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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 16, 1995
DATE OF AMENDMENT: AUGUST 4, 1995
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-16741 94-1667468
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
5005 LBJ FREEWAY, SUITE 1000, DALLAS, TEXAS 75244
(Address of principal executive offices)
(214) 701-2000
(Registrant's Telephone No.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 1995, Comstock Resources, Inc. together with its wholly
owned subsidiaries, (the "Company"), closed an acquisition of producing oil and
gas properties and natural gas gathering systems located in East Texas and
North Louisiana from Sonat Exploration Company, a wholly owned subsidiary of
Sonat Inc. ("Sonat") for total consideration of $50.6 million.
The Company acquired interests in 319 (188 net) oil and gas wells from
Sonat for $49.1 million. The Company will operate 245 of the wells acquired.
In addition, the Company acquired the managing general partner interest and a
20.31% limited partner interest in Crosstex Pipeline Partners, Ltd.
("Crosstex") as well as certain other gas gathering systems primarily located
in Harrison County, Texas from Sonat for $1.5 million. The Company will
operate 78 miles of gathering systems owned by Crosstex or acquired directly by
the Company.
Additionally, on July 31, 1995, the Company entered into a $110 million
credit facility with two commercial banks to provide a $100 million revolving
credit facility and to provide a one year term loan of $10 million. Amounts
outstanding under the revolving credit facility bear interest at the agent
bank's prime rate plus 1 1/2% and are subject to a borrowing base determined
semiannually by the banks. The borrowing base as of July 31, 1995 for the
revolving credit facility was $70,000,000 and reduces by $1,060,000 each month
beginning September 1, 1995. The revolving credit facility has a final
maturity of October 1, 1998. Amounts outstanding under the term loan bear
interest at the agent's prime rate plus 4% and are payable in full on July 31,
1996. As of August 4, 1995, the Company had $63,940,000 outstanding under the
revolving credit facility and $10 million outstanding under the term loan.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a. Financial Statements
It is impracticable to file the financial statements required by
Item 7(a). Such financial statements will be filed by amendment to
this Report on Form 8-K as soon as practicable.
b. Pro Forma Financial Information
It is impracticable to file the pro forma financial information
required by Item 7(b). Such pro forma financial information will be
filed by amendment to this Report on Form 8-K as soon as practicable.
c. Exhibits
2(a) Purchase and Sale Agreement between Comstock Resources,
Inc. and Sonat Exploration Company dated May 16, 1995.
99(a) Press Release issued May 17, 1995.
99(b)* Press Release issued August 1, 1995.
99(c)* Credit Agreement dated as of July 31, 1995 between
Comstock Resources, Inc., Comstock Oil & Gas, Inc.,
Comstock Oil & Gas -- Louisiana, Inc., Comstock
Offshore Energy, Inc., the Banks and NBD Bank, as
Agent.
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* Filed herewith.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: August 4, 1995 By: /s/ ROLAND O. BURNS
-----------------------------------------------
ROLAND O. BURNS
Senior Vice President, Chief Financial Officer,
Secretary, and Treasurer (Principal Financial
and Accounting Officer)
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2(a) Purchase and Sale Agreement between
Comstock Resources, Inc. and Sonat Exploration
Company dated May 16, 1995.
99(a) Press Release issued May 17, 1995.
99(b)* Press Release issued August 1, 1995.
99(c)* Credit Agreement dated as of July 31, 1995
between Comstock Resources, Inc., Comstock Oil
& Gas, Inc., Comstock Oil & Gas -- Louisiana,
Inc., Comstock Offshore Energy, Inc., the
Banks and NBD Bank, as Agent.
</TABLE>
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* Filed herewith.
4
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EXHIBIT 99(b)
COMSTOCK
RESOURCES
FOR IMMEDIATE RELEASE NEWS RELEASE
Contact: Roland O. Burns
Senior Vice President
(214) 701-2000
COMSTOCK RESOURCES, INC. COMPLETES ACQUISITION FROM
SONAT EXPLORATION COMPANY FOR $50.6 MILLION AND
ENTERS INTO $110 MILLION BANK CREDIT FACILITY
DALLAS, TX, August 1, 1995--Comstock Resources, Inc. ("Comstock"
or the "Company")(NASDAQ-NMS:CMRE) today announced that on July 31, 1995,
Comstock closed the previously announced acquisition of certain producing oil
and gas properties and natural gas gathering systems located in East Texas and
North Louisiana from Sonat Exploration Company, a wholly owned subsidiary of
Sonat Inc. ("Sonat") for total consideration of $50.6 million.
Comstock acquired interests in 319 (188 net) oil and gas wells
from Sonat for $49.1 million. Comstock will operate 245 of the wells acquired.
In addition, Comstock, through its wholly owned subsidiary, Comstock Natural
Gas, Inc., acquired the managing general partner interest and a 20.31% limited
partner interest in the Crosstex Pipeline Partners, Ltd. ("Crosstex") as well
as certain other gathering systems primarily located in Harrison County, Texas
from Sonat for $1.5 million. Comstock will operate the more than 78 miles of
gathering systems owned by Crosstex or acquired directly by Comstock.
Comstock also announced that on July 31, 1995, the Company entered
into a $110 million credit facility with NBD Bank and Bank One, Texas to
finance the acquisition from Sonat as well as to finance future acquisition and
development activities of the Company. On July 31, 1995, the Company had $76.9
million outstanding under the bank credit facility.
"The $50.6 million acquisition is the largest transaction
completed by the Company in its operating history", stated M. Jay Allison,
President and Chief Executive Officer. "The acquisition will more than double
our daily natural gas production beginning in August 1995. We expect to
increase the production from the properties we acquired from Sonat during the
next six months by spending approximately $3.1 million to recomplete 15
existing wells and drill six new development wells."
Comstock Resources, Inc. is a rapidly growing independent energy
company engaged in oil and gas property acquisitions and oil and gas
exploration, development, and production in the United States.
5005 LBJ FREEWAY . SUITE 1000 . DALLAS, TEXAS 75244 (214) 701-2000
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EXHIBIT 99(c)
CREDIT AGREEMENT
DATED AS OF JULY 31, 1995
COMSTOCK RESOURCES, INC.,
COMSTOCK OIL & GAS, INC.,
COMSTOCK OIL & GAS - LOUISIANA, INC.
COMSTOCK OFFSHORE ENERGY, INC.,
THE BANKS PARTY HERETO
AND
NBD BANK, AS AGENT
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitions; Rules of Construction . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. The Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Disbursement of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Conditions of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Letter of Credit Reimbursement Payments. . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4. Payment and Prepayment; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Payment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 No Setoff or Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Payment on Non-Business Day; Payment Computations . . . . . . . . . . . . . . . . . 22
4.7 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Additional Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.8 Use of Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Security Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Consents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
<S> <C> <C> <C>
SECTION PAGE
6.12 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.14 Environmental and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.15 Direct Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . 29
(b) Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . 29
(d) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Access to Records, Books, Etc . . . . . . . . . . . . . . . . . . . . . 32
7.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Merger; Acquisitions; Etc. . . . . . . . . . . . . . . . . . . . . . . . 34
(g) Disposition of Assets; Etc . . . . . . . . . . . . . . . . . . . . . . . 35
(h) Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(i) Investments, Advance and Advances,
Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 36
(l) General and Administrative Expenses . . . . . . . . . . . . . . . . . . 36
SECTION 8. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Distribution of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.4 Letter of Credit Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
CREDIT AGREEMENT Page ii
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<TABLE>
<S> <C> <C>
SECTION PAGE
SECTION 9. The Agent and the Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.2 Scope of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.3 Duties of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.4 Resignation of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.5 Pro Rata Sharing by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.6 Determination of Borrowing Base, Etc . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.1 Amendments; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.3 Conduct No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 43
10.4 Reliance on and Survival of Various Provisions . . . . . . . . . . . . . . . . . . 44
10.5 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.8 Table of Contents and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.9 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . 49
10.10 Integration and Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.11 Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.13 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.14 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.15 Jury Trial Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.16 Joint and Several Obligations;
Contribution Rights; Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . 51
10.17 Consents to Renewals, Modifications
and Other Actions and Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.18 Waivers, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.19 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
CREDIT AGREEMENT Page iii
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<TABLE>
<S> <C> <C>
EXHIBIT
A . . . . . . . . . . . . Consent and Amendment of Security Documents
B . . . . . . . . . . . . Revolving Credit Note
C . . . . . . . . . . . . Term Note
D . . . . . . . . . . . . Request for Loan
E . . . . . . . . . . . . Assignment and Acceptance
F . . . . . . . . . . . . Assumption Agreement
SCHEDULES
6.4 . . . . . . . . . . . Subsidiaries
7.2(d) . . . . . . . . . Permitted Indebtedness
7.2(e) . . . . . . . . . Permitted Liens
7.2(i) . . . . . . . . . CRI Guaranteed Indebtedness
</TABLE>
CREDIT AGREEMENT Page iv
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CREDIT AGREEMENT
THIS AGREEMENT, dated as of July 31, 1995, is among COMSTOCK
RESOURCES, INC. a Nevada corporation ("CRI"), COMSTOCK OIL & GAS, INC., a
Nevada corporation ("COG"), COMSTOCK OIL & GAS - LOUISIANA, INC., a Nevada
corporation ("COGL"), COMSTOCK OFFSHORE ENERGY, INC., a Delaware corporation
("COE") (CRI, COG, COGL and COE may hereinafter collectively be referred to as
the "Borrowers"), the lenders party hereto from time to time (collectively, the
"Banks" and individually, a "Bank") and NBD BANK, formerly known as NBD Bank,
N.A., as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Borrowers, the Banks and the Agent are parties to
a Credit Agreement dated September 30, 1994, as amended (the "Existing Credit
Agreement"), which amended and restated a Credit Agreement dated as of November
15, 1993, as amended.
B. The Borrowers have requested that the Banks amend and
restate the Existing Credit Agreement as herein provided, replacing and
refinancing the indebtedness thereunder and certain other indebtedness, with a
secured credit facility providing for revolving credit loans in the aggregate
principal amount of $100,000,000 and a term loan in the aggregate principal
amount of $10,000,000 in order to provide bridge financing for the Borrowers'
acquisition of properties from Sonat Exploration Company, and the Banks are
willing to establish such a credit facility and term loan in favor of the
Borrowers and amend and restate the Existing Credit Agreement on the terms and
conditions herein set forth.
AGREEMENT
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree that the Existing Credit Agreement
shall be amended and restated as follows:
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SECTION 1. DEFINITIONS
1.1 Certain Definitions. As used herein, the following
terms shall have the following respective meanings:
"Adjusted Future Net Income-PV" shall mean, at any date, an
amount equal to 67.5% of the present value of Future Net Income (discounted at
a discount rate determined by the Agent) determined by the Agent.
"Adjusted Prime Rate" shall mean the per annum rate equal to
the sum of (a) (i) with respect to Revolving Credit Loans and any other amounts
owing hereunder other than the Term Loan, one and one-half percent (1-1/2%) per
annum, and (ii) with respect to the Term Loan, four percent (4%) per annum,
plus (b) the greater of (i) the per annum rate announced by the Agent from time
to time as its "prime rate", which "prime rate" may not be the lowest rate
charged by the Agent to any of its customers but will be its only published
prime rate, and (ii) the sum of one-half percent (1/2%) per annum plus the
Federal Funds Rate, such Adjusted Prime Rate to change simultaneously with any
change in such "prime rate" or Federal Funds Rate, as the case may be;
all as conclusively determined in good faith by the Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of 1/100 of 1%.
"Advances" shall mean the Loans and the Letter of Credit
Advances.
"Advance Date" shall mean each date for the making of an
Advance as specified in the notice delivered by the Borrowers, or any of them,
under Section 3.1 and permitted by this Agreement.
"Affiliate", when used with respect to any person shall mean
any other person which, directly or indirectly, controls or is controlled by or
is under common control with such person or any other person which is owned 5%
or more by such person or any Subsidiary or other Affiliate of such person.
For purposes of this definition "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), with respect to
any person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or otherwise.
"Bank Obligations" shall mean all indebtedness, obligations
and liabilities, whether now or hereafter arising, of the Borrowers to the
Agent or any Bank pursuant to any of the Loan Documents.
"Borrowing Base" shall mean an amount equal to the difference of
CREDIT AGREEMENT Page 2
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(a) the present value of the Future Net Income
(discounted at the Discount Rate) times a fraction determined by the Agent (or
by each of the Banks as described in Section 9.6) based on the Agent's or each
Bank's, as the case may be, customary and standard practices in lending to oil
and gas companies generally, including without limitation their standard
engineering criteria and oil and gas lending criteria (and it is acknowledged
and agreed that such customary and standard practices, including without
limitation such engineering criteria and oil and gas lending criteria, shall be
determined by the Agent and each Bank, as the case may be, in their sole
discretion, and such determination shall be conclusive and binding), minus
(b) an amount cumulatively determined, equal to
$1,060,000 per month for the period from and including September 1, 1995 to and
including March 1, 1996 or such later date on which the reevaluation of the
Borrowing Base is completed pursuant to the terms of this Agreement, and
subsequent monthly reductions will also be made and such reductions may be
adjusted by the Majority Banks upon such reevaluation. The Borrowing Base as
of the Effective Date is $70,000,000.
"Business Day" shall mean any day other than a Saturday or
Sunday or other day on which the Agent or any Bank is not open for transaction
of substantially all of its banking functions.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations thereunder.
"CMC" shall mean Comstock Management Corporation, a Nevada corporation.
"CNG" shall mean Comstock Natural Gas, Inc., a Nevada
corporation.
"CNG/CRI Guaranty Formula" shall mean, as of any date, the sum
of (a) an amount equal to 70% of the amount of Eligible CNG Accounts Receivable
(other than those described in clause (b)) plus (b) an amount equal to 90% of
the amount of Eligible CNG Accounts Receivable supported by letters of credit
confirmed by a financial institution acceptable to the Agent in its reasonable
discretion; provided, that, the amount of Eligible CNG Accounts Receivable
described in this clause (b) included in the CNG Borrowing Base may not exceed
50% of the aggregate amount of Eligible CNG Accounts Receivable.
"Collateral" shall have the meaning ascribed thereto in
Section 5.1(a) hereof.
"Commitments" shall mean, with respect to each Bank, the
commitment of each such Bank to make Revolving Credit Advances pursuant to
Section 2.1(a), in amounts not exceeding in aggregate principal amount
outstanding at any time the respective revolving credit commitment amount for
each Bank set forth next to the name of each such Bank on the signature pages
hereof or established pursuant to Section 10.6, as the case may be, as such
amount may be reduced from time to time pursuant to Section 2.1(a).
CREDIT AGREEMENT Page 3
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"Consent and Amendment of Security Documents" shall mean the
consent and amendment of security documents entered into by the Borrowers, the
Guarantors and the Agent pursuant to this Agreement in substantially the form
of Exhibit A, as amended or modified from time to time.
"Consolidated" or "consolidated" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or
more Persons of the amount signified by such term for all such Persons
determined on a consolidated basis and in accordance with generally accepted
accounting principles.
"Consolidated Adjusted Cash Flow" shall mean, for any period,
the Consolidated Net Income for such period taken as a single accounting
period, plus, to the extent deducted in determining such Consolidated Net
Income, all depreciation, amortization and depletion expense, and other non
cash charges, provided that in determining Consolidated Net Income as used in
this definition the following shall be excluded, without duplication: (a) the
income of any Person accrued prior to the date such Person is merged into or
consolidated with a Borrower or such Person's assets are acquired by a
Borrower, (b) the proceeds of any insurance policy, (c) gains or losses from
the sale, exchange, transfer or other disposition of property or assets of any
Borrower and related tax effects in accordance with GAAP and (d) any
extraordinary or non-recurring gains of any Borrower, and related tax effects
in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net
income of CRI and its Subsidiaries for such period, determined in accordance
with GAAP, minus, to the extent not deducted from such net income, the amount
of allowable cash dividends paid during such period on the 1994 Preferred Stock
and on the 1995 Preferred Stock.
"Contingent Liabilities" of any person shall mean, as of any
date, all obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business and
indemnifications typical and customary in the ordinary course of such person's
oil and gas business in connection with operating agreements and other
agreements executed in the ordinary course of such person's oil and gas
business), including without limitation all reimbursement obligations of such
person in respect of any letters of credit, surety bonds or similar obligations
and all obligations of such person to advance funds to, or to purchase assets,
property or services from, any other person in order to maintain the financial
condition of such other person.
"CPI" shall mean Crosstex Pipeline, Inc. a Texas corporation.
"Current Assets" and "Current Liabilities" shall mean all
assets or liabilities of CRI and its Subsidiaries, on a consolidated basis
respectively, which should be classified as current assets and current
liabilities in accordance with GAAP; provided that the calculation of
CREDIT AGREEMENT Page 4
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Current Assets shall not include receivables of the Borrowers owing by any
Affiliate in excess of 90 days or subject to any dispute or offset or otherwise
unacceptable, advances by the Borrowers to any Affiliate or any asset
classified as a Current Asset solely because it is held for sale, and Current
Liabilities shall not include any Revolving Credit Loans.
"Default" shall mean any Event of Default or any event or
condition which might become an Event of Default with notice or lapse of time
or both.
"Discount Rate" shall mean the discount rate determined from
time to time by the Agent or, in the case of each Bank calculating the
Borrowing Base pursuant to Section 9.6, by such Bank in its own calculation.
"Dollars" and "$" shall mean the lawful money of the United States of America.
"Effective Date" shall mean the effective date specified in
the final paragraph of this Agreement.
"Eligible CNG Accounts Receivable" shall mean, as of any date,
those trade accounts receivable owned by CNG which are payable in Dollars,
valued at the face amount thereof less sales, excise or similar taxes and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, including without limitation rebates and advertising allowances
receivable, owing, granted, outstanding, available or claimed, but shall not
include any such account receivable (a) that is not a bona fide existing
obligation created by the sale and actual delivery of inventory, goods or other
property or the furnishing of services or other good and sufficient
consideration to customers of CNG in the ordinary course of business, (b) that
is more than 30 days past due, (c) that is subject to any known dispute,
contra-account, defense, offset or counterclaim or any lien, encumbrance or
security interest, (d) that is payable by any person located outside the United
States (which shall not be deemed to include any territories of the United
States) and is not supported by a letter of credit issued by banks acceptable
to the Agent in its reasonable discretion, (e) that is payable by the United
States or any of its departments, agencies or instrumentalities, (f) that is
payable by any person that is the subject of any proceeding seeking to
adjudicate it a bankrupt or insolvent or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief or protection of debtors or seeking the appointment of
a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or that is not generally paying its debts as
they become due or has admitted in writing its inability to pay its debts
generally or has made a general assignment for the benefit of creditors, (g)
which is evidenced by a promissory note or other instrument, (h) that is
payable by any person, the aggregate accounts owing to CNG aggregate, are in
excess of 10% of all Eligible CNG Accounts Receivable, or (i) for which the
prospect of payment or performance is or will be impaired as determined by the
Agent in its reasonable discretion.
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"Environmental Laws" at any date shall mean all provisions of
law, statute, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by the government of the
United States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge of
substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, together with any successor statute
thereto and the regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which (i) together with the Borrowers or any Subsidiary,
would be treated as a single employer under Section 414(b) or (c) of the Code
or (ii) for purposes of liability under Section 412(C)(11) of the Code, the
lien created under Section 412(n) of the Code or for a tax imposed for failure
to meet minimum funding standards under Section 4971 of the Code, a member of
the same affiliated service group (within the meaning of Section 401(m) of the
Code) as the Borrowers or any Subsidiary, or any other trade or business
described in clause (i) above.
"Event of Default" shall mean any of the events or conditions
described in Section 8.1.
"Federal Funds Rate" shall mean a per annum rate established
and announced by the Agent from time to time as the opening federal funds rate
paid or payable by the Agent in its regional federal funds market for overnight
borrowing from other banks.
"Funded Indebtedness" of any person shall mean, as of any
date, all Indebtedness of such person which by its terms has a final maturity,
duration or payment date more than one year from the date such Indebtedness was
originally incurred (including any such Indebtedness having a final maturity,
duration or payment date within one year from such date which, pursuant to the
terms of a revolving credit or similar agreement or otherwise, may be renewed
or extended for more than one year form such date, whether or not thereto fore
renewed or extended).
"Future Net Income" shall mean the aggregate amount of Net
Income from Oil and Gas Interests reasonably estimated by any Bank (such
estimate to be conclusive and binding) as of 7:00 a.m. on the date of any
determination to be receivable by the Borrowers in the future.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with that reflected in the financial statements
referred to in Section 6.7 hereof.
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"Guarantor" shall mean each present and future Subsidiaries of
any of the Borrowers (other than any Borrower and Comstock DR-II Oil and Gas
Acquisition Limited Partnership).
"Guaranty" shall mean each guaranty of each Guarantor
delivered at any time pursuant to Section 5.2.
"Hydrocarbons" shall mean oil, gas casinghead, gas, drip
gasoline, natural gas and condensates and all other liquid or gaseous
hydrocarbons.
"Indebtedness" of any person shall mean, as of any date, (a)
all obligations of such Person for borrowed money, (b) all obligations which
are secured by any lien or encumbrance existing on property owned by such
Person whether or not the obligation secured thereby shall have been assumed by
such Person, other than those obligations which are incurred in the ordinary
course of business and are not required to be shown as a liability on a balance
sheet in accordance with GAAP, (c) all obligations as lessee under any lease
which, in accordance with GAAP, is or should be capitalized on the books of the
lessee, (d) the deferred purchase price for goods, property or services
acquired by such Person, and all obligations of such Person to purchase such
goods, property or services where payment therefore is required regardless of
whether or not delivery of such goods or property or the performance of such
services is ever made or tendered, other than unsecured trade payables incurred
in the ordinary course of business (e) all obligations of such Person to
advance funds to, or to purchase property or services from, any other Person in
order to maintain the financial condition of such Person, (f) all obligations
of such person in respect of any interest rate or currency swap, rate cap or
other similar transaction (valued in an amount equal to the highest termination
payment, if any, that would be payable by such person upon termination for any
reason on the date of termination), and (g) all obligations of such person or
of others for which such person is contingently liable, as guarantor, surety or
in any other similar capacity, or in respect of which obligations such person
assures a creditor against loss or agrees to take any action to prevent any
such loss (other than endorsements of negotiable instruments for collection in
the ordinary course of business), including without limitation all
reimbursement obligations of such person in respect of any letters of credit,
surety bonds or similar obligations and all obligations of such person to
advance funds to, or to purchase assets, property or services from, any other
person in order to maintain the condition, financial or otherwise, of such
other person.
"Interest Payment Date" shall mean the last Business Day of
each month, commencing with the first such day after the Effective Date, and
the Termination Date.
"Letter of Credit" shall mean a standby letter of credit
having a stated expiry date not later than twelve months after the date of
issuance and not later than the fifth Business Day before the Termination Date,
issued by the Agent on behalf of the Banks for the account of the Borrowers
under an application and related documentation acceptable to the Agent
requiring, among other things, immediate reimbursement by the Borrowers to the
Agent in respect of all
CREDIT AGREEMENT Page 7
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drafts or other demand for payment honored thereunder and all expenses paid or
incurred by the Agent relative thereto.
"Letter of Credit Advance" shall mean any issuance of a Letter
of Credit pursuant to this Agreement in which each Bank acquires a pro rata
risk participation.
"Letter of Credit Documents" shall have the meaning ascribed
thereto in Section 3.3(b)(i).
"Lien" shall mean any pledge, assignment, hypothecation,
mortgage, security interest, deposit arrangement, option, conditional sale or
title retaining contract, sale and leaseback transaction, financing statement
filing, lessor's or lessee's interest under any lease, subordination of any
claim or right, or any other type of lien, charge, encumbrance, preferential
arrangement or other claim or right.
"Loan Documents" shall mean this Agreement, the Notes, the
Security Documents, the environmental certificate and any other agreement,
instrument or document executed at any time pursuant to, in connection with, or
otherwise relating to this Agreement.
"Loans" mean the Revolving Credit Loans and the Term Loan.
"Majority Banks" shall mean Banks holding not less than 66% of
the aggregate principal amount of the Loans then outstanding (or 66% of the
Commitments if no Loans are then outstanding).
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, property, operations or conditions, financial or
otherwise, of the Borrowers and the Guarantors on a consolidated basis, (b) the
ability of any Borrower or any Guarantor to perform its obligations under this
Agreement, any Note or any Security Document or (c) the validity or
enforceability or the rights and remedies of the Agent or any Bank under this
Agreement, any Note or any Security Document.
"Maturity Date" means with respect to the Term Loan, the first
anniversary of the date such Term Loan is made, which in any event shall be no
later than July 31, 1996.
"Mortgages" shall have the meaning ascribed thereto in Section
5.1.
"Multiemployer Plan" shall mean any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Income from Oil and Gas Interests" shall mean the
aggregate of the net proceeds payable to any Borrower from the sale of
Hydrocarbons attributable to Proved Developed Reserves owned by such Borrower
which are part of the Collateral and in which the
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<PAGE> 14
Agent, for the benefit of the Banks, has a first priority, perfected and
enforceable lien and security interest, such net proceeds to be determined by
subtracting from such proceeds the aggregate of all costs and expenses incurred
in connection with the production and sale of such Hydrocarbons and the
generation of such revenues, including without limitation: (i) all producing
and operating costs, including expenses of development, extraction, treatment,
maintenance, processing, handling, storage, marketing, transportation,
delivery, environmental remediation (if any) and sale, but excluding all
overhead of such Borrower, whether attributable thereto or otherwise; (ii) all
taxes imposed or assessed with respect to, or measured by, or charged against
or attributable to, such oil and natural gas, including all applicable mineral,
severance, ad valorem, windfall profits, and property taxes; (iii) capital
expenditures incurred in connection with such production and sale; (iv) all
royalties, overriding royalties, production payments and other burdens, charges
or fees to which such Hydrocarbons, revenues or any interest therein may be
subject; and (v) such other costs, expenses or other amounts deducted by the
Agent or any Bank, as the case may be, in accordance with its customary and
standard practices in lending to oil and gas companies.
"1995 Preferred Stock" shall mean the 1,500,000 shares of
Series 1995 Convertible Preferred Stock issued by CRI.
"1994 Preferred Stock" shall mean the 600,000 shares of Series
1994 Convertible Preferred Stock issued by CRI and the 1,000,000 shares of 1994
Series B Convertible Preferred Stock Issued by CRI.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Oil and Gas Interests" shall mean all leasehold interests,
mineral fee interest, overriding royalty and royalty interests, net revenue and
net working interest and all other rights and interests relating to
Hydrocarbons, including without limitation any reserves thereof.
"Overdue Rate" shall mean a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Adjusted Prime Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean the Liens permitted by Section
7.2(e) hereof.
"Person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company, an
unincorporated organization, a joint venture, a government (foreign or
domestic), and any agency or political subdivision thereof, or any other
entity.
CREDIT AGREEMENT Page 9
<PAGE> 15
"Plan" shall mean, with respect to any Person, any employee
benefit or other plan (other than a Multiemployer Plan) maintained by such
Person for its employees and covered by Title IV of ERISA or to which Section
412 of the Code applies.
"Pro Rata Share" shall mean, as to obligations of the Banks,
the percentage set forth opposite its name on the signature pages hereof or
otherwise established pursuant to Section 10.6. As to obligations owing to the
Banks, shall mean: (a) in the case of payments of principal and interest on
the Loans, in an amount with respect to each Bank equal to the product of such
amount received times the ratio which the outstanding principal balance of its
Note or Notes bears to the outstanding principal balance of all Notes, and (b)
in the case of all other amounts payable hereunder (other than as otherwise
noted with respect to fees) and other amounts, in an amount with respect to
each Bank equal to the product of such amount received times the ratio which
the Commitment of such Bank bears to the Commitments of all Banks.
"Proved Developed Reserves" shall mean all Oil and Gas
Interests which, to the satisfaction of the Agent, are estimated, with
reasonable certainty, and as demonstrated by geological and engineering data
acceptable to the Agent, to be economically recoverable from existing wells
requiring no more than minor workover operations from existing completion
intervals open for production and which are producing, and have proven reserves
of, Hydrocarbons.
"Purchase Documents" shall mean all purchase agreements,
purchase and sale agreements and other agreements and documents between CRI and
Sonat for the purchase by CRI of the properties described therein, together
with all other agreements and documents delivered pursuant to Section
3.2(a)(xii).
"Purchased Sonat Assets" shall mean all oil and gas interests,
capital stock, partnership interests, pipeline systems and other assets being
purchased pursuant to the Purchase Documents.
"Reportable Event" shall mean a reportable event as described
in Section 4043(b) of ERISA including those events as to which the thirty (30)
day notice period is waived under Part 2615 of the regulations promulgated by
the PBGC under ERISA.
"Revolving Credit Advance" shall mean any Revolving Credit
Loan or any Letter of Credit Advance.
"Revolving Credit Loan" means any loan under Section 3.1
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1(a).
"Revolving Credit Note" shall mean any promissory note of the
Borrowers evidencing the Revolving Credit Loans, in substantially the form
annexed hereto as Exhibit B,
CREDIT AGREEMENT Page 10
<PAGE> 16
as amended or modified from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"Security Agreements" shall have the meaning ascribed thereto
in Section 5.1.
"Security Documents" shall have the meaning ascribed thereto
in Section 5.1.
"Sonat" shall mean Sonat Exploration Company, a Delaware
corporation.
"Subsidiary" of any person shall mean any other person
(whether now existing or hereafter organized or acquired) in which (other than
directors qualifying shares required by law) at least a majority of the
securities or other ownership interests of each class having ordinary voting
power or analogous right (other than securities or other ownership interests
which have such power or right only by reason of the happening of a
contingency), at the time as of which any determination is being made, are
owned, beneficially and of record, by such person or by one or more of the
other Subsidiaries of such person or by any combination thereof. Unless
otherwise specified, reference to "Subsidiary" shall mean a Subsidiary of CRI.
"Swap Agreement" shall mean any interest rate swap agreement,
interest cap or collar agreement or other financial agreement or arrangement
with any Bank designed to protect the Borrowers against fluctuations in
interest rates.
"Tangible Net Worth" of any Person shall mean, as of any date,
(a) the amount of any capital stock or similar ownership liability plus (or
minus in the case of a deficit) the capital surplus and retained earnings of
such Person and the amount of any foreign currency translation adjustment
account shown as a capital account of such Person, less (b) the net book value
of all items of the following character which are included in the assets of
such Person: (i) goodwill, including without limitation, the excess of cost
over book value of any asset, (ii) organization or experimental expenses, (iii)
unamortized debt discount and expense, (iv) stock discount and expense, (v)
patents, trademarks, trade names and copyrights, (vi) treasury stock, (vii)
deferred taxes and deferred charges, (viii) franchises, licenses and permits,
and (ix) all other assets which are deemed intangible assets under GAAP;
provided, that such calculation of Tangible Net Worth under this definition
shall not include receivables or other assets of such Person which are owing by
any Affiliate or advances by such Person to any Affiliate.
"Term Loan" means any borrowing under Section 3.1 evidenced by
the Term Note and made pursuant to Section 2.1(b).
"Term Note" means any promissory note of the Borrowers
evidencing the Term Loan, in substantially the form annexed hereto as Exhibit
C, as amended or modified from time to time together with any promissory note
or notes issued in exchange or replacement therefor.
CREDIT AGREEMENT Page 11
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"Termination Date" shall mean the earlier to occur of (a)
October 31, 1998 and (b) the date on which the Commitments shall be terminated
pursuant to Section 2.1 or 8.2.
"Total Liabilities" of any Person shall mean, as of any date,
all obligations which, in accordance with GAAP, are or should be classified as
liabilities on a balance sheet of such Person.
1.2 Other Definitions; Rules of Construction. As used
herein, the terms "Agent," "Banks," "CRI", "COG", "COGL", "COE", "Borrowers"
and "this Agreement" shall have the respective meanings ascribed thereto in the
introductory paragraph of this Agreement. Such terms, together with the other
terms defined in Section 1.1, shall include both the singular and the plural
forms thereof and shall be construed accordingly. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with GAAP unless such principles are inconsistent with the express
requirements of this Agreement.
SECTION 2. THE COMMITMENTS.
2.1 Advances. (a) Each Bank agrees, for itself only, to
advance and to readvance, subject to the terms and conditions herein set forth,
to the Borrowers at any time and from time to time from the Effective Date
hereof until the Termination Date amounts equal to such Bank's Pro Rata Share
of such aggregate amounts as any Borrower may from time to time request,
provided that no Revolving Credit Loans may be made if the aggregate
outstanding amount of all Revolving Credit Loans to all Borrowers would exceed
the lesser of the Commitments or the Borrowing Base, and the aggregate Letter
of Credit Advances may not exceed the lesser of $250,000 or the CNG/CRI
Guaranty Formula. Each Loan made hereunder shall be evidenced by the Notes,
which shall mature and bear interest as set forth in Section 4 hereof and in
such Notes. On the Effective Date, the Borrowers shall issue and deliver to
each Bank a Revolving Credit Note in the principal amount of such Banks'
Commitment for the period beginning on the Effective Date. Each Revolving
Credit Loan shall be in a minimum amount of $100,000 and in integral multiples
of $50,000. Subject to the terms and conditions of this Agreement, the
Borrowers may borrow, prepay pursuant to Section 4.1(b) and reborrow under this
Section 2.1(a). The Borrowers shall have the right to terminate or reduce the
Commitments at any time and from time to time, provided that (i) the Borrowers
shall give notice of such termination or reduction to the Agent specifying the
amount and effective date thereof, (ii) each partial reduction of the
Commitments shall be in a minimum amount of $100,000 and in integral multiples
of $50,000 and shall reduce the Commitments of all of the Banks proportionally
in accordance with the respective Commitment amounts of each such Bank, (iii)
no such termination or reduction, either in whole or part and including without
limitation any termination, shall be permitted with respect to any portion of
the Commitments as to which a request for a Revolving Credit Advances is then
pending, and (iv) the Commitments may not be terminated if any Revolving Credit
Advances are then outstanding and may not be reduced below the principal amount
of Revolving Credit Advances then outstanding, for the benefit of
CREDIT AGREEMENT Page 12
<PAGE> 18
Banks. The Commitments or any portion thereof so terminated or reduced may not
be reinstated. Any Borrower may request Revolving Credit Advances without the
consent of any other Borrower, and each Borrower consents to and approves any
Revolving Credit Advances requested by any other Borrower. The Revolving
Credit Advances hereunder replace the revolving credit loans outstanding
pursuant to Section 2.1(a) of the Existing Credit Agreement and provide
additional credit as described above.
(b) Each Bank further agrees, for itself only,
subject to the terms and conditions of this Agreement, to make its Pro Rata
Share of a single term loan to the Borrowers on the Effective Date in an
aggregate amount not to exceed Ten Million Dollars ($10,000,000). This term
loan replaces the $3,000,000 term loan outstanding under the Existing Credit
Agreement and provides an additional $7,000,000.
(c) Nothing in this Agreement shall be construed
to require or authorize any Bank to issue any Letter of Credit, it being
recognized that the Agent has the sole obligation under this Agreement to issue
Letters of Credit on behalf of the Banks, and the Commitment of each Bank with
respect to Letter of Credit Advances is expressly conditioned upon the Agent's
performance of such obligations. Upon such issuance by the Agent, each Bank
shall automatically acquire a pro rata risk participation interest in such
Letter of Credit Advance based on its respective Commitment. If the Agent
shall honor a draft or other demand for payment presented or made under any
Letter of Credit, the Agent shall provide notice thereof to each Bank on the
date such draft or demand is honored unless the Borrowers shall have satisfied
their reimbursement obligation under Section 3.3 by payment to the Agent on
such date. Each Bank, not later than the Business Day after the Agent shall
have given the notice specified in the previous sentence, shall make its pro
rata share of the amount paid by the Agent available in immediately available
funds at the principal office of the Agent for the account of the Agent. If
and to the extent such Bank shall not have made any required pro rata portion
available to the Agent or made its portion of Revolving Credit Loan available
pursuant to Section 3.3(a)(i), such Bank and the Borrowers severally agree to
pay to the Agent forthwith on demand such amount together with interest
thereon, for each day from the date such amount was paid by the Agent until
such amount is so made available to the Agent at (i) the rate per annum equal
to the interest rate applicable to the related Loan disbursement under Section
3.3 for such day in the case of the Company and (ii) the rate per annum equal
to the Federal Funds Rate for such day in the case of any Bank. If such Bank
shall pay such amount to the Agent together with such interest, such amount so
paid shall constitute a Revolving Credit Loan by such Bank as part of the
Revolving Credit Loans disbursed in respect of the reimbursement obligation of
the Company under Section 3.3 for purposes of this Agreement. The failure of
any Bank to make its pro rata portion of any such amount paid by the Agent
available to the Agent shall not relieve any other Bank of its obligation to
make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.
CREDIT AGREEMENT Page 13
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SECTION 3. THE ADVANCES.
3.1 Disbursement of Advances. (a) Borrowers shall give
notice to the Agent of each requested Advances in substantially the form of
Exhibit D hereto, which notice given shall be received by the Agent not later
than 11:00 A.M. (Detroit time), provided that any such notice for a Letter of
Credit Advance must be received by the Agent not later than 11:00 A.M. (Detroit
time) four Business Days prior to the day such Letter of Credit is requested to
be issued. Each such notice given shall be irrevocable and binding on the
Borrowers. The Agent shall provide notice of such requested Loan to each Bank
on the same Business Day such notice is received from the Borrowers. Subject
to the terms and conditions of this Agreement, the Agent shall, on the date any
Letter of Credit Advance is requested to be made, issue the related Letter of
Credit on behalf of the Banks for the account of the Borrowers, provided that
in the case of each Letter of Credit Advance the Borrowers provide such
information as may be necessary for the issuance thereof by the Agent and
execute any document in connection therewith as may be requested by the Agent.
Notwithstanding anything herein to the contrary, the Agent may decline to issue
any requested Letter of Credit on the basis that the beneficiary, the purpose
of issuance or the terms or conditions of drawing are illegal or contrary to a
policy of the Agent.
(b) Subject to the terms and conditions of this
Agreement, the proceeds of such requested Loan shall be made available to the
Borrowers by depositing the proceeds thereof, in immediately available funds,
on the Advance Date for such Loan in an account maintained and designated by
the Borrowers at the principal office of the Agent. Each Bank, on the Advance
Date of each such Loan shall make its Pro Rata Share of such Loan available in
immediately available funds at the principal office of the Agent for
disbursement to the Borrowers. Unless the Agent shall have received notice
from any Bank prior to the date of any requested Loan under this Section 3.1
that such Bank will not make available to the Agent such Bank's Pro Rata Share,
the Agent may assume that such Bank has made such share available to the Agent
on the Advance Date of such Loan in accordance with this Section 3.1(b). If
and to the extent such Bank shall not have so made such Pro Rata Share
available to the Agent, the Agent may (but shall not be obligated to) make such
amount available to the Borrowers on the relevant Advance Date, and such Bank
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date such amount is made available to
the Borrowers by the Agent until the date such amount is paid to the Agent, at
the Federal Funds Rate. If such Bank shall pay to the Agent such amount, such
amount so paid shall constitute a Loan by such Bank as a part of such borrowing
for purposes of this Agreement. The failure of any Bank to make its Pro Rata
Share of any such Loan available to the Agent shall not relieve any other Bank
of its obligations to make available its Pro Rata Share of such Loan on the
Advance Date of such Loan, but no Bank shall be responsible for failure of any
other Bank to make such Pro Rata Share available to the Agent on the Advance
Date of any such Loan.
CREDIT AGREEMENT Page 14
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3.2 Conditions of Advances. The Banks and the Agent
shall not be obligated to make any Advance hereunder at any time unless:
(a) Prior to or simultaneously with the first
Advance hereunder, there shall have been delivered to each Bank the following
documents, in form and substance satisfactory to the Agent:
(i) The favorable opinion of such
counsel for the Borrowers and each Guarantor, as shall be approved by the
Banks, with respect to the matters as requested by the Banks, including
down-dated title opinions on at least 67% of the value of the assets acquired
by the Borrowers from Sonat (provided that it is acknowledged and agreed that
the Borrowers shall provide additional title opinions with respect to at least
an additional 8% of the value of the assets acquired by the Borrowers from
Sonat within 30 days of the Effective Date) and opinions as to such other
matters as the Banks shall reasonably request, all in form and substance
satisfactory to the Banks;
(ii) certified copies of such corporate
documents of each Borrower and each Guarantor, including each Borrower's and
each Guarantor's articles of incorporation, by-laws and a good standing
certificate, and such documents evidencing necessary corporate action with
respect to this Agreement, the Loans, the Notes and the Security Documents, and
certifying to the incumbency of, and attesting to the genuineness of the
signatures of, those officers authorized to act on behalf of each Borrower and
each Guarantor, as the Banks shall request;
(iii) the Security Documents required as
of the Effective Date under Section 5.1 duly executed on behalf of the
Borrowers and each Guarantor, together with evidence of the recordation, filing
and other action in such jurisdictions as the Banks may deem necessary or
appropriate with respect to the Security Documents and evidence of the
first-priority of the Banks' liens and security interests under the Security
Documents, subject only to Permitted Liens, including without limitation such
additional mortgages, security agreements, pledge agreements, other documents
and opinions of counsel required by the Banks and original stock certificates
and assignments separate from certificate of each person whose stock is
required to be pledged;
(iv) the Notes duly executed on behalf of
the Borrowers, and it is acknowledged and agreed that the Notes: (A) are
issued in exchange and replacement for the promissory notes issued pursuant to
the Existing Credit Agreement, (B) shall not be deemed a novation or to have
satisfied such promissory notes and (C) evidence the same indebtedness
evidenced by such promissory notes plus additional indebtedness;
(v) the Consent and Amendment of
Security Documents duly executed by the Borrowers and the Guarantors;
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(vi) payment of such fees agreed to among
the Borrowers and the Agent;
(vii) the execution by the Borrowers and
each Guarantor of the Agent's standard environmental certificate;
(viii) the Banks shall have determined that
the Loans to be made are equal to or less than the Borrowing Base, and such
determination shall be made by the Banks in their sole discretion and based
upon their evaluation of the Borrowing Base;
(ix) copies of all agreements relating to
any material Indebtedness for borrowed money, any preferred stock, any joint
ventures or partnerships or any other material documents requested by the
Banks;
(x) the originals of all promissory
notes payable to any Borrower or any Guarantor;
(xi) such other agreements, documents,
conditions and certificates as reasonably requested by the Banks, including
without limitation, releases and terminations of all other Liens which are not
permitted hereunder, assignment of the Purchase Documents, amendments of
existing Security Documents, the establishment of all primary bank accounts of
each Borrower and each Guarantor at a Bank (and each agrees to maintain such
accounts at a Bank), all in form and substance satisfaction to the Banks;
(xii) certified copies of all purchase
agreements, purchase and sale agreements, other agreements and documents
executed or to be executed and delivered in connection with the acquisition by
CRI of certain oil and gas properties and other assets from Sonat and;
(xiii) evidence satisfactory to the
Majority Banks that, but for the payment of a portion of the purchase price to
be paid by the initial Loans under this Agreement, the representations and
warranties in the last sentence of Section 6.12 are accurate.
(b) The aggregate outstanding principal amount of
all Revolving Credit Loans, after giving effect to the proposed Revolving
Credit Loans, does not exceed the lesser of the Commitments or the Borrowing
Base, and the aggregate outstanding principal amount of all Advances, after
giving effect to the proposed Advance, does not exceed the Adjusted Future Net
Income-PV.
(c) On and as of the date of each such Advance,
the representations and warranties contained in Section 6 hereof shall be true
and correct in all material respects as if made on such date; provided,
however, that for purposes of this Section 3.2(c) the representations and
warranties contained in Section 6.7 hereof shall be deemed made with
CREDIT AGREEMENT Page 16
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respect to both the financial statements referred to therein and the most
recent financial statements delivered pursuant to Section 7.1(d)(ii) and (iii).
(d) No Default has occurred and is continuing or
will exist upon the disbursement of such Advance.
Acceptance of the proceeds of any Advance hereunder by the Borrowers shall be
deemed to be a certification by the Borrowers at such time with respect to the
matters set forth in subparagraphs (b), (c) and (d) of Section 3.2.
3.3 Letter of Credit Reimbursement Payments. (a)(i) The
Borrowers agree to pay to the Agent, on the day on which the Agent shall honor
a draft or other demand for payment presented or made under any Letter of
Credit, an amount equal to the amount paid by the Agent in respect of such
draft or other demand under such Letter of Credit and all expenses paid or
incurred by the Agent relative thereto. Unless the Borrowers shall have made
such payment to the Agent on such day, upon each such payment by the Agent, the
Agent shall be deemed to have disbursed to the Borrowers, and the Borrowers
shall be deemed to have elected to satisfy its reimbursement obligation by
borrowing, a Revolving Credit Loan for the account of the Banks in an amount
equal to the amount so paid by the Agent in respect of such draft or other
demand under such Letter of Credit. Such Revolving Credit Loan shall be
disbursed, and each Bank shall advance its Pro Rata Share thereof,
notwithstanding any failure to satisfy any conditions for disbursement of any
Loan set forth in Section 3.2 or any other condition and, to the extent of the
Revolving Credit Loan so disbursed, the reimbursement obligation of the
Borrowers under this Section 3.3 shall be deemed satisfied; provided, however,
that such disbursement shall not be deemed to be a waiver of any Event of
Default or Default, if any.
(ii) If for any reason (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Borrowers or any of its Subsidiaries pursuant to Section 8.1(g), Revolving
Credit Loans may not be made by the Banks as described in Section 3.3(a)(i),
then (A) the Borrowers agree that each reimbursement amount not paid pursuant
to the first sentence of Section 3.3(a)(i) shall bear interest, payable on
demand by the Agent, at the interest rate then applicable to Revolving Credit
Loans, and (B) effective on the date each such Revolving Credit Loan would
otherwise have been made, each Bank severally agrees that it shall
unconditionally and irrevocably, without regard to the occurrence of any
Default or Event of Default, in lieu of a deemed disbursement of Revolving
Credit Loans, to the extent of such Bank's Pro Rata Share, purchase a
participating interest in each reimbursement amount. Each Bank will
immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Bank shall share on a pro rata basis (calculated by
reference to the Bank Commitments) in any interest which accrues thereon and in
all repayments thereof. If and to the extent that any Bank shall not have so
made the amount of such participating interest available to the Agent, such
Bank and the Borrowers agree to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Agent until the date such amount is paid to the Agent, at (x) in the case
CREDIT AGREEMENT Page 17
<PAGE> 23
of the Borrowers, the interest rate then applicable to Loans and (y) in the
case of such Bank, the federal funds rate.
(b) The reimbursement obligations of the
Borrowers under this Section 3.3 shall be absolute, unconditional and
irrevocable and shall remain in full force and effect until all obligations of
the Borrowers to the Agent and the Banks hereunder shall have been satisfied,
and such obligations of the Borrowers shall not be affected, modified or
impaired upon the happening of any event, including without limitation, any of
the following, whether or not with notice to, or the consent of, the Borrowers:
(i) Any lack of validity or
enforceability of any Letter of Credit or any documentation relating to any
Letter of Credit or to any transaction related in any way to such Letter of
Credit (the "Letter of Credit Documents");
(ii) Any amendment, modification, waiver
or consent, or any substitution, exchange or release of or failure to perfect
any interest in collateral or security, with respect to any of the Letter of
Credit Documents;
(iii) The existence of any claim, setoff,
defense or other right which the Borrowers may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting) ,
the Agent or any Bank or any other person or entity, whether in connection with
any of the Letter of Credit Documents, the transactions contemplated herein or
therein or any unrelated transactions;
(iv) Any draft or other statement or
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) Payment by the Agent to the
beneficiary under any Letter of Credit against presentation of documents which
do not comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack
on the part of the Agent or any Bank or any party to any of the Letter of
Credit Documents to enforce, assert or exercise any right, power or remedy
conferred upon the Agent, any Bank or any such party under this Agreement or
any of the Letter of Credit Documents, or any other acts or omissions on the
part of the Agent, any Bank or any such party; or
(vii) Any other event or circumstance that
would, in the absence of this clause, result in the release or discharge by
operation of law or otherwise of the
CREDIT AGREEMENT Page 18
<PAGE> 24
Borrowers from the performance or observance of any obligation, covenant or
agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Borrowers has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the
Borrowers against the Agent or any Bank. Nothing in this Section 3.3 shall
limit the liability, if any, of the Banks to the Borrowers pursuant to Section
10.5(c).
(c) For purposes of this Agreement, a Letter of
Credit Advance (i) shall be deemed outstanding in an amount equal to the sum of
the maximum amount available to be drawn under the related Letter of Credit on
or after the date of determination and on or before the stated expiry date
thereof plus the amount of any draws under such Letter of Credit that have not
been reimbursed as provided in this Section 3.3 and (ii) shall be deemed
outstanding at all times on and before such stated expiry date or such earlier
date on which all amounts available to be drawn under such Letter of Credit
have been fully drawn, and thereafter until all related reimbursement
obligations have been paid pursuant to Section 3.3. As provided in Section
this 3.3, upon each payment made by the Agent in respect of any draft or other
demand for payment under any Letter of Credit, the amount of any Letter of
Credit Advance outstanding immediately prior to such payment shall be
automatically reduced by the amount of each Revolving Credit Loan deemed
advanced in respect of the related reimbursement obligation of the Borrowers.
(d) Each Bank's obligation to purchase
participating interests pursuant to Section 2.1(c) and this Section 3.3, and to
comply with the terms of Section 2.1(c) and this Section 3.3, shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Bank or the Borrowers may have against the Agent, the
Borrowers or anyone else for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Borrowers; (iv) any breach of
this Agreement by the Borrowers or any other Bank; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
SECTION 4. PAYMENT AND PREPAYMENT; FEES.
4.1 Principal Payments.
(a) Unless earlier payment is required under this
Agreement, the Borrowers shall pay (i) the entire outstanding principal amount
of, and all accrued interest on, the Revolving Credit Advances on the
Termination Date, and (ii) the entire outstanding principal amount of and all
accrued interest on, the Term Loan on the Maturity Date.
CREDIT AGREEMENT Page 19
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(b) The Borrowers may from time to time prepay
all or a portion of the Revolving Credit Advances without premium or penalty,
provided, however, that (i) the Borrowers shall have given not less than one
Business Day's prior written notice thereof to the Agent, and (ii) each such
prepayment shall be in an integral multiple of $50,000.
(c) If it should be determined by the Agent at
any time and from time to time that the principal amount of the Revolving
Credit Advances exceeds the then Borrowing Base, the Borrowers shall promptly
do one of the following:
(i) In addition to all payments of
principal and interest required to be paid on the Revolving Credit Advances,
prepay, upon demand and without premium or penalty, the Revolving Credit Notes
in an amount by which, in the determination of the Agent, such aggregate
principal amount outstanding exceeds the Borrowing Base; or
(ii) Grant a lien and security interest
to the Agent, for the benefit of the Banks, in form and substance satisfactory
to the Majority Banks, additional interests in Proved Developed Reserves of the
Borrowers which, in the determination of the Majority Banks, will increase the
Borrowing Base by an amount such that the then aggregate principal amount of
the Revolving Credit Advances does not exceed the Borrowing Base; or
(iii) Any combination of the foregoing
acceptable to the Majority Banks.
(d) If it should be determined by the Agent at
any time and from time to time that the principal amount of all Advances
exceeds the Adjusted Future Net Income-PV, the Borrowers shall promptly do one
of the following:
(i) In addition to all payments of
principal and interest required to be paid on the Notes, prepay, upon demand
and without premium or penalty, the Advances in an amount by which, in the
determination of the Agent, such aggregate principal amount outstanding exceeds
the Adjusted Future Net Income-PV; or
(ii) Grant a lien and security interest
to the Agent, for the benefit of the Banks, in form and substance satisfactory
to the Majority Banks, additional interests in Proved Developed Reserves of the
Borrowers which, in the determination of the Agent, will increase the present
value of the Future Net Income by an amount such that the then aggregate
principal amount of the Advances does not exceed the Adjusted Future Net
Income-PV; or
(iii) Any combination of the foregoing
acceptable to the Majority Banks.
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All determinations made pursuant to this
Section 4.1 shall be made by the Agent or the Majority Banks, as the case may
be, and shall be conclusively binding on the parties absent manifest error.
4.2 Interest Payment. (a) The Borrowers shall pay
interest to the Banks on the unpaid principal amount of each Revolving Credit
Loan, for the period commencing on the date such Revolving Credit Loan is made
until such Revolving Credit Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the Adjusted Prime Rate.
(b) The Borrowers shall pay interest to the Banks
on the unpaid principal amount of each Term Loan, for the period commencing on
the date such Term Loan is made until such Term Loan is paid in full, and at
maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the Adjusted Prime Rate.
(c) Notwithstanding the foregoing paragraph (a),
the Borrowers hereby agree, if requested by the Majority Banks, to pay interest
on demand at the Overdue Rate on the outstanding principal amount of any Loan
and any other amount payable by the Borrowers hereunder (other than interest)
upon and during the continuance of any Default.
4.3 Fees. (a) The Borrowers agree to pay to the Agent,
for the pro rata account of the Banks, (i) a commitment fee computed at the
rate of one-half of one percent (1/2%) per annum on the amount by which the
Borrowing Base exceeds the aggregate outstanding principal amount of the
Revolving Credit Loans, for the period from the Effective Date until the
Termination Date, which fees shall be paid quarterly, on the last day of each
March, June, September and December commencing on the first such date after the
Effective Date, and on the Termination Date and (ii) a facility fee equal to
one percent (1%) of the amount of any increase in the amount of the Borrowing
Base after the Effective Date, which fee shall not be required to be repaid in
the event the Borrowing Base is decreased and subsequently increased, to the
extent the Borrower has previously paid the fee required by this Section
4.3(a)(ii).
(b) The Borrowers agree (i) to pay to the Agent,
for the benefit of the Banks, a fee equal to 1-1/2% per annum of the maximum
amount available to be drawn under each Letter of Credit at the time such fee
is to be paid for the period from and including the date of issuance of such
Letter of Credit to and including the stated expiry date of such Letter of
Credit, provided that the amount payable for any quarter under this clause (i)
shall be not less than $500, and (ii) to pay an additional fee to the Agent for
its own account computed at the rate of one-quarter of one percent (1/4 of 1%)
per annum of such maximum amount for such period. Such fees shall be payable
quarterly in advance, payable on the date of the issuance of any Letter of
Credit and each three month interval thereafter. Such fees are nonrefundable
and the Borrowers shall not be entitled to any rebate of any portion thereof if
such Letter of Credit does not remain outstanding through the date for which
such fees have been paid. The Borrowers
CREDIT AGREEMENT Page 21
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further agree to pay to the Agent, on demand, such other customary
administrative fees, charges and expenses of the Agent in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of each
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(c) The Borrowers agree to pay to the Agent
agency and servicing fees for its services under this Agreement in such amounts
as it may from time to time be agreed upon between the Borrowers and the Agent,
which fee shall be retained solely by the Agent.
4.4 Payment Method. All payments to be made by the
Borrowers hereunder will be made in Dollars and in immediately available funds
to the Agent at its address set forth in Section 10.2 not later than 11:00 a.m.
Detroit time on the date on which such payment shall become due. Payments
received after 11:00 a.m. Detroit time shall be deemed to be payments made
prior to 11:00 a.m. Detroit time on the next succeeding Business Day. At the
time of making each such payment, the Borrowers shall specify to the Agent that
obligation of the Borrowers hereunder to which such payment is to be applied,
or, in the event that the Borrowers fails to so specify or if an Event of
Default shall have occurred and be continuing, the Agent may apply such
payments as it may determine in its sole discretion. On the day such payments
are received, the Agent shall remit to the Banks their respective Pro Rata
Shares of such payments, in immediately available funds.
4.5 No Setoff or Deduction. All payments of principal of
and interest on the Advances and other amounts payable by the Borrowers
hereunder shall be made by the Borrowers without setoff or counterclaim, and
free and clear of, and without deduction or withholding for, or on account of,
any present or future taxes, levies, imposts, duties, fees, assessments, or
other charges of whatever nature, imposed by any governmental authority, or by
any department, agency or other political subdivision or taxing authority.
4.6 Payment on Non-Business Day; Payment Computations.
Except as otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Advances outstanding hereunder
or any other amount due hereunder, becomes due and payable on a day which is
not a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of any installment of principal,
interest shall be payable thereon at the rate per annum determined in
accordance with this Agreement during such extension. Computations of interest
and other amounts due under this Agreement shall be made on the basis of a year
of 360 days for the actual number of days elapsed, including the first day but
excluding the last day of the relevant period.
4.7 Capital Adequacy. In the event that any applicable
law, treaty, rule or regulation (whether domestic or foreign) now or hereafter
in effect and whether or not presently applicable to any Bank or the Agent, or
any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Bank or the Agent with any guideline, request or directive of any such
authority (whether
CREDIT AGREEMENT Page 22
<PAGE> 28
or not having the force of law), affects or would affect the amount of capital
required or expected to be maintained by such Bank or the Agent or any
corporation controlling such Bank or the Agent and such Bank or the Agent, as
the case may be, determines that the amount of such capital is increased by or
based upon the existence of such Bank's or the Agent's obligations hereunder
and such increase has the effect of reducing the rate of return on such Bank's
or the Agent's capital as a consequence of its obligations hereunder to a level
below that which such Bank or the Agent could have achieved but for such
circumstances (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank or the Agent to be material, then
the Borrowers shall pay to such Bank or the Agent, as the case may be, from
time to time, upon request by such Bank (with a copy of such request to be
provided to the Agent) or the Agent, additional amounts sufficient to
compensate such Bank or the Agent for any increase in the amount of capital and
reduced rate of return which such Bank or the Agent reasonably determines to be
allocable to the existence of such Bank's or the Agent's obligations hereunder.
A statement as to the amount of such compensation, prepared in good faith and
in reasonable detail by such Bank or the Agent, as the case may be, and
submitted by such Bank or the Agent to the Borrowers, shall be conclusive and
binding for all purposes absent manifest error in computation.
SECTION 5. SECURITY.
5.1 Security Documents. To secure amounts due under this
Agreement, the Notes, and to secure all other Indebtedness and obligations of
the Borrowers to the Agent and the Banks, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, the
Borrowers shall, and shall cause each Guarantor to:
(a) Execute and deliver to the Agent, on or
before the Effective Date, such indentures of mortgage, deeds of trust,
security agreements, financing statements and assignment of production and
other agreements, including without limitation any amendments to any such
documents previously executed and delivered in favor of the Agent or any Bank
(as amended or modified from time to time, the "Mortgages" and together with
the Security Agreements, the Guaranties and all agreements and documents
described in this Section 5.1(a) and in 5.1(b), 5.2 and 5.3 and all other
agreements and documents securing or guaranteeing any of the Bank obligations
at any time or otherwise executed by any Borrower or Guarantor with or in favor
of the Agent and the Banks, and including without limitation the Letter of
Credit Documents, as amended or modified from time to time, the "Security
Documents"), in form and substance satisfactory to the Majority Banks, granting
the Agent, for the benefit of the Banks, a first-priority, perfected and
enforceable lien and security interest, subject only to the Permitted Liens, in
the following (collectively, with all other assets described in Section 5.1(b),
the "Collateral"): all oil, gas and mineral properties and all other assets of
the Borrowers and each Guarantor, including without limitation all leasehold
and royalty interests and all other rights in connection therewith, and all
interests in machinery, equipment, materials, improvements, hereditaments,
appurtenances and other property, real, personal and/or mixed, now or hereafter
CREDIT AGREEMENT Page 23
<PAGE> 29
a part of or obtained in or used in connection with such properties and all
interests in and to any and all oil, gas and other minerals now in storage or
now or hereafter located in, under, on or produced from, such properties and an
assignment of production from such properties to the Agent;
(b) Execute and deliver to the Agent, on or
before the Effective Date, such security agreements, financing statements and
other agreements, including without limitation the Consent and Amendment of
Security Documents confirming the continuing effectiveness of previously
executed and delivered to the Agent or any Bank (as amended or modified from
time to time, the "Security Agreements"), in form and substance satisfactory to
the Majority Banks, granting to the Agent, for the benefit of the Banks, a
first-priority, perfected and enforceable lien and security interest, subject
only to the Permitted Liens, in all other assets, whether real, personal or
mixed, and whether now owned or hereafter existing and wherever located, of the
Borrowers and each Guarantor; provided, however, that the Borrowers and the
Guarantors shall not be required to grant a lien on, or security interest in,
the assets described on Schedule 5.1 for so long as they are contractually
prohibited from doing so, and each of the Borrowers and each of the Guarantors
represent that they are contractually prohibited from granting liens on, or
security interest in, the assets described on Schedule 5.1 and agree not to
enter into any further restrictions with respect thereto and CPI shall not be
required to deliver a guaranty, security agreement and related documents until
on or before 30 days after the Effective Date.
5.2 Guaranty. To confirm its guarantee of all
indebtedness, obligations and liabilities of the Borrowers owing to the Banks,
whether under this Agreement or otherwise, the Borrowers shall cause each
Guarantor to deliver the Consent and Amendment of Security Documents confirming
the continuing effectiveness of the guaranty agreements previously executed by
each Guarantor (the "Guaranties") in favor of the Agent or Banks, in form and
substance satisfactory to the Majority Banks.
5.3 Additional Security Documents. If at any time
requested by the Agent or the Majority Banks, the Borrowers shall, and shall
cause each Guarantor to, execute and deliver such additional documents, and
shall take such other action, as the Agent or the Majority Banks may reasonably
consider necessary or proper to evidence or perfect the liens and security
interests described in Section 5.1 hereof and grant the guaranties described in
Section 5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Each of the Borrowers and each of the Guarantors represent and
warrant that:
6.1 Corporate Existence and Power. It is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business and in
good standing in each additional jurisdiction where failure to so
CREDIT AGREEMENT Page 24
<PAGE> 30
qualify would have a Material Adverse Effect. It has all requisite corporate
power to own its properties and to carry on its business as now being conducted
and as proposed to be conducted, and to execute and deliver this Agreement, the
Notes and the Security Documents and to engage in the transactions contemplated
by this Agreement, the Notes and the Security Documents.
6.2 Corporate Authority. The execution, delivery and
performance by it of this Agreement, the Notes and the Security Documents are
within its corporate powers, have been duly authorized by all necessary
corporate action and are not in contravention of any law, rule or regulation,
or any judgment, decree, writ, injunction, order or award of any arbitrator,
court or governmental authority, or of the terms of its charter or by-laws, or
of any contract or undertaking to which it is a party or by which it or its
property may be bound or affected.
6.3 Binding Effect. This Agreement is, and the Notes and
the Security Documents to which it is a party when delivered hereunder will be,
legal, valid and binding obligations of each Borrower and each Guarantor,
enforceable against each in accordance with their respective terms.
6.4 Subsidiaries. All Subsidiaries of CRI are duly
organized, validly existing and in good standing under the laws of their
jurisdictions of incorporation and are duly qualified to do business in each
jurisdiction where failure to so qualify would have a Material Adverse Effect.
All outstanding shares of capital stock of each class of each Subsidiary of CRI
have been and will be validly issued and are and will be fully paid and
nonassessable and are and will be owned, beneficially and of record, by CRI,
free and clear of any Liens. Schedule 6.4 is a complete list of all
Subsidiaries of CRI. Each of COG, COE, CMC and CNG is and will remain a wholly
owned Subsidiary of CRI, COGL is and will remain a wholly owned Subsidiary of
COG and CPI is and, without the prior written consent of the Agent, will remain
a wholly owned Subsidiary of CNG.
6.5 Liens. The properties of each Borrower and each
Guarantor (including without limitation the Collateral) are not subject to any
Lien except Permitted Liens.
6.6 Litigation. There is no action, suit or proceeding
pending or, to the best of its knowledge, threatened against or affecting it
before or by any court, governmental authority, or arbitrator which would be
reasonably likely to result in, either individually or collectively, a Material
Adverse Effect and, to the best of the Borrowers' knowledge, there is no basis
for any such action, suit or proceeding.
6.7 Financial Condition. The consolidated balance sheet
of CRI and its Subsidiaries and the consolidated statements of income and cash
flow of CRI and its Subsidiaries for the fiscal year ended December 31, 1994
and reported on by Arthur Andersen, LLP, and the interim consolidated balance
sheet and interim consolidated statements of income and cash flow of CRI and
its Subsidiaries, as of or for the three-month period ended on March 31, 1995
contained in the CRI's most recent form 10-Q, copies of which have been
furnished to the Bank,
CREDIT AGREEMENT Page 25
<PAGE> 31
fairly present, and the financial statements of CRI and its Subsidiaries to be
delivered pursuant to Section 7.1(d) will fairly present, the consolidated
financial position of CRI and its Subsidiaries and is at their respective dates
thereof, and the consolidated results of operations of CRI and its Subsidiaries
for their respective periods indicated, all in accordance with generally
accepted accounting principles consistently applied. There has been no event
or development which has had or would be reasonably likely to have a Material
Adverse Effect since December 31, 1994. There is no material Contingent
Liability of CRI or any of its Subsidiaries that is not reflected in such
financial statements or in the notes thereto.
6.8 Use of Advance. Neither any Borrower nor any
Guarantor extends or maintains, in the ordinary course of business, credit for
the purpose, whether immediate, incidental, or ultimate, of buying or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of each Advance will
be used for the purpose, whether immediate, incidental, or ultimate, of buying
or carrying any such margin stock or maintaining or extending credit to others
for such purpose. After applying the proceeds of the Advances, such margin
stock will not constitute more than 25% of the value of the assets that are
subject to any provisions of this Agreement or any Security Document that may
cause the Advances to be secured, directly or indirectly by margin stock.
6.9 Security Documents. The Security Documents create a
valid and enforceable first-priority lien on and perfected security interest in
all right, title and interest of each Borrower and each Guarantor in and to the
Collateral described therein, securing all amounts intended to be secured
thereby (including without limitation all principal of and interest on the
Notes) subject only to the Permitted Liens. The respective net revenue
interests of each Borrower in and to the Oil and Gas Interests as set forth in
the Security Documents are true and correct and accurately reflect the
interests to which each Borrowers is legally entitled, subject only to the
Permitted Liens.
6.10 Consents, Etc. No consent, approval or authorization
of or declaration, registration or filing with any governmental authority or
any nongovernmental person or entity, including without limitation any creditor
or stockholder of it, is required on the part of it in connection with the
execution, delivery and performance of this Agreement, the Notes, the Security
Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, the Notes or any of the
Security Documents.
6.11 Taxes. It has filed all tax returns (federal, state
and local) required to be filed and has paid all taxes shown thereon to be due,
including interest and penalties, or has established adequate financial
reserves on their respective books and records for payment thereof, except
where the failure to do so would not have a Material Adverse Effect.
6.12 Title to Properties. It has good and defensible
title to, and a valid indefeasible ownership interest in, all of its properties
and assets (including, without limitation,
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the Collateral subject to the Security Documents) free and clear of any Lien
except the Permitted Liens, it is the owner of all the Collateral described in
the Security Documents to which it is a party. All wells on any of the
mortgaged premises have been drilled, operated, shut-in, abandoned or suspended
in accordance with good oil and gas field practices and in compliance with all
applicable laws, permits, statutes, orders, licenses, rules and regulations.
All leases with respect to any Oil and Gas Interests owned by the Borrowers or
any Guarantor are in good standing and are in full force and effect, all
royalties, rents, taxes, assessments and other payments thereunder or with
respect thereto have been properly and timely paid and all conditions necessary
to keep such leases in full force have been fully performed, including without
limitation any condition to maintain continuous production or other activity
with respect thereto. All transactions contemplated pursuant to the Purchase
Documents have been completed, including without limitation the acquisition by
CRI or another Borrower or a Guarantor of the Purchased Sonat Assets (and it is
acknowledged that COG will own the oil and gas interests located in Texas, COGL
will own the oil and gas interests located in Louisiana and CNG will own the
capital stock of CPI, the limited partnership interest in Crosstex Pipeline
Partners, LTD. and the pipeline system located in Longwood-Waskom Field in the
states of Texas and Louisiana),, and have been completed in accordance with all
applicable laws and regulations and CRI owns the Purchased Sonat Assets free
and clear of all liens other than the first priority, perfected and enforceable
lien and security interest in favor of the Agent for the benefit of the Banks.
6.13 ERISA. CRI and its Subsidiaries and their Plans are
in compliance in all material respects with those provisions of ERISA and of
the Code which are applicable with respect to any Plan. No prohibited
transaction (as defined in Section 406 of ERISA and Section 9975 of the Code)
and no reportable event (as defined in ERISA) has occurred with respect to any
Plan. Neither CRI, any of its Subsidiaries nor any of its ERISA Affiliates is
an employer with respect to any multiemployer plan (as defined in Section
4001(a)(3) of ERISA). CRI, its Subsidiaries and the ERISA Affiliates have met
the minimum funding requirements under ERISA and the Code with respect to each
of the respective Plans, if any, and have not incurred any liability to the
PBGC or any Plan. There is no unfunded benefit liability with respect to any
Plan.
6.14 Environmental and Safety Matters. It is in
compliance in all material respects with all federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to the
environmental condition, including without limitation all Environmental Laws in
jurisdictions in which it owns any interest in or operates, a well, a facility
or site, or arranges for disposal or treatment of hazardous substances, solid
waste, or other wastes, accepts for transporting any hazardous substances,
solid waste, or other wastes, or holds any interest in real property or
otherwise, except where any such noncompliance would not have a Material
Adverse Effect. No demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise, arising under,
relating to or in connection with any Environmental Laws is pending or its best
of any Borrower's knowledge threatened against it,
CREDIT AGREEMENT Page 27
<PAGE> 33
any real property in which it holds or has held an interest or any past or
present operation of it. It (a) does not know of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (b) has not received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any Environmental Laws, and
(c) does not know of any basis for any such investigation, notice or violation.
No material release, threatened release or disposal of hazardous waste, solid
waste or other wastes is occurring or has occurred on, under or to any real
property in which it holds any interest or performs any of its operations, in
violation of any Environmental Law which would have a Material Adverse Effect.
6.15 Direct Benefit. The initial Advances hereunder and
all additional Advances are for the direct benefit of each of the Borrowers and
the Guarantors, and the initial Advances hereunder are used to acquire the
Purchased Sonat Assets and to refinance and replace indebtedness owing,
directly or indirectly, by the Borrowers and the Guarantor to the Banks under
the Existing Credit Agreement. The Borrowers and the Guarantors are engaged as
an integrated group in the business of oil and gas exploration and related
fields, and any benefits to any Borrower or any Guarantor is a benefit to all
of them, both directly or indirectly, inasmuch as the successful operation and
condition of the Borrowers and the Guarantors is dependent upon the continued
successful performance of the functions of the integrated group as a whole.
6.16 Solvency. Each of the following is true for each
Borrower and each Guarantor and the Borrowers and the Guarantors on a
consolidated basis: (a) the fair saleable value of its property is (i) greater
than the total amount of its liabilities (including contingent liabilities),
and (ii) greater than the amount that would be required to pay its probable
aggregate liability on its then existing debts as they become absolute and
matured; (b) its property is not unreasonable in relation to its business or
any contemplated or undertaken transaction; and (c) it does not intend to
incur, or believe that it will incur, debts beyond its ability to pay such
debts as they become due.
6.17 Disclosure. This Agreement and all other documents,
certificates, reports or statements or other information furnished to any Bank
or the Agent in writing by or on behalf of any Borrower in connection with the
negotiation or administration of this Agreement or any transactions
contemplated hereby when read together do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
known to any Borrower which has caused, or which likely would in the future in
the reasonable judgment of the Borrowers, cause a Material Adverse Effect
(except for any economic conditions which affect generally the industry in
which the Borrowers and their Subsidiaries conduct business), which has not
been set forth in this Agreement or in the other documents, certificates,
statements, reports and other information furnished in writing to the Banks by
or on behalf of any Borrower in connection with the transactions contemplated
hereby.
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<PAGE> 34
SECTION 7. COVENANTS.
7.1 Affirmative Covenants. Each Borrower covenants and
agrees that, until the Termination Date and expiration of all Letters of Credit
and thereafter until the payment in full of the principal of and accrued
interest on the Notes and the performance of all other obligations of the
Borrowers under this Agreement, the Notes and the Security Documents, unless
the Majority Banks shall otherwise consent in writing, each of the Borrowers
and each of the Guarantors shall:
(a) Preservation of Corporate Existence, Etc.
Preserve and maintain its corporate existence, rights and privileges and its
material licenses, franchises and permits, and qualify and remain qualified as
a validly existing corporation in good standing in each jurisdiction in which
such qualification is necessary under applicable law.
(b) Compliance with Laws, Etc. Comply in all
material respects with all applicable laws, rules, regulations and orders of
any governmental authority, whether federal, state, local or foreign (including
without limitation ERISA, the Code and Environmental Laws), in effect from time
to time; and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on its books and records.
(c) Maintenance of Properties; Insurance.
Maintain, preserve and protect all property that is material to the conduct of
its business and keep such property in good repair, working order and condition
and from time to time make, or cause to be made all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times in accordance with customary and prudent business practices for
similar businesses; comply with all applicable permits, statutes, laws, orders,
licenses, rules and regulations relating to the Oil and Gas Interests owned by
it, unless any non compliance would not cause a Material Adverse Effect, and
ensure that all wells and other properties operated by it, either in its own
name or as a partner, are operated in accordance with good oil and gas field
practices; comply with all of its duties and obligations under, and take all
actions to maintain, consistent with prudent oil and gas practices, all leases
and other rights in full force and effect; and, in addition to that insurance
required under the Security Documents, maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance,
CREDIT AGREEMENT Page 29
<PAGE> 35
insurance against claims for personal injury or death or property damage
occurring in connection with any of its activities or any of any properties
owned, occupied or controlled by it, in such amount as it shall reasonably deem
necessary, and maintain such other insurance as may be required by law or as
may be reasonably requested by the Banks for purposes of assuring compliance
with this Section 7.1(c).
(d) Reporting Requirements. Furnish to each
Bank, in form and substance satisfactory to the Majority Banks, the following:
(i) Promptly and in any event within
three calendar days after becoming aware of the occurrence of
(A) any Default, (B) the commencement of any material
litigation against, by or affecting the Borrowers and, upon
request by any Bank, any material developments therein, or (C)
any development in the business or affairs of the Borrowers
which has resulted in, or which is likely in the reasonable
judgment of the Borrowers to result in (including without
limitation the entering into of any material contract and/or
undertaking by the Borrowers) a Material Adverse Effect or (D)
any "reportable event" (as defined in ERISA) under, or the
institution of steps by the Borrowers or any Subsidiary to
withdraw from, or the institution of any steps to terminate,
any Plan, a statement of the chief financial officer of the
Borrowers setting forth details of such Default or such event
or condition or such litigation and the action which CRI or
any Subsidiary has taken and proposes to take with respect
thereto;
(ii) As soon as available and in any
event within 45 days after the end of each fiscal quarter of
CRI, the consolidated balance sheets of CRI and its
Subsidiaries as of the end of such quarter, and the related
consolidated statements of income and cash flow for the period
commencing at the end of the previous fiscal year and ending
with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal year, all
in reasonable detail and duly certified (subject to year-end
audit adjustments) by an appropriate officer of the Borrowers
as having been prepared in accordance with generally accepted
accounting principles, together with a certificate of an
appropriate officer of the Borrowers with a computation in
reasonable detail calculating the covenants contained in
Sections 7.2(a), (b), (c), (i), (j) and (l) hereof;
(iii) As soon as available and in any
event within 120 days after the end of each fiscal year, a
copy of the consolidated balance sheet of CRI and its
Subsidiaries for the fiscal year and related statements of
income and cash flow with a customary audit report thereon by
Arthur Andersen & Co. or other independent certified public
accountants selected by CRI and acceptable to the Banks,
without qualifications unacceptable to the Banks together with
a certificate of such accountants stating that they have
reviewed this Agreement and stating
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further that in making their review in accordance with
generally accepted accounting principles nothing came to their
attention that made them believe that any Default exists, or
if their examination has disclosed the existence of any
Default, specifying the nature, period of existence and status
thereof, together with a certificate of an appropriate officer
of the Borrowers with a computation in reasonable detail
calculating the covenants contained in Sections 7.2(a), (b),
(c), (i), (j) and (l) hereof;
(iv) Upon the request of the Majority
Banks or the Agent, a schedule of all oil, gas, and other
mineral production attributable to all material Oil and Gas
Interest of the Borrowers and each Guarantor, and in any event
all such Oil and Gas Interests included in the Borrowing Base;
(v) Promptly, all title or other
information received after the Effective Date by the Borrowers
or any Guarantor which discloses any material defect in the
title to any material asset included in the Borrowing Base;
(vi) As soon as practicable and in any
event within 30 days after the sending or filing thereof,
copies of all such financial statements and reports as it
shall send to its security holders and of all final
prospectuses under the Securities Act of 1933 (other than Form
S-8), reports on Forms 10-Q, 10-K and 8-K and all similar
regular and periodic reports filed by it (i) with any federal
department, bureau, commission or agency from time to time
having jurisdiction with respect to the sale of securities or
(ii) with any securities exchange;
(vii) As soon as available and in any
event within 105 days after the end of each calendar year, an
annual reserve report with respect to all Hydrocarbon reserves
of the Borrowers and the Guarantors prepared by an independent
engineering firm of recognized standing acceptable to the
Majority Banks in accordance with accepted industry practices
and otherwise acceptable and in form and substance
satisfactory to the Majority Banks, and including without
limitation all assets included in the Borrowing Base;
(viii) Upon the request of the Banks, an
updated reserve report with respect to all Hydrocarbon
reserves of the Borrowers and the Guarantors prepared by the
Borrowers in accordance with accepted industry practices and
otherwise acceptable and in form and substance satisfactory to
the Majority Banks, and including without limitation all
assets included in the Borrowing Base;
(ix) Promptly, any management letter from
the auditors for any Borrower and all other information
respecting the business, properties or the condition or
operations, financial or otherwise, including, without
limitation, geological and engineering data of any Borrower or
any Guarantor and any title
CREDIT AGREEMENT Page 31
<PAGE> 37
work with respect to any Oil and Gas Interests of any
Borrowers or any Guarantor as any Bank may from time to time
reasonably request;
(x) At all times after the date ninety
(90) days after the Effective Date, provide title opinions and
other opinions of counsel, in each case in form and substance
acceptable to the Majority Banks, with respect to at least
eighty (80%) percent of the value of the assets included in
the Borrowing Base; and
(xi) As soon as available and in any
event within 45 days after the end of each month, (A) the
balance sheet of CNG as of the end of each month, and the
related statements of income for the period commencing at the
end of the previous fiscal year and ending with the end of
such month, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of
the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by an
appropriate officer of CNG as having been prepared in
accordance with generally accepted accounting principles, (B)
a schedule of accounts receivable of CNG, certified by an
appropriate officer of CNG, as of the end of such month,
indicating the totals of accounts receivable by type, and by
age, describing any returns, defenses, setoffs or other
pertinent information in connection therewith, together with
evidence of letters of credit supporting Eligible CNG Accounts
Receivable, and (C) a computation, certified by an appropriate
officer of CNG, of the CNG/CRI Guaranty Formula as of the end
of such month.
(e) Access to Records, Books, Etc. At any
reasonable time and from time to time, permit any Bank or any agents or
representatives thereof, at the Borrowers' own expense, to examine and make
copies of and abstracts from the records and books of account of, and visit the
properties of, the Borrowers and the Guarantors, and to discuss the affairs,
finances and accounts of the Borrowers and the Guarantors with their respective
officers and employees. Without limiting the foregoing, the Borrowers and the
Guarantors agree that any reasonable time and from time to time, the Borrowers
will permit any Bank or any agents or representatives thereof to inspect, at
the office of the Borrowers and the Guarantors listed on its signature page
hereto, all opinions with respect to title and other material work received by
the Borrowers or the Guarantors with respect to any asset included in the
Borrowing Base.
7.2 Negative Covenants. Until payment in full of the
principal of and accrued interest on the Notes, the expiration of this
Agreement and all Letters of Credit and the payment and performance of all
other obligations of the Borrowers and each Guarantor under this Agreement, the
Notes and the Security Documents, each Borrower and each Guarantor agree that,
unless the Majority Banks shall otherwise consent in writing, none of them
shall:
CREDIT AGREEMENT Page 32
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(a) Current Ratio. Permit or suffer the ratio of
Current Assets to Current Liabilities at any time to be less than 1.0 to 1.0.
(b) Tangible Net Worth. Permit or suffer
Consolidated Tangible Net Worth of CRI and its Subsidiaries to be less than, at
any time, the sum of (i) $53,000,000, plus (ii) 50% of Consolidated Net Income
of CRI and its Subsidiaries for any fiscal year, commencing with the fiscal
year ending December 31, 1995, and to be added as of the last day of each such
fiscal year, provided that if such Consolidated Net Income is negative in any
fiscal year the amount added pursuant to this clause (ii) shall be zero and
shall not reduce the amount added pursuant to this clause (ii) for any other
fiscal year, plus (iii) 75% of the net cash proceeds of any equity offering of
CRI.
(c) Debt Service. Permit or suffer, as of the
last day of each fiscal quarter of CRI, the ratio of (i) Consolidated Adjusted
Cash Flow of CRI and its Subsidiaries, as calculated for the fiscal quarter
then ending to (ii) the current portion of all Consolidated Funded Indebtedness
of CRI and its Subsidiaries due in the fiscal quarter then ending, including
the amount of mandatory Borrowing Base reductions required pursuant to clause
(b) of the definition of Borrowing Base set forth in Section 1.1, to be less
than 1.1 to 1.0 as of the last day of any fiscal quarter.
(d) Indebtedness. Create, incur, assume,
guaranty or in any manner become liable in respect of, or suffer to exist, any
Indebtedness other than:
(i) The Advances;
(ii) The Indebtedness described in
Schedule 7.2(d) hereto, including any refinancing or extension
thereof but no increase in the amount thereof shall be
permitted;
(iii) Other Indebtedness in aggregate
outstanding amount not to exceed $100,000;
(iv) Unsecured insurance premium
financing incurred in the ordinary course of business;
(v) Indebtedness pursuant to any Swap
Agreement with any Bank; and
(vi) Indebtedness permitted pursuant to
Section 7.2(i).
(e) Liens. Create, incur or suffer to exist, any
Lien to exist on any assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, other than:
CREDIT AGREEMENT Page 33
<PAGE> 39
(i) Liens for taxes not delinquent or
for taxes being contested in good faith by appropriate
proceedings and as to which adequate financial reserves have
been established on its books and records;
(ii) Liens (other than any Lien imposed
by ERISA) created and maintained in the ordinary course of
business which are not material in the aggregate, and which
would not have a Material Adverse Effect and which constitute
(A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good
faith deposits in connection with bids, tenders, contracts or
leases to which any Borrower or any Guarantor is a party for a
purpose other than borrowing money or obtaining credit,
including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen, operators and
mechanics, if payment of the obligation secured thereby is not
yet due, (D) Liens securing taxes, assessments or other
governmental charges or levies not yet subject to penalties
for nonpayment, and (E) pledges or deposits to secure public
or statutory obligations of any Borrower or any Guarantor, or
surety, customs or appeal bonds to which such Borrower or such
Guarantor is a party;
(iii) Liens created pursuant to the
Security Documents and Liens expressly permitted by the
Security Documents;
(iv) Each Lien described on Schedule
7.2(e) hereto may be suffered to exist upon the same terms as
those existing on the date hereof, but no increase in the
amount of Indebtedness secured thereby; and
(v) Liens securing Indebtedness
permitted pursuant to Section 7.2(d)(iii) created to secure
payment of a portion of the purchase price of, or existing at
the time of acquisition of, any tangible fixed asset acquired
by any Borrower or any Guarantor if the outstanding principal
amount of the Indebtedness secured by such Lien does not at
any time exceed the purchase price paid by such Borrower or
such Guarantor for such assets, provided that such Lien does
not encumber any other asset at any time owned by such
Borrower or such Guarantor.
(f) Merger; Acquisitions; Etc. Purchase or
otherwise acquire, whether in one or a series of transactions, unless the
Majority Banks shall otherwise consent in writing, all or any substantial
portion of the business assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, of any person, or all or any substantial portion
of the capital stock of or other ownership interest in any other person,
provided that Borrowers may make such purchases or other acquisitions provided
that the aggregate amount paid or payable or otherwise transferred for all such
purchases or other acquisitions after the Effective Date shall not exceed
$5,000,000 in aggregate amount in any fiscal year; nor merge or consolidate or
CREDIT AGREEMENT Page 34
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amalgamate with any other person or take any other action having a similar
effect, nor enter into any joint venture or similar arrangement with any other
person, other than a joint venture or similar arrangement in connection with
oil and gas drilling ventures, oil and gas leases or otherwise in connection
with oil and gas properties in the ordinary course of business. Each of the
Banks acknowledges and agrees that it has previously provided consent to each
acquisition by each Borrower and each Guarantor prior to the Effective Date
pursuant to the terms of the Existing Credit Agreement.
(g) Disposition of Assets; Etc. Without the
prior written consent of the Majority Banks, sell, lease, license, transfer,
assign or otherwise dispose of any Collateral or any of its other business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than (i)
inventory sold in the ordinary course of business upon customary credit terms,
and (ii) if no Default has occurred and is continuing or would be caused
thereby, other sales of assets in aggregate amount not to exceed $250,000 in
any twelve month period.
(h) Nature of Business. Make any substantial
change in the nature of its business from that engaged in on the date of this
Agreement or engage in any other businesses other than those in which it is
engaged on the date of this Agreement.
(i) Investments, Advance and Advances, Contingent
Liabilities. Purchase or otherwise acquire any capital stock of or other
ownership interest in, or debt securities of or other evidences of
Indebtedness of, any other person; nor make any loan or advance of any of its
funds or property or make any other extension of credit to, or make any
investment or acquire any interest whatsoever in, any other person, except (i)
loans and advances to officers of the Borrowers, provided that the aggregate
amount of all such loans and advances does not exceed $5,000, (ii) loans and
advances among the Borrowers only, (iii) other loans and advances, provided
that the aggregate amount of all such loans and advances, together with
Indebtedness allowed under Section 7.2(d)(iii), shall not exceed $100,000, and
(iv) loans and advances by CRI to CNG in an aggregate amount not to exceed
$2,000,000, the proceeds of which shall be used in connection with the purchase
of pipeline and marketing operations and to provide ongoing working capital for
such entity; nor incur any Contingent Liability except for any guaranty of the
permitted indebtedness described in Section 7.2(d)(i), guarantees by CRI of
obligations of CNG to purchase natural gas in an aggregate amount outstanding
at any time not to exceed the lesser of (A) $2,000,000 minus the aggregate
outstanding Letters of Credit or (B) the CNG/CRI Guaranty Formula minus the
aggregate outstanding Letters of Credit and (v) the indebtedness described on
Schedule 7.2(i), if any.
(j) Dividends. With respect to CRI only, make,
pay, declare or authorize any dividend, payment or other distribution in
respect of any class of its capital stock or any dividend, payment or
distribution in connection with the redemption, repurchase, defeasance,
conversion, retirement or other acquisition, directly or indirectly, of any
shares of its capital stock, except (i) solely in shares of capital stock of
CRI and (ii) cash dividends in
CREDIT AGREEMENT Page 35
<PAGE> 41
respect of 1994 Preferred Stock only in aggregate amount not to exceed
$1,165,000 in any twelve month period and only if both before the payment of
such cash dividend and after giving effect to the payment of such cash dividend
no Default or Event of Default shall have occurred and be continuing and (iii)
cash dividends in respect to the 1995 Preferred Stock only in an aggregate
amount not to exceed $1,350,000 in any twelve month period and only if both
before the payment of such dividend and after giving effect to the payment of
such dividend to no Default or Event of Default shall have occurred and be
continuing. For purposes of this Section 7.2(j), "capital stock" shall include
capital stock (preferred, common or other) and any securities exchangeable for
or convertible into capital stock and any warrants, rights or other options to
purchase or otherwise acquire capital stock or such securities.
(k) Transactions with Affiliates. Enter into or
be a party to any transaction or arrangement with any Affiliate (including,
without limitation, the purchase from, sale to or exchange of property with, or
the rendering of any service by or for, any Affiliate), except in the ordinary
course of and pursuant to the reasonable requirements of the Borrowers' or the
Guarantors' business and upon fair and reasonable terms no less favorable to
such Borrower or such Guarantor than would be obtained in a comparable
arms-length transaction with a Person other than an Affiliate and except the
loans and advances described in Section 7.2(i).
(l) General and Administrative Expenses. With
respect to the Borrowers only, incur general and administrative expenses in
excess of $1,800,000 (other than expenses for which the Borrowers are
reimbursed by a Person which is not a Borrower, and compensation paid solely in
securities of CRI) in any twelve month period.
SECTION 8. DEFAULT.
8.1 Events of Default. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived by the Majority Banks pursuant to Section 10.1:
(a) Any Borrower shall fail to pay within 2
Business Days of when due any principal of or interest on the Notes, any fees
or any other amount payable hereunder or under any Security Document; or
(b) Any representation or warranty made by any
Borrowers or any Guarantor in Section 6 hereof, in any Security Document or any
other document or certificate furnished by or on behalf of any Borrower or any
Guarantor in connection with this Agreement, shall prove to have been incorrect
in any material respect when made; or
(c) (i) Any Borrower or any Guarantor shall fail
to perform or observe any term, covenant or agreement contained in Sections
7.1(b), 7.1(c) (other than the agreement
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to maintain continuous insurance coverage), 7.1(d), 7.2(a), 7.2(b), 7.2(c) or
7.2(l) hereof or in any Security Document, any other Loan Document or any other
agreement among the Borrowers, Guarantors, the Banks and the Agent, or any of
them, and such failure shall remain unremedied for 30 calendar days after the
earlier of the date notice thereof shall have been given to Borrowers by the
Agent or any Bank or any Borrower knows of such failure, or (ii) any Borrower
or any Guarantor shall fail to perform or observe any other term, covenant, or
agreement contained in this Agreement; or
(d) Any Borrower or any Guarantor shall fail to
pay any part of the principal of, the premium, if any, or the interest on, or
any other payment of money due under any of its Indebtedness (other than
Indebtedness hereunder), beyond any period of grace provided with respect
thereto, which individually or together with other such Indebtedness as to
which any such failure exists has an aggregate outstanding principal amount in
excess of $100,000; or if any Borrower or any Guarantor fails to perform or
observe any other term, covenant or agreement contained in any agreement,
document or instrument evidencing or securing any such Indebtedness, or under
which any such Indebtedness was issued or created, beyond any period of grace,
if any, provided with respect thereto if the effect of such failure is either
(i) to cause, or permit the holders of such Indebtedness (or a trustee on
behalf of such holders) to cause, any payment in respect of such Indebtedness
to become due prior to its due date or (ii) to permit the holders of such
Indebtedness (or a trustee on behalf of such holder) to elect a majority of the
board of directors of any Borrower or any Guarantor; or
(e) A judgment or order for the payment of money,
which together with other such judgments or orders exceeds the aggregate amount
of $100,000, shall be rendered against any Borrower or any Guarantor and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order and such judgment or order shall have remained unsatisfied
and such proceedings shall have remained unstayed for a period of 30
consecutive days, or (ii) for a period of 30 consecutive days, such judgment or
order shall have remained unsatisfied and a stay of enforcement thereof, by
reason of pending appeal or otherwise, shall not have been in effect; or
(f) The occurrence or existence with respect to
any Borrower or any Guarantor or any of their ERISA Affiliates of any of the
following: (i) any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) any Reportable
event shall occur with respect to any Plan, (iii) the filing under ERISA of a
notice of intent to terminate any Plan or the termination of any Plan, (iv) any
event or circumstance exists which might constitute grounds entitling the PBGC
to institute proceedings under ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the institution of the PBGC of any
such proceedings, or (v) complete or partial withdrawal under ERISA from any
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan, and in each of the foregoing cases, such event or
condition, together with all other events or conditions, if any, could in the
opinion of the Banks subject any Borrower
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or any Guarantor to any tax, penalty, or other liability to a Plan, the PBGC,
or otherwise (or any combination thereof); or
(g) Any Borrower or any Guarantor shall generally
not pay its debts as they become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors, or shall institute, or there shall be instituted against any
Borrower or any Guarantor, any proceeding or case seeking to adjudicate it a
bankrupt or insolvent or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, and, if such proceeding is
instituted against any Borrower or any Guarantor and is being contested by such
Borrower or such Guarantor, as the case may be, in good faith by appropriate
proceedings, such proceedings shall remain undismissed or unstayed for a period
of 30 days; or the any Borrower or any Guarantor shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection; or
(h) Any event of default described in any
Security Document shall have occurred and be continuing, or any material
provision of any Security Document shall at any time for any reason cease to be
valid and binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested by any
person, or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any Security Document shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to the Bank the benefits purported to be created
thereby; or
(i) (A) There shall be any change in the current
Chief Executive Officer or Chief Financial Officer of any Borrower, (B) the
current directors of CRI do not constitute a majority of the Board of Directors
of CRI, (C) COG or COE shall fail to be a wholly owned Subsidiary of CRI or (D)
COGL shall fail to be a wholly-owned subsidiary of COG.
8.2 Remedies.
(a) Upon the occurrence and during the
continuance of any Event of Default, the Agent may, and upon being directed to
do so by the Majority Banks, shall, by notice to the Borrowers terminate the
Commitments or declare the outstanding principal of, and accrued interest on,
the Notes and all other amounts due under this Agreement and all other Loan
Documents, to be immediately due and payable, or demand immediate delivery of
cash collateral, and the Borrowers agree to deliver such cash collateral upon
such demand, in an amount equal to the maximum amount that may be available to
be drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or all of the above, whereupon the
CREDIT AGREEMENT Page 38
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Commitments shall terminate forthwith and all such amounts shall become
immediately due and payable, or both, as the case may be, provided that in the
case of any event or condition described in Section 8.1(g), the Commitments
shall automatically terminate forthwith and all such amounts shall
automatically become immediately due and payable without notice; in each case
without demand, presentment, protest, diligence, notice of dishonor or other
formality, all of which are hereby expressly waived.
(b) Upon the occurrence and during the
continuance of such Event of Default, the Agent may, and upon being directed to
do so by the Majority Banks, shall, in addition to the remedies provided in
Section 8.2(a), enforce its rights either by suit in equity, or by action at
law, or by other appropriate proceedings, whether for the specific performance
(to the extent permitted by law) of any covenant or agreement contained in this
Agreement or in any then outstanding Note or any Security Document or in aid of
the exercise of any power granted in this Agreement, any then outstanding Notes
or any Security Document, and may enforce the payment of any then outstanding
Notes and any of the other rights of the Agent and the Banks in any other
agreement or available at law or in equity.
(c) Upon the occurrence and during the
continuance of any Event of Default hereunder, each Bank may at any time and
from time to time, without notice to the Borrowers (any requirement for such
notice being expressly waived by the Borrowers and Guarantors) set off and
apply against any and all of the obligations of any Borrower or any Guarantor
now or hereafter existing under this Agreement, any of the Notes or the
Security Documents, any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of any Borrower or any
Guarantor and any property of any Borrower or any Guarantor from time to time
in possession of such Bank, irrespective of whether or not any Bank shall have
made any demand hereunder and although such obligations may be contingent and
unmatured. The rights of the Banks under this Section 8.2(c) are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which the Banks may have.
8.3 Distribution of Proceeds. All proceeds of any
realization on the Collateral received by the Agent pursuant to the Security
Documents or any payments on any of the liabilities secured by the Security
Documents received by the Agent or any Bank upon and during the continuance of
any Event of Default shall be allocated and distributed as follows:
(a) First, to the payment of all costs and
expenses, including without limitation all attorneys' fees, of the Agent in
connection with the enforcement of the Security Documents and otherwise
administering this Agreement;
(b) Second, to the payment of all costs, expenses
and fees, including without limitation, commitment fees and attorneys' fees,
owing to the Banks pursuant to the Bank Obligations on a pro rata basis in
accordance with the Bank Obligations consisting of fees,
CREDIT AGREEMENT Page 39
<PAGE> 45
costs and expenses owing to the Banks under the Bank Obligations for
application to payment of such liabilities;
(c) Third, to the Banks on a pro rata basis in
accordance with the Bank Obligations consisting of interest and principal
(including without limitation any cash collateral for any outstanding Letters
of Credit) owing to the Banks under the Bank Obligations and to any Bank owing
pursuant to any Swap Agreement to which it is a party (whether pursuant to a
termination thereof or otherwise), for application to payment of such
liabilities;
(d) Fourth, to the payment of any and all other
amounts owing to the Banks on a pro rata basis in accordance with the total
amount of such Indebtedness owing to each of the Banks, for application to
payment of such liabilities; and
(e) Fifth, to the Borrowers or such other person
as may be legally entitled thereto.
8.4 Letter of Credit Liabilities. For the purposes of
payments and distributions under Section 8.3, the full amount of Bank
Obligations on account of any Letter of Credit then outstanding but not drawn
upon shall be deemed to be then due and owing. Amounts distributable to the
Banks on account of such Bank Obligations under such Letter of Credit shall be
deposited in a separate interest bearing collateral account in the name of and
under the control of the Agent and held by the Agent first as security for such
Letter of Credit Bank Obligations and then as security for all other Bank
Obligations and the amount so deposited shall be applied to the Letter of
Credit Bank Obligations at such times and to the extent that such Letter of
Credit Bank Obligations become absolute liabilities and if and to the extent
that the Letter of Credit Bank Obligations fail to become absolute Bank
Obligations because of the expiration or termination of the underlying Letters
of Credit without being drawn upon then such amounts shall be applied to the
remaining Bank Obligations in the order provided in Section 8.3. Each Borrower
hereby grants to the Agent, for the benefit of the Banks, a lien and security
interest in all such funds deposited in such separate interest bearing
collateral account, as security for all the Bank Obligations as set forth
above.
SECTION 9. THE AGENT AND THE BANKS.
9.1 Appointment of Agent. NBD Bank, N.A. is hereby
appointed Agent for the Banks and accepts such appointment and agrees to act as
such upon the conditions herein set forth. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement, and shall
not, by reason of this Agreement, have a fiduciary relationship with any Bank.
9.2 Scope of Agency. Neither the Agent nor any of its
directors, officers or agents shall be liable to the Banks for any action taken
or omitted by any of them hereunder or
CREDIT AGREEMENT Page 40
<PAGE> 46
under the Notes or the Security Documents, except for its, his or her own gross
negligence or willful misconduct; or be responsible to the Banks for any
recitals, warranties or representations herein or in the Notes or the Security
Documents or for the execution or validity of this Agreement, the Notes or the
Security Documents; or be required to make any inquiry concerning the
performance by the Borrowers of any of its obligations under this Agreement,
the Notes or the Security Documents. In the absence of gross negligence or
willful misconduct, the Agent shall be entitled to rely, without liability
therefor, upon any certificate or other document or other communication
believed by it to be genuine and correct and to have been signed or sent by the
proper officer or Person and upon the advice of legal counsel (which may be
legal counsel for the Borrowers), independent public accountants and other
experts concerning all matters pertaining to the agency. To the extent that
the Borrowers shall fail to pay or to reimburse the Agent for the payment of
the same, each Bank shall reimburse the Agent in accordance with such Bank's
Pro Rata Share, and any such amount so paid shall be immediately due and
payable to the Banks by the Borrowers. The Banks shall indemnify the Agent
ratably in accordance with their Pro Rata Share of the Commitments for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the transactions contemplated
hereby, provided that no Bank shall be liable for any of the foregoing to the
extent they arise from the Agent's gross negligence or willful misconduct.
9.3 Duties of Agent. In carrying out the agency, the
Agent shall have only the duties and responsibilities expressly set forth in
this Agreement and in performing such duties and responsibilities the Agent
shall exercise the same degree of care as it would if the Advances were
entirely for its own account, but the Agent shall not be deemed to have
knowledge of the occurrence of any Event of Default, or any event or condition
which with notice or lapse of time, or both, could become such an Event of
Default and need not take or continue any action with respect thereto or toward
the enforcement of this Agreement, the Notes or the Security Documents, nor
prosecute or defend any suit with respect to this Agreement, the Notes or the
Security Documents, unless directed to do so by the Banks and unless
indemnified to its satisfaction against any loss, cost, liability or expense
which it might incur as a consequence of taking such action. The Agent may
employ agents and attorneys and shall not be answerable for the negligence or
misconduct of any such agents or attorneys selected by it with reasonable care.
The Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent hereunder. Each Bank agrees that it has, independently
and without reliance on the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of the Borrowers and its Subsidiaries in connection with its decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement.
CREDIT AGREEMENT Page 41
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9.4 Resignation of Agent. The Agent may resign as such
at any time upon thirty days' prior written notice to the Borrowers and the
Banks. In the event of any such resignation, the Banks shall, by an instrument
in writing delivered to the Borrowers and the Agent, appoint a successor which
shall be an incorporated bank or trust company. If a successor is not so
appointed or does not accept such appointment at least five days before the
Agent's resignation becomes effective, the Agent may appoint a temporary
successor to act until such appointment by the Banks is made and accepted. Any
successor to the Agent shall be reasonably acceptable to the Borrowers, have
adequate expertise in oil and gas lending and execute and deliver to the
Borrowers and the Banks an instrument accepting such appointment and thereupon
such successor Agent, without further act, deed, conveyance or transfer shall
become vested with all of the properties, rights, interests, powers,
authorities and obligations of its predecessor hereunder with like effect as if
originally named as Agent hereunder. Upon request of such successor Agent, the
Borrowers and the Agent ceasing to act shall execute and deliver such
instruments of conveyance, assignment and further assurance and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in such successor Agent all such properties, rights, interests,
powers, authorities and obligations.
9.5 Pro Rata Sharing by Banks. Each Bank agrees with
every other Bank that, in the event that it shall receive and retain any
payment on account of the Borrowers's obligations under this Agreement, the
Notes or the Security Documents in a greater proportion than that received by
any other Bank, whether such payment be voluntary, involuntary or by operation
of law, by application of set-off of any indebtedness or otherwise, then such
Bank shall promptly purchase a participation interest from the other Banks,
without recourse, for cash and at face value, ratably in accordance with its
Pro Rata Share, in such an amount that each Bank shall have received payment in
respect of such obligations in accordance with its Pro Rata Share; provided,
that if any such purchase be made by any Bank and if any such excess payment
relating thereto or any part thereof is thereafter recovered from such Bank,
appropriate adjustment in the related purchase from the other Banks shall be
made by rescission and restoration of the purchase price as to the portion of
such excess payment so recovered. It is further agreed that, to the extent
there is then owing by the Borrowers to any Bank indebtedness other than that
evidenced by this Agreement, the Notes and the Security Documents to which such
Bank may apply any involuntary payments of indebtedness by the Borrowers,
including those resulting from exercise of rights of set-off or similar rights,
such Bank shall apply all such involuntary payments first to obligations of the
Borrowers to the Banks hereunder and under the Notes and the Security Documents
and then to such other indebtedness owed to it by the Borrowers. In addition,
it is further agreed that any and all proceeds resulting from a sale or other
disposition of any collateral which may be hereafter granted for the benefit of
the Banks to secure the obligations of the Borrowers hereunder, shall be
applied first to obligations of the Borrowers to the Banks hereunder and under
the Notes and the Security Documents, and then ratably to any other
indebtedness owed by the Borrowers to the Banks which is secured by such
collateral.
CREDIT AGREEMENT Page 42
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9.6 Determination of Borrowing Base, Etc. Any
determination of the Borrowing Base shall be made by each Bank and submitted to
the Agent. The redetermined Borrowing Base shall be equal to the lowest
determination by any Bank whose Pro Rata Share is at least 25%. The Borrowing
Base may be re-evaluated from time to time as determined by the Majority Banks,
and will be re-evaluated upon the request of the Borrowers (provided that the
Borrowers cannot request any re-evaluation of the Borrowing Base more than two
times in any twelve month period), and, in addition, at least twice annually as
follows: promptly upon receipt of the annual reserve report referred to in
Section 7.1(d)(ix) hereof and each six months thereafter. Except for the
scheduled re-evaluations of the Borrowing Base upon receipt of the annual
reserve report and each six months thereafter, each Bank requesting a
re-evaluation of the Borrowing Base agrees to give notice to the Borrowers of
such request.
SECTION 10. MISCELLANEOUS.
10.1 Amendments; Etc. This Agreement and any term or
provision hereof may be amended, waived or terminated by an instrument in
writing executed by the Borrowers and the Majority Banks, provided, that,
notwithstanding anything in this Agreement to the contrary, except by an
instrument in writing executed by the Borrowers and all of the Banks, no such
amendment, waiver or termination shall:
(a) Authorize or permit the extension of the time
or times of payment of the principal of, or interest on, the Notes or the
reduction in principal amount thereof or the rate of interest thereon, or any
fees payable hereunder, or increase the respective Commitments of any Bank, or
release any Guaranty or Borrower, or release any material amount of the
Collateral from the Liens granted pursuant hereto, or amend this Section 10.1;
or
(b) Any such amendment, waiver or termination
shall be effective only in the specific instance and for the specific purpose
for which given.
10.2 Notices. (a) Except as otherwise provided in
Section 10.2(c) hereof, all notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
the Borrowers, the Banks and the Agent at the respective addresses for notices
set forth on the signature pages hereof, or to such other address as may be
designated by the Borrowers, the Agent or any Bank by notice to the other
parties hereto. All notices shall be deemed to have been given at the time of
actual delivery thereof to such address, or if sent by the Agent or any Bank to
the Borrowers by certified or registered mail, postage prepaid, to such
address, on the fifth day after the date of mailing.
(b) Notices by the Borrowers to the Agent with
respect to requests for Advances pursuant to Section 3.1 and notices of
prepayment pursuant to Section 4.1(c) shall be irrevocable and binding on the
Borrowers.
CREDIT AGREEMENT Page 43
<PAGE> 49
(c) Any notice to be given by the Borrowers to
the Agent pursuant to Section 4.1(c) or Section 3.1 and any notice to be given
by the Agent or any Bank hereunder, may be given by telephone, by telex or by
facsimile transmission and must be immediately confirmed in writing in the
manner provided in Section 10.2(a). Any such notice given by telephone, telex
or facsimile transmission shall be deemed effective upon receipt thereof by the
party to whom such notice is given.
10.3 Conduct No Waiver; Remedies Cumulative. No course of
dealing on the part of the Agent or the Banks, nor any delay or failure on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or the Banks' rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or the Banks under this
Agreement is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy given hereunder or now or hereafter existing under any applicable law.
Every right and remedy given by this Agreement or by applicable law to the
Agent or the Banks may be exercised from time to time and as often as may be
deemed expedient by them.
10.4 Reliance on and Survival of Various Provisions. All
terms, covenants, agreements, representations and warranties of the Borrowers
made herein or in any certificate or other document delivered pursuant hereto
shall be deemed to be material and to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or
on any Bank's behalf, and those covenants and agreements of the Borrowers set
forth in Section 10.5 hereof shall survive the repayment in full of the
Advances and other obligations of the Borrowers hereunder and under Security
Documents and the termination of the Commitments.
10.5 Expenses; Indemnification. (a) The Borrowers agree
to pay and save the Agent harmless from liability for the payment of the
reasonable fees and expenses of Messrs. Dickinson, Wright, Moon, Van Dusen &
Freeman ("DWMV&F") or any other counsel the Agent shall employ, in connection
with the preparation, execution and delivery of this Agreement, the Notes and
the Security Documents and the consummation of the transactions contemplated
hereby and in connection with any amendments, waivers or consents and other
matters in connection therewith, and all reasonable costs and expenses of the
Agent and the Banks (including reasonable fees and expenses of counsel) in
connection with any enforcement of this Agreement, the Notes or the Security
Documents; provided, that, prior to any Event of Default, the Agent shall
obtain the prior consent of CRI to the selection of employment of any other
counsel to the Agent other than DWMV&F, which consent shall not be unreasonably
withheld.
(b) Each of the Borrowers hereby indemnifies and
agrees to hold harmless the Banks and the Agent, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
damages, losses, liabilities, costs or expenses of
CREDIT AGREEMENT Page 44
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any kind or nature whatsoever which the Banks or the Agent or any such person
may incur or which may be claimed against any of them by reason of or in
connection with any Letter of Credit, and neither any Bank nor the Agent or any
of their respective officers, directors, employees or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency or genuineness of documents or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Borrowers shall not be required to indemnify the
Banks and the Agent and such other persons, and the Banks and the Agent shall
be liable to the Borrowers to the extent, but only to the extent, of any
direct, as opposed to consequential or incidental, damages suffered by any
Borrower which were caused by (A) the Agent's wrongful dishonor of any Letter
of Credit after the presentation to it by the beneficiary thereunder of a draft
or other demand for payment and other documentation strictly complying with the
terms and conditions of such Letter of Credit, or (B) the payment by the Agent
to the beneficiary under any Letter of Credit against presentation of documents
which do not comply with the terms of the Letter of Credit to the extent, but
only to the extent, that such payment constitutes gross negligence or wilful
misconduct of the Agent. It is understood that in making any payment under a
Letter of Credit the Agent will rely on documents presented to it under such
Letter of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary, and
such reliance and payment against documents presented under a Letter of Credit
substantially complying with the terms thereof shall not be deemed gross
negligence or wilful misconduct of the Agent in connection with such payment.
It is further acknowledged and agreed that a Borrower may have rights against
the beneficiary or others in connection with any Letter of Credit with respect
to which the Agent is alleged to be liable and it shall be a precondition of
the assertion of any liability of the Agent under this Section that such
Borrower shall first have taken reasonable steps to enforce remedies in respect
of the alleged loss against such beneficiary and any other parties obligated or
liable in connection with such Letter of Credit and any related transactions.
(c) In consideration of the execution and
delivery of this Agreement by each Bank and the extension of the Commitments,
the Borrowers hereby indemnify, exonerate and hold the Agent, each Bank and
each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable
CREDIT AGREEMENT Page 45
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attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:
(i) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Advance;
(ii) the entering into and performance of
this Agreement and any other agreement or instrument executed in connection
herewith by any of the Indemnified Parties (including any action brought by or
on behalf of the Borrowers as the result of any determination by the Majority
Banks not to fund any Advance in compliance with this Agreement);
(iii) any investigation, litigation or
proceeding related to any acquisition or proposed acquisition by the Borrowers
or any of their Subsidiaries of any portion of the stock or assets of any
Person, whether or not the Agent or such Bank is party thereto;
(iv) any investigation, litigation or
proceeding related to any environmental cleanup, audit, compliance or other
matter relating to any release by the Borrowers or any of their Subsidiaries of
any hazardous material or any violations of Environmental Laws; or
(v) the presence on or under, or the
escape, seepage, leakage, spillage, discharge, emission, discharging or
releases from, any real property owned or operated by the Borrowers or any
Subsidiary thereof of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law), regardless of whether caused by, or within the
control of, the Borrowers or such Subsidiary, except for any such Indemnified
Liabilities arising for the account of a particular Indemnified Party by reason
of the activities of the Indemnified Party on the property of the Borrowers
conducted subsequent to a foreclosure on such property by the Banks or by
reason of the relevant Indemnified Party's gross negligence or wilful
misconduct or breach of this Agreement, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrowers hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
Borrowers shall be obligated to indemnify the Indemnified Parties for all
Indemnified Liabilities subject to and pursuant to the foregoing provisions,
regardless of whether the Borrowers or any of its Subsidiaries had knowledge of
the facts and circumstances giving rise to such Indemnified Liability.
10.6 Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that the Borrowers may not, without
the prior consent of the Majority Banks, assign their rights or obligations
hereunder or under the Notes and the Banks shall not be obligated to make any
Advance hereunder to any entity other than the Borrowers.
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(b) Any Bank may sell a participation interest to
any financial institution or institutions, and such financial institution or
institutions may further sell, a participation interest (undivided or divided)
in, the Advances and such Bank's rights and benefits under this Agreement, the
Notes and the Security Documents and to the extent of that participation, such
participant or participants shall have the same rights and benefits against the
Borrowers under Section 6.2(c) as it or they would have had if participation of
such participant or participants were the Bank making the Advances to the
Borrowers hereunder, provided, however, that (i) such Bank's obligations under
this Agreement shall remain unmodified and fully effective and enforceable
against such Bank, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Bank shall
remain the holder of its Note for all purposes of this Agreement, (iv) the
Borrowers, the Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement, and (v) such Bank shall not grant to its participant any
rights to consent or withhold consent to any action taken by such Bank or the
Agent under this Agreement other than action requiring the consent of all of
the Banks hereunder. The Agent from time to time in its sole discretion may
appoint agents for the purpose of servicing and administering this Agreement
and the transactions contemplated hereby and enforcing or exercising any rights
or remedies of the Agent provided under this Agreement, the Notes, or
otherwise. In furtherance of such agency, the Agent may from time to time
direct that the Borrowers provide notices, reports and other documents
contemplated by this Agreement (or duplicates thereof) to such agent. The
Borrowers hereby consents to the appointment of such agent and agrees to
provide all such notices, reports and other documents and to otherwise deal
with such agent acting on behalf of the Agent in the same manner as would be
required if dealing with the Agent itself.
(c) Each Bank may, with the prior consent of the
Borrowers and the Agent, assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and
the Note or Notes and the Security Documents held by it); provided, however,
that (i) each such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations, (ii) except in the case of an
assignment of all of a Bank's rights and obligations under this Agreement, (A)
the amount of the Commitment of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$1,000,000, and in integral multiples of $500,000 thereafter, or such lesser
amount as the Borrowers and the Agent may consent to and (B) after giving
effect to each such assignment, the amount of the Commitment of the assigning
Bank shall in no event be less than $1,000,000, and (iii) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance in the form of Exhibit
E hereto (an "Assignment and Acceptance"), together with any Note or Notes
subject to such assignment and a processing and recordation fee of $1,000.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have
CREDIT AGREEMENT Page 47
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been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder and (y) the Bank assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrowers or the performance or observance by the Borrowers of any of
its obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 6.7 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance under the Agent, such assigning Bank or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Bank.
(e) The Agent shall maintain at its address
designated on the signature pages hereof a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Banks and the Commitment of, and principal
amount of the Advances owing to, each Bank from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers, the Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and
Acceptance executed by an assigning Bank and an assignee, together with any
Note or Notes subject to such assignment,
CREDIT AGREEMENT Page 48
<PAGE> 54
the Agent shall, if such Assignment and Acceptance has been completed, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrowers.
Within five Business Days after its receipt of such notice, the Borrowers, at
its own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes a new Note to the order of such assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained a Commitment hereunder, a
new Note to the order of the assigning Bank in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit E
hereto.
(g) The Banks may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 10.6, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrowers provided that such
proposed assignee or participant has agreed to hold such information
confidential under the terms described in Section 10.19.
(h) Additional lenders may also become Banks
hereunder, with the prior written consent of the Borrowers and the Agent, by
executing an Assumption Agreement substantially in the form of Exhibit F
hereto, provided that without the prior written consent of the Majority Banks,
the aggregate Commitments of all Banks may not exceed $200,000,000. Any Bank,
subject to the prior written approval of the Majority Banks, the Agent and the
Borrowers and subject to being paid in full for all outstanding liabilities
owing to such Bank, may be terminated as a Bank hereunder and upon such
termination the Borrowers shall have the option to select a bank to replace
such terminating bank and to assume the rights and obligations of such
terminated Bank hereunder, provided that such replacement bank is acceptable to
the Agent and executes an Assumption Agreement substantially in the form of
Exhibit F hereto. Upon any Bank being added hereto or terminated, a new
schedule will be distributed by the Agent to all Banks and the Borrowers
showing the Commitment amount, the Term Loan amount and the Pro Rata Share of
each Bank.
10.7 GOVERNING LAW. THIS AGREEMENT IS A CONTRACT MADE
UNDER, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
10.8 Table of Contents and Headings. The table of
contents and the headings of the various subdivisions hereof are for the
convenience of reference only and shall in no way modify any of the terms or
provisions hereof.
CREDIT AGREEMENT Page 49
<PAGE> 55
10.9 Construction of Certain Provisions. All computations
required hereunder and all financial terms used herein shall be made or
construed in accordance with GAAP unless such principles are inconsistent with
the express requirements of this Agreement. If any provision of this Agreement
refers to any action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
10.10 Integration and Severability. This Agreement
embodies the entire agreement and understanding between the Borrowers and the
Banks, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. In case any one or more of the obligations of the
Borrowers under this Agreement, the Notes or any Security Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining obligations of the Borrowers shall not in
any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Borrowers under this Agreement, the
Notes or any Security Documents in any other jurisdiction.
10.11 Interest Rate Limitation. Notwithstanding any
provisions of this Agreement, the Notes or any Security Documents, in no event
shall the amount of interest paid or agreed to be paid by the Borrowers exceed
an amount computed at the highest rate of interest permissible under applicable
law. If, from any circumstances whatsoever, fulfillment of any provision of
this Agreement, the Notes or any Security Documents at the time performance of
such provision shall be due, shall involve exceeding the interest rate
limitation validly prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, ipso facto, the obligations to be fulfilled
shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever the Banks
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Advances outstanding and other obligations of the Borrowers
hereunder (whether or not then due and payable) and not to the payment of
interest, or shall be refunded to the Borrowers if such principal has been paid
in full. Anything herein to the contrary notwithstanding, the obligations of
the Borrowers under this Agreement shall be subject to the limitation that
payments of interest shall not be required to the extent that receipt of any
such payment by the Banks would be contrary to provisions of law applicable to
the Banks which limits the maximum rate of interest which may be charged or
collected by the Banks.
10.12 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
10.13 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any such covenant, the fact that it would be permitted by
an exception to, or would be otherwise within
CREDIT AGREEMENT Page 50
<PAGE> 56
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or any event or condition which with notice or lapse of time, or
both, could become such an Event of Default if such action is taken or such
condition exists.
10.14 Consent to Jurisdiction. Notwithstanding the place
where any liability originates or arises, or is to be repaid, any suit, action
or proceeding arising out of or relating to this Agreement, any Security
Documents, or the Notes may be instituted in any court of competent
jurisdiction in the State of Michigan, the Borrowers and each Guarantor hereby
irrevocably waives any objection which it may have or hereafter has to the
laying of such venue of any such suit, action or proceeding and any claim that
any such suit, action or proceeding has been brought in an inconvenient forum,
and the Borrowers and each Guarantor hereby irrevocably submits its person and
property to the jurisdiction of any such court in any such suit, action or
proceedings. Nothing in this Section 10.14 shall affect the right of the Bank
to bring proceedings against the Borrowers and each Guarantor or any of their
property in the courts of any other court of competent jurisdiction.
10.15 JURY TRIAL WAIVER. THE AGENT, THE BANKS, EACH
BORROWER AND EACH GUARANTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING
OUT OF THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS, OR ANY RELATED
INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, THE NOTES OR THE SECURITY DOCUMENTS OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM.
NEITHER THE AGENT, THE BANKS, ANY BORROWER NOR ANY GUARANTOR SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER THE AGENT AND THE BANKS OR
THE BORROWERS AND THE GUARANTORS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL
OF THEM.
10.16 Joint and Several Obligations; Contribution Rights;
Savings Clause. (a) Notwithstanding anything to the contrary set forth herein
or in any Note or in any other Loan Document, the obligations of the Borrowers
hereunder and under the Notes and the other Loan Documents are joint and
several.
(b) If any Borrower makes a payment in respect of
the Bank Obligations it shall have the rights of contribution set forth below
against the other Borrowers; provided that such Borrower shall not exercise its
right of contribution until all the Bank Obligations shall have been finally
paid in full in cash. If any Borrower makes a payment in
CREDIT AGREEMENT Page 51
<PAGE> 57
respect of the Bank Obligations that is smaller in proportion to its Payment
Share (as hereinafter defined) than such payments made by the other Borrowers
are in proportion to the amounts of their respective Payment Shares, the
Borrower making such proportionately smaller payment shall, when permitted by
the preceding sentence, pay to the other Borrowers an amount such that the net
payments made by the Borrower in respect of the Bank Obligations shall be
shared among the Borrowers pro rata in proportion to their respective Payment
Shares. If any Borrower receives any payment that is greater in proportion to
the amount of its Payment Shares than the payments received by the other
Borrowers are in proportion to the amounts of their respective Payment Shares,
the Borrower receiving such proportionately greater payment shall, when
permitted by the second preceding sentence, pay to the other Borrowers an
amount such that the payments received by the Borrowers shall be shared among
the Borrowers pro rata in proportion to their respective Payment Shares.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Borrower that shall accrue
pursuant to this paragraph shall be paid nor shall it be deemed owed pursuant
to this paragraph until all of the Bank Obligations shall be finally paid in
full in cash.
For purposes hereof, the "Payment Share" of each Borrower
shall be the sum of (a) the aggregate proceeds of the Bank Obligations received
by such Borrower plus (b) the product of (i) the aggregate Bank Obligations
remaining unpaid on the date such Bank Obligations become due and payable in
full, whether by stated maturity, acceleration, or otherwise (the
"Determination Date") reduced by the amount of such Bank Obligations attributed
to all or such Borrowers pursuant to clause (a) above, times (ii) a fraction,
the numerator of which is such Borrower's net worth on the effective date of
this Agreement (determined as of the end of the immediately preceding fiscal
reporting period of such Borrower), and the denominator of which is the
aggregate net worth of all Borrowers on such effective date.
(c) It is the intent of each Borrower, the Agent
and the Banks that each Borrower's maximum Bank Obligations shall be in, but
not in excess of:
(i) in a case or proceeding commenced by
or against such Borrower under the Bankruptcy Code on or within one year from
the date on which any of the Bank Obligations are incurred, the maximum amount
that would not otherwise cause the Bank Obligations (or any other obligations
of such Borrower to the Agent and the Banks) to be avoidable or unenforceable
against such Borrower under (A) Section 548 of the Bankruptcy Code or (B) any
state fraudulent transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by
or against such Borrower under the Bankruptcy Code subsequent to one year from
the date on which any of the Bank Obligations are incurred, the maximum amount
that would not otherwise cause the Bank Obligations (or any other obligations
of such Borrower to the Agent and the Banks) to be avoidable or unenforceable
against such Borrower under any state fraudulent transfer or
CREDIT AGREEMENT Page 52
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fraudulent conveyance act or statute applied in any such case or proceeding by
virtue of Section 544 of the Bankruptcy Code;
(iii) in a case or proceeding commenced by
or against such Borrower under any law, statute or regulation other than the
Bankruptcy Code (including, without limitation, any other bankruptcy,
reorganization, arrangement, moratorium, readjustment of debt, dissolution,
liquidation or similar debtor relief laws), the maximum amount that would not
otherwise cause the Bank Obligations (or any other obligations of such Borrower
to the Agent and the Banks) to be avoidable or unenforceable against such
Borrower under such law, statute or regulation including, without limitation,
any state fraudulent transfer or fraudulent conveyance act or statute applied
in any such case or proceeding.
(d) The Borrowers acknowledge and agree that they
have requested that the Banks make credit available to the Borrowers with each
Borrower expecting to derive benefit, directly and indirectly, from the
Advances and other credit extended by the Banks to the Borrowers.
10.17 Consents to Renewals, Modifications and Other Actions
and Events. This Agreement and all of the obligations of the Borrowers
hereunder shall remain in full force and effect without regard to and shall not
be released, affected or impaired by: (a) any amendment, assignment, transfer,
modification of or addition or supplement to the Bank Obligations, this
Agreement, any Note or any other Loan Document; (b) any extension, indulgence,
increase in the Bank Obligations or other action or inaction in respect of any
of the Loan Documents or otherwise with respect to the Bank Obligations, or any
acceptance of security for, or guaranties of, any of the Bank Obligations or
Loan Documents, or any surrender, release, exchange, impairment or alteration
of any such security or guaranties including without limitation the failing to
perfect a security interest in any such security or abstaining from taking
advantage or of realizing upon any guaranties or upon any security interest in
any such security; (c) any default by any Borrower under, or any lack of due
execution, invalidity or unenforceability of, or any irregularity or other
defect in, any of the Loan Documents; (d) any waiver by the Banks or any other
person of any required performance or otherwise of any condition precedent or
waiver of any requirement imposed by any of the Loan Documents, any guaranties
or otherwise with respect to the Bank Obligations; (e) any exercise or
non-exercise of any right, remedy, power or privilege in respect of this
Agreement or any of the other Loan Documents; (f) any sale, lease, transfer or
other disposition of the assets of any Borrower or any consolidation or merger
of any Borrower with or into any other person, corporation, or entity, or any
transfer or other disposition by any Borrower or any other holder of any shares
of capital stock of any Borrower; (g) any bankruptcy, insolvency,
reorganization or similar proceedings involving or affecting any Borrower; (h)
the release or discharge of any Borrower from the performance or observance of
any agreement, covenant, term or condition under any of the Bank Obligations or
contained in any of the Loan Documents by operation of law; or (i) any other
cause whether similar or dissimilar to the foregoing which, in the absence of
this provision, would release, affect or impair the obligations, covenants,
agreements and duties of any Borrower hereunder,
CREDIT AGREEMENT Page 53
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including without limitation any act or omission by the Agent, or the Bank or
any other any person which increases the scope of such Borrower's risk; and in
each case described in this paragraph whether or not any Borrower shall have
notice or knowledge of any of the foregoing, each of which is specifically
waived by each Borrower. Each Borrower warrants to the Agent and the Banks
that it has adequate means to obtain from each other Borrower on a continuing
basis information concerning the financial condition and other matters with
respect to the Borrowers and that it is not relying on the Agent or the Banks
to provide such information either now or in the future.
10.18 Waivers, Etc. Each Borrower unconditionally waives:
(a) notice of any of the matters referred to in Section 10.17 above; (b) all
notices which may be required by statute, rule or law or otherwise to preserve
any rights of the Agent or the Banks including, without limitation, presentment
to and demand of payment or performance from the other Borrowers and protect
for non-payment or dishonor; (c) any right to the exercise by the Agent or the
Banks of any right, remedy, power or privilege in connection with any of the
Loan Documents; (d) any requirement that the Agent or the Banks in the event of
any default by any Borrower, first make demand upon or seek to enforce remedies
against, such Borrower or any other Borrower before demanding payment under or
seeking to enforce this Agreement against any other Borrower; (f) any right to
notice of the disposition of any security which the Agent or the Banks may hold
from any Borrower or otherwise and any right to object to the commercial
reasonableness of the disposition of any such security; and (g) all errors
and omissions in connection with the Agent's or any Bank's administration of
any of the Bank Obligations, any of the Loan Documents, or any other act or
omission of the Agent or any Bank which changes the scope of the Borrower's
risk, except as a result of the gross negligence or willful misconduct of the
Agent or any Bank. The obligations of each Borrower hereunder shall be
complete and binding forthwith upon the execution of this Agreement and subject
to no condition whatsoever, precedent or otherwise, and notice of acceptance
hereof or action in reliance hereon shall not be required.
10.19 Confidentiality. The Banks and the Agent shall hold
all confidential information obtained pursuant to the requirements of this
Agreement which has been identified as such by any Borrower or any Guarantor in
accordance with their customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices and in any event may make disclosure to its examiners, affiliates,
outside auditors, counsel and other professional advisors in connection with
this Agreement or as reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process. Without limiting the
foregoing, it is expressly understood that such confidential information shall
not include information which, at the time of disclosure is in the public
domain or, which after disclosure, becomes part of the public domain or
information which is obtained by any Bank or the Agent had obtained prior to
the time of disclosure and identification by any Borrowers or any Guarantor
under this Section, or information received by any Bank or the Agent from a
third party. Nothing in this
CREDIT AGREEMENT Page 54
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Section or otherwise shall prohibit any Bank or the Agent from disclosing any
confidential information to the other Banks or the Agent or render any of them
liable in connection with any such disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of this 31st day of July, 1995,
which shall be the Effective Date of this Agreement.
Address for Notices:
<TABLE>
<S> <C>
COMSTOCK RESOURCES, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
Address for Notices:
COMSTOCK OIL & GAS, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
</TABLE>
CREDIT AGREEMENT Page 55
<PAGE> 61
<TABLE>
<S> <C>
Address for Notices:
COMSTOCK OIL & GAS - LOUISIANA, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
COMSTOCK OFFSHORE ENERGY, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
611 Woodward Avenue NBD BANK, individually
Energy Division as a Bank and as Agent
Detroit, Michigan 48226
Attention: Energy Division By: /s/ RUSSELL H. LIEBETRAU, JR.
Telephone No: (313) 225-1557
Facsimile No: (313) 225-2649 Its: Second Vice President
Revolving Credit
Commitment Amount: $50,000,000
Term Loan Amount: $5,000,000
Pro Rata Share: 50%
1717 Main Street BANK ONE, TEXAS, NA
Dallas, Texas 75201
Attention: Mark Cranmer By: /s/ MARK CRANMER
Telephone No: (214) 290-2212
Facsimile No: (214) 290-2627 Its: Assistant Vice President
Revolving Credit
Commitment Amount: $50,000,000
Term Loan Amount: $5,000,000
Pro Rata Share: 50%
</TABLE>
CREDIT AGREEMENT Page 56
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CONSENT AND ACKNOWLEDGEMENT
Each of the undersigned Guarantors is hereby executing this
Agreement for the purpose of agreeing to all of the terms and provisions hereof
applicable to it, and making the representations and warranties applicable to
it.
IN WITNESS WHEREOF, the undersigned Guarantors have caused
this Agreement to be duly executed and delivered as of this 31st day of July,
1995.
COMSTOCK MANAGEMENT CORPORATION
By: /s/ M. JAY ALLISON
M. Jay Allison, its president and chief
executive officer
COMSTOCK NATURAL GAS, INC.
By: /s/ ROLAND O. BURNS
Roland O. Burns, its senior vice-
president and chief financial officer
CREDIT AGREEMENT Page 57
