EXHIBIT 99.2
RESTATED CREDIT AGREEMENT
AMONG
ADDISON ENERGY INC.
AS BORROWER,
AND
BANK ONE, NA, CANADA BRANCH
AND THE INSTITUTIONS NAMED HEREIN
AS LENDERS,
BANK ONE, NA, CANADA BRANCH
AS ADMINISTRATIVE AGENT
AND
BNP PARIBAS (CANADA)
AS SYNDICATION AGENT
AND
THE BANK OF NOVA SCOTIA
AS DOCUMENTATION AGENT
AND
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND BOOKRUNNER
DECEMBER 18, 2001
$77,500,000 CANADIAN REVOLVING CREDIT
TABLE OF CONTENTS
PAGE NO.
1. Definitions............................................................1
2. Commitment of the Lender..............................................13
(a) Terms of Revolving Commitment...................................13
(b) Procedure for Borrowing.........................................13
(c) Voluntary Reduction of Revolving Commitment.....................14
(d) Mandatory Revolving Commitment Reductions.......................14
(e) Several Obligations.............................................14
(f) Type and Number of Advances.....................................14
3. Notes Evidencing Loans................................................14
(a) Form of Revolving Notes.........................................14
(b) Issuance of Additional Notes....................................15
(c) Interest Rates..................................................15
(d) Payment of Interest.............................................15
(e) Payment of Principal............................................15
(f) Payment to Lenders..............................................15
(g) Sharing of Payments, Etc........................................16
(h) Non-Receipt of Funds by the Agent...............................16
4. Interest Rates........................................................16
(a) Options.........................................................16
(b) Interest Rate Determination; INTEREST ACT (Canada)..............17
(c) Conversion Option...............................................18
(d) Recoupment......................................................18
5. Special Provisions Relating to Loans..................................18
(a) Unavailability of Funds or Inadequacy of Pricing................18
(b) Change in Laws..................................................18
(c) Increased Cost or Reduced Return................................19
(d) Discretion of Lender as to Manner of Funding....................21
(e) Breakage Fees...................................................21
(f) Indemnified Taxes...............................................21
(g) Replacement of Lenders..........................................22
6. Collateral Security...................................................22
7. Borrowing Base........................................................24
(a) Initial Borrowing Base..........................................24
(b) Subsequent Determinations of Borrowing Base.....................24
8. Fees..................................................................25
(a) Unused Commitment Fee...........................................25
(b) Borrowing Base Increase Fee.....................................25
(c) Closing Fee.....................................................26
(d) Agency Fee......................................................26
9. Prepayments...........................................................26
(a) Voluntary Prepayments...........................................26
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(b) Mandatory Prepayment For Borrowing Base Deficiency..............26
10. Representations and Warranties........................................27
(a) Creation and Existence..........................................27
(b) Power and Authority.............................................27
(c) Binding Obligations.............................................27
(d) No Legal Bar or Resultant Lien..................................27
(e) No Consent......................................................27
(f) Financial Condition.............................................28
(g) Liabilities.....................................................28
(h) Litigation......................................................28
(i) Taxes; Governmental Charges.....................................28
(j) Titles, Etc.....................................................28
(k) Defaults........................................................28
(l) Casualties; Taking of Properties................................29
(m) Location of Business and Offices................................29
(n) Compliance with the Law.........................................29
(o) No Material Misstatements.......................................29
(p) Subsidiaries....................................................29
(q) Environmental Matters...........................................30
(r) Liens...........................................................30
11. Conditions of Lending.................................................30
12. Affirmative Covenants.................................................32
(a) Financial Statements and Reports................................32
(b) Certificates of Compliance......................................33
(c) Taxes and Other Liens...........................................33
(d) Compliance with Laws............................................33
(e) Further Assurances..............................................33
(f) Performance of Obligations......................................34
(g) Insurance.......................................................34
(h) Accounts and Records............................................35
(i) Right of Inspection.............................................35
(j) Notice of Certain Events........................................35
(k) Environmental Reports and Notices...............................35
(l) Compliance and Maintenance......................................36
(m) Operation of Properties.........................................36
(n) Compliance with Leases and Other Instruments....................37
(o) Certain Additional Assurances Regarding
Maintenance and Operations of Properties........................37
(p) Sale of Certain Assets/Prepayment of Proceeds...................37
(q) Title Matters...................................................38
(r) Curative Matters................................................38
(s) Change of Principal Place of Business...........................38
(t) Additional Collateral...........................................38
(u) Cash Collateral Accounts........................................39
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13. Negative Covenants....................................................39
(a) Negative Pledge.................................................39
(b) Current Ratio...................................................40
(c) Debt Coverage Ratio.............................................40
(d) Minimum Consolidated Tangible Net Worth.........................40
(e) Leverage Ratio..................................................40
(f) Consolidations and Mergers......................................40
(g) Debts, Guaranties and Other Obligations.........................40
(h) Restricted Payments.............................................41
(i) Loans and Advances..............................................41
(j) Receivables and Payables........................................42
(k) Nature of Business..............................................42
(l) Transactions with Affiliates....................................42
(m) Hedging Transactions............................................42
(n) Investments.....................................................42
(o) Amendment to Articles of Incorporation or Bylaws................42
(p) Issuance of Preferred Stock....................................42
14. Events of Default.....................................................42
15. The Agent and the Lenders.............................................45
(a) Appointment and Authorization...................................45
(b) Note Holders....................................................46
(c) Consultation with Counsel.......................................46
(d) Documents.......................................................46
(e) Resignation or Removal of Agent.................................46
(f) Responsibility of Agent.........................................47
(g) Independent Investigation.......................................48
(h) Indemnification.................................................49
(i) Benefit of Section 15...........................................49
(j) Pro Rata Treatment..............................................49
(k) Assumption as to Payments.......................................50
(l) Other Financings................................................50
(m) Interests of Lenders............................................50
(n) Investments.....................................................50
16. Exercise of Rights....................................................51
17. Notices...............................................................51
18. Expenses..............................................................51
19. Indemnity.............................................................52
20. Governing Law.........................................................53
21. Invalid Provisions....................................................53
22. Maximum Interest Rate.................................................53
23. Amendments............................................................53
24. Multiple Counterparts.................................................54
25. Conflict..............................................................54
26. Survival..............................................................54
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27. Parties Bound.........................................................54
28. Assignments and Participations........................................54
29. Choice of Forum: Consent to Service of Process and
Jurisdiction..........................................................56
30. Waiver of Jury Trial..................................................56
31. Other Agreements......................................................56
32. Financial Terms.......................................................57
EXHIBITS
Exhibit "A" - Form of Notice of Borrowing
Exhibit "B" - Form of Revolving Note
Exhibit "C" - Form of Subsidiary Guaranty
Exhibit "D" - Form of Parent Guaranty
Exhibit "E" - Form of Certificate of Compliance
Exhibit "F" - Form of Assignment and Acceptance Agreement
Exhibit "G" - Form of Subordination Agreement
SCHEDULES
Schedule 1 - Liens
Schedule 2 - Financial Condition
Schedule 3 - Liabilities
Schedule 4 - Litigation
Schedule 5 - Subsidiaries
Schedule 6 - Environmental Matters
Schedule 7 - Title Matters
Schedule 8 - Curative Matters
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RESTATED
CREDIT AGREEMENT
THIS RESTATED
CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 18th day of December, 2001, by and between
ADDISON ENERGY INC., an
Alberta, Canada corporation ("Borrower") and ▇▇▇▇ ▇▇▇,
▇▇, ▇▇▇▇▇▇ BRANCH ("Bank One"), and each of the financial institutions which is
a party hereto (as evidenced by the signature pages to this Agreement) or which
may from time to time become a party hereto pursuant to the provisions of
Section 28 hereof or any successor or assignee thereof (hereinafter collectively
referred to as "Lenders", and individually, "Lender") and Bank One, as
Administrative Agent (the "Agent"), BNP Paribas (Canada), as Syndication Agent,
The Bank of Nova Scotia, as Documentation Agent and Banc One Capital Markets,
Inc., as Lead Arranger and Bookrunner ("Arranger").
W I T N E S S E T H:
WHEREAS, as of April 26, 2001, Borrower, certain of the Lenders and the
Agent entered into a
Credit Agreement pursuant to which the Lenders made
available to Borrower a revolving credit facility of up to $77,500,000 Canadian;
WHEREAS, Borrower has requested that the Lenders provide Borrower with a
restated credit facility and the Lenders are willing to make such facility
available to Borrower.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. DEFINITIONS. When used herein the terms "Agent", "Agreement",
"Arranger", "Bank One", "Borrower", "Lender" and "Lenders", shall have the
meanings indicated above. When used herein the following terms shall have
the following meanings:
ADDISON means Addison Energy Inc., an
Alberta, Canada corporation.
ADVANCE OR ADVANCES means a loan or loans hereunder.
AFFILIATE means any Person which, directly or indirectly, controls, is
controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean a member of the board of directors, a partner or an
officer of such Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee, or by
proxy) of voting shares, partnership interests or voting rights, through a
management contract or otherwise. Any Person owning or controlling directly or
indirectly ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be deemed to be
an Affiliate of such Person.
ASSIGNMENT AND ACCEPTANCE means a document substantially in the form of
Exhibit "F" hereto.
BA RATE means (i) for a period of 30, 60 or 90 days a reference rate per
annum as determined by the Agent as being equal to the discount rate of interest
at which the Agent, acting reasonably and in good faith, is offering at or about
11:00 a.m. (Toronto, Canada time) on that date to purchase Banker's Acceptances
accepted by the Agent having a maturity date and face amount comparable to the
maturity date and face amount for such periods, plus (ii) the BA Rate Margin.
BA RATE LOANS means any Loan during any period which bears interest based
upon the BA Rate.
BA RATE MARGIN shall be:
(i) At any time when (ii) below does not apply:
(a) two percent (2.0%) per annum whenever the
Borrowing Base Usage is equal to or greater
than 90%;
(b) one and three-quarters percent (1.75%) per annum
whenever the Borrowing Base Usage is equal to or greater
than 70%, but less than 90%; or
(c) one and one-half percent (1.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50% but
less than 70%; or
(d) one and one-quarter percent (1.25%) per
annum whenever the Borrowing Base Usage is
less than 50%; or
(ii) At any time that (A) the ratio of (x) Consolidated Funded Debt
to Consolidated EBITDA is less than 2.0 to 1.0 as of the most
recent fiscal quarter, and (y) Consolidated Total Debt to
Consolidated Total Capital is less than .60 to 1.0 as of the
most recent fiscal quarter and (B) no Borrowing Base
Deficiency exists:
(a) one and three-quarters percent (1.75%) per
annum whenever the Borrowing Base Usage is
equal to or greater than 90%;
(b) one and one-half percent (1.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 70%,
but less than 90%; or
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(c) one and one-quarter percent (1.25%) per annum whenever
the Borrowing Base Usage is equal to or greater than 50%
but less than 70%; or
(d) one percent (1%) per annum whenever the Borrowing Base
Usage is less than 50%.
BORROWING BASE shall mean the value assigned by the Lenders from time to
time to the Oil and Gas Properties pursuant to Section 7 hereof.
BORROWING BASE DEFICIENCY is used herein as defined in Section 9(b).
BORROWING BASE USAGE shall mean, as of any date, all amounts outstanding
on the Loan divided by the Borrowing Base.
BORROWING DATE means the date elected by Borrower pursuant to Section 2(b)
hereof for an Advance on the Loan.
BUSINESS DAY shall mean a day (other than Saturdays and Sundays) on which
banks are legally open for business in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
CANADIAN DOLLARS means the lawful currency of Canada.
CANADIAN PRIME RATE means a rate per annum equal to the higher of (i) the
rate of interest per annum most recently announced by the Agent as its reference
rate for Canadian Dollar commercial loans made to a borrower in Canada, and (ii)
the sum of (A) CDOR for a 30-day period in effect on such day plus (B) 1%.
CDOR means on any date, the annual rate of interest which is the rate
based on an average rate applicable to Canadian Dollar bankers' acceptances for
the applicable period appearing on the "Reuters Screen CDOR Page" (as defined in
the International Swaps and Derivatives Association, Inc. 1991 definitions, as
modified and amended from time to time), rounded to the nearest 1/100th of 1%
(with .005% being rounded up), at approximately 10:00 a.m. (Toronto time), on
such date, or if such date is not a Business Day, then on the immediately
preceding Business Day, provided that if such rate does not appear on the
Reuters Screen CDOR Page on such date as contemplated, then the CDOR Rate on
such date shall be calculated as the arithmetic mean of the rates for the term
referred to above applicable to Canadian Dollar bankers' acceptances quoted by
the banks listed in Schedule I of the BANK ACT (Canada) as of 10:00 a.m.
(Toronto time) on such date or, if such date is not a Business Day, then on the
immediately preceding Business Day.
CHANGE OF CONTROL shall occur if any Person (or syndicate or group of
Persons which is deemed a Person for the purposes of Sections 13(d) or 14(d)(ii)
of the Securities Act of 1934, as amended) shall acquire, directly or indirectly
a number of membership interests in Borrower
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sufficient to change the control of Borrower by causing the election or
change of a majority of the board of directors of Borrower.
COLLATERAL is used herein as defined in Section 6 hereof.
COMMITMENT means the Revolving Commitment.
CONSOLIDATED as used herein means the financial consolidation, in
accordance with GAAP, of EXCO Resources, Inc. and all of its Subsidiaries,
including Borrower.
CONSOLIDATED CURRENT ASSETS means the total of the consolidated current
assets determined in accordance with GAAP, PLUS, as of any date, the unused
availability on the Revolving Commitment, LESS any amount required to be
included in Consolidated Current Assets as a result of the application of FASB
Statement 133.
CONSOLIDATED CURRENT LIABILITIES means the total of consolidated current
obligations as determined in accordance with GAAP, excluding therefrom any
amount required to be included in Consolidated Current Liabilities as a result
of the application of FASB Statement 133.
CONSOLIDATED CURRENT RATIO means the ratio of Consolidated Current Assets
for the date or period being measured to the Consolidated Current Liabilities
for such date or period.
CONSOLIDATED DEBT means, without duplication, all obligations and
liabilities of a Person on a consolidated basis to any other person, including,
without limitation, all debts, claims and indebtedness, heretofore, now and/or
from time to time hereafter owing, due or payable, however evidenced, created,
incurred, acquired or owing and however arising, whether under written or oral
agreement, operation of law, or otherwise. Debt includes, without limiting the
foregoing, (i) indebtedness for borrowed money (including without duplication
obligations to reimburse the issuer of any letter of credit or any guarantor or
surety), (ii) indebtedness for the deferred purchase price of property or
services, excluding trade accounts payable within ninety (90) days and arising
in the ordinary course of business, (ii) indebtedness evidenced by bonds,
debentures, notes or other similar instruments, (iv) obligations and liabilities
secured by a Lien on property owned by such Person whether or not such Person
has assumed such obligations and liabilities and the amount of which Debt shall
not exceed the fair market value of the property subject to the Lien if such
Person has not assumed such obligations and liabilities, (v) obligations or
liabilities created or arising under any capitalized lease, (vi) all net
payments or amounts owing by such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity swap agreements or
other interests, exchange rate or commodity hedging arrangements and (vii)
liabilities in respect of unfunded vested benefits under any Plan. Debt shall
not include accounts payable and expense accruals incurred or assumed in the
ordinary course of business nor shall it include liabilities required to be
included as balance sheet liabilities as a result of the application of FASB
Statement 133.
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CONSOLIDATED EBITDA shall mean Consolidated Net Income (excluding gains
and losses from asset sales, extraordinary and non-recurring non-cash gains and
losses) plus the sum of (i) (A) income tax expense (but excluding income tax
expense relating to the sales or other disposition of assets, including capital
stock, the gains and losses from which are excluded in the determination of
Consolidated Net Income), plus (B) Consolidated Interest Expense, plus (C)
depreciation, depletion and amortization expense, plus (D) any other non-cash
expenses, less (ii) any other non-cash income, all as determined in accordance
with GAAP, in each case for four (4) fiscal quarters ending on the date of
determination.
CONSOLIDATED FUNDED DEBT means, as of any date, without duplication, (i)
all obligations for borrowed money or for the purchase price of property, (ii)
all obligations evidenced by bonds, debentures, notes, or other similar
instruments, (iii) all other indebtedness (including obligations under capital
leases, other than usual and customary oil and gas leases) on which interest
charges are customarily paid or accrued, (iv) all guarantees, (v) the unfunded
or unreimbursed portion of all letters of credit, (vi) any indebtedness or other
obligation secured by a Lien on assets, whether or not assumed, and (vii) all
liability as a general partner of a partnership for obligations of that
partnership of the nature described in (i) through (vii) preceding.
CONSOLIDATED INTANGIBLE ASSETS means the amount (to the extent reflected
in determining such consolidated shareholders equity) of all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, tradenames, copyrights, organization expenses and
other intangible items.
CONSOLIDATED INTEREST EXPENSE shall mean the aggregate amount of interest
expense, as determined on a consolidated basis in accordance with GAAP.
CONSOLIDATED NET INCOME shall mean consolidated net income after income
taxes calculated in accordance with GAAP, but excluding (i) any non-cash gains
or losses as a result of the application of FASB Statement 133, and (ii) the
effect of ceiling test write downs.
CONSOLIDATED TANGIBLE NET WORTH shall mean consolidated shareholders
equity less Consolidated Intangible Assets.
CONSOLIDATED TOTAL CAPITAL means the sum of Consolidated Debt plus
Consolidated Tangible Net Worth.
CURRENT EXCHANGE RATE means, as of any date, the rate at which U.S.
Dollars may be converted into Canadian Dollars, as reported in the financial
pages of the Wall Street Journal on such date.
DEFAULT means all the events specified in Section 14 hereof, regardless of
whether there shall have occurred any passage of time or giving of notice, or
both, that would be necessary in order to constitute such event as an Event of
Default.
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DEFAULT RATE means the sum of the CANADIAN PRIME RATE plus four percent
(4%) per annum.
EFFECTIVE DATE means the date of this Agreement.
ELIGIBLE ASSIGNEE means any of (i) a Lender or any Affiliate of a Lender;
(ii) a commercial bank having a combined capital and surplus of at least
$100,000,000 U.S. or the equivalent; (iii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000.00 U.S. or the
equivalent, (iv) a Person that is primarily engaged in the business of
commercial lending and that (A) is a subsidiary of a Lender, (B) a subsidiary of
a Person of which a Lender is a subsidiary, or (C) a Person of which a Lender is
a subsidiary; (v) any other entity (other than a natural person) which is an
"accredited investor" which extends credit or buys loans as one of its
businesses, including, but not limited to, insurance companies, mutual funds,
investments funds and lease financing companies; and (vi) with respect to any
Lender that is a fund that invests in loans, any other fund that invests in
loans and is managed by the same investment advisor of such Lender or by an
Affiliate of such investment advisor (and treating all such funds so managed as
a single Eligible Assignee); provided, however, that no Affiliate of Borrower
shall be an Eligible Assignee.
ENGINEERED VALUE is used herein as defined in Section 6 hereof.
ENVIRONMENTAL LAWS means all federal, provincial, local and foreign laws,
statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, orders, permits and restrictions of any federal, state,
county, municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or foreign,
relating to oil pollution, air pollution, water pollution, noise control and/or
the handling, discharge, disposal or recovery of on-site or off-site asbestos,
radioactive materials, spilled or leaked petroleum products, distillates or
fractions and industrial solid waste or other hazardous substances, as amended
from time to time.
ENVIRONMENTAL LIABILITY means any claim, demand, obligation, cause of
action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other costs or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law or the release of any
substance into the environment which is required to be remediated by a
regulatory agency or governmental authority or the imposition of any
Environmental Lien (as hereinafter defined) which could reasonably be expected
to individually or in the aggregate have a Material Adverse Effect.
ENVIRONMENTAL LIEN means a Lien in favor of any court, governmental agency
or instrumentality or any other Person (i) for any Environmental Liability or
(ii) for damages arising
6
from or cost incurred by such court or governmental agency or instrumentality
or other person in response to a release or threatened release of asbestos or
"hazardous substance" into the environment, the imposition of which Lien
could reasonably be expected to have a Material Adverse Effect.
EVENT OF DEFAULT is used herein as defined in Section 14 hereof.
FINANCIAL STATEMENTS means balance sheets, income statements, statements
of cash flow and appropriate footnotes and schedules, prepared in accordance
with GAAP, for EXCO Resources, Inc. and its Subsidiaries, including Borrower, on
a consolidated basis.
GAAP means generally accepted accounting principles (U.S.),
consistently applied.
GUARANTIES means the Subsidiary Guaranties in the form of Exhibit "C"
hereto and the Parent Guaranty in the form of Exhibit "D" hereto.
GUARANTORS mean (i) all material Subsidiaries of Borrower (as determined
by Agent) and (ii) EXCO Resources, Inc.
INTERCREDITOR AGREEMENT means that certain intercreditor agreement
between the Agent and the Lenders and the agent and the lenders under the
U.S.
Credit Agreement.
INTEREST PAYMENT DATE shall mean the last day of each calendar month in
the case of Prime Rate Loans and, in the case of BA Rate Loans, the last day of
the applicable Interest Period.
INTEREST PERIOD shall mean with respect to any BA Rate Loan (i) initially,
the period commencing on the date such BA Rate Loan is made and ending one (1),
two (2) or three (3) months thereafter as selected by the Borrower pursuant to
Section 4(a)(ii), and (ii) thereafter, each period commencing on the day
following the last day of the next preceding Interest Period applicable to such
BA Rate Loan and ending one (1), two (2) or three (3) months thereafter, as
selected by the Borrower pursuant to Section 4(a)(ii); provided, however, that
(i) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day unless the result of such extension would be to extend such Interest Period
into the next calendar month, in which case such Interest Period shall end on
the immediately preceding Business Day, (ii) if any Interest Period begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) such Interest Period shall end on the last Business Day of a calendar
month, and (iii) any Interest Period which would otherwise expire after the
Revolving Maturity Date shall end on such Revolving Maturity Date.
LIEN means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
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LOAN DOCUMENTS means this Agreement, the Notes, the Guaranties, the
Intercreditor Agreement, the Security Instruments and all other documents
executed by Borrower or any of its Subsidiaries with Agent or the Lenders in
connection with the transaction described in this Agreement
LOANS means the Revolving Loans.
MAJORITY LENDERS means Lenders holding 66-2/3% or more of the Commitments
hereunder.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (i) the
assets or properties, liabilities, financial condition, business, operations,
affairs or circumstances of the Borrower, (ii) the ability of the Borrower to
carry out its businesses as of the date of this Agreement or as proposed at the
date of this Agreement to be conducted, (iii) the ability of Borrower to perform
fully and on a timely basis its obligations under any of the Loan Documents, or
(iv) the validity or enforceability of any of the Loan Documents or the rights
and remedies of the Agent or the Lenders thereunder.
MAXIMUM RATE is used herein as defined in Section 22 hereof.
NOTES means the Revolving Notes.
OIL AND GAS PROPERTIES means all oil, gas and mineral properties and
interests, related personal properties, in which Borrower or the Guarantors
grant to the Lenders either a first and prior Lien and security interest
pursuant to Section 6 hereof (subject only to Permitted Lines) or a negative
pledge pursuant to Section 13(a) hereof.
OTHER FINANCING is used herein as defined in Section 15(l) hereof.
PAYOR is used herein as defined in Section 3(h)hereof.
PERMITTED LIENS shall mean (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens; (ii) sales
contracts or other arrangements for the sale of production of oil, gas or
associated liquid or gaseous hydrocarbons which would not (when considered
cumulatively with the matters discussed in clause (i) above) deprive Borrower of
any material right in respect of Borrower's assets or properties (except for
rights customarily granted with respect to such contracts and arrangements);
(iii) statutory Liens for taxes or other assessments that are not yet delinquent
(or that, if delinquent, are being contested in good faith by appropriate
proceedings, levy and execution thereon having been stayed and continue to be
stayed and for which Borrower has set aside on its books adequate reserves in
accordance with GAAP); (iv) easements, rights of way, servitudes, permits,
surface leases and other rights in respect to surface operations, pipelines,
grazing, logging, canals, ditches, reservoirs or the like, conditions, covenants
and other restrictions, and easements of streets, alleys, highways, pipelines,
telephone lines, power lines, railways and other easements and rights of way on,
over
8
or in respect of Borrower's assets or properties and that could not
individually or in the aggregate, reasonably be expected to cause a Material
Adverse Effect; (v) materialmen's, mechanic's, repairman's, employee's,
vendor's laborer's warehousemen's, landlord's, carrier's, pipeline's,
contractor's, sub-contractor's, operator's, non-operator's (arising under
operating or joint operating agreements), and other Liens (including any
financing statements filed in respect thereof) incidental to obligations
incurred by Borrower in connection with the construction, maintenance,
development, transportation, processing, storage or operation of Borrower's
assets or properties to the extent not delinquent (or which, if delinquent,
are being contested in good faith by appropriate proceedings and for which
Borrower has set aside on its books adequate reserves in accordance with the
requirements of its auditors); (vi) all contracts, agreements and
instruments, and all defects and irregularities and other matters affecting
Borrower's assets and properties which were in existence at the time
Borrower's assets and properties were originally acquired by Borrower and all
routine operational agreements entered into in the ordinary course of
business, which contracts, agreements, instruments, defects, irregularities
and other matters and routine operational agreements are not such as to,
individually or in the aggregate, interfere materially with the operation,
value or use of Borrower's assets and properties, considered in the
aggregate; (vii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations; (viii) legal or equitable encumbrances deemed to exist
by reason of the existence of any litigation or other legal proceeding or
arising out of a judgment or award with respect to which an appeal is being
prosecuted in good faith and levy and execution thereon have been stayed and
continue to be stayed; (ix) rights reserved to or vested in any municipality,
governmental, statutory or other public authority to control or regulate
Borrower's assets and properties in any manner, and all applicable laws,
rules and orders from any governmental authority; (x) landlord's Liens; (xi)
Liens incurred pursuant to the Security Instruments and Liens expressly
subordinated to the Liens under the Security Instruments that secure
obligations under Rate Management Transactions permitted pursuant to Section
13(m) hereof; and (xii) Liens existing at the date of this Agreement which
are identified in Schedule "1" hereto.
PERSON means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
PLAN means any retirement plan maintained by Borrower for its employees,
or any such Plan in which Borrower is required to contribute on behalf of its
employees which is maintained pursuant to, and in compliance with applicable
Canadian law.
PRE-APPROVED CONTRACTS as used herein shall mean any contracts or
agreements entered into in connection with any Rate Management Transaction
which are (i) designed to hedge, provide a price floor for, or swap crude oil
or natural gas or otherwise sell up to (A) 80% of the Borrower's anticipated
production from proved, developed producing reserves of crude oil, and/or (B)
80% of the Borrower's anticipated production from proved, developed producing
reserves of natural gas, during the period from the immediately preceding
settlement date (or the
9
commencement of the term of such hedge transactions if there is no prior
settlement date) to such settlement date, (ii) interest rate ▇▇▇▇▇▇ in an
aggregate notional amount of not more than eighty percent (80%) of the total
funded debt of Borrower projected to be outstanding for any period covered by
such ▇▇▇▇▇▇, (iii) with a maturity of thirty (30) months or less, and (iv)
with counterparties to the hedging agreement which are approved by Agent.
PRIME RATE means the Canadian Prime Rate plus the Prime Rate Margin.
PRIME RATE LOANS means any loans during any period which bear interest at
the Canadian Prime Rate.
PRIME RATE MARGIN shall be:
(i) At any time when (ii) below does not apply:
(a) one and three-quarters of one percent
(1.75%) per annum whenever the Borrowing
Base Usage is equal to or greater than 90%;
(b) one and one-half of one percent (1.50%) per annum
whenever the Borrowing Base Usage is equal to or greater
than 70%, but less than 90%; or
(c) one and one-quarter of one percent (1.25%) per annum
whenever the Borrowing Base Usage is equal to or greater
than 51% but less than 70%; or
(d) one percent (1%) per annum whenever the
Borrowing Base Usage is less than 50%; or
(ii) At any time that (A) the ratio of (x) Consolidated Funded Debt
to Consolidated EBITDA is less than 2.0 to 1.0 as of the most
recent fiscal quarter, and (y) Consolidated Total Debt to
Consolidated Total Capital is less than .60 to 1.0 as of the
most recent fiscal quarter, and (B) no Borrowing Base
Deficiency exists:
(a) one and one-half of one percent (1.50%) per
annum whenever the Borrowing Base Usage is
equal to or greater than 90%;
(b) one and one-quarter of one percent (1.25%) per annum
whenever the Borrowing Base Usage is equal to or greater
than 70%, but less than 90%; or
10
(c) one percent (1%) per annum whenever the Borrowing Base
Usage is less than 70%.
PRO RATA OR PRO RATA PART means for each Lender, (i) for all purposes
where no Loan is outstanding, such Lender's Revolving Commitment Percentage and
(ii) otherwise, the proportion which the portion of the outstanding Loans owed
to such Lender bears to the aggregate outstanding Loans owed to all Lenders at
the time in question.
RATE MANAGEMENT TRANSACTION means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by Borrower or any
of its Subsidiaries which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, forward exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.
RELEASE PRICE is used herein as defined in Section 12(p) hereof.
REQUIRED LENDERS means Lenders holding 66-2/3% or more of the
aggregate of the Commitments hereunder and the Commitments under the U.S.
Credit Agreement.
REQUIRED PAYMENT is used herein as defined in Section 3(h) hereof.
REVOLVING COMMITMENT means (A) For all Lenders, the LESSER of (i)
$77,500,000 Canadian or (ii) the Borrowing Base, as reduced or increased from
time to time pursuant to Sections 2 and 7 hereof, and (B) as to any Lender, its
obligation to make Advances hereunder on the Loan in amounts not exceeding, in
the aggregate, an amount equal to such Lender's Revolving Commitment Percentage
times the total Revolving Commitment as of any date. The Revolving Commitment of
each Lender hereunder shall be adjusted from time to time to reflect assignments
made by such Lender pursuant to Section 28 hereof. Each reduction in the
Revolving Commitment shall result in a Pro Rata reduction in each Lender's
Revolving Commitment.
REVOLVING COMMITMENT PERCENTAGE means for each Lender the percentage set
forth opposite the Lender's name on the signature page hereto. The Revolving
Commitment Percentage of each Lender hereunder shall be adjusted from time to
time to reflect assignments made by such Lender pursuant to Section 28 hereof.
REVOLVING LOAN OR LOANS means an Advance or Advances made under the
Revolving Commitment.
REVOLVING MATURITY DATE shall mean April 30, 2004.
11
REVOLVING NOTES means the Notes, substantially in the form of Exhibit "B"
hereto issued or to be issued hereunder to each Lender, respectively, to
evidence the indebtedness to such Lender arising by reason of the Advances on
the Revolving Commitment, together with all modifications, renewals and
extensions thereof or any part thereof.
SECURITY INSTRUMENTS is used collectively herein to mean this Agreement,
all debentures, deeds of trust, mortgages, security agreements, assignments of
production and financing statements and other collateral documents covering the
Oil and Gas Properties and related personal property, equipment, oil and gas
inventory and proceeds of the foregoing, all Guaranties, all pledge agreements
and all collateral assignments of notes and liens, all such documents to be in
form and substance reasonably satisfactory to Agent.
SUBORDINATION AGREEMENT means a Subordination Agreement in the form of
Exhibit "G" hereto pursuant to which all indebtedness owed by Borrower to EXCO
Resources, Inc. is fully subordinated to indebtedness owed the Lenders pursuant
to the Loan Documents.
SUBSIDIARY means for any Person, any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person or another
Subsidiary.
TOTAL OUTSTANDINGS means, as of any date, the total principal balance
outstanding on the Revolving Notes.
TRANCHE means a set of BA Rate Loans made by the Lenders at the same time
and for the same Interest Period.
UNSCHEDULED REDETERMINATIONS means a redetermination of the Borrowing Base
made at any time other than on the dates set for the regular semi-annual
redetermination of the Borrowing Base which are made (A) at the request of
Borrower (but only once between Borrowing Base redeterminations), or (B) at the
request of Majority Lenders, or (C) immediately after issuance by EXCO
Resources, Inc. or any Subsidiary of EXCO, of any debt or equity other than
common stock.
UNUSED COMMITMENT FEE RATE shall be three-eighths of one percent (3/8%)
per annum.
U.S. means the United States of America.
U.S.
CREDIT AGREEMENT means that certain Restated
Credit Agreement
between EXCO Resources, Inc., et al. and Bank One, NA as Administrative
Agent for itself and the lenders named therein as of December 18, 2001.
U.S. DOLLAR means the lawful currency of the United States of
America.
12
2. COMMITMENT OF THE LENDER.
(a) TERMS OF REVOLVING COMMITMENT. On the terms and conditions
hereinafter set forth, each Lender agrees severally to make Advances to
the Borrower in Canadian Dollars from time to time during the period
beginning on the Effective Date and ending on the Revolving Maturity Date
in such amounts as the Borrower may request up to an amount not to exceed,
in the aggregate principal amount advanced at any time, the aggregate
Revolving Commitment less Total Outstandings. The obligation of the
Borrower hereunder shall be evidenced by this Agreement and the Revolving
Notes issued in connection herewith, said Revolving Notes to be as
described in Section 3 hereof. Notwithstanding any other provision of this
Agreement, no Advance shall be required to be made hereunder if any
Default or Event of Default (as hereinafter defined) has occurred and is
continuing. Each Advance under the Revolving Commitment shall be an
aggregate amount of at least $1,000,000 Canadian or any whole multiples of
$100,000 Canadian in excess thereof. Irrespective of the face amount of
the Revolving Note or Notes, the Lenders shall never have the obligation
to Advance any amount or amounts in excess of the Revolving Commitment or
to increase the Revolving Commitment.
(b) PROCEDURE FOR BORROWING. Whenever the Borrower desires an
Advance under the Revolving Commitment, it shall give Agent telegraphic,
telex, facsimile or telephonic notice ("Notice of Borrowing") of such
requested Advance, which in the case of telephonic notice, shall be
promptly confirmed in writing. Each Notice of Borrowing shall be in the
form of Exhibit "A" attached hereto and shall be received by Agent not
later than 11:00 a.m. Toronto, Canada time, (i) one Business Day prior to
the Borrowing Date in the case of Prime Rate Loans, or (ii) two Business
Days prior to any proposed Borrowing Date in the case of BA Rate Loans.
Each Notice of Borrowing shall specify (i) the Borrowing Date (which shall
be a Business Day), (ii) the principal amount to be borrowed, (iii) the
portion of the Advance constituting Prime Rate Loans and/or BA Rate Loans
and (iv) if any portion of the proposed Advance is to constitute BA Rate
Loans, the initial Interest Period selected by Borrower pursuant to
Section 4 hereof to be applicable thereto. Upon receipt of such Notice,
Agent shall advise each Lender thereof; provided, that if the Lenders have
received at least one (1) day's notice of such Advance prior to funding of
a Prime Rate Loan, or at least two (2) days' notice of each Advance prior
to funding in the case of a BA Rate Loan, each Lender shall provide Agent
at its office at BCE Place, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
M5J 2SI, not later than 1:00 p.m., Toronto, Canada time, on the Borrowing
Date, in immediately available funds, its Pro Rata share of the requested
Advance, but the aggregate of all such fundings by each Lender shall never
exceed such Lender's Commitment. Not later than 2:00 p.m., Toronto, Canada
time, on the Borrowing Date, Agent shall make available to the Borrower at
the same office, in like funds, the aggregate amount of such requested
Advance. Neither Agent nor any Lender shall incur any liability to the
Borrower in acting upon any Notice of Borrowing referred to above which
Agent or such Lender
13
believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of Borrower or for otherwise
acting in good faith under this Section 2(b). Upon funding of Advances
by Lenders and such funds being made available to Borrower in accordance
with this Agreement, pursuant to any such Notice, the Borrower shall have
effected Advances hereunder.
(c) VOLUNTARY REDUCTION OF REVOLVING COMMITMENT. Subject to the
provisions of Section 5(e) hereof, the Borrower may at any time, or from
time to time, upon not less than three (3) Business Days' prior written
notice to Agent, reduce or terminate the Revolving Commitment; provided,
however, that (i) each reduction in the Revolving Commitment must be in
the amount of $1,000,000 Canadian or more, in increments of $1,000,000
Canadian and (ii) each reduction must be accompanied by a prepayment of
the Notes in the amount by which the outstanding principal balance of the
Notes exceeds the Revolving Commitment as reduced pursuant to this Section
2.
(d) MANDATORY REVOLVING COMMITMENT REDUCTIONS. The Borrowing Base
shall be reduced from time to time by an amount of any prepayment required
by Section 12(p) hereof upon the sale of assets. If, as a result of any
such reduction in the Borrowing Base, the Total Outstandings ever exceed
the Borrowing Base then in effect, the Borrower shall make the mandatory
prepayment of principal required pursuant to Section 9(b) hereof.
(e) SEVERAL OBLIGATIONS. The obligations of the Lenders under the
Commitment are several and not joint. The failure of any Lender to make an
Advance required to be made by it shall not relieve any other Lender of
its obligation to make its Advance, and no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender.
(f) TYPE AND NUMBER OF ADVANCES. Any Advance on the Commitment may
be a Prime Rate Loan or a BA Rate Loan, or a combination thereof, as
selected by the Borrower pursuant to Section 4 hereof. The total number of
Tranches which may be outstanding at any time shall never exceed four (4).
3. NOTES EVIDENCING LOANS. The loans described above in Section
2 shall be evidenced by promissory notes of Borrower as follows:
(a) FORM OF REVOLVING NOTES. The Revolving Loan shall be evidenced
by a Revolving Note or Notes in the aggregate face amount of $77,500,000
Canadian, and shall be in the form of Exhibit "B" hereto with appropriate
insertions. Notwithstanding the face amount of the Revolving Notes, the
actual principal amount due from the Borrower to Lenders on account of the
Revolving Notes, as of any date of computation, shall be the sum of
Advances then and theretofore made on account thereof, less all principal
payments actually received by Lenders in collected funds with respect
thereto.
14
Although the Revolving Notes may be dated as of the Effective Date,
interest in respect thereof shall be payable only for the period during
which the loans evidenced thereby are outstanding and, although the
stated amount of the Revolving Notes may be higher, the Revolving Notes
shall be enforceable, with respect to Borrower's obligation to pay the
principal amount thereof, only to the extent of the unpaid principal
amount of the Revolving Loans. Irrespective of the face amount of the
Revolving Notes, no Lender shall ever be obligated to advance on the
Revolving Commitment any amount in excess of its Revolving Commitment then
in effect.
(b) ISSUANCE OF ADDITIONAL NOTES. At the Effective Date there shall
be outstanding Revolving Notes in the aggregate face amount of $77,500,000
Canadian payable to the order of Lenders. From time to time new Notes may
be issued to other Lenders as such Lenders become parties to this
Agreement. Upon request from Agent, the Borrower shall execute and deliver
to Agent any such new or additional Notes. From time to time as new Notes
are issued the Agent shall require that each Lender exchange its Note(s)
for newly issued Note(s) to better reflect the extent of each Lender's
Commitment hereunder.
(c) INTEREST RATES. The unpaid principal balance of the
Notes shall bear interest from time to time as set forth in Section
4 hereof.
(d) PAYMENT OF INTEREST. Interest on the Notes shall be
payable on each Interest Payment Date.
(e) PAYMENT OF PRINCIPAL. Principal of the Revolving Notes shall be
due and payable to the Agent for the ratable benefit of the Lenders on the
Revolving Maturity Date unless earlier due in whole or in part as a result
of an acceleration of the amount due or pursuant to the mandatory
prepayment provisions of Sections 9(b) hereof.
(f) PAYMENT TO LENDERS. Each Lender's Pro Rata Part of payment or
prepayment of the Loans shall be directed by wire transfer to such Lender
by the Agent at the address provided to the Agent for such Lender for
payments no later than 3:00 p.m., Toronto, Canada, time on the Business
Day such payments or prepayments are deemed hereunder to have been
received by Agent; provided, however, in the event that any Lender shall
have failed to make an Advance as contemplated under Section 2 hereof (a
"Defaulting Lender") and the Agent or another Lender or Lenders shall have
made such Advance, payment received by Agent for the account of such
Defaulting Lender or Lenders shall not be distributed to such Defaulting
Lender or Lenders until such Advance or Advances shall have been repaid in
full to the Lender or Lenders who funded such Advance or Advances. Any
payment or prepayment received by Agent at any time after 12:00 noon,
Toronto, Canada time on a Business Day shall be deemed to have been
received on the next Business Day. Interest shall cease to accrue on any
principal as of the end of the day preceding the Business Day on which any
such payment or
15
prepayment is deemed hereunder to have been received by Agent. If Agent
fails to transfer any principal amount to any Lender as provided above,
then Agent shall promptly direct such principal amount by wire transfer
to such Lender.
(g) SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, or otherwise) on account of the Loans,
(including, without limitation, any set-off) which is in excess of its Pro
Rata Part of payments on either of the Loans, as the case may be, obtained
by all Lenders, such Lender shall purchase from the other Lenders such
participation as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata with each of them; provided that, if all
or any portion of such excess payment is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of the recovery. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section may, to the fullest extent permitted by law, exercise all of its
rights of payment (including the right of offset) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
(h) NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall have
been notified by a Lender or the Borrower (the "Payor") prior to the date
on which such Lender is to make payment to the Agent of the proceeds of a
Loan to be made by it hereunder or the Borrower is to make a payment to
the Agent for the account of one or more of the Lenders, as the case may
be (such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall
not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, pay
to the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was
made available by the Agent until the date the Agent recovers such amount
at the rate applicable to such portion of the applicable Loan.
4. INTEREST RATES.
(a) OPTIONS.
(i) PRIME RATE LOANS. On all Prime Rate Loans the Borrower
agrees to pay interest on the Notes calculated on the basis of the
actual days elapsed in a year consisting of 365, or if appropriate
366, days with respect to the unpaid principal amount of each Prime
Rate Loan from the date the proceeds thereof are made available to
Borrower until maturity (whether by acceleration or otherwise), at a
varying rate per annum equal
16
to the lesser of (i) the Maximum Rate (defined herein), or (ii)
the Prime Rate. Subject to the provisions of this Agreement as to
prepayment, the principal of the Notes representing Prime Rate
Loans shall be payable as specified in Section 3(e) hereof and
the interest in respect of each Prime Rate Loan shall be payable
on each Interest Payment Date applicable thereto. Past due
principal and, to the extent permitted by law, past due interest
in respect to each Prime Rate Loan, shall bear interest, payable
on demand, at a rate per annum equal to the Default Rate.
(ii) BA RATE LOANS. On all BA Rate Loans the Borrower agrees
to pay interest calculated on the basis of a year consisting of 365,
or if appropriate 366, days with respect to the unpaid principal
amount of each BA Rate Loan from the date the proceeds thereof are
made available to Borrower until maturity (whether by acceleration
or otherwise), at a varying rate per annum equal to the lesser of
(i) the Maximum Rate, or (ii) the BA Rate. Subject to the provisions
of this Agreement with respect to prepayment, the principal of the
Notes shall be payable as specified in Section 3(e) hereof and the
interest with respect to each BA Rate Loan shall be payable on each
Interest Payment Date applicable thereto. Past due principal and, to
the extent permitted by law, past due interest shall bear interest,
payable on demand, at a rate per annum equal to the Default Rate.
Upon three (3) Business Days' written notice prior to the making by
the Lenders of any BA Rate Loan (in the case of the initial Interest
Period therefor) or the expiration date of each succeeding Interest
Period (in the case of subsequent Interest Periods therefor),
Borrower shall have the option, subject to compliance by Borrower
with all of the provisions of this Agreement, as long as no Event of
Default exists, to specify whether the Interest Period commencing on
any such date shall be a 30, 60 or 90 day period. If Agent shall not
have received timely notice of a designation of such Interest Period
as herein provided, Borrower shall be deemed to have elected to
convert all maturing BA Rate Loans to Prime Rate Loans.
(b) INTEREST RATE DETERMINATION; INTEREST ACT (CANADA). The Agent
shall determine each interest rate applicable to the Loans hereunder. The
Agent shall give prompt notice to the Borrower and the Lenders of each
rate of interest so determined and its determination thereof shall be
conclusive absent error. For the purposes of the INTEREST ACT (Canada) and
disclosure thereunder, whenever any interest or any fee to be paid
hereunder or in connection herewith is to be calculated on the basis of a
360 day year, the yearly rate of interest to which the rate used in such
calculation is equivalent is the rate so used multiplied by the actual
number of days in the calendar year in which the same is to be ascertained
and divided by 365, or if appropriate, 366. The rates of interest under
this Agreement are nominal rates, and not effective rates or yields. The
principle of deemed reinvestment of interest does not apply to any
interest calculation under this Agreement.
17
(c) CONVERSION OPTION. Borrower may elect from time to time (i) to
convert all or any part of its BA Rate Loans to Prime Rate Loans by giving
Agent irrevocable notice of such election in writing prior to 10:00 a.m.
(Toronto, Canada time) on the date of conversion and such conversion shall
be made on the requested conversion date, provided that any such
conversion of BA Rate Loan shall only be made on the last day of the
Interest Period with respect thereof, (ii) to convert all or any part of
its Prime Rate Loans to BA Rate Loans by giving the Agent irrevocable
written notice of such election three (3) Business Days prior to the
proposed conversion date and such conversion shall be made on the
requested conversion date or, if such requested conversion date is not a
Business Day, on the next succeeding Business Day. Any such conversion
shall not be deemed to be a prepayment of any of the loans for purposes of
this Agreement or the Notes.
(d) RECOUPMENT. If at any time the applicable rate of interest
selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall exceed the
Maximum Rate, thereby causing the interest on the Notes to be limited to
the Maximum Rate, then any subsequent reduction in the interest rate so
selected or subsequently selected shall not reduce the rate of interest on
the Notes below the Maximum Rate until the total amount of interest
accrued on the Note equals the amount of interest which would have accrued
on the Notes if the rate or rates selected pursuant to Sections 4(a)(i) or
(ii), as the case may be, had at all times been in effect.
5. SPECIAL PROVISIONS RELATING TO LOANS.
(a) UNAVAILABILITY OF FUNDS OR INADEQUACY OF PRICING. In the event
that, in connection with any proposed BA Rate Loan, the Agent reasonably
determines, which determination shall, absent manifest error, be final,
conclusive and binding upon all parties, due to changes in circumstances
since the date hereof, adequate and fair means do not exist for
determining the BA Rate or such rate will not accurately reflect the costs
to the Lenders of funding BA Rate Loan for such Interest Period, the Agent
shall give notice of such determination to the Borrower and the Lenders,
whereupon, until the Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make, continue or convert Loan into BA Rate
Loan shall be suspended, and all loans to Borrower shall be Prime Rate
Loans during the period of suspension.
(b) CHANGE IN LAWS. If at any time any new law or any change in
existing laws or in the interpretation of any new or existing laws shall
make it unlawful for any Lender to make or continue to maintain or fund
Loans hereunder, then such Lender shall promptly notify Borrower in
writing and such Lender's obligation to make, continue or convert Loans
into BA Rate Loans under this Agreement shall be suspended until it is no
longer unlawful for such Lender to make or maintain BA Rate Loans. Upon
receipt of such notice, Borrower shall either repay the outstanding BA
Rate Loans owed to such
18
Lender, without penalty, on the last day of the current Interest
Periods (or, if any Lender may not lawfully continue to maintain and
fund such BA Rate Loans, immediately), or Borrower may convert such BA
Rate Loans at such appropriate time to Prime Rate Loans.
(c) INCREASED COST OR REDUCED RETURN.
(i) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule,
or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank, or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or
not having the force of law) of any such governmental authority,
central bank, or comparable agency:
(A) shall subject such Lender to any tax, duty, or other
charge with respect to any BA Rate Loan, its Notes, or its
obligation to make BA Rate Loans, or change the basis of
taxation of any amounts payable to such Lender under this
Agreement or its Notes in respect of any BA Rate Loan (other
than franchise taxes and taxes imposed on or measured by the
overall net income of such Lender);
(B) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or Commitment of, such
Lender, including the Commitment of such Lender hereunder; or
(C) shall impose on such Lender any other condition
affecting this Agreement or its Notes or any of such
extensions of credit or liabilities or Commitment;
and the result of any of the foregoing is to increase the cost to
such Lender of making, converting into, continuing, or maintaining
any BA Rate Loan or to reduce any sum received or receivable by such
Lender under this Agreement or its Notes with respect to any BA Rate
Loan, then Borrower shall pay to such Lender on demand such amount
or amounts as will reasonably compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by
Borrower under this Section 5(c), Borrower may, by notice to such
Lender (with a copy to Agent), suspend
19
the obligation of such Lender to make or continue BA Rate Loans,
or to convert all or part of the Prime Rate Loans owing to such
Lender to BA Rate Loans, until the event or condition giving rise
to such request ceases to be in effect (in which case the
provisions of Section 5(c) shall be applicable); PROVIDED that
such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(ii) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or
comparable agency, has or would have the effect of reducing the rate
of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or
such corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand
Borrower shall pay to such Lender such additional amount or amounts
as will reasonably compensate such Lender for such reduction.
(iii) Each Lender shall promptly notify Borrower and Agent of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to
this Section 5(c) and will designate a separate lending office, if
applicable, if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 5(c) shall furnish to Borrower and
Agent a statement setting forth the additional amount or amounts to
be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(iv) Any Lender giving notice to the Borrower through the
Agent pursuant to Section 5(c) shall give to the Borrower a
statement signed by an officer of such Lender setting forth in
reasonable detail the basis for, and the calculation of such
additional cost, reduced payments or capital requirements, as the
case may be, and the additional amounts required to compensate such
Lender therefor.
20
(v) Within five (5) Business Days after receipt by the
Borrower of any notice referred to in Section 5(c), the Borrower
shall pay to the Agent for the account of the Lender issuing such
notice such additional amounts as are required to compensate such
Lender for the increased cost, reduced payments or increased capital
requirements identified therein, as the case may be.
(d) DISCRETION OF LENDER AS TO MANNER OF FUNDING. Notwithstanding
any provisions of this Agreement to the contrary, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loan
in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as
if each Lender had actually funded and maintained each BA Rate Loan
through the purchase of deposits having a maturity corresponding to the
last day of the Interest Period applicable to such BA Rate Loan and
bearing an interest rate to the applicable interest rate for such BA
Period.
(e) BREAKAGE FEES. Without duplication under any other provision
hereof, if any Lender incurs any loss, cost or expense including, without
limitation, any loss of profit and loss, cost, expense or premium
reasonably incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Lender to fund or maintain any BA
Rate Loan or the relending or reinvesting of such deposits or amounts paid
or prepaid to the Lenders as a result of any of the following events other
than any such occurrence as a result in the change of circumstances
described in Sections 5(a) and (b):
(i) any payment, prepayment or conversion of a BA Rate Loan on
a date other than the last day of its Interest Period (whether by
acceleration, prepayment or otherwise);
(ii) any failure to make a principal payment of a
BA Rate Loan on the due date thereof; or
(iii) any failure by the Borrower to borrow, continue, prepay
or convert to a BA Rate Loan on the dates specified in a notice
given pursuant to Section 2(b) or 4(c) hereof;
then the Borrower shall pay to such Lender such amount as will reimburse
such Lender for such loss, cost or expense. If any Lender makes such a
claim for compensation, it shall furnish to Borrower and Agent a statement
setting forth the amount of such loss, cost or expense in reasonable
detail (including an explanation of the basis for and the computation of
such loss, cost or expense) and the amounts shown on such statement shall
be conclusive and binding absent manifest error.
(f) INDEMNIFIED TAXES. Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and
without
21
deduction for any Indemnified Taxes; provided that if the Borrower shall
be required to deduct any Indemnified Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that, after making
all required deductions (including deductions applicable to additional
sums payable under this Section 5(f)), the Agent or Lender ( as the case
may be) receives an amount equal to the sum it would have received had no
such deduction been made, (ii) the Borrower shall make such deduction, and
(iii) the Borrower shall pay the full amount deducted to the relevant
governmental authority in accordance with applicable law, and (iv) the
Borrower shall provide original evidence of any such payment of
Indemnified Taxes to the Agent. In addition to the payments by the
Borrower required by the previous sentence, the Borrower shall pay any and
all present or future stamp or documentary Taxes or any other excise or
property Taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement to the relevant governmental authority in
accordance with applicable law. "Indemnified Taxes" means all Taxes other
than Excluded Taxes. "Taxes" means all taxes, charges, fees, levies,
imposts and other assessments, including all income, sales, use, goods and
services, value added, capital, capital gains, alternative, net worth,
transfer, profits, withholding, payroll, employer health, excise, real
property and personal property taxes, and any other taxes, customs duties,
fees, assessments or similar charges in the nature of a tax, together with
any installments with respect thereto, and any interest, fines and
penalties with respect thereto, imposed by any governmental authority, and
whether disputed or not. "Excluded Taxes" means, with respect to the
Agent, any Lender or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, income or
franchise Taxes imposed on (or measured by) its taxable income or capital
Taxes imposed on (or measured by) its taxable capital, in each case by
Canada, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located.
(g) REPLACEMENT OF LENDERS. If any Lender suspends its obligations
to make BA Loans pursuant to Section 5(b) or requests compensation under
Section 5(c), then Borrower, with the consent of the Agent, shall have the
right to remove or replace such Lender as a party to this Agreement,
Borrower may, upon notice to such Lender and Agent and with the consent of
the Agent, (i) remove such Lender by terminating such Lender's Revolving
Commitment, or (ii) replace such Lender by causing such Lender to assign
its Revolving Commitment (without payment of any assignment fee) pursuant
to Section 28 to one or more other Lenders or Eligible Assignees procured
by Borrower and approved by Agent. Borrower shall pay in full all
principal, interest, fees, and other amounts owing to such Lender through
the date of termination or assignment. Any Lender being replaced shall
execute and deliver an Assignment and Acceptance Agreement with respect to
such Lender's Revolving Commitment and outstanding Loans.
6. COLLATERAL SECURITY. To secure the performance by Borrower of its
obligations hereunder, and under the Notes and Security Instruments, whether now
or hereafter incurred,
22
matured or unmatured, direct or contingent, joint or several, or joint and
several, including extensions, modifications, renewals and increases thereof,
and substitutions therefor, Borrower has heretofore granted and assigned to
Agent for the ratable benefit of the Lenders a first and prior Lien on
certain of its Oil and Gas Properties, certain related equipment, oil and gas
inventory and proceeds of the foregoing. To secure the performance of the
Guarantors under the Guaranties, whether now or hereafter incurred, matured
or unmatured, direct or contingent, joint or several, or joint and several,
including, extensions, modifications, renewals and increases thereof, and
substitutions therefor, the Guarantors have heretofore granted and assigned
to Agent for the ratable benefit of the Lenders a Lien on certain of their
Oil and Gas Properties, certain related equipment, oil and gas inventory and
the proceeds of the foregoing. To further secure the performance by the
Borrower hereunder, the Borrower has heretofore granted to the Agent for the
ratable benefit of the Lenders a first and prior Lien on all of the issued
and outstanding voting securities of each of its Subsidiaries. The Oil and
Gas Properties heretofore mortgaged to the Agent by the Borrower and the
Guarantors shall represent not less than 90% of the Engineered Value (as
hereinafter defined). In addition to the mortgaging of the Oil and Gas
Properties, Borrower has provided the Lenders with the Guaranties of all of
its material Subsidiaries (as determined by Agent). Obligations arising from
agreements arising from Rate Management Transactions between Borrower or any
Guarantor and one or more of the Lenders or an Affiliate of any of the
Lenders shall be secured by the Collateral (as hereinafter defined) on a pari
passu basis with the indebtedness and obligations of the Borrower under the
Loan Documents. All Oil and Gas Properties and other collateral in which
Borrower or any Guarantor heretofore has granted or hereafter grants to Agent
for the ratable benefit of the Lenders a first and prior Lien (to the
satisfaction of the Agent) in accordance with this Section 6 or the Oil and
Gas Properties, as such properties and interests are from time to time
constituted, are hereinafter collectively called the "Collateral".
The granting and assigning of such security interests and Liens by
Borrower and one or more of the Guarantors shall be pursuant to Security
Instruments in form and substance reasonably satisfactory to the Agent.
Concurrently with the delivery of each of the Security Instruments or within a
reasonable time thereafter, Borrower and the Guarantors shall have furnished to
the Agent mortgage and title opinions and other title information reasonably
satisfactory to Agent with respect to the title and Lien status of Borrower's
and Guarantors' interests in not less than 80% of the Engineered Value.
"Engineered Value" for this purpose shall mean future net revenues discounted at
the discount rate being used by the Agent as of the date of any such
determination utilizing the pricing parameters used in the engineering report
furnished to the Agent, pursuant to Sections 7 and 12 hereof. Borrower will
cause to be executed and delivered to the Agent, in the future, additional
Security Instruments if the Agent reasonably deems such are necessary to insure
perfection or maintenance of Lenders' security interests and Liens in the Oil
and Gas Properties or any part thereof.
23
7. BORROWING BASE.
(a) INITIAL BORROWING BASE. At the Effective Date, the
Borrowing Base shall be US $45,000,000 or the Canadian dollar
equivalent as of the Effective Date.
(b) SUBSEQUENT DETERMINATIONS OF BORROWING BASE. Subsequent
determinations of the Borrowing Base shall be made semi-annually on May 1
and November 1 of each year beginning May 1, 2002 or as an Unscheduled
Redetermination. By March 1 each year, beginning March 1, 2002, Borrower
shall furnish to the Lenders an engineering report in form and substance
reasonably satisfactory to Agent prepared by an independent petroleum
engineering firm acceptable to Agent, said engineering report to utilize
economic and pricing parameters used by the Agent as established from time
to time, together with such other information, reports and data concerning
the value of the Oil and Gas Properties as Agent shall deem reasonably
necessary to determine the value of such Oil and Gas Properties. By
September 1 of each year beginning September 1, 2002, or within thirty
(30) days after either (i) receipt of notice from Agent that the Lenders
require an Unscheduled Redetermination, or (ii) the Borrower gives notice
to Agent of its desire to have an Unscheduled Redetermination performed,
the Borrower shall furnish to the Lenders an engineering report in form
and substance reasonably satisfactory to Agent, said internally prepared
engineering report to utilize economic and pricing parameters used by the
Agent as established from to time, together with such other information,
reports and data concerning the value of such Oil and Gas Properties.
Agent shall by written notice to the Borrower no later than May 1 and
November 1 of each year, or within a reasonable time thereafter (herein
called the "Determination Date"), notify the Borrower of the determination
by the Lenders of the new Borrowing Base for the period beginning on such
Determination Date and continuing until, but not including, the next
Determination Date. If an Unscheduled Redetermination is to be made by the
Lenders, the Agent shall notify the Borrower within a reasonable time
after receipt of all requested information of the new Borrowing Base, and
such new Borrowing Base shall continue until the next Determination Date.
If the Borrower does not furnish all such information, reports and data by
any date specified in this Section 7(b), unless such failure is of no
fault of the Borrower, the Lenders may nonetheless designate the Borrowing
Base at any amounts which the Lenders in their reasonable discretion
determine and may redesignate the Borrowing Base from time to time
thereafter until the Lenders receive all such information, reports and
data, whereupon the Lenders shall designate a new Borrowing Base as
described above. The procedure for determining the Borrowing Base at each
redetermination shall be that the Agent shall determine the Borrowing Base
and submit the same to the Lenders. Increases in the Borrowing Base will
require approval of all Lenders, but other changes in the Borrowing Base
will be subject to the approval of Majority Lenders. If any redetermined
Borrowing Base is not approved by Majority Lenders within twenty (20) days
after submission to the Lenders by the Agent, the Agent shall notify each
of the Lenders that the proposed Borrowing Base has not been approved and
each Lender will submit within ten (10) days thereafter
24
its proposed Borrowing Base. The redetermined Borrowing Base shall be then
determined based upon the weighted arithmetic average of the proposed
amounts submitted by each Lender, said proposals to be weighted according
to each Lender's Commitment. Each Lender shall determine the amount of the
Borrowing Base based upon the loan collateral value which such Lender in
its sole discretion (using such methodology, assumptions and discount
rates as such Lender customarily uses in assigning collateral value to oil
and gas properties, oil and gas gathering systems, gas processing and
plant operations) assigns to such Oil and Gas Properties of the Borrower
at the time in question and based upon such other credit factors
consistently applied (including, without limitation, the assets,
liabilities, cash flow, business, properties, prospects, management and
ownership of the Borrower and its affiliates and the Current Exchange
Rate) as such Lender customarily considers in evaluating similar oil and
gas credits. If at any time any of the Oil and Gas Properties are sold,
the Borrowing Base then in effect shall automatically be reduced by a sum
equal to the amount of prepayment, if any, required to be made pursuant to
Section 12(p) hereof. The Borrowing Base shall be additionally reduced
from time to time pursuant to the provisions of Sections 2(d) hereof. It
is expressly understood that the Lenders have no obligation to designate
the Borrowing Base at any particular amounts, except in the exercise of
their discretion, whether in relation to the Commitment or otherwise.
Provided, however, that the Lenders shall not have the obligation to
designate a Borrowing Base in an amount in excess of the Commitment.
8. FEES.
(a) UNUSED COMMITMENT FEE. The Borrower shall pay to Agent for the
ratable benefit of the Lenders an unused commitment fee (the "Unused
Commitment Fee") equivalent to the Unused Commitment Fee Rate times the
daily average of the unadvanced amount of the Commitment (i.e., the
Commitment minus the Total Outstandings). Such Unused Commitment Fee shall
be calculated on the basis of a year consisting of 360 days. The Unused
Commitment Fee shall be payable in arrears on the last Business Day of
each calendar quarter beginning December 31, 2001 with the final fee
payment due on the Maturity Date for any period then ending for which the
Unused Commitment Fee shall not have been theretofore paid. In the event
the Commitment terminates on any date prior to the end of any such monthly
period, the Borrower shall pay to the Agent for the ratable benefit of the
Lenders, on the date of such termination, the total Unused Commitment Fee
due for the period in which such termination occurs.
(b) BORROWING BASE INCREASE FEE. The Borrower shall pay to the Agent
for the ratable benefit of the Lenders a Borrowing Base increase fee equal
to one-quarter of one percent (.25%) of the amount of any incremental
increase in the Borrowing Base from the amount of the Borrowing Base set
as of the preceding Determination Date (whether scheduled or made as an
Unscheduled Redetermination), said fee to be payable upon notice to
Borrower of such increase. At the Effective Date, Borrower shall pay to
25
the Lenders (other than The Bank of Nova Scotia) the Borrowing Base
Increase Fee required by this subsection.
(c) CLOSING FEE. At the Effective Date, the Borrower shall
pay to The Bank of Nova Scotia a Closing Fee in the amount of
one-half of one percent (.50%) of the amount of its initial
Commitment.
(d) AGENCY FEE. The Borrower shall pay to the Agent an
annual Agency Fee for acting as administrative agent hereunder in an
amount agreed upon between Agent and Borrower.
9. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Subject to the provisions of Section 5(e)
hereof, the Borrower may at any time and from time to time, without
penalty or premium, prepay the Notes, in whole or in part. Each such
prepayment shall be made on at least three (3) Business Days' notice to
Agent in the case of BA Rate Loan Tranches and without notice in the case
of Prime Rate Loans and shall be in a minimum amount of (i) $500,000
Canadian or any whole multiple of $100,000 Canadian in excess thereof (or
the unpaid balance of the Notes, whichever is less), for Prime Rate Loans,
plus accrued interest thereon and (ii) $1,000,000 Canadian or any whole
multiple of $100,000 Canadian in excess thereof (or the unpaid balance on
the Notes, whichever is less) for BA Rate Loans, plus accrued interest
thereon to the date of prepayment.
(b) MANDATORY PREPAYMENT FOR BORROWING BASE DEFICIENCY. In the event
the Total Outstandings ever exceeds the Borrowing Base as determined by
Lenders pursuant to Section 7(b) hereof (a "Borrowing Base Deficiency"),
the Borrower shall, within ten (10) days after written notification from
the Agent, either (A) by instruments reasonably satisfactory in form and
substance to the Lender, provide the Agent with Collateral with value and
quality in amounts satisfactory to all of the Lenders in their discretion
in order to increase the Borrowing Base by an amount at least equal to
such excess, or (B) prepay, without premium or penalty, the principal
amount of the Notes in an amount at least equal to such excess plus
accrued interest thereon to the date of prepayment, or (C) prepay, without
premium or penalty, the principal amount of such excess in not more than
six (6) equal monthly installments to be applied to principal plus accrued
interest thereon with the first such monthly payment being due upon the
30th day after receipt of notice of such deficiency; provided, however,
that the entire principal amount of such excess must be repaid before the
next Determination Date. If the Total Outstandings ever exceeds the
Commitment as a result of a required reduction in the Commitment pursuant
to Section 2(d) hereof, then in such event, Borrower shall, upon written
notice, immediately prepay the principal amount of the Notes in an amount
at least equal to such excess plus accrued interest to the date of
prepayment.
26
10. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lenders to enter into this Agreement, the Borrower represents and warrants
to the Lenders (which representations and warranties will survive the
delivery of the Notes) that:
(a) CREATION AND EXISTENCE. Borrower is a corporation duly organized
and validly existing under the laws of
Alberta, Canada and is duly
qualified in all jurisdictions wherein failure to qualify may result in a
Material Adverse Effect. Each of the Guarantors is a corporation duly
organized and validly existing under the laws of the jurisdiction in which
it was formed and is duly qualified in all jurisdictions wherein failure
to qualify may result in a Material Adverse Effect. Borrower and each
Guarantor has all corporate power and authority to own their respective
properties and assets and to transact the business in which they are
engaged.
(b) POWER AND AUTHORITY. Borrower is duly authorized and empowered
to create and issue the Notes; and Borrower and each Guarantor is duly
authorized and empowered to execute, deliver and perform their respective
Loan Documents, including this Agreement; and all corporate action on
Borrower's and each Guarantor's part requisite for the due creation and
issuance of the Notes and for the due execution, delivery and performance
of the Loan Documents, including this Agreement, has been duly and
effectively taken.
(c) BINDING OBLIGATIONS. This Agreement does, and the Notes and
other Loan Documents upon their creation, issuance, execution and delivery
will, constitute valid and binding obligations of the Borrower and each
Guarantor, respectively, enforceable in accordance with its respective
terms (except that enforcement may be subject to general principles of
equity and to any applicable bankruptcy, insolvency, or similar debtor
relief laws now or hereafter in effect and relating to or affecting the
enforcement of creditors' rights generally).
(d) NO LEGAL BAR OR RESULTANT LIEN. The Notes and the Loan
Documents, including this Agreement, do not and will not, to the best of
Borrower's or any Guarantor's knowledge violate any provisions of any
contract, agreement, law, regulation, order, injunction, judgment, decree
or writ to which Borrower or any Guarantor is subject, or result in the
creation or imposition of any lien or other encumbrance upon any assets or
properties of Borrower, other than those contemplated by this Agreement.
(e) NO CONSENT. The execution, delivery and performance by Borrower
of the Notes and the execution, delivery and performance by Borrower and
each Guarantor of the other Loan Documents, including this Agreement, does
not require the consent or approval of any other person or entity,
including without limitation any regulatory authority or governmental body
of the United States or any state thereof or any political subdivision of
the United States or any state thereof except for consents required for
27
federal, state and, in some instances, private leases, right of ways and
other conveyances or encumbrances of oil and gas leases.
(f) FINANCIAL CONDITION. The audited Financial Statements dated as
of December 31, 2000 and the interim Financial Statements dated as of
September 30, 2001 which have been delivered to Lenders are complete and
correct in all material respects and fully and accurately reflect in all
material respects the financial conditions and the results of the
operations of EXCO Resources, Inc. and its consolidated Subsidiaries as of
such dates and for the periods stated and no changes have occurred between
such dates and the Effective Date in the condition, financial or otherwise
of EXCO Resources, Inc. and its consolidated Subsidiaries which are
reasonably expected to have a Material Adverse Effect, except as disclosed
to Lenders in Schedule "2" attached hereto.
(g) LIABILITIES. Neither Borrower nor any Guarantor has any material
liability, direct or contingent on the Effective Date, except as disclosed
to the Lenders in the Financial Statements and on Schedule "3" attached
hereto. No unusual or unduly burdensome restrictions, restraint, or hazard
exists by contract, law or governmental regulation or otherwise relative
to the business, assets or properties of Borrower or any Guarantor which
is reasonably expected to have a Material Adverse Effect.
(h) LITIGATION. Except as described in the Financial Statements, or
as otherwise disclosed to the Lenders in Schedule "4" attached hereto, on
the Effective Date there is no litigation, legal or administrative
proceeding, investigation or other action of any nature pending or, to the
knowledge of the officers of Borrower, threatened against or affecting
Borrower or any Guarantor which involves the possibility of any judgment
or liability not fully covered by insurance, and which is reasonably
expected to have a Material Adverse Effect.
(i) TAXES; GOVERNMENTAL CHARGES. Borrower and each Guarantor have
filed all tax returns and reports required to be filed and has paid all
taxes, assessments, fees and other governmental charges levied upon it or
its assets, properties or income which are due and payable, including
interest and penalties, the failure of which to pay could reasonably be
expected to have a Material Adverse Effect, except such as are being
contested in good faith by appropriate proceedings and for which adequate
reserves for the payment thereof as required by GAAP has been provided and
levy and execution thereon have been stayed and continue to be stayed.
(j) TITLES, ETC. Borrower and each Guarantor have good and
defensible title to all of their material assets, including without
limitation, the Oil and Gas Properties, free and clear of all liens or
other encumbrances except Permitted Liens.
(k) DEFAULTS. Neither Borrower nor any Guarantor is in default and
no event or circumstance has occurred which, but for the passage of time
or the giving of notice, or
28
both, would constitute a default under any loan or
credit agreement,
indenture, mortgage, deed of trust, security agreement or other
agreement or instrument to which Borrower or any Guarantor is a party
in any respect that would be reasonably expected to have a Material
Adverse Effect. No Event of Default hereunder has occurred and is
continuing.
(l) CASUALTIES; TAKING OF PROPERTIES. Since the dates of the latest
Financial Statements of the Borrower delivered to Lenders, neither the
business nor the assets or properties of Borrower or any Guarantor has
been affected (to the extent it is reasonably expected to cause a Material
Adverse Effect), as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits or
concessions by any domestic or foreign government or any agency thereof,
riot, activities of armed forces or acts of God or of any public enemy.
USE OF PROCEEDS. The proceeds of the Commitment will only be used by
the Borrower for the purposes of (i) acquisition, exploration and
development of oil and gas properties, and (ii) working capital and other
general corporate purposes.
(m) LOCATION OF BUSINESS AND OFFICES. The principal place
of business and chief executive offices of the Borrower and each
Guarantor are located at the address as stated in Section 17 hereof.
(n) COMPLIANCE WITH THE LAW. To the best of Borrower's
knowledge, neither Borrower nor any Guarantor:
(i) is in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which Borrower, or
any of its assets or properties are subject; or
(ii) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of any
of its assets or properties or the conduct of its business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(o) NO MATERIAL MISSTATEMENTS. No information, exhibit or report
furnished by Borrower or any Guarantor to the Lenders in connection with
the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(p) SUBSIDIARIES. Each of the Borrower's and the
Guarantors' Subsidiaries are listed on Schedule "5" hereto.
29
(q) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule "6", as
of the Effective Date neither Borrower nor any Guarantor (i) has received
notice or otherwise earned of any Environmental Liability which would be
reasonably expected to individually or in the aggregate have a Material
Adverse Effect arising in connection with (A) any non-compliance with or
violation of the requirements of any Environmental Law or (B) the release
or threatened release of any toxic or hazardous waste into the
environment, (ii) has received notice of any threatened or actual
liability in connection with the release or notice of any threatened
release of any toxic or hazardous waste into the environment which would
be reasonably expected to individually or in the aggregate have a Material
Adverse Effect or (iii) has received notice or otherwise learned of any
federal or state investigation evaluating whether any remedial action is
needed to respond to a release or threatened release of any toxic or
hazardous waste into the environment for which Borrower or any Guarantor
is or may be liable which could reasonably be expected to result in a
Material Adverse Effect.
(r) LIENS. Except (i) as disclosed on Schedule "1" hereto and (ii)
for Permitted Liens, the assets and properties of the Borrower and each
Guarantor are free and clear of all Liens and encumbrances.
11. CONDITIONS OF LENDING.
(a) The effectiveness of this Agreement, and the obligation to make the
initial Advance under the Commitment shall be subject to satisfaction of the
following conditions precedent:
(i) BORROWER'S EXECUTION AND DELIVERY. Borrower shall
have executed and delivered the Agreement, the Notes and other
required Loan Documents, all in form and substance
satisfactory to the Agent;
(ii) GUARANTOR'S EXECUTION AND DELIVERY. Each
Guarantor shall have executed and delivered its Guaranty in
the form of Exhibits "C" and "D" hereto and other required
Loan Documents;
(iii) CORPORATE RESOLUTIONS. The Agent shall have
received appropriate certified corporate resolutions of
Borrower and each Guarantor;
(iv) CERTIFICATES OF STATUS OR COMPLIANCE. The Agent
shall have received Certificates of Status or Compliance, as
applicable, for Borrower and each Guarantor;
(v) ACQUISITION. The Agent shall have received
satisfactory evidence that the acquisition by Borrower of the
PrimeWest Energy Inc. oil and gas properties has closed, or is
closing contemporaneously herewith, pursuant to the terms of
that certain Agreement of Purchase and Sale among PrimeWest
Energy
30
Inc. and PrimeWest Oil and Gas Corp. and Addison Energy Inc.
dated November 22, 2001;
(vi) SUBORDINATION. The Agent shall have received an
executed copy of a Subordination Agreement in the form of
Exhibit "G" hereto;
(vii) INTERCREDITOR AGREEMENT. The Agent shall have
received evidence that the Intercreditor Agreement has been
executed by all parties thereto;
(viii) PAYMENT OF FEES. The Agent shall have
received the Fees required by Section 8 hereof;
(ix) REPRESENTATION AND WARRANTIES. The representations and
warranties of Borrower under this Agreement shall be true and correct in
all material respects as of such date, as if then made (except to the
extent that such representations and warranties related solely to an
earlier date);
(x) NO EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing;
(xi) OTHER DOCUMENTS. Agent shall have received such
other instruments and documents incidental and appropriate to
the transaction provided for herein as Agent or its counsel
may reasonably request, and all such documents shall be in
form and substance reasonably satisfactory to the Agent; and
(xii) LEGAL MATTERS SATISFACTORY. All legal matters
incident to the consummation of the transactions contemplated
hereby shall be reasonably satisfactory to special counsel for
Agent retained at the expense of Borrower.
(b) The obligation of the Lenders to make any Advance under the Commitment
(other than the initial Advance) shall be subject to the following additional
conditions precedent that, at the date of making each such Advance and after
giving effect thereto:
(i) REPRESENTATION AND WARRANTIES. The
representations and warranties of Borrower under this
Agreement are true and correct in all material respects as of
such date, as if then made (except to the extent that such
representations and warranties related solely to an earlier
date); and
(ii) NO EVENT OF DEFAULT. No Event of Default shall have occurred
and be continuing nor shall any event have occurred or failed to occur
which, with the passage of time or service of notice, or both, would
constitute an Event of ▇▇▇▇▇▇▇.
▇▇
▇▇. AFFIRMATIVE COVENANTS. A deviation from the provisions of this Section
12 shall not constitute a Default or an Event of Default under this Agreement if
such deviation is consented to in writing by Majority Lenders prior to the date
of deviation. The Borrower will at all times comply, and will cause each
Guarantor to comply, with the covenants contained in this Section 12 from the
date hereof and for so long as the Commitment is in existence or any amount is
owed to the Agent or the Lenders under this Agreement or the other Loan
Documents.
(a) FINANCIAL STATEMENTS AND REPORTS. Borrower shall
promptly furnish to the Agent from time to time such information
regarding the business and affairs and financial condition of
Borrower and Guarantor:
(i) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available,
and in any event within ninety (90) days after the close of each
fiscal year, the annual audited consolidated Financial Statements
prepared in accordance with GAAP accompanied by an unqualified
opinion on such consolidated statements rendered by an independent
accounting firm reasonably acceptable to the Agent;
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within forty-five (45) days
after the end of each fiscal quarter of each year, the
quarterly unaudited, consolidated Financial Statements
prepared in accordance with GAAP;
(iii) REPORT ON PROPERTIES. As soon as available and in any
event on or before March 1 and September 1 of each calendar year,
and at such other times as any Lender, in accordance with Section 7
hereof, may request, the engineering reports required to be
furnished to the Agent under such Section 7 on the Oil and Gas
Properties;
(iv) MONTHLY PRODUCTION REPORTS. If requested by Lenders and
within thirty (30) days of such request, a monthly report, in form
and substance satisfactory to the Agent, indicating the next
preceding month's sales volumes, sales revenues, production taxes,
operating expenses and net operating income from the Oil and Gas
Properties, with detail, calculations and worksheets, all in form
and substance reasonably satisfactory to the Agent;
(v) ADDITIONAL INFORMATION. Promptly upon
request of the Agent from time to time any additional
financial information or other information that the
Agent may reasonably request.
All such reports, information, balance sheets and Financial Statements
referred to in Subsection 12(a) above shall be in such detail as the Agent
may reasonably request and shall be prepared in a manner consistent with
the Financial Statements.
32
(b) CERTIFICATES OF COMPLIANCE. Concurrently with the furnishing of
the annual audited Financial Statements pursuant to Subsection 12(a)(i)
hereof and the quarterly unaudited Financial Statements pursuant to
Subsection 12(a)(ii) hereof for the months coinciding with the end of each
calendar quarter, Borrower and Guarantor, as the case may be, will furnish
or cause to be furnished to the Agent a certificate in the form of Exhibit
"E" attached hereto, signed by the President or Chief Financial Officer of
Borrower and each Guarantor, (i) stating that Borrower and each Guarantor
have fulfilled in all material respects their respective obligations under
the Notes and the Loan Documents, including this Agreement, and that all
representations and warranties made herein and therein continue (except to
the extent they relate solely to an earlier date) to be true and correct
in all material respects (or specifying the nature of any change), or if a
Default has occurred, specifying the Default and the nature and status
thereof; (ii) to the extent requested from time to time by the Agent,
specifically affirming compliance of Borrower and each Guarantor in all
material respects with any of its representations (except to the extent
they relate solely to an earlier date) or obligations under said
instruments; (iii) setting forth the computation, in reasonable detail as
of the end of each period covered by such certificate, of compliance with
Sections 13(b), (c), (d) and (e); and (iv) containing or accompanied by
such financial or other details, information and material as the Agent may
reasonably request to evidence such compliance.
(c) TAXES AND OTHER LIENS. Borrower and each Guarantor will pay and
discharge promptly all taxes, assessments and governmental charges or
levies imposed upon Borrower and each Guarantor, or upon the income or any
assets or property of Borrower and each Guarantor, as well as all claims
of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a Lien or other encumbrance upon any or all
of the assets or property of Borrower or any Guarantor and which could
reasonably be expected to result in a Material Adverse Effect; provided,
however, that neither Borrower nor any Guarantor shall be required to pay
any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings diligently conducted, levy and execution
thereon have been stayed and continue to be stayed and if Borrower or any
such Guarantor shall have set up adequate reserves therefor, if required,
under GAAP.
(d) COMPLIANCE WITH LAWS. Borrower and each Guarantor will observe
and comply, in all material respects, with all applicable laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, orders and restrictions relating to environmental standards
or controls or to energy regulations of all federal, state, county,
municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or
foreign.
(e) FURTHER ASSURANCES. Borrower and each Guarantor will cure
promptly any defects in the creation and issuance of the Notes and the
execution and delivery of the Notes and the Loan Documents, including this
Agreement. Borrower and each Guarantor
33
at their sole expense will promptly execute and deliver to Agent upon
its reasonable request all such other and further documents,
agreements and instruments in compliance with or accomplishment of the
covenants and agreements in this Agreement, or to correct any
omissions in the Notes or more fully to state the obligations set out
herein.
(f) PERFORMANCE OF OBLIGATIONS. Borrower will pay the Notes and
other obligations incurred by it hereunder according to the reading, tenor
and effect thereof and hereof; and Borrower and each Guarantor will do and
perform every act and discharge all of the obligations provided to be
performed and discharged by the Borrower or any Guarantor under the Loan
Documents, including this Agreement, at the time or times and in the
manner specified.
(g) INSURANCE. The Borrower and each Guarantor now maintains and
will continue to maintain insurance with financially sound and reputable
insurers with respect to its assets against such liabilities, fires,
casualties, risks and contingencies and in such types and amounts as is
customary in the case of persons engaged in the same or similar businesses
and similarly situated. Upon request of the Agent, the Borrower will
furnish or cause to be furnished to the Agent from time to time a summary
of the respective insurance coverage of Borrower and each Guarantor in
form and substance reasonably satisfactory to the Agent, and, if
requested, will furnish the Agent copies of the applicable policies. Upon
demand by Agent any insurance policies covering any such property shall be
endorsed (i) to provide that such policies may not be canceled, reduced or
affected in any manner for any reason without fifteen (15) days prior
notice to Agent, (ii) to provide for insurance against fire, casualty and
other hazards normally insured against, in the amount of the full value
(less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated business and properties) of the property
insured, and (iii) to provide for such other matters as the Agent may
reasonably require. The Borrower and each Guarantor shall at all times
maintain adequate insurance with respect to all of its assets, including
but not limited to, the Oil and Gas Properties or any collateral against
its liability for injury to persons or property, which insurance shall be
by financially sound and reputable insurers and shall without limitation
provide the following coverages: comprehensive general liability
(including coverage for damage to underground resources and equipment,
damage caused by blowouts or cratering, damage caused by explosion, damage
to underground minerals or resources caused by saline substances, broad
form property damage coverage, broad form coverage for contractually
assumed liabilities and broad form coverage for acts of independent
contractors), worker's compensation and automobile liability. The Borrower
and each Guarantor shall at all times maintain cost of control of well
insurance with respect to the Oil and Gas Properties which shall insure
the Borrower and each Guarantor against seepage and pollution expense;
redrilling expense; and cost of control of well; fires, blowouts, etc., if
deemed economical in the reasonable discretion of the Borrower and each
such Guarantor. Additionally, the Borrower shall at all times maintain
adequate insurance
34
with respect to all of its other assets and ▇▇▇▇▇ in accordance with
prudent business practices.
(h) ACCOUNTS AND RECORDS. Borrower and each Guarantor will keep
books, records and accounts in which full, true and correct entries will
be made of all dealings or transactions in relation to its business and
activities, prepared in a manner consistent with prior years, subject to
changes suggested by Borrower's or any Guarantor's auditors.
(i) RIGHT OF INSPECTION. Borrower and each Guarantor will permit any
officer, employee or agent of the Lenders upon reasonable notice to
examine Borrower's and each Guarantor's books, records and accounts, and
take copies and extracts therefrom, all at such reasonable times during
normal business hours and as often as the Lenders may reasonably request.
The Lenders will use best efforts to keep all Confidential Information (as
herein defined) confidential and will not disclose or reveal the
Confidential Information or any part thereof other than (i) as required by
law, and (ii) to the Lenders', and the Lenders' subsidiaries', Affiliates,
officers, employees, legal counsel and regulatory authorities or advisors
to whom it is necessary to reveal such information for the purpose of
effectuating the agreements and undertakings specified herein or as
otherwise required in connection with the enforcement of the Lenders' and
the Agent's rights and remedies under the Notes, this Agreement and the
other Loan Documents. As used herein, "Confidential Information" means
information about the Borrower or any Guarantor furnished by the Borrower
or any Guarantor to the Lenders, but does not include information (i)
which was publicly known, or otherwise known to the Lenders, at the time
of the disclosure, (ii) which subsequently becomes publicly known through
no act or omission by the Lenders, or (iii) which otherwise becomes known
to the Lenders, other than through disclosure by the Borrower.
(j) NOTICE OF CERTAIN EVENTS. The Borrower and each Guarantor shall
promptly notify the Agent if Borrower or any Guarantor learns of the
occurrence of (i) any event which constitutes an Event of Default together
with a detailed statement by Borrower of the steps being taken to cure
such Event of Default; (ii) any legal, judicial or regulatory proceedings
affecting Borrower or any Guarantor or any of the assets or properties of
Borrower or any Guarantor which, if adversely determined, could reasonably
be expected to have a Material Adverse Effect; (iii) any dispute between
Borrower or any Guarantor and any governmental or regulatory body or any
other Person or entity which, if adversely determined, could reasonably be
expected to cause a Material Adverse Effect; (iv) any other matter which
in Borrower's or any Guarantor's reasonable opinion could have a Material
Adverse Effect.
(k) ENVIRONMENTAL REPORTS AND NOTICES. The Borrower and each
Guarantor will deliver to the Agent (i) promptly upon its becoming
available, one copy of each report (other than routine informational
filings) sent by Borrower or any Guarantor to any court, governmental
agency or instrumentality pursuant to any Environmental Law,
35
(ii) notice, in writing, promptly upon Borrower's or any Guarantor's
receipt of notice or otherwise learning of any claim, demand, action,
event, condition, report or investigation indicating any potential or
actual liability arising in connection with (x) the non-compliance with
or violation of the requirements of any Environmental Law which
reasonably could be expected to have a Material Adverse Effect; (y) the
release or threatened release of any toxic or hazardous waste into the
environment which reasonably could be expected to have a Material
Adverse Effect or which release Borrower or any Guarantor would have a
duty to report to any court or government agency or instrumentality, or
(iii) the existence of any Environmental Lien on any properties or
assets of Borrower or any Guarantor, and Borrower and such Guarantor
shall promptly deliver a copy of any such notice to Agent.
(l) COMPLIANCE AND MAINTENANCE. The Borrower and each Guarantor will
(i) observe and comply in all material respects with all Environmental
Laws; (ii) except as provided in Subsections 12(n) and 12(o) below,
maintain the Oil and Gas Properties and other assets and properties in
good and workable condition at all times and make all repairs,
replacements, additions, betterments and improvements to the Oil and Gas
Properties and other assets and properties as are needed and proper so
that the business carried on in connection therewith may be conducted
properly and efficiently at all times in the opinion of the Borrower or
the affected Guarantor exercised in good faith; (iii) take or cause to be
taken whatever actions are necessary or desirable to prevent an event or
condition of default by Borrower or any Guarantor under the provisions of
any gas purchase or sales contract or any other contract, agreement or
lease comprising a part of the Oil and Gas Properties or other collateral
security hereunder which default could reasonably be expected to result in
a Material Adverse Effect; and (iv) furnish Agent upon request evidence
reasonably satisfactory to Agent that there are no Liens, claims or
encumbrances on the Oil and Gas Properties, except Permitted Liens.
(m) OPERATION OF PROPERTIES. Except as provided in Subsection 12(o)
and (p) below, the Borrower and each Guarantor will operate, or use
reasonable efforts to cause to be operated, all Oil and Gas Properties in
a careful and efficient manner in accordance with the practice of the
industry and in compliance in all material respects with all applicable
laws, rules, and regulations, and in compliance in all material respects
with all applicable proration and conservation laws of the jurisdiction in
which the properties are situated, and all applicable laws, rules, and
regulations, of every other agency and authority from time to time
constituted to regulate the development and operation of the properties
and the production and sale of hydrocarbons and other minerals therefrom;
provided, however, that the Borrower and each Guarantor shall have the
right to contest in good faith by appropriate proceedings, the
applicability or lawfulness of any such law, rule or regulation and
pending such contest may defer compliance therewith, as long as such
deferment shall not subject the properties or any part thereof to
foreclosure or loss.
36
(n) COMPLIANCE WITH LEASES AND OTHER INSTRUMENTS. The Borrower and
each Guarantor will pay or cause to be paid and discharge all rentals,
delay rentals, royalties, production payment, and indebtedness required to
be paid by such party (or required to keep unimpaired in all material
respects the rights of such party in Oil and Gas Properties) accruing
under, and perform or cause to be performed in all material respects each
and every act, matter, or thing required of such party by each and all of
the assignments, deeds, leases, subleases, contracts, and agreements in
any way relating to such party or any of the Oil and Gas Properties and do
all other things necessary of such party to keep unimpaired in all
material respects the rights of such party thereunder and to prevent the
forfeiture thereof or default thereunder; provided, however, that nothing
in this Agreement shall be deemed to require Borrower or any Guarantor to
perpetuate or renew any oil and gas lease or other lease by payment of
rental or delay rental or by commencement or continuation of operations
nor to prevent Borrower or any Guarantor from abandoning or releasing any
oil and gas lease or other lease or well thereon when, in any of such
events, in the opinion of Borrower or any Guarantor exercised in good
faith, it is not in the best interest of the Borrower or such Guarantor to
perpetuate the same.
(o) CERTAIN ADDITIONAL ASSURANCES REGARDING MAINTENANCE AND
OPERATIONS OF PROPERTIES. With respect to those Oil and Gas Properties
which are being operated by operators other than the Borrower or any
Guarantor, neither the Borrower nor any Guarantor shall be obligated to
perform any undertakings contemplated by the covenants and agreement
contained in Subsections 12(n) or 12(o) hereof which are performable only
by such operators and are beyond the control of the Borrower or any
Guarantor; however, the Borrower and each Guarantor agrees to promptly
take all reasonable actions available under any operating agreements or
otherwise to bring about the performance of any such material undertakings
required to be performed thereunder.
(p) SALE OF CERTAIN ASSETS/PREPAYMENT OF PROCEEDS. The Borrower and
each Guarantor will immediately pay over to the Agent for the ratable
benefit of the Lenders as a prepayment of principal on the Notes and a
reduction of the Commitment, an amount equal to 100% of the Release Price
from the proceeds of the sale of the Oil and Gas Properties, which sale
has been either (i) made in compliance with the provisions of Section
13(a)(ii) hereof, or (ii) approved in advance by the Majority Lenders. The
term "Release Price" as used herein shall mean a price determined by the
Majority Lenders in their discretion based upon the loan collateral value
of the Oil and Gas Properties being sold by Borrower which such Lenders in
their discretion (using such methodology, assumptions and discounts rates
as such Lenders customarily use in assigning collateral value to oil and
gas properties, oil and gas gathering systems, gas processing and plant
operations) assign to such Oil and Gas Properties at the time in question.
Any such prepayment of principal on the Notes required by this Section
12(r), shall not be in lieu of, but shall be in addition to, any mandatory
prepayment of principal required to be paid pursuant to Section 9(b)
hereof.
37
(q) TITLE MATTERS. Within sixty (60) days after the Effective Date
with respect to the Oil and Gas Properties listed on Schedule "7" hereto,
Borrower shall furnish Agent with title opinions and/or title information
reasonably satisfactory to Agent showing good and defensible title of
Borrower or a Guarantor, as the case may be, to such Oil and Gas
Properties subject only to the Permitted Liens. As to any Oil and Gas
Properties hereafter mortgaged to Agent, Borrower will promptly (but in no
event more than thirty (30) days following such mortgaging), furnish, if
requested, Agent with title opinions and/or title information reasonably
satisfactory to Agent showing good and defensible title of Borrower or a
Guarantor, as the case may be, to such Oil and Gas Properties subject only
to Permitted Liens. The obligation of the Borrower to furnish title
opinions and/or title information required by this Section 12(p) shall be
limited to its obligation to furnish title opinions and other title
information on not less than 80% of the Engineered Value.
(r) CURATIVE MATTERS. Within sixty (60) days after the Effective
Date with respect to matters listed on Schedule "8" and, thereafter,
within sixty (60) days after receipt by Borrower from Agent or its counsel
of written notice of title defects the Agent reasonably requires to be
cured, Borrower shall either (i) provide such curative information, in
form and substance satisfactory to Agent, or (ii) substitute Oil and Gas
Properties of value and quality satisfactory to the Agent for all of Oil
and Gas Properties for which such title curative was requested but upon
which Borrower elected not to provide such title curative information,
and, within sixty (60) days of such substitution, provide title opinions
or title information satisfactory to the Agent covering the Oil and Gas
Properties so substituted. If the Borrower fails to satisfy (i) or (ii)
above within the time specified, the loan collateral value assigned by the
Lenders to the Oil and Gas Properties for which such curative information
was requested shall be deducted from the Borrowing Base resulting in a
reduction thereof.
(s) CHANGE OF PRINCIPAL PLACE OF BUSINESS. Borrower and each
Guarantor shall give Agent at least thirty (30) days prior written notice
of its intention to move its principal place of business from the address
set forth in Section 17 hereof.
(t) ADDITIONAL COLLATERAL. The Borrower agrees to regularly monitor
engineering data covering all producing oil and gas properties and
interests owned or acquired by Borrower on or after the date hereof and to
mortgage or cause to be mortgaged such of the same to Agent for the
ratable benefit of the Lenders in substantially the form of the Security
Instruments, as applicable, to the extent that the Lenders shall at all
times during the existence of the Commitment be secured by perfected Liens
and security interests covering not less than ninety percent (90%) of the
Engineered Value of all producing oil and gas properties of Borrower. In
addition, the Borrower agrees that in connection with the mortgaging of
such additional oil and gas properties, it shall within a reasonable time
thereafter, deliver or cause to be delivered to the Agent such mortgage
and title opinions and other title information with respect to the title
and Lien status of such oil and gas properties as may be necessary to
maintain at all
38
times a level of such title opinions and title information of not less
than eighty percent (80%) of the Engineered Value.
(u) CASH COLLATERAL ACCOUNTS. Borrower shall establish and maintain
with Agent or another Lender one or more operating accounts (the
"Operating Accounts"), the maintenance of which shall be subject to such
rules and regulations as Agent or such other Lender from time to time
specify. Such Operating Accounts shall be the sole operating accounts of
the Borrower. Such accounts shall be maintained until all amounts due
hereunder and under the Notes have been paid in full. To the extent not
already so instructed, Borrower shall within sixty (60) days of the
Effective Date instruct and cause all monetary proceeds of production from
the Oil and Gas Properties to be remitted to its Operating Accounts. Such
proceeds of production shall not be redirected without the prior written
consent of the Agent until such time as all indebtedness due Lenders by
Borrower has been paid in full and the Commitment has been terminated.
Borrower hereby grants a security interest to Lenders in and to its
Operating Accounts (collectively, the "Cash Collateral Accounts") and all
checks, drafts and other items ever received by any Lender for deposit
therein. If any Event of Default shall occur and be continuing, Agent or
such other Lender shall have the immediate right, without prior notice or
demand, to take and apply against the Borrower's obligations hereunder any
and all funds legally and beneficially owned by the Borrower then or
thereafter on deposit in the Cash Collateral Accounts for the ratable
benefit of the Lenders.
13. NEGATIVE COVENANTS. A deviation from the provisions of this Section 13
shall not constitute an Event of Default under this Agreement if such deviation
is consented to in writing by Majority Lenders prior to the date of deviation.
The Borrower will at all times comply, and cause each Guarantor to comply, with
the covenants contained in this Section 13 from the date hereof and for so long
as the Commitment is in existence or any amount is owed to the Agent or the
Lenders under this Agreement or the other Loan Documents.
(a) NEGATIVE PLEDGE. Neither Borrower nor any Guarantor
shall without the prior written consent of the Majority Lenders:
(i) create, incur, assume or permit to exist any Lien,
security interest or other encumbrance on any of its assets or
properties except Permitted Liens; or
(ii) sell, lease, transfer or otherwise dispose of, in any
fiscal year, any of its assets except for (A) sales, leases,
transfers or other dispositions made in the ordinary course of
Borrower's or any Guarantor's oil and gas businesses (including
sales of leasehold inventory), and (B) other sales, leases, transfer
or other dispositions made with the consent of Majority Lenders;
39
(b) CURRENT RATIO. Borrower shall not allow the
Consolidated Current Ratio to be less than 1.0 to 1.0 as of the end
of any fiscal quarter beginning June 30, 2001.
(c) DEBT COVERAGE RATIO. The Borrower will not allow the ratio of
Consolidated Funded Debt to Consolidated EBITDA to be greater than 2.5 to
1.0 as of the end of any fiscal quarter beginning with the fiscal quarter
ending June 30, 2001.
(d) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not
allow the Consolidated Tangible Net Worth to ever be less than the sum of
(i) $48,000,000 U.S., plus (ii) as of the end of each fiscal quarter, 50%
of Consolidated Net Income for such fiscal quarter then ended (but only if
positive) and (iii) 75% of the net proceeds from the issuance of any
equity securities after April 26, 2001 by Borrower's parent, excluding, in
each instance, the effect of ceiling test write downs.
(e) LEVERAGE RATIO. Borrower will not allow the ratio of
Consolidated Debt to Consolidated Total Capital to ever be greater than
0.65 to 1.0 tested at the end of each fiscal quarter beginning with the
fiscal quarter ending June 30, 2001.
(f) CONSOLIDATIONS AND MERGERS. Neither Borrower nor any Guarantor
will consolidate or merge with or into any other Person, except that (i)
Borrower or any Guarantor may merge with another Person if Borrower or
such Guarantor is the surviving entity in such merger or (ii) any
Subsidiary Guarantor may merge with Borrower and any other Guarantor, or
(iii) Borrower and Addison may merge or amalgamate, if, after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing.
(g) DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Neither Borrower nor
any Guarantor will incur, create, assume or in any manner become or be
liable in respect of any indebtedness, nor will Borrower or any Guarantor
guarantee or otherwise in any manner become or be liable in respect of any
indebtedness, liabilities or other obligations of any other person or
entity, whether by agreement to purchase the indebtedness of any other
person or entity or agreement for the furnishing of funds to any other
person or entity through the purchase or lease of goods, supplies or
services (or by way of stock purchase, capital contribution, advance or
loan) for the purpose of paying or discharging the indebtedness of any
other person or entity, or otherwise, except that the foregoing
restrictions shall not apply to:
(i) the Notes and any renewal or increase thereof, or other
indebtedness of the Borrower heretofore disclosed to Lenders in the
Borrower's Financial Statements or on Schedule "4" hereto; or
(ii) taxes, assessments or other government charges which are
not yet due or are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such reserve
as shall be
40
required by GAAP shall have been made therefor and levy and
execution thereon have been stayed and continue to be stayed; or
(iii) indebtedness (other than in connection with a loan or
lending transaction) incurred in the ordinary course of business,
including, but not limited to indebtedness for drilling, completing,
leasing and reworking oil and gas ▇▇▇▇▇; or
(iv) obligations under Rate Management
Transactions permitted pursuant to Section 13(m) hereof;
or
(v) indebtedness owed by Borrower to EXCO Resources, Inc.
pursuant to a Cdn $150,000,000 promissory note issued to Borrower in
connection with the acquisition of Borrower by EXCO Resources Canada
Inc., which promissory note and the obligations owed on it are
subordinated to obligations owed under this Agreement pursuant to
the Subordination Agreement; or
(vi) other indebtedness of any nature not in
excess of $25,000 Canadian in outstanding principal
amount in the aggregate; or
(vii) indebtedness of EXCO owed pursuant to the
U.S.
Credit Agreement; or
(viii) any renewals or extensions of (but not
increases in) any of the foregoing.
(h) RESTRICTED PAYMENTS. Borrower will not declare or pay any cash
dividend, purchase, redeem or otherwise acquire for value any of its stock
now or hereafter outstanding, return any capital to its stockholders, or
make any distribution of its assets to its stockholders except that
Borrower may pay cash dividends to EXCO Resources, Inc. if, and only if,
(i) immediately before and giving effect to any such dividend payment no
Default or Event of Default shall exist, and (ii) the total amount of all
such dividends are used by EXCO Resources, Inc. to purchase additional
common stock issued by Borrower. Borrower will not retire, redeem or
prepay prior to scheduled maturity any indebtedness other than obligations
under this Agreement.
(i) LOANS AND ADVANCES. Neither Borrower nor any Guarantor
shall make or permit to remain outstanding any loans or advances to
or in any person or entity, except that the foregoing restriction
shall not apply to:
(i) loans or advances to any person, the material details of
which have been set forth in the Financial Statements of the
Borrower and each of the Guarantors heretofore furnished to Lenders;
or
41
(ii) advances made in the ordinary course of
Borrower's or any Guarantor's oil and gas business.
(j) RECEIVABLES AND PAYABLES. Neither Borrower nor any Guarantor
will discount or sell with recourse, or sell for less than the greater of
the face or market value thereof, any of its notes receivable or accounts
receivable.
(k) NATURE OF BUSINESS. Neither Borrower nor any Guarantor
will permit any material change to be made in the character of its
businesses as carried on at the date hereof.
(l) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any Guarantor
will enter into any transaction with any Affiliate, except transactions
upon terms that are no less favorable to it than would be obtained in a
transaction negotiated at arm's length with an unrelated third party.
(m) HEDGING TRANSACTIONS. Neither Borrower nor any Guarantor will
enter into any Rate Management Transactions, except the foregoing
prohibitions shall not apply to (x) transactions consented to in writing
by the Majority Lenders which are on terms acceptable to the Majority
Lenders, or (y) Pre-Approved Contracts with Agent, a Lender or an
Affiliate of Agent, a Lender or with other counterparties acceptable to
the Lender that is a party to such Pre-Approved Contract or if no Lender
is a party thereto, to the Agent. Once Borrower or any Guarantor enters
into a Rate Management Transaction, the terms and conditions of such Rate
Management Transaction may not be amended or modified nor may such Rate
Management Transaction be cancelled, without the prior written consent of
Majority Lenders.
(n) INVESTMENTS. Neither Borrower nor any Subsidiary Guarantor shall
make any investments in any person or entity other than investments
approved in advance by the Agent.
(o) AMENDMENT TO ARTICLES OF INCORPORATION OR BYLAWS.
Neither Borrower nor any Guarantor will permit any material
amendment to, or any alteration of, its Articles of Incorporation or
its Bylaws.
(p) ISSUANCE OF PREFERRED STOCK. Borrower shall not issue
any preferred stock after the Effective Date.
14. EVENTS OF DEFAULT. Any one or more of the following events
shall be considered an "Event of Default" as that term is used herein:
(a) The Borrower shall fail to pay when due or declared due
the principal of the Notes; or
42
(b) Borrower shall fail to pay when due accrued interest on any of
the Notes or any fees or any other amount payable hereunder and such
failure shall continue for a period of three (3) days following the due
date; or
(c) Any representation or warranty made by Borrower or any Guarantor
under this Agreement, or in any certificate or statement furnished or made
to the Lenders pursuant hereto, or in connection herewith, or in
connection with any document furnished hereunder, shall prove to be untrue
in any material respect as of the date on which such representation or
warranty is made (or deemed made), or any representation, statement
(including financial statements), certificate, report or other data
furnished or to be furnished or made by Borrower or any Guarantor under
any Loan Document, including this Agreement, proves to have been untrue in
any material respect, as of the date as of which the facts therein set
forth were stated or certified; or
(d) Default shall be made in the due observance or performance of
any of the covenants or agreements of the Borrower or any Guarantor
contained in the Loan Documents, including this Agreement (excluding
covenants contained in Section 13 of the Agreement for which there is no
cure period), and such default shall continue for more than thirty (30)
days after written notice from Agent is received by Borrower; or
(e) Default shall be made in the due observance or
performance of the covenants of Borrower or any Guarantor contained
in Section 13 of this Agreement; or
(f) Default shall be made in respect of any obligation for borrowed
money in excess of $250,000 Canadian, other than the Notes, for which
Borrower or any Guarantor is liable (directly, by assumption, as guarantor
or otherwise), or any obligations secured by any mortgage, pledge or other
consensual security interest with respect thereto, on any asset or
property of Borrower or any Guarantor or in respect of any agreement
relating to any such obligations unless Borrower or such Guarantor is not
liable for same (i.e., unless remedies or recourse for failure to pay such
obligations is limited to foreclosure of the collateral security
therefor), and if such default shall continue beyond the applicable grace
period, if any; or
(g) Borrower or any Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking an appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action authorizing the foregoing; or
43
(h) An involuntary case or other proceeding, shall be commenced
against Borrower or any Guarantor seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of sixty (60) days; or an order for relief shall be entered
against Borrower or any Guarantor under the federal bankruptcy laws as now
or hereinafter in effect; or
(i) A final judgment or order for the payment of money in excess of
$100,000 Canadian(or judgments or orders aggregating in excess of $100,000
Canadian) shall be rendered against Borrower or any Guarantor and such
judgments or orders shall continue unsatisfied and unstayed for a period
of thirty (30) days; or
(j) In the event the Total Indebtedness shall at any time exceed the
Borrowing Base established for the Notes, and the Borrower shall fail to
comply with the provisions of Section 9(b) hereof; or
(k) A Change of Control shall occur; or
(l) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇ shall cease for any
reason to serve as the Chief Executive Officer or President,
respectively, of EXCO Resources, Inc. on a full-time basis.
(m) An Event of Default (as defined therein) shall occur
under the U.S. Credit Agreement.
Upon occurrence of any Event of Default specified in Subsections 14(g) and
(h) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of the Borrower hereunder, shall
become immediately due and payable all without notice and without presentment,
demand, protest, notice of protest or dishonor or any other notice of default of
any kind, all of which are hereby expressly waived by the Borrower. Upon the
occurrence of any other Event of Default, the Agent, upon request of Required
Lenders, shall by written notice to the Borrower declare the principal of, and
all interest then accrued on, the Notes and any other liabilities hereunder to
be forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which the Borrower
hereby expressly waives, anything contained herein or in the Note to the
contrary notwithstanding.
Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrower or any Guarantor (any such notice being expressly waived
by the Borrower and the Guarantors), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at
44
any time held and other indebtedness at any time owing by any of the Lenders
to or for the credit or the account of the Borrower or any Guarantor against
any and all of the indebtedness of the Borrower under the Notes and the Loan
Documents, including this Agreement, irrespective of whether or not the
Lenders shall have made any demand under the Loan Documents, including this
Agreement or the Notes and although such indebtedness may be unmatured. Any
amount set-off by any of the Lenders shall be applied against the
indebtedness owed the Lenders by the Borrower pursuant to this Agreement and
the Notes. The Lenders agree promptly to notify the Borrower and the affected
Guarantor after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Lenders may have.
Notwithstanding the foregoing, after the occurrence of an Event of
Default, the provisions of the Intercreditor Agreement shall apply with respect
to the rights of the Agent and all Lenders under both this Agreement and the
U.S. Credit Agreement.
15. THE AGENT AND THE LENDERS.
(a) APPOINTMENT AND AUTHORIZATION. Each Lender hereby appoints Agent
as its nominee and agent, in its name and on its behalf: (i) to act as
nominee for and on behalf of such Lender in and under all Loan Documents;
(ii) to arrange the means whereby the funds of Lenders are to be made
available to the Borrower under the Loan Documents; (iii) to take such
action as may be requested by any Lender under the Loan Documents (when
such Lender is entitled to make such request under the Loan Documents);
(iv) to receive all documents and items to be furnished to Lenders under
the Loan Documents; (v) to be the secured party, mortgagee, beneficiary,
and similar party in respect of, and to receive, as the case may be, any
collateral for the benefit of Lenders; (vi) to promptly distribute to each
Lender all material information, requests, documents and items received
from the Borrower under the Loan Documents; (vii) to promptly distribute
to each Lender such Lender's Pro Rata Part of each payment or prepayment
(whether voluntary, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Loan Documents and (viii) to deliver to
the appropriate Persons requests, demands, approvals and consents received
from Lenders. Each Lender hereby authorizes Agent to take all actions and
to exercise such powers under the Loan Documents as are specifically
delegated to Agent by the terms hereof or thereof, together with all other
powers reasonably incidental thereto. With respect to its Commitment
hereunder and the Notes issued to it, Agent and any successor Agent shall
have the same rights under the Loan Documents as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include Agent
and any successor Agent in its capacity as a Lender. Agent and any
successor 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 the Borrower, and any person which may do business with the
Borrower, all as if Agent and
45
any successor Agent was not Agent hereunder and without any duty to
account therefor to the Lenders; provided that, if any payments in
respect of any property (or the proceeds thereof) now or hereafter in
the possession or control of Agent which may be or become security for
the obligations of the Borrower arising under the Loan Documents by
reason of the general description of indebtedness secured or of
property contained in any other agreements, documents or instruments
related to any such other business shall be applied to reduction of the
obligations of the Borrower arising under the Loan Documents, then each
Lender shall be entitled to share in such application according to its
pro rata part thereof. Each Lender, upon request of any other Lender,
shall disclose to all other Lenders all indebtedness and liabilities,
direct and contingent, of the Borrower to such Lender as of the time of
such request.
(b) NOTE HOLDERS. From time to time as other Lenders become a party
to this Agreement, Agent shall obtain execution by the Borrower of
additional Notes in amounts representing the Commitment of each such new
Lender, up to an aggregate face amount of all Notes not exceeding
$77,500,000 Canadian for the Revolving Commitment. The obligation of such
Lender shall be governed by the provisions of this Agreement, including
but not limited to, the obligations specified in Section 2 hereof. From
time to time, Agent may require that the Lenders exchange their Notes for
newly issued Notes to better reflect the Commitment of the Lenders. Agent
may treat the payee of any Note as the holder thereof until written notice
of transfer has been filed with it, signed by such payee and in form
satisfactory to Agent.
(c) CONSULTATION WITH COUNSEL. Lenders agree that Agent may consult
with legal counsel selected by Agent and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice
of such counsel. LENDERS ACKNOWLEDGE THAT GARDERE ▇▇▇▇▇ ▇▇▇▇▇▇ LLP AND
▇▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ LLP ARE COUNSEL FOR BANK ONE, BOTH AS AGENT AND
AS A LENDER, AND THAT SUCH FIRMS DO NOT REPRESENT ANY OF THE OTHER LENDERS
IN CONNECTION WITH THIS TRANSACTION.
(d) DOCUMENTS. Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Agent shall be entitled
to assume that the same are valid, effective, enforceable and genuine and
what they purport to be.
(e) RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any
time by giving written notice thereof to Lenders and the Borrower, and
Agent may be removed at any time with or without cause by all Lenders
(excluding the Agent). If no successor Agent has been so appointed by
Majority Lenders (and approved by the Borrower) and
46
has accepted such appointment within thirty (30) days after the
retiring Agent's giving of notice of resignation or removal of the
retiring Agent, then the retiring Agent may, on behalf of Lenders,
appoint a successor Agent. Any successor Agent must be approved by
Borrower, which approval will not be unreasonably withheld. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Agent, and the retiring
Agent, as the case may be, shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 15 shall
continue in effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Agent. To be eligible
to be an Agent hereunder the party serving, or to serve, in such
capacity must own a Pro Rata Part of the Commitment equal to the level
of Commitment required to be held by any Lender pursuant to Section 28
hereof.
(f) RESPONSIBILITY OF AGENT. It is expressly understood and agreed
that the obligations of Agent under the Loan Documents are only those
expressly set forth in the Loan Documents as to each and that Agent, shall
be entitled to assume that no Default or Event of Default has occurred and
is continuing, unless Agent has actual knowledge of such fact or has
received notice from a Lender or the Borrower that such Lender or the
Borrower considers that a Default or an Event of Default has occurred and
is continuing and specifying the nature thereof. Neither Agent nor any of
its directors, officers, attorneys or employees shall be liable for any
action taken or omitted to be taken by them under or in connection with
the Loan Documents, except for its or their own gross negligence or
willful misconduct. Agent shall not incur liability under or in respect of
any of the Loan Documents by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be genuine or
authentic or to be signed by the proper party or parties, or with respect
to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or
desirable. The Syndication Agent and the Arranger shall have no
responsibilities as an agent hereunder.
Agent shall not be responsible to Lenders for any of the Borrower's
recitals, statements, representations or warranties contained in any of
the Loan Documents, or in any certificate or other document referred to or
provided for in, or received by any Lender under, the Loan Documents, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of or any of the Loan Documents or for any failure by the
Borrower to perform any of its obligations hereunder or thereunder. Agent
may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents,
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
The relationship between Agent and each Lender is only that of agent
and principal and has no fiduciary aspects. Nothing in the Loan Documents
or elsewhere
47
shall be construed to impose on Agent any duties or responsibilities
other than those for which express provision is therein made. In
performing its duties and functions hereunder, Agent does not assume
and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation or responsibility toward or any relationship
of agency or trust with or for the Borrower or any of its beneficiaries
or other creditors. As to any matters not expressly provided for by the
Loan Documents, Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of all Lenders and such instructions
shall be binding upon all Lenders and all holders of the Notes;
provided, however, that Agent shall not be required to take any action
which is contrary to the Loan Documents or applicable law.
Agent shall have the right to exercise or refrain from exercising,
without notice or liability to the Lenders, any and all rights afforded to
Agent by the Loan Documents or which Agent may have as a matter of law;
provided, however, Agent shall not (i) except as provided herein and in
Section 7(b) hereof, without the consent of Majority Lenders designate the
amount of the Borrowing Base or (ii) without the consent of Majority
Lenders, take any other action with regard to amending the Loan Documents,
waiving any default under the Loan Documents or taking any other action
with respect to the Loan Documents. Provided further, however, that no
amendment, waiver, or other action shall be effected pursuant to the
preceding clause (ii) without the consent of all Lenders which: (a) would
increase the Borrowing Base, (b) would reduce any fees hereunder, or the
principal of, or the interest on, any Lender's Note or Notes, (c) would
postpone any date fixed for any payment of any fees hereunder, or any
principal or interest of any Lender's Note or Notes, (d) would increase
the aggregate Commitment or any Lender's individual Commitment hereunder
or would materially alter Agent's obligations to any Lender hereunder, (e)
would release Borrower from its obligation to pay any Lender's Note or
Notes, (f) would change the definition of Majority Lenders or Required
Lenders, (g) would waive any of the conditions precedent to the Effective
Date or the making of any Loan or issuance of any Letter of Credit or (h)
would extend the Revolving Maturity Date, or (i) would release or
substitute Collateral, or (j) would amend this sentence or the previous
sentence. Agent shall not have liability to Lenders for failure or delay
in exercising any right or power possessed by Agent pursuant to the Loan
Documents or otherwise unless such failure or delay is caused by the gross
negligence of the Agent, in which case only the Agent responsible for such
gross negligence shall have liability therefor to the Lenders.
(g) INDEPENDENT INVESTIGATION. Each Lender severally represents and
warrants to Agent that it has made its own independent investigation and
assessment of the financial condition and affairs of the Borrower in
connection with the making and continuation of its participation hereunder
and has not relied exclusively on any information provided to such Lender
by Agent in connection herewith, and each Lender represents, warrants and
undertakes to Agent that it shall continue to make its own
48
independent appraisal of the credit worthiness of the Borrower while
the Notes are outstanding or its Commitment hereunder are in force.
Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any
other document referred to or provided for herein or to inspect the
properties or books of the Borrower. Other than as provided in this
Agreement, Agent shall not have any duty, responsibility or liability
to provide any Lender with any credit or other information concerning
the affairs, financial condition or business of the Borrower which may
come into the possession of Agent.
(h) INDEMNIFICATION. Lenders agree to indemnify Agent, ratably
according to their respective Commitment on a Pro Rata basis, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any proper
and reasonable kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by Agent under the Loan
Documents, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Each Lender shall be entitled to be
reimbursed by the Agent for any amount such Lender paid to Agent under
this Section 15(h) to the extent the Agent has been reimbursed for such
payments by the Borrower or any other Person. THE PARTIES INTEND FOR THE
PROVISIONS OF THIS SECTION TO APPLY TO AND PROTECT THE AGENT FROM THE
CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR
THREATENED TO BE IMPOSED ON AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS
OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING
OR CONCURRING CAUSE OF ANY SUCH LIABILITY.
(i) BENEFIT OF SECTION 15. The agreements contained in this Section
15 are solely for the benefit of Agent and the Lenders and are not for the
benefit of, or to be relied upon by, the Borrower, any affiliate of the
Borrower or any other person.
(j) PRO RATA TREATMENT. Subject to the provisions of this Agreement,
each payment (including each prepayment) by the Borrower and each
collection by Lenders (including offsets) on account of the principal of
and interest on the Notes and fees provided for in this Agreement, that
are payable by the Borrower, shall be made Pro Rata; provided, however, in
the event that any Defaulting Lender shall have failed to make an Advance
as contemplated under Section 3 hereof and Agent or another Lender or
Lenders shall have made such Advance, payment received by Agent for the
account of such Defaulting Lender or Lenders shall not be distributed to
such Defaulting Lender or Lenders until such Advance or Advances shall
have been repaid in full to the Lender or Lenders who funded such Advance
or Advances.
49
(k) ASSUMPTION AS TO PAYMENTS. Except as specifically provided
herein, unless Agent shall have received notice from the Borrower prior to
the date on which any payment is due to Lenders hereunder that the
Borrower will not make such payment in full, Agent may, but shall not be
required to, assume that the Borrower has made such payment in full to
Agent on such date and Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower shall not
have so made such payment in full to Agent, each Lender shall repay to
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount
to Agent, at the interest rate applicable to such portion of the Loan.
(l) OTHER FINANCINGS. Without limiting the rights to which any
Lender otherwise is or may become entitled, such Lender shall have no
interest, by virtue of this Agreement or the Loan Documents, in (a) any
present or future loans from, letters of credit issued by, or leasing or
other financial transactions by, any other Lender to, on behalf of, or
with the Borrower (collectively referred to herein as "Other Financings")
other than the obligations hereunder; (b) any present or future guarantees
by or for the account of the Borrower which are not contemplated by the
Loan Documents; (c) any present or future property taken as security for
any such Other Financings; or (d) any property now or hereafter in the
possession or control of any other Lender which may be or become security
for the obligations of the Borrower arising under any loan document by
reason of the general description of indebtedness secured or property
contained in any other agreements, documents or instruments relating to
any such Other Financings.
(m) INTERESTS OF LENDERS. Nothing in this Agreement shall be
construed to create a partnership or joint venture between Lenders for any
purpose. Agent, Lenders and the Borrower recognize that the respective
obligations of Lenders under the Commitment shall be several and not joint
and that neither Agent nor any of Lenders shall be responsible or liable
to perform any of the obligations of the other under this Agreement. Each
Lender is deemed to be the owner of an undivided interest in and to all
rights, titles, benefits and interests belonging and accruing to Agent
under the Security Instruments, including, without limitation, liens and
security interests in any collateral, fees and payments of principal and
interest by the Borrower under the Commitment on a Pro Rata basis. Each
Lender shall perform all duties and obligations of Lenders under this
Agreement in the same proportion as its ownership interest in the Loans
outstanding at the date of determination thereof.
(n) INVESTMENTS. Whenever Agent in good faith determines that it is
uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any
dispute among the Lenders about how such funds should be distributed,
Agent may choose to defer distribution of the funds which are the subject
of such uncertainty or dispute. If Agent in good faith believes that the
uncertainty
50
or dispute will not be promptly resolved, or if Agent is otherwise
required to invest funds pending distribution to the Lenders, Agent may
invest such funds pending distribution (at the risk of the Borrower).
All interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportions and to the
same Persons as such investment. All monies received by Agent for
distribution to the Lenders (other than to the Person who is Agent in
its separate capacity as a Lender) shall be held by the Agent pending
such distribution solely as Agent for such Lenders, and Agent shall
have no equitable title to any portion thereof.
16. EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Agent or the Lenders, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right. The rights of the Agent and the Lenders hereunder shall be in addition to
all other rights provided by law.
17. NOTICES. Any notices or other communications required or
permitted to be given by this Agreement or any other documents or
instruments referred to herein must be given in writing (which may be by
bank wire, telecopy or similar writing) and shall be given to the party to
whom such notice or communication is directed at the address or telecopy
number of such party as follows: (a) BORROWER: ADDISON ENERGY INC., c/o
EXCO RESOURCES, INC., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, L.B. 17, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Executive Officer, (b) AGENT and LENDERS: c/o BANK ONE CANADA, BCE Place,
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Facsimile
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇ with a copy to: Wm. ▇▇▇▇ ▇▇▇▇▇▇▇,
Vice President, Bank One, NA, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇ and (ii) ▇▇▇▇ ▇▇▇, ▇▇, ▇ Bank ▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndication. Any such
notice or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section 17 and the appropriate answerback is received or receipt is
4otherwise confirmed, (b) if given by mail, three (3) days after deposit in
the mails with first-class postage, prepaid, as addressed as aforesaid or
(c) if given by any other method, when delivered at the address specified
in this Section 17; provided, however, that notices to the Agent under
Sections 2, 3, 4 or 5 hereof shall not be effective until received. Any
notice required to be given to the Lenders shall be given to the Agent and
distributed to all Lenders by the Agent.
18. EXPENSES. The Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent, in connection with the preparation any Loan
Document, any waiver or consent hereunder or any amendment hereof or any default
or Event of Default or alleged default or Event of Default hereunder, (ii) all
reasonable and necessary out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent in connection
with the preparation of any participation agreement for a participant or
participants requested by the Borrower or any amendment thereof and (iii) if a
Default or an Event of Default occurs, all
51
reasonable and necessary out-of-pocket expenses incurred by the Lenders,
including fees and disbursements of counsel, in connection with such Default
and Event of Default and collection and other enforcement proceedings
resulting therefrom. THE BORROWER HEREBY ACKNOWLEDGES THAT GARDERE ▇▇▇▇▇
▇▇▇▇▇▇ LLP AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ LLP ARE SPECIAL COUNSEL TO BANK ONE,
AS AGENT AND AS A LENDER, UNDER THIS AGREEMENT AND SUCH FIRMS ARE NOT COUNSEL
TO, NOR DO SUCH FIRMS REPRESENT THE BORROWER IN CONNECTION WITH THE
TRANSACTIONS DESCRIBED IN THIS AGREEMENT. The Borrower is relying on separate
counsel in the transaction described herein. The Borrower shall indemnify the
Lenders against any transfer taxes, document taxes, assessments or charges
made by any governmental authority by reason of the execution, delivery and
filing of the Loan Documents. The obligations of this Section 18 shall
survive any termination of this Agreement, the expiration of the Loans and
the payment of all indebtedness of the Borrower to the Lenders hereunder and
under the Notes.
19. INDEMNITY. The Borrower agrees to indemnify and hold harmless the
Lenders and their respective officers, employees, agents, attorneys and
representatives (singularly, an "Indemnified Party", and collectively, the
"Indemnified Parties") from and against any loss, cost, liability, damage or
expense (including the reasonable fees and out-of-pocket expenses of counsel to
the Lenders, including all local counsel hired by such counsel) ("Claim")
incurred by the Lenders in investigating or preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect of
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law, federal or state environmental
law, or any other statute of any jurisdiction, or any regulation, or at common
law or otherwise, which is alleged to arise out of or is based upon any acts,
practices or omissions or alleged acts, practices or omissions of the Borrower
or its agents or arises in connection with the duties, obligations or
performance of the Indemnified Parties in negotiating, preparing, executing,
accepting, keeping, completing, countersigning, issuing, selling, delivering,
releasing, assigning, handling, certifying, processing or receiving or taking
any other action with respect to the Loan Documents and all documents, items and
materials contemplated thereby even if any of the foregoing arises out of an
Indemnified Party's ordinary negligence. The indemnity set forth herein shall be
in addition to any other obligations or liabilities of the Borrower to the
Lenders hereunder or at common law or otherwise, and shall survive any
termination of this Agreement, the expiration of the Loans and the payment of
all indebtedness of the Borrower to the Lenders hereunder and under the Notes,
provided that the Borrower shall have no obligation under this Section to any
Lender with respect to any of the foregoing arising out of the gross negligence
or willful misconduct of any Lender. If any Claim is asserted against any
Indemnified Party, the Indemnified Party shall endeavor to notify the Borrower
of such Claim (but failure to do so shall not affect the indemnification herein
made except to the extent of the actual harm caused by such failure). The
Indemnified Party shall have the right to employ, at the Borrower's expense,
counsel of the Indemnified Parties' choosing and to control the defense of the
Claim. The Borrower may at its own expense also participate in the defense of
any Claim. Each Indemnified Party may employ separate counsel in connection with
any Claim
52
to the extent such Indemnified Party believes it reasonably prudent to
protect such Indemnified Party. THE PARTIES INTEND FOR THE PROVISIONS OF THIS
SECTION TO APPLY TO AND PROTECT EACH INDEMNIFIED PARTY FROM THE CONSEQUENCES
OF ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR THREATENED TO BE
IMPOSED ON AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE,
WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE
OF ANY CLAIM.
20. GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN THE PROVINCE OF
ALBERTA, CANADA AND THE SUBSTANTIVE
LAWS OF THE PROVINCE OF
ALBERTA, CANADA SHALL GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND
INSTRUMENTS REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
21. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.
22. MAXIMUM INTEREST RATE. If any provision of this Agreement would oblige
the Borrower to make any payment of interest or other amount payable to any
Lender in an amount or calculated at a rate which would be prohibited by law or
would result in a receipt by that Lender of "interest" at a "criminal rate" (as
such terms are construed under the CRIMINAL CODE (Canada)), then,
notwithstanding such provision, such amount or rate shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as
the case may be, as would not be so prohibited by applicable law or so result in
a receipt by that Lender of "interest" at a "criminal rate".
23. AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed by an authorized officer of the party against whom such
amendment is sought to be enforced. No modification or waiver of any provision
of the Loan Documents, including this Agreement, or the Notes nor consent to
departure therefrom, shall be effective unless in writing signed by Borrower and
Majority Lenders (or by Agent on behalf of Majority Lenders) subject to the
additional requirements of Section 15(f) hereof, to the extent applicable. No
such consent or waiver shall extend beyond the particular case and purpose
involved. No notice or demand given in any case shall constitute a waiver of the
right to take other action in the same, similar or other circumstances without
such notice or demand.
53
24. MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical separate counterparts, each of which for all purposes is to be deemed
an original, but all of which shall constitute, collectively, one agreement. No
party to this Agreement shall be bound hereby until a counterpart of this
Agreement has been executed by all parties hereto.
25. CONFLICT. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the Loan Documents,
the terms or provisions contained in this Agreement shall be controlling.
26. SURVIVAL. All covenants, agreements, undertakings, representations and
warranties made in the Loan Documents, including this Agreement, the Notes or
other documents and instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.
27. PARTIES BOUND. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
legal representatives and estates, provided, however, that the Borrower may not,
without the prior written consent of all of the Lenders, assign any rights,
powers, duties or obligations hereunder.
28. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender shall have the right to sell, assign or transfer all
or any part of its Note or Notes, its Commitment and its rights and
obligations hereunder to one or more Affiliates, Lenders, financial
institutions, pension plans, insurance companies, investment funds, or
similar Persons who are Eligible Assignees; PROVIDED, that each sale,
assignment or transfer (other than to an Affiliate or a Lender) shall
require the consent of Agent and the Borrower, which consents will not be
unreasonably withheld; provided, however, that if an Event of Default has
occurred and is continuing, the consent of the Borrower shall not be
required. Any such assignee, transferee or recipient shall have, to the
extent of such sale, assignment, or transfer, the same rights, benefits
and obligations as it would if it were such Lender and a holder of such
Note, Commitment and rights and obligations, including, without
limitation, the right to vote on decisions requiring consent or approval
of all Lenders or Majority Lenders and the obligation to fund its
Commitment; provided, that (1) each such sale, assignment, or transfer
(other than to an Affiliate or a Lender) shall be in an aggregate
principal amount not less than $5,000,000 Canadian, (2) each remaining
Lender shall at all times maintain Commitment then outstanding in an
aggregate principal amount at least equal to $5,000,000 Canadian; (3) each
such sale, assignment or transfer shall be of a Pro Rata portion of such
Lender's Commitment, (4) no Lender may offer to sell its Note or Notes,
Commitment, rights and obligations or interests therein in violation of
any securities laws; (5) no such assignments shall become effective until
the assigning Lender and its assignee delivers to Agent and Borrower an
Assignment and Acceptance and the Note or Notes subject to such assignment
and other documents evidencing any such assignment, and (6) an
54
assignee Lender that is not a resident of Canada shall not be entitled
to claim under Section 5(f) of this Agreement any amount in respect of
the assigned Commitment which could not have been claimed by the
assigning Lender. An assignment fee in the amount of $3,500 Canadian
for each such assignment (other than to an Affiliate or a Lender) will
be payable to Agent by assignor or assignee. Within five (5) Business
Days after its receipt of copies of the Assignment and Acceptance and
the other documents relating thereto and the Note or Notes, the
Borrower shall execute and deliver to Agent (for delivery to the
relevant assignee) a new Note or Notes evidencing such assignee's
assigned Commitment and if the assignor Lender has retained a portion
of its Commitment, a replacement Note in the principal amount of the
Commitment retained by the assignor (except as provided in the last
sentence of this paragraph (a) such Note or Notes to be in exchange
for, but not in payment of, the Note or Notes held by such Lender). On
and after the effective date of an assignment hereunder, the assignee
shall for all purposes be a Lender, party to this Agreement and any
other Loan Document executed by the Lenders and shall have all the
rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party thereto, and no further
consent or action by Borrower, Lenders or the Agent shall be required
to release the transferor Lender with respect to its Commitment
assigned to such assignee and the transferor Lender shall henceforth be
so released
(b) Each Lender shall have the right to grant participations in all
or any part of such Lender's Notes and Commitment hereunder to one or more
pension plans, investment funds, insurance companies, financial
institutions or other Persons, provided, that:
(i) each Lender granting a participation shall retain the
right to vote hereunder, and no participant shall be entitled to
vote hereunder on decisions requiring consent or approval of Lender
or Majority Lenders (except as set forth in (iii) below);
(ii) in the event any Lender grants a participation hereunder,
such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender
shall remain the holder of any such Note or Notes for all purposes
under the Loan Documents, and Agent, each Lender and Borrower shall
be entitled to deal with the Lender granting a participation in the
same manner as if no participation had been granted; and
(iii) no participant shall ever have any right by reason of
its participation to exercise any of the rights of Lenders
hereunder, except that any Lender may agree with any participant
that such Lender will not, without the consent of such participant
(which consent may not be
55
unreasonably withheld) consent to any amendment or waiver
requiring approval of all Lenders.
(c) It is understood and agreed that any Lender may provide to
assignees and participants and prospective assignees and participants
financial information and reports and data concerning Borrower's
properties and operations which was provided to such Lender pursuant to
this Agreement, provided, that each recipient thereto has first agreed,
for the benefit of Borrower, to hold such information, reports and data in
confidence on the terms set out in Section 12(i) hereof.
(d) Upon the reasonable request of either Agent or Borrower, each
Lender will identify those to whom it has assigned or participated any
part of its Notes and Commitment, and provide the amounts so assigned or
participated.
29. CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS AND Jurisdiction. THE
OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE PERFORMABLE IN THE PROVINCE
OF
ALBERTA, CANADA. ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER WITH
RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT
THEREOF, MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, AND
THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN
SAID COURT BY THE MAILING THEREOF BY LENDER BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER, AT THE ADDRESS FOR NOTICES AS PROVIDED IN
SECTION 17. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN
THE PROVINCE OF
ALBERTA, CANADA AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
30. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
31. OTHER AGREEMENTS. THIS WRITTEN CREDIT AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
56
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
32. FINANCIAL TERMS. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance
with GAAP.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
---------
ADDISON ENERGY INC.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
57
LENDERS:
--------
COMMITMENT BANK ONE, NA CANADA BRANCH
PERCENTAGE: as a Lender and as Administrative Agent
31.59073936% By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: First Vice President
58
COMMITMENT BNP PARIBAS (CANADA)
PERCENTAGE: as a Lender and as Syndication Agent
26.92307692% By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Energy & Project Finance
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director Energy
& Project Finance
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ BRANCH
PERCENTAGE:
14.56310680% By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
60
COMMITMENT THE BANK OF NOVA SCOTIA
PERCENTAGE: as a Lender and as Documentation Agent
26.92307692% By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
61