative Agent, and
Administrative Agent shall promptly thereafter remit to each Bank such Bank's
Percentage Share of such Availability Amount Increase Fee.
2.17 Up-Front Fee. At Closing Borrower shall pay to Agent, for the account
of the Banks, a fee equal to $165,000.00, which is three-quarters percent
(0.75%) of the Availability Amount in effect at Closing. Administrative Agent
shall promptly thereupon remit one-third of this Up-Front Fee to each Bank.
2.18 Addition of Collateral Assets. The Borrower may, from time to time
upon written notice to the Administrative Agent, propose to add Oil and Gas
Properties and/or Pipeline Properties of the Borrower to the Collateral Assets.
Any such proposal to add Oil and Gas Properties or Pipeline Properties of the
Borrower to the Collateral Assets shall be accompanied by an Engineering Report
applicable to such properties that conforms to the requirements of Section 2.06,
and evidence sufficient to establish that Borrower has Defensible Title to such
Oil and Gas Properties and/or Pipeline Properties, and any such addition shall
become effective at such time as: (a) the Administrative Agent, with the
approval of all the Banks, has made a determination of the amount by which the
Term Loan Availability Amount would be increased as the result of such addition
and (b) the conditions set forth in Article III hereof, to the extent they are
applicable to such additional Oil and Gas Properties and/or Pipeline Properties
of the Borrower, have been satisfied. In determining the increase in the Term
Loan Availability Amount pursuant to this Section, the Administrative Agent and
the Banks shall apply the parameters and other credit factors consistently
applied then generally being utilized by the Administrative Agent and each such
Bank, respectively, for Term Loan Availability Amount determinations for other
similarly situated borrowers.
2.19 Adjustment to Aggregate Commitment Amount. At any time that Borrower
proposes to increase the Term Loan Availability Amount by adding additional Oil
and Gas Properties and/or Pipeline Properties to the Collateral Assets pursuant
to Section 2.18, Borrower may also request that Banks increase the amount of the
Aggregate Commitment Amount. At any time that Borrower makes such a request it
shall promptly provide Administrative Agent with such financial information as
Administrative Agent may request to assist the Administrative Agent in
evaluating such request. Following the receipt of such information from
Borrower, the Administrative Agent shall, with the unanimous approval of the
Banks in each Bank's sole discretion, increase the Aggregate Commitment Amount,
which shall become effective upon written notification from the Administrative
Agent to Borrower of the new Aggregate Commitment Amount. The Borrower may upon
written notice to Administrative Agent, not sooner than one hundred eighty (180)
days subsequent to the last such action by Borrower, amend the definition of the
Aggregate Commitment Amount by reducing the amount set forth in such definition.
Upon such reduction, the Banks shall not be obligated to make Credit Extensions
in excess of such reduced Aggregate Commitment Amount. If and when the Banks
change the Aggregate Commitment Amount at Borrower's request, the commitment
fee, as determined pursuant to Section 2.15 of this Agreement, shall be
calculated using such changed amount for all of the calculation period in which
such Aggregate Commitment Amount was changed.
2.20 Facility LCs.
(A) Issuance. The LC Issuer hereby agrees, on the terms and conditions
set forth in this Agreement, to issue standby letters of credit (each, a
"Facility LC") and to renew, extend, increase, decrease or otherwise modify
each Facility LC ("Modify," and each such action a "Modification"), from
time to time from and including the date of this Agreement and prior to the
Facility Termination Date upon the request of the Borrower; provided that
immediately after each such Facility LC is issued or Modified, (i) the
aggregate amount of the outstanding LC Obligations shall not exceed Five
Million Dollars ($5,000,000.00) and (ii) the Aggregate Outstanding Credit
Exposure shall not exceed the Aggregate Commitment Amount. The aggregate
amount of the outstanding LC Obligations, from time to time, shall
constitute a corresponding reduction in the aggregate amount of the Loans
that may be outstanding under the Revolving Loan Availability Amount. No
Facility LC shall have an expiry date later than the earlier of (x) the
thirtieth (30th) day prior to the Facility Termination Date and (y)
eighteen (18) months after its issuance.
(B) Participations. Upon the issuance or Modification by the LC Issuer
of a Facility LC in accordance with this Section 2.20, the LC Issuer shall
be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Bank, and each Bank shall be
deemed, without further action by any party hereto, to have unconditionally
and irrevocably purchased from the LC Issuer, a participation in such
Facility LC (and each Modification thereof) and the related LC Obligations
in proportion to its Percentage Share.
(C) Notice. Subject to Section 2.20(A), the Borrower shall give the LC
Issuer notice prior to 10:00 a.m. (Los Angeles, California time) at least
five Business Days prior to the proposed date of issuance or Modification
of each Facility LC, specifying the beneficiary, the proposed date of
issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC and the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice,
the LC Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Bank, of the contents
thereof and of the amount of such Bank's participation in such proposed
Facility LC. The issuance or Modification by the LC Issuer of any Facility
LC shall, in addition to the conditions precedent set forth in Article III
(the satisfaction of which the LC Issuer shall have no duty to ascertain),
be subject to the conditions precedent that such Facility LC shall be
satisfactory to the LC Issuer and that the Borrower shall have executed and
delivered such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall have
reasonably requested (each, a "Facility LC Application"). In the event of
any conflict between the terms of this Agreement and the terms of any
Facility LC Application, the terms of this Agreement shall control. Each
notice required or permitted to be given under this Section 2.20(C) by any
party to any other party may be given by fax to the fax contact numbers
specified for such party on Schedule 2.20(C) attached hereto.
(D) LC Fees. The Borrower shall pay to the Administrative Agent, for
the account of the Banks ratably in accordance with their respective
Percentage Shares, with respect to each Facility LC, a letter of credit fee
at a rate as specified in the Pricing Grid based on the Senior Debt to
EBITDA Ratio applicable at the time of issuance of the Facility LC
(computed on the basis of a year of 360 days), but not less than $500.00
per Facility LC per annum, such fee to be payable in arrears on or before
the first Business Day of each calendar month (each such fee described in
this sentence an "LC Fee"). The Borrower shall also pay to the LC Issuer
for its own account (x) at the time of issuance of each Facility LC, a
fronting fee calculated at the rate of twelve and five-tenths (12.5) basis
points per annum pro-rated over the term, and (y) documentary and
processing charges in connection with the issuance or Modification of and
draws under Facility LCs in accordance with the LC Issuer's standard
schedule for such charges as in effect from time to time.
(E) Administration; Reimbursement by Banks. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Administrative Agent and the
Administrative Agent shall promptly notify the Borrower and each other Bank
as to the amount to be paid by the LC Issuer as a result of such demand and
the proposed payment date (the "LC Payment Date"). The responsibility of
the LC Issuer to the Borrower and each Bank shall be only to determine that
the documents (including each demand for payment) delivered under each
Facility LC in connection with such presentment shall be in conformity in
all material respects with such Facility LC. The LC Issuer shall endeavor
to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any
gross negligence or willful misconduct by the LC Issuer, each Bank shall be
unconditionally and irrevocably liable without regard to the occurrence of
any Default or any condition precedent whatsoever, to reimburse the LC
Issuer on demand for (i) such Bank's Percentage Share of the amount of each
payment made by the LC Issuer under each Facility LC to the extent such
amount is not reimbursed by the Borrower pursuant to Section 2.20(F) below,
plus (ii) interest on the foregoing amount to be reimbursed by such Bank,
for each day from the date of the LC Issuer's demand for such reimbursement
(or, if such demand is made after 10:00 a.m. (Los Angeles, California time)
on such date, from the next succeeding Business Day) to the date on which
such Bank pays the amount to be reimbursed by it, at a rate of interest per
annum equal to the Federal Funds Effective Rate for the first three days
and, thereafter, at a rate of interest equal to the Floating Rate based on
RR.
(F) Reimbursement by Borrower. The Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the
applicable LC Payment Date for any amounts to be paid by the LC Issuer upon
any drawing under any Facility LC, without presentment, demand, protest or
other formalities of any kind; provided that neither the Borrower nor any
Bank shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrower or such Bank to the extent,
but only to the extent, caused by (i) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented
under any Facility LC issued by it complied with the terms of such Facility
LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by
it after the presentation to it of a request strictly complying with the
terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the Borrower shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to (x) the rate
applicable to RR Loans for such day if such day falls on or before the
applicable LC Payment Date and (y) the sum of 2% plus the rate applicable
to RR Loans for such day if such day falls after such LC Payment Date. The
LC Issuer will pay to each Bank ratably in accordance with its Percentage
Share all amounts received by it from the Borrower for application in
payment, in whole or in part, of the Reimbursement Obligation in respect of
any Facility LC issued by the LC Issuer, but only to the extent such Bank
has made payment to the LC Issuer in respect of such Facility LC pursuant
to Section 2.20(E). Subject to the terms and conditions of this Agreement
(including without limitation the submission of a Request for Advance in
compliance with Section 2.02 and the satisfaction of the applicable
conditions precedent set forth in Article III), the Borrower may request a
Loan hereunder for the purpose of satisfying any Reimbursement Obligation.
(G) Obligations Absolute. The Borrower's obligations under this
Section 2.20 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the LC Issuer, any
Bank or any beneficiary of a Facility LC. The Borrower further agrees with
the LC Issuer and the Banks that the LC Issuer and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, any of
its Affiliates, the beneficiary of any Facility LC or any financing
institution or other party to whom any Facility LC may be transferred or
any claims or defenses whatsoever of the Borrower or of any of its
Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Facility LC. The
Borrower agrees that any action taken or omitted by the LC Issuer or any
Bank under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct,
shall be binding upon the Borrower and shall not put the LC Issuer or any
Bank under any liability to the Borrower. Nothing in this Section 2.20(G)
is intended to limit the right of the Borrower to make a claim against the
LC Issuer for damages as contemplated by the proviso to the first sentence
of Section 2.20(F).
(H) Actions of LC Issuer. The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts
selected by the LC Issuer. The LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Required Banks as it
reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.20, the LC Issuer shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request
of the Required Banks, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Banks and any future holders
of a participation in any Facility LC.
(I) Indemnification. The Borrower hereby agrees to indemnify and hold
harmless each Bank Party and their respective directors, officers, agents
and employees from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank Party may incur (or which
may be claimed against such Bank Party by any Person whatsoever) by reason
of or in connection with the issuance, execution and delivery or transfer
of or payment or failure to pay under any Facility LC or any actual or
proposed use of any Facility LC, including, without limitation, any claims,
damages, losses, liabilities, costs or expenses which the LC Issuer may
incur by reason of or in connection with (i) the failure of any other Bank
to fulfill or comply with its obligations to the LC Issuer hereunder (but
nothing herein contained shall affect any rights the Borrower may have
against any defaulting Bank) or (ii) by reason of or on account of the LC
Issuer issuing any Facility LC which specifies that the term "Beneficiary"
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify
any Bank Party for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (x) the willful
misconduct or gross negligence of the LC Issuer in determining whether a
request presented under any Facility LC complied with the terms of such
Facility LC or (y) the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of such Facility LC. Nothing in this Section 2.20(I) is
intended to limit the obligations of the Borrower under any other provision
of this Agreement.
(J) Banks' Indemnification. Each Bank shall, ratably in accordance
with its Percentage Share, indemnify the LC Issuer, its affiliates and
their respective directors, officers, agents and employees (to the extent
not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of the Facility LC) that such indemnitees may suffer or
incur in connection with this Section 2.20 or any action taken or omitted
by such indemnitees hereunder.
(K) Rights as a Bank. In its capacity as a Bank, the LC Issuer shall
have the same rights and obligations as any other Bank.
2.21 Advances to Satisfy Obligations of the Borrower. The Administrative
Agent or any Bank may, but shall not be obligated to, make advances hereunder
for the benefit of the Banks and apply same to the satisfaction of any
condition, warranty, representation or covenant of the Borrower contained in
this Agreement, and the funds so advanced and applied shall be part of the Loan
proceeds advanced under this Agreement and evidenced by the Notes.
2.22 Assignment of Production. Certain of the Security Instruments covering
the Collateral Assets contain an assignment unto and in favor of Administrative
Agent for the benefit of the Banks of all oil, gas and other minerals produced
and to be produced from or attributable to the Collateral Assets together with
all of the revenues and proceeds attributable to such production, and such
Security Instruments further provide that all such revenues and proceeds which
may be so collected by the Administrative Agent for the benefit of the Banks
pursuant to the assignment shall be applied to the payment of the Notes and the
satisfaction of all other Indebtedness to be secured by such Security
Instruments. The Borrower hereby appoints the Administrative Agent as its agent
and attorney-in-fact until this Agreement has been terminated in accordance with
Section 9.19 hereof for purposes of completing the Transfer Order Letters
delivered to the Administrative Agent pursuant to Section 3.02(B) hereof, which
power is coupled with an interest and is not revocable.
2.23 Facility Termination Date. The Bank Parties, acting unanimously and in
their respective sole discretion, may extend the Facility Termination Date
insofar as it relates to the Revolving Loan for successive one-year periods
effective in each case upon written notice from Administrative Agent to
Borrower.
Article III.
CONDITIONS
The obligation of the Banks to make the Credit Extensions is subject to the
following conditions precedent:
3.01 General Conditions to Closing and to all Disbursements. At the time of
the execution and delivery of this Agreement by all parties who are designated
as signatories on the signature pages of this Agreement (the "Closing") and at
each subsequent Credit Extension:
(A) No Event of Default shall have occurred and be continuing, and no
Unmatured Event of Default shall have occurred;
(B) The representations and warranties contained in Article IV of this
Agreement shall be true and correct in all material respects as though such
representations and warranties had been made on such date, except such as
are expressly limited to a prior date, which shall have been true and
correct in all material respects as of such prior date;
(C) The Administrative Agent and the Banks shall have been, and shall
continue to be, satisfied, in their good faith discretion, that the
Borrower (individually or collectively) holds Defensible Title to the
Collateral Assets, and that such ownership includes record title to an
undivided net revenue interest in the production from each Oil and Gas
Property that is not less than, as well as an undivided working interest in
each Oil and Gas Property that is not greater than (unless there is a
corresponding increase in the net revenue interest attributed to such party
therein), the net revenue interest therein and the working interest
therein, respectively, attributed to the Borrower on Exhibit "A," subject
to the limitations and qualifications on such exhibit (or attributed to
Borrower in any Security Instrument applicable to any Oil and Gas Property
that is added to the Collateral Assets in connection with any subsequent
funding after the Closing);
(D) No Material Adverse Change shall have occurred since June 30, 2003
or, if later, since the date of the latest audited Financial Statements
provided to the Administrative Agent;
(E) All of the Borrower's CRI Security Instruments delivered with
respect to the Collateral Assets shall have remained in full force and
effect;
(F) Borrower shall have entered into Hydrocarbon Hedge Agreements
acceptable to the Banks; and
(G) All legal matters incidental thereto shall be reasonably
satisfactory to legal counsel designated by the Administrative Agent.
3.02 Deliveries at the Closing. The Borrower shall have duly delivered or
caused to be delivered to the Administrative Agent, prior to or
contemporaneously with the Closing, the following:
(A) The Notes payable to each respective Bank, along with the Security
Instruments covering each of the Collateral Assets not already covered by
the Borrower's CRI Security Instruments.
(B) Transfer Order Letters applicable to the production of oil and gas
from any Collateral Assets for which Transfer Order letters have not
previously been delivered to the Administrative Agent.
(C) Security Instruments covering all Collateral Assets described on
Exhibit A and amending and restating in form and substance acceptable to
the Administrative Agent the Borrower's CRI Security Instruments.
(D) The results of a Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against the
Borrower in the Offices of the Secretaries of State of the State of
Oklahoma, the State of North Dakota, and each other State in which any of
the Collateral Assets are located or deemed to be located, and the counties
and/or parishes in which the Borrower maintains its principal place of
business and in which any of the Collateral Assets are located, such search
to be as of a date no more than ten (10) days prior to the date of Closing.
(E) A certified (as of the date of the Closing) copy of resolutions of
Borrower's Governing Body authorizing the execution, delivery, and
performance of this Agreement, the Notes, and each other document to be
delivered pursuant hereto;
(F) A certificate (dated the date of the Closing) of Borrower's
corporate secretary as to the incumbency and signatures of the officers of
the Borrower signing this Agreement, the Notes, and each other document to
be delivered pursuant hereto;
(G) A copy, certified as of the most recent date practicable by the
Secretary of State of the state in which Borrower was formed, of the
Borrower's Certificate of Formation, together with a certificate (dated the
date of the Closing) of the Borrower's corporate secretary to the effect
true and complete copies of the Borrower's Governing Documentation are
attached thereto and that such Governing Documentation has not been amended
except as described therein;
(H) Certificates, as of the most recent dates practicable, of the
aforesaid Secretary of State, and the Secretary of State of each state in
which the Borrower is qualified as a foreign Business Entity and the
department of revenue or taxation of each of the foregoing states, as to
the good standing of the Borrower;
(I) A Compliance Certificate, dated the date of the Closing;
(J) Payment of the Administrative Agent's attorneys' fees upon receipt
of a reasonably detailed invoice pursuant to Section 5.12 hereof;
(K) A legal opinion or opinions of outside counsel to the Borrower,
addressed to the Bank Parties, in form and substance reasonably
satisfactory to the Administrative Agent, covering, among other matters
reasonably requested by Administrative Agent or its counsel, the matters
addressed in Sections 4.01, 4.02, 4.03, 4.20 and 4.21 hereof;
(L) An Amendment to the CRI Credit Agreement, duly executed by all
Parties thereto, pursuant to which: (i) Borrower is released from its
guaranty of CRI's obligations under the CRI Credit Agreement and (ii) the
parties thereto agree that Borrower's assets covered by the Borrower's CRI
Security Instruments shall no longer constitute security for the
obligations of CRI under the CRI Credit Agreement;
(M) Duly executed assignments from the Collateral Agent, as defined in
the CRI Credit Agreement, to Administrative Agent of Borrower's CRI
Security Instruments, in form and substance satisfactory to the
Administrative Agent;
(N) A ▇▇▇▇▇▇ and Click report and financial projection model with
respect to Borrower that is acceptable to the Banks;
(O) A Phase I Environmental Report or Reports relating to the real
property comprising any part of the Collateral Assets prepared by a
reputable third-party environmental firm in form and substance acceptable
to the Lenders;
(P) A pro-forma balance sheet of Borrower inclusive of acquisitions
occurring since June 30, 2003; and
3.03 Documents Required for Subsequent Disbursements Involving Additional
Collateral Assets. As of the time of funding any additional advances to Borrower
that have been approved by the Banks pursuant to Section 2.01 and are made in
conjunction with the addition of Oil and Gas Properties and/or Pipeline
Properties owned by the Borrower to the Collateral Assets, the Borrower shall
have duly delivered to the Administrative Agent: (i) the Security Instruments
that are necessary or appropriate, in the reasonable opinion of the
Administrative Agent, relating to such additional Collateral Assets, and (ii)
Transfer Order Letters applicable to the production of oil and gas from the such
additional Collateral Assets.
Article IV.
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Banks to enter into this
Agreement and to make the Credit Extensions hereunder, Borrower represents and
warrants to the Administrative Agent and the Banks that:
4.01 Existence. The Borrower is a Business Entity of the type specified for
such Borrower on the signature pages of this Agreement, duly organized, legally
existing, and in good standing under the Laws of the State in which it was
organized; the Borrower has the lawful power to own its properties and to engage
in the businesses it conducts, and it is duly qualified and in good standing as
a foreign Business Entity in the jurisdictions wherein the nature of the
business transacted by it or property owned by it makes such qualification
necessary; the states in which the Borrower is incorporated or organized and
qualified to do business are set forth in Schedule 4.01; the addresses of all
places of business of the Borrower are as set forth in Schedule 4.01; Borrower
has not changed its name, been the surviving company in a merger, acquired any
business except the business of the Great Plains Pipeline System, or changed its
principal executive office to a location outside the State of Oklahoma within
five (5) years and one (1) month prior to the date hereof; and Borrower has no
Subsidiaries.
4.02 Due Authorization. Upon execution of the Loan Documents, the execution
and delivery by the Borrower of this Agreement, the Notes, and the borrowings
hereunder; the execution and delivery by the Borrower of the Security
Instruments and the Transfer Order Letters; and the repayment by the Borrower of
the Indebtedness evidenced by the Notes and interest and fees provided in the
Notes and this Agreement are (a) within the Corporate Power of the Borrower; (b)
have been duly authorized by all necessary Corporate Action, and (c) do not and
will not (i) require the consent of any regulatory authority or governmental
body, (ii) contravene or conflict with any provision of Law or of the Governing
Documentation of the Borrower, (iii) contravene or conflict with any indenture,
instrument or other agreement to which the Borrower is a party or by which its
property may be presently bound or encumbered, or (iv) result in or require the
creation or imposition of any mortgage, lien, pledge, security interest, charge
or other encumbrance in, upon or of any of the properties or assets of the
Borrower under any such indenture, instrument or other agreement, other than
under any of the Security Instruments.
4.03 Valid and Binding Obligations. This Agreement, the Notes, the Security
Instruments (when amended and restated to relate to the Loans provided for in
this Agreement with regard to Borrower's CRI Security Instruments) and the other
Loan Documents when duly executed and delivered, will be legal, valid and
binding obligations of and enforceable against the Borrower, in accordance with
their respective terms (subject to any applicable bankruptcy, insolvency or
other Laws of general application affecting creditors' rights, general equitable
principles, whether considered in a proceeding in equity or at law, and judicial
decisions interpreting any of the foregoing).
4.04 Scope and Accuracy of Financial Statements. All Financial Statements
submitted and to be submitted to the Administrative Agent hereunder are and will
be complete and correct in all material respects, Financial Statements that are
to be provided after the date of this Agreement will be prepared in accordance
with GAAP consistently applied, and do and will fairly reflect the consolidated
financial condition and the results of the operations of the Borrower in all
material respects as of the dates and for the period stated therein (subject
only to normal year-end audit adjustments with respect to such unaudited interim
statements of the Borrower), and no Material Adverse Change has occurred since
the effective date of the latest audited Financial Statements of Borrower
delivered to Administrative Agent.
4.05 Title to Collateral Assets. The Borrower has Defensible Title to the
working and net revenue interests in the Collateral Assets as set forth on
Exhibit "A", free and clear of all mortgages, liens and encumbrances, except for
Permitted Encumbrances (specifically including, but not limited to, the liens
created by Borrower's CRI Security Instruments) and any other exceptions,
limitations or qualifications expressly disclosed on Exhibit "A."
4.06 Oil and Gas Leases. The Leases which constitute any part of the
Collateral Assets are in full force and effect as to those portions within the
Collateral Assets, are valid, subsisting leases as to those portions within the
Collateral Assets to which they pertain and all rentals, royalties and other
amounts due and payable in accordance with the terms of the Leases as to those
portions within the Collateral Assets, overriding royalties, net profits or
other production burdens have been duly paid or provided for; the obligations to
be performed under the Leases as to those portions within the Collateral Assets
have been duly performed; and the Borrower is not aware of any default by any
third party under any of the Leases with respect to such third party's
obligations.
4.07 Interest in the Collateral Assets. Except as otherwise set forth on
Exhibit "A" hereto, with respect to each of the Collateral Assets, the ownership
of the Borrower in such property will, with respect to the ▇▇▇▇▇, units and/or
tracts of land described in Exhibit "A" hereto in connection with such property,
(i) entitle the Borrower, to receive (subject to the terms and provisions of
this Agreement) a decimal share of the oil and gas produced from, or allocated
to, such ▇▇▇▇▇, units and/or tracts equal to not less than the decimal share set
forth in Exhibit "A" in connection with such ▇▇▇▇▇, units and/or tracts, and
(ii) cause the Borrower to be obligated to bear a decimal share of the cost of
exploration, development and operation of such ▇▇▇▇▇, units and/or tracts of
land not greater than the decimal share set forth in Exhibit "A" in connection
with such ▇▇▇▇▇, units and/or tracts, unless any increase in the Borrower's
share of costs is accompanied by a pro-rata increase in the Borrower's share of
revenue. Except as set forth in the instrument and agreements, if any, more
particularly described in Exhibit "A" hereto, all such shares of production
which the Borrower is entitled to receive, and shares of expenses which the
Borrower is obligated to bear, are not subject to change, except for changes
attributable to future elections by the Borrower not to participate in
operations proposed pursuant to customary forms of applicable joint operating
agreements, and except for changes attributable to changes in participating
areas under any federal units wherein participating areas may be formed,
enlarged or contracted in accordance with the rules and regulations of the
applicable governmental authority.
4.08 Oil and Gas Contracts. Except as set forth on Schedule 4.08 attached
hereto, Borrower is not obligated, by virtue of any prepayment under any
contract providing for the sale by the Borrower of Hydrocarbons which contains a
"take-or-pay" clause or under any similar prepayment agreement or arrangement,
including, without limitation, "gas balancing agreements", to deliver a material
amount of Hydrocarbons produced from the Collateral Assets at some future time
without then or thereafter receiving full payment therefor (i.e., in the case of
oil, not in excess of sixty (60) days, and in the case of gas, not in excess of
ninety (90) days). Except as set forth on Schedule 4.08 attached hereto, the
Collateral Assets are not subject to any contractual, or other arrangement for
the sale of crude oil which cannot be canceled on ninety (90) days' (or less)
notice, unless the price provided for therein is equal to or greater than the
prevailing market price in the vicinity. The Collateral Assets are not subject
to any gas sales contract that contains any material terms which are not
customary in the industry within the region in which the Collateral Assets
affected thereby are located. The Collateral Assets are not subject to any
regulatory refund obligation and no facts exist which might cause the same to be
imposed.
4.09 Producing ▇▇▇▇▇. All producing ▇▇▇▇▇ located on the Collateral Assets
have been, during all times that such were under the direction or control of the
Borrower and, to the knowledge of the Borrower, at all other times, drilled,
operated and produced in conformity with all applicable Laws, rules, regulations
and orders of all regulatory authorities having jurisdiction, are subject to no
penalties on account of past production, and are bottomed under and are
producing from, and the well bores are wholly within, the Collateral Assets, or
on Oil and Gas Properties which have been pooled, unitized or communitized with
the Collateral Assets.
4.10 Purchasers of Production. The persons who are purchasing the
Borrower's interests in oil and gas produced from the Collateral Assets as of
the calendar month during which the initial Loans are made hereunder are
identified on Schedule 4.10 attached hereto.
4.11 Authorizations and Consents. Except as required in conjunction with
the CRI Credit Agreement and satisfied pursuant to Section 3.02(K) hereof, no
authorization, consent, approval, exemption, franchise, permit or license of, or
filing with, any governmental or public authority or any third party is required
to authorize, or is otherwise required in connection with the valid execution
and delivery by the Borrower of this Agreement, the Notes, and the Security
Instruments, or any other instrument contemplated hereby to which such Person is
a party, the repayment by the Borrower of advances against the Notes and
interest and fees provided in the Notes and this Agreement, or the performance
by the Borrower of its obligations under any of the foregoing.
4.12 Environmental Laws. Except to the extent that the failure to do so
would not have and would not be expected to have a Material Adverse Effect, the
Borrower (a) is and has in the past been in compliance with all Environmental
Laws and all permits, requests and notifications relating to health, safety or
the environment applicable to the Borrower or any of its properties, assets,
operations and businesses; (b) has obtained and adhered to and currently
possesses all necessary permits and other approvals, including interim status
under the Federal Resource Conservation and Recovery Act, necessary to store,
dispose of and otherwise handle Hazardous Substances and to operate its
properties, assets and businesses; (c) has reported, to the extent required by
all federal, state and local statutes, Laws, ordinances, regulations, rules,
permits, judgments, orders and decrees, all past and present sites owned and/or
operated by the Borrower where any Hazardous Substance has been released,
treated, stored or disposed of and (d) has not used, stored, or Released any
Hazardous Substance in excess of amounts allowed by Environmental Law. There is
(x) no location on any property currently or previously owned or operated by the
Borrower where Hazardous Substances are known to have entered or are likely to
enter into the soil or groundwater or such property, other than immaterial
releases of oil or natural gas in the ordinary course of business none of which
releases (i) either individually, or in the aggregate, has had or may be
expected to have a Material Adverse Effect or (ii) has violated or may be
expected to violate any Environmental Laws, except for any such violation that
has not had and would not be expected to have a Material Adverse Effect, and (y)
no on-site or off-site location to which the Borrower has released or
transported Hazardous Substances or arranged for the transportation or disposal
of Hazardous Substances, which is or is likely to be the subject of any federal,
state, local or foreign enforcement action or any investigation which could lead
to any material claims against any such entity for any clean-up cost, remedial
work, damage to natural resources, common law or legal liability, including, but
not limited to, claims under Comprehensive Environmental Response, Compensation,
and Liability Act. For the purposes of this Section, references to "the
Borrower" shall include all predecessors, successors-in-interest of the
Borrower.
4.13 Compliance with Laws, Rules, Regulations and Orders. Except to the
extent that the failure to comply would not materially interfere with the
conduct of the business of the Borrower, Borrower has complied with all
applicable Laws with respect to: (1) the conduct of its business; and (2) the
use, maintenance, and operation of the Collateral Assets and personal properties
owned or leased by it in the conduct of its business; except as expressly set
forth on Exhibit "A" hereto, Borrower possesses all licenses, approvals,
registrations, permits and other authorizations necessary to enable it to carry
on its business in all material respects as now conducted, and all such
licenses, approvals, registrations, permits and other authorizations are in full
force and effect; and Borrower has no reason to believe that the Borrower will
be unable to obtain the renewal of any such licenses, approvals, registrations,
permits and other authorizations.
4.14 Liabilities, Litigation and Restrictions. Except as disclosed in the
Financial Statements, Borrower does not have any liabilities, direct or
contingent, which may materially and adversely affect it, its business or
assets. There is no litigation or other action of any nature pending before any
court, governmental instrumentality, regulatory authority or arbitral body or,
to the knowledge of the Borrower threatened against or affecting Borrower which
might reasonably be expected to result in any material, adverse change in the
Borrower, or its business or assets. To the best of the Borrower's knowledge, no
unduly burdensome restriction, restraint or hazard exists by contract or Law
that would have a Material Adverse Effect.
4.15 Existing Indebtedness. All Indebtedness of Borrower consisting of
liability to repay borrowed money or to pay money to become due on capital
leases as of the Closing is described in Schedule 4.15; and Borrower is not in
default with respect to any of its existing Indebtedness.
4.16 Material Contracts. All of Borrower's material contracts, leases
(other than oil and gas leases), or commitments of any kind (including, without
limitation, gas gathering, processing, compression, treatment, storage, exchange
and handling agreements of any type; employment agreements with executive
officers; collective bargaining agreements; powers of attorney; distribution
arrangements; patent license agreements; contracts for future purchase or
delivery of goods or rendering of services, including, but not limited to,
contracts with producers for the purchase of natural gas from whom production
purchases by Borrower represents 10% or more of all production purchases by
Borrower; bonuses, pension and retirement plans; or accrued vacation pay,
insurance and welfare agreements), all of which are collectively called
"Material Contracts," are described on Schedule 4.16 attached hereto; (b) to the
best of Borrower's knowledge, all parties to all such Material Contracts have
complied with the provisions thereof; and (c) to the best of the Borrower's
knowledge, no party is in default under any thereof and no event has occurred
that but for the giving of notice or the passage of time, or both, would
constitute a default, except for defaults and events that have not had and would
not be expected to have a Material Adverse Effect.
4.17 Margin Stock. The Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T, U, or
X of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any extension of credit under this Agreement will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock. Neither the Borrower nor any
Person acting on its behalf has taken any action that might cause the
transactions contemplated by this Agreement or the Notes to violate Regulations
T, U, or X or to violate the Securities Exchange Act of 1934, as amended.
4.18 Proper Filing of Tax Returns and Payment of Taxes Due. Except as
otherwise permitted herein, the Borrower, as a member of the CRI consolidated
group, has to Borrower's best knowledge filed all federal, state, and local tax
returns and other reports required by any applicable Laws to have been filed
prior to the date hereof, has paid or caused to be paid all taxes, assessments,
and other governmental charges that are due and payable prior to the date
hereof, and has made adequate provision for the payment of such taxes,
assessments, or other charges accruing but not yet payable; the CRI consolidated
group has elected to be taxed as a sub-chapter "S" corporation; and the Borrower
has no knowledge of any material deficiency or additional assessment in
connection with any taxes, assessments, or charges not provided for on its
books.
4.19 ERISA. The Borrower is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any plan; no notice
of intent to terminate a plan has been filed, nor has any plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate a plan, nor has the PBGC instituted any such proceedings;
neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multi-Employer Plan; the
Borrower and each ERISA Affiliate has met its minimum funding requirements under
ERISA with respect to all of its plans and the present value of all vested
benefits under each plan is less than the fair market value of all plan assets
allocable to such benefits, as determined on the most recent valuation date of
the plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of the Borrower or any ERISA
Affiliate to the PBGC or the plan under Title IV of ERISA; and neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA.
4.20 Investment Company Act Compliance. Borrower is not directly or
indirectly controlled by, or acting on behalf of, any, Person which is an
"Investment Company," within the meaning of the Investment Company Act of 1940,
as amended.
4.21 Public Utility Holding Company Act Compliance. Borrower is not a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.22 Insurance. Borrower maintains insurance with respect to the properties
and business of the Borrower providing coverage for such liabilities,
casualties, risks and contingencies and in such amounts as is customary in the
industry. The insurance coverage reflected on the Certificate of Insurance
attached hereto as Schedule 4.22 is in full force and effect, and all premiums
due thereon have been paid or provided for.
4.23 Borrower's Shareholders and Directors. Each "person" or "group"
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) that is directly or indirectly a "beneficial owner" (as
defined in Section 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as
amended) of shares of the outstanding capital stock of Borrower representing
five percent (5%) or more of the outstanding capital stock of Borrower as of the
date of this Agreement is listed on Schedule 4.23 attached hereto, and each
member of Borrower's board of directors as of the date of this Agreement is
listed on Schedule 4.23.
4.24 Material Misstatements and Omissions. No representation or warranty by
or with respect to Borrower contained herein or in any certificate or other
document furnished by the Borrower pursuant hereto contains any untrue statement
of a material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made.
Article V.
AFFIRMATIVE COVENANTS
Borrower covenants so long as any Indebtedness of the Borrower to any Bank
or the LC Issuer remains unpaid under this Agreement, or any Obligations of the
Borrower to any Bank Parties remain unsatisfied, or any Bank remains obligated
to make advances hereunder or the LC Issuer is obligated to issue any Facility
LC hereunder, to;
5.01 Use of Funds. Use Loan proceeds advanced hereunder in connection with
the Term Loan solely for purposes of a one-time cash distribution to CRI, to be
used by CRI for payment of Indebtedness outstanding under the CRI Credit
Agreement; and use Loan proceeds advanced under the Revolving Loan to connect
future ▇▇▇▇▇ to Borrower's gas pipeline and gathering systems, to acquire
additional Pipeline Properties and Oil and Gas Properties, and for funding
Borrower's general working capital needs.
5.02 Maintenance and Access to Records. Keep adequate records in accordance
with good accounting practices, of all of the transactions of the Borrower so
that at any time, and from time to time, such records present fairly the
financial condition of the Borrower which may be readily determined and, at the
Administrative Agent's reasonable request, make all financial records and
records relating to the Collateral Assets available for the Administrative
Agent's inspection and permit the Administrative Agent to make and take away
copies thereof.
5.03 Quarterly Unaudited Financial Statements. Deliver to the
Administrative Agent, on or before the forty-fifth (45th) day after the end of
each calendar quarter, unaudited consolidated Financial Statements of the
Borrower, as at the end of such period and from the beginning of such fiscal
year to the end of the respective period, as applicable, which Financial
Statements shall be certified by the president or chief financial officer of the
Borrower, as being true and correct, subject to changes resulting from year-end
audit adjustments.
5.04 Annual Audited Financial Statements. Deliver to the Administrative
Agent, on or before the one hundred twentieth (120th) day after the close of
each fiscal year of the Borrower a copy of annual audited consolidated Financial
Statements of the Borrower, together with the report and opinion thereon of
independent certified public accountants acceptable to the Administrative Agent
at its reasonable discretion.
5.05 Compliance Certificate. At Closing and at the time of delivery of the
certified but unaudited Financial Statements pursuant to Section 5.03 above, and
the delivery of the annual audited Financial Statements pursuant to Section 5.04
above, deliver to the Administrative Agent a Compliance Certificate.
5.06 Statement of Material Adverse Change. Deliver to the Administrative
Agent, promptly upon any officer of Borrower having knowledge of any Material
Adverse Change (or any event or circumstance that would result in any such
Material Adverse Change), a statement of the President, Chief Financial Officer,
or the Treasurer of the Borrower, setting forth the change in condition or event
or circumstance likely to result in any such change and the steps being taken by
the Borrower with respect to such change in condition or event or circumstance.
5.07 Title Defects. Cure any title defects to the Collateral Assets which
cause the title to the Collateral Assets not to be Marketable and which title
defects cause material reduction in value of the Collateral Assets, considered
as a whole, in the reasonable opinion of the Administrative Agent, and, in the
event any such title defects are not cured in a timely manner, pay all related
costs and fees incurred by the Administrative Agent for the account of the Banks
to do so.
5.08 Additional Information. Furnish to the Administrative Agent copies of
all information, if any, filed with the Securities Exchange Commission in
written or electronic form by the Borrower. Furnish to the Administrative Agent,
promptly upon the Administrative Agent's reasonable request, such additional
financial or other information concerning the assets, liabilities, operations,
and transactions of the Borrower, including, without limitation, information
concerning title to any of the Collateral Assets.
5.09 Compliance with Laws and Payment of Assessments and Charges. Comply
with all applicable statutes and government regulations, including, without
limitation, ERISA, and pay all taxes, assessments, governmental charges, claims
for labor, supplies, rent and other obligations which, if unpaid, might become a
lien other than a Permitted Encumbrance against its property, except any of the
foregoing being contested in good faith and as to which accruals satisfactory to
the Administrative Agent, in its reasonable discretion, have been provided.
5.10 Maintenance of Existence and Good Standing. Maintain the Borrower's
corporate existence and good standing in the jurisdiction of its organization,
and maintain the Borrower's qualification and good standing in all other
jurisdictions wherein the property now owned or hereafter acquired or business
now or hereafter conducted by Borrower necessitates same, other than those
jurisdictions wherein the failure to so qualify will not have a Material Adverse
Effect on the Borrower.
5.11 Further Assurances. Promptly cure any defects in the execution and
delivery of this Agreement, the Notes, the Security Instruments, the Transfer
Order Letters, or any other instrument referred to herein or executed in
connection with the Notes, and upon the reasonable request of the Administrative
Agent promptly execute and deliver to the Administrative Agent all such other
and further instruments as may be reasonably required or desired by the
Administrative Agent from time to time in compliance with the covenants and
agreements made in this Agreement.
5.12 Initial Expenses of the Bank. Pay prior to or at Closing all
documented reasonable fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., the special
legal counsel for the Administrative Agent incurred directly and solely in
connection with the preparation of this Agreement, the Notes, the Security
Instruments, the Transfer Order Letters, and any other instrument referred to
herein or executed directly and solely in connection with the Notes, the
satisfaction of the conditions precedent set forth in Article III of this
Agreement and the consummation of the transactions contemplated in this
Agreement.
5.13 Subsequent Expenses of the Bank Parties. Upon request, promptly
reimburse any Bank Party for all documented amounts reasonably expended,
advanced or incurred by such Bank Party to collect the Notes, restructure the
Notes or to enforce the rights of such Bank Party under this Agreement, the
Notes, the Security Instruments, the Transfer Order Letters, or any other
instrument referred to herein or executed in connection with the Notes, which
amounts shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrower by the Administrative Agent and which amounts will
include, but not be limited to, (a) all court costs, (b) reasonable attorneys'
fees, (c) fees of auditors and accountants, (d) investigation expenses, (e) fees
and expenses incurred in connection with any Bank Party's participation as a
member of the creditors committee in a case commenced under Title 11 of the
United States Code or other similar Law of the United States, the State of Texas
or any other jurisdiction, (f) fees and expenses incurred in connection with
lifting the automatic stay prescribed in ss.ss.362 Title 11 of the United States
Code, and (g) fees and expenses incurred in connection with any action pursuant
to ss.ss.1129 Title 11 of the United States Code, reasonably incurred by any
Bank Party in connection with the collection of any sums due under this
Agreement, together with interest at the Floating Rate per annum, calculated on
a basis of a year of three hundred sixty (360) days on each such amount from the
date of notification to the Borrower that the same was expended, advanced or
incurred by any Bank Party until, but not including, the date it is repaid to
such Bank Party, with the obligations under this Section 5.13, surviving the
non-assumption of this Agreement in a case commenced under Title 11 of the
United States Code or other similar Law of the United States, the State of Texas
or any other jurisdiction and being binding upon the Borrower or a trustee,
receiver or liquidator of any such party appointed in any such case.
5.14 Maintenance of Tangible Property. Maintain all of its tangible
property relating to the Collateral Assets in good repair and condition and make
all necessary replacements thereof and operate such property in a good and
workmanlike manner in accordance with standard industry practices, unless the
failure to do so would not have a Material Adverse Effect on the Borrower or the
value of any Collateral Asset.
5.15 Maintenance of Insurance. Continue to maintain, or cause to be
maintained, insurance with respect to the properties and business of the
Borrower against such liabilities, casualties, risks and contingencies and in
such amounts as is customary in the industry and furnish to the Administrative
Agent annually after the execution of this Agreement certificates evidencing
such insurance.
5.16 Inspection of Tangible Assets/Right of Audit. Permit any authorized
representative of the Administrative Agent to visit and inspect (at the risk of
the Administrative Agent and/or such representative) any tangible asset of the
Borrower, and/or to audit the books and records of the Borrower during normal
business hours, at the expense of the Administrative Agent following reasonable
advance notice.
5.17 Payment of Note and Performance of Obligations. Pay the Notes
according to the reading, tenor and effect thereof, as modified hereby, and do
and perform every act and discharge all of the Obligations provided to be
performed and discharged hereunder.
5.18 Availability Amount. Maintain a Availability Amount such that the
amount of the Outstanding Credit Exposure will not, at any time other than
during applicable grace periods expressly set forth elsewhere in this Agreement,
exceed the Aggregate Commitment Amount.
5.19 Compliance with Environmental Laws. To the extent necessary to avoid a
Material Adverse Effect, comply with any and all requirements of Law, including,
without limitation, Environmental Laws, (a) applicable to any natural or
environmental resource or media located on, above, within, in the vicinity of,
related to or affected by any Collateral Assets or any other property of the
Borrower, or (b) applicable to the performance or conduct of its operations,
including, without limitation, all permits, licenses, registrations, approvals
and authorizations, and, in this regard, comply with, and require all employees,
crew members, agents, contractors and subcontractors (pursuant to appropriate
contractual provisions) and future lessees (pursuant to appropriate lease
provisions) of the Borrower while such Persons are acting within the scope of
their relationship with the Borrower, to so comply with, all applicable
requirements of Law, including, without limitation, applicable Environmental
Laws, and other applicable requirements with respect to the property of the
Borrower, and the operation thereof necessary or appropriate to enable the
Borrower to fulfill its obligations under all applicable requirements of Law,
including, without limitation, Environmental Laws, applicable to the use,
generation, handling, storage, treatment, transport and disposal of any
Hazardous Substances now or hereafter located or present on or under any such
property.
5.20 Hazardous Substances Indemnification. Indemnify and hold each of the
Bank Parties harmless from and against any and all claims, losses, damages,
liabilities, fines, penalties, charges, administrative and judicial proceedings
and orders, judgments, remedial actions, requirements and enforcement actions of
any kind, and all costs and expenses incurred in connection therewith
(including, without limitation, attorneys' fees and expenses), arising directly
or indirectly, in whole or in part, out of (a) the presence of any Hazardous
Substances on, under or from its property, whether prior to or during the term
hereof, or (b) any activity carried on or undertaken on or off its property,
whether prior to or during the term hereof, and whether by the Borrower, or any
predecessor in title or any employees, agents, contractors or subcontractors of
the Borrower, or any predecessor in title, or any third Persons at any time
occupying or present on such property, in connection with the handling,
treatment, removal, storage, decontamination, cleanup, transportation or
disposal of any Hazardous Substances at any time located or present on or under
such property; with the foregoing indemnity further applying to any residual
contamination on or under the property of the Borrower, or any property of any
other Person, or affecting any natural resources, and to any contamination of
any property or natural resources arising in connection with the generation,
use, handling, storage, transportation or disposal of any Hazardous Substances,
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable requirements of Law, including, without limitation,
Environmental Laws, and surviving satisfaction of all Indebtedness of the
Borrower to any of the Bank Parties and the termination of this Agreement,
unless all such Indebtedness has been satisfied wholly in cash from the Borrower
and not by way of realization against any property or the conveyance of any
property of the Borrower in lieu thereof, provided that the claims and other
actions of any kind against any of the Bank Parties which give rise to such
indemnity are not barred by the applicable statute of limitations at the time
such claims or actions are instituted and such indemnity shall not extend to any
act or omission by any of the Bank Parties with respect to the relevant property
subsequent to the Administrative Agent, the Arranger or any Bank becoming the
owner of, taking possession of to the exclusion of the Borrower or assuming
operations of any property previously owned by the Borrower and with respect to
which property such claim, loss, damage, liability, fine, penalty, charge,
proceeding, order, judgment, action or requirement arises subsequent to the
acquisition of title thereto, taking possession thereof or assumption of
operations thereon by any of the Bank Parties.
5.21 Transactions with Affiliates. Conduct all transactions with any
Affiliate of the Borrower on an arm's-length basis (provided that such
transactions are otherwise permitted by the terms of this Agreement),
specifically including, but not limited to, all Material Contracts with any
Affiliate.
5.22 Leases. Keep and continue all Leases comprising the Collateral Assets
and related contracts and agreements relating thereto in full force and effect
in accordance with the terms thereof and not permit the same to lapse or
otherwise become impaired for failure to comply with the obligations thereof,
whether express or implied; provided, however, that this provision shall not
prevent the Borrower from abandoning and releasing any such Leases upon their
termination as the result of cessation of production in paying quantities that
did not result from the Borrower's failure to maintain such production as a
reasonably prudent operator.
5.23 Operation of Collateral Assets. Operate the Collateral Assets and all
▇▇▇▇▇ drilled thereon and that may hereafter be drilled thereon, continuously
and in a good and workmanlike manner and in accordance with all Laws of the
State in which the Collateral Assets are situated and the United States of
America, as well as all rules, regulations, and Laws of any governmental agency
having jurisdiction to regulate the manner in which the operation of the
Collateral Assets shall be carried on, and comply with all terms and conditions
of the Leases it now holds, and any assignment or contract obligating the
Borrower in any way with respect to the Collateral Assets; but nothing herein
shall be construed to empower the Borrower to bind any Bank Party to any
contract obligation, or render any Bank Party in any way responsible or liable
for bills or obligations incurred by the Borrower.
5.24 Assignments. Upon request of the Administrative Agent, execute and
deliver written notices of assignments to any persons, corporations or other
entities owing or which may in the future owe to the Borrower monies or accounts
arising in connection with any of the following matters: (a) any oil, gas or
mineral production from the Collateral Assets; (b) any gas contracts, processing
contracts or other contracts relating to the Collateral Assets; or (c) the
operation of or production from any part of the Collateral Assets.
5.25 Change of Purchasers of Production. On or before each anniversary of
the Closing, and at any other time that the Administrative Agent may so request
in writing, the Borrower shall notify the Administrative Agent in writing of the
identity and address of each then-current purchaser of production from the
Collateral Assets and, if requested by the Administrative Agent, shall provide
the Administrative Agent with Transfer Order Letters executed by the Borrower
and addressed to such purchasers of production.
5.26 Payment of Taxes, Etc. Pay or cause to be paid when due, all taxes,
assessments, and charges or levies imposed upon it and/or any of its
Subsidiaries, or on any of their respective property, or which it or they are
required to withhold and pay, except where contested in good faith by
appropriate proceedings with adequate reserves therefor having been set aside on
its books, provided, however, that the Borrower shall each pay or cause to be
paid all such taxes, assessments, charges, or levies forthwith whenever
foreclosure on any lien that may have attached (or security therefor) appears
imminent.
5.27 Notice of Litigation. Give immediate notice to the Administrative
Agent of: (1) any litigation or proceeding in which it or any of its
Subsidiaries is a party if an adverse decision therein would require it or any
of its Subsidiaries to pay more than Five Hundred Thousand Dollars ($500,000.00)
in the aggregate or deliver assets the value of which exceeds such sum (whether
or not the claim is considered to be covered by insurance); and (2) the
institution of any other suit or proceeding involving the Borrower that might
materially and adversely affect its operations, financial condition, property,
or business prospects.
5.28 Notice of Events of Default. Notify the Administrative Agent
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition, or event that only with the giving of notice or passage of
time or both, would become an Event of Default or if it becomes aware of any
Material Adverse Change (including, without limitation, proceedings in
bankruptcy, insolvency, reorganization, or the appointment of a receiver or
trustee), or of the failure of the Borrower to observe any of its undertakings
hereunder or under the Security Instruments.
5.29 Notice of Change of Principal Offices. Notify the Administrative Agent
thirty (30) days in advance of any change in the location of the principal
offices of Borrower or any of its Subsidiaries.
5.30 Employee Benefit Plans. Fund its Plan(s) in accordance with no less
than the minimum funding standards of 29 U.S.C.A. ss. 1082 (Section 302 of
ERISA); furnish the Administrative Agent, promptly after the filing or receiving
of the same, with copies of any reports or other statements filed with, or
notices or other communications received from, the United States Department of
Labor, the PBGC, or the Internal Revenue Service with respect to any such Plan;
promptly advise the Administrative Agent of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan and the action the
Borrower proposes to take with respect thereto; and promptly advise the
Administrative Agent when the Borrower knows or has reason to believe that the
PBGC or the Borrower has instituted or will institute proceedings under Title IV
of ERISA to terminate any such Plan and the action the Borrower proposes to take
with respect thereto.
5.31 Annual Capital Budget. Within thirty (30) days after Closing, Borrower
shall prepare and submit to Administrative Agent monthly financial projections
and planned capital expenditures (the "Budget") applicable to the activities of
Borrower to be conducted: (a) through the fiscal quarter ending March 31, 2004,
with respect to all activities of Borrower, such Budget to be in form and
substance reasonably satisfactory to Administrative Agent, and which shall be
sufficient to demonstrate to the Required Banks' reasonable satisfaction that
Borrower will remain in compliance with this Agreement and the other Loan
Documents during the period covered by the Budget. Thereafter, an updated Budget
shall be submitted to Administrative Agent within ninety (90) days after the
close of each fiscal year so that the Budget always covers the period through
the projected completion of all planned capital expenditures through the ensuing
four (4) calendar quarters with respect to all activities of Borrower. Each
updated Budget submitted to the Administrative Agent within ninety (90) days
after the close of each fiscal year shall also include a comparison of
Borrower's actual capital expenditures during such preceding fiscal year
compared to the expenditures forecast for such fiscal year on the most recent
Budget that had been submitted to Administrative Agent with respect thereto.
Borrower shall conduct the activities contemplated by the capital expenditures
forecast in each current Budget, substantially as and when contemplated in such
Budget.
5.32 Payment of Obligations. Promptly pay (or renew and extend) all of its
Indebtedness as it becomes due, unless payment of such Indebtedness is: (a)
restricted pursuant to Article VI hereof, or (b) being contested in good faith
by appropriate proceedings.
5.33 Compliance with Section 2.06. Comply with Section 2.06, including, but
not limited to, the delivery of the Engineering Reports, as specified therein.
5.34 Notice Regarding Early Termination of Hedge Agreements. Promptly
notify Administrative Agent regarding the occurrence of any early termination or
other unwind of any Hedge Agreement prior to the end of its original, nominal
term, such notification to be given by Borrower as promptly as possible after
Borrower learns of the occurrence or impending occurrence of such early
termination, and in any event not later than two Business Days thereafter.
5.35 Accounts Receivable Aging Reports. Within fourteen (14) days from the
end of each calendar month, submit to Administrative Agent a report in form and
substance acceptable to the Administrative Agent identifying the accounts
receivable aging for all accounts receivable of Borrower as of the end of such
calendar month.
5.36 Accruals for Personal Tax Distributions.
(a) While Borrower is a Subsidiary of CRI. For so long as Borrower is
a wholly-owned Subsidiary of CRI, Borrower shall prepare a hypothetical
separate tax return on the assumptions that (a) Borrower is a separate
taxpaying corporation and (b) Borrower has not elected to be taxed as an
"S" corporation. Borrower may establish and maintain a cash reserve account
for Personal Tax Distributions (the "Tax Accrual Account"), and shall be
permitted to make quarterly deposits into that account equal to a sum
determined by multiplying Borrower's estimated taxable income for the
quarter (x) by a percentage equal to 34% during each tax year through 2005,
and (y) after December 31, 2005, by a percentage equal to the highest
combined federal and state income tax rate applicable to an individual
taxpayer (the "Annual Tax Rate"). Borrower shall have the right to disburse
from such account quarterly, to CRI for the benefit of its shareholders, an
amount equal to the estimated federal income tax liability payable by such
shareholders with respect to such quarter that is attributable to the
taxable income of the CRI consolidated group for such quarter multiplied by
a fraction, the numerator of which is the Borrower's estimated taxable
income for such quarter and the denominator of which is of the estimated
taxable income of the CRI consolidated group for such quarter ("Borrower's
Percentage Share"). After the end of each tax year, but on or before April
15 of the following year, when the taxable income of the CRI consolidated
group is determined, Borrower shall have the right to disburse from such
account and from other funds available to Borrower, if necessary, to the
shareholders of CRI an amount equal to a sum determined by multiplying the
Annual Tax Rate times Borrower's Percentage Share of CRI's consolidated
group taxable income, less the sum of all amounts previously distributed
from the Tax Accrual Account to CRI for the benefit of its shareholders
with respect to such tax year.
(b) When Borrower is No Longer a Subsidiary of CRI. From and after the
time that Borrower is no longer a wholly-owned Subsidiary of CRI, and for
so long as Borrower is an "S" corporation for federal income tax purposes,
Borrower may continue to establish and maintain the Tax Accrual Account,
and shall be permitted to make quarterly deposits into that account equal
to Borrower's estimated taxable income for the quarter multiplied by the
Annual Tax Rate. Borrower shall have the right to disburse from the Tax
Accrual Account quarterly to its own shareholders an amount equal to the
estimated federal income tax liability payable by such shareholders with
respect to such quarter that is attributable to the taxable income of
Borrower for such quarter. After the end of each tax year, but on or before
April 15 of the following year, when the taxable income of the Borrower is
determined, Borrower shall have the right to disburse from such account
(and from other funds available to Borrower, if necessary) to its
shareholders an amount equal to a sum determined by multiplying the Annual
Tax Rate times Borrower's taxable income for such tax year, less the sum of
all amounts previously distributed form the Tax Accrual Account to such
shareholders with respect to such tax year.
(c) Application of Excess Accruals. If after applying the provisions
of Sections 5.36(a) or (b), as applicable, with respect to a full tax year,
there remains any sum in the Tax Accrual Account that Borrower was not
permitted by Section 5.36(a) or (b), as applicable, to distribute to the
shareholders of CRI or Borrower, respectively, then on or before April 15
following the end of such tax year, CRI shall pay 75% of such undistributed
amount to the Banks as a supplemental payment out of Excess Cash Flow to be
applied to the outstanding balance of the Term Loan as provided in the last
sentence of Section 2.08.
(d) Information to be provided to Administrative Agent.
Contemporaneously with making any deposit into the Tax Accrual Account and
with making any disbursement out of the Tax Accrual Account to CRI, or to
the shareholders of CRI or Borrower, as applicable, Borrower shall notify
Administrative Agent in writing regarding the amount(s) of such deposit(s)
and/or disbursement(s), accompanied by detailed calculations in support of
the amount so deposited or disbursed, in accordance with the provisions of
this Section.
5.37 Collateral Audit. Borrower shall exercise full cooperation and
diligence to facilitate the conduct by the Documentation Agent or its
designees of an audit (but not a title examination) of the Collateral
Assets, accounts receivable and inventory of Borrower to be completed no
later than 30 days after Closing (provided that Borrower shall afford
Documentation Agent as much additional time as is reasonably necessary to
enable Documentation Agent to complete such audit to its satisfaction). If,
as the result of such audit, Documentation Agent discovers facts that
reasonably warrant modifications to the definition of "Eligible Accounts"
or "Revolving Loan Availability Amount," including, but not limited to, the
percentages set forth in such latter definition, the Documentation Agent,
with the approval of the Required Banks, shall have the right to amend such
definitions in accordance with Documentation Agent's standard definitions
and parameters for such terms (and substantially similar terms) by sending
written notice of such amendment to Borrower and the Banks, which amendment
will take effect upon Borrower's receipt thereof.
Article VI.
NEGATIVE COVENANTS
Without the prior written consent of the Administrative Agent and the
Required Banks and so long as any part of the principal or interest on the Notes
shall remain unpaid or any Bank remains obligated to make advances hereunder,
Borrower covenants that it will not:
6.01 Other Indebtedness. Incur, create, assume or suffer to exist any
Indebtedness, whether by way of loan or the issuance or sale of securities
except Permitted Indebtedness.
6.02 Loans or Advances. Make or agree to make or allow to remain
outstanding any loans or advances to any Person, except advances or extensions
of credit in the form of accounts receivable incurred in the ordinary course of
business.
6.03 Mortgages or Pledges of Assets. Create, incur, assume or permit to
exist, any mortgage, pledge, security interest, lien or encumbrance on any of
its properties or assets (now owned or hereafter acquired), except for Permitted
Encumbrances.
6.04 Sales of Assets. Except for Permitted Asset Sales, sell, lease,
assign, transfer or otherwise dispose of, in one or any series of related
transactions, all or any portion of its Oil and Gas Properties or other material
assets, whether now owned or hereafter acquired, including transfers to
Subsidiaries, nor enter into any arrangement, directly or indirectly, with any
Person to sell and rent or lease back as lessee such property or any part
thereof which is intended to be used for substantially the same purpose or
purposes as the property sold or transferred.
6.05 Payment of Accounts Payable. Allow any account payable to remain
unpaid more than ninety (90) days after the date of the invoice therefor, except
such as are (i) being contested in good faith and as to which adequate provision
or accrual has been made, or (ii) the subject of usual and customary review and
evaluation.
6.06 Cancellation of Insurance. Allow any property and casualty insurance
policy required to be carried hereunder to be terminated or lapse or expire
without provision for adequate renewal or replacement thereof.
6.07 Investments. Make Investments in or purchase or otherwise acquire all
or substantially all of the assets of any Person, or any shares of stock of, or
similar interest in, any other Person, if the result of such action would impair
the ability of the Borrower to perform any of its Obligations pursuant to this
Agreement, including, without limitation, the obligation to repay the
Indebtedness evidenced by the Notes, except that the Borrower may invest in
instruments that are investment grade, and in short-term commercial paper.
6.08 Changes in Structure or Business. Consolidate or merge with or
purchase (for cash or securities), all or substantially all of the assets or
capital stock of any corporation, firm, association or enterprise, or allow any
such entity to be merged into the Borrower, or change the basic business
operations of the Borrower, unless all of the following conditions are
satisfied: (a) Borrower has provided Administrative Agent complete and detailed
information relating to such merger or purchase at least fifteen (15) days in
advance thereof, (b) Borrower is the survivor of such merger or the acquiror in
any such purchase, and (c) such merger or purchase will not otherwise constitute
or result in an Event of Default or Unmatured Event of Default under any other
provisions of this Agreement.
6.09 Pooling or Unitization. Voluntarily pool or unitize, all or any part
of the Collateral Assets where the pooling or unitization would result in the
diminution of the Borrower's net revenue from production from the pooled or
unitized lands, without the Required Banks' prior consent, which will not be
unreasonably withheld. Any unitization, pooling or communitization or other
action or instrument in violation of this Section 6.10 shall be of no force or
effect against any Bank.
6.10 Hedge Agreements. Except for Permitted Hedge Agreements of which
Borrower has notified Administrative Agent in writing at or prior to the time
that Borrower becomes party thereto, enter into or become obligated under any
contract for sale for future delivery of Hydrocarbons other than normal
production contracts entered into in the Borrower's normal course of business
(whether or not the subject Hydrocarbons are to be delivered), forward contract,
Hedging Agreement, futures contract or any other similar agreement, without the
prior written consent of the Required Banks, acting in their sole discretion.
6.11 Capital Stock of Borrower/Redemption of Senior Subordinated Notes. (a)
issue, redeem, purchase, retire or otherwise acquire for value any of its
capital stock or Senior Subordinated Notes or grant, issue, purchase, retire or
otherwise acquire for value any warrant, right, or option pertaining thereto or
other security convertible into any of the foregoing; (b) permit any transfer,
sale, redemption, retirement, or other change in the ownership of the
outstanding capital stock of the Borrower; or (c) enter into any agreement or
adopt any plan that would require it to do anything prohibited by clauses (a) or
(b); in any case without the prior written consent of the Required Banks, acting
in their discretion; except for issuance, transfer or repurchase of the
Borrower's capital stock which does not result in a Change of Control or
otherwise constitute or result in an Event of Default or an Unmatured Event of
Default under any other provisions of this Agreement.
6.12 Margin Stock. Directly or indirectly apply any part of the proceeds of
the Loans to the purchasing or carrying of any "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder.
6.13 Amendment, Termination or Waiver of Material Contracts. Terminate or
allow any Material Contract to be terminated prior to the expiration of its
stated term; waive noncompliance with the material terms of any Material
Contract by any party thereto; or amend the material terms of any Material
Contracts such that the terms of the Material Contract, as amended, are less
favorable to the Borrower than immediately before such amendment.
6.14 Current Ratio. Permit as of the end of any fiscal quarter its Current
Ratio to be less than 1.00 to 1.00.
6.15 Interest Charge Coverage Ratio. Permit, as of the end of any fiscal
quarter, the ratio of EBITDA to Borrower's Total Interest Charges to be lesser
than 3.00 to 1.0, calculated on a rolling four-quarter basis. For purposes of
this Section, the term "Total Interest Charges" means all cash interest charges
of Borrower.
6.16 Fixed Charge Coverage Ratio. Permit, as of the end of any fiscal
quarter, the ratio of EBITDA to Borrower's Total Fixed Charges to be lesser than
1.50 to 1.0, calculated on a rolling four-quarter basis. For purposes of this
Section, the term "Total Fixed Charges" means all cash interest charges,
maintenance capital expenditures, scheduled and required principal amortization
and cash dividends.
6.17 Senior Debt to EBITDA. Permit, as of the end of any fiscal quarter,
the ratio of Aggregate Outstanding Credit Exposure to EBITDA to be greater than
3.5 to 1.0 from Closing through September 30, 2004; 3.25 to 1.0 from October 1,
2004 through March 31, 2005; and 3.00 to 1.00 thereafter, each case calculated
on a rolling four-quarter basis.
6.18 Rolling Four-Quarter Basis. For purposes of Section 6.17 through 6.19
hereof, EBITDA on a rolling four-quarter basis shall be calculated: (a) for the
period ending December 31, 2003, by multiplying EBITDA accrued during the fiscal
quarter ended December 31, 2003 times four; (b) for the period ending March 31,
2004, by multiplying EBITDA accrued during the period from October 1, 2003
through March 31, 2004 times two; for the period ending June 30, 2004, by
multiplying EBITDA accrued during the period from October 1, 2003 through June
30, 2004 times 1.33; (d) for the period ending September 30, 2004 and at the end
of each subsequent fiscal quarter, based on EBITDA accrued during the
four-quarter period ending on such date.
Article VII.
EVENTS OF DEFAULT
7.01 Enumeration of Events of Default. Any of the following events shall be
considered an Event of Default as that term is used herein:
(a) Default shall be made by the Borrower in the payment of any installment
of principal or interest (including, without limitation, any mandatory
prepayments payable pursuant to either Section 2.07 or 2.08 of this Agreement)
on the Notes, any LC Fee or any other monetary obligation (other than
Reimbursement Obligations) payable hereunder when due, or any other fee due to
any Bank Party hereunder within five (5) days after such payment was due, or in
the payment of any Reimbursement Obligation within one Business Day after the
same becomes due;
(b) Default shall be made by the Borrower in the due observance or
performance of any affirmative covenant required in this Agreement, the Notes,
the Facility LC Applications or the Security Instruments and such default
continues for more than thirty (30) days after the earlier of: (i) Borrower
having knowledge thereof, or (ii) Borrower receiving written notice thereof from
the Administrative Agent;
(c) Default shall be made by the Borrower in the due observance or
performance of any negative covenant required in this Agreement, the Notes, the
Facility LC Applications or the Security Instruments;
(d) Any representation or warranty herein made by the Borrower proves to be
untrue in any respect material to the Borrower, provided that any such
representation or warranty that either expressly or by its context necessarily
relates only to a specific time need be true only as of such specific time, or
any representation, statement (including Financial Statements), certificate or
data furnished or made by the Borrower to the Administrative Agent in connection
herewith proves to have been untrue in any respect material to the Borrower as
of the date the facts therein set forth were stated or certified;
(e) Default shall be made by any Borrower (as principal or other surety) in
payment or performance of any bond, debenture, note or other evidence of
Indebtedness for borrowed money, or under any credit agreement, loan agreement,
indenture, promissory note or similar agreement or instrument executed in
connection with any of the forgoing, relating to any Indebtedness in an
aggregate amount of One Million Dollars ($1,000,000.00) or more, and such
default shall remain unremedied for in excess of the period of grace, if any,
with respect thereto.
(f) At a time when Borrower continues to be a Subsidiary of CRI, default
shall be made by CRI under the CRI Credit Agreement, or default shall be made by
CRI with respect to the Senior Subordinated Notes, and any such default shall
remain unremedied for in excess of the period of grace, if any, with respect
thereto.
(g) Borrower (i) discontinues its usual business or applies for or consents
to the appointment of a receiver, trustee or liquidator of it or all or a
substantial part of its assets, or (ii) files a voluntary petition commencing a
case under Title 11 of the United States Code, seeking liquidation,
reorganization or rearrangement or taking advantage of any bankruptcy,
insolvency, debtor's relief or other similar Law of the United States the State
of Texas or any other jurisdiction, or (iii) makes a general assignment for the
benefit of creditors, or (iv) is unable, or admits in writing its inability to
pay its debts generally as they become due, or (v) files an answer admitting the
material allegations of a petition filed against it in any case commenced under
Title 11 of the United States Code or any reorganization, insolvency,
conservatorship or similar proceeding under any bankruptcy, insolvency, debtor's
relief or other similar Law of the United States, the State of Texas or any
other jurisdiction;
(h) An order, judgment or decree shall be entered against Borrower by any
court of competent jurisdiction or by any other duly authorized authority, on
the petition of a creditor or otherwise, granting relief under Title 11 of the
United States Code or under any bankruptcy, insolvency, debtor's relief or other
similar Law of the United States, the State of Texas or any other jurisdiction,
approving a petition seeking reorganization or an arrangement of its debts or
appointing a receiver, trustee, conservator, custodian or liquidator of it or
all or any substantial part of its assets, and the failure to have such order,
judgment or decree dismissed within thirty (30) days of its entry;
(i) Borrower has concealed, removed, or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them; or has made or suffered a transfer of any of its
property which would be characterized as a fraudulent conveyance under
bankruptcy or similar Laws; or has made any transfer of its property to or for
the benefit of a creditor at a time when other creditors similarly situated have
not been paid; or has suffered or permitted, while insolvent, any creditor to
obtain a lien upon any of its property through legal proceedings or distraint
which is not vacated within thirty (30) days from the date thereof;
(j) the Liens under the Security Instruments cease to be perfected or cease
to be first priority Liens subject to only Permitted Encumbrances; or
(k) a Material Adverse Change occurs.
7.02 Rights Upon Unmatured Event of Default. At any time that there exists
an Unmatured Event of Default, any obligation of the Banks and the LC Issuer to
make Credit Extensions shall be suspended unless and until the Administrative
Agent, with the approval of the Super-Majority and the LC Issuer, shall
reinstate the same in writing, the Unmatured Event of Default shall have been
waived by the Administrative Agent, with approval of the Super-Majority and the
LC Issuer or the relevant Unmatured Event of Default shall have been remedied
prior to ripening into an Event of Default.
7.03 Rights Upon Default. Upon the happening of an Event of Default
specified in Subsections 7.01 (g) or (h), the obligations of the Banks and the
LC Issuer to make Credit Extensions hereunder shall automatically terminate and
all Obligations then outstanding hereunder and the interest accrued thereon
shall automatically become immediately due and payable without any election or
action on the part of the Administrative Agent, any Bank or the LC Issuer. Upon
the happening and during the continuation of any other Event of Default, upon
the request of the Super-Majority subject to Section 9.13, the Administrative
Agent shall terminate or suspend the obligations of the Banks and the LC Issuer
to make Credit Extensions hereunder, or declare the Obligations to be
immediately due and payable, or both, and upon such declaration with respect to
the Obligations they shall become immediately due and payable. In either case,
the entire principal and interest shall thereupon become immediately due and
payable, without notice (including, without limitation, notice of intent to
accelerate maturity or notice of acceleration of maturity) and without
presentment, demand, protest, notice of protest or other notice of default or
dishonor of any kind, except as provided to the contrary elsewhere herein, all
of which are hereby expressly waived by the Borrower.
If, within thirty (30) days after acceleration of the maturity of the
Obligations or termination of the obligations of the Banks and LC Issuer to make
Credit Extensions hereunder as the result of any Event of Default (other than
any Event of Default specified in subsections 7.01(g) or (h)) and before any
judgment or decree for the payment of the Obligations due shall have been
obtained or entered, the Super-Majority (in their sole discretion) shall direct
with respect to the Obligations relating to the Loans or the LC Issuer (in its
sole discretion) shall direct with respect to Obligations relating to Facility
LCs, the Administrative Agent shall, by notice to the Borrower, rescind and
annul such acceleration and/or termination.
7.04 Remedies. After any acceleration, as provided for in Section 7.03, the
Bank Parties shall have, in addition to the rights and remedies given them by
this Agreement and the Security Instruments, all those allowed by all applicable
Laws, including, but without limitation, the Uniform Commercial Code as enacted
in any jurisdiction in which any of the Collateral Assets may be located.
Without limiting the generality of the foregoing, the Administrative Agent, upon
the request of the Super-Majority shall, immediately without demand of
performance and without other notice (except as specifically required by this
Agreement or the Security Instruments) or demand whatsoever to the Borrower, all
of which are hereby expressly waived, and without advertisement, sell at public
or private sale or otherwise realize upon, in Garfield County, Oklahoma, or in
any other place where the Collateral Assets may be located, or in such other
place or places as the Administrative Agent may designate, the whole or, from
time to time, any part of the Collateral Assets, or any interest which the
Borrower may have therein. After deducting from the proceeds of sale or other
disposition of the Collateral Assets all expenses (including all reasonable
expenses for legal services), the Bank shall apply such proceeds toward the
satisfaction of the Obligations. Any remainder of the proceeds after
satisfaction in full of the Obligations shall be distributed as required by
applicable Laws. Notice of any sale or other disposition shall be given to the
Borrower at least five (5) days before the time of any public sale or of the
time after which any intended private sale or other disposition of the
Collateral Assets is to be made, which the Borrower hereby agrees shall be
reasonable notice of such sale or other disposition. The Borrower agrees to
assemble, or to cause to be assembled, at its own expense, documents evidencing
its ownership of the Collateral Assets and such other documents or items as the
Administrative Agent may reasonably request at such place or places as the
Administrative Agent shall designate. At any such sale or other disposition, the
Administrative Agent and/or any Bank, to the extent permissible under applicable
Laws, may purchase the whole or any part of the Collateral Assets, free from any
right of redemption on the part of the Borrower, which right is hereby waived
and released. Without limiting the generality of any of the rights and remedies
conferred upon the Administrative Agent for the benefit of the Banks under this
paragraph, the Administrative Agent may, to the full extent permitted by the
applicable Laws:
(A) Enter upon the premises of the Borrower (and, to the extent
necessary in the judgment of the Administrative Agent, exclude therefrom
the Borrower or any Affiliate thereof) and take immediate possession of the
Collateral Assets, either personally or by means of a receiver appointed by
a court of competent jurisdiction, using all necessary force to do so;
(B) At the Administrative Agent's option, use, operate, manage, and
control the Collateral Assets in any lawful manner;
(C) Collect and receive all rents, income, revenue, earnings, issues,
and profits therefrom for the benefit of the Banks; and
(D) Maintain, repair, renovate, alter, or remove the Collateral Assets
as the Banks may determine in their discretion.
7.05 Right of Set-off. Upon the occurrence of any Event of Default, each
Bank may, and is hereby authorized by the Borrower, at any time and from time to
time, to the fullest extent permitted by applicable Laws, without advance notice
to the Borrower (any such notice being expressly waived by the Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by such Bank to or for the credit or the account of the Borrower against
any or all of the Obligations of the Borrower now or hereafter existing, whether
or not such Obligations have matured and irrespective of whether such Bank may
have exercised any other rights that they have or may have with respect to such
Obligations, including, without limitation, any acceleration rights. Each Bank
agrees promptly to notify the Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 7.05
are in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which the Banks may have.
Article VIII.
THE AGENTS
8.01 Authorization and Action. Each Bank hereby irrevocably appoints and
authorizes each Agent to act on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are specifically delegated to or
required of such Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or the other Loan Documents (including, without
limitation, enforcement or collection of the Notes), no Agent shall be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and, as between such Agent and the Banks, shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Banks, and such instructions shall be binding upon all Banks and all
holders of Notes; provided, however, that no Agent shall be required to take any
action which exposes such Agent to personal liability or which is contrary to
this Agreement, the other Loan Documents or applicable law.
8.02 Agent's Reliance, Etc. Neither any Agent nor any of its directors,
officers, agents or employees shall be liable to any Bank for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
or the other Loan Documents (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its or their own gross negligence or
willful misconduct (it being the express intention of the parties that no Agent
nor its directors, officers, agents and employees shall have any liability for
actions and omissions under this Section 8.02 resulting from their sole ordinary
or contributory negligence). Without limitation of the generality of the
foregoing, each Agent: (i) may treat the payee of each Note as the holder
thereof until such Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to such Agent; (ii) may
consult with legal counsel (including counsel for Borrower or any of its
Subsidiaries), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations made
in or in connection with this Agreement or the other Loan Documents; (iv) except
as otherwise expressly provided herein, shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents or to inspect the
property (including the books and records) of Borrower and its Subsidiaries; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, telecopier, cable or
telex) reasonably believed by it to be genuine and signed or sent by the proper
party or parties; and (vii) the provisions of this Section 8.02 shall survive
the termination of this Agreement and/or the payment or assignment of any of the
Indebtedness under this Agreement.
8.03 Each Agent and its Affiliates. With respect to its Commitment, the
Credit Extensions made by it and the Note issued to it as a Bank, each Agent
shall have the same rights and powers under this Agreement or the other Loan
Documents as any other Bank and may exercise the same as though it were not an
Agent. The term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include each Agent in its individual capacity. Each Agent and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with Borrower, any of its respective
Subsidiaries and any Person who may do business with or own securities of
Borrower, any of its respective Subsidiaries, all as if such Agent were not an
Agent and without any duty to account therefor to the Banks.
8.04 Bank Credit Decision. Each Bank acknowledges and agrees that it has,
independently and without reliance upon the Administrative Agent or any other
Agent and based on the Financial Statements referred to in Section 5.04 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Administrative Agent or any other Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
8.05 Agent's Indemnity. No Agent shall be required to take any action
hereunder or to prosecute or defend any suit in respect of this Agreement or the
other Loan Documents unless indemnified to such Agent's satisfaction by the
Banks against loss, cost, liability and expense. If any indemnity furnished to
such Agent shall become impaired, it may call for additional indemnity and cease
to do the acts indemnified against until such additional indemnity is given. In
addition, the Banks agree to indemnify such Agent (to the extent not reimbursed
by Borrower), ratably according to the respective principal amounts of the Notes
then held by each of them (or if no Notes are at the time outstanding, ratably
according to either (i) the respective amounts of their Commitments, or (ii) if
no Commitments are outstanding, the respective amounts of the Commitments
immediately prior to the time the Commitments ceased to be outstanding), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by such Agent under this Agreement or the other Loan Documents
(including, without limitation, any action taken or omitted under Article II of
this Agreement); provided, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Each Bank agrees, however, that it expressly intends, under
this Section 8.05, to indemnify each Agent ratably as aforesaid for all such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements arising out of or resulting from such Agent's
ordinary or contributory negligence. Without limitation of the foregoing, each
Bank agrees to reimburse such Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel fees) incurred by
such Agent in connection with the preparation, execution, administration, or
enforcement of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Loan Documents to the extent that such Agent is not
reimbursed for such expenses by Borrower. The provisions of this Section 8.05
shall survive the termination of this Agreement and/or the payment or assignment
of any of the Indebtedness under this Agreement.
8.06 Successor Agents. Each Agent may resign at any time by giving written
notice thereof to the Banks and Borrower and may be removed as an Agent under
this Agreement and the other Loan Documents at any time with or without cause by
the Required Banks. Upon any such resignation or removal, the Required Banks
with the concurrence of Borrower shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 calendar days after the
retiring Agent's giving of notice of resignation or the Required Banks' removal
of the retiring Agent, then the retiring Agent may, on behalf of the Banks and
with the concurrence of Borrower, appoint a successor Agent. Upon the acceptance
of any appointment as Agent hereunder and under the other Loan Documents by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation or removal as Agent hereunder and under the other Loan Documents,
the provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
8.07 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
hereunder unless such Agent shall have received notice from a Bank or Borrower
referring to this Agreement, describing such Unmatured Event of Default or Event
of Default and stating that such notice is a "notice of default." If any Agent
receives such a notice, such Agent shall give notice thereof to the Banks;
provided, however, if such notice is received from a Bank, such Agent also shall
give notice thereof to Borrower. The Administrative Agent shall be entitled to
take action or refrain from taking action with respect to such Unmatured Event
of Default or Event of Default as provided in Section 8.01 and Section 8.02.
Article IX.
MISCELLANEOUS
9.01 Security Interests in Deposits and Right of Offset or the Banker's
Lien. The Borrower hereby transfers, assigns, pledges and grants to each Bank a
security interest (as security for the payment and/or performance of the
Obligations of the Borrower, with such interest of each Bank to be
retransferred, reassigned and/or released by such Bank at the expense of the
Borrower upon payment in full and/or complete performance by the Borrower of all
such Obligations) and the right, exercisable at such time as any obligation
hereunder shall mature, whether by acceleration of maturity or otherwise, of
offset or banker's lien against all funds or other property of the Borrower now
or hereafter or from time to time on deposit with or in the possession of such
Bank, including, without limitation, all certificates of deposit and other
depository accounts.
9.02 Survival of Representations, Warranties and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Notes and this
Agreement so long as any debt is outstanding under the Notes, or any renewal or
extension of this Agreement or the Notes, or the Banks remain obligated to make
advances hereunder.
9.03 Notices and Other Communications. Notices, requests and communications
hereunder shall be in writing and shall be sufficient in all respects if
delivered to the relevant address indicated below (including delivery by
registered or certified United States mail, facsimile, telex, telegram or hand):
(A) If to
Borrower: CONTINENTAL GAS, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
(B) If to
any of the
Bank Parties: UNION BANK OF CALIFORNIA, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Any party may, by proper written notice hereunder to the other, change the
individuals or addresses to which such notices to it shall thereafter be sent.
9.04 Parties in Interest. All covenants and agreements herein contained by
or on behalf of the Borrower shall be binding upon the Borrower and its
successors and assigns and inure to the benefit of the Bank Parties and their
respective successors and assigns.
9.05 Successors and Assigns; Participation; Purchasing Banks.
(a) Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and permitted assigns
of such party; and all covenants, promises and agreements by or on behalf of
Borrower, the Administrative Agent or the Banks that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
permitted assigns. Borrower may not assign or transfer any of its rights or
obligations hereunder without the written consent of all the Banks.
(b) Each Bank may, without the consent of Borrower, sell participations to
one or more banks or other financial institutions in all or a portion of its
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitment, the Loans
owing to it, and the Notes held by it); provided, however, that (i) the selling
Bank's obligations under this Agreement and the other Loan Documents shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) Borrower, the
Administrative Agent, and the other Banks shall continue to deal solely and
directly with the selling Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, (iv) the selling
Bank shall remain the holder of its Note(s) for all purposes of this Agreement,
and (v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement or any Note,
or any consent to any departure by the Borrower therefrom, except to the extent
that such amendment, waiver or consent would reduce to the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or postpone any regularly
scheduled payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation.
(c) With the prior written consent of Borrower and the Administrative
Agent, each Bank may assign to one or more banks or other entities (a
"Purchasing Bank"), all or a portion of its interests, rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Commitment and the same portion of the Loans
at the time owing to it and the Notes held by it); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Bank's rights and obligations under this Agreement and the
other Loan Documents, (ii) after giving effect to such assignment, the
Purchasing Bank's Commitment must be at least $5,000,000 (either solely as the
result of such assignment or as the result of multiple assignments from two or
more assigning Banks), (iii) the parties to each such assignment shall execute
and deliver to the Administrative Agent a Commitment Transfer Supplement
together with any Notes subject to such Commitment Transfer Supplement, (iv) the
assigning Bank shall pay to Administrative Agent an assignment fee of $3,500,
(v) an assigning Bank shall not assign a portion of such Bank's Commitment in an
amount less than an amount equal to the lesser of such Bank's Commitment
hereunder and $2,500,000 and (vi) if the assigning Bank has retained any
Commitment hereunder, such assigning Bank's Commitment shall be at least
$5,000,000 after giving effect to such assignment. Upon such execution and
delivery, from and after the effective date specified in each Commitment
Transfer Supplement, which effective date shall be at least five Business Days
after the execution thereof (x) the Purchasing Bank thereunder shall be a party
hereto and, to the extent herein provided in such, have the rights and
obligations of a Bank hereunder and (y) the assignor Bank thereunder shall, to
the extent provided in such assignment, be released from its obligations under
this Agreement and the other Loan Documents (and, in the case of a Commitment
Transfer Supplement covering all of the remaining portion of an assigning Bank's
rights and obligations under this Agreement and the other Loan Documents, such
Bank shall cease to be a party hereto). Such Commitment Transfer Supplement
shall be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
adjustment of Percentage Shares arising from the purchase by such Purchasing
Bank of all or a portion of the rights and obligations of such assigning Bank
under this Agreement, the Notes and the other Loan Documents.
(d) The Administrative Agent shall maintain at its office a copy of each
Commitment Transfer Supplement delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitment Amount
of, and principal amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, the Administrative Agent, and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by an
assigning Bank and a Purchasing Bank together with any Notes subject to such
Commitment Transfer Supplement and the written consent to such Commitment
Transfer Supplement, the Administrative Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Banks and Borrower. Within
five (5) Business Days after receipt of such notice, Borrower shall, at its own
expense, execute and deliver to the Administrative Agent, in exchange for the
surrendered Notes, replacement Notes dated as of the effective date of such
surrendered Notes and otherwise substantially in the form of the Notes replaced
thereby payable to the order of such Purchasing Bank in an amount equal to the
Commitment assumed by it pursuant to such Commitment Transfer Supplement and, if
the assigning Bank has retained any Commitment hereunder, replacement Notes
dated as of the effective date of the surrendered Notes and otherwise
substantially in the form of the Notes replaced thereby payable to the order of
the assigning Bank in an amount equal to the Commitment of such assigning Bank
retained by it hereunder. Such replacement Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes. Contemporaneously with the delivery of the replacement Notes, the
canceled Notes shall be returned to Borrower marked "Replaced."
(f) Each Bank agrees to hold any confidential information which it may
receive from the Borrower pursuant to this Agreement in confidence, except for
disclosure (i) to its Affiliates and to other Banks and their respective
Affiliates, (ii) to legal counsel, accountants, and other professional advisors
to such Bank, (iii) to regulatory officials, (iv) to any Person as requested
pursuant to or as required by law, regulation, or legal process, (v) to any
Person in connection with any legal proceeding to which such Bank is a party,
(vi) to such Bank's direct or indirect contractual counterparties in swap
agreements or to legal counsel, accountants and other professional advisors to
such counterparties, and (vii) permitted by this Section. Notwithstanding any
other provision herein, any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.05, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower or any other Subsidiary of
Borrower furnished to such Bank by or on behalf of Borrower or any other
Subsidiary of Borrower; provided, that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to
Borrower and any of its Subsidiaries received from such Bank to the same extent
as required by this Section.
(g) Assignment to Federal Reserve Bank or Federal Home Loan Bank.
Notwithstanding any other language in this Agreement, any Bank may at any time
assign all or any portion of its rights under this Agreement and the Notes to a
Federal Reserve Bank or a Federal Home Loan Bank as collateral in accordance
with Regulation A and the applicable operating circular of such Federal Reserve
Bank or Federal Home Loan Bank.
9.06 Renewals and Extensions. All provisions of this Agreement relating to
the Notes shall apply with equal force and effect to each and all promissory
notes hereafter executed which in whole or in part represent a renewal,
extension, amendment, modification or rearrangement of any part of the
Indebtedness originally represented by the Notes.
9.07 No Waiver by the Bank Parties. No course of dealing on the part of the
Bank Parties, their officers or employees, nor any failure or delay by any of
the Bank Parties with respect to exercising any of its rights, powers or
privileges under this Agreement, the Notes, the Facility LC Applications, the
Security Instruments, or any other instrument referred to herein or executed in
connection with the Notes shall operate as a waiver thereof. The rights and
remedies of the Bank Parties under this Agreement, the Notes, the Facility LC
Applications, the Security Instruments, or any other instrument referred to
herein or executed in connection with the Notes shall be cumulative and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.
No Credit Extensions hereunder shall constitute a waiver of any of the
covenants or warranties of the Borrower contained herein or of any of the
conditions to the Banks' or the LC Issuer's obligation to make further Credit
Extensions hereunder. In the event that the Borrower is unable to satisfy any
such covenant, warranty or condition, no such Credit Extension shall have the
effect of precluding the Banks or the LC Issuer from thereafter declaring such
inability to be an Event of Default as hereinabove provided.
9.08 Waiver, Release, and Indemnification by the Borrower. To the maximum
extent permitted by applicable Laws, the Borrower:
(A) Waives (1) protest of all commercial paper at any time held by any
Bank on which the Borrower is in any way liable; (2) except as the same may
herein be specifically granted, notice of acceleration and intention to
accelerate; and (3) notice and opportunity to be heard, after acceleration
in the manner provided in Section 7.03, before exercise by Administrative
Agent, any Bank or the LC Issuer of the remedies of self-help, set-off, or
of other summary procedures permitted by any applicable Laws or by any
agreement with the Borrower, and, except where required hereby or by any
applicable Laws, notice of any other action taken by Administrative Agent,
any Bank or the LC Issuer;
(B) Releases each Agent, each of the Bank Parties and the LC Issuer
and their respective officers, employees, directors, attorneys, and agents
from all claims for loss or damage caused by any act or omission on the
part of any of them except willful misconduct or gross negligence; and
(C) Agrees to indemnify and hold the Bank Parties and the LC Issuer
and their respective officers, employees, directors, attorneys, and agents
harmless from and against all claims, damages, liabilities and expenses,
known or unknown, accrued and unaccrued, unless attributable to the gross
negligence or willful misconduct of the Bank Parties, the LC Issuer or
their respective officers, employees, directors, attorneys, and agents,
that may now or hereafter be asserted against any of the Bank Parties and
the LC Issuer and their respective officers, employees, directors,
attorneys, and agents in connection with or arising out of any
investigation, litigation or proceeding directly or indirectly relating to
or arising out of any of the transactions contemplated by this Agreement.
9.09 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE DEEMED TO BE
CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS. EACH PARTY HERETO AGREES THAT IN CONNECTION WITH
ANY LITIGATION BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO
SEEKING TO ENFORCE ANY RIGHTS, REMEDIES OR OBLIGATIONS UNDER THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, EACH PARTY CONCLUSIVELY WAIVES IT RIGHT TO
TRIAL BY JURY.
9.10 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
attached to this Agreement are incorporated herein for all purposes and shall be
considered a part of this Agreement.
9.11 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in this Agreement, the Notes, the Security Instruments, or
in any other instrument referred to herein or executed in connection with the
Notes shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof or of any other instrument referred to herein or
executed in connection herewith.
9.12 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Bank Parties and Borrower and no other Person
shall have standing to require satisfaction of such provisions in accordance
with their terms or be entitled to assume that any Bank will refuse to make
advances in the absence of strict compliance with any or all thereof. Any or all
of such provisions may be freely waived in whole or in part by the
Administrative Agent, the Banks and the LC Issuer at any time if in their
discretion they deem it advisable to do so.
9.13 Amendments or Modifications. Subject to the provisions of this
Section, the Required Banks (or the Administrative Agent with the consent in
writing of the Required Banks) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Banks or the Borrower
hereunder or waiving any Event of Default hereunder; provided, however, that:
(a) no such supplemental agreement shall, without the consent of all of the
Banks:
(i) Extend the final maturity of any Loan, postpone any regularly
scheduled payment of principal of any Loan, forgive all or any portion of
the principal amount thereof, or reduce the rate or extend the time of
payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Banks.
(iii) Reduce the percentage specified in the definition of
Super-Majority.
(iv) Extend the Facility Termination Date, or reduce the amount or
extend the payment date for, the mandatory payments required under Sections
2.07 or 2.08, or increase the Aggregate Commitment Amount or the Commitment
of any Bank hereunder, or permit the Borrower to assign its rights under
this Agreement.
(v) Amend the requirement that the Availability Amount may be
increased only with the consent of all Banks.
(vi) Release any guarantor of any Loan or, except as provided in the
Security Instruments, release all or substantially all of the Collateral
Assets.
(vii) Amend this Section 9.13.
(b) No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent.
9.14 Agreement Construed as an Entirety. This Agreement, for convenience
only, has been divided into Articles and Sections and it is understood that the
rights, powers, privileges, duties and other legal relations of the parties
hereto shall be determined from this Agreement as an entirety and without regard
to the aforesaid division into Articles and Sections and without regard to
headings prefixed to said Articles or Sections.
9.15 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural and likewise
the plural shall be understood to include the singular. Words denoting sex shall
be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the
general, but shall be construed as cumulative.
9.16 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS AGREEMENT, TOGETHER
WITH THE NOTES, THE FACILITY LC APPLICATIONS, THE SECURITY INSTRUMENTS, AND ANY
OTHER WRITTEN INSTRUMENTS EXECUTED PURSUANT TO THIS AGREEMENT REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF, UNLESS SUCH PRIOR AGREEMENT IS EXPRESSLY
CONTINUED IN EFFECT UNDER THE TERMS HEREOF. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
9.17 Controlling Provision Upon Conflict. In the event of a conflict
between the provisions of this Agreement and those of the Notes, the Facility LC
Applications, the Security Instruments or any other instrument referred to
herein or executed in connection with the Notes, the provisions of this
Agreement shall control; provided if any of the Facility LC Applications or
Security Instruments contain any representations, warranties, or covenants of
the Borrower that are in addition to or are more restrictive on the Borrower
than those set forth in this Agreement, such additional or more restrictive
representations, warranties, and covenants shall control.
9.18 Time, Place and Method of Payments. All payments required pursuant to
this Agreement or the Notes shall be made in immediately available funds; shall
be deemed received by the Administrative Agent on the next Business Day
following receipt if such receipt is after 4:00 p.m. Los Angeles, California
time, on any Business Day, and shall be made at the principal banking quarters
of the Administrative Agent in Monterey Park, California.
9.19 Termination. This Agreement and the Aggregate Commitment Amount may be
canceled by the Borrower without premium or penalty prior to the Facility
Termination Date upon at least thirty (30) days' prior written notice, provided,
that the Obligations that are then due and payable are paid and performed in
full to the satisfaction of the Administrative Agent and the Banks; provided,
however that any such cancellation hereunder shall not terminate any
obligations, representations or warranties of the Borrower to the Administrative
Agent and/or the Banks hereunder and under other Loan Documents that survive
beyond the Facility Termination Date. Upon the earlier to occur of the (i) the
Facility Termination Date, and (ii) cancellation of this Agreement and the
Aggregate Commitment Amount prior thereto in accordance with this Section 9.19
and upon payment and performance in full of the Obligations that are due and
payable to the satisfaction of the Banks, the Administrative Agent agrees, at
the Borrower's request and sole cost and expense, to execute and deliver any
such lien release documents and other documentation reasonably requested by the
Borrower to release or terminate the Administrative Agent's liens and security
interests hereunder and under the other Loan Documents.
9.20 Non-Application of Chapter 346 of Texas Finance Code. The provisions
of Chapter 346 of the Texas Finance Code are specifically declared by the
parties hereto not to be applicable to this Agreement or any of the other
Security Instruments or to the transactions contemplated hereby.
9.21 Counterpart Execution. This Agreement may be executed as one
instrument signed by all parties or in separate counterparts hereof, each of
which counterparts shall be considered an original and all of which shall be
deemed to be one instrument, and any signed counterpart shall be deemed
delivered by the party signing it if sent to any other party hereto by
electronic facsimile transmission.
9.22 Power of Attorney. To the fullest extent permitted by Law and until
this Agreement is terminated in accordance with Section 9.19 hereof, Borrower
hereby appoints Administrative Agent as its attorney-in-fact (without requiring
the Administrative Agent to act as such) to execute any Security Instrument in
the name of the Borrower, and to perform all other acts that the Administrative
Agent deems appropriate to perfect and continue its liens, security interests,
and other rights in, and to protect and preserve, the Collateral Assets and
other collateral covered by or described in (or, as evidenced by this Agreement,
intended to have been covered by) any of the Security Instruments, but only to
the extent required of Borrower under the terms of this Agreement.
9.23 Borrower's CRI Security Instruments. As provided in Section 5.01, a
substantial component of the advances made by Banks to Borrower at Closing is to
be distributed to CRI to be applied to the indebtedness owed by CRI pursuant to
the CRI Credit Agreement. Accordingly, as evidenced by an Assignment of Liens
and Security Instruments of even date herewith from the Collateral Agent under
the CRI Credit Agreement to the Administrative Agent hereunder, such Collateral
Agent assigned the Borrower's CRI Security Instruments to Administrative Agent
to secure the obligations of Borrower to the Bank Parties hereunder, and the
Notes executed and delivered by Borrower to the Bank Parties hereunder partially
amend, restate and rearrange the obligations of Borrower under its guaranty of
CRI's obligations under the CRI Credit Agreement, which have been satisfied by
Loan advances made by the Banks hereunder.
9.24 Confidentiality. Each of the Bank Parties agrees to keep confidential
all non-public information provided to it by Borrower pursuant to this Agreement
that is designated by Borrower as confidential; provided that nothing herein
shall prevent any Bank Party from disclosing any such information (a) to any
Bank Party or any affiliate of any thereof, (b) to any assignee or prospective
assignee that agrees to comply with the provisions of this Section or
substantially equivalent provisions, (c) to any of its employees, directors,
agents, attorneys, accountants and other professional advisors, in each case on
a "need to know" basis, (d) to any financial institution that is a direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by the
provisions of this Section), (e) upon the request or demand of any governmental
authority having jurisdiction over it, (f) in response to any order of any court
or other governmental authority or as may otherwise be required pursuant to any
requirement of law, (g) in connection with any litigation or similar proceeding,
(h) that has been publicly disclosed other than in breach of this Section, (i)
to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to
information about a Bank Party's investment portfolio in connection with ratings
issued with respect to such Bank Party or (j) in connection with the exercise of
any remedy hereunder or under any other Loan Document; provided that prior to
disclosure pursuant to clauses (f) or (g) above, the relevant Bank Party shall
(to the extent that it is lawfully permitted to do so, as determined by it in
consultation with counsel) give reasonable prior notice of such disclosure to
the Borrower. Notwithstanding anything herein to the contrary, any party subject
to confidentiality obligations hereunder or under any other related document
(and any employee, representative or other agent of such party) may disclose to
any and all persons, without limitation of any kind, such party's U.S. federal
income tax treatment and tax structure of the transactions contemplated by this
Agreement relating to such party and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure. However, no such party shall be required to
disclose any information relating to such tax treatment or tax structure to the
extent nondisclosure is reasonably necessary in order to comply with applicable
securities laws. Subject to the foregoing, nothing herein shall release any Bank
Party from any other confidentiality agreement previously executed with any
Borrower.
[signature pages follow]
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER
CONTINENTAL GAS, INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
President
ADMINISTRATIVE AGENT, LEAD
ARRANGER, LC ISSUER, FRONTING
BANK AND BANK:
UNION BANK OF CALIFORNIA, N.A.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Senior Vice President
By: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇,
Vice President
SYNDICATION AGENT,
CO-ARRANGER AND BANK:
FORTIS CAPITAL CORP.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Managing Director
By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
DOCUMENTATION AGENT,
CO-ARRANGER AND BANK:
▇▇▇▇▇ FARGO BANK TEXAS, N.A.
By:
Name:
Title:
EXHIBIT "A"
COLLATERAL ASSETS
This Exhibit A sets forth the description of the Collateral Assets covered
by the Agreement to which this Exhibit is attached. All of the terms defined in
the Agreement are used in this Exhibit with the same meanings given therein.
This Exhibit and the Agreement cover and include the following:
(a) All of Borrower's right, title and interest in and to the oil, gas
and mineral leases described herein and/or lands described in and subject
to such oil, gas and mineral leases (regardless, as to such leases and/or
lands, of any surface acreage and/or depth limitations set forth in any
description of any of such oil, gas and mineral leases), and all of
Borrower's right, title and interest in and to any of the oil, gas and
minerals in, on or under the lands, if any, described on this Exhibit,
including, without limitation, all contractual rights, fee interests,
leasehold interests, overriding royalty interests, non-participating
royalty interests, mineral interests, production payments, net profits
interests, or any other interest measured by or payable out of production
of oil, gas or other minerals from the oil, gas and mineral leases and/or
lands described herein; and
(b) All of the foregoing interests of the Borrower as such interests
may be enlarged by the discharge of any payments out of production or by
the removal of any charges or encumbrances together with the Borrower's
interests in, to and under or derived from all renewals and extensions of
any oil, gas and mineral leases described herein, it being specifically
intended hereby that any new oil and gas lease (i) in which an interest is
acquired by the Borrower after the termination or expiration of any oil and
gas lease, the interests of the Borrower in, to and under or derived from
which are subject to the lien and security interest hereof, and (ii) that
covers all or any part of the property described in and covered by such
terminated or expired leases, shall, to the extent, and only to the extent
such new oil and gas lease may cover such property, be considered a renewal
or extension of such terminated or expired lease; and
(c) All right, title and interest of Borrower in, to and under or
derived from any operating, farmout, and bidding agreements, assignments
and subleases, whether or not described in this Exhibit, to the extent, and
only to the extent, that such agreements, assignments and subleases (i)
cover or include any of the Borrower's present right, title and interest in
and to the leases and/or lands described in this Exhibit, or (ii) cover or
include any other undivided interests now or hereafter held by the Borrower
in, to and under the described leases and/or lands, including, without
limitation, any future operating, farmout and bidding agreements,
assignments, subleases and pooling, unitization and communitization
agreements and the units created thereby (including, without limitation all
units formed under orders, regulations, rules or other official acts of any
governmental body or agency having jurisdiction) to the extent and only to
the extent that such agreements, assignments, subleases, or units cover or
include the described leases and/or lands; and
(d) All right, title, and interest of the Borrower in, to and under or
derived from all presently existing and future advance payment agreements,
oil, casinghead gas and gas sales, exchange, and processing contracts and
agreements including, without limitation, those contracts and agreements
that are described on this Exhibit to the extent, and only to the extent,
those contracts and agreements cover or include the described leases and/or
lands herein; and
(e) All right, title and interest of the Borrower in, to and under or
derived from all existing and future permits, licenses, easements and
similar rights and privileges that relate to or are appurtenant to any of
the described leases and/or lands.
Notwithstanding the intention of this Agreement to cover all of the
right, title and interest of Borrower in and to the described leases and/or
lands, except as expressly set forth herein Borrower hereby specifically
warrants and represents that the interests covered by this Exhibit are not
greater than the working interest nor less than the net revenue interest,
overriding royalty interest, net profit interest, production payment
interest or other interest payable out of or measured by production set
forth in connection with each oil and gas well described in this Exhibit.
In the event the Borrower owns any other or greater interest, such
additional interest shall also be covered by and included in this
Agreement. The designation "Working Interest" or "W.I." means an interest
owned in an oil, gas, and mineral lease (including operating rights and/or
record title interest in oil and gas leases issued pursuant to the Outer
Continental Shelf Lands Act) that determines the cost bearing percentage of
the owner of such interest. The designation "Net Revenue Interest" or "NRI"
means net revenue interest, or that portion of the production attributable
to the owner of a working interest after deduction for all royalty burdens,
overriding royalty burdens, or other burdens on production, except
severance, production, windfall profits and other similar taxes. The
designation "Overriding Royalty Interest" or "ORRI" means an interest in
production which is free of any obligation for the expense of exploration,
development and production, bearing only its pro rata share of severance,
production, windfall profits and other similar taxes.
EXHIBIT "B-1"
ADVANCING TERM NOTE
[Bank's Percentage Share Dallas, Texas October __, 2003
of $25,000,000.00]
On the dates hereinafter prescribed, for value received, CONTINENTAL GAS,
INC., an Oklahoma corporation (herein called "Borrower"), having an address at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ promises to pay to the order of
__________________ (herein called "Bank"), by payment to UNION BANK OF
CALIFORNIA, N.A., the Administrative Agent in the Credit Agreement (defined
below) at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) the principal
amount of [Bank's percentage share of TWENTY-FIVE MILLION AND NO]/100 DOLLARS
([Bank's percentage share of $25,000,000.00]) or the principal amount advanced
pursuant to the terms of the Credit Agreement (defined herein) as of the date of
maturity hereof, whether by acceleration or otherwise, whichever may be the
lesser, and (ii) interest on the principal balance from time to time advanced
and remaining unpaid from the date of the advance until maturity at a rate of
interest equal to lesser of (a) the "Floating Rate" (as defined and calculated
in the Credit Agreement), or (b) the Maximum Rate (as defined and calculated in
the Credit Agreement). Any increase or decrease in interest rate resulting from
a change in the Maximum Rate shall be effective immediately when such change
becomes effective, without notice to the Borrower, unless Applicable Law (as
defined in the Credit Agreement) requires that such increase or decrease not be
effective until a later time, in which event such increase or decrease shall be
effective at the earliest time permitted under the provisions of such law.
Notwithstanding the foregoing, if during any period the Floating Rate
exceeds the Maximum Rate, the rate of interest in effect on this Note shall be
limited to the Maximum Rate during each such period, but at all times thereafter
the rate of interest in effect on this Note shall be the Maximum Rate or, if
there is no Maximum Rate, the Agreed Maximum Rate (as defined below), until the
total amount of interest accrued on this Note equals the total amount of
interest which would have accrued hereon if the Floating Rate had at all times
been in effect.
This Note is an advancing term credit note and it is contemplated that by
reason of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrence, this Note shall remain valid and
in full force and effect as to each principal advance made hereunder subsequent
to each such occurrence. Each principal advance and each payment hereof made
pursuant to this Note shall be reflected by the Bank's records and the aggregate
unpaid amounts reflected by such records shall constitute rebuttably presumptive
evidence of the principal and unpaid, accrued interest remaining outstanding on
this Note.
"Agreed Maximum Rate" means a per annum rate of seven and three fourths
percent (7.75%) plus the Floating Rate from time to time in effect, which Agreed
Maximum Rate shall apply only during any period while there is no Maximum Rate
applicable to this Note.
Other capitalized terms used herein that are not defined herein, shall have
the meanings prescribed therefor in the Credit Agreement.
The Borrower and the Bank hereby agree that Chapter 346 of the Texas
Finance Code, shall not apply to this Note or the loan transaction evidenced by,
and referenced in, the Credit Agreement (hereinafter defined) in any manner,
including without limitation, to any account or arrangement evidenced or created
by, or provided for in, this Note.
The principal sum of this Note, after giving credit for unadvanced
principal, if any, remaining at final maturity, shall be due and payable on or
before September 30, 2006; interest to accrue upon the principal sum from time
to time owing and unpaid hereunder shall be due and payable as provided in the
Credit Agreement; provided, however, the final installment of interest hereunder
shall be due and payable not later than the maturity of the principal sum
hereof, howsoever such maturity may be brought about.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this Note.
The Bank and the Borrower specifically intend and agree to limit contractually
the interest payable on this Note to not more than an amount determined at the
Maximum Rate. Therefore, none of the terms of this Note or any other instruments
pertaining to or securing this Note shall ever be construed to create a contract
to pay interest at a rate in excess of the Maximum Rate, and neither the
Borrower nor any other party liable herefor shall ever be liable for interest in
excess of that determined at the Maximum Rate, and the provisions of this
paragraph shall control over all provisions of this Note or of any other
instruments pertaining to or securing this Note. If any amount of interest taken
or received by the Bank shall be in excess of the maximum amount of interest
which, under Applicable Law, could lawfully have been collected on this Note,
then the excess shall be deemed to have been the result of a mathematical error
by the parties hereto and shall be refunded promptly to the Borrower. All
amounts paid or agreed to be paid in connection with the indebtedness evidenced
by this Note which would under Applicable Law be deemed "interest" shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout the full term of this Note.
This Note is secured by all security agreements, collateral assignments,
mortgages and lien instruments executed by the Borrower (or by any other party)
in favor of Union Bank of California, N.A., as Administrative Agent for the
Banks, including those executed simultaneously herewith, those executed
heretofore and those hereafter executed, and including specifically and without
limitation the Security Instruments described and defined in that certain Term
and Revolving Credit Agreement dated as of the date first stated above among
Borrower, Bank and certain other financial institutions (the "Credit
Agreement").
This Note is issued pursuant to the Credit Agreement. Reference is hereby
made to the Credit Agreement for a statement of the rights and obligations of
the holder of this Note and the duties and obligations of the Borrower in
relation thereto; but neither this reference to the Credit Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay any outstanding and unpaid principal of and
interest on this Note when due, in accordance with the terms of the Credit
Agreement. Each advance and each payment made pursuant to this Note shall be
reflected by notations made by the Bank on its records and the aggregate unpaid
amounts reflected by the notations on the records of the Bank shall be deemed
rebuttably presumptive evidence of the principal amount owing under this Note.
In the event of default in the payment when due of any of the principal of
or any interest on this Note, or in the event of default under the terms of the
Credit Agreement or any of the Security Instruments, or if any event occurs or
condition exists which authorizes the acceleration of the maturity of this Note
under any agreement made by the Borrower, the Bank (or other holder of this
Note) may, at its option, without presentment or demand or any notice to the
Borrower or any other person liable herefor, declare the unpaid principal
balance of and accrued interest on this Note to be immediately due and payable.
If this Note is collected by suit or through the Probate or Bankruptcy
Court, or any judicial proceeding, or if this Note is not paid at maturity,
however such maturity may be brought about, and is placed in the hands of an
attorney for collection, then the Borrower agrees to pay reasonable and
documented attorneys' fees, not to exceed 10% of the full amount of principal
and interest owing hereon at the time this Note is placed in the hands of an
attorney.
The Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, notice of intent to accelerate maturity, notice of acceleration of
maturity, and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, and agree to any substitution,
exchange or release of any such security or the release of any party primarily
or secondarily liable hereon and further agrees that it will not be necessary
for the Bank, in order to enforce payment of this Note by them, to first
institute suit or exhaust its remedies against any Borrower or others liable
herefor, or to enforce its rights against any security herefor, and consent to
any one or more extensions or postponements of time of payment of this Note on
any terms or any other indulgences with respect hereto, without notice thereof
to any of them. The Bank may transfer this Note, and the rights and privileges
of the Bank under this Note shall inure to the benefit of the Bank's
representatives, successors or assigns.
[This Note amends, extends, rearranges and restates those certain [describe
each Note being replaced] (the "Prior Notes"). All liens and security interests
that exist to secure the indebtedness evidenced by that Prior Notes shall
continue in force and effect to secure the indebtedness evidenced by this Note.
(This paragraph shall be included only in replacement Notes executed pursuant to
Section 9.05(e) of the Credit Agreement).]
[signature page follows]
Executed as of the date and year first set forth above.
Attest: CONTINENTAL GAS, INC.
By:
Secretary
EXHIBIT "B-2"
REVOLVING NOTE
[Bank's percentage Dallas, Texas October __, 2003
share of $10,000,000]
On the dates hereinafter prescribed, for value received, CONTINENTAL GAS,
INC., an Oklahoma corporation (herein called "Borrower"), having an address at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, promises to pay to the order
of _____________________ (herein called "Bank"), by payment to UNION BANK OF
CALIFORNIA, N.A., the Administrative Agent in the Credit Agreement (defined
below) at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) the principal
amount of U.S. [Bank's percentage share of TEN MILLION] DOLLARS ([Bank's
percentage share of $10,000,000]) or the principal amount advanced pursuant to
the terms of the Credit Agreement (defined herein) as of the date of maturity
hereof, whether by acceleration or otherwise, whichever may be the lesser, and
(ii) interest on the principal balance from time to time advanced and remaining
unpaid from the date of the advance until maturity at a rate of interest equal
to lesser of (a) the "Floating Rate" (as defined and calculated in the Credit
Agreement), or (b) the Maximum Rate (as defined and calculated in the Credit
Agreement). Any increase or decrease in interest rate resulting from a change in
the Maximum Rate shall be effective immediately when such change becomes
effective, without notice to the Borrower, unless Applicable Law (as defined in
the Credit Agreement) requires that such increase or decrease not be effective
until a later time, in which event such increase or decrease shall be effective
at the earliest time permitted under the provisions of such law.
Notwithstanding the foregoing, if during any period the Floating Rate
exceeds the Maximum Rate, the rate of interest in effect on this Note shall be
limited to the Maximum Rate during each such period, but at all times thereafter
the rate of interest in effect on this Note shall be the Maximum Rate or, if
there is no Maximum Rate, the Agreed Maximum Rate (as defined below), until the
total amount of interest accrued on this Note equals the total amount of
interest which would have accrued hereon if the Floating Rate had at all times
been in effect.
This Note is a revolving credit note and it is contemplated that by reason
of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrence, this Note shall remain valid and
in full force and effect as to each principal advance made hereunder subsequent
to each such occurrence. Each principal advance and each payment hereof made
pursuant to this Note shall be reflected by the Bank's records and the aggregate
unpaid amounts reflected by such records shall constitute rebuttably presumptive
evidence of the principal and unpaid, accrued interest remaining outstanding on
this Note.
"Agreed Maximum Rate" means a per annum rate of seven and three-fourths
percent (7.75%) plus the Floating Rate from time to time in effect, which Agreed
Maximum Rate shall apply only during any period while there is no Maximum Rate
applicable to this Note.
Other capitalized terms used herein, that are not defined herein, shall
have the meanings prescribed therefor in the Credit Agreement.
The Borrower and the Bank hereby agree that Chapter 346 of the Texas
Finance Code, shall not apply to this Note or the loan transaction evidenced by,
and referenced in, the Credit Agreement (hereinafter defined) in any manner,
including without limitation, to any account or arrangement evidenced or created
by, or provided for in, this Note.
The principal sum of this Note, after giving credit for unadvanced
principal, if any, remaining at final maturity, shall be due and payable on or
before September 30, 2006; interest to accrue upon the principal sum from time
to time owing and unpaid hereunder shall be due and payable as provided in the
Credit Agreement; provided, however, the final installment of interest hereunder
shall be due and payable not later than the maturity of the principal sum
hereof, howsoever such maturity may be brought about.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this Note.
The Bank and the Borrower specifically intend and agree to limit contractually
the interest payable on this Note to not more than an amount determined at the
Maximum Rate. Therefore, none of the terms of this Note or any other instruments
pertaining to or securing this Note shall ever be construed to create a contract
to pay interest at a rate in excess of the Maximum Rate, and neither the
Borrower nor any other party liable herefor shall ever be liable for interest in
excess of that determined at the Maximum Rate, and the provisions of this
paragraph shall control over all provisions of this Note or of any other
instruments pertaining to or securing this Note. If any amount of interest taken
or received by the Bank shall be in excess of the maximum amount of interest
which, under Applicable Law, could lawfully have been collected on this Note,
then the excess shall be deemed to have been the result of a mathematical error
by the parties hereto and shall be refunded promptly to the Borrower. All
amounts paid or agreed to be paid in connection with the indebtedness evidenced
by this Note which would under Applicable Law be deemed "interest" shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout the full term of this Note.
This Note is secured by all security agreements, collateral assignments,
mortgages and lien instruments executed by the Borrower (or by any other party)
in favor of Union Bank of California, N.A., as Administrative Agent for the
Banks, including those executed simultaneously herewith, those executed
heretofore and those hereafter executed, and including specifically and without
limitation the Security Instruments described and defined in that certain Term
and Revolving Credit Agreement dated as of the date first stated above among
Borrower, Bank and certain other financial institutions (the "Credit
Agreement").
This Note is issued pursuant to the Credit Agreement. Reference is hereby
made to the Credit Agreement for a statement of the rights and obligations of
the holder of this Note and the duties and obligations of the Borrower in
relation thereto; but neither this reference to the Credit Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay any outstanding and unpaid principal of and
interest on this Note when due, in accordance with the terms of the Credit
Agreement. Each advance and each payment made pursuant to this Note shall be
reflected by notations made by the Bank on its records and the aggregate unpaid
amounts reflected by the notations on the records of the Bank shall be deemed
rebuttably presumptive evidence of the principal amount owing under this Note.
In the event of default in the payment when due of any of the principal of
or any interest on this Note, or in the event of default under the terms of the
Credit Agreement or any of the Security Instruments, or if any event occurs or
condition exists which authorizes the acceleration of the maturity of this Note
under any agreement made by the Borrower, the Bank (or other holder of this
Note) may, at its option, without presentment or demand or any notice to the
Borrower or any other person liable herefor, declare the unpaid principal
balance of and accrued interest on this Note to be immediately due and payable.
If this Note is collected by suit or through the Probate or Bankruptcy
Court, or any judicial proceeding, or if this Note is not paid at maturity,
however such maturity may be brought about, and is placed in the hands of an
attorney for collection, then the Borrower agrees to pay reasonable and
documented attorneys' fees, not to exceed 10% of the full amount of principal
and interest owing hereon at the time this Note is placed in the hands of an
attorney.
The Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, notice of intent to accelerate maturity, notice of acceleration of
maturity, and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, and agree to any substitution,
exchange or release of any such security or the release of any party primarily
or secondarily liable hereon and further agrees that it will not be necessary
for the Bank, in order to enforce payment of this Note by them, to first
institute suit or exhaust its remedies against any Borrower or others liable
herefor, or to enforce its rights against any security herefor, and consent to
any one or more extensions or postponements of time of payment of this Note on
any terms or any other indulgences with respect hereto, without notice thereof
to any of them. The Bank may transfer this Note, and the rights and privileges
of the Bank under this Note shall inure to the benefit of the Bank's
representatives, successors or assigns.
[This Note amends, extends, rearranges and restates those certain [describe
each Note being replaced] (the "Prior Notes"). All liens and security interests
that exist to secure the indebtedness evidenced by that Prior Notes shall
continue in force and effect to secure the indebtedness evidenced by this Note.
(This paragraph shall be included only in replacement Notes executed pursuant to
Section 9.05(e) of the Credit Agreement).]
[signature page follows]
Executed as of the date and year first set forth above.
CONTINENTAL GAS, INC.
Attest:
By:
Secretary
EXHIBIT "C"
COMPLIANCE CERTIFICATE
I, the President of CONTINENTAL GAS, INC. (the "Company"), pursuant to
Section 5.05 of the Revolving Credit Agreement dated as of October ___, 2003, by
and among the Company, UNION BANK OF CALIFORNIA, N.A., as Administrative Agent,
and the other Banks that are party thereto (the "Agreement") do hereby certify,
as of the date hereof, that to my knowledge:
(a) No Event of Default (as defined in the Agreement) has occurred and is
continuing, and no Unmatured Event of Default (as defined in the
Agreement) has occurred and is continuing except for the following
events (include actions taken to cure such situations):
(b) No Material Adverse Change has occurred since the effective date of
the latest audited consolidated Financial Statements of the Company
delivered to the Administrative Agent;
(c) Except as otherwise stated in the Schedule, if any, attached hereto,
each of the representations and warranties of the Company contained in
Article IV of the Agreement is true and correct in all respects; and
(d) The Company's consolidated financial condition for the quarter ending
__________ is as follows:
Required Ratio or Actual Ratio or
Financial Covenant Date or Time Period Amount Amount
================================= ========================= ====================== =================
(a) Current Ratio As of the end of each is not less than
(Current Assets to Current fiscal quarter 1.0 to 1.0 __________
Liabilities)
(b) Fixed Interest Coverage Ratio As of the end of each is not less than
(EBITDA to Total Interest fiscal quarter, during 3.00 to 1.0 __________
Charges) the preceding four
quarters
(c) Fixed Charge Coverage Ratio As of the end of each is not less than
fiscal quarter, during 1.50 to 1.0 __________
the preceding four
quarters
(d) Senior Debt to EBITDA As of the end of each is not greater than
fiscal quarter 3.50 to 1.0 from __________
Closing through
9/30/04; 3.25 to 1.0
from 10/1/04 through
3/31/05; and 3.00 to
1.00 thereafter
This certificate is executed this _____ day of_________,_____.
CONTINENTAL GAS, INC.
By:
______________________, President
EXHIBIT "D"
SECURITY INSTRUMENTS
The Security Instruments securing the Borrower's Obligations and
Indebtedness to the Bank shall include the following, each in form and substance
satisfactory to the Bank:
1. DEED(S) OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF PRODUCTION covering all of Borrower's Oil and Gas Properties and Pipeline
Properties situated in Oklahoma, North Dakota, and all other applicable states,
the personal property and equipment therein and thereon, the production of oil,
gas, and other minerals therefore, and all of the products and proceeds thereof,
to be duly executed by Borrower with respect to all of the Collateral Assets.
2. SECURITY AGREEMENT granting the Administrative Agent a first priority
security interest in all of the Borrower's and its Subsidiaries' accounts,
equipment, machinery, fixtures, inventory, chattel paper, documents, instruments
and general intangibles relating to or arising out of the Collateral Assets, and
the business of the Borrower, whether now owned or hereafter acquired, and all
products and proceeds thereof.
3. FINANCING STATEMENTS in connection with the Security Instruments
described in the preceding paragraphs, in form and number satisfactory to the
Administrative Agent as the Administrative Agent, from to time, may specify
(including additional or supplemental financing statements, amendments thereto,
and continuation statements thereof).
4. OTHER SECURITY INSTRUMENTS. Such other instruments as are necessary or
appropriate from time to time, in the good faith opinion of the Administrative
Agent, to perfect to the satisfaction of the Administrative Agent, its liens,
security interests, and other rights in the Collateral Assets and in any and all
other collateral covered by or described in (or, as evidenced by the Agreement,
intended to have been covered by) any of the other Security Instruments
described above.
EXHIBIT "E"
REQUEST FOR ADVANCE
I, the undersigned officer of CONTINENTAL GAS, INC. (the "Company"),
pursuant to Section 2.01 of the Revolving Credit Agreement dated as of October
___, 2003, as amended from time to time (the "Agreement"), by and between UNION
BANK OF CALIFORNIA, N.A. ("Administrative Agent"), the banks and other financial
institutions from time to time parties to the Agreement (the "Banks"), and the
Company, do hereby make the requests indicated below on this day of , 200 :
o 1. Loans:
(a) Amount of new Loan: $
(b) Requested funding date: , 200
(c) $ of such Loan is to be an RR Loan;
$ of such Loan is to be a LIBOR Loan.
Requested Interest Period for LIBOR Loan: months.
o 2. Continuation or conversion of LIBOR Loan maturing
on , 200 :
(a) Amount to be continued as a LIBOR Loan is $ , with
an Interest Period of months;
(b) Amount to be converted to an RR Loan is $ .
o 3. Conversion of RR Loan:
(a) Requested conversion date: , 200 .
(b) Amount to be converted to a LIBOR Loan is $ , with
an Interest Period of months.
4. The undersigned certifies that the funds advanced from the Banks
to the Company pursuant to paragraphs 1 through 3 hereof, as
applicable, shall be used by the Company solely for the purposes
permitted by the Agreement.
5. The undersigned certifies that to my knowledge after reasonable
inquiry into the applicable facts, as of the date hereof, the
Company is in compliance with all of the representations,
warranties, terms, conditions and covenants contained in the
Agreement and no Event of Default or Unmatured Event of Default
has occurred and is continuing under the Agreement.
6. The undersigned certifies that to my knowledge after reasonable
inquiry into the applicable facts, as of the date hereof, no
Material Adverse Change has occurred since the effective date of
the latest audited Financial Statements of the Company delivered
to the Administrative Agent;
This certificate is executed this ____ day of ___________, 200 .
CONTINENTAL GAS, INC.
By:
EXHIBIT "F"
AVAILABILITY AMOUNT CERTIFICATE
Availability Amount Certificate as of _______________, 200____
Reference is made to that certain Term and Revolving Credit Agreement dated
as of October 22, 2003 (as the same may be amended, restated or otherwise
modified from time to time, the "Credit Agreement") among Continental Gas, Inc.
(the "Borrower"), each of the financial institutions from time to time party
thereto (the "Banks") and Union Bank of California, N.A., as administrative
agent for the Banks (the "Administrative Agent"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
Pursuant to Section 2.06(b) of the Credit Agreement, the Borrower hereby
certifies to the Administrative Agent and the Banks as follows as of _________,
200_:
1. Revolving Loan Availability Amount value of Eligible Receivables (80%):
(See Schedule 1 attached hereto for supporting information.)
$_____________
2. Revolving Loan Availability Amount value of Inventory (50%): $_____________
(See Schedule 2 attached hereto for supporting information.)
3. TOTAL REVOLVING LOAN AVAILABILITY AMOUNT: $_____________
(The sum of item 1 plus item 2.)
4. LESSER OF TOTAL REVOLVING LOAN AVAILABILITY AMOUNT OR $5,000,000.00:
$_____________
5. Aggregate principal amount of all outstanding Revolving Loans:
$_____________
6. Aggregate amount of all LC Obligations: $_____________
7. REVOLVING LOAN AVAILABILITY AMOUNT AVAILABILITY: $_____________
(Remainder of (a) item 4 minus (b) the sum of item 5
plus item 6.)
The Borrower has caused this Availability Amount Certificate to be executed
this ___ day of ___________, 200_.
Continental Gas, Inc.
By:
Name:
Title:
SCHEDULE 1
to
Availability Amount Certificate
dated as of _________, ____
[Supporting information regarding Eligible Receivables]
SCHEDULE 2
to
Availability Amount Certificate
dated as of _________, ____
[Appropriate supporting information regarding Inventory]
Schedule 1.01(b)
Commitment Amounts and Aggregate Commitment Amount
Bank Percentage Commitment
Share Amount
Union Bank of California, N.A. 33.3333334% $11,666,666.67
▇▇▇▇▇ Fargo Bank Texas, N.A. 33.3333333% $11,666,666.66
Fortis Capital Corp. 33.3333333% $11,666,666.66
--------------
Aggregate Commitment Amount: $35,000,000.00
Schedule 2.20(C)
Fax Numbers for all Parties
Union Bank of California, N.A..................................▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ Fargo Bank Texas, N.A. ..................................▇▇▇-▇▇▇-▇▇▇▇
Fortis Capital Corp............................................▇▇▇-▇▇▇-▇▇▇▇
Continental Gas, Inc...........................................▇▇▇-▇▇▇-▇▇▇▇
COMMITMENT TRANSFER SUPPLEMENT
THIS COMMITMENT TRANSFER SUPPLEMENT (this "Commitment Transfer Supplement")
dated as of the date set forth in Item 1 of Schedule I hereto, is among the
Transferor Bank set forth in Item 2 of Schedule I hereto (the "Transferor
Bank"), each Purchasing Bank set forth in Item 3 of Schedule 1 (each a
"Purchasing Bank"), and UNION BANK OF CALIFORNIA, N.A., as Administrative Agent
for the Banks under, and as defined in, the Credit Agreement described below (in
such capacity, the "Administrative Agent").
RECITALS
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 9.05(c) of the Revolving Credit Agreement
dated as of October ___, 2003, by and among CONTINENTAL GAS, INC., an Oklahoma
corporation and certain of its Affiliates ("Borrower"), the Transferor Bank and
the other Banks party thereto and the Administrative Agent (as from time to time
amended, supplemented or otherwise modified in accordance with the terms
thereof, the "Credit Agreement"; terms defined therein being used herein as
therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank party to the
Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each Purchasing
Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
GENERAL TERMS
Section 1. Upon receipt by the Administrative Agent of five counterparts of
this Commitment Transfer Supplement, to each of which is attached a fully
completed Schedule I and Schedule II, and each of which has been executed by the
Transferor Bank, each Purchasing Bank (and any other person required by the
Credit Agreement to execute this Commitment Transfer Supplement), the
Administrative Agent will transmit to the Borrower, the Transferor Bank and each
Purchasing Bank a Transfer Effective Notice, substantially in the form of
Schedule III to this Commitment Transfer Supplement (a "Transfer Effective
Notice"). Such Transfer Effective Notice shall set forth, inter alia, the date
on which the transfer effected by this Commitment Transfer Supplement shall
become effective (the "Transfer Effective Date"), which date shall be at least
five (5) Business Days following the date of such Transfer Effective Notice.
From and after the Transfer Effective Date each Purchasing Bank shall be a Bank
party to the Credit Agreement for all purposes thereof.
Section 2. At or before 12:00 Noon, local time of the Transferor Bank, on
the Transfer Effective Date, each Purchasing Bank shall pay to the Transferor
Bank, in immediately available funds, an amount equal to the purchase price, as
agreed between the Transferor Bank and such Purchasing Bank (the "Purchase
Price"), of the portion being purchased by such Purchasing Bank (such Purchasing
Bank's "Purchased Percentage") of the outstanding Credit Extensions and other
amounts owing to the Transferor Bank under the Credit Agreement and the Notes.
Effective upon receipt by the Transferor Bank of the Purchase Price from a
Purchasing Bank, the Transferor Bank hereby irrevocably sells, assigns and
transfers to such Purchasing Bank, without recourse, representation or warranty,
and each Purchasing Bank hereby irrevocably purchases, takes and assumes from
the Transferor Bank, such Purchasing Bank's Purchased Percentage of the
Commitment of the Transferor Bank and the presently outstanding Credit
Extensions and other amounts owing to the Transferor Bank under the Credit
Agreement and the Notes together with all instruments, documents and collateral
security pertaining thereto.
Section 3. The Transferor Bank has made arrangements with each Purchasing
Bank with respect to (a) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor Bank to such Purchasing Bank of any fees
heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date, and (b) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.
Section 4. (a) All principal payments that would otherwise be payable from
and after the Transfer Effective Date to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Notes shall, instead, be payable
to or for the account of the Transferor Bank and the Purchasing Banks, as the
case may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue for
the account of the Transferor Bank from and after the Transfer Effective Date
pursuant to the Credit Agreement and the Notes shall, instead, accrue for the
account of, and be payable to, the Transferor Bank and the Purchasing Banks, as
the case may be, in accordance with their respective interests as reflected in
this Commitment Transfer Supplement.
(c) In the event that any amount of interest, fees or other amounts
accruing prior to the Transfer Effective Date was included in the Purchase Price
paid by any Purchasing Bank, the Transferor Bank and each Purchasing Bank will
make appropriate arrangements for payment by the Transferor Bank to such
Purchasing Bank of such amount upon receipt thereof from the Borrower.
Section 5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Administrative Agent its Note. Within five (5) Business Days
after Borrower's receipt of notice from Administrative Agent of Administrative
Agent's receipt of this Commitment Transfer Supplement, the Borrower will
deliver to the Administrative Agent, in exchange for the surrendered Note from
the Transferor Bank, a new Note for each Purchasing Bank and the Transferor
Bank, to the extent the Transferor Bank has retained any of its Commitment, in
each case in principal amounts reflecting, in accordance with the Credit
Agreement, their respective Commitment Amounts (as adjusted pursuant to this
Commitment Transfer Supplement). As provided in Section 9.05(e) of the Credit
Agreement, each such new Note shall be dated the date of the original Note
delivered pursuant to the Credit Agreement (the "Effective Date"). Promptly
after the Transfer Effective Date, the Administrative Agent will send to each of
the Transferor Bank and the Purchasing Banks its new Note and will send to the
Borrower the superseded Note of the Transferor Bank, marked "Canceled" or
"Replaced" as appropriate.
Section 6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) conformed copies of all documents in the
Transferor Bank's possession that were delivered to the Administrative Agent on
the Effective Date in satisfaction of the conditions precedent set forth in the
Credit Agreement.
Section 7. Each of the parties to this Commitment Transfer Supplement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Commitment Transfer Supplement.
Section 8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Administrative Agent and the Banks as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Notes, any other Loan Document or any other instrument or
document furnished pursuant thereto; (ii) the Transferor Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any Subsidiary of the Borrower or the
performance or observance by the Borrower or any Subsidiary of the Borrower of
any of their respective obligations under the Credit Agreement, the Notes, any
other Loan Document or any other instrument or document furnished pursuant
hereto; (iii) each Purchasing Bank confirms that it has received a copy of the
Credit Agreement, together with copies of the Financial Statements referred to
in Section 3.1(D), the Financial Statements delivered pursuant to Sections 5.03
and 5.04, if any, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Commitment Transfer Supplement; (iv) each Purchasing Bank will, independently
and without reliance upon the Administrative Agent, the Transferor Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (v) each Purchasing Bank appoints
and authorizes the Administrative Agent to take such action as Administrative
Agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, all in accordance with Article
VIII of the Credit Agreement; and (vi) each Purchasing Bank agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank.
Section 9. Each party hereto represents and warrants to and agrees with the
Administrative Agent that it is aware of and will comply with the provision of
Section 2.16 of the Credit Agreement.
Section 10. Schedule II hereto sets forth the revised Commitment Amounts
and Percentage Shares of the Transferor Bank and each Purchasing Bank as well as
administrative information with respect to each Purchasing Bank.
Section 11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on
Schedule I hereto as of the date set forth in Item I of Schedule I hereto.
Schedule I to
Commitment Transfer Supplement
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Re: Revolving Credit Agreement dated as of October ___, 2003, among
CONTINENTAL GAS, Inc., and certain of its Affiliates, the Banks,
and Union Bank of California, N.A., as Administrative Agent for
the Banks thereunder.
Item 1 (Date of Commitment Transfer
Supplement): [Insert date of Commitment Transfer Supplement]
Item 2 (Transferor Bank): [Insert name of Transferor Bank]
Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]]
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement): ____________________________, as Transferor Bank
By:
Title:
, as Purchasing Bank
By:
Title:
, as Purchasing Bank
By:
Title:
CONSENTED TO AND ACKNOWLEDGED:
CONTINENTAL GAS, INC.
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
as Administrative Agent
By:
Name:
Title:
[Consents Required only when
Purchasing Bank is not already
a Bank or Affiliate thereof]
ACCEPTED FOR RECORDATION
IN REGISTER:
UNION BANK OF CALIFORNIA, N.A.
as Administrative Agent
By:
Title:
Schedule II to
Commitment Transfer Supplement
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor Bank]
Revised Commitment Amount: $
Revised Commitment Percentage:
[Name of Purchasing Bank]
New Commitment Amount: $
New Commitment Percentage:
Address for Notices:
[address]
Attention:
Telex:
Answer back:
Telephone:
Telecopier:
Lending Office:
[Form of Transfer Effective Notice]
Schedule III to
Commitment Transfer Supplement
To: [Insert Name of Borrower, Transferor Bank and each Purchasing
Bank]
The undersigned, as Administrative Agent under the Revolving Credit
Agreement dated as of October __, 2003, among CONTINENTAL GAS, INC.
("Borrower"), the Banks and other financial institutions from time to time
parties thereto and Union Bank of California, N.A. as Administrative Agent,
acknowledges receipt of five executed counterparts of a completed Commitment
Transfer Supplement, as described in Schedule I hereto. [Note: attach copy of
Schedule I from Commitment Transfer Supplement.] Terms defined in such
Commitment Transfer Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be [Insert fifth Business Day
following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver its Note to the Administrative Agent on or
before the Transfer Effective Date.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the fifth
(5th) Business Day from its receipt of this notice, in return for the Note
surrendered to the Administrative Agent by the Transferor Bank, the
following Notes [Describe each Note for Transferor Bank and Purchasing Bank
as to principal amount and payee], dated October __, 2003.
4. Pursuant to such Commitment Transfer Supplement each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or
before 12:00 Noon on the Transfer Effective Date in immediately available
funds.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By:
Title: