<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
{x} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from ______ to ________
Commission File Number 0-9592
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 34-1312571
(State of incorporation) (I.R.S. Employer
Identification No.)
500 THROCKMORTON STREET, FT. WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 870-2601
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
37,635,727 Common Shares were outstanding on November 10, 1999.
<PAGE> 2
PART I. FINANCIAL INFORMATION
The financial statements included herein have been prepared in
conformity with generally accepted accounting principles and should be read in
conjunction with the Company's December 31, 1998 Form 10-K. The statements are
unaudited but reflect all adjustments which, in the opinion of management, are
necessary to fairly present the Company's financial position and results of
operations.
2
<PAGE> 3
RANGE RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
---------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents ......................................................... $ 10,954 $ 11,289
Accounts receivable .......................................................... 30,384 25,967
IPF receivables (Note 4) ..................................................... 7,140 11,000
Marketable securities ........................................................ 3,258 3,219
Assets held for sale (Note 5) ................................................ 51,822 19,867
Inventory and other .......................................................... 3,373 9,562
--------- ---------
106,931 80,904
--------- ---------
IPF receivables, net (Note 4) .................................................. 70,032 58,263
Oil and gas properties, successful efforts method .............................. 935,822 926,544
Accumulated depletion and impairment ....................................... (273,723) (322,684)
--------- ---------
662,099 603,860
--------- ---------
Transportation, processing and field assets .................................... 89,471 27,657
Accumulated depreciation ................................................... (15,146) (3,252)
--------- ---------
74,325 24,405
--------- ---------
Other .......................................................................... 8,225 8,353
--------- ---------
$ 921,612 $ 775,785
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ............................................................. $ 28,163 $ 26,847
Accrued liabilities .......................................................... 23,626 19,636
Accrued interest ............................................................. 9,439 4,749
Current portion of long-term debt (Note 6) ................................... 55,187 29
--------- ---------
116,415 51,261
--------- ---------
Senior debt (Note 6) ........................................................... 311,875 146,650
Non-recourse debt (Note 6) ..................................................... 60,100 146,755
Subordinated notes (Note 6) .................................................... 180,000 176,360
Commitments and contingencies (Note 8) ......................................... -- --
Company-obligated preferred securities of subsidiary trust (Note 9) ............ 120,000 117,669
Stockholders' equity (Notes 9 and 10) Preferred stock,
$1 par, 10,000,000 shares authorized,
$2.03 convertible preferred, 1,149,840 issued
(liquidation preference $28,746,000) ..................................... 1,150 1,150
Common stock, $.01 par, 50,000,000 shares authorized,
35,933,523 and 37,489,311 issued ......................................... 359 375
Capital in excess of par value ............................................... 334,817 339,188
Retained deficit ............................................................. (203,396) (204,600)
Other comprehensive income .................................................... 292 977
--------- ---------
133,222 137,090
--------- ---------
$ 921,612 $ 775,785
========= =========
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE> 4
RANGE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1998 1999 1998 1999
----------- ----------- ----------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales ..................................... $ 32,467 $ 37,530 $ 95,748 $ 108,611
Transportation, processing and marketing .............. 1,682 2,100 5,045 5,798
IPF income ............................................ 1,130 2,065 1,130 5,520
Gain on sales, net (Note 17) .......................... 140 39,259 1,619 40,736
Interest and other .................................... 116 141 275 579
--------- --------- --------- ---------
35,535 81,095 103,817 161,244
--------- --------- --------- ---------
Expenses
Direct operating ...................................... 9,999 11,041 26,041 33,126
IPF expense ........................................... 452 1,412 452 4,389
Exploration ........................................... 1,997 368 4,428 1,730
General and administrative ............................ 2,401 2,244 6,336 5,906
Interest .............................................. 10,995 12,126 29,103 36,579
Depletion, depreciation and amortization .............. 14,618 18,770 39,371 57,708
Provision for impairment (1999 amount relates to assets
held for sale) ...................................... 97,862 20,988 97,862 20,988
--------- --------- --------- ---------
138,324 66,949 203,593 160,426
--------- --------- --------- ---------
Income (loss) before taxes ............................... (102,789) 14,146 (99,776) 818
Income taxes
Current ............................................... 57 1,424 192 1,594
Deferred .............................................. (35,939) -- (34,884) --
--------- --------- --------- ---------
(35,882) 1,424 (34,692) 1,594
Income (loss) before extraordinary item ................. (66,907) 12,722 (65,084) (776)
Extraordinary item
Gain on retirement of securities, net (Note 18) ...... -- -- -- 2,430
--------- --------- --------- ---------
Net income (loss) ........................................ $ (66,907) $ 12,722 $ (65,084) $ 1,654
========= ========= ========= =========
Comprehensive income (loss) Note (2) ..................... $ (68,243) $ 11,559 $ (67,679) $ 1,894
========= ========= ========= =========
Earnings (loss) per common share
Basic ............................................. $ (2.57) $ 0.33 $ (2.92) $ 0.00
========= ========= ========= =========
Dilutive .......................................... $ (2.57) $ 0.33 $ (2.92) $ 0.00
========= ========= ========= =========
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE> 5
RANGE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------
1998 1999
----------------- ---------------
(unaudited)
<S> <C> <C>
Cash flows from operations:
Net income (loss) ........................................................ $ (65,084) $ 1,654
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Depletion, depreciation and amortization ............................ 39,371 57,708
Provision for impairment ............................................ 97,862 20,988
Amortization of security issuance costs ............................. 868 887
Deferred taxes ...................................................... (34,884) --
Changes in working capital net of effects of purchases of businesses:
Accounts receivable ........................................ 5,314 4,417
Allowance for IPF receivables .............................. -- 2,965
Marketable securities ...................................... (67) --
Inventory and other ........................................ (583) (6,219)
Accounts payable ........................................... (5,747) (4,639)
Accrued liabilities ........................................ 1,620 (8,680)
Gain on sale of assets and other .................................... (2,874) (40,736)
Gain on exchange of securities ...................................... -- (2,430)
--------- ---------
Net cash provided by operations .......................................... 35,796 25,915
Cash flows from investing:
Acquisition of businesses, net of cash .............................. (46,277) --
Investment in Great Lakes ........................................... -- 97,095
Oil and gas properties .............................................. (128,485) (8,901)
Additions to property and equipment ................................. (1,131) (432)
IPF investments of capital .......................................... (3,397) (4,180)
IPF repayments of capital ........................................... 596 9,124
Proceeds on sale of assets .......................................... 18,195 17,270
--------- ---------
Net cash provided by (used in) investing ................................. (160,499) 109,976
Cash flows from financing:
Proceeds from indebtedness .......................................... 130,608 --
Repayments of indebtedness .......................................... (406) (133,729)
Preferred stock dividends ........................................... (1,751) (1,750)
Common stock dividends .............................................. (2,490) (1,108)
Proceeds from common stock issuance ................................. 1,415 1,054
Repurchase of common stock .......................................... (2,705) (23)
--------- ---------
Net cash provided by (used in) financing ................................. 124,671 (135,556)
--------- ---------
Change in cash ........................................................... (32) 335
Cash and equivalents at beginning of period .............................. 9,725 10,954
--------- ---------
Cash and equivalents at end of period .................................... $ 9,693 $ 11,289
========= =========
Supplemental disclosures of non-cash investing and
financing activities:
Purchase of property and equipment financed with
common stock ......................................................... $ 111,062 --
Common stock issued in connection with benefit plans ................... 1,267 777
Common stock issued in connection with retirement of
securities (Note 18) ................................................ -- 3,355
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE> 6
RANGE RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
Range Resources Corporation ("Range" or the "Company") is an
independent oil and gas company engaged in development, exploration and
acquisition primarily in three core areas of the United States: the Southwest,
the Gulf Coast and Appalachia. Through its Independent Producer Finance
subsidiary ("IPF"), the Company also provides financing to smaller producers by
purchasing term overriding royalty interests in oil and gas properties.
Historically, the Company has increased its reserves and production through
acquisitions, development and exploration. In pursuing this strategy, the
Company has concentrated its activities in selected geographic areas. In each
core area, the Company has established operating, engineering, geoscience,
marketing and acquisition expertise.
In August 1998, the stockholders of the Company approved the
acquisition via merger (the "Merger") of Domain Energy Corporation ("Domain").
Pursuant to the Merger, Domain became a wholly owned subsidiary.
Simultaneously, the Company's name was changed to Range Resources Corporation.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of the
Company, all majority owned subsidiaries and its pro rata share of the assets,
liabilities, income and expenses of certain oil and gas partnerships and joint
ventures. Highly liquid temporary investments with an initial maturity of ninety
days or less are considered cash equivalents. The Company recognizes revenues
from the sale of its respective products in the period delivered. Revenue for
services is recognized in the period the services are provided.
MARKETABLE SECURITIES
Debt and marketable equity securities are classified in one of three
categories: trading, available-for-sale, or held to maturity. Equity securities
of other companies held by Range qualify as available-for-sale. Such securities
are recorded at fair value, and unrealized holding gains and losses, net of the
related tax effect, are reflected as a separate component of stockholders'
equity. A decline in the market value of an available-for-sale security below
cost that is deemed other than temporary is charged to earnings and results in
the establishment of a new cost basis for the security. Realized gains and
losses are determined on the specific identification method and are reflected in
income. During the nine months ended September 30, 1999 Range sold $1.2 million
of marketable equity securities for a $0.4 million gain.
GREAT LAKES ENERGY PARTNERS, L.L.C. ("GREAT LAKES")
In September 1999, Range and FirstEnergy Corp. ("FirstEnergy") each
contributed all of their Appalachia oil and gas properties and associated gas
gathering and transportation systems to Great Lakes. In addition, Range
contributed $188.3 million of indebtedness and FirstEnergy contributed $2.0
million in cash. Great Lakes expects to increase production by active
development of existing fields and exploitation of deeper formations. In
addition, Great Lakes intends to pursue acquisition opportunities in Appalachia.
Range and FirstEnergy each retained a 50% ownership interest in Great Lakes. The
Company consolidates its pro rata interest in the joint venture's assets and
liabilities based upon its ownership interest in Great Lakes.
Great Lakes had proved reserves of approximately 450 Bcfe as of
September 30, 1999, of which 90 percent is natural gas, 4,700 miles of gas
gathering and transportation lines and a leasehold position of nearly one
million gross acres. The joint venture owns interest in over 1,000 proved
drilling locations within existing fields and has a reserve life of 18 years.
6
<PAGE> 7
INDEPENDENT PRODUCER FINANCE
Through IPF, Range acquires dollar denominated term overriding royalty
interests in properties owned by smaller oil and gas producers. The Company
accounts for the acquired term overriding royalty interests as receivables
because the funds advanced to a producer for these interests are repaid from an
agreed upon share of cash proceeds from the sale of production until the amount
advanced plus a specified return is received. Only the interest portion of
payments, net of reserves, received from producers is recognized as IPF income.
The remaining cash receipts are recorded as a reduction in receivables on the
balance sheet and as a return of capital on the statements of cash flows. The
portion of the term overriding royalty interests classified as a current asset
are those expected to be received as repayments over the next twelve month
period. Periodically, the Company reviews IPF's receivables and provides an
allowance for uncollectible amounts. During the first nine months of 1999, IPF
recorded gross income of $8.5 million and allowances against its portfolio of
receivables of $3.0 million. At September 30, 1999 IPF's allowance for
uncollectible receivables totaled $16.9 million. During the first nine months of
1999, IPF expenses were comprised of $3.2 million of interest and $1.2 million
of administrative expenses.
OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting for oil
and gas properties. Exploratory costs are capitalized pending determination of
whether the well has found proved reserves. Exploratory costs which result in
the discovery of proved reserves and the cost of development wells are
capitalized. In the absence of a determination as to whether the reserves found
from an exploratory well can be classified as proved, the costs of drilling such
an exploratory well are not carried as an asset for more than one year following
the completion of drilling. Geological and geophysical costs, delay rentals and
costs to drill unsuccessful exploratory wells are expensed. Depletion is
provided on the unit-of-production method. Oil is converted to Mcfe at the rate
of 6 Mcf per barrel. The depletion rates per Mcfe were $0.87 and $0.99 in the
nine months of 1998 and 1999, respectively. Approximately $75.9 million and
$72.5 million of oil and gas properties were classified as unproved properties
as of December 31, 1998 and September 30, 1999, respectively.
The Company has adopted SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets", which establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill. SFAS No. 121
requires a review for impairment whenever circumstances indicate that the
carrying amount of an asset may not be recoverable. In performing the review for
recoverability at September 30, 1998, the Company recorded provision for
impairment of $97.8 million which reduced the carrying value of certain oil and
gas properties to what the Company estimates to have been their fair value at
that time. The provision for impairment on the oil and gas properties was due to
reserve revisions as a result of drilling results and declines in oil and gas
prices in 1998. The impairment was determined based on the difference between
the carrying amount of the assets and the present value of the future cash
flows from proved properties discounted at 10%. Impairment is recognized only
if the carrying amount of a property is greater than its expected undiscounted
future cash flows. A change in reserve or price estimates could occur which
would adversely affect management's estimate of future cash flows and
consequently the carrying value of the properties.
Unproved properties are assessed periodically to determine whether
there has been a decline in value. If such decline is indicated, a loss is
recognized. The Company compares the carrying value of its unproved properties
to the present value of the future cash flows of unproved properties discounted
at 10% or considers such other information the Company believes is relevant in
evaluating the properties' fair value. Such other information may include the
Company's geological assessment of the area or other acreage purchases in the
area. The present value of future cash flows from such properties has been
adjusted for the Company's assessment of risk related to the unproved
properties.
7
<PAGE> 8
TRANSPORTATION, PROCESSING AND FIELD ASSETS
The Company's gas gathering systems and gas processing plant are in
proximity to its principal gas properties. Depreciation is calculated on the
straight-line method based on estimated useful lives ranging from four to
fifteen years. At September 30, 1999, the Company decided to sell its gas
processing plant and certain related assets. See Note (5) - Assets Held For Sale
The Company receives fees for providing field related services. These
fees are recognized as earned. Depreciation is calculated on the straight-line
method based on estimated useful lives ranging from one to five years, except
buildings which are being depreciated over seven to twenty-five year periods.
SECURITY ISSUANCE COSTS
Expenses associated with the issuance of the 6% Convertible
Subordinated Debentures due 2007, the 8.75% Senior Subordinated Notes due 2007
and the 5 3/4% Trust Convertible Preferred Securities are included in Other
Assets on the accompanying balance sheet and are being amortized on the interest
method over the term of the securities.
GAS IMBALANCES
The Company uses the sales method to account for gas imbalances. Under
the sales method, revenue is recognized based on cash received rather than the
proportionate share of gas produced. Gas imbalances at December 31, 1998 and
September 30, 1999 were not material.
COMPREHENSIVE INCOME
Comprehensive income is defined as changes in stockholders' equity from
nonowner sources which includes net income and changes in the fair value of
marketable securities. The following is a calculation of comprehensive income
for the three and nine month periods ended September 30, 1998 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------------
1998 1999 1998 1999
-------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net income (loss).......................... $ (66,907) $ 12,722 $ (65,084) $ 1,654
Add: Unrealized gain/(loss)
Gross................................ (2,138) (806) (4,087) 685
Tax effect........................... 802 - 1,533 -
Less: Realized gain/(loss)
Gross................................ - (357) (66) (445)
Tax effect........................... - - 25 -
-------------- ------------- ------------- ---------------
Comprehensive income (loss)................ $ (68,243) $ 11,559 $ (67,679) $ 1,894
============== ============= ============= ===============
</TABLE>
8
<PAGE> 9
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NATURE OF BUSINESS
The Company operates in an environment with many financial and
operating risks, including, but not limited to, the ability to acquire
additional economically recoverable oil and gas reserves, the inherent risks of
the search for, development of and production of oil and gas, the ability to
sell oil and gas at prices which will provide attractive rates of return, and
the highly competitive nature of the industry and worldwide economic conditions.
The Company's ability to expand its reserve base and diversify its operations is
also dependent on its ability to obtain the necessary capital through operating
cash flow, borrowings or debt securities.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 1999.
SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It also requires that an entity
recognize all derivatives as either assets or liabilities on the balance sheet
and measure those items at fair value. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure to
change in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The Company plans to adopt SFAS No. 133 during 2000 and is
currently evaluating its effects.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period
presentation to conform with current period classifications.
(3) ACQUISITION AND DEVELOPMENT:
All of the Company's acquisitions have been accounted for as purchases.
Purchase prices were allocated to the assets acquired based on estimates of the
fair value of such assets and liabilities at the respective acquisition dates.
The acquisitions were funded by working capital, advances with bank debt and the
issuance of securities.
In March 1998, oil and gas properties in the Powell Ranch Field in West
Texas (the "Powell Ranch Properties") were acquired for $60 million, comprised
of $54.6 million in cash and $5.4 million of Common Stock.
As described in Note 1, the Company acquired Domain for a purchase
price of $161.6 million, comprised of $50.5 million of cash and $111.1 million
of Common Stock. Domain's principal assets included oil and gas properties in
the Gulf Coast and the Gulf of Mexico, as well as IPF.
The Company acquired other properties for an aggregate consideration of
$22 million and $2 million during the nine months ended September 30, 1998 and
1999, respectively.
9
<PAGE> 10
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following table presents unaudited pro forma operating results as
if certain transactions had occurred at the beginning of each period presented.
The pro forma operating results include the Great Lakes transaction.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------
1998 1999
------------------ ------------------
(In thousands, except per share data)
<S> <C> <C>
Revenues............................ $ 95,210 $ 154,495
Net income (loss)................... (59,777) 3,845
Earnings (loss) per share-basic..... (2.69) 0.06
Earnings (loss) per share-diluted... (2.69) 0.06
Total assets........................ 936,600 775,785
Stockholders' equity................ 234,575 137,090
</TABLE>
The pro forma operating results have been prepared for comparative
purposes only. They do not purport to present actual operating results that
would have been achieved had the transaction occurred at the beginning of each
period presented or to necessarily be indicative of future results.
(4) IPF RECEIVABLES
At September 30, 1999, IPF had net receivables of $69.3 million. The
receivables result from the purchase of term overriding royalty interests
representing an agreed share of revenues from certain properties until the
amount invested and a specified rate of return are received. These royalty
interests constitute property interests that serve as security for the
receivables. The Company has estimated that $11.0 million of receivables will be
repaid in the next twelve months and has classified such receivables as current
assets. The net outstanding receivables include an allowance for uncollectible
receivables of $14.0 million and $16.9 million at December 31, 1998 and
September 30, 1999, respectively.
(5) ASSETS HELD FOR SALE
At September 30, 1999, assets held for sale consisted of the Company's
gas processing plant and associated assets located in the Permian Basin. In
connection with the 1999 plan of disposal, the Company determined that the
carrying value of the gas processing plant exceeded its fair value. Accordingly,
an impairment loss of $21.0 million represents the excess of the carrying value
over the fair value.
Fair value was determined by reference to the present value of the
estimated future cash inflows of the gas processing plant. The impairment
estimate on the gas processing plant recorded in the third quarter 1999 was
based on estimates of future cash flows for the property. Future cash flows
include revenues from residue gas, plant liquids and by-products derived from
both equity and third party proved natural gas reserves, which are estimated to
pass through the plant, direct operating costs and capitalized costs. The
Company used estimated future gas prices by referencing ten year future strip
prices in the calculation of the plant revenues estimated over the anticipated
life of the property. These prices were then adjusted for the effect of the
estimated throughput production, subject to existing sales contracts, and are
not necessarily indicative of actual prices received by the Company at the date
of the impairment charge.
Operating costs and capitalized costs were estimated based on the
Company's historical operating experience. These costs and expenses were
adjusted for changes in variable costs attributable to changes in estimated
throughput volumes. The impairment estimate was determined based on the
difference between the carrying value of the plant and the present value of
future cash flows discounted at 10%. It is reasonably possible that a change in
10
<PAGE> 11
reserve or price estimates could occur in the near term and adversely impact
management's estimate of future cash flows and consequently the carrying value
of property.
At December 31, 1998, assets held for sale primarily consisted of oil
and gas properties located in south Texas and in the Gulf of Mexico. The Company
entered into agreements with an independent firm to assist it in selling these
assets. The assets were recorded at the lower of cost or estimated market value
of the properties as assets held for sale in the current asset section of the
Consolidated Balance Sheets.
(6) INDEBTEDNESS
The Company had the following debt outstanding as of the dates shown.
Interest rates at September 30, 1999 are shown parenthetically (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
-------- --------
<S> <C> <C>
Senior debt
Credit Facility (7.4%) ........................... $365,175 $146,600
Other (6.3%) ..................................... 1,887 79
-------- --------
367,062 146,679
Less amounts due within one year ................. 55,187 29
-------- --------
Senior debt, net ................................. $311,875 $146,650
======== ========
Non-recourse debt
Great Lakes (7.6%) ............................... $ -- $ 94,139
IPF (7.5%) ....................................... 60,100 52,616
-------- --------
Non-recourse debt ................................ $ 60,100 $146,755
======== ========
Subordinated notes
8.75% Senior Subordinated Notes due 2007 ......... $125,000 $125,000
6% Convertible Subordinated Debentures due 2007 .. 55,000 51,360
-------- --------
Subordinated notes ............................... $180,000 $176,360
======== ========
</TABLE>
The Company maintains a $225 million revolving bank facility (the
"Credit Facility"). The Credit Facility provides for a borrowing base, which is
subject to semi-annual redeterminations. The Credit Facility is secured by the
Company's oil and gas properties. At November 10, 1999, the borrowing base on
the Credit Facility was $160 million of which $18.0 million was available. The
borrowing base is subject to semi-annual determination and certain other
redeterminations based upon a variety of factors, including the discounted
present value of estimated future net cash flow from oil and gas production. At
the Company's option, loans may be prepaid and the revolving credit commitment
may be reduced, in whole or in part at anytime in certain minimum amounts. The
next redetermination occurs on April 1, 2000. If amounts outstanding at April 1,
2000 exceed the redetermined borrowing base, one-half of the excess, if any,
must be repaid within 90 days and the remaining excess, if any, must be repaid
within 180 days. Any borrowing base in excess of $135 million requires the
approval of all lenders. Interest is payable quarterly or as LIBOR notes mature
and the loan matures in February 2003. A commitment fee is paid quarterly on the
undrawn balance at a rate of 0.25% to 0.50% depending upon the percentage of the
borrowing base drawn. It is the Company's policy to extend the term of the
Credit Facility annually. The interest rate on the Credit Facility is LIBOR plus
between 1.50% and 2.25%, depending upon amounts outstanding. The weighted
average interest rates on these borrowings were 6.8% and 7.2% for the three
months ended September 30, 1998 and 1999, respectively.
11
<PAGE> 12
The Company pro rata consolidates 50% of amounts outstanding under the
$275 million revolving bank facility (the "Great Lakes Facility") through its
participation in Great Lakes. The Great Lakes Facility is non-recourse to Range.
The Great Lakes Facility provides for a borrowing base, which is subject to
semi-annual redeterminations. The Great Lakes Facility is secured by the Great
Lakes oil and gas properties. At November 10, 1999, the borrowing base on the
Great Lakes Facility was $195 million of which $5.7 million was available.
Beginning December 1, 1999, the borrowing base reduces by $1 million per month
to $190 million at April 1, 2000. The borrowing base is subject to a semi-annual
borrowing review on April 1, 2000. The redetermined borrowing base on April 1,
2000 requires the approval of all lenders. Interest is payable quarterly or as
LIBOR notes mature and the loan matures in September 2002. The interest rate on
the Great Lakes Facility is LIBOR plus between 1.50% and 2.00%, depending upon
amounts outstanding. A commitment fee is paid quarterly on the undrawn balance
at a rate of 0.25% to 0.50% depending upon the percentage of the borrowing base
drawn.
IPF has a $150 million revolving credit facility (the "IPF Facility")
through which it finances its activities. The IPF Facility is non-recourse to
Range. The IPF Facility matures in July 2001 at which time all amounts owed
thereunder are due and payable. The IPF Facility is secured by substantially all
of IPF's assets. The borrowing base under the IPF Facility is subject to
redeterminations, which occur routinely during the year. On November 10, 1999,
the borrowing base on the IPF Facility was $56 million of which $3.4 million was
available. The IPF Facility bears interest at prime rate or interest at LIBOR
plus a margin of 1.75% to 2.25% per annum depending on the total amount
outstanding. Interest expense during the first nine months of 1999 amounted to
$3.2 million and is included in IPF expenses on the Consolidated Statements of
Operations. A commitment fee is paid quarterly on the average undrawn balance at
a rate of 0.375% to 0.50%. The weighted average interest rate on these
borrowings was 7.5% for the nine months ended September 30, 1999.
The 8.75% Senior Subordinated Notes due 2007 (the "8.75% Notes") are
not redeemable prior to January 15, 2002. Thereafter, the 8.75% Notes are
subject to redemption at the option of the Company, in whole or in part, at
redemption prices beginning at 104.375% of the principal amount and declining to
100% in 2005. The 8.75% Notes are unsecured general obligations of the Company
and are subordinated to all senior debt (as defined) including borrowings under
the Credit Facility. The 8.75% Notes are guaranteed on a senior subordinated
basis by the Company's subsidiaries.
The 6% Convertible Subordinated Debentures Due 2007 (the "Debentures")
are convertible into shares of Common Stock at the option of the holder at any
time prior to maturity. The Debentures are convertible at a conversion price of
$19.25 per share, subject to adjustment in certain events. Interest is payable
semi-annually in January and June. The Debentures mature in 2007 and are
redeemable beginning on February 1, 2000 at a price of 104% of the face amount
and declining 0.5% annually though 2007. The Debentures are unsecured general
obligations and are subordinated to all senior indebtedness (as defined), which
includes the 8.75% Notes and the Credit Facility. During the nine months of
1999, $3.6 million of Debentures were retired at the option of the holders in
exchange for approximately 496,000 shares of Common Stock. An extraordinary gain
of $1.2 million was recorded as the Debentures were retired at a discount to
their face value.
The debt agreements contain various covenants relating to net worth,
working capital maintenance and financial ratio requirements. The Company is in
compliance with these various covenants as of September 30, 1999. Interest paid
during the nine months ended September 30, 1998 and 1999 totaled $32.1 million
and $36.6 million, respectively. The Company does not capitalized any interest
expense.
(7) FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Company's financial instruments include cash and equivalents,
accounts receivable, accounts payable, debt obligations, commodity and interest
rate futures, options, and swaps. The book value of cash and equivalents,
accounts receivable and payable and short term debt are considered to be
representative of fair value because of the short maturity of these instruments.
The Company believes that the carrying value of its borrowings under its bank
credit facility approximates their fair value as they bear interest at rates
indexed to LIBOR. The Company's accounts receivables are concentrated in the oil
and gas industry. The Company does not view such a
12
<PAGE> 13
concentration as an unusual credit risk. The Company had allowances for doubtful
accounts (excluding IPF) of $.8 million and $1.0 million at December 31, 1998
and September 30, 1999, respectively.
A portion of the Company's crude oil and natural gas sales are
periodically hedged against price risks through the use of futures, option or
swap contracts. The gains and losses on these instruments are included in the
valuation of the production being hedged in the contract month and are included
as an adjustment to oil and gas revenue. The Company also manages interest rate
risk on its Credit Facility through the use of interest rate swap agreements.
Gains and losses on swap agreements are included as an adjustment to interest
expense.
The following table sets forth the book value and estimated fair values
of the Company's financial instruments:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------------------------- -------------------------------
(In thousands)
Book Fair Book Fair
Value Value Value Value
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash and equivalents................ $ 10,954 $ 10,954 $ 11,289 $ 11,289
Marketable securities............... 2,966 3,258 2,242 3,219
Long-term debt...................... (607,162) (607,162) (469,794) (469,794)
Commodity swaps..................... - 45 - (6,908)
Interest rate swaps................. - (361) - (13)
</TABLE>
At September 30, 1999, the Company had open contracts for gas and oil
price derivative swaps of 36 Bcfe of gas and 800,000 Bbls of oil. The swap
contracts are designed to set average NYMEX prices ranging from $1.90 to $3.17
per Mmbtu of gas and fix oil prices ranging from $17.32 to $20.71 per Bbl. While
these transactions have no carrying value, the fair value of these and
subsequent transactions entered into, represented by the estimated amount that
would be required to terminate the contracts, was a net loss of approximately
$3.4 million at November 10, 1999. These contracts expire monthly through
September 2000. The gains or losses on the Company's hedging transactions are
determined as the difference between the contract price and the reference price,
generally closing prices on the New York Mercantile Exchange. The resulting
transaction gains and losses are determined monthly and are included in net
income in the period the hedged production or inventory is sold. Net gains
(losses) relating to these derivatives for the nine months ended September 30,
1998 and 1999 approximated $2.8 million and $(6.6) million, respectively.
Interest rate swap agreements, which are used by the Company in the
management of interest rate exposure, are accounted for on the accrual basis.
Income and expense resulting from these agreements are recorded in the same
category as expense arising from the related liability. Amounts to be paid or
received under interest rate swap agreements are recognized as an adjustment to
expense in the periods in which they accrue. At September 30, 1999, the Company
had $80 million of borrowings subject to four interest rate swap agreements at
rates of 5.35%, 4.82%, 5.64% and 5.59% through January 2000, September 2000,
October 2000 and October 2001, respectively. The interest rate swaps may be
extended at the counterparties' option for two years. The agreements require
that the Company pay the counterparty interest at the above fixed swap rates and
requires the counterparty to pay the Company interest at the 30-day LIBOR rate.
The closing 30-day LIBOR rate on September 30, 1999 was 5.40%. The fair value of
the interest rate swap agreements at September 30, 1999 is based upon quotes at
that date for equivalent agreements. As discussed in Note 6, the Company's bank
facilities are based on LIBOR plus applicable margin (as defined).
These hedging activities are conducted with major financial or
commodities trading institutions which management believes entail acceptable
levels of market and credit risks. At times such risks may be concentrated
13
<PAGE> 14
with certain counterparties or groups of counterparties. The credit worthiness
of counterparties is subject to continuing review and full performance is
anticipated.
(8) COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal actions and claims arising in
the ordinary course of business. In the opinion of management, such litigation
and claims are likely to be resolved without material adverse effect on the
Company's financial position or results of operations.
In May 1998, a Domain stockholder filed an action in the Delaware Court
of Chancery, alleging that the terms of the Merger were unfair to a purported
class of Domain stockholders and that the defendants (except Range) violated
their legal duties to the class in connection with the Merger. Range is alleged
to have aided and abetted the breaches of fiduciary duty allegedly committed by
the other defendants. The action sought an injunction enjoining the Merger as
well as a claim for money damages. In September 1998, the parties executed a
Memorandum of Understanding (the "MOU"), which represents a settlement in
principle of the litigation. Under the terms of the MOU, appraisal rights
(subject to certain conditions) were offered to all holders of Domain common
stock (excluding the defendants and their affiliates). Domain also agreed to pay
any court-awarded attorneys' fees and expenses of the plaintiffs' counsel in an
amount not to exceed $.3 million. The settlement in principle is subject to
court approval and certain other conditions that have not been satisfied.
(9) EQUITY AND TRUST SECURITIES
In October 1997, the Company, through a newly-formed affiliate Lomak
Financing Trust (the "Trust") completed the issuance of $120 million of 5 3/4%
trust convertible preferred securities (the "Convertible Preferred Securities").
The Trust issued 2,400,000 shares of the Convertible Preferred Securities at $50
per share. Each Convertible Preferred Security is convertible at the holder's
option into 2.1277 shares of Common Stock, representing a conversion price of
$23.50 per share. During the first nine months of 1999, $2.3 million of
Convertible Preferred Securities were retired at the option of the holder in
exchange for approximately 202,000 shares of Common Stock. An extraordinary gain
of $1.2 million was recorded as the Convertible Preferred Securities were
retired at a discount to their face value.
The Trust invested the $120 million of proceeds in 5 3/4% convertible
junior subordinated debentures issued by Range (the "Junior Debentures"). In
turn, Range used the net proceeds from the issuance of the Junior Convertible
Debentures to repay a portion of its Credit Facility. The sole assets of the
Trust are the Junior Debentures. The Junior Debentures and the related
Convertible Preferred Securities mature on November 1, 2027. Range and the Trust
may redeem the Junior Debentures and the Convertible Preferred Securities,
respectively, in whole or in part, on or after November 4, 2000. For the first
twelve months thereafter, redemptions may be made at 104.025% of the principal
amount. This premium declines proportionally every twelve months until November
1, 2007, when the redemption price becomes fixed at 100% of the principal
amount. If the Company redeems any Junior Debentures prior to the scheduled
maturity date, the Trust must redeem Convertible Preferred Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Debentures so redeemed.
The Company has guaranteed the payments of distributions and other
payments on the Convertible Preferred Securities only if and to the extent that
the Trust has funds available. Such guarantee, when taken together with Range's
obligations under the Junior Debentures and related indenture and declaration of
trust, provide a full and unconditional guarantee of amounts due on the
Convertible Preferred Securities.
The Company owns all the common securities of the Trust. As such, the
accounts of the Trust will be included in Range's consolidated financial
statements after appropriate eliminations of intercompany balances. The
distributions on the Convertible Preferred Securities will be recorded as a
charge to interest expense on Range's consolidated statements of operations, and
such distributions are deductible by Range for income tax purposes.
14
<PAGE> 15
In November 1995, the Company issued 1,150,000 shares of $2.03
convertible exchangeable preferred stock (the "$2.03 Preferred Stock") for $28.8
million. The $2.03 Preferred Stock is convertible into the Company's common
stock at a conversion price of $9.50 per share, subject to adjustment in certain
events. The $2.03 Preferred Stock is redeemable, at the option of the Company,
at a price of $26.25 per share beginning November 1, 1998, declining $0.25 per
share annually through 2003. At the option of the Company, the $2.03 Preferred
Stock is exchangeable for the Company's 8-1/8% Convertible Subordinated Notes
due 2005. The notes would be subject to the same redemption and conversion terms
as the $2.03 Preferred Stock.
(10) STOCK OPTION AND PURCHASE PLAN
The Company has four stock option plans, one stock incentive plan, as
well as a stock purchase plan. Two of the stock option plans were adopted as a
result of the Merger. Information with respect to these stock option plans is
summarized as follows:
<TABLE>
<CAPTION>
Plans Adopted Via
the Merger
1999 ----------------------
Incentive Option Director's Option Director's
Plan Plan Plan Plan Plan Total
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at December 31, 1998 - 2,042,757 140,000 938,976 19,340 3,141,073
Granted........................ 60,000 904,150 40,000 - 1,004,150
Exercised...................... - - - (374,264) - (374,264)
Expired/Cancelled.............. - (426,871) (12,000) (12,833) - (451,704)
---------- ---------- ---------- ---------- ----------- ---------
Outstanding at September 30, 1999 60,000 2,520,036 168,000 551,879 19,340 3,319,255
========== ========== =========== ========== =========== ==========
</TABLE>
In May 1999, the shareholders approved the Company's 1999 Stock
Incentive Plan (the "Incentive Plan") providing for the issuance of up to 1.4
million shares of common stock. The Incentive Plan is administered by the
Compensation Committee of the Board. All options issued under the Incentive Plan
vest 25% per year beginning one year after the grant date and expire 10 years
from date of grant. During the nine months ended September 30, 1999, 60,000
options were granted, none of which were exercisable.
Range maintains the 1989 stock option plan ("Option Plan") which
authorized the grant of options of up to 3.0 million shares of Common Stock,
however, no new options will be granted under this plan. Under the Option Plan,
incentive and non-qualified options have been issued to officers, employees and
consultants. The Option Plan is administered by the Compensation Committee of
the Board. All options issued under the Option Plan before September 1998 vest
30% after one year, 60% after two years and 100% after three years and expire 5
years from date of grant. Options issued after September 1998 vest 25% per year
beginning one year after the grant date and expire 10 years from date of grant.
During the nine months ended September 30, 1999, no options were exercised.
At September 30, 1999, 972,216 options were exercisable at prices ranging from
$3.375 to $18.00 per share.
In 1994, the stockholders approved the 1994 Outside Directors Stock
Option Plan (the "Directors Plan"). Only Directors who are not employees of the
Company are eligible under the Directors Plan. The Directors Plan covers a
maximum of 200,000 shares. At September 30, 1999, 92,800 options were
exercisable at prices ranging from $8.00 to $16.875 per share.
In connection with the Merger, Range adopted the Second Amended and
Restated 1996 Stock Purchase and Option Plan for Key Employees of Domain Energy
Corporation and Affiliates (the "Domain Option Plan") and the Domain Energy
Corporation 1997 Stock Option Plan for Nonemployee Directors (the "Domain
Director Plan"). Subsequent to the Merger, no new options will be granted under
the Domain Option and Director Plans and existing options are exercisable into
shares of Range Common Stock. During the first nine months ended September 30,
1999 options covering 356,812 shares were exercised at $0.01 per share and
17,452 shares were exercised at $3.46 per share. At September 30, 1999, 440,174
options were currently exercisable under the Domain Option Plan at $3.46 per
share. The remaining 111,705 options have an exercise price of $0.01 per share.
15
<PAGE> 16
At September 30, 1999, options totaling 19,340 shares were outstanding and
exercisable under the Domain Director Plan at $11.17 per share.
In June 1997, the stockholders approved the 1997 Stock Purchase Plan
(the "1997 Plan") which authorizes the sale of up to 900,000 shares of common
stock to officers, directors, key employees and consultants. Under the 1997
Plan, the right to purchase shares at prices ranging from 50% to 85% of market
value may be granted. Through September 30, 1999, no rights had been granted
for less than 75% of market value. The Company previously had stock purchase
plans which covered 833,333 shares. The previous stock purchase plans have been
terminated. The 1997 Plan is administered by the Compensation Committee of the
Board. From inception through September 30, 1999, a total of 499,897 registered
shares had been sold through stock purchase plans, for a total consideration of
approximately $2.9 million.
(11) BENEFIT PLAN
The Company maintains a 401(K) Plan for the benefit of its employees.
The Plan permits employees to make contributions on a pre-tax salary reduction
basis. The Company makes discretionary contributions to the Plan. Company
contributions for 1998 totaled $0.7 million of Common Stock, valued at market on
date of contribution.
(12) INCOME TAXES
The Company follows FASB Statement No. 109, "Accounting for Income
Taxes". Under Statement 109, the liability method is used in accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
The income tax provisions for the nine month periods ended September
30, 1998 and 1999 were $(34.7) million and $1.6 million, respectively. The
current portion of the income tax provisions represent state income taxes
currently payable. Statement 109 requires a valuation allowance be recorded when
it is more likely than not that some or all of the deferred tax assets will not
be realized. A valuation allowance for the full amount of the net deferred tax
asset was recorded due to the uncertainties as to the amount of taxable income
that would be generated in future years. The Company established a valuation
allowance of $25 million at December 31, 1998 and increased the allowance to $29
million at September 30, 1999. Upon future realization of the deferred tax
asset, $29 million of the valuation allowance will reduce the Company's future
income tax expense.
The Company has entered into several business combinations accounted
for as purchases. In connection with these transactions, deferred tax assets and
liabilities of $7.7 million and $38.3 million respectively, were recorded. In
1998 the Company acquired Domain Energy Corporation in a taxable business
combination accounted for as a purchase. A net deferred tax liability of $29
million was recorded in the transaction.
At December 31, 1998, the Company had available for federal income tax
reporting purposes net operating loss carryovers of approximately $131 million
that are subject to annual limitations as to their utilization and otherwise
expire between 1999 and 2013, if unused. The Company has alternative minimum tax
net operating loss carryovers of $116 million that are subject to annual
limitations as to their utilization and otherwise expire from 1999 to 2013 if
unused. The Company has statutory depletion carryover of approximately $4
million and an alternative minimum tax credit carryover of approximately $.9
million. The statutory depletion carryover and alternative minimum tax credit
carryover are not subject to limitation or expiration.
16
<PAGE> 17
(13) EARNINGS PER COMMON SHARE
The following table sets forth the computation of earnings per common
share and earnings per common share - assuming dilution (in thousands):
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------------- -----------------------------
1998 1999 1998 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Numerator:
Net Income ................................. $ (66,907) $ 12,722 $ (65,084) $ 1,654
Preferred stock dividends................... (584) (584) (1,751) (1,751)
-------------- -------------- -------------- --------------
Numerator for earnings per common share..... (67,491) 12,138 (66,835) (97)
Effect of dilutive securities:
Preferred stock dividends................. - - - -
-------------- -------------- -------------- --------------
Numerator for earnings per common
Share - assuming dilution................. $ (67,491) $ 12,138 $ (66,835) $ (97)
============== ============== ============== ==============
Denominator:
Denominator for basic earnings per common
Share - weighted average shares........... 26,243 37,477 22,857 36,745
Effect of dilutive securities:
Employee stock options.................... 385 - 469 -
Warrants.................................. - - - -
-------------- -------------- -------------- --------------
385 - 469 -
-------------- -------------- -------------- --------------
Dilutive potential common shares
Denominator for diluted earnings per share
Adjusted weighted-average shares and
Assumed conversions....................... 26,628 37,477 23,326 36,745
============== ============== ============== ==============
Earnings (loss) per common share................ $ (2.57) $ 0.33 $ (2.92) $ 0.00
============== ============== ============== ==============
Earnings (loss) per common
Share - assuming dilution................. $ (2.57) $ 0.33 $ (2.92) $ 0.00
============== ============== ============== ==============
</TABLE>
For additional disclosure regarding the Debentures and the $2.03
Preferred Stock, see Notes 6 and 9, respectively. The Debentures were
outstanding during 1998 and 1999 but were not included in the computation of
diluted earnings per share because the conversion price was greater than the
average market price of common shares and, therefore, the effect would be
antidilutive. The $2.03 Preferred Stock was outstanding during 1998 and 1999 and
was convertible into 3,026,316 of additional shares of common stock. The
3,026,316 additional shares were not included in the computation of diluted
earnings per share because the effect would be antidilutive. There were employee
stock options outstanding during the first nine months of 1998 and 1999 which
were exercisable, resulting in 1,051,370 and 1,683,936 additional shares,
respectively, under the treasury method of accounting for common stock
equivalents. These additional shares were not included in the first nine months
1999 computations of diluted earnings per share because the effect was
antidilutive.
17
<PAGE> 18
(14) MAJOR CUSTOMERS
The Company markets its oil and gas production on a competitive basis.
The type of contract under which gas production is sold varies but can generally
be grouped into three categories: (a) life-of-the-well; (b) long-term (1 year or
longer); and (c) short-term contracts which may have a primary term of one year,
but which are cancelable at either party's discretion in 30-120 days.
Approximately 89% of gas production is currently sold under market sensitive
contracts, which do not contain floor price provisions. For the nine months
ended September 30, 1999, no one customer accounted for 10% or more of total oil
and gas revenues. Management believes that the loss of any one customer would
not have a material adverse effect on operations. Oil is sold on a basis such
that the purchaser can be changed on 30 days notice. The price received is
generally equal to a posted price set by the major purchasers in the area. Oil
is sold on a basis of price and service.
(15) OIL AND GAS ACTIVITIES
The following summarizes selected information with respect to oil and
gas activities (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
----------------- ----------------
(unaudited)
<S> <C> <C>
Oil and gas properties:
Proved properties.................................. $ 859,911 $ 854,090
Unproved properties................................ 75,911 72,454
----------------- ----------------
Total.......................................... 935,822 926,544
Accumulated depletion and impairment............... (273,723) (322,684)
----------------- ----------------
Net oil and gas properties..................... $ 662,099 $ 603,860
================= ================
Nine Months
Year Ended Ended
December 31, September 30,
1998 1999
----------------- ----------------
(unaudited)
Costs incurred:
Acquisition........................................ $ 286,974 $ 2,084
Development........................................ 71,793 20,074
Exploration........................................ 9,756 2,438
----------------- ----------------
Total costs incurred........................... $ 368,523 $ 24,596
================= ================
</TABLE>
18
<PAGE> 19
(16) INVESTMENT IN GREAT LAKES
As described in Note 2, the Company has a 50% ownership interest in
Great Lakes. At September 30, 1999, the Company pro rata consolidated its
interest in the joint venture's assets and liabilities based upon its ownership
interest in Great Lakes. No operations for Great Lakes are reflected in the
Company's Statements of Operations due to the fact that the joint venture was
completed on September 30, 1999. The following table summarizes the financial
information for 100% of Great Lakes (in thousands).
<TABLE>
<CAPTION>
September 30,
1999
-----------------
(unaudited)
<S> <C>
Current assets............................................ $ 2,708
Oil and gas properties, net............................... 288,941
Transportation, processing and field assets, net.......... 39,710
Other assets.............................................. 2,166
Current liabilities....................................... 5,003
Long-term debt............................................ 188,277
Net equity................................................ 140,245
</TABLE>
(17) GAIN ON SALE
In September 1999, Range transferred all of its Appalachian oil and gas
properties and associated gas gathering and transportation systems to Great
Lakes in exchange for a non-controlling ownership interest. Additionally, the
Company contributed $188.3 million of indebtedness to Great Lakes. The Great
Lakes partners have no commitment to support the operations or related
obligations of Great Lakes. In connection with the transfer, Range recognized a
gain of $41.0 million, which was attributable to the portion of the net assets
conveyed to Great Lakes. The gain was calculated by comparing the Company's
estimate of the fair market value of the assets and liabilities conveyed to
their net book value.
The estimated fair market value of oil and gas properties was based
upon future net cash flows from the assets discounted 10% at September 30, 1999.
The present value of future cash flows from such properties has been adjusted
for the Company's assessment of risk related to the properties. For purposes of
determining the fair market value of oil and gas properties, risk factors
ranging from 20% to 60% were used depending on the nature of the reserve
category. The Company assumed NYMEX prices of $19.00 per barrel of oil and
$2.65 per mcf of gas for purposes of calculating future net cash flows. Prices
were escalated 2.5% annually, with oil capped at the price of $30.00 per barrel
and gas capped at the price of $5.00 per mcf. These prices were then adjusted
for the effect of the Company's production subject to existing sales contracts,
and are not necessarily indicative of actual prices received by the Company at
the dates of the impairment charges. Severance taxes, direct operating costs
and capitalized costs were estimated based on the Company's historical
operating experience. These costs and expenses were escalated at 2.5% per year.
These prices and costs were applied to production profiles developed by the
Company's engineers using estimates of proved reserves and unproved reserves.
The estimated fair market value of other assets contributed to Great Lakes was
determined by an internally generated cash flow model which was developed to
determine the future revenues and costs associated with these activities,
discounted 10% annually. These discounted cash flows were risked individually
at rates ranging between 30% and 60%.
During the nine months ended September 30, 1999, the Company sold
various non-strategic properties. A net loss in the amount of $1.8 million was
recognized on the sale of these properties due to their net book value being
greater than proceeds received upon their sale.
19
<PAGE> 20
(18) EXTRAORDINARY ITEM
During 1999 Range exchanged $2.3 million of Convertible Preferred
Securities and $3.6 million of Debentures for approximately 698,000 shares of
Common Stock. In connection with the exchange a $2.4 million extraordinary gain
was recorded because the Convertible Preferred Securities and Debentures were
retired at a discount to their face value.
20
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
FACTORS AFFECTING FINANCIAL CONDITION AND LIQUIDITY
LIQUIDITY AND CAPITAL RESOURCES
General
During the nine months ended September 30, 1999, the Company spent
approximately $24.6 million on acquisition, development and exploration
activities. At September 30, 1999, the Company had $14.5 million in cash and
marketable securities and total assets of $776 million. At that date working
capital was $29.6 million. During the first nine months of 1999, total debt
decreased $137.4 million. At September 30, 1999, debt to total book
capitalization was 65%.
Long-term debt at September 30, 1999 included $147 million of
borrowings under the Credit Facility, $94 million under the non-recourse Great
Lakes Facility, $53 million under the non-recourse IPF Facility, $125 million of
8.75% Senior Subordinated Notes and $51 million of 6% Convertible Subordinated
Debentures. The Company's exposure to its recourse Credit Facility was reduced
60% from $365 million at December 31, 1998 to $147 million at September 30,
1999. Including the debt exchanges noted below, total debt fell from $607.2
million at December 31, 1998 to $469.8 million at September 30, 1999.
During 1999, Range exchanged $2.3 million of Convertible
Preferred Securities and $3.6 million of Debentures for approximately 698,000
shares of Common Stock. In connection with the exchange a $2.4 million
extraordinary gain was recorded as the Convertible Preferred securities and
Debentures were retired at a discount to their face value.
The Company believes that its capital resources are adequate to meet
the requirements of its business. However, future cash flows are subject to a
number of variables including the level of production and oil and gas prices,
and there can be no assurance that operations and other capital resources will
provide cash in sufficient amounts to maintain planned levels of capital
expenditures.
In September 1999, the Company elected to pursue the sale of its gas
processing plant and associated assets located in the Permian Basin. At
September 30, 1999, the Company classified these assets as held for sale. In
that connection, the Company determined that the carrying value of the plant
exceeded its fair value. Accordingly, an impairment loss of $21.0 million was
recorded which represented the excess of the carrying value over the estimated
fair value.
Fair value of the gas processing plant was estimated by reference to
the present value of the estimated future cash inflows of the gas processing
plant. The impairment estimate on the gas processing plant recorded in the third
quarter 1999 was based on estimates of future cash flows for the property.
Future cash flows include revenues from residue gas, plant liquids and
by-products derived from both equity and third party proved natural gas
reserves, which are estimated to pass through the plant, direct operating costs
and capitalized costs. The Company used an estimated future gas prices by
referencing ten year future strip prices in the calculation of the plant
revenues estimated over the anticipated life of the property. These prices were
then adjusted for the effect of the estimated throughput production, subject to
existing sales contracts, and are not necessarily indicative of actual prices
received by the Company at the date of the impairment charge.
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Cash Flow
The Company's principal operating sources of cash include sales of oil
and gas, revenues from transportation, processing and marketing and IPF
revenues. The Company's cash flow is highly dependent upon oil and gas prices.
Decreases in the market price of oil and gas in late 1998 reduced cash flow and
resulted in the reduction of the borrowing base under the Credit Facility. As a
result, the Company reduced its development and exploration budget to $38
million in 1999. For the first nine months of 1999, the Company spent
approximately $22.5 million on these activities. The 1999 expenditures have been
funded primarily by internally generated cash flow.
The Company's net cash provided by operations for the nine months ended
September 30, 1998 and 1999 was $35.8 million and $25.9 million, respectively.
The decrease in the Company's cash flow from operations is attributed primarily
to decreases in oil and gas prices and increased interest on amounts outstanding
under the Credit Facility.
The Company's net cash provided by (used in) investing for the nine
months ended September 30, 1998 and 1999 was $(160.5) million and $110.0
million, respectively. Investing activities for these periods are comprised
primarily of additions to oil and gas properties through the Company's
investment in Great Lakes, acquisitions and development, proceeds on sale of
assets, IPF investments and, to a lesser extent, exploration and additions of
field assets. Cash flows from investing in 1999 also included the Company's
investment in Great Lakes. These uses of cash have historically been partially
offset by cash inflows associated with asset sales and IPF return of capital.
The Company's acquisition, drilling and IPF activities have been financed
through a combination of operating cash flow, bank borrowings and capital raised
through equity and debt offerings.
The Company's net cash provided by (used in) financing for the nine
months ended September 30, 1998 and 1999 was $124.7 million and $(135.6)
million, respectively. Sources of financing used by the Company during the most
recent nine month period were borrowings under its Credit Facilities. The
Company decreased its debt borrowings by $133.7 million during the period
primarily due to the conveyance of debt to Great Lakes.
Capital Requirements
During the nine months ended September 30, 1999, $22.5 million and of
costs were incurred for development and exploration activities. In an effort to
reduce outstanding debt, the Company reduced its 1999 exploration and
development capital budget to $38 million. The development and exploration
activities are highly discretionary and in 1999 have been reduced to levels
below internally generated cash flow. The remaining cash flow has been available
for debt repayment. The Company does not expect any additional material capital
expenditures outside its normal operations over the next 12 month period.
Bank Facilities
The Company maintains a $225 million revolving bank facility (the
"Credit Facility"). The Credit Facility provides for a borrowing base, which is
subject to semi-annual redeterminations. The Credit Facility is secured by the
Company's oil and gas properties. At November 10, 1999, the borrowing base on
the Credit Facility was $160 million of which $18.0 million was available to be
drawn. The borrowing base is subject to semi-annual determination and certain
other redeterminations based upon a variety of factors, including the discounted
present value of estimated future net cash flow from oil and gas production. At
the Company's option, loans may be prepaid and the revolving credit commitment
may be reduced, in whole or in part at anytime in certain minimum amounts. The
next redetermination occurs on April 1, 2000. If amounts outstanding at April 1,
2000 exceed the redetermined borrowing base, one-half of the excess, if any,
must be repaid within 90 days and the remaining excess, if any, must be repaid
within 180 days. Any borrowing base in excess of $135 million requires the
approval of all lenders. Interest is payable quarterly or as LIBOR notes mature
and the loan matures in February 2003. A commitment fee is paid quarterly on the
undrawn balance at a rate of 0.25% to 0.50% depending upon the percentage of the
borrowing base drawn. It is the Company's policy to extend the term period of
the Credit
22
<PAGE> 23
Facility annually. The interest rate on the Credit Facility is LIBOR plus
between 1.50% and 2.25%, depending upon amounts outstanding. The weighted
average interest rates on these borrowings were 6.8% and 7.2% for the three
months ended September 30, 1998 and 1999, respectively.
The Company pro rata consolidates 50% of amounts outstanding under the
$275 million revolving bank facility (the "Great Lakes Facility") through its
participation in Great Lakes. The Great Lakes Facility is non-recourse to Range.
The Great Lakes Facility provides for a borrowing base, which is subject to
semi-annual redeterminations. The Great Lakes Facility is secured by the Great
Lakes oil and gas properties. At November 10, 1999, the borrowing base on the
Great Lakes Facility was $195 million of which $5.7 million was available to be
drawn. Beginning December 1, 1999, the borrowing base reduces $1 million per
month to $190 million at April 1, 2000. The borrowing base is subject to a
semi-annual borrowing review on April 1, 2000. The redetermined borrowing base
on April 1, 2000 requires the approval of all lenders. Interest is payable
quarterly or as LIBOR notes mature and the loan matures in September 2002. The
interest rate on the Great Lakes Facility is LIBOR plus between 1.50% and 2.00%,
depending upon amounts outstanding. A commitment fee is paid quarterly on the
undrawn balance at a rate of 0.25% to 0.50% depending upon the percentage of the
borrowing base drawn.
IPF has a $150 million revolving credit facility (the "IPF Facility")
through which it finances its activities. The IPF Facility is non-recourse to
Range. The IPF Facility matures in July 2001 at which time all amounts owed
thereunder are due and payable. The IPF Facility is secured by substantially all
of IPF's assets. The borrowing base under the IPF Facility is subject to
redeterminations, which occur routinely during the year. On November 10, 1999,
the borrowing base on the IPF Facility was $56 million of which $3.4 million was
available to be drawn. The IPF Facility bears interest at prime rate or interest
at LIBOR plus a margin of 1.75% to 2.25% per annum depending on the total amount
outstanding. Interest expense during the first nine months of 1999 amounted to
$3.2 million and is included in IPF expenses on the Consolidated Statements of
Operations. A commitment fee is paid quarterly on the average undrawn balance at
a rate of 0.375% to 0.50%. The weighted average interest rate on these
borrowings was 7.5% for the nine months ended September 30, 1999.
Hedging Activities
Periodically, the Company enters into futures, option and swap
contracts to reduce the effects of fluctuations in crude oil and natural gas
prices. At September 30, 1999, the Company had open hedges for natural gas of 36
Bcf and oil swaps of 800,000 barrels. While these transactions have no carrying
value, the fair value of these and subsequent transactions entered into,
represented by the estimated amount that would be required to terminate the
contracts, was a net loss of approximately $3.4 million at November 10, 1999.
The gas contracts are at prices ranging from $1.90 to $3.17 per Mmbtu and the
oil contracts range from $17.32 to $22.95 per Bbl. The gains or losses on the
Company's hedging transactions are determined as the difference between the
contract price and a reference price, generally closing prices on the NYMEX. The
resulting transaction gains and losses are determined monthly and are included
in the period the hedged production or inventory is sold. Net gains (losses)
relating to these derivatives for the nine months ended September 30, 1998 and
1999, approximated $2.8 million and $(6.6) million respectively.
Interest Rate Risk
At September 30, 1999, Range had debt outstanding of $469.8 million. Of
this amount, $176.4 million, or 38% bears interest at fixed rates averaging
7.9%. The remaining $293.4 million of debt outstanding at September 30, 1999
bears interest at floating rates which averaged 7.6%. The terms of the credit
facilities in place allow interest rates to be fixed at Range's option for
periods of between 30 and 180 days. At September 30, 1999, the Company had $80
million of borrowings subject to four interest rate swap agreements at rates of
5.35%, 4.82%, 5.64% and 5.59% through January 2000, September 2000, October 2000
and October 2001, respectively. The interest rate swaps may be extended at the
counterparties' option for two years. The agreements require that the Company
pay the counterparty interest at the above fixed swap rates and require the
counterparty to pay the Company interest at the 30-day LIBOR rate. The closing
30-day LIBOR rate on September 30, 1999 was 5.40%. A 10% increase in short-term
interest rates on the floating-rate debt outstanding at the end of 1998 would
equal
23
<PAGE> 24
approximately 76 basis points. Such an increase in interest rates would increase
Range's nine month 1999 interest expense by approximately $1.7 million, assuming
borrowed amounts remain outstanding.
The above sensitivity analysis for interest rate risk excludes accounts
receivable, accounts payable and accrued liabilities because of the short-term
maturity of such instruments.
INFLATION AND CHANGES IN PRICES
The Company's revenues and the value of its oil and gas properties have
been and will be affected by changes in oil and gas prices. The Company's
ability to maintain current borrowing capacity and to obtain additional capital
on attractive terms is also dependent on oil and gas prices. Oil and gas prices
are subject to significant seasonal and other fluctuations that are beyond the
Company's ability to control or predict. During the first nine months of 1999,
the Company received an average of $13.97 per barrel of oil, an increase of 13%
from the comparable 1998 period, and $2.01 per Mcf of gas, a decrease of 17%
from the comparable 1998 period. Although certain of the Company's costs and
expenses are affected by the level of inflation, inflation did not have a
significant effect during the first nine months of 1999.
RESULTS OF OPERATIONS
Comparison of 1999 to 1998
The Company reported net income for the three months ended September
30, 1999 of $12.7 million compared to net loss of $66.9 million in the third
quarter of 1998. Production volumes increased 7% from 165,760 Mcfe/d in 1998 to
177,816 Mcfe/d in 1999. The average price received on an equivalent unit basis
increased 8% from $2.13 per Mcfe in 1998 to $2.29 per Mcfe in 1999. The average
oil price increased 38% to $16.21 per barrel while average gas prices decreased
2% to $2.18 per Mcf. As a result of the Company's larger base of producing
properties and production, oil and gas production expenses increased 10% to
$11.0 million in 1999 versus $10.0 million in 1998. The average operating cost
per Mcfe of production increased 2% from $0.66 in the third quarter of 1998 to
$0.67 in 1999 due to higher production taxes.
Transportation, processing and marketing net revenues increased 25% to
$2.1 million versus $1.7 million in 1998. IPF net income consists of the
interest portion of the term overriding royalty interest and is net an allowance
for possible uncollectable accounts. During the third quarter of 1999, IPF
expense included $1.0 million of interest and $0.4 million of administrative
expense.
General and administrative expenses decreased 7% from $2.4 million in
1998 to $2.2 million in 1999. General and administrative cost per Mcfe produced
decreased 13% from $0.16 in 1998 to $0.14 in 1999. Exploration expense decreased
from $2.0 million to $.4 million due to the farming out of projects in exchange
for carried interests and decreased expenditures resulting from a reduced
capital expenditure budget.
Gain on sale relates to the net excess of proceeds received on the sale
of properties over their book value. The increase in gain on sale of $39.1
million over that in the third quarter 1998 primarily due to the $41 million
proportional gain recognized on the Great Lakes transaction (See Note (17) -
Gain on Sale).
Interest and other income remained relatively constant compared to the
same 1998 period. Interest and other income is primarily comprised of interest
on bank deposits. In 1999 interest expense increased 10% to $12.1 million as
compared to $11.0 million in 1998. The increase was primarily a result of the
higher average outstanding debt balance during the year due to the financing of
acquisitions and capital expenditures and a higher average cost of borrowing.
The average outstanding balances on the Credit Facility were $240 million and
$363 million and the nine months ended September 30, 1998 and 1999,
respectively. The weighted average interest rate on these borrowings was 6.7%
and 7.0% for the nine month periods ended September 30, 1998 and 1999,
respectively.
24
<PAGE> 25
Depletion, depreciation and amortization increased 28% compared to 1998
as a result of increased production volumes. The Company's depletion rate was
$0.84 per Mcfe in the third quarter of 1998 versus $1.02 per Mcfe in the third
quarter of 1999. In the third quarter of 1999, the Company recognized a $21
million impairment on a gas processing plant and related assets located in the
Permian Basin. The Company has decided to sell the plant and related assets and
the net book value of these assets is classified as a current asset at September
30, 1999 on the Consolidated Balances Sheets (See Note (5) Assets Held For
Sale).
Year 2000
The Company has developed a plan (the "Year 2000 Plan") to address the
Year 2000 issue caused by computer programs and applications that utilize two
digit date fields rather than four to designate a year. As a result, computer
equipment, software and devices with embedded technology that are date sensitive
may be unable to recognize or misinterpret the actual date. This could result in
a system failure or miscalculations causing disruptions of operations. The
Company's Board of Directors has established a Year 2000 committee to review the
adoption and implementation of the Year 2000 Plan.
Assessment of the information technology ("IT") and non-IT systems has
been completed. The term "IT systems" include personal computers,
accounting/data processing software and other miscellaneous systems. Range's
computerized accounting / production / land system was upgraded and tested to be
Year 2000 compliant. The Company's personal computer systems are also Year 2000
compliant.
The non-IT systems include operational and control equipment with
embedded chip technology that is utilized in the offices and field operations.
The systems were reviewed as part of the Year 2000 Plan. Most of the wells are
operated by non-computerized equipment. The potentially affected areas are the
gas processing plant in the Midland Basin, telemetry that controls approximately
10% of the wells and portable metering devices which are used on less than 2% of
the wells. As of September 30, 1999, Range has completed the remediation of all
known Year 2000 problems associated with non-IT systems.
Range is also monitoring the compliance efforts of its significant
suppliers, customers and service providers with whom it does business and whose
IT and non-IT systems interface with those of the Company to ensure that they
will be Year 2000 compliant. If they are not, such failure could affect the
ability of the Company to sell its oil and gas and receive payments therefrom
and the ability of vendors to provide products and services in support of the
Company's operations. Although the Company has no reason to believe that its
vendors and customers will not be compliant by the year 2000, the Company is
unable to determine the extent to which Year 2000 issues will affect its vendors
and customers. However, management believes that ongoing communication with and
assessment of the compliance efforts of these third parties will minimize these
risks.
The discussion of the Company's efforts and management's expectations
relating to Year 2000 compliance contains forward-looking statements. Range has
conducted a comprehensive analysis of the financial and operational problems
that would be reasonably likely to result from failure by Range and significant
third parties to complete efforts necessary to achieve Year 2000 compliance on a
timely basis. Business contingency plans for mission critical systems have been
developed to deal with misrepresentations by equipment manufacturers and the
inability of purchasers or partners to conduct normal operations.
The total costs for the Year 2000 Project is not expected to be in
excess of $180,000. Of this amount, approximately $150,000 had been incurred as
of September 30, 1999.
Range presently does not expect to experience significant operational
problems due to the Year 2000 issues. However, if all Year 2000 issues are not
properly identified, assessed, remediated and tested, there can be no assurance
that the Year 2000 issue will not materially impact Range's results of
operations or adversely affect its relationship with customers, vendors, or
others. Additionally, there can be no assurance that the Year 2000 issues of
other entities will not have a material impact on Range's systems or results of
operations.
25
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GLOSSARY
The terms defined in this glossary are used throughout this From 10-Q.
Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in
reference to crude oil or other liquid hydrocarbons.
Bcf. One billion cubic feet.
Bcfe. One billion cubic feet of natural gas equivalents, based on a ratio of 6
Mcf for each barrel of oil, which reflects the relative energy content.
Development well. A well drilled within the proved area of an oil or natural gas
reservoir to the depth of a stratigraphic horizon known to be productive.
Dry hole. A well found to be incapable of producing either oil or natural gas in
sufficient quantities to justify completion as an oil or gas well.
Exploratory well. A well drilled to find and produce oil or gas in an unproved
area, to find a new reservoir in a field previously found to be productive of
oil or gas in another reservoir, or to extend a known reservoir.
Gross acres or gross wells. The total acres or wells, as the case may be, in
which a working interest is owned.
Infill well. A well drilled between known producing wells to better exploit the
reservoir.
Mbbl. One thousand barrels of crude oil or other liquid hydrocarbons.
Mcf. One thousand cubic feet.
Mcf/d. One thousand cubic feet per day.
Mcfe. One thousand cubic feet of natural gas equivalents, based on a ratio of 6
Mcf for each barrel of oil, which reflects the relative energy content.
Mmbbl. One million barrels of crude oil or other liquid hydrocarbons.
MmBtu. One million British thermal units. One British thermal unit is the heat
required to raise the temperature of a one-pound mass of water from 58.5 to 59.5
degrees Fahrenheit.
Mmcf. One million cubic feet.
Mmcfe. One million cubic feet of natural gas equivalents.
Net acres or net wells. The sum of the fractional working interests owned in
gross acres or gross wells.
Net oil and gas sales. Oil and natural gas sales less oil and natural gas
production expenses.
Present Value. The pre-tax present value, discounted at 10%, of future net cash
flows from estimated proved reserves, calculated holding prices and costs
constant at amounts in effect on the date of the report (unless such prices or
costs are subject to change pursuant to contractual provisions) and otherwise in
accordance with the Commission's rules for inclusion of oil and gas reserve
information in financial statements filed with the Commission.
26
<PAGE> 27
Productive well. A well that is producing oil or gas or that is capable of
production.
Proved developed non-producing reserves. Reserves that consist of (i) proved
reserves from wells which have been completed and tested but are not producing
due to lack of market or minor completion problems which are expected to be
corrected and (ii) proved reserves currently behind the pipe in existing wells
and which are expected to be productive due to both the well log characteristics
and analogous production in the immediate vicinity of the wells.
Proved developed producing reserves. Proved reserves that can be expected to be
recovered from currently producing zones under the continuation of present
operating methods.
Proved developed reserves. Proved reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
Proved reserves. The estimated quantities of crude oil, natural gas and natural
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions.
Proved undeveloped reserves. Proved reserves that are expected to be recovered
from new wells on undrilled acreage, or from existing wells where a relatively
major expenditure is required for recompletion.
Recompletion. The completion for production of an existing wellbore in another
formation from that in which the well has previously been completed.
Reserve life index. The presentation of proved reserves defined in number of
years of annual production.
Royalty interest. An interest in an oil and gas property entitling the owner to
a share of oil and natural gas production free of costs of production.
Standardized Measure. The present value, discounted at 10%, of future net cash
flows from estimated proved reserves after income taxes calculated holding
prices and costs constant at amounts in effect on the date of the report (unless
such prices or costs are subject to change pursuant to contractual provisions)
and otherwise in accordance with the Commission's rules for inclusion of oil and
gas reserve information in financial statements filed with the Commission.
Term overriding royalty. A royalty interest that is carved out of the operating
or working interest in a well. Its term does not extend to the economic life of
the property and is of shorter duration than the underlying working interest.
The term overriding royalties in which the Company participates through its
Independent Producer Finance subsidiary typically extend until amounts financed
and a designated rate of return have been achieved. At such point in time, the
override interest reverts back to the working interest owner.
Working interest. The operating interest that gives the owner the right to
drill, produce and conduct operating activities on the property and a share of
production, subject to all royalties, overriding royalties and other burdens and
to all costs of exploration, development and operations and all risks in
connection therewith.
27
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various legal actions and claims arising in
the ordinary course of business. In the opinion of management, such litigation
and claims are likely to be resolved without material adverse effect on the
Company's financial position.
In May 1998, a Domain stockholder filed an action in the Delaware Court
of Chancery, alleging that the terms of the Merger were unfair to a purported
class of Domain stockholders and that the defendants (except Range) violated
their legal duties to the class in connection with the Merger. Range is alleged
to have aided and abetted the breaches of fiduciary duty allegedly committed by
the other defendants. The action sought an injunction enjoining the Merger as
well as a claim for money damages. On September 3, 1998, the parties executed a
Memorandum of Understanding (the "MOU"), which represents a settlement in
principle of the litigation. Under the terms of the MOU, appraisal rights
(subject to certain conditions) were offered to all holders of Domain common
stock (excluding the defendants and their affiliates). Domain also agreed to pay
any court-awarded attorneys' fees and expenses of the plaintiffs' counsel in an
amount not to exceed $.3 million. The settlement in principle is subject to
court approval and certain other conditions that have not been satisfied.
Items 2 - 5. Not applicable
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits
10.1 $225,000,000 Amended and Restated Credit Agreement among Range
Resources Corporation, as Borrower, The Lenders from Time to
Time Parties Hereto, as Lenders, Bank One, Texas, N.A., as
Administrative Agent, Chase Bank of Texas, N.A., as
Syndication Agent, and Bank of America, N.A., as Documentation
Agent dated September 30, 1999.
10.2 Credit Agreement Among Great Lakes Energy Partners,
L.L.C., as Borrower and Bank One, Texas, N.A., as
Administrative Agent, Chase Bank of Texas, N.A., as
Syndication Agent, Bankers Trust Company, as Documentation
Agent, The Bank of Nova Scotia and Credit Lyonnais New
York Branch, as Managing Agents Banc One Capital Markets,
Inc., as Co-Lead Arranger and Chase Securities Inc., as
Co-Lead Arranger, as dated September 30, 1999.
27 Financial data schedule
(b) Reports on Form 8-K
Current Report on Form 8-K, dated October 15, 1999 regarding
the Great Lakes transaction.
28
<PAGE> 29
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 thereunto duly authorized.
RANGE RESOURCES CORPORATION
By: (Thomas W. Stoelk)
---------------------------
Thomas W. Stoelk
Senior Vice President
Finance & Administration
Chief Financial Officer
November 15, 1999
29
<PAGE> 30
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- ----------------------- ----------------------------------------------------
10.1 $225,000,000 Amended and Restated Credit Agreement
among Range Resources Corporation, as Borrower, The
Lenders from Time to Time Parties Hereto, as Lenders,
Bank One, Texas, N.A., as Administrative Agent, Chase
Bank of Texas, N.A., as Syndication Agent, and Bank
of America, N.A., as Documentation Agent dated
September 30, 1999.
10.2 Credit Agreement Among Great Lakes Energy Partners,
L.L.C., as Borrower and Bank One, Texas, N.A., as
Administrative Agent, Chase Bank of Texas, N.A., as
Syndication Agent, Bankers Trust Company, as
Documentation Agent, The Bank of Nova Scotia and
Credit Lyonnais New York Branch, as Managing Agents
Banc One Capital Markets, Inc., as Co-Lead Arranger
and Chase Securities Inc., as Co-Lead Arranger, as
dated September 30, 1999.
27 Financial data schedule
30
<PAGE> 1
Exhibit 10.1
$225,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
RANGE RESOURCES CORPORATION,
AS BORROWER,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
AS LENDERS,
BANK ONE, TEXAS, N.A.,
AS ADMINISTRATIVE AGENT,
CHASE BANK OF TEXAS, N.A.,
AS SYNDICATION AGENT,
AND
BANK OF AMERICA, N.A.,
AS DOCUMENTATION AGENT
DATED AS OF SEPTEMBER 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 - DEFINITIONS...........................................................................................2
1.01. DEFINED TERMS...................................................................................2
1.02. OTHER DEFINITIONAL PROVISIONS..................................................................19
ARTICLE 2 - AMOUNT AND TERMS OF COMMITMENTS......................................................................19
2.01. COMMITMENTS....................................................................................19
2.02. PROCEDURE FOR BORROWING........................................................................20
2.03. NOTES..........................................................................................20
2.04. INTEREST RATES AND PAYMENT DATES...............................................................21
2.05. NON-RECEIPT OF FUNDS BY ADMINISTRATIVE AGENT...................................................22
2.06. USE OF PROCEEDS................................................................................23
2.07. CONVERSIONS AND RENEWALS.......................................................................23
2.08. LIMITATION ON NUMBER OF EURODOLLAR LOANS.......................................................23
2.09. PREPAYMENTS....................................................................................24
2.10. MANNER AND APPLICATION OF PAYMENTS.............................................................24
2.11. VOLUNTARY REDUCTION OF COMMITMENT..............................................................25
ARTICLE 3 - LETTERS OF CREDIT....................................................................................25
3.01. LETTERS OF CREDIT..............................................................................25
3.02. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT....................................................26
3.03. FEES, COMMISSIONS, AND OTHER CHARGES...........................................................26
3.04. LETTER OF CREDIT PARTICIPATION.................................................................27
3.05. REIMBURSEMENT OBLIGATION OF BORROWER...........................................................28
3.06. OBLIGATIONS ABSOLUTE...........................................................................29
3.07. LETTER OF CREDIT PAYMENTS......................................................................29
3.08. LETTER OF CREDIT APPLICATIONS..................................................................30
3.09. CASH COLLATERALIZATION OF LETTERS OF CREDIT....................................................30
ARTICLE 4 - BORROWING BASE.......................................................................................30
4.01. DETERMINATION OF BORROWING BASE................................................................30
4.02. PERIODIC DETERMINATION.........................................................................31
4.03. SPECIAL REDETERMINATION REQUESTED BY BORROWER..................................................31
4.04. SPECIAL DETERMINATIONS REQUESTED BY REQUIRED LENDERS...........................................32
4.05. INITIAL BORROWING BASE.........................................................................32
4.06. OVER ADVANCE...................................................................................32
ARTICLE 5 - COLLATERAL...........................................................................................33
5.01. SECURITY.......................................................................................33
5.02. GUARANTIES.....................................................................................34
</TABLE>
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<TABLE>
<S> <C>
5.03. LEGAL OPINIONS; CORPORATE MATTERS..............................................................34
5.04. ADDITIONAL TITLE DATA..........................................................................34
5.05. BENEFITS OF COLLATERAL.........................................................................34
5.06. STATUS OF COLLATERAL IN EVENT OF DEFAULT.......................................................35
ARTICLE 6 - CONDITIONS PRECEDENT.................................................................................35
6.01. CONDITIONS PRECEDENT TO RESTATEMENT OF EXISTING CREDIT AGREEMENT AND INITIAL EXTENSION
OF CREDIT HEREUNDER............................................................................35
(a) CLOSING DELIVERIES....................................................................35
(b) NO MATERIAL ADVERSE CHANGE............................................................37
(c) NO LEGAL PROHIBITION..................................................................37
(d) NO LITIGATION.........................................................................37
(e) OTHER MATTERS.........................................................................37
(f) CLOSING FEES..........................................................................37
6.02. CONDITIONS TO EACH LOAN AND EACH LETTER OF CREDIT..............................................37
ARTICLE 7 - REPRESENTATIONS, WARRANTIES, AND COVENANTS...........................................................38
7.01. WARRANTIES.....................................................................................38
(a) FINANCIAL CONDITION...................................................................38
(b) NO CHANGE.............................................................................39
(c) CORPORATE EXISTENCE...................................................................39
(d) CORPORATE POWER.......................................................................39
(e) INFORMATION...........................................................................40
(f) AUTHORIZATIONS........................................................................40
(g) ENFORCEABLE OBLIGATIONS...............................................................40
(h) NO LEGAL BAR..........................................................................40
(i) COMPLIANCE............................................................................40
(j) DEBTS OF OTHERS.......................................................................40
(k) NO MATERIAL LITIGATION................................................................41
(l) SUBSIDIARIES..........................................................................41
(m) ERISA.................................................................................41
(n) ENVIRONMENTAL MATTERS.................................................................41
(o) TITLES................................................................................42
(p) RESERVE REPORTS.......................................................................42
(q) INTELLECTUAL PROPERTY.................................................................42
(r) NO BURDENSOME RESTRICTIONS............................................................42
(s) TAXES.................................................................................42
(t) FEDERAL REGULATIONS...................................................................43
(u) INVESTMENT COMPANY ACT; OTHER REGULATIONS.............................................43
(v) YEAR 2000 PROBLEM.....................................................................43
7.02. AFFIRMATIVE COVENANTS..........................................................................43
</TABLE>
xxxiii
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<TABLE>
<S> <C>
(a) CORPORATE EXISTENCE...................................................................43
(b) MAINTENANCE OF BOOKS AND RECORDS......................................................43
(c) FINANCIAL INFORMATION.................................................................44
(d) RIGHT TO INSPECT......................................................................45
(e) PAYMENT OF OTHER OBLIGATIONS..........................................................45
(f) PERFORMANCE...........................................................................45
(g) INSURANCE.............................................................................45
(h) DEPOSITORY ACCOUNTS...................................................................45
(i) NOTICE OF DEFAULT AND LITIGATION......................................................46
(j) FURTHER ASSURANCES....................................................................46
(k) MAINTENANCE AND OPERATION OF PROPERTY.................................................46
(l) ERISA.................................................................................47
(m) ENVIRONMENTAL MATTERS.................................................................47
(n) ENVIRONMENTAL INDEMNITY...............................................................47
(o) OTHER INDEMNITY.......................................................................48
7.03. NEGATIVE COVENANTS.............................................................................48
(a) OTHER LIENS...........................................................................49
(b) OTHER DEBT............................................................................49
(c) MERGERS AND SALES OF ASSETS...........................................................49
(d) CHANGES IN BUSINESS...................................................................50
(e) PLAN CONTRIBUTIONS....................................................................50
(f) ADVANCES AND INVESTMENTS..............................................................50
(g) RESTRICTED PAYMENTS...................................................................51
(h) INTEREST PAYMENTS.....................................................................51
(i) OIL AND GAS HEDGE TRANSACTIONS........................................................51
(j) TRANSACTIONS WITH AFFILIATES..........................................................51
(k) PLANS.................................................................................51
(l) SPECULATIVE HEDGE TRANSACTIONS........................................................51
(m) OPTIONAL PAYMENTS AND MODIFICATIONS...................................................52
(n) LIMITATION ON SALES AND LEASEBACKS....................................................52
(o) LIMITATION ON NEGATIVE PLEDGE CLAUSES.................................................52
(p) RESTRICTIONS WITH RESPECT TO OBLIGATIONS OF REFC......................................52
7.04. FINANCIAL COVENANTS............................................................................52
(a) CONSOLIDATED TANGIBLE NET WORTH.......................................................52
(b) SENIOR DEBT INTEREST COVERAGE RATIO...................................................53
(c) TOTAL DEBT INTEREST COVERAGE RATIO....................................................53
(d) SENIOR DEBT LEVERAGE RATIO............................................................53
(e) TOTAL DEBT LEVERAGE RATIO.............................................................53
(f) CURRENT RATIO.........................................................................53
ARTICLE 8 - DEFAULT..............................................................................................53
8.01. EVENTS OF DEFAULT..............................................................................53
</TABLE>
xxxiv
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<TABLE>
<S> <C>
8.02. REMEDIES.......................................................................................56
ARTICLE 9 - AGENCY PROVISIONS....................................................................................57
9.01. APPOINTMENT....................................................................................57
9.02. DELEGATION OF DUTIES...........................................................................57
9.03. EXCULPATORY PROVISIONS.........................................................................57
9.04. RELIANCE BY AGENTS.............................................................................58
9.05. NOTICE OF DEFAULT..............................................................................58
9.06. NON-RELIANCE ON AGENTS AND OTHER LENDERS.......................................................58
9.07. INDEMNIFICATION................................................................................59
9.08. EACH AGENT IN ITS INDIVIDUAL CAPACITY..........................................................59
9.09. SUCCESSOR AGENT................................................................................60
9.10. ISSUING LENDER.................................................................................60
ARTICLE 10 - PROTECTION OF YIELD; CHANGE IN LAWS.................................................................60
10.01. RISK-BASED CAPITAL.............................................................................60
10.02. BASIS FOR DETERMINING INTEREST RATE APPLICABLE TO EURODOLLAR LOANS INADEQUATE..................61
10.03. ILLEGALITY OF EURODOLLAR LOANS.................................................................61
10.04. INCREASED COST OF EURODOLLAR LOANS.............................................................62
10.05. ALTERNATIVE LOANS SUBSTITUTED FOR AFFECTED EURODOLLAR LOANS....................................63
10.06. FUNDING LOSS INDEMNIFICATION...................................................................63
10.07. TAXES..........................................................................................63
10.08. DISCRETION OF LENDERS AS TO MANNER OF FUNDING..................................................64
10.09. LIMITATION ON ADDITIONAL AMOUNTS...............................................................64
10.10. REPLACEMENT LENDERS............................................................................64
ARTICLE 11 - FEES................................................................................................65
11.01 COMMITMENT FEES................................................................................65
11.02. AGENCY FEES....................................................................................66
11.03. LETTER OF CREDIT FEES..........................................................................66
11.04. OTHER FEES.....................................................................................66
ARTICLE 12 - GENERAL PROVISIONS..................................................................................66
12.01. EXPENSES.......................................................................................66
12.02. NON-WAIVER.....................................................................................67
12.03. AMENDMENT AND WAIVERS..........................................................................67
12.04. SURVIVAL.......................................................................................67
12.05. LIMITATION ON INTEREST.........................................................................67
12.06. INVALID PROVISIONS.............................................................................68
12.07. WAIVER OF CONSUMER CREDIT LAW..................................................................68
</TABLE>
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<TABLE>
<S> <C>
12.08. SUCCESSORS AND ASSIGNS.........................................................................68
12.09. FOREIGN LENDERS, PARTICIPANTS, AND ASSIGNEES...................................................69
12.10. NOTICES........................................................................................70
12.11. REPORTS AND CERTIFICATES.......................................................................71
12.12. GOVERNING LAW..................................................................................71
12.13. COMPLETE AGREEMENT.............................................................................71
12.14. WAIVER OF JURY TRIAL...........................................................................71
12.15. COUNTERPARTS; EFFECTIVENESS....................................................................71
12.16. CONFIDENTIALITY................................................................................71
</TABLE>
xxxvi
<PAGE> 7
Schedule 1 - Commitments
Schedule 2 - Addresses for Notices
Schedule 3 - List of Subsidiaries
Exhibit A - Form of Note
Exhibit B - Form of Guaranty Agreement
Exhibit C - Form of Pledge Agreement
Exhibit D - Form of Notice of Borrowing
Exhibit E - Form of Rollover Notice
Exhibit F - Form of Request for Letter of Credit
Exhibit G - Form of Compliance Certificate
Exhibit H - Form of Assignment Agreement
xxxvii
<PAGE> 8
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
This Amended and Restated Credit Agreement is made on September 30,
1999, among RANGE RESOURCES CORPORATION, a Delaware corporation ("BORROWER"),
BANK ONE, TEXAS, N.A., as Administrative Agent ("ADMINISTRATIVE AGENT"), CHASE
BANK OF TEXAS, N.A., as Syndication Agent ("SYNDICATION AGENT"), and BANK OF
AMERICA, N.A., as Documentation Agent ("DOCUMENTATION AGENT") (collectively
"AGENTS"), and the banks, financial institutions, and other entities listed on
attached SCHEDULE 1, as Lenders (individually a "LENDER" and collectively
"LENDERS").
RECITALS:
A. Borrower, Agents, and Lenders are parties to a Credit Agreement
dated as of February 14, 1997 (as amended through and including the date hereof,
the "EXISTING CREDIT AGREEMENT"), pursuant to which credit is outstanding to
Borrower.
B. Borrower intends to contribute, or cause its Subsidiaries to
contribute, the Appalachian Properties (as defined below) to Great Lakes Energy
Partners, L.L.C., a Delaware limited liability company ("GLEP"), in exchange for
an equity interest in GLEP equal to 50%.
C. Immediately after giving effect to the GLEP Transaction (as defined
below), but subject to the satisfaction of each condition precedent set forth in
SECTION 6.01 hereof, Borrower, Agents, and Lenders desire to amend and restate
the Existing Credit Agreement in its entirety in order to, among other things,
(a) amend and restate the aggregate Commitments of Lenders, and (b) modify
certain other provisions of the Existing Credit Agreement.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree that upon satisfaction of each condition
precedent set forth in SECTION 6.01 hereof, the Existing Credit Agreement shall
be amended and restated in its entirety on the terms and conditions set forth
herein. It is the intention of the parties that upon satisfaction of the
conditions precedent, this Agreement shall amend, restate, supersede, and
replace the Existing Credit Agreement in its entirety; PROVIDED THAT (a) the
foregoing shall operate to renew, extend, amend, and modify the rights and
obligations of the parties under the Existing Credit Agreement (the "EXISTING
RIGHTS AND OBLIGATIONS"), but shall not effect a novation thereof, and (b)
except for such Liens securing the Existing Rights and Obligations which are no
longer required pursuant to the terms of this Agreement (and which are being
terminated and released pursuant to express written instruments to such effect
duly filed and recorded in the appropriate jurisdictions), the Liens securing
the
<PAGE> 9
Existing Rights and Obligations shall not be extinguished, but shall be carried
forward and shall secure the Obligations as defined herein and as renewed,
extended, amended, and modified hereby. Borrower, Agents, and Lenders hereby
further agree as follows:
ARTICLE 1 - DEFINITIONS.
1.01. DEFINED TERMS. As used in this Agreement, the following terms
have the respective meanings assigned them in this Article or in the sections or
subsections referred to below:
ABR LOAN- means a Loan bearing interest with reference to the Adjusted
Base Rate.
ADDITIONAL PROPERTIES- has the meaning given that term in SECTION 4.03.
ADMINISTRATIVE AGENT- means Bank One, Texas, N.A., in its capacity as
Administrative Agent for Lenders.
ADJUSTED BASE RATE- means, for any day, a rate per annum (rounded
upwards, if necessary to the next 1/16 of 1%) equal to the greater of (a) the
Base Rate in effect on that day or (b) the Federal Funds Rate in effect on that
day plus 1/2 of 1%; any change in the Adjusted Base Rate due to a change in the
Base Rate or the Federal Funds Rate shall be effective as of the opening of
business on the effective day of the change in the Base Rate or the Federal
Funds Rate, respectively.
ADVANCE- means, with respect to any Person, any loan, advance, or
extension of credit to any other Person.
AFFILIATE- means, as to any person, any other Person (other than a
wholly owned Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, that Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of that Person or (b) direct or cause the
direction of the management and policies of that Person, whether by contract or
otherwise.
AGENT- means any of Administrative Agent, Syndication Agent, and
Documentation Agent, and "AGENTS" means Administrative Agent, Syndication Agent,
and Documentation Agent.
AGREEMENT- means this Amended and Restated Credit Agreement, including
the Schedules and Exhibits hereto, as the same may be amended, supplemented, or
otherwise modified from time to time.
2
<PAGE> 10
APPALACHIAN PROPERTIES- means all of Borrower's Oil and Gas Properties
in the states of Michigan, New York, Ohio, Pennsylvania, and West Virginia.
APPLICABLE MARGIN- means, on any day, the basis points set out below,
determined based upon the type of Loan and the Borrowing Base Usage on any such
day:
BORROWING BASE USAGE
<TABLE>
<S> <C> <C> <C> <C>
less than 40% 40% less than 60% 60% less than 80% 80%
- -------------------------------- -------------------- ------------------- ------------------- ----------------------
Eurodollar Loans 150 basis points 175 basis points 200 basis points 225 basis points
- -------------------------------- -------------------- ------------------- ------------------- ----------------------
ABR Loans 25 basis points 50 basis points 75 basis points 100 basis points
</TABLE>
ASSIGNMENT- has the meaning given that term in SECTION 10.10.
AUTHORIZED OFFICER- means, as to any Person, its Chairman, President,
or Chief Financial Officer duly authorized to act on behalf of that Person.
BASE RATE- means the rate of interest per annum publicly announced from
time to time by Administrative Agent as its "base rate" or "prime rate" of
interest, which rate may not be the lowest, best, or most favorable rate of
interest which Administrative Agent may charge on loans to its customers.
BORROWER- means Range Resources Corporation, a Delaware corporation.
BORROWER'S OIL AND GAS PROPERTIES- means all oil and gas properties,
pipelines, gathering systems, gas processing plants, and other similar assets
owned by Borrower and its Consolidated Subsidiaries, including related personal
property and other fixed assets and all related easements, servitudes, and
similar real property interests owned by Borrower and its Consolidated
Subsidiaries.
BORROWING- means any disbursement to Borrower under, or to satisfy the
obligations of the Loan Parties under, any of the Loan Documents. Any Borrowing
comprised of ABR Loans is an "ABR BORROWING", and any Borrowing comprised of
Eurodollar Loans is a "EURODOLLAR BORROWING."
Amended and Restated Credit Agreement - Page 3
<PAGE> 11
BORROWING BASE- means, at the time of any Determination, the amount
then in effect as determined in accordance with Article 4.
BORROWING BASE DEFICIENCY- means, at any time, the amount by which the
aggregate of all Outstanding Obligations exceeds the Borrowing Base then in
effect. For purposes of determining the existence of and amount of any Borrowing
Base Deficiency, Letter of Credit Outstandings will not be deemed to be
outstanding hereunder to the extent they have been cash collateralized in the
manner required by SECTION 3.09.
BORROWING BASE USAGE- means at any time the quotient, expressed as a
percentage, of (a) the aggregate Outstanding Obligations at such time, divided
by (b) the Borrowing Base in effect at such time.
BORROWING DATE- means any Business Day specified in a Notice of
Borrowing or Request for Letter of Credit as a date on which Borrower requests a
Borrowing hereunder or that an Issuing Lender issue a Letter of Credit
hereunder.
BUSINESS DAY- means any day except a Saturday, Sunday, or other day on
which national banks in Dallas, Texas, are authorized or required by law to
close and, if the applicable day relates to a Eurodollar Loan, a day on which
dealings in dollar deposits are also carried on in the applicable interbank
market and banks are open for business in such market.
CAPITAL LEASE- means, for any Person as of any date, any lease of
property, real or personal, the obligations of the lessee in respect of which
are required in accordance with GAAP to be capitalized on a balance sheet of the
lessee.
CLOSING DATE- means the date that all conditions precedent set out in
SECTION 6.01 below have been satisfied, in each case satisfactory to Agents.
CODE- means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and published interpretations thereof.
COLLATERAL- means the Mortgaged Properties and all other assets of the
Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to
be created by any Security Document.
COMMITMENT- means, with respect to any Lender, its commitment to make
Loans and participate in Letters of Credit hereunder in an aggregate amount
outstanding at any time not in excess of the amount of its Commitment as set
forth in SCHEDULE 1 hereto.
4
<PAGE> 12
COMMITMENT PERCENTAGE- means, with respect to any Lender at any time,
the Commitment Percentage for that Lender set forth on SCHEDULE 1 hereto.
COMMITMENT PERIOD- means the period from and including the date hereof
to but not including the Termination Date or the earlier date on which the Total
Commitment shall terminate as provided herein.
COMMONLY CONTROLLED ENTITY- means an entity, whether or not
incorporated, which is under common control with Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes Borrower and which is
treated as a single employer under SECTION 414 of the Code.
CONSOLIDATED INTEREST EXPENSE- means with respect to Borrower and the
Consolidated Subsidiaries on a consolidated basis for any period, the sum of (a)
gross interest expense (including all cash and accrued interest expense) of
Borrower and the Consolidated Subsidiaries for that period on a consolidated
basis, including (i) the amortization of debt discounts, (ii) the amortization
of all fees payable in connection with the occurrence of Debt to the extent
included in interest expense, and (iii) the portion of any payments or accruals
with respect to Capital Leases allocable to interest expense and (b) capitalized
interest of Borrower and the Consolidated Subsidiaries on a consolidated basis.
CONSOLIDATED NET INCOME- means for any period, net income of Borrower
and the Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP.
CONSOLIDATED SUBSIDIARY- or "CONSOLIDATED SUBSIDIARIES" means, for any
person, at any time, any Subsidiary or other entity the accounts of which would
be consolidated with those of that Person into its consolidated financial
statements as of that time.
CONSOLIDATED TANGIBLE NET WORTH- means, for any Person as of any date,
the consolidated shareholder's equity of such Person and its Consolidated
Subsidiaries which would be reflected on a consolidated balance sheet for such
Person and its Consolidated Subsidiaries prepared as of such date in accordance
with GAAP less the consolidated Intangible Assets of such Person as of such
date. For purposes of this definition, "INTANGIBLE ASSETS" means the amount (to
the extent reflected in determining such consolidated shareholder's equity) of
all unamortized debt discount and expense, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights,
organization expenses, and other intangible items.
DEBT- of any Person means at any date, without duplication, (a) all
obligations of that Person for borrowed money or for the purchase price of
property, (b) all obligations of that Person evidenced by bonds, debentures,
notes, or other similar instruments, (c) all other indebtedness (including
obligations under Capital Leases, other than usual and customary oil and gas
leases) of that Person on which interest charges are customarily paid or
accrued, (d) all Guarantees by that Person, (e) the unfunded or unreimbursed
portion of all letters of credit issued for the account of that Person, (f) any
indebtedness
Amended and Restated Credit Agreement - Page 5
<PAGE> 13
or other obligation secured by a Lien on the assets of such Person, whether or
not assumed by such Person, and (g) all liability of that Person as a general
partner of a partnership for obligations of that partnership of the nature
described in (a) through (f) preceding.
DEFAULT- means any condition or event which constitutes an Event of
Default or which with the giving of notice, the lapse of time, or both, would,
unless cured or waived, become an Event of Default.
DETERMINATION- means any Periodic Determination or Special
Determination.
DETERMINATION DATE- means, (i) with respect to any Special
Determination, the date that is 30 days after the date of the applicable Request
for Determination, and (ii) with respect to any Periodic Determination, each
October 1 and April 1, commencing April 1, 2000.
DISTRIBUTION- by any Person, means (a) with respect to any stock issued
by that Person, any limited liability company interest of that Person, or any
partnership interest of that Person, the retirement, redemption, purchase,
re-purchase, or other acquisition for value of any stock, partnership, or
limited liability company interest, (b) the declaration or payment of any cash
dividend or other distribution on or with respect to any stock, partnership, or
limited liability company interest of that Person, and (c) any other payment by
that Person with respect to its stock, partnership, or limited liability company
interest.
DOCUMENTATION AGENT- means Bank of America, N.A., in its capacity as
Documentation Agent for Lenders.
EBITDA- means, for any period, Consolidated Net Income for that period,
PLUS, without duplication and to the extent deducted from revenues in
determining Consolidated Net Income for that period, (a) the aggregate amount of
Consolidated Interest Expense for that period, (b) the aggregate amount of
letter of credit fees paid during that period, (c) the aggregate amount of
income tax expense for that period, (d) all amounts attributable to
depreciation, depletion and amortization for that period, and (e) all non-cash,
extraordinary expenses during that period, and MINUS, without duplication and to
the extent added to revenues in determining Consolidated Net Income for that
period, all non-cash, extraordinary income during that period, in each case
determined in accordance with GAAP.
ERISA- means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
6
<PAGE> 14
ENVIRONMENTAL LAWS- means any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, or other legally enforceable requirement
(including, without limitation, common law) of any foreign government, the
United States, or any state, local, municipal or other governmental authority,
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health as it relates to the
environment, as has been, is now, or may at any time hereafter be, in effect.
EQUITY- means shares of capital stock or a partnership, profits,
capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Person.
EURODOLLAR BASE RATE- applicable to any Interest Period means the rate
per annum determined by Administrative Agent (rounded upward, if necessary, to
the next higher 1/64 of 1%) at which deposits in dollars are offered to
Administrative Agent by first class banks in the eurodollar interbank market
selected by Administrative Agent as of the first day of the Interest Period in
an amount approximately equal to the principal amount of the Eurodollar Loan to
which the Interest Period is to apply and for a period of time comparable to the
Interest Period.
EURODOLLAR LOAN- means a Loan bearing interest with reference to the
Eurodollar Rate; each Eurodollar Loan having a different Interest Period shall
be deemed to be a separate Eurodollar Loan.
EURODOLLAR RATE- means, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum equal to the quotient
obtained (rounded upward, if necessary to the next higher 1/64 of 1%) by
dividing (i) the applicable Eurodollar Base Rate by (ii) 1.00, minus the
Eurodollar Reserve Percentage, adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Percentage.
EURODOLLAR RESERVE PERCENTAGE- means, for any day as applied to a
Eurodollar Loan, that percentage (expressed as a decimal) which is in effect on
that day, as prescribed by the Board of Governors of the Federal Reserve System
or other Governmental Authority having jurisdiction with respect thereto for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System, in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
Eurodollar Rate is determined or any category of extension of credit or other
assets that include Eurodollar Loans).
EVENT OF DEFAULT- means any of the events specified in SECTION
8.01.
EXISTING CREDIT AGREEMENT- has the meaning given that term in the
recitals hereto.
Amended and Restated Credit Agreement - Page 7
<PAGE> 15
EXISTING MORTGAGE AMENDMENT- means one or more Amendments to Mortgages,
UCC-3 Amendments and other documents, instruments, and agreements in form and
substance acceptable to Administrative Agent to be entered into by and among
Borrower or the pertinent Subsidiaries and Bank One, Texas, N.A. in its capacity
as Administrative Agent, pursuant to which the Existing Mortgages shall be
modified, amended, renewed, and extended to (a) reflect the renewal, extension,
amendment, and modification of the Existing Rights and Obligations pursuant to
this Agreement, and (b) to secure the Obligations as defined herein.
EXISTING MORTGAGES- means the mortgages, deeds of trust, security
agreements, financing statements and assignments of production executed by
Borrower and its Subsidiaries in favor of Bank One, Texas, N.A. as
Administrative Agent under the Existing Credit Agreement to secure the Existing
Rights and Obligations.
EXISTING MORTGAGED PROPERTIES- means the oil and gas properties owned
by Borrower and its Subsidiaries which are subject to the Liens created by the
Existing Mortgages to secure the Existing Rights and Obligations.
EXISTING RIGHTS AND OBLIGATIONS- has the meaning given that term in the
recitals hereto.
FEDERAL FUNDS RATE- means, as of any date, the rate per annum (rounded
upwards, if necessary to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on that date, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding that
date, PROVIDED THAT (i) if the day for which that rate is to be determined is
not a Business Day, the Federal Funds Rate for that day shall be the rate on
such transactions on the next preceding Business Day, as so published on the
next succeeding Business Day, and (ii) if no such rate is so published on the
next succeeding Business Day, the Federal Funds Rate for that day shall be the
average rate charged to Administrative Agent on that day on such transactions as
determined by Administrative Agent.
GAAP- means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants or in statements of the
Financial Accounting Standards Board or their respective successors and which
are applicable in the circumstances as of the date in question (accounting
principles are applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects to those
accounting principles applied in a preceding period).
GLEP- has the meaning given that term in the recitals hereto.
8
<PAGE> 16
GLEP TRANSACTION- means, collectively, the (i) transaction contemplated
by a Letter of Intent dated June 23, 1999, between Borrower and FirstEnergy,
Inc., by which Borrower or its Subsidiaries, as appropriate, will contribute the
Appalachian Properties to GLEP for an equity interest in GLEP equal to 50%, and
(ii) the funding of GLEP's $275,000,000 credit facility.
GOVERNMENTAL AUTHORITY- means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government.
GUARANTEE- by any Person means any obligation, contingent or otherwise,
of that Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of that Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by "comfort letter"
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against loss in
respect thereof (in whole or in part), PROVIDED THAT the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
GUARANTY AGREEMENT- means a Guaranty Agreement substantially in the
form of EXHIBIT B attached hereto (with applicable conforming changes) to be
executed by each existing and future Subsidiary of Borrower (excluding REFC), in
favor of Lenders, pursuant to which each such Subsidiary guarantees payment and
performance in full of the Obligations.
HEDGE TRANSACTIONS- means any commodity, interest rate, currency or
other swap, option, collar, futures contract, advance payment contract or other
contract pursuant to which a Person hedges risks related to commodity prices,
interest rates, currency exchange rates, securities prices or financial market
conditions. Hedge Transactions expressly include Oil and Gas Hedge Transactions.
INDENTURE- means that certain Indenture dated as of March 14, 1997, by
and between Borrower and Fleet National Bank, as Trustee, which Indenture sets
forth certain terms applicable to the Subordinate Notes.
Amended and Restated Credit Agreement - Page 9
<PAGE> 17
INITIAL BORROWING BASE- means a Borrowing Base in the amount of
$160,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the April 1, 2000, Periodic Determination.
INITIAL RESERVE REPORT- means the Post-Divestiture Reserve Summary as
of June 30, 1999, prepared by Borrower for its Southwest and Gulf Coast Business
Units.
INTELLECTUAL PROPERTY- has the meaning given that term in SECTION
7.02(Q).
INTEREST PERIOD- means, with respect to each Eurodollar Loan, the
period commencing on the date that Loan is made and ending one, two, three, six,
nine, or twelve months thereafter, subject to availability, as Borrower may
elect, PROVIDED THAT:
(i) any Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless that Business Day falls in another calendar month, in which
case the Interest Period will end on the next preceding Business Day;
(ii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of the Interest Period) will,
subject to clause (iii) below, end on the last Business Day of a calendar month;
(iii) if any Interest Period includes a date on which
any payment of principal of the Loan is required to be made hereunder, but does
not end on that date, then (A) the principal amount of each Eurodollar Loan
required to be repaid on that date shall have an Interest Period ending on that
date and (B) the remainder of the Eurodollar Loan shall have an Interest Period
determined as set forth above; and
(iv) No Interest Period shall extend past the
Termination Date.
INVESTMENT- means, with respect to any Person, any capital contribution
to, investment in, or purchase of the stock securities of, or interests in, any
other Person.
ISSUING LENDER- means any Agent selected by Borrower, in its capacity
as issuer of a Letter of Credit.
LENDER- means any financial institution listed on SCHEDULE 1 hereto as
having a Commitment, and its successors and assigns, and "LENDERS" shall mean
all Lenders.
LENDER TERMINATION DATE- has the meaning given that term in SECTION
10.10.
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LENDING OFFICE- means, with respect to any Lender, for each type of
Loan, the Lending Office of that Lender (or of an affiliate of that Lender)
designated for that type of Loan on the signature pages hereof or another office
of that Lender (or of an affiliate of that Lender) as that Lender may from time
to time specify to Borrower and Administrative Agent as the office at which its
Loans of that type are to be made and maintained.
LETTER OF CREDIT- means a letter of credit issued for the account of
Borrower pursuant to SECTION 3.01(a).
LETTER OF CREDIT APPLICATION- has the meaning given this term in
SECTION 3.02.
LETTER OF CREDIT OUTSTANDINGS- means, at any time, the sum of (a) the
aggregate amount available for drawing under Letters of Credit then outstanding
and (b) the aggregate amount of all drawings under Letters of Credit which have
not been reimbursed.
LETTER OF CREDIT PARTICIPATING INTEREST- means with respect to any
Letter of Credit (a) in the case of the Issuing Lender with respect thereto, its
interest in the Letter of Credit and any Letter of Credit Application relating
thereto after giving effect to the granting of participating interests therein,
if any, pursuant hereto and (b) in the case of each Lender, its undivided
participating interest in the Letter of Credit and any Letter of Credit
Application relating thereto.
LIEN- means with respect to any asset, any mortgage, lien, pledge,
charge, security interest, or encumbrance of any kind in respect of the asset.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, Capital
Lease, or other title retention agreement relating to the asset.
LOAN- means a loan made pursuant to SECTION 2.01, which can be either
an ABR Loan or a Eurodollar Loan, and "LOANS" means ABR Loans and Eurodollar
Loans and any combination thereof.
LOAN DOCUMENTS- means this Agreement, the Notes, the Mortgages, the
Letter of Credit Applications, the Security Documents, and all other
certificates, documents or instruments delivered in connection with this
Agreement, as they may be amended from time to time.
Amended and Restated Credit Agreement - Page 11
<PAGE> 19
LOAN PARTIES- means Borrower and each Subsidiary of Borrower which is
now or hereafter becomes a party to a Loan Document.
MANAGING AGENT- means Bankers Trust Company, in its capacity as
Managing Agent for Lenders.
MAJORITY LENDERS- means at any time Lenders whose Commitment
Percentages aggregate at least 66.67%.
MATERIAL ADVERSE EFFECT- means any circumstance or event that has had
or would be reasonably likely to have a material adverse effect on (a) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of Administrative Agent, any other Agent, or Lenders hereunder, (b) the
business, assets, property, or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole, (c) the ability of Borrower or any
Subsidiary of Borrower to perform any of its obligations or substantially all of
its Obligations under the Loan Documents.
MAXIMUM LAWFUL RATE- means, for each Lender, the maximum rate (or, if
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the portion of the Loans owed to that Lender at such time to exceed the maximum
amount which that Lender would be allowed to contract for, charge, take,
reserve, or receive under applicable law, taking into account to the extent
required under applicable law, any and all relevant payments or charges under
the Loan Documents. To the extent the laws of the State of Texas are applicable
for purposes of determining the "Maximum Lawful Rate," such term shall mean the
"indicated rate ceiling" from time to time in effect under Article 1.04, Title
79, Revised Civil Statutes of Texas, 1925, as amended, or, if permitted by
applicable law and effective upon the giving of the notices required by such
Article 1.04 (or effective upon any other date otherwise specified by applicable
law), the "quarterly ceiling" or "annualized ceiling" from time to time in
effect under such Article 1.04, whichever Administrative Agent (with the
approval of Majority Lenders) shall elect to substitute for the "indicated rate
ceiling," and VICE VERSA, each such substitution to have the effect provided in
such Article 1.04, and Administrative Agent (with the approval of Required
Lenders) shall be entitled to make such election from time to time and one or
more times and, without notice to Borrower, to leave any such substitute rate in
effect for subsequent periods in accordance with SUBSECTION (h)(1) of such
Article 1.04.
MORTGAGED PROPERTIES- means Borrower's Oil and Gas Properties that are
now or hereafter become subject to Mortgages.
MORTGAGES- means each mortgage, deed of trust, security agreement,
financing statement, assignment, and each other document and instrument
(including division and
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transfer orders), previously granted or hereafter granted to Administrative
Agent, for the ratable benefit of each Lender, to secure repayment of the
Obligations (including, without limitation, the Existing Mortgages), as amended,
modified, or supplemented from time to time.
MULTIEMPLOYER PLAN- means a Plan described in Section 4001(a)(3) of
ERISA.
NET CASH PROCEEDS- means (a) with respect to the sale, transfer, lease
or other disposition of any asset by Borrower or any Subsidiary, an amount
certified in reasonable detail by an Authorized Officer of Borrower to Lenders
as the excess, if any, of (i) the sum of cash and cash equivalents received in
connection with such sale, transfer, lease or other disposition over (ii) the
sum of (A) amounts placed in escrow or held as a reserve, in accordance with
GAAP, against any liabilities associated with the sale or disposition (except
that, to the extent and as of the time any of the amounts is released from the
reserve, the amounts shall constitute Net Cash Proceeds), and (B) the reasonable
out-of-pocket expenses actually incurred by Borrower or its Subsidiary in
connection with the sale, transfer, lease or other disposition, and (b) with
respect to the sale or issuance of any Equity by Borrower or any Subsidiary, an
amount certified in reasonable detail by an Authorized Officer of Borrower to
Lenders as the difference of (i) the sum of the cash and cash equivalents
received in connection with the sale or issuance minus, without duplication,
(ii) the underwriting discounts and commissions (if any) and other reasonable
fees, out-of-pocket expenses, and other costs actually incurred by Borrower or
the Subsidiary in connection with the sale or issuance and (c) with respect to
the incurrence of Debt by Borrower or any Subsidiary, an amount certified in
reasonable detail by an Authorized Officer of Borrower to Lenders as the excess
of (i) the sum of the cash and cash equivalents received in connection with the
incurrence of Debt over (ii) the reasonable fees, out-of-pocket expenses, and
other costs actually incurred by Borrower or any Subsidiary in connection with
the incurrence of Debt.
NOTE- means, for each Lender, the promissory note evidencing Loans made
by such Lender hereunder and any renewals, extensions, or modifications of it,
and "NOTES" means all of such Notes.
NOTICE OF BORROWING- has the meaning given that term in SECTION 2.02.
NOTICE OF TERMINATION- has the meaning given that term in SECTION
10.10.
OBLIGATIONS- means, collectively, all present and future indebtedness,
obligations and liabilities, and all renewals and extensions thereof, or any
part thereof, of Borrower or any of its Subsidiaries to any Lender or to any
Affiliate of any Lender (a) arising pursuant to the Loan Documents, and all
interest accrued thereon and costs, expenses, and attorneys' fees incurred in
the enforcement or collection thereof, and (b) arising
Amended and Restated Credit Agreement - Page 13
<PAGE> 21
under or in connection with any Hedge Transaction entered into between Borrower
or any Subsidiary and any Lender or any Affiliate of any Lender, regardless of
whether the indebtedness, obligations and liabilities are direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several or joint and
several.
OIL AND GAS HEDGE TRANSACTIONS- means transactions providing for the
hedging, forward sale, or swap of crude oil or natural gas by Borrower or its
Subsidiaries (excluding REFC).
OUTSTANDING OBLIGATIONS- means, at any time, the sum of the aggregate
principal amount of the Loans and the Letter of Credit Outstandings.
PBGC- means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any entity succeeding to any or
all of its functions under ERISA.
PARTICIPATING LENDER- means with respect to any Letter of Credit, any
Lender (other than the Issuing Lender with respect to such Letter of Credit)
with respect to its Letter of Credit Participating Interest.
PERIODIC DETERMINATION- means any Determination of the Borrowing Base
pursuant to SECTION 4.02.
PERMITTED ENCUMBRANCES- means with respect to any asset:
(a) Liens securing the Obligations in favor of Lenders;
(b) Minor defects in title which do not secure the payment of
money and otherwise have no material adverse effect on the value or operation of
oil and gas properties, and for the purposes of this Agreement, a minor defect
in title shall include (i) those instances where record title to an oil and gas
lease is in a predecessor in title to Borrower or any of its Subsidiaries, but
where Borrower or any of its Subsidiaries, by reason of a farmout or other
instrument is presently entitled to receive an assignment of its interest or
other evidence of title and the appropriate Person is proceeding diligently to
obtain the assignment, and (ii) easements, rights-of-way, servitudes, permits,
surface leases and other similar rights in respect of surface operations, and
easements for pipelines, streets, alleys, highways, telephone lines, power
lines, railways, and other easements and rights-of-way, on, over or in respect
of any of the properties of Borrower (or its Subsidiaries, as applicable) that
are customarily granted in the oil and gas industry; so long as, with respect to
any of the minor defects in title, the same are minor defects which are
customary and usual in the oil and gas industry and which are customarily
accepted by a reasonably prudent operator dealing with its properties;
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(c) Inchoate statutory or operators' liens which are not
delinquent securing obligations for labor, services, materials, and supplies
furnished to oil and gas properties;
(d) Mechanic's, materialmen's, warehouseman's, journeyman's
and carrier's liens, and other similar liens arising by operation of law or
statute or incident to the exploration, development, operation, and maintenance
of oil and gas properties, each of which arises in the ordinary course of
business and is in respect of obligations that have not been outstanding more
than 90 days or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been maintained in accordance
with GAAP;
(e) Production sales contracts, gas balancing agreements, and
joint operating agreements entered into in the ordinary course of business and
which do not involve any advance payments for production to be produced at a
later date; PROVIDED THAT the amount of all gas imbalances known to any
Authorized Officer of Borrower shall have been disclosed or otherwise taken into
account in the Reserve Reports delivered to Lenders hereunder;
(f) Liens for Taxes or other assessments not yet due or not
yet delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action for which adequate reserves have
been established;
(g) All rights to consent by, required notices to, filings
with, or other actions by, Governmental Authorities in connection with the sale
or conveyance of oil and gas leases or interests therein if Borrower (or its
Subsidiaries, if applicable) is entitled to such consent, the same are
customarily obtained subsequent to the sale or conveyance, and the appropriate
Person is proceeding diligently to obtain the consent, notice or filing;
(h) The terms and provisions of any of the oil and gas leases
pursuant to which Borrower (or its Subsidiaries, as applicable) derives its
interests;
(i) Lease burdens payable to third parties which are deducted
in the calculation of discounted present value in the Reserve Reports including,
without limitation, any royalty, overriding royalty, net profits interest,
production payment, carried interest, or reversionary working interest and which
have been disclosed to Administrative Agent in writing; PROVIDED, HOWEVER, THAT
Borrower shall not be required to disclose the lease burdens unless they are not
customarily and usually found in the oil and gas industry or unless they
obligate Borrower, or a Subsidiary, as applicable, in a fashion not customarily
and usually found in the oil and gas industry;
(j) All applicable laws, rules, and orders of Governmental
Authorities having jurisdiction of the affairs of Borrower or a Subsidiary; and
Amended and Restated Credit Agreement - Page 15
<PAGE> 23
(k) Liens securing Debt incurred to finance the acquisition of
the assets which are the subject of the Liens to the extent such Debt is
permitted by SECTION 7.03(b)(2).
PERMITTED INVESTMENTS- means with respect to Borrower and its
Subsidiaries: (a) Investments by Borrower in its Subsidiaries (excluding REFC)
or by its Subsidiaries in other Subsidiaries (excluding REFC) or in Borrower;
(b) Investments in (1) direct obligations of the United States or any agency
thereof with maturities of one year or less from the date of acquisition; (2)
commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investor Service, Inc.; (3) certificates of
deposit with maturities of one year or less from the date of acquisition issued
by any commercial bank which is a member of the Federal Reserve System and has
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (4) Equity, obligations, or securities received in settlement of
debts (created in the ordinary course of business) owing to Borrower or any
Subsidiary; and (5) Oil and Gas Hedge Transactions permitted by SECTION 7.03(i);
and (c) Investments in Equity of publicly traded companies, PROVIDED THAT the
aggregate cost of all Investments which are outstanding pursuant to this clause
(c) at any time shall not exceed an amount equal to 10% of the Borrowing Base in
effect at such time.
PERSON- means an individual, corporation, partnership, association,
business trust, joint stock company, trust, unincorporated association, joint
venture, or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
PLAN- means, at a particular time, any employee benefit pension plan
which is subject to Title IV of ERISA and in respect of which Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at that time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
PLEDGE AGREEMENT- means a Pledge Agreement substantially in the form of
EXHIBIT C attached hereto (with applicable conforming changes) to be executed by
Borrower and each existing Subsidiary (excluding REFC) and any future Subsidiary
of Borrower (to the extent any such Subsidiary owns any outstanding Equity of
another Subsidiary of Borrower), pursuant to which Borrower or such Subsidiary
shall pledge to Administrative Agent, for the ratable benefit of Lenders, all of
the issued and outstanding Equity of any Subsidiary owned by such Person to
secure the Obligations.
PREFERRED STOCK- means Borrower's Series C Convertible Preferred Stock
containing the rights and preferences set forth in, and issued pursuant to, the
Preferred Stock Designation.
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PREFERRED STOCK DESIGNATION- means the Certificate of Designation of
Rights and References of Series C Preferred Stock filed with the Secretary of
State of Delaware on or about November 1, 1995, setting forth the rights and
preferences of the Preferred Stock.
PRESENT VALUE- means pre-tax value, discounted at 10%, of future net
cash flows from estimated proved reserves, calculated holding prices and costs
constant at amounts in effect on the date of the Reserve Report (unless such
prices or costs are subject to change pursuant to contractual provisions) and
otherwise in accordance with the Securities and Exchange Commission's rules for
inclusion of oil and gas reserve information in financial statements filed with
the Commission.
PROHIBITED TRANSACTION- means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
PROPERTY DISPOSITION- has the meaning given that term in SECTION
7.03(c).
REFC- means Range Energy Finance Corporation, a Delaware corporation.
REFC GUARANTEE- means a Guarantee by Borrower of up to $50,000,000 in
the aggregate of REFC's Debt or other obligations owed to REFC's lender
effective only in the event of a failure of title to an interest (i) acquired by
REFC from a third party to whom REFC has provided financing and (ii) considered
by REFC's lender for purposes of determining REFC's borrowing base.
REPLACEMENT LENDERS- has the meaning given that term in SECTION 10.10.
REPORTABLE EVENT- means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19, or .20 of PBGC Reg.
'2615.
REQUEST FOR DETERMINATION- means Borrower's or Required Lenders'
request for a Special Determination of the Borrowing Base made pursuant to
SECTIONS 4.03 or 4.04.
REQUEST FOR LETTER OF CREDIT- has the meaning given that term in
SECTION 3.02.
REQUIRED LENDERS- means, at any time, Lenders whose Commitment
Percentages aggregate at least 75%.
Amended and Restated Credit Agreement - Page 17
<PAGE> 25
RESERVE REPORT- means an engineering analysis of Borrower's Oil and Gas
Properties (or properties proposed to be acquired by Borrower or one or more of
its Subsidiaries) in form and substance acceptable to Required Lenders prepared
by independent petroleum engineers acceptable to Required Lenders in accordance
with customary and prudent practices in the petroleum engineering industry and
Financial Accounting Standards Board Statement 69, which designates the owner of
each asset that is the subject of the Reserve Report.
RESTRICTED PAYMENT- means (a) any Distribution by Borrower or any
Subsidiary of Borrower to any Person other than Borrower or another wholly-owned
Subsidiary of Borrower, (b) any Distribution by Borrower or any subsidiary of
Borrower to REFC, (c) the issuance of a Guarantee by Borrower or a Subsidiary of
Borrower with respect to any Debt or other obligation of Borrower or any
Subsidiary (excluding (i) any Guarantee by a Subsidiary with respect to any Debt
or other obligation of Borrower or any Subsidiary of Borrower incurred in
connection with the Subordinate Notes, or any renewal, amendment, refinancing,
rearrangement, modification, or restatement thereof on terms and conditions
similar in all material respects to the notes issued pursuant to such offering
and (ii) the REFC Guarantee), and (d) the retirement, redemption, or prepayment
prior to the scheduled maturity by Borrower or any Subsidiary of Borrower of its
Subordinated Debt.
ROLLOVER NOTICE- has the meaning given that term in SECTION 2.07.
SECURITY DOCUMENTS- means the collective reference to the Guaranty
Agreement(s), the Pledge Agreement(s), the Security Agreement(s), the Mortgages,
and all other security documents hereafter delivered to Administrative Agent
granting a Lien on any asset or assets of any Person to secure the Obligations
and liabilities of Borrower hereunder and under any of the other Loan Documents
or to secure any guarantee of any the obligations and liabilities.
SENIOR DEBT- means, at any time outstanding, all Debt of Borrower and
its Subsidiaries except Subordinated Debt.
SPECIAL ACCOUNTS- means a Person's revenue distribution accounts and
other accounts at a Lender which are not solely for the benefit of that Person;
PROVIDED THAT accounts for the benefit of Borrower and one or more of its
Subsidiaries or for one or more Subsidiaries shall not be a "Special Account"
for purposes of this Agreement.
SPECIAL DETERMINATION- means any determination of the Borrowing Base
pursuant to SECTIONS 4.03 or 4.04.
STERLING GAS PLANT- means the gas processing plant located in Sterling
County, Texas, owned by Range Pipeline Systems, L.P., and all pipelines,
gathering systems, and other similar assets owned by such Person, including
related personal property and other
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fixed assets and all related servitudes, and similar real property interests
owned by such Person.
SUBORDINATE NOTES- means those certain 8.75% Senior Subordinate Notes
due January 15, 2007, as the same are more particularly described in the
Indenture.
SUBORDINATED DEBT- means Debt incurred by Borrower, the repayment of
which is subordinate (in a manner acceptable to Required Lenders, as evidenced
by their written approval) to Borrower's repayment of the Obligations, including
(a) notes created upon the exchange of Borrower's convertible exchangeable
Preferred Stock outstanding as of the Closing Date, (b) Debt under Borrower's 6%
convertible subordinated debentures due 2007, and (c) Debt incurred by Borrower
in accordance with the Subordinate Notes.
SUBSIDIARY- means, for any Person, any corporation, partnership,
limited liability company, or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions (including that
of a general partner) are at the time directly or indirectly owned,
collectively, by such Person and any Subsidiaries of such Person. The term
Subsidiary shall include Subsidiaries of Subsidiaries (and so on).
SYNDICATION AGENT- means Chase Bank of Texas, N.A., in its capacity as
Syndication Agent for Lenders.
TAXES- means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, interest equalization
taxes, capital transaction taxes, foreign exchange taxes or other charges, or
other charges of any nature whatsoever, from time to time or at any time imposed
by law or any federal, state or local governmental agency. "TAX" means any one
of the foregoing.
TERMINATED LENDER- has the meaning given that term in SECTION 10.10.
TERMINATION DATE- means February 14, 2003.
TOTAL COMMITMENT- means the Commitments of Lenders in an initial
aggregate amount of $225,000,000, as that amount may be reduced from time to
time pursuant to the terms of this Agreement.
TOTAL DEBT- means, at any time outstanding, all Debt of Borrower and
its Subsidiaries.
UNUSED AVAILABILITY- means, at any time during the Commitment Period,
the remainder of (i) the Borrowing Base at that time, minus (ii) the Outstanding
Obligations.
Amended and Restated Credit Agreement - Page 19
<PAGE> 27
YEAR 2000 PROBLEM- has the meaning given that term in SECTION 7.01(v).
1.02. OTHER DEFINITIONAL PROVISIONS. Other terms are defined within
this agreement. All definitions contained in this Agreement are equally
applicable to the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of similar import referring to
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article and Section
references pertain to this Agreement. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All petroleum terms
used herein have the meanings given them from time to time and at the time in
question by the Society of Professional Engineers of the American Institute of
Mining Engineers. Terms used herein that are defined in the Uniform Commercial
Code as adopted by the State of Texas, unless otherwise defined herein, shall
have the meanings specified in the Uniform Commercial Code as adopted by the
State of Texas.
ARTICLE 2 - AMOUNT AND TERMS OF COMMITMENTS.
2.01. COMMITMENTS. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make revolving loans (the "LOANS") to Borrower from
time to time during the Commitment Period in an aggregate principal amount not
to exceed at any one time outstanding the amount of that Lender's Commitment
reduced by an amount equal to that Lender's Participating Interests in Letters
of Credit then outstanding; PROVIDED THAT no Lender will make Loans if, after
giving effect thereto, the Outstanding Obligations would exceed the lesser of
(i) the Total Commitment or (ii) the Borrowing Base then in effect. During the
Commitment Period, Borrower may use the Commitments by borrowing, prepaying the
Loans in whole or in part, and reborrowing all in accordance with the terms and
conditions hereof.
(b) The Loans may be outstanding as ABR Loans or Eurodollar Loans or a
combination thereof, as determined by Borrower and notified to Administrative
Agent in accordance with SECTIONS 2.02 and 2.07; PROVIDED THAT no Loan shall be
made as a Eurodollar Loan after the day that is one month before the Termination
Date. Each type of Loan shall be made and maintained at each Lender's Lending
Office for that type of Loan. The failure of any Lender to make any requested
Loan to be made by it on the Borrowing Date specified for that Loan shall not
relieve the other Lenders of their obligation (if any) to make Loans on that
date, but no Lender shall be responsible for the failure of the other Lenders to
make Loans to be made by the other Lender. Each Borrowing shall (i) be in a
minimum principal amount of $1,000,000 or any larger integral multiple of
$100,000 (except that any ABR Loan may be in the amount of the unused portion of
the Total Commitment) and (ii) be made from each Lender ratably in accordance
with its respective Commitment Percentage. Notwithstanding any provision
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of this Agreement or the Loan Documents to the contrary, on the Closing Date and
continuously until repayment in full of all Loans or the termination of this
Agreement, whichever occurs first, there shall be and remain outstanding Loans
of not less than $1,000, the balance of which may not be prepaid.
2.02. PROCEDURE FOR BORROWING. (a) To request a Borrowing hereunder,
Borrower shall hand deliver or telecopy to Administrative Agent a Notice of
Borrowing in the form of EXHIBIT D hereto (a "NOTICE OF BORROWING") prior to
1:00 p.m. (Dallas, Texas time) at least one Business Day before the requested
Borrowing Date of each ABR Borrowing, and at least three Business Days before
the Borrowing Date of each Eurodollar Borrowing. Each Notice of Borrowing shall
specify (1) the Borrowing Date; (2) the aggregate amount of the Borrowing
requested; (3) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing, and (4) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto. Administrative Agent shall promptly notify
each Lender of Borrower's request, and not later than 12:00 noon (Dallas, Texas
time), on the Borrowing Date, each Lender will make available to Administrative
Agent at 1717 Main Street, 4th Floor Dallas, Texas 75201, in immediately
available funds, that Lender's Commitment Percentage of the aggregate amount of
such Borrowing. After Administrative Agent's receipt of these funds, not later
than 2:00 p.m. (Dallas, Texas time) on the Borrowing Date and upon fulfillment
of the applicable conditions set forth in Article 6, Administrative Agent will
make the proceeds of such Borrowing available to Borrower in immediately
available funds by crediting the amount thereof to Borrower's account with
Administrative Agent.
(b) All notices given by Borrower under this SECTION 2.02
shall be irrevocable and shall be given not later than 1:00 p.m. (Dallas, Texas
time) on a day which is not less than the number of Business Days specified
above for the notice.
2.03. NOTES. (a) All Loans made by each Lender shall be evidenced by,
and repaid with interest in accordance with a single promissory note of Borrower
(a "NOTE"), which shall be (i) in substantially the form of attached EXHIBIT A,
duly completed; (ii) be dated the date hereof; (iii) be in a face amount equal
to that Lender's Commitment; (iv) be payable to the order of that Lender for the
account of its applicable Lending Office; and (v) bear interest in accordance
with SECTION 2.04 hereof. Notwithstanding the principal amount of each Lender's
Note as stated on the face thereof, the amount of principal actually owing on
that Lender's Note at any given time shall be the aggregate of that Lender's
Loans made to Borrower, less all payments of principal actually received by such
Lender. The Loans shall mature on the Termination Date.
Amended and Restated Credit Agreement - Page 21
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(b) Simultaneously with the execution of this Agreement,
Administrative Agent shall deliver to each Lender the Note payable to that
Lender referenced in SECTION 2.03(a). Each Lender may endorse (and prior to any
transfer of its Note shall endorse) on the schedule attached to the Note held by
that Lender appropriate notations to evidence the date and amount of each Loan
made by it, the Interest Period applicable thereto, and the date and amount of
each payment of principal of any Loan made by Borrower with respect thereto,
PROVIDED THAT the failure by any Lender to so endorse its Note shall not affect
the liability of Borrower for the repayment of all amounts outstanding under the
Note together with interest thereon. Each Lender is hereby irrevocably
authorized by Borrower to endorse its Note and to attach to and make a part of
any Note a continuation of any such schedule as required.
2.04. INTEREST RATES AND PAYMENT DATES. Borrower shall pay interest to
Administrative Agent for the account of each Lender on the outstanding and
unpaid principal amount of that Lender's Loans made under this Agreement at a
rate per annum as follows:
(a) For each ABR Loan, at a rate equal to the sum of the
Adjusted Base Rate in effect from day to day plus the Applicable Margin,
PROVIDED THAT in no event will the rate charged hereunder or under any Note
exceed the Maximum Lawful Rate. Interest which accrues on each ABR Loan shall be
payable in arrears on the first day of January, April, July, and October of each
year.
(b) For each Eurodollar Loan, for the Interest Period
applicable thereto, at a rate equal to the sum of the Eurodollar Rate plus the
Applicable Margin, PROVIDED THAT in no event will the rate charged hereunder or
under any Note exceed the Maximum Lawful Rate. Interest which accrues on each
Eurodollar Loan shall be payable in arrears on the expiration of each applicable
Interest Period and, in the case of any Eurodollar Loan with an Interest Period
of longer than three months, at the expiration of each three-month period during
such Interest Period.
(c) Administrative Agent shall determine each interest rate
applicable to the Loans in accordance with the terms hereof. Administrative
Agent shall promptly notify Borrower and Lenders of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(d) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Adjusted Base Rate or the Eurodollar
Rate hereunder (the "CONTRACT RATE") is limited to the Maximum Lawful Rate, any
subsequent reductions in the contract rate shall not reduce the rate of interest
on the affected Loan below the Maximum Lawful Rate until the total amount of
interest accrued equals the amount of interest which would have accrued if the
contract rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of a Note, the total amount of
interest paid or accrued on such Note is less than the amount of interest
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which would have accrued if the contract rate had at all times been in effect
with respect thereto, then at that time, to the extent permitted by law,
Borrower shall pay to the holder of the Note an amount equal to the difference
between (i) the lesser of the amount of interest which would have accrued if the
contract rate had at all times been in effect and the amount of interest which
would have accrued if the Maximum Lawful Rate had at all times been in effect,
and (ii) the amount of interest actually paid on such Note.
(e) Any change in the interest rate on a Loan resulting from a
change in the Adjusted Base Rate or the Eurodollar Reserve Percentage shall be
effective as of the opening of business on the Business Day on which the change
becomes effective. Interest on the unpaid principal of (i) each Eurodollar Loan
shall be calculated on the basis of the actual days elapsed in a year consisting
of 360 days (except to the extent that such calculation would result in a
usurious rate, in which case a year consisting of 365 or 366 days, as the case
may be, shall be used), and (ii) each ABR Loan shall be calculated on the basis
of the actual days elapsed in a year consisting of 365 days or 366 days, as the
case may be.
(f) Any overdue principal of and, to the extent permitted by
law, overdue interest on any Loan (after giving effect to all grace periods)
shall bear interest payable on demand, for each day until paid at a rate per
annum equal to the lesser of (i) the sum of the Adjusted Base Rate plus 2% and
(ii) the Maximum Lawful Rate.
2.05. NON-RECEIPT OF FUNDS BY ADMINISTRATIVE AGENT. (a) Unless
Administrative Agent receives written notice from a Lender prior to the
Borrowing Date applicable to a Borrowing that such Lender will not make the
amount that would constitute its Commitment Percentage of the Borrowing,
available to Administrative Agent, Administrative Agent may assume that Lender
will make the funds available to Administrative Agent on the Borrowing Date, and
Administrative Agent may, but shall not be obligated to, in reliance upon that
assumption, make available to Borrower on the Borrowing Date a corresponding
amount. If such Lender has not made the funds available to Administrative Agent,
by the required time on the applicable Borrowing Date, that Lender agrees to
repay to Administrative Agent, immediately on demand, the corresponding amount
together with interest thereon, for each day from the date the amount is made
available to Borrower until the date the amount is repaid to Administrative
Agent, at the Federal Funds Rate for three Business Days and thereafter at the
Adjusted Base Rate. If such Lender shall repay to Administrative Agent the
corresponding amount, the amount so repaid shall constitute such Lender's Loan
for purposes of this Agreement. If such Lender does not pay the corresponding
amount immediately upon Administrative Agent's demand therefor, Administrative
Agent shall promptly notify Borrower, and Borrower shall immediately pay the
corresponding amount to Administrative Agent with interest thereon, for each day
from the date the amount is made available to Borrower until the date the amount
is repaid to Administrative Agent, at the rate of interest applicable at the
time to the proposed Loan.
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(b) Unless Administrative Agent receives notice from Borrower
prior to the date on which any payment is due to Lenders hereunder that Borrower
will not make the payment in full, Administrative Agent may assume that Borrower
has made the payment in full to Administrative Agent on that date, and
Administrative Agent in its sole discretion may, but is not be obligated to, in
reliance upon this assumption, cause to be distributed to each Lender on that
due date an amount equal to the amount then due that Lender. If and to the
extent Borrower does not make the payment in full to Administrative Agent, each
Lender shall repay to Administrative Agent immediately on demand the amount
distributed to that Lender together with interest thereon, for each day from the
date the amount is distributed to such Lender until the date the Lender repays
the amount to Administrative Agent, at the Federal Funds Rate for three Business
Days and thereafter at the Adjusted Base Rate.
2.06. USE OF PROCEEDS. The proceeds of the Loans made on or after the
Closing Date shall be used (a) to refinance indebtedness existing as of the
Closing Date of Borrower or any Subsidiary of Borrower excluding REFC; (b) for
payment of capital expenditures, drilling costs, and other expenses incurred by
Borrower and its Subsidiaries excluding REFC in the further development,
exploration, and production of Borrower's Oil and Gas Properties; (c) for
Borrower and its Subsidiaries excluding REFC to purchase additional oil and gas
properties; (d) for working capital and general corporate purposes, but only to
the extent that the use of proceeds for these purposes would be permitted under
the terms of this Agreement; (e) to fund reimbursement obligations with respect
to Letters of Credit; (f) for Permitted Investments, but excluding Equity of
publicly traded companies; and (g) for Restricted Payments permitted under this
Agreement.
2.07. CONVERSIONS AND RENEWALS. Borrower may elect from time to time to
convert all or a part of one type of Loan into another type of Loan or to renew
all or part of a Loan by giving Administrative Agent written notice thereof by
12:00 noon (Dallas, Texas time) at least one Business Day before the conversion
into an ABR Loan and at least three Business Days before the conversion into or
renewal of a Eurodollar Loan, specifying: (a) the renewal or conversion date;
(b) the amount of the Loan to be converted or renewed; and (c) in the case of
conversions, the type of Loan to be converted into; and (d) in the case of
renewals of or a conversion into Eurodollar Loans, the duration of the Interest
Period applicable thereto; PROVIDED THAT (i) the minimum principal amount of all
Eurodollar Loans outstanding and subject to the same Interest Period after a
renewal or conversion shall be $1,000,000 or any larger integral multiple of
$100,000; and (ii) Eurodollar Loans can be converted to ABR Loans only on the
last day of the Interest Period applicable thereto. All notices given by
Borrower under this SECTION 2.07 shall be irrevocable and shall be in the form
of EXHIBIT E hereto (a "ROLLOVER NOTICE"). If Borrower fails to give
Administrative Agent the notice as specified above for the renewal or conversion
of a Eurodollar Loan prior to the end of the Interest Period with respect
thereto, that Eurodollar Loan shall automatically be converted into an ABR Loan
on the last day of the Interest Period for the Loan.
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2.08. LIMITATION ON NUMBER OF EURODOLLAR LOANS. There may be no more
than an aggregate of ten Interest Periods applicable to outstanding Eurodollar
Loans in effect at any time, unless otherwise agreed by Lenders.
2.09. PREPAYMENTS. (a) Borrower may, without premium or penalty, upon
one Business Days' prior written notice to Administrative Agent, prepay the
Notes, in whole or in part, with accrued interest to the date of the prepayment
on the amount prepaid, PROVIDED THAT (i) each prepayment of less than the full
outstanding principal balance of the Notes shall be in a minimum amount equal to
$1,000,000 or any larger integral multiple of $100,000; and (ii) if Borrower
prepays the principal of any Eurodollar Loan on any date other than the last day
of the Interest Period applicable thereto, Borrower shall also pay to Lenders
the amounts specified in SECTION 10.06. Upon receipt of any prepayments,
Administrative Agent will promptly thereafter cause to be distributed the
prepayment to each Lender for the account of its applicable Lending Office in
the proportion that each Lender's Loan to which the prepayment applies bears to
the total amount of all Lenders' Loans to which the prepayment applies.
(b) Borrower shall make a mandatory prepayment on the Loans
(i) simultaneously with any reduction in the Borrowing Base pursuant to SECTION
4.05 hereof in an amount sufficient to eliminate any Borrowing Base Deficiency
resulting from such prepayment, and (ii) at each other time required by SECTION
4.06 hereof as a result of any Borrowing Base Deficiency.
(c) Any voluntary prepayment of a Eurodollar Loan hereunder
shall be (i) made together with interest accrued (through the date of the
prepayment) on the principal amount prepaid and (ii) applied first to accrued
interest and then to principal.
2.10. MANNER AND APPLICATION OF PAYMENTS. (a) All payments of principal
of, and interest on, any Note shall be made by Borrower to Administrative Agent
before 1:00 p.m. (Dallas, Texas time), in federal or other immediately available
funds, at Administrative Agent's office at 1717 Main Street, 4th Floor, Dallas,
Texas 75201, for the account of the applicable Lending Office of each Lender.
Should the principal of, or any installment of the principal or interest on, any
Note, or any commitment fee, become due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day. Whenever any payment to be made under this Agreement or under any
Note shall be stated to be due on a day other than a Business Day, the payment
shall be made on the next succeeding Business Day, and the extension of time
shall be included in the computation of the payment of interest and the
commitment fee, as the case may be, except, in the case of a Eurodollar Loan, if
the result of the extension would be to extend the payment into another calendar
month, the payment shall be made on the immediately preceding Business Day. All
payments made
Amended and Restated Credit Agreement - Page 25
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under the Loan Documents shall be credited, to the extent of the amount thereof,
in the following manner: (i) first to fees, costs and expenses which Borrower
has agreed to pay under the Loan Documents; (ii) second, against the amount of
interest accrued and unpaid on the Notes as of the date of the payment; (iii)
third, against all principal (if any) due and owing on the Notes as of the date
of the payment; (iv) fourth, as a prepayment of outstanding ABR Loans under the
Notes; (v) fifth, as a prepayment of outstanding Eurodollar Loans under the
Notes; and (vi) sixth, as a prepayment of any remaining Obligation. Subject to
the foregoing, Borrower shall select ABR Loans and Eurodollar Loans to be repaid
in a manner designated to minimize the loss to each Lender, if any, resulting
from the payments; PROVIDED, HOWEVER, THAT if Borrower fails to select the ABR
Loans and Eurodollar Loans to which the payments are to be applied, or if an
Event of Default has occurred and is continuing at the time of the payment, then
each Lender shall be entitled to apply the payment to ABR Loans and Eurodollar
Loans in the manner it shall deem appropriate.
(b) On the Business Day of receipt by Administrative Agent, if
Administrative Agent's receipt occurs before 1:00 p.m. (Dallas, Texas time),
Administrative Agent will promptly thereafter cause to be distributed, on the
same Business Day, (1) the payments of principal and interest in like funds to
each Lender for the account of its applicable Lending Office pro rata according
to the respective outstanding principal amounts of the Loans to which the
payment applies then held by Lenders and (2) other fees payable to any Lender to
be applied in accordance with the terms of this Agreement. All payments received
by Administrative Agent after 1:00 p.m. (Dallas, Texas time) will be distributed
promptly by Administrative Agent, and in no event later than 2:00 p.m. (Dallas,
Texas time) of the next succeeding Business Day. Borrower authorizes each
Lender, if and to the extent payment is not made when due under this Agreement
or under any Note, to charge from time to time against any account of Borrower
with that Lender other than a Special Account any amount as due.
2.11. VOLUNTARY REDUCTION OF COMMITMENT. Borrower may, by notice to
Administrative Agent five Business Days prior to the effective date of any such
reduction, reduce the Total Commitment (and thereby reduce the Commitment of
each Bank ratably) in amounts not less than $1,000,000 and in any amount which
is an integral multiple of $100,000. On the effective date of any such
reduction, Borrower shall, to the extent required as a result of such reduction,
make a principal prepayment on the Loans in an amount sufficient to cause the
Outstanding Obligations to be equal to or less than the Total Commitment as
thereby reduced. Notwithstanding the foregoing, Borrower shall not be permitted
to voluntarily reduce the Total Commitment to an amount less than the Letter of
Credit Outstandings.
ARTICLE 3 - LETTERS OF CREDIT.
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3.01. LETTERS OF CREDIT. (a) Subject to the terms and conditions
hereof, the Issuing Lender selected by Borrower, in reliance on the agreements
of the other Lenders set forth in SECTION 3.04(a), agrees to issue letters of
credit ("LETTERS OF CREDIT") for the account of Borrower on any Business Day
during the Commitment Period in such form as may be approved from time to time
by the Issuing Lender; PROVIDED THAT Issuing Lender shall not issue any Letter
of Credit if, after giving effect to the issuance and after giving effect to any
Borrowing requested to be made or Letters of Credit requested to be issued on
that date, (i) the Letter of Credit Outstandings would exceed $20,000,000 or
(ii) the Outstanding Obligations would exceed the lesser of (x) the Total
Commitment or (y) the Borrowing Base then in effect. Each Letter of Credit shall
(i) be issued to support obligations of Borrower or any of its Subsidiaries
contingent or otherwise, which finance the working capital and business needs of
Borrower and its Subsidiaries, and (ii) shall expire no later than the earlier
of (x) one year after the date of issuance or (y) five Business Days prior to
the Termination Date. Each Letter of Credit shall be denominated in dollars.
(b) Each Letter of Credit shall be subject to the Uniform
Customs and Practice for Documentary Credits (1995 Revision), International
Chamber of Commerce Publication No. 500, as the same may be amended from time to
time, and, to the extent not inconsistent therewith, the laws of the State of
Texas.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if the issuance would conflict with, or
cause the Issuing Lender or any Participating Lender to exceed any limits
imposed by, any applicable law.
3.02. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender and Administrative Agent at their respective
addresses for notices specified herein a Request for Letter of Credit in the
form of EXHIBIT F hereto, together with a letter of credit application in the
Issuing Lender's then customary form (a "LETTER OF CREDIT APPLICATION")
completed to the satisfaction of the Issuing Lender, and the other certificates,
documents, and other papers and information as may be customary and as the
Issuing Lender may reasonably request. Upon receipt of any Letter of Credit
Application, the Issuing Lender will process the Letter of Credit Application
and the certificates, documents, and other papers and information delivered to
it in connection therewith in accordance with its customary procedures and, upon
receipt by the Issuing Lender of confirmation from Administrative Agent that
issuance of the Letter of Credit will not contravene SECTION 3.01, the Issuing
Lender shall promptly issue the Letter of Credit requested thereby (but in no
event shall the Issuing Lender be required to issue any Letter of Credit earlier
than three Business Days after its receipt of the Letter of Credit Application
therefor and all certificates, documents, and other papers and information
relating thereto) by issuing the original of the Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Lender and
Borrower. The Issuing Lender
Amended and Restated Credit Agreement - Page 27
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shall furnish a copy of the Letter of Credit to Borrower and Administrative
Agent promptly following the issuance thereof, and, thereafter, Administrative
Agent shall promptly furnish a copy thereof to Lenders.
3.03. FEES, COMMISSIONS, AND OTHER CHARGES. (a) Borrower shall pay to
Administrative Agent, for the account of the Issuing Lender and the
Participating Lenders, a letter of credit commission with respect to each Letter
of Credit on the average daily aggregate amount available to be drawn under such
Letter of Credit during the relevant period equal to the greater of (x) $500 or
(y) an amount calculated for the period from the date the Letter of Credit is
issued to the date upon which the payment is due under this SECTION 3.03 (and,
thereafter, from the date of prior payment under this SECTION 3.03 to the date
upon which the payment is due under this section) at a rate per annum equal to
the Applicable Margin in effect on the date such payment is due with respect to
Eurodollar Loans MINUS .125%, based upon the actual number of days that such
Letter of Credit is outstanding. Borrower also shall pay to Administrative
Agent, for the account of the Issuing Lender, a letter of credit commission with
respect to each Letter of Credit in an amount equal to .125% per annum of the
stated amount of the Letter of Credit, based upon the actual number of days that
such Letter of Credit is outstanding. The Letter of Credit commissions payable
pursuant to the first sentence of this section shall be payable quarterly in
arrears on the first day of each October, January, April, and July, commencing
October 1, 1999, and on the Termination Date. The letter of credit commissions
payable pursuant to the second sentence of this section shall be payable in
arrears on the first day of each October, January, April, and July, commencing
October 1, 1999, on the date such Letter of Credit is extended, and on the
Termination Date.
(b) In addition to the foregoing fees and commissions,
Borrower shall pay or reimburse the Issuing Lender for all normal and customary
costs and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending, or otherwise administering any Letter of
Credit.
(c) Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the Participating Lenders all fees
and commissions received by Administrative Agent for their respective accounts
pursuant to this subsection.
3.04. LETTER OF CREDIT PARTICIPATION. (a) Effective on the date of
issuance of each Letter of Credit (including, without limitation, each Existing
Letter of Credit which is deemed issued on the Closing Date), the Issuing Lender
irrevocably agrees to grant and hereby grants to each Participating Lender, and
each Participating Lender irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Issuing Lender, on the terms and conditions
hereinafter stated, for the Participating Lender's own account and risk, an
undivided interest equal to the Participating Lender's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit
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issued by the Issuing Lender and the amount of each draft paid by the Issuing
Lender thereunder. Each Participating Lender unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by Borrower in
accordance with the terms of this Agreement, the Participating Lender shall pay
to Administrative Agent, for the account of the Issuing Lender, upon demand at
Administrative Agent's address specified in SECTION 12.10, an amount equal to
the Participating Lender's Commitment Percentage of the amount of the draft, or
any part thereof, which is not so reimbursed. On the date that any assignee
becomes a Lender party to this Agreement in accordance with SECTION 12.08,
participating interests in any outstanding Letters of Credit held by the
transferor Lender from which the assignee acquired its interest hereunder shall
be proportionately reallotted between the assignee and the transferor Lender.
Each Participating Lender hereby agrees that its obligation to participate in
each Letter of Credit, and to pay or to reimburse the Issuing Lender for its
participating share of the drafts drawn or amounts otherwise paid thereunder, is
absolute, irrevocable, and unconditional and shall not be affected by any
circumstances whatsoever (including, without limitation, the occurrence or
continuance of any Default or Event of Default), and that each payment shall be
made without offset, abatement, withholding, or other reduction whatsoever.
(b) If any amount required to be paid by any Participating
Lender to the Issuing Lender pursuant to SECTION 3.04(a) in respect of any
unreimbursed portion of any draft paid by the Issuing Lender under any Letter of
Credit is paid to the Issuing Lender within three Business Days after the date
the payment is due, the Participating Lender also shall pay to Administrative
Agent, for the account of the Issuing Lender, on demand, an amount equal to the
product of (i) that amount, times (ii) the daily average Federal Funds Rate
during the period from and including the date the draft is paid to the date on
which the payment is immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapsed during that
period and the denominator of which is 360. If any amount required to be paid by
any Participating Lender pursuant to SECTION 3.04(a) is not in fact made
available to Administrative Agent, for the account of the Issuing Lender, by the
Participating Lender within three Business Days after the date the payment is
due, the Issuing Lender shall be entitled to recover from the Participating
Lender, on demand, the amount with interest thereon calculated from the due date
at the Adjusted Base Rate A certificate of the Issuing Lender submitted to any
Participating Lender with respect to any amounts owing under this section shall
be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has paid a
draft under any Letter of Credit and has received from any Participating Lender
its PRO RATA share of the payment in accordance with SECTION 3.04(a), the
Issuing Lender receives any reimbursement on account of the unreimbursed
portion, or any payment of interest on account thereof, the Issuing Lender will
pay to Administrative Agent, for the account of the Participating Lender, its
PRO RATA share thereof; PROVIDED, HOWEVER, THAT in the event
Amended and Restated Credit Agreement - Page 29
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that any the payment received by the Issuing Lender shall be required to be
returned by the Issuing Lender, the Participating Lender shall return to
Administrative Agent for the account of the Issuing Lender, the portion thereof
previously distributed to it.
3.05. REIMBURSEMENT OBLIGATION OF BORROWER. If any draft is presented
for payment under any Letter of Credit, the Issuing Lender shall notify Borrower
and Administrative Agent of the date and the amount thereof. Borrower agrees to
reimburse the Issuing Lender (whether with its own funds or with proceeds of
Loans), within two Business Days after notice that the Issuing Lender paid a
draft so presented under any Letter of Credit, for the amount of (i) the draft
so paid and (ii) any taxes, fees, charges, or other costs or expenses incurred
by the Issuing Lender in connection with the payment. Each payment shall be made
to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by Borrower
under this subsection from the date of payment of the applicable draft until
payment in full thereof, (x) for the period commencing on the date of payment of
the applicable draft to the date which is three days after notice of payment of
the draft, at the Adjusted Base Rate at that time and (y) thereafter, at the
Adjusted Base Rate at that time plus 2%.
3.06. OBLIGATIONS ABSOLUTE. (a) Borrower's obligations under this
Article 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim, or defense to payment which
Borrower or any other Person may have or have had against the Issuing Lender or
any other Lender or any beneficiary of a Letter of Credit. Borrower also agrees
with the Issuing Lender that the Issuing Lender shall not be responsible for,
and Borrower's obligations under SECTION 3.05 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon which on its face appears valid, even though the documents shall in fact
prove to be invalid, fraudulent, or forged, or any dispute between or among
Borrower and any beneficiary of any Letter of Credit or any other party to which
the Letter of Credit may be transferred or any claims whatsoever of Borrower
against any beneficiary of the Letter of Credit or any the transferee. The
Issuing Lender shall not be liable for any error, omission, interruption, or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or willful misconduct.
Borrower agrees that any action taken or omitted by the Issuing Lender under or
in connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of Texas, including, without limitation, Article V thereof, shall be binding on
Borrower and shall not result in any liability of the Issuing Lender to
Borrower.
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(b) Without limiting the generality of the foregoing, it is
expressly agreed that the absolute and unconditional nature of Borrower's
obligations under this Article 3 to reimburse the Issuing Lender for each
drawing under a Letter of Credit will not be excused by the gross negligence or
willful misconduct of the Issuing Lender. However, the foregoing shall not be
construed to excuse the Issuing Lender from liability to Borrower to the extent
of any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Borrower to the extent permitted by applicable law)
suffered by Borrower that are caused by the Issuing Lender's gross negligence or
willful misconduct in determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof.
3.07. LETTER OF CREDIT PAYMENTS. Without limitation of SECTION 3.06,
the responsibility of the Issuing Lender to Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in the Letter of Credit, be limited to
determining that the documents (including each draft) delivered under the Letter
of Credit in connection with the presentment are in conformity with the Letter
of Credit.
3.08. LETTER OF CREDIT APPLICATIONS. To the extent that any provision
of any Letter of Credit Application, including any reimbursement provisions
contained therein, related to any Letter of Credit is inconsistent with the
provisions of this Article 3, the provisions of this Article 3 shall prevail.
3.09. CASH COLLATERALIZATION OF LETTERS OF CREDIT. Upon request of
Administrative Agent after the occurrence and during the continuance of an Event
of Default and at any time required to eliminate any Borrowing Base Deficiency
pursuant to SECTION 4.06 hereof, Borrower shall deposit cash with Administrative
Agent in an amount equal to the aggregate Letter of Credit Outstandings (or, in
the event of a Borrowing Base Deficiency in the amount required pursuant to
SECTION 4.06). Such amount so deposited shall be held by Administrative Agent
for the ratable benefit of all Lenders as security for the Letter of Credit
Outstandings and other Obligations, and Borrower will, in connection therewith,
deliver such security agreements in form and substance satisfactory to
Administrative Agent which it may, in its discretion require. As drafts or
demands are presented under any Letter of Credit, Administrative Agent shall
disburse such cash to the applicable Issuing Lender to the extent necessary to
satisfy Borrower's reimbursement obligations in connection therewith. To the
extent drafts or other demands for payment are not made prior to the expiration
date for any Letter of Credit, Administrative Agent agrees, if no Event of
Default has occurred and is continuing, to remit to Borrower cash in the amount
deposited under this SECTION 3.09 for which the contingent obligations evidenced
by such Letter of Credit have ceased. When all Letters of Credit have expired or
been canceled, and all Letter of Credit Obligations and other Obligations have
been paid in full and all Commitments have been terminated (or any Borrowing
Base Deficiency has been eliminated to the extent such cash collateralization is
required as a result of Borrowing
Amended and Restated Credit Agreement - Page 31
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Base Deficiency) Administrative Agent shall release any remaining cash deposited
under this SECTION 3.09 to Borrower.
ARTICLE 4 - BORROWING BASE.
4.01. DETERMINATION OF BORROWING BASE. (a) The term "BORROWING BASE"
means the designated loan value of Borrower's Oil and Gas Properties as
determined by Agents in their sole discretion and approved by Required Lenders
in their sole discretion, in each case in accordance with their respective
then-current practices, customary procedures and standards for their respective
petroleum industry customers, and utilizing (i) the pertinent economic
parameters customarily used by each Lender with respect to credits of a similar
size and nature, and (ii) the information that the Lenders have available to
them at the time of each determination, including, without limitation, assets,
liabilities, cash flow and other financial information regarding Borrower and
its Subsidiaries, the Collateral and the business, properties, prospects,
management, and ownership of the Borrower and its Subsidiaries. The Borrowing
Base in effect under this Agreement shall be redetermined at the times set forth
in SECTION 4.02, 4.03, and 4.04 and in accordance with the procedures set forth
in SECTION 4.01(b). Until the Commitments of all Banks have terminated, all
Letters of Credit have expired or been canceled, and all Obligations have been
paid in full, amounts outstanding under this Agreement shall be subject to the
then effective Borrowing Base.
(b) Not later than ten Business Days prior to each
Determination Date applicable to any redetermination of the Borrowing Base, (i)
Agents shall agree among themselves with respect to the Borrowing Base which
Agents recommend be effective commencing on such Determination Date, and (ii)
Administrative Agent shall notify each Lender of the amount of such recommended
Borrowing Base. If Required Lenders, or all Lenders in the event of a proposed
increase in the Borrowing Base, fail to promptly approve such recommended
Borrowing Base, Agents shall propose one or more alternative Borrowing Bases and
shall consult with Lenders regarding the proposed Borrowing Base until such time
as Required Lenders, or all Lenders in the event of a proposed increase in the
Borrowing Base, approve a Borrowing Base proposed by Agents. Promptly upon
approval by Required Lenders, or all Lenders in the event of a proposed increase
in the Borrowing Base, of the Borrowing Base to become effective on a
Determination Date, Administrative Agent shall provide written notice of the
amount of such Borrowing Base to Borrower which shall become effective on the
date specified in such notice (which shall be no sooner than the date such
notice is sent). In the event Required Lenders, or all Lenders in the event of a
proposed increase in the Borrowing Base, fail to approve a Borrowing Base to be
effective on any applicable Determination Date, the Borrowing Base in effect
prior to such Determination Date shall remain in effect until such time as
Required Lenders, or all Lenders in the event of a proposed increase in the
Borrowing Base, approve a new Borrowing Base (which will become effective
immediately upon notice to Borrower from Administrative Agent setting forth the
amount thereof).
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4.02. PERIODIC DETERMINATION. The Borrowing Base will be redetermined
semiannually on April 1 and October 1, commencing April 1, 2000, or on such date
promptly following each such date as may be required to redetermine the
Borrowing Base in accordance with the procedures set forth in SECTION 4.01(b).
Notwithstanding any provisions to the contrary in SECTION 4.01 above, the
Borrowing Base resulting from the April 1, 2000, Determination shall not exceed
$135,000,000 without the approval of all Lenders.
4.03. SPECIAL REDETERMINATION REQUESTED BY BORROWER. In addition to
Periodic Determinations required herein and Special Determinations requested by
Required Lenders in accordance with SECTION 4.04, Borrower may request up to two
Special Determinations of the Borrowing Base pursuant to this SECTION 4.03 in
each calendar year; PROVIDED THAT one of such requests must be in connection
with a request for an increase in the Borrowing Base to finance the acquisition
by Borrower (or one of its Subsidiaries) of additional oil and gas properties
("ADDITIONAL PROPERTIES"). Together with any Request for Determination delivered
by Borrower to Lenders under this SECTION 4.03, Borrower shall deliver to
Lenders a Reserve Report prepared as of a date not more than 30 days prior to
the date of such Request for Determination. At Borrower's option, such Reserve
Report may only apply to (a) the Additional Properties which are the subject of
such request, or (b) those existing properties which Borrower believes support
an increase in the Borrowing Base as a result of the completion of a successful
drilling and development program or other factors.
4.04. SPECIAL DETERMINATIONS REQUESTED BY REQUIRED LENDERS. In addition
to Periodic Determinations required herein and Special Determinations requested
by Borrower in accordance with SECTION 4.03, Required Lenders may request (a) a
Special Determination in connection with any issuance by Borrower or any of its
Subsidiaries of Subordinated Debt or Preferred Stock, and (b) two Special
Determinations in each calendar year in addition to each Special Determination
allowed under SECTION 4.04(a); PROVIDED THAT one such Special Determination
requested pursuant to this clause (b) shall be based on a determination by
Required Lenders, in their sole discretion that either (i) there has been a
material decrease in the Present Value of Borrower's Oil and Gas Properties, or
(ii) an event has occurred which has had, or which is reasonably expected to
have, a Material Adverse Effect; and FURTHER PROVIDED THAT no Special
Determination may be made pursuant to clause (b) before the April 1, 2000,
Periodic Determination provided in SECTION 4.02 above unless such Special
Determination is requested by all Lenders. In the event Required Lenders request
a Special Determination pursuant to this SECTION 4.04, they may, at their
option, suspend the next Periodic Determination.
4.05. INITIAL BORROWING BASE. Subject to the rights of Borrower to
request an earlier Special Determination pursuant to SECTION 4.03 above, the
rights of Lenders to request an earlier Special Determination pursuant to
SECTION 4.04 above, and the rights of
Amended and Restated Credit Agreement - Page 33
<PAGE> 41
Lenders to reduce the Borrowing Base as provided in SECTION 7.03(C) below, the
Borrowing Base in effect under this Agreement for the period from the Closing
Date through April 1, 2000, shall be the Initial Borrowing Base.
4.06. OVER ADVANCE. (a) In the event any Borrowing Base Deficiency
results from any redetermination of the Borrowing Base pursuant to SECTION 4.02,
4.03, or 4.04 hereof, Borrower shall be required to eliminate such deficiency by
making mandatory prepayments on the outstanding principal balance of the Loans
in an amount equal to the amount of such deficiency, one half of which shall be
paid on or before the 90th day following the effective date of the
redetermination resulting in such Borrowing Base Deficiency, and the remaining
balance of which shall be paid in full on or before the 180th day following the
effective date of such redetermination.
(b) In the event any Borrowing Base Deficiency results from
any reduction in the Borrowing Base pursuant to SECTION 4.05, Borrower shall be
required to eliminate such deficiency by making a mandatory prepayment on the
outstanding principal balance of the Loans in an amount equal to the amount of
such deficiency, which prepayment shall be due and payable simultaneously with
such reduction in the Borrowing Base.
(c) In the event any Borrowing Base Deficiency cannot be
eliminated pursuant to this SECTION 4.06 by prepayment of the Loans in full (as
a result of Letter of Credit Outstandings) on or before each date on which a
prepayment of the Loans is required by this SECTION 4.06, Borrower shall also
deposit cash with Administrative Agent to be held by Administrative Agent
pursuant to SECTION 3.09 in an amount sufficient to eliminate such Borrowing
Base Deficiency (or the required portion of such Borrowing Base Deficiency in
the case of the payment due 90 days after the determination that a Borrowing
Base Deficiency exists pursuant to SECTION 4.06(a)).
ARTICLE 5 - COLLATERAL.
5.01. SECURITY. (a) The Obligations shall be secured by first and prior
Liens (subject only to Permitted Encumbrances) covering (i) Borrower's Oil and
Gas Properties selected by Administrative Agent which in the aggregate comprise
at least 80% of the total Present Value assigned by Administrative Agent to
Borrower's Oil and Gas Properties, (ii) the Sterling Gas Plant, (iii) 100% of
the issued and outstanding Equity of each existing and future Subsidiary of
Borrower (exclusive of REFC), and (iv) 50% of the issued and outstanding Equity
of GLEP.
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(b) On each occasion on which Borrower and its Subsidiaries
may be required to grant Liens on any asset, upon submission to Borrower by
Administrative Agent, Borrower and its Subsidiaries shall promptly execute and
deliver to Administrative Agent, for the ratable benefit of each Lender,
Security Documents in form and substance acceptable to Administrative Agent
granting first and prior Liens (subject only to Permitted Encumbrances) on the
designated properties. Borrower acknowledges that all Mortgages now or hereafter
executed by Borrower or its Subsidiaries will be recorded promptly and all other
action necessary to perfect the liens and security interests evidenced by the
Mortgages will be taken. Borrower represents and warrants to Lenders that all
Mortgages (i) are or will be duly authorized, executed, and delivered by the
Person executing them, (ii) constitute the valid, binding, and enforceable
obligations of each Person that executed the Mortgages in accordance with their
terms, and (iii) operate to create in favor of Administrative Agent, for the
ratable benefit of Lenders, first priority liens in the interests covered
thereby.
(c) On the date of the creation or acquisition by Borrower of
any Subsidiary, or on the date of creation or acquisition by any Subsidiary of
Borrower of any Subsidiary, Borrower or such Subsidiary of Borrower (as
applicable) shall execute and deliver to Administrative Agent a Pledge Agreement
together with (i) all certificates (or other evidence acceptable to
Administrative Agent) evidencing the issued and outstanding Equity of any such
Subsidiary of every class which shall be duly endorsed or accompanied by stock
powers executed in blank (as applicable), and (ii) such UCC-1 financing
statements as Administrative Agent shall deem necessary or appropriate to grant,
evidence and perfect the Liens required by SECTION 5.1(a)(iii) in the issued and
outstanding Equity of each such Subsidiary.
5.02. GUARANTIES. Payment and performance of the Obligations will be
fully guaranteed by each existing or hereafter created or acquired Subsidiary of
Borrower (other than REFC) pursuant to a Guaranty Agreement. On the date of
creation or acquisition by Borrower or a Subsidiary of Borrower of any
Subsidiary, Borrower shall cause such Subsidiary to execute and deliver to
Administrative Agent a Guaranty Agreement.
5.03. LEGAL OPINIONS; CORPORATE MATTERS. Administrative Agent will be
permitted, at Borrower's expense, to obtain opinions of counsel in each
jurisdiction in which oil and gas properties of Borrower or its Subsidiaries are
located, with respect to the validity, enforceability, and actions necessary to
perfect the liens and security interests created by the Mortgages covering the
oil and gas properties and as to the other matters as Administrative Agent shall
deem necessary with respect to the Mortgages. Furthermore, simultaneously with
the execution and delivery of any Mortgages required by SECTION 5.01, Borrower
shall also deliver to Administrative Agent (i) such resolutions, certificates,
and documents as Required Lenders shall request relating to the existence of
Borrower and its Subsidiaries, the corporate, partnership, limited liability
company, or other authority for the execution, delivery, and performance of the
Mortgages and all
Amended and Restated Credit Agreement - Page 35
<PAGE> 43
other matters relevant thereto as Required Lenders may reasonably request, and
(ii) at Required Lenders' request, an opinion of counsel satisfactory to them
with respect to the matters referred to in clause (i) immediately preceding.
5.04. ADDITIONAL TITLE DATA. (a) Borrower shall, upon the request of
Required Lenders, make available to Administrative Agent at Borrower's Fort
Worth, Texas, and Oklahoma City, Oklahoma, offices, all title opinions, title
information, and other information in its possession, control, or direction with
respect to title to the Mortgaged Properties and relative priority of the
Mortgages as are appropriate to determine the status thereof.
(b) At any time Borrower or its Subsidiaries are required to
mortgage any oil and gas properties and related assets pursuant to SECTION 5.01,
Borrower shall deliver to Administrative Agent title opinions or other title
information acceptable to Administrative Agent covering Borrower's Oil and Gas
Properties which are, or are to become, Mortgaged Properties and other
information regarding title to such properties and the relative priority of the
Liens in favor of Administrative Agent as Administrative Agent shall reasonably
request, all in form and substance and from attorneys acceptable to
Administrative Agent.
5.05. BENEFITS OF COLLATERAL. Administrative Agent shall hold the
Collateral required to be pledged and deposited by the Loan Parties to
Administrative Agent, along with all payments and proceeds arising therefrom,
for the ratable benefit of Lenders as security for the payment of all
Obligations. Upon payment in full of all Obligations and termination of all
Commitments, Administrative Agent shall release, if not sooner released pursuant
to SECTION 5.01(d), all of the Collateral remaining in its possession to
Borrower and shall notify each Lender of the release. Except as otherwise
expressly provided for in this Article 5, Administrative Agent, in its own name
or in the name of Borrower, may enforce any of the Collateral or the security
therefor by any mode provided under the Loan Documents or by the law of the
state in which the Collateral or in which any real property subject to any of
the Collateral is located, and may collect and receive proceeds receivable on
account of ownership of the Collateral.
5.06. STATUS OF COLLATERAL IN EVENT OF DEFAULT. Notwithstanding the
terms of any Mortgage or other security instrument securing repayment of the
Obligations by which Borrower assigns to Administrative Agent for the ratable
benefit of Lenders the proceeds from the sale of production accruing to the
Mortgaged Properties, so long as no Default or Event of Default has occurred
that is continuing, Borrower shall be permitted to continue to receive from the
purchasers of production all proceeds from the sale of production, and
Administrative Agent shall not request that such proceeds be paid to
Administrative Agent. Upon the occurrence and continuation of any Event of
Default, Administrative Agent, at the request of Required Lenders, may direct
the Persons
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purchasing the production from Borrower's Oil and Gas Properties to pay the
proceeds of sale directly to Administrative Agent.
ARTICLE 6 - CONDITIONS PRECEDENT.
6.01. CONDITIONS PRECEDENT TO RESTATEMENT OF EXISTING CREDIT AGREEMENT
AND INITIAL EXTENSION OF CREDIT HEREUNDER. The agreement of each Lender to (i)
enter into and perform its obligations under the Closing Assignment, (ii)
restate the Existing Credit Agreement, and (iii) make the initial Loan requested
to be made by it, and of the Issuing Lender to issue the initial Letter of
Credit to be issued by it, is subject to the satisfaction, prior to or
concurrently therewith of the following conditions precedent:
(a) CLOSING DELIVERIES. Administrative Agent shall have
received the following documents, instruments, agreements, and other
information, each of which shall be in form and substance and executed in such
counterparts as shall be acceptable to Administrative Agent and Required Lenders
and each of which shall, unless otherwise indicated, be dated the Closing Date:
(i) this Agreement;
(ii) a Note payable to the order of each Lender
in the amount of such Lender's Commitment, duly executed by Borrower;
(iii) a Mortgage duly executed by the appropriate
Person covering the Sterling Gas Plant, accompanied by such financing statements
requested by Administrative Agent to perfect the Lien granted by the Mortgage;
(iv) Existing Mortgage Amendments duly executed
by the appropriate Person;
(v) a Guaranty Agreement duly executed by each
of Borrower's Subsidiaries (excluding REFC);
(vi) a Pledge Agreement duly executed by
Borrower and its Subsidiaries, as appropriate, together with (A) certificates
evidencing (1) 100% of the issued and outstanding Equity of Borrower's
Subsidiaries and (2) 50% of the issued and outstanding Equity of GLEP (all
certificates delivered pursuant to this provision shall be duly endorsed or
accompanied by duly executed blank stock powers), and (B) accompanied by such
financing statements executed by Borrower as Administrative Agent shall request
to perfect the Liens granted pursuant to the Pledge Agreement;
(vii) an opinion of Vinson & Elkins L.L.P.,
special counsel for Borrower and its Subsidiaries, favorably opining as to the
enforceability of each of the
Amended and Restated Credit Agreement - Page 37
<PAGE> 45
Loan Documents executed and delivered by Borrower and its Subsidiaries and to
such other matters as Administrative Agent or Required Lenders may reasonably
request;
(viii) certificates executed by an Authorized
Officer of Borrower stating that (A) the representations and warranties of
Borrower contained in this Agreement and the other Loan Documents are true and
correct in all respects, (B) no Default or Event of Default has occurred which
is continuing, and (C) all conditions set forth in this SECTION 6.01 and in
SECTION 6.02 have been satisfied;
(ix) such resolutions, certificates and other
documents relating to the existence of the Loan Parties, the corporate,
partnership, or limited liability company authority for the execution, delivery
and performance of this Agreement, the Notes, the other Loan Documents, and
certain other matters relevant hereto, in form and substance satisfactory to
Administrative Agent, which resolutions, certificates and documents include
resolutions of the directors of each Loan Party authorizing the execution,
delivery, and performance of the Loan Documents and certificates of incumbency
for each Loan Party;
(x) all documents required by Administrative
Agent to evidence that the GLEP Transaction has closed, which must occur on or
before September 30, 1999;
(xi) Agents have completed a review of the
policies and procedures of Borrower and its Subsidiaries with respect to
compliance with Environmental Laws, and Agents are reasonably satisfied with the
results of that review;
(xii) title information with respect to
Borrower's Oil and Gas Properties and the Sterling Gas Plant sufficient to
enable Agents or their counsel to review title to that part of the Properties
deemed necessary by Agents, and Agents are reasonably satisfied with the results
of that review; and
(xiii) an unaudited pro forma consolidated
balance sheet of Borrower and its Consolidated Subsidiaries which projects the
financial condition of Borrower and its Consolidated Subsidiaries as at the
Closing Date after giving effect to the initial extensions of credit under this
Agreement and which enables Agents to verify that Borrower will have adequate
liquidity on and after the Closing Date, in the sole judgment of Agents.
(b) NO MATERIAL ADVERSE CHANGE. No event has occurred
that would have a Material Adverse Effect.
(c) NO LEGAL PROHIBITION. The transactions contemplated by
this Agreement and the agreements pertinent to the GLEP Transaction shall be
permitted by applicable law and regulation and shall not subject Agents, any
Lender, Borrower, or any
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Subsidiary to any material adverse change in their assets, liabilities,
financial condition, or prospects.
(d) NO LITIGATION. No litigation, arbitration, or similar
proceeding shall be pending which calls into question the validity or
enforceability of this Agreement, the other Loan Documents, or the agreements
pertinent to the GLEP Transaction.
(e) OTHER MATTERS. All matters related to this Agreement, the
other Loan Documents, Borrower, its Subsidiaries, and the GLEP Transaction shall
be acceptable to Administrative Agent and each Lender in their discretion, and
Borrower shall have delivered to Administrative Agent and each Lender such
evidence as they shall request to substantiate any matters related to this
Agreement, the other Loan Documents, Borrower, its Subsidiaries, and the GLEP
Transaction as Administrative Agent or any Lender shall request.
(f) CLOSING FEES. Borrower shall have paid (or made
arrangements for payment from initial Loan proceeds) to Agents and Lenders any
fees payable to those parties.
6.02. CONDITIONS TO EACH LOAN AND EACH LETTER OF CREDIT. The obligation
of each Lender to loan its Commitment Percentage of each Borrowing and the
obligation of the Issuing Lender to issue Letters of Credit on the date any
Letter of Credit is to be issued is subject to the further satisfaction of the
following conditions:
(a) timely receipt by Administrative Agent of a Notice of
Borrowing or Request for Letter of Credit;
(b) immediately before and after giving effect to such
Borrowing or issuance of the Letter of Credit, no Default or Event of Default
shall have occurred and be continuing and neither the Loan nor the issuance of
the Letter of Credit shall cause a Default or Event of Default;
(c) the representations and warranties of the Loan Parties
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of the applicable Borrowing or the
date of the issuance of the Letter of Credit;
(d) the funding of the Borrowing or the issuance of the Letter
of Credit and all other Borrowings to be made and/or Letters of Credit to be
issued on the same day under this Agreement, shall not cause a Borrowing Base
Deficiency;
(e) following the issuance of any Letter of Credit, the
aggregate Letter of Credit Outstandings shall not exceed $20,000,000.
Amended and Restated Credit Agreement - Page 39
<PAGE> 47
Each Borrowing and the issuance of each Letter of Credit hereunder
shall constitute a representation and warranty by Borrower that on the date of
the Borrowing or issuance of the Letter of Credit that statements contained in
subclauses (b), (c), (d), and (e) above are true.
ARTICLE 7 - REPRESENTATIONS, WARRANTIES, AND COVENANTS.
7.01. WARRANTIES. To induce Lenders to enter into this Agreement and to
lend to Borrower and for each Lender's reliance in so doing, Borrower warrants
to each Lender that each of the following statements is true and correct on the
date hereof and will be true and correct on the Closing Date both before and
after giving effect to the GLEP Transaction, and will be true and correct on the
date of each Borrowing and the date of issuance of each Letter of Credit:
(a) FINANCIAL CONDITION. (1) The consolidated balance sheet of
Borrower and its Consolidated Subsidiaries at December 31, 1998, and the related
consolidated statements of operations, of cash flows and of changes in
stockholders' equity for the fiscal year ended on that date, which have been
furnished to each Lender, present fairly in all material respects the
consolidated financial condition of Borrower and its Consolidated Subsidiaries
as at that date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended.
(2) The consolidated balance sheet of Borrower
and its Consolidated Subsidiaries at June 30,1999, and the related consolidated
statements of operations, of cash flows and of changes in stockholders' equity
for the two fiscal quarters ended on that date, which have been furnished to
each Lender, present fairly in all material respects the consolidated financial
condition of Borrower and its Consolidated Subsidiaries as at that date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended.
(3) The unaudited pro forma consolidated
balance sheet of Borrower and its Consolidated Subsidiaries, as at June 30,
1999, certified by an Authorized Officer, copies of which have been furnished to
each Lender, represents in all material respects the pro forma consolidated
financial condition of each of Borrower and its Consolidated Subsidiaries as at
that date after giving effect to the initial extensions of credit under this
Agreement; PROVIDED THAT the financial information which constitute projections,
copies of which have been furnished to each Lender prior to the Closing Date,
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were believed by Borrower to be reasonable in all material
respects at the time made and which Borrower believes are reasonable in all
material respects on the date hereof.
(4) The consolidated balance sheet and other
financial statements, referred to in SECTIONS 7.01(a)(1) and (2), including the
related schedules and notes
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thereto, were prepared in accordance with GAAP applied consistently throughout
the period involved. Neither Borrower nor any of its Consolidated Subsidiaries
had, at the date of the balance sheet, any material obligation, contingent
liability, or liability for Taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
statement or in the notes thereto to the extent required by GAAP. During the
period from January 1, 1999, to and including the date of this Agreement there
has been no sale, transfer, or other disposition by Borrower or any of its
Consolidated Subsidiaries of any material part of its business or property other
than the GLEP Transaction and no purchase or other acquisition of any business
or property (including any Equity of any other Person) material in relation to
the consolidated financial condition of Borrower and its Consolidated
Subsidiaries at December 31, 1998.
(b) NO CHANGE. Since December 31, 1998, there has been no
development, circumstance, or event which has had or could reasonably be
expected to have a Material Adverse Effect.
(c) CORPORATE EXISTENCE. Borrower and each of its Subsidiaries
is duly organized and validly existing under the laws of its state of
incorporation, organization, or formation, and is in good standing in that state
and all other states in which it has material assets or operations.
(d) CORPORATE POWER. Borrower and each of its Subsidiaries has
and will continue to have full power and authority to execute and deliver to
Lenders this Agreement and the Loan Documents, and to perform all of its
obligations under this Agreement and the Loan Documents; all of those actions
have been duly authorized and are not and will not be in conflict with any
provision of law or the terms of its articles of incorporation, articles of
organization, joint venture agreement, partnership agreement, or any other
agreement or undertaking to which it is a party or by which it is bound.
(e) INFORMATION. No written information, exhibit, schedule
or report prepared by or on behalf of Borrower and furnished to any Agent or any
Lender by or at the direction of Borrower or any of its Subsidiaries in
connection with this Agreement or the transactions contemplated herein contained
any material misstatement of fact or, when such statement is considered with all
other written statements furnished to the Lenders in that connection, omitted to
state a material fact or any fact necessary to make the statement contained
therein not misleading; PROVIDED THAT the financial information which constitute
projections, copies of which have been furnished to each Lender prior to the
Closing Date, were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were believed by Borrower to be reasonable in all
material respects at the time made and which Borrower believes are reasonable in
all material respects on the date hereof.
Amended and Restated Credit Agreement - Page 41
<PAGE> 49
(f) AUTHORIZATIONS. Borrower and each of its Subsidiaries has
obtained all authorizations, licenses, permits, consents, approvals, and
undertakings which are required under any applicable law in connection with the
execution and delivery of and the performance of its Obligations under or in
connection with this Agreement and the other Loan Documents.
(g) ENFORCEABLE OBLIGATIONS. This Agreement has been, and each
other Loan Document to which any Loan Party is a party will be, duly executed
and delivered on behalf of the Loan Party. This Agreement constitutes, and each
other Loan Document to which any Loan Party is a party when executed and
delivered will constitute, a legal, valid, and binding obligation of the Loan
Party enforceable against the Loan Party in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, moratorium, and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law), and an implied covenant of good faith and
fair dealing.
(h) NO LEGAL BAR. The execution, delivery, and performance of
the Loan Documents, the granting of the Liens under the Security Documents, and
the Borrowings hereunder and the use of the proceeds thereof will not violate
any applicable requirement of law or material contractual Obligation of Borrower
or any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective material properties or
revenues except pursuant to the Loan Documents.
(i) COMPLIANCE. Borrower and each of its Subsidiaries is in
compliance with all statutes, ordinances, and regulations of each Governmental
Authority having jurisdiction over its activities to the extent a failure to be
in compliance could reasonably be expected to have a Material Adverse Effect.
(j) DEBTS OF OTHERS. Neither Borrower nor any of its
Subsidiaries is a guarantor or surety or otherwise responsible in any material
manner with respect to any Debt or undertaking of a Person other than a
Subsidiary of Borrower.
(k) NO MATERIAL LITIGATION. No litigation is pending which
affects the execution and delivery of this Agreement or any other Loan Document
or the ability of any Loan Party to perform under them, and no litigation is
pending which could have a Material Adverse Effect.
(l) SUBSIDIARIES. Borrower has no Subsidiaries other than
those listed on attached SCHEDULE 3.
(m) ERISA. Borrower and each Subsidiary of Borrower is in
compliance in all material respects with all applicable provisions of ERISA;
neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to terminate a Plan has
been filed, nor has any Plan been
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terminated; no circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings; neither Borrower nor any
Commonly Controlled Entity has completely or partially withdrawn from a
Multiemployer Plan; Borrower and each Commonly Controlled Entity have met their
minimum funding requirements under ERISA with respect to all of their Plans and
the present value of all vested benefits under each Plan does not exceed the
fair market value of all Plan assets allocable to the benefits, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA; and neither Borrower nor any Commonly Controlled Entity has incurred
any liability to the PBGC under ERISA.
(n) ENVIRONMENTAL MATTERS. To the extent any of the following
would have a Material Adverse Effect on Borrower or its Subsidiaries:
(i) Neither Borrower nor any of its
Subsidiaries has failed to duly comply with, or failed to cause their
businesses, operations, assets, equipment, property, leaseholds, or other
facilities to be in compliance with, the provisions of any applicable
Environmental Law.
(ii) Neither Borrower nor any of its
Subsidiaries has received notice of, nor knows of, or suspects facts which might
constitute violations of any applicable Environmental Law with respect to its
businesses, operations, assets, equipment, property, leaseholds, or other
facilities.
(iii) Except in accordance with a valid
governmental permit, license, certificate, or approval, there has been no
emission, spill, release, or discharge into or upon (1) the air; (2) soils, or
any improvements located thereon; (3) surface water or groundwater; or (4) the
sewer, septic system or waste treatment, storage, or disposal system servicing
the premises of any toxic or hazardous substances or wastes ("WASTE") at or from
the premises ("RELEASE"); and accordingly the premises of Borrower and any
Subsidiary are free of all waste.
(iv) There has been no complaint, order,
directive, claim, citation, or notice by any Governmental Authority or any
person or entity with respect to (1) air emissions; (2) release; (3) noise
emissions; (4) solid or liquid waste disposal; (5) the use, generation, storage,
transportation, or disposal of waste ("TREATMENT"); or (6) other environmental,
health, or safety matters affecting Borrower or any Subsidiary of Borrower or
its business, operations, assets, equipment, property, leaseholds, or other
facilities.
(o) TITLES. Each of Borrower and its Subsidiaries has good and
defensible title to all material assets purported to be owned by it subject only
to Permitted Encumbrances. Without limiting the foregoing, with the exception of
oil and gas properties which are clearly identified as being owned by Persons
other than the Loan
Amended and Restated Credit Agreement - Page 43
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Parties, the Loan Parties have good and defensible title to all material oil and
gas properties which are the subject of the most recent Reserve Report provided
to Lenders (or, until superseded, the oil and gas properties which are the
subject of the Initial Reserve Report), and the Mortgages establish first and
prior Liens on the properties and interests intended to be covered thereby
subject only to Permitted Encumbrances.
(p) RESERVE REPORTS. The Initial Reserve Report accurately
reflects, and all Reserve Reports hereafter delivered pursuant to this Agreement
will reflect, in all material respects, the ownership interests of Borrower and
its Subsidiaries in the oil and gas properties referred to therein (including
all material before and after payout calculations).
(q) INTELLECTUAL PROPERTY. Each Loan Party owns, or is
licensed to use, all trademarks, tradenames, copyrights, technology, know how,
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect (the "INTELLECTUAL PROPERTY"). No
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does any Loan Party know of any valid basis for any
such claim, except claims that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The use of Intellectual Property by
a Loan Party does not infringe on the rights of any Person, except for claims
and infringements that, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(r) NO BURDENSOME RESTRICTIONS. No applicable requirement of
law or contractual obligation of any Loan Party could reasonably be expected to
have a Material Adverse Effect.
(s) TAXES. Each Loan Party has filed all material tax returns
which to the knowledge of the Loan Party are required to be filed by it and has
paid or caused to be paid all material assessments, fees, and other governmental
charges levied upon it or upon any of its property or income which are due and
payable, except such taxes, assessments, fees, and other governmental charges,
if any, as are being diligently contested in good faith and by appropriate
proceedings and with respect to which there have been established adequate
reserves on the books of the Loan Party in accordance with GAAP. No tax lien has
been filed with respect to any material taxes or material assessments, fees, or
other governmental charges.
(t) FEDERAL REGULATIONS. No part of the proceeds of any Loan
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors of the Federal Reserve System as now and from time
to time hereafter in effect. If requested by any Lender or Administrative Agent,
Borrower will furnish Administrative
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Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in Regulation G or
Regulation U, as the case may be.
(u) INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness under this
Agreement or the other Loan Documents.
(v) YEAR 2000 PROBLEM. Borrower and its Subsidiaries have
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the risk that certain computer applications used by Borrower and
its Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving dates after December 31, 1999 (the "YEAR 2000 PROBLEM"). The
Year 2000 Problem is not reasonably expected to result in a Material Adverse
Effect.
7.02. AFFIRMATIVE COVENANTS. Borrower hereby agrees that, so long as
the Total Commitment remains in effect, any Loan, Note, or Letter of Credit
remains outstanding and unpaid, or any amount is owing to any Lender or any
Agent under this Agreement or any other Loan Document, Borrower shall, and
except in the case of delivery of financial information, reports and policies,
cause each of its Subsidiaries to:
(a) CORPORATE EXISTENCE. Maintain its existence in good
standing with full legal capacity to perform all of its obligations under this
Agreement and all documents called for by this Agreement and not permit its
dissolution, liquidation, or other termination of existence or forfeiture of
right to do business.
(b) MAINTENANCE OF BOOKS AND RECORDS. At all times keep
business records in conformity with GAAP, those records to be kept at Borrower's
administrative office, which at present is located at 125 State Route 43,
Hartville, Ohio 44632.
(c) FINANCIAL INFORMATION. Furnish to Lenders:
(1) Within 90 days after the end of Borrower's
fiscal year (which ends on December 31), a copy of its annual audited
consolidated financial statement including at least a balance sheet as of the
close of the year, a statement of operations, a statement of changes in
shareholders' equity, and a statement of cash flow, prepared in conformity with
GAAP by Arthur Andersen L.L.P. or another independent firm of certified public
accountants acceptable to Lenders, together with a certificate from an
Amended and Restated Credit Agreement - Page 45
<PAGE> 53
Authorized Officer of Borrower that no Default or Event of Default has occurred
or exists;
(2) Within 45 days after the end of each of the
first three calendar quarters, a copy of Borrower's unaudited consolidated
quarterly report, prepared in conformity with GAAP, consisting of at least a
balance sheet as of the close of that quarter, a statement of operations, a
statement of changes in shareholders' equity, and a statement of cash flows for
the period from the beginning of the fiscal year to the close of that quarter,
certified to be accurate by an Authorized Officer of Borrower, and accompanied
by a certificate of the signing officer that no Default or Event of Default has
occurred or exists;
(3) Simultaneously with the delivery of the
financial statements referred to in SECTIONS 7.02(c)(1) and (2), a compliance
certificate in the form of EXHIBIT G hereto signed by an Authorized Officer of
Borrower (i) certifying that it is in compliance with the provisions of SECTION
7.04, (ii) setting forth in reasonable detail the calculations required to
establish that Borrower was in compliance with the provisions of SECTION 7.04 as
of the end of each quarter, and (iii) certifying that no Default or Event of
Default has occurred and is continuing and that all representations and
warranties of Borrower are true and correct.
(4) No later than each March 1 and September
1 during the Commitment Period, a Reserve Report as of the preceding December 31
and June 30, respectively, covering all of the oil and gas properties of
Borrower and its Subsidiaries that in the opinion of Required Lenders have
material value;
(5) No later than March 1 and September 1, (i)
complete revenue, expense, and production information for the aggregate of the
oil and gas properties of Borrower and its Subsidiaries for the most recent
twelve-month period preceding the Determination Date; (ii) detailed revenue,
expense, and production information for the same time period, for each area of
operation, for oil and gas wells of Borrower and its Subsidiaries; (iii) an oil
and gas operating statement prepared on a basis acceptable to Lenders reflecting
at a minimum, for the pertinent period, net production volume, prices received,
severance taxes, and capital and operating expenses, including a calculation of
net operating income; and (iv) a summary of the Hedge Transactions to which
Borrower or any Subsidiary is a party on such date;
(6) Promptly upon filing thereof with the
Securities and Exchange Commission, copies of the following securities
information for Borrower: (i) all final registration statements and post
effective amendments thereto; (ii) all annual, quarterly, and special reports
filed; and (iii) any item submitted for a vote of Borrower's shareholders;
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(7) No later than 10 days before the date that
Borrower issues Preferred Stock or incurs Subordinated Debt (to the extent
permitted hereunder), written notice setting out all details deemed material by
Lenders concerning either event; and
(8) As Required Lenders may from time to time
reasonably require by written notice to Borrower, other reasonable oil or gas
well information, other financial information and other information concerning
the business affairs of Borrower and its Subsidiaries in addition to those
specifically required by this Agreement.
(d) RIGHT TO INSPECT. Permit any Person designated by any
Lender to visit and inspect at reasonable places and times during normal
business hours any of the properties, books, and records of Borrower and any
Subsidiary as often as any Lender may reasonably request.
(e) PAYMENT OF OTHER OBLIGATIONS. Pay when due all Taxes,
assessments, and other liabilities, except and so long as contested in good
faith in a manner acceptable to Lenders and adequate reserves are being
maintained.
(f) PERFORMANCE. Promptly and fully perform all of its
obligations under this Agreement and all other Loan Documents (whether now
existing or entered into hereafter).
(g) INSURANCE. Maintain casualty insurance on all material
property and improvements and maintain liability insurance to such extent and
against such hazards and liabilities as like properties are customarily insured
within the oil and gas industry by Persons similarly situated to Borrower (each
policy of insurance must be with responsible insurers and must name
Administrative Agent as loss payee and as an additional insured party), and
deliver to Administrative Agent certificates of insurance coverage as and when
reasonably requested by Administrative Agent.
(h) DEPOSITORY ACCOUNTS. Maintain its primary depository
accounts at one or more of Lenders (Borrower acknowledges that this requirement
is a legitimate and reasonable measure to preserve and protect Lenders' first
priority Liens in all property intended as Security for the Obligations under
the Loan Documents).
(i) NOTICE OF DEFAULT AND LITIGATION. Give Lenders prompt
notice in writing of the occurrence or existence of a Default, an Event of
Default, any litigation or proceeding or other event affecting Borrower or any
of its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.
(j) FURTHER ASSURANCES. Borrower will and will cause each
Subsidiary to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the Security Documents and this
Agreement. Borrower at its expense will and
Amended and Restated Credit Agreement - Page 47
<PAGE> 55
will cause each Subsidiary to promptly execute and deliver to Administrative
Agent upon request all such other documents, agreements, and instruments to
comply with or accomplish the covenants and agreements of Borrower or any
Subsidiary, as the case may be, in the Security Documents and this Agreement, or
to further evidence and more fully describe the collateral intended as security
for the Obligations, or to correct any omissions in the Security Documents, or
to state more fully the security obligations set out herein or in any of the
Security Documents, or to perfect, protect, or preserve any Liens created
pursuant to any of the Security Documents, or to make any recordings, to file
any notices or obtain any consents, all as may be necessary or appropriate in
connection therewith.
(k) MAINTENANCE AND OPERATION OF PROPERTY. To the extent that
the failure to comply could have a Material Adverse Effect on the financial
condition or operations of Borrower or its Subsidiaries and consistent with the
standards of a reasonably prudent operator:
(1) Maintain, develop, and operate Borrower's
Oil and Gas Properties in a good and workmanlike manner, and observe and comply
with all of the terms and provisions, express or implied, of all oil and gas
leases relating to the properties so long as the oil and gas leases are capable
of producing hydrocarbons and accompanying elements in paying quantities;
(2) Comply in all material respects with all
contracts and agreements applicable to or relating to Borrower's Oil and Gas
Properties or the production and sale of hydrocarbons and accompanying elements
therefrom;
(3) At all times, maintain, preserve, and
keep all operating equipment used with respect to Borrower's Oil and Gas
Properties in proper repair, working order and condition, and make all necessary
or appropriate repairs, renewals, replacements, additions and improvements
thereto so that the efficiency of the operating equipment shall at all times be
properly preserved and maintained, PROVIDED THAT no item of operating equipment
need be so repaired, renewed, replaced, added to or improved, if Borrower or its
Subsidiary shall in good faith determine that the action is not necessary or
desirable for its continued efficient and profitable operation of business.
(4) With respect to Borrower's Oil and Gas
Properties which are operated by operators other than Borrower or a Subsidiary,
seek to enforce the operators' contractual obligations to maintain, develop, and
operate the oil and gas properties subject to the applicable operating
agreements.
(l) ERISA. As soon as possible, and in any event within 30
days after Borrower knows or has reason to know that any circumstances exist
that constitute grounds entitling the PBGC to institute proceedings to terminate
a Plan subject to ERISA
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with respect to Borrower or any Commonly Controlled Entity, and promptly but in
any event within two Business Days of receipt by Borrower or any Commonly
Controlled Entity of notice that the PBGC intends to terminate a Plan or appoint
a trustee to administer the same, and promptly but in any event within five
Business Days of the receipt of notice concerning the imposition of withdrawal
liability with respect to Borrower or any Commonly Controlled Entity, Borrower
shall deliver to each Lender a certificate of the chief financial officer of
Borrower setting forth all relevant details and the action which Borrower
proposes to take with respect thereto.
(m) ENVIRONMENTAL MATTERS. To the extent necessary to avoid a
Material Adverse Effect, be and remain, and cause each Subsidiary to be and
remain, in compliance with the provisions of all Environmental Laws; notify
Administrative Agent immediately of any notice of a hazardous discharge or
material environmental complaint received from any Governmental Authority or any
other party; notify Administrative Agent immediately of any release from or
affecting its properties; immediately contain and remove the same, in compliance
with all applicable laws; promptly pay any fine or penalty assessed in
connection therewith; permit Administrative Agent to inspect the premises, to
conduct tests thereon, and to inspect all books, correspondence, and records
pertaining thereto; and at Administrative Agent's request, and at Borrower's
expense, provide a report of a qualified environmental engineer, satisfactory in
scope, form, and content to Administrative Agent, and all other and further
assurances reasonably satisfactory to Administrative Agent that the condition
has been corrected.
(n) ENVIRONMENTAL INDEMNITY. NOTWITHSTANDING ANY OTHER
LIMITATION OF LIABILITY IN THIS OR ANY OTHER AGREEMENT OR INSTRUMENT BETWEEN
BORROWER OR A SUBSIDIARY AND LENDERS OR AGENTS, BORROWER PROMISES THAT IT WILL
INDEMNIFY, DEFEND, SAVE, AND HOLD HARMLESS EACH LENDER AND EACH AGENT AND
AGENT'S AND EACH LENDER'S AFFILIATES, OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES, AGENTS, ATTORNEYS, PARTNERS, AND THEIR RESPECTIVE HEIRS, SUCCESSORS,
AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED PARTIES") AGAINST AND FROM, AND TO
REIMBURSE INDEMNIFIED PARTIES WITH RESPECT TO, ANY AND ALL DAMAGES, CLAIMS,
LIABILITIES, LOSSES, COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEY'S FEES AND EXPENSES, COURT COSTS, ADMINISTRATIVE COSTS, AND
COSTS OF APPEALS), INCURRED BY OR ASSERTED AGAINST INDEMNIFIED PARTIES BY REASON
OR ARISING OUT OF THE TREATMENT OR RELEASE OF ANY WASTE IN, ON, OR AFFECTING OIL
AND GAS PROPERTIES OF BORROWER OR ITS SUBSIDIARIES, WHETHER OR NOT CAUSED BY
BORROWER OR ANY OF ITS SUBSIDIARIES, OR THE VIOLATION OF ANY ENVIRONMENTAL LAWS,
EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF ANY
Amended and Restated Credit Agreement - Page 49
<PAGE> 57
INDEMNIFIED PARTY. NOTWITHSTANDING ANYTHING IN THE LOAN DOCUMENTS TO THE
CONTRARY, THE UNDERTAKINGS OF BORROWER IN THIS PARAGRAPH SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT REGARDLESS OF THE MEANS OF
EXPIRATION OR TERMINATION ; PROVIDED, HOWEVER, NO INDEMNITY SHALL BE AFFORDED
UNDER THIS SECTION 7.02(N) IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING
FROM THE ACTS OR OMISSIONS OF ADMINISTRATIVE AGENT OR ANY LENDER DURING THE
PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS, SHALL HAVE OBTAINED
POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE). SPECIFICALLY, THE
INDEMNIFICATION IN THIS PARAGRAPH SHALL RUN FROM THE NOTICE COMMUNICATED TO
ADMINISTRATIVE AGENT OF ANY TREATMENT OR RELEASE OF WASTE OR OTHER ENVIRONMENTAL
CONDITION COVERED BY THIS AGREEMENT.
(o) OTHER INDEMNITY. BORROWER AGREES TO INDEMNIFY THE
INDEMNIFIED PARTIES AND HOLD THEM HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, COSTS AND EXPENSES OF ANY KIND (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR EACH
INDEMNIFIED PARTY IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR
JUDICIAL PROCEEDING, WHETHER OR NOT THE INDEMNIFIED PARTIES SHALL BE DESIGNATED
A PARTY THERETO) WHICH MAY BE INCURRED BY ANY INDEMNIFIED PARTY, RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR ANY ACTUAL OR PROPOSED USE OF PROCEEDS OF LOANS
HEREUNDER, INCLUDING AN INDEMNIFIED PARTY'S NEGLIGENCE; PROVIDED THAT
INDEMNIFIED PARTIES SHALL NOT BE INDEMNIFIED HEREUNDER FOR THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
7.03. NEGATIVE COVENANTS. Borrower hereby agrees that, so long as the
Total Commitments remain in effect, any Loan, Note, or any Letter of Credit
remains outstanding and unpaid, or any amount is owing to any Lender or any
Agent hereunder or under any other Loan Document, Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly:
(a) OTHER LIENS. Create incur, assume, or permit to exist any
Lien with respect to any of its assets, whether now owned or hereafter acquired,
EXCEPT FOR (i) Permitted Encumbrances; (ii) Liens securing Capital Leases
allowed under Section 7.03(b)(1)(vi), but only on the property under lease;
(iii) Liens on cash or securities of Borrower or any Subsidiary securing the
Debt described in Section 7.03(b)(1)(vii); and (iv) Liens set forth on SCHEDULE
4 hereto.
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(b) OTHER DEBT. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Debt
except:
(1) (i) Debt under this Agreement;
(ii) Subordinated Debt incurred by Borrower as a result of the exchange of
Preferred Stock issued in Borrower's November 1995 Preferred Stock offering;
(iii) Subordinated Debt in existence on the Closing Date and Subordinated Debt
subsequently incurred by Borrower, the terms and amount of which are acceptable
to Required Lenders; (iv) Debt under any Hedge Transaction permitted by SECTIONS
7.03(i) or (l) below; (v) Debt under Capital Leases not to exceed $10,000,000;
(vi) Debt associated with bonds or surety obligations required in the ordinary
course of business by any Governmental Authority in connection with the
operation of Borrower's Oil and Gas Properties; (vii) Debt of Borrower and its
Subsidiaries existing on the Closing Date which is reflected in the financial
statements described in SECTION 7.01(a) or otherwise disclosed to Administrative
Agent in writing, and any renewals or extensions (but not increases) thereof;
(viii) accounts payable (for the deferred purchase price of property or
services) from time to time incurred in the ordinary course of business which,
if greater than 90 days past the invoice or billing date, are being contested in
good faith by appropriate proceedings if reserves adequate under GAAP shall have
been established therefor; (ix) Debt of Borrower arising under any Guarantee by
Borrower of a Subsidiary's obligations with respect to gas purchase agreements
or other contracts for the purchase of crude oil or natural gas excluding such
obligations of REFC; and (x) Debt of REFC with respect to which there is no
recourse for repayment to Borrower or any other Subsidiary of Borrower; and
(2) Debt in addition to that permitted in
SECTION 7.03(b)(1) not to exceed $10,000,000 in the aggregate.
(c) MERGERS AND SALES OF ASSETS. Borrower will not and will
not permit any Subsidiary of Borrower to (a) merge or consolidate with, whether
in one transaction or in a series of transactions, any Person or Persons or (b)
sell, assign, lease, or otherwise dispose of, whether in one transaction or in a
series of transactions, any properties (a "PROPERTY DISPOSITION") other than (x)
sales of hydrocarbons produced from Borrower's Oil & Gas Properties in the
ordinary course of business and (y) other Property Dispositions; PROVIDED THAT
(i) unless Borrower has provided Lenders prior notice of a Property Disposition
as provided in clause (ii) below, (A) such Property Disposition may only be for
cash consideration, and (B) the Borrowing Base shall reduce simultaneously with
the completion of such Property Disposition by an amount equal to the Net Cash
Proceeds from such Property Disposition, and (ii) Borrower may, at its option in
connection with any Property Disposition in which the cash consideration
consists solely of cash, and Borrower shall, in connection with any Property
Disposition in which the consideration consists in whole or in part of property
other than cash, provide Lenders not less than 15 days advance written notice of
such Property Disposition, describing the
Amended and Restated Credit Agreement - Page 51
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properties to be disposed of and the consideration to be received, and Lenders
shall have the right to reduce the Borrowing Base then in effect by an amount
equal to the Borrowing Base value attributable to the properties to be disposed
of; any reduction in the Borrowing Base pursuant to this clause (ii) shall (A)
be determined by Required Lenders in their sole discretion but in a manner
consistent with redeterminations of the Borrowing Base generally as provided in
Article IV, (B) shall be effective simultaneously with the subject Property
Disposition, and (C) shall not be in lieu of any Special Determination available
to Lenders under Article IV; notwithstanding the foregoing, no reduction of the
Borrowing Base shall be required in connection with a Property Disposition under
this clause (b) of this SECTION 7.03(c) except with respect to the aggregate
consideration received by Borrower and its Subsidiaries for all Property
Dispositions completed since the most recent Periodic Determination (including
the consideration to be received pursuant to the subject Property Disposition)
that exceeds 5% of the Borrowing Base in effect immediately after such Periodic
Determination. Notwithstanding anything to the contrary contained in clause (a)
of this SECTION 7.03(c), Borrower or any Subsidiary of Borrower may merge or
consolidate with any other Person and any Subsidiary of Borrower may transfer
properties to any other Subsidiary of Borrower or to Borrower so long as, in
each case, (i) immediately thereafter and giving effect thereto, no event will
occur and be continuing which constitutes an Event of Default, (ii) in the case
of any such merger or consolidation to which Borrower is a party, Borrower is
the surviving Person, (iii) in the case of any such merger or consolidation to
which any Subsidiary of Borrower is party (but not Borrower), a Subsidiary is
the surviving Person, and (iv) the surviving Person ratifies each applicable
Loan Document and; PROVIDED, FURTHER, THAT any Subsidiary of Borrower may merge
or consolidate with any other Subsidiary of Borrower so long as, in each case
(i) immediately thereafter and giving effect thereto, no event will occur and be
continuing which constitutes an Event of Default and (ii) the surviving Person,
if necessary, ratifies each applicable Loan Document.
(d) CHANGES IN BUSINESS. Engage in any business which differs
substantially from its present business.
(e) PLAN CONTRIBUTIONS. Make contributions to any Plan in any
one year which, in the aggregate, exceed $4,000,000.
(f) ADVANCES AND INVESTMENTS. Make or permit any Subsidiary to
make Advances to any Person or Investments in any Person; PROVIDED THAT Borrower
and its Subsidiaries may (i) make Advances to or Investments in any wholly owned
Subsidiary of Borrower excluding REFC, (ii) make Advances in addition to those
described in clause (i) preceding which do not exceed $5,000,000 in the
aggregate in any calendar year and $15,000,000 in the aggregate during the
Commitment Period, and (iii) make Permitted Investments.
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(g) RESTRICTED PAYMENTS. Make any Restricted Payment; PROVIDED
THAT so long as no Default or Event of Default exists and no Default or Event of
Default will result from the Restricted Payment, Restricted Payments may be made
in an aggregate amount (measured cumulatively from June 30, 1999) not to exceed
the sum of (i) $10,000,000, plus (ii) 50% of the Net Cash Proceeds to Borrower
from all common equity offerings completed by Borrower after the Closing Date,
plus (ii) 50% of Borrower's Consolidated Net Income earned after June 30, 1999
(for purposes of this SECTION 7.03(g) only, Consolidated Net Income shall
exclude non-cash impairments of long-lived assets as prescribed under Financial
Accounting Standards Board Statements Nos. 19 and 121).
(h) INTEREST PAYMENTS. Make payments of interest or principal
on Subordinated Debt, if there is an Event of Default under this Agreement or if
a payment of interest or principal on the Subordinated Debt will cause a breach
of any of the covenants set out in SECTION 7.04.
(i) OIL AND GAS HEDGE TRANSACTIONS. Enter into Oil and Gas
Hedge Transactions with the exception that Borrower and its Subsidiaries may
enter into Oil and Gas Hedge Transactions as long as the volume of hydrocarbons
with respect to which a settlement payment is calculated under such Oil and Gas
Hedge Transactions does not exceed 80% of Borrower's and its Subsidiaries'
anticipated production from proved, developed producing reserves during the
period from the immediately preceding settlement date (or the commencement of
the term of such Oil and Gas Hedge Transactions if there is no prior settlement
date) to such settlement date.
(j) TRANSACTIONS WITH AFFILIATES. Engage in any material
transaction with an Affiliate unless the transaction is generally as favorable
to Borrower or any Subsidiary as could be obtained in an arm's length
transaction with an unaffiliated Person in accordance with prevailing industry
customs and practices.
(k) PLANS. Permit any Subsidiary to create, adopt, or become
bound by any Plan.
(l) SPECULATIVE HEDGE TRANSACTIONS. Enter into or permit any
Subsidiary to enter into any commodity, interest rate, currency or other swap,
option, collar or other derivative transaction pursuant to which Borrower or a
Subsidiary speculates on the movement of commodity prices, interest rates,
financial markets, currency markets or other items; PROVIDED THAT nothing
contained herein shall prohibit Borrower from (a) entering into interest rate
swaps or other interest rate hedge transactions pursuant to which Borrower
hedges interest rate risk with respect to the interest reasonably anticipated to
be incurred pursuant to this Agreement, (b) entering into Oil and Gas Hedge
Transactions permitted by this SECTION 7.03(i) hereof, or (c) making Permitted
Investments.
Amended and Restated Credit Agreement - Page 53
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(m) OPTIONAL PAYMENTS AND MODIFICATIONS. Make any optional
payment on or defeasance or purchase of (or otherwise set apart assets for a
sinking or other analogous fund or trust for the purchase of) any Debt, or
amend, modify, waive, supplement or terminate, or permit the amendment,
modification, supplement, waiver or termination of any document related to
Subordinated Debt.
(n) LIMITATION ON SALES AND LEASEBACKS. Enter into any
arrangement with any Person providing for the leasing by Borrower or any
Subsidiary of any real or personal property which has been or is to be sold or
transferred by Borrower or the Subsidiary to the Person or to any other Person
to whom funds have been or are to be advanced by the Person on the security of
the property or rental obligations of Borrower or any Subsidiary.
(o) LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any
Person any agreement, other than the Loan Documents, which prohibits or limits
the ability of Borrower or any Subsidiary to create, incur, assume, or suffer to
exist any Lien upon any of its property, assets, or revenues, whether now owned
or hereafter acquired, other than restrictions imposed in connection with
Capital Leases or purchase money obligations for property leased or acquired in
the ordinary course of business on the property so leased or acquired, customary
restrictions contained in stock purchase agreements, asset sale agreements
limiting the transfer of assets pending the closing of the sale, and customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practice.
(p) RESTRICTIONS WITH RESPECT TO OBLIGATIONS OF REFC. Issue a
Guarantee with respect to any Debt or other obligation of REFC or otherwise
become liable, directly or indirectly, for any such Debt or other obligation,
with the exception that Borrower may issue the REFC Guarantee; or make any
Advance to, Investment in, or Distribution to REFC other than as may be
permitted under SECTION 7.03(f) and SECTION 7.03(g) above.
7.04. FINANCIAL COVENANTS. So long as this Agreement remains in force,
Borrower and its Consolidated Subsidiaries shall maintain, on a consolidated
basis, the following (all calculated in accordance with GAAP):
(a) CONSOLIDATED TANGIBLE NET WORTH. A minimum Consolidated
Tangible Net Worth as of any date which is not less than the sum of (i)
$175,000,000, plus (ii) 50% of the net proceeds to Borrower from the issuance of
equity securities on or after September 30, 1999 (for purposes of this SECTION
7.04(a) only, Consolidated Tangible Net Worth shall exclude non-cash impairments
of long-lived assets as prescribed under Financial Accounting Standards Board
Statements Nos. 19 and 121);
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(b) SENIOR DEBT INTEREST COVERAGE RATIO. A ratio of EBITDA to
Consolidated Interest Expense on Senior Debt for each period of four immediately
preceding consecutive fiscal quarters of at least 3.0 to 1.0;
(c) TOTAL DEBT INTEREST COVERAGE RATIO. For the fiscal quarter
ended June 30, 1999, through the fiscal quarter ending December 31, 1999, a
ratio of EBITDA to Consolidated Interest Expense on Total Debt for each period
of four immediately preceding consecutive fiscal quarters of at least 2.0 to
1.0, and for each fiscal quarter ending after December 31, 1999, a ratio of
EBITDA to Consolidated Interest Expense on Total Debt for each period of four
immediately preceding consecutive fiscal quarters of at least 2.5 to 1.0;
(d) SENIOR DEBT LEVERAGE RATIO. For the fiscal quarter ended
June 30, 1999, through the fiscal quarter ending December 31, 1999, a ratio of
Senior Debt as of the last day of any fiscal quarter to EBITDA for the period of
four immediately preceding fiscal quarters then ended not in excess of 4.0 to
1.0, and for each fiscal quarter ending after December 31, 1999, a ratio of
Senior Debt as of the last day of any fiscal quarter to EBITDA for each period
of four immediately preceding consecutive fiscal quarters then ended not in
excess of 3.0 to 1.0;
(e) TOTAL DEBT LEVERAGE RATIO. For the fiscal quarter ended
June 30, 1999, through the fiscal quarter ending December 31, 1999, a ratio of
Total Debt as of the last day of any fiscal quarter to EBITDA for the period of
four immediately preceding consecutive fiscal quarters then ended not in excess
of 6.0 to 1.0, and for each fiscal quarter ending after December 31, 1999, a
ratio of Total Debt as of the last day of any fiscal quarter to EBITDA for each
period of four immediately preceding consecutive fiscal quarters then ended not
in excess of 5.0 to 1.0; and
(f) CURRENT RATIO. A ratio of current assets to current
liabilities on any date of at least 1.0 to 1.0 (for purposes of this
calculation, current assets will include an amount equal to the Unused
Availability).
ARTICLE 8 - DEFAULT.
8.01. EVENTS OF DEFAULT. As used in this Agreement, the term "EVENT OF
DEFAULT" means the occurrence of any of the following events or existence of any
of the following conditions:
(a) Failure of Borrower to pay when due any principal of any
Note or any reimbursement obligation with respect to any Letters of Credit when
due; or
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(b) Failure of Borrower to pay any accrued interest due and
owing on any Note or any fees or any other amount payable hereunder when due and
the failure shall continue for a period of five days; or
(c) Failure of Borrower to observe or perform any covenant or
agreement contained in SECTION 7.02(C), SECTION 7.03, or SECTION 7.04 of this
Agreement; or
(d) Any default by Borrower or a Subsidiary in the performance
of any other covenant, agreement, obligation, or undertaking contained in this
Agreement or any other Loan Document, any document called for by this Agreement
or any other Loan Document, or any other agreement with any Agent or Lenders
(whether now existing or made hereafter), which is not expressly covered by
another subsection of this SECTION 8.01, and which has not been cured to
Majority Lenders' satisfaction within the earlier to occur of (i) 30 days after
written notice from Administrative Agent to Borrower of the default or (ii) 30
days after the date Borrower should have notified Lenders of the default
pursuant to the terms of this Agreement; or
(e) Any warranty, representation, or statement contained in
this Agreement or made or furnished to Lenders or on behalf of Borrower in
connection with this Agreement or the Loans proves to have been false in any
material respect when made or furnished; or
(f) (i) The default by Borrower or any Subsidiary in the
performance of any obligation owed to someone other than Lenders with respect to
any Debt in excess of $5,000,000, or (ii) the commencement of any foreclosure
proceedings against Borrower or any Subsidiary, if the default has not been
cured or the foreclosure proceeding stopped, to Majority Lenders' satisfaction,
within the earlier to occur of (A) 30 days after written notice from
Administrative Agent to Borrower of the default or (B) 30 days after the date
Borrower should have notified Lenders of the default pursuant to the terms of
this Agreement; or
(g) Borrower's or any Subsidiary's (excluding REFC) voluntary
bankruptcy filing, its liquidation or termination of existence, its merger or
consolidation with another, where Borrower is not the surviving entity, its
insolvency, its forfeiture of right to do business, its appointment of a
custodian, trustee, or receiver for any part of its property, or its assignment
for the benefit of creditors; or
(h) The commencement by a third party of any proceeding under
any bankruptcy or insolvency law against Borrower or any Subsidiary (excluding
REFC) if the proceeding has not been dismissed within 60 days after its
commencement; or
(i) Borrower's failure to remedy a Borrowing Base
Deficiency as required by SECTION 4.06; or
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(j) Any of the following events shall occur or exist with
respect to Borrower and any Commonly Controlled Entity under ERISA: any
Reportable Event shall occur; complete or partial withdrawal from any
Multiemployer Plan shall take place; any Prohibited Transaction shall occur; a
notice of intent to terminate a Plan shall be filed, or a Plan shall be
terminated; or circumstances shall exist which constitute grounds entitling the
PBGC to institute proceedings to terminate a Plan, or the PBGC shall institute
such proceedings; and in each case above, such event or condition, together with
all other events or conditions, if any, could subject Borrower to any tax,
penalty, or other liability which in the aggregate may exceed $2,000,000; or
(k) If any Lender or any Agent receives its first notice of a
material hazardous discharge or a material environmental complaint from a source
other than Borrower (such Lender to immediately notify Administrative Agent and
Borrower thereof) and Administrative Agent does not receive notice (which may be
given in oral form, provided same is followed with all due dispatch by written
notice given to Administrative Agent by certified mail, return receipt
requested) of the hazardous discharge or environmental complaint from Borrower
within 72 hours of the time such Lender or Agent first receives the notice from
a source other than Borrower; or if any federal, state, or local agency asserts
or creates a lien upon any or all of the assets, equipment, property, leaseholds
or other facilities of any Loan Party by reason of the occurrence of a hazardous
discharge or an environmental complaint; or if any federal, state, or local
agency asserts a claim against any Loan Party and/or its assets, equipment,
property, leaseholds, or other facilities for damages or cleanup costs relating
to a hazardous discharge or an environmental complaint; PROVIDED, HOWEVER, THAT
the claim shall not constitute a default if, within five Business Days of the
occurrence giving rise to the claim (a) Borrower can provide to the satisfaction
of each Agent that Borrower has commenced and is diligently pursuing either: (i)
a cure or correction of the event which constitutes the basis for the claim, and
continues diligently to pursue the cure or correction to completion or (ii)
proceedings for an injunction, a restraining order or other appropriate
emergency relief preventing the agency or agencies from asserting such claim,
which relief is granted within ten Business Days of the occurrence giving rise
to the claim and the injunction, order, or emergency relief is not thereafter
resolved or reversed on appeal; and (b) in either of the foregoing events,
Borrower or a Subsidiary has posted a bond, letter of credit, or other security
satisfactory in form, substance, and amount to each Agent and the agency or
entity asserting the claim to secure the proper and complete cure or correction
of the event which constitutes the basis for the claim; or
(l) One or more judgments or orders for the payment of money
aggregating in excess of $1,000,000 shall be rendered against Borrower or any
Subsidiary of Borrower and such judgment or order (i) shall continue unsatisfied
and unstayed (unless bonded with a supersedeas bond at least equal to such
judgment or order) for a period of
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30 days or (ii) is not fully paid and satisfied at least ten days prior to the
date on which any of its assets may be lawfully sold to satisfy such judgment or
order; or
(m) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the validity
or enforceability thereof shall be contested or challenged by Borrower or any
Subsidiary of Borrower, or any Borrower or any Subsidiary of Borrower shall deny
that it has any further liability or obligation under any of the Loan Documents,
or any Lien created by the Loan Documents shall for any reason (other than the
release thereof in accordance with the Loan Documents) cease to be a valid,
first priority, perfected Lien upon any of the property purported to be covered
thereby; or
(n) Any Person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934) shall become the direct or
indirect beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of more than 35% of the total voting power of all classes
of Equity then outstanding of Borrower entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of Borrower.
8.02. REMEDIES. (a) Upon the occurrence of an Event of Default, and at
any time thereafter, Administrative Agent shall at the request of, or may, with
the consent of, Majority Lenders, by notice to Borrower, (1) declare the
Commitments to be terminated, whereupon the same shall immediately terminate;
(2) declare the outstanding Notes, all interest thereon, and all other amounts
payable under this Agreement, and the other Loan Documents to be immediately due
and payable, whereupon the Notes, all interest, and all other amounts shall
become and be immediately due and payable, without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration, or further notice of any
kind, all of which are hereby expressly waived by Borrower, and (3) exercise all
of their rights and remedies under the Loan Documents; PROVIDED THAT in the case
of the Events of Default specified in SECTION 8.01(g) or (h), without any notice
to Borrower or any other act by Administrative Agent or Lenders, the Commitments
shall thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable.
(b) Upon the occurrence and during the continuance of any
Event of Default, each Lender is hereby authorized at any time and from time to
time, without notice to Borrower (any notice being expressly waived by
Borrower), to set off and apply any and all deposits (general or special, time
or demand, provisional or final), excluding those held in Special Accounts, at
any time held and other indebtedness at any time owing by that Lender to or for
the credit or the account of Borrower against any and all of the Obligations of
Borrower now or hereafter existing under this Agreement or any Note held by that
Lender or any other Loan Document, irrespective of whether or not Administrative
Agent or that Lender shall have made any demand under this Agreement or the Note
or such other Loan Document and although the obligations may be unmatured. Each
Lender agrees promptly to notify Borrower (with a copy of
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Administrative Agent) after any set off and application, PROVIDED THAT the
failure to give the notice shall not affect the validity of the set off and
application. The rights of each Lender under this SECTION 8.02(b) are in
addition to the other rights and remedies (including, without limitation, other
rights of set off) which each Lender may have.
(c) Each Lender agrees that if it shall, by exercising any
right of setoff or counterclaim or otherwise, receive payment after the
occurrence and during the continuance of an Event of Default of a proportion of
the aggregate amount of principal and interest due with respect to any Loan
which is greater than the proportion received by any other Lender in respect of
such Loan, Lender receiving such proportionately greater payment shall purchase
such participations in the interests in such Loan held by the other Lenders, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to each Loan held by Lenders
shall be shared by Lenders ratably in accordance with their respective
Commitment Percentages; PROVIDED THAT nothing in this SECTION 8.03(c) shall
impair the right of any Lender to exercise any right of setoff or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of Borrower other than its indebtedness under the Loans. Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that Lenders may exercise rights of setoff or counterclaim and other rights with
respect to such participation as fully as if such holder of a participation were
a direct creditor of Borrower in the amount of such participation.
ARTICLE 9 - AGENCY PROVISIONS.
9.01. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints each of Administrative Agent, Syndication Agent, and Documentation
Agent as its Agent under this Agreement and the other Loan Documents, and each
Lender irrevocably authorizes Agents, in those capacities, to take all action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise all powers and perform all duties as are expressly delegated to
Agents by the terms of this Agreement and the other Loan Documents, together
with all other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement, Agents shall
not have any duties or responsibilities except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against
Agents.
9.02. DELEGATION OF DUTIES. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to the duties. Agents shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
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9.03. EXCULPATORY PROVISIONS. No Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or that Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any Lender for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by Agents under or in connection with, this Agreement or any other Loan Document
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party to perform its obligations hereunder or thereunder. Agents shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
9.04. RELIANCE BY AGENTS. Agents shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Loan Parties), independent accountants and other
experts selected by each Agent. The Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with
Administrative Agent. Agents shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless it shall
first receive the advice or concurrence of Required Lenders or Majority Lenders,
as applicable, as it deems appropriate or it shall first be indemnified to its
satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any action. Agents
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of Required Lenders, and the request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders and all future holders of the
Loans.
9.05. NOTICE OF DEFAULT. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender or Borrower referring to this
Agreement, describing the Default or Event of Default and stating that the
notice is a "notice of default". In the event that any Agent receives such a
notice, such Agent shall give notice thereof to each other Agent and each other
Lender. Administrative Agent shall take action with respect to the Default or
Event of Default as shall be reasonably directed by Majority Lenders; PROVIDED
THAT unless and until Administrative Agent shall have received these directions,
Administrative Agent may (but shall not be obligated to) take action, or refrain
from
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taking action, with respect to the Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
9.06. NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that neither Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by Agents hereafter taken, including any
review of the affairs of any Loan Party, shall be deemed to constitute any
representation or warranty by Agents to any Lender. Each Lender represents to
Agents that it has, independently and without reliance upon Agents or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of each
Loan Party and made its own decision to make its extensions of credit hereunder
and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon Agents or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of each
Loan Party. Except for notices, reports, and other documents expressly required
to be furnished to Lenders by Administrative Agent hereunder, no Agent shall
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party which may come
into the possession of Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
9.07. INDEMNIFICATION. Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by Borrower and without limiting
the obligation of Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against any Agent in any way relating to or arising out of, the Total
Commitment, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by each Agent
under or in connection with any of the foregoing; PROVIDED THAT no Lender shall
be liable for the payment of any portion of the liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting solely from an Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Obligations and all other amounts payable hereunder.
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9.08. EACH AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its
Affiliates may make loans to, accept deposits from, and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent
hereunder and under the other Loan Documents. With respect to the extensions of
credit made by it, each Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
9.09. SUCCESSOR AGENT. Each Agent may resign as Agent upon written
notice to Lenders and the appointment of a Successor Agent as set out in the
following sentence. If an Agent shall resign as Agent under this Agreement and
the other Loan Documents, then Required Lenders shall appoint from among Lenders
a successor agent for Lenders, which successor agent, with the consent of
Borrower (the consent not to be unreasonably withheld or delayed), shall succeed
to the rights, powers and duties of such Agent hereunder. Effective upon the
appointment and approval, the term "Agent" shall mean the successor agent
(serving in the capacity of the predecessor Agent), and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of the former Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring Agent's
resignation as Agent, the provisions of this Article 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
9.10. ISSUING LENDER. The provisions of this Article 9 applicable to an
Agent shall apply to the Issuing Lender in the performance of its duties under
the Loan Documents, allowing for the appropriate changes that must be made.
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ARTICLE 10 - PROTECTION OF YIELD; CHANGE IN LAWS.
10.01. RISK-BASED CAPITAL. In the event any Lender determines that (a)
compliance with any judicial, administrative, or other governmental
interpretation of any law or regulation adopted or made after the date hereof,
or (b) compliance by such Lender or any corporation controlling such Lender with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) adopted or made after the date hereof
has the effect of requiring an increase in the amount of capital required or
expected to be maintained by such Lender or any corporation controlling the
Lender, and such Lender determines that the increase is based upon its
obligations hereunder, Borrower shall pay to Administrative Agent, for the
account of the applicable Lender, the additional amount as shall be certified by
that Lender to be the amount allocable to such Lender's obligations to Borrower
hereunder. Such Lender will promptly notify Borrower (with a copy to
Administrative Agent) of any event occurring after the date of this Agreement
that will entitle that Lender to compensation pursuant to this SECTION 10.01 as
promptly as practicable, and in any event within 90 days after it obtains
knowledge thereof and determines to request the compensation.
Borrower's obligations under this Section 10.01 shall be
subject to delivery to Borrower by any Lender claiming compensation under this
Section 10.01 of a certificate setting forth in reasonable detail the additional
amount or amounts to be paid to it hereunder and certifying that it is generally
charging such costs to other similarity situated borrowers under similar credit
facilities.
Determinations by a Lender for purposes of this SECTION 10.01
of the effect of any increase in the amount of capital required to be maintained
by such Lender and of the amount allocable to that Lender's obligations to
Borrower hereunder shall be conclusive, absent manifest error.
10.02. BASIS FOR DETERMINING INTEREST RATE APPLICABLE TO EURODOLLAR
LOANS INADEQUATE. If on or prior to the first day of any Interest Period:
(a) Administrative Agent is advised that deposits in dollars
(in the applicable amounts) are not being offered to Lenders in the interbank
eurocurrency market for the Interest Period, or
(b) Administrative Agent determines that the Eurodollar Rate
as determined by it will not adequately and fairly reflect the cost to Lenders
of funding a Eurodollar Loan for the Interest Period; or
(c) Adequate means do not exist in the interbank eurocurrency
market to determine the Eurodollar Rate;
Amended and Restated Credit Agreement - Page 63
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the obligation of Lenders to make Eurodollar Loans shall be suspended until
Administrative Agent notifies Borrower that the circumstances giving rise to the
suspension no longer exist. Unless Borrower notifies Administrative Agent at
least two Business Days before the date of any Eurodollar Loan previously
requested that it elects not to borrow on that date, the Loan shall instead be
made as a ABR Loan.
10.03. ILLEGALITY OF EURODOLLAR LOANS. (a) If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central Bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any the authority, central Bank, or comparable agency shall make it
unlawful or impossible for that Lender (or its Lending Office) to make, maintain
or fund its Eurodollar Loans, the obligation of such Lender to make Eurodollar
Loans shall be suspended. If any Lender determines that it may not lawfully
continue to maintain and fund any of its outstanding Eurodollar Loans to
maturity, Borrower shall immediately convert the principal amount of each
Eurodollar Loan to an ABR Loan of an equal principal amount from such Lender.
(b) No Lender shall be required to make a Loan hereunder if
the making of the Loan would be in violation of any law applicable to such
Lender.
10.04. INCREASED COST OF EURODOLLAR LOANS. If after the date hereof,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration hereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any that authority,
central bank, or comparable agency:
(a) shall subject such Lender to any tax, duty or other charge
with respect to its Eurodollar Loans or its obligation to make Eurodollar Loans
or shall change the basis of taxation of payments to a Lender of the principal
of or interest on its Eurodollar Loans or any other amounts due under this
Agreement in respect of its Eurodollar Loans or its obligation to make
Eurodollar Loans (except for changes in the rate of tax on the overall net
income of a Lender imposed by the jurisdiction in which such Lender's Lending
Office is located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement [including, without limitation, any
requirement imposed by the Board of Governors of the Federal Reserve System (but
excluding with respect to any Eurodollar Loan any requirement included in an
applicable Eurodollar Reserve Percentage)] against assets of, deposits with or
for the account of or credit extended by such Lender or shall impose on such
Lender or the eurodollar interbank market any other
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condition affecting the Eurodollar Loans, any Note or such Lender's obligation
to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by that Lender under this Agreement or under the Note
with respect thereto, by an amount deemed by the Lender to be material, then,
within 10 days after demand by Administrative Agent, Borrower shall pay to that
Lender the additional amount or amounts as will compensate that Lender for the
increased cost or reduction. Each Lender will promptly notify Borrower and
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
SECTION 10.04 and will designate a different Lending Office if the designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the reasonable judgment of that Lender, be otherwise disadvantageous to
the Lender. Borrower's obligations under this SECTION 10.04 shall be subject to
delivery to Borrower of a certificate by any Lender claiming compensation under
this SECTION 10.04, setting forth in reasonable detail the additional amount or
amounts to be paid to it hereunder and certifying that it is generally charging
such costs to other similarly situated borrowers under similar credit facilities
shall be delivered to Borrower and shall be conclusive in the absence of
manifest error. In determining the amount, each Lender must use reasonable
averaging and attribution methods.
10.05. ALTERNATIVE LOANS SUBSTITUTED FOR AFFECTED EURODOLLAR LOANS. If
(a) the obligation of any Lender to make Eurodollar Loans has been suspended
pursuant to SECTION 10.03 or (b) such Lender has demanded compensation under
SECTION 10.04, and Borrower shall, by at least five Business Days prior notice
to such Lender, have elected that the provisions of this SECTION 10.05 shall
apply, then, unless and until such Lender notifies Borrower that the
circumstances giving rise to the suspension or demand for compensation no longer
apply:
(i) all Loans which would otherwise be made by such
Lender as Eurodollar Loans shall be made instead as ABR Loans, and
(ii) after each of its Eurodollar Loans has been
repaid, all payments of principal which would otherwise be applied to repay the
Eurodollar Loans shall be applied to repay its ABR Loans.
10.06. FUNDING LOSS INDEMNIFICATION. Upon notice to Borrower from a
Lender (with a copy to Administrative Agent), Borrower shall pay to
Administrative Agent, within five days after notice from a Lender, for the
ratable benefit of each Lender, the amount or amounts sufficient to compensate
them for any actual loss, cost, or expense (excluding loss of anticipated
profits) incurred as a result of:
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(a) Any payment of a Eurodollar Loan on a date other than the
last day of the Interest Period for the Loan including, but not limited to,
acceleration of the Loans by Administrative Agent pursuant to this Agreement, or
(b) Any failure by Borrower to borrow or convert, as the case
may be, a Eurodollar Loan on the date for borrowing or conversion, as the case
may be, specified in the relevant notice under SECTION 2.02 or 2.07, as the case
may be.
Each Lender shall determine the amount of compensation and will provide Borrower
with the basis for its determination. Each Lender's determination shall be
conclusive, absent manifest error.
10.07. TAXES. All amounts payable by Borrower under the Loan Documents
(whether principal, interest, fees, expenses, or otherwise) to or for the
account of each Lender shall be paid in full, free of any deductions or
withholdings for or on account of any Taxes. If Borrower is prohibited by law
from paying the amount free of any deductions and withholdings, then (at the
same time and in the same manner that the original amount is otherwise due under
the Loan Documents), Borrower shall pay to or for the account of such Lender
such additional amount as may be necessary in order that the actual amount
received by such Lender after deduction and/or withholding (and after payment of
any additional Taxes due as a consequence of the payment of the additional
amount, and so on) will equal the amount such Lender would have received if the
deduction or withholding were not made.
10.08. DISCRETION OF LENDERS AS TO MANNER OF FUNDING. Notwithstanding
any provisions of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Loans in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Eurodollar Loan during the Interest Period
for the Eurodollar Loan through the purchase of deposits having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the Eurodollar Rate for the Interest Period.
10.09. LIMITATION ON ADDITIONAL AMOUNTS. Notwithstanding anything to
the contrary contained in SECTION 10.01, 10.04, and 10.07, neither Borrower nor
any Subsidiary of Borrower shall be required to pay to any Lender any increased
costs, Taxes, loss, expense, or liability, reduction in amounts received or
receivable or reduction in return on capital incurred more than 180 days prior
to the date that such Lender notifies Borrower of such Lender's intention to
claim any such compensation; PROVIDED THAT if the circumstances giving rise to
such claim have a retroactive effect, then such 180 day period shall be extended
to include the period of such retroactive effect.
10.10. REPLACEMENT LENDERS. (a) If any Lender has notified Borrower
and Administrative Agent of its incurring additional costs under SECTIONS 10.01
or 10.04, or has required Borrower
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<PAGE> 74
to make payments for Taxes under SECTION 10.07, then Borrower may, unless such
Lender has notified Borrower and Administrative Agent that the circumstances
giving rise to such notice no longer apply, terminate, in whole but not in part,
the Commitment of any Lender (other than Administrative Agent) (the "TERMINATED
LENDER") at any time upon five Business Days prior written notice to the
Terminated Lender and Administrative Agent (such notice referred to herein as a
"NOTICE OF TERMINATION").
(b) In order to effect the termination of the Commitment of
the Terminated Lender, Borrower shall: (i) obtain an agreement with one or more
Lenders to increase their Commitment or Commitments and/or (ii) request any one
or more other banking institutions to become parties to this Agreement in place
and instead of such Terminated Lender and agree to accept a Commitment or
Commitments; PROVIDED, HOWEVER, THAT such one or more other banking institutions
(referred to herein as the "REPLACEMENT LENDERS") agree to accept in whole or in
part the Commitment of the Terminated Lender, are reasonably acceptable to all
Agents, and become parties to this Agreement by executing an assignment in the
form of attached EXHIBIT H, with appropriate insertions and modifications (an
"ASSIGNMENT"), such that the aggregate increased and/or accepted Commitments of
the Replacement Lenders under clauses (i) and (ii) above equal the Commitment of
the Terminated Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the "LENDER TERMINATION
DATE"), and the Replacement Lender or Replacement Lenders to which the
Terminated Lender will assign its Commitment and, if there will be more than one
Replacement Lender, the portion of the Terminated Lender's Commitment to be
assigned to each Replacement Lender.
(d) On the Lender Termination Date, (i) the Terminated Lender
shall by execution and delivery of an Assignment assign its Commitment to the
Replacement Lender or Replacement Lenders (pro rata, if there is more than one
Replacement Lender, in proportion to the portion of the Terminated Lender's
Commitment to be assigned to each Replacement Lender) indicated in the Notice of
Termination and shall assign to the Replacement Lender or Replacement Lenders
each of its Loan (if any) then outstanding and participation interests in
Letters of Credit (if any) then outstanding pro rata as aforesaid), (ii) the
Terminated Lender shall endorse its Note, payable without recourse,
representation or warranty to the order of the Replacement Lender or Replacement
Lenders (pro rata as aforesaid), (iii) the Replacement Lender or Replacement
Lenders shall purchase the Note held by the Terminated Lender (pro rata as
aforesaid) at a price equal to the unpaid principal amount thereof plus interest
and facility and other fees accrued and unpaid to the Termination Date, and (iv)
the Replacement Lender or Replacement Lenders will thereupon (pro rata as
aforesaid) succeed to and be substituted in all respects for the Terminated
Lender with like effect as if becoming a Lender pursuant to the terms of SECTION
12.08(b), and the Terminated Lender will have the rights
Amended and Restated Credit Agreement - Page 67
<PAGE> 75
and benefits of an assignor under SECTION 12.08(b). To the extent not in
conflict, the terms of SECTION 12.08(B) shall supplement the provisions of this
SECTION 10.10(d). For each assignment made under this SECTION 10.10, the
Replacement Lender shall pay to Administrative Agent any processing fee provided
for in SECTION 12.08(b). Borrower shall pay any breakage costs as provided by
SECTION 10.06, which occur as a result of the operation of this SECTION 10.10.
ARTICLE 11 - FEES.
11.01 COMMITMENT FEES. On the first day of each October, January,
April, and July, commencing on October 1, 1999, and ending on the Termination
Date or any earlier termination of the Commitments, Borrower shall pay to
Administrative Agent for the ratable benefit of each Lender, a commitment fee
payable with respect to the daily Unused Availability for the calendar quarter
(or portion thereof) ending on the day prior to the date such payment is due
equal to (i) .25% per annum of the average daily Unused Availability for such
calendar quarter or portion thereof if the daily average Borrowing Base Usage
during such calendar quarter (or portion thereof) is less than 40% for the
calendar quarter ending on the date immediately preceding the date such
commitment fee is payable; (ii) .375% per annum of the average daily Unused
Availability for such calendar quarter or portion thereof if the average daily
Borrowing Base Usage during such calendar quarter (or portion thereof) is equal
to or greater than 40% but less than 60% for the calendar quarter ending on the
day immediately preceding the date such commitment fee is payable; and (iii)
.50% per annum of the average daily Unused Availability for such calendar
quarter or portion thereof if the average daily Borrowing Base Usage during such
calendar quarter (or portion thereof) is equal to or greater than 60% for the
calendar quarter ending on the day immediately preceding the date such
commitment fee is payable. The commitment fees payable pursuant to this SECTION
11.01 shall be calculated on the basis of the actual number of days elapsed
assuming a calendar year of 360 days.
11.02. AGENCY FEES. Borrower shall pay to each Agent and its Affiliates
those fees and other amounts as Borrower shall be required to pay to each Agent
and its Affiliates from time to time pursuant to any separate agreement between
Borrower and that Agent or any of its Affiliates setting forth the compensation
to be paid to such Agent and its Affiliates in consideration for acting as Agent
hereunder and for providing other services in connection with the credit
facilitations provided pursuant hereto. These fees and other amounts shall be
retained by the applicable Agent and its Affiliates, and no Lender (other than
the applicable Agents) shall have any interest therein.
11.03. LETTER OF CREDIT FEES. Borrower shall pay to Administrative
Agent, for the ratable benefit of each Lender, and to the Issuing Lender, as
appropriate, the fees provided for in SECTION 3.03 with respect to all Letters
of Credit issued.
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<PAGE> 76
11.04. OTHER FEES. Borrower shall pay to Administrative Agent, for the
ratable benefit of each Lender, those fees and other amounts as Borrower shall
be required to pay to each Lender from time to time pursuant to any separate
agreement between Borrower and Administrative Agent, for the ratable benefit of
each Lender, setting forth the compensation to be paid to Lenders in
consideration for participating in the credit facilitations provided pursuant
hereto.
ARTICLE 12 - GENERAL PROVISIONS.
12.01. EXPENSES. Borrower shall pay (i) all reasonable out-of-pocket
expenses of Syndication Agent associated with the syndication of the Loans, (ii)
all reasonable out-of-pocket expenses of Syndication Agent, including reasonable
fees, disbursements and other charges of counsel for Syndication Agent, in
connection with the preparation of this Agreement and the other Loan Documents
and, if appropriate, the recordation of the Loan Documents, (iii) all reasonable
out-of-pocket expenses of Administrative Agent, including reasonable fees,
disbursements, and other charges of counsel for Administrative Agent, in
connection with the preparation of any waiver or consent under this Agreement or
any amendment hereof or any default or alleged default hereunder, (iv) all
reasonable out-of-pocket expenses of preparing, obtaining, and furnishing to any
Agent or any Lender any statements, opinions, certificates, schedules,
documents, insurance policies, and all other items required to furnished to any
Agent or any Lender pursuant to this Agreement or any request made pursuant to
this Agreement or any other Loan Document, and (v) if an Event of Default
occurs, all out-of-pocket expenses incurred by Administrative Agent or any
Lender, including the fees, disbursements and other charges of counsel in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom, fees of auditors and consultants incurred in
connection therewith and investigation expenses incurred by Administrative Agent
or any Lender in connection therewith.
12.02. NON-WAIVER. No act, delay, omission, or course of dealing will
be a waiver of any of a Lender's rights or remedies under this Agreement or
otherwise, and no waiver, change, or modification in whole or in part of this
Agreement, any Note, or any other agreement will be effective unless in a
writing signed by Borrower and Lenders. All rights and remedies of Lenders are
cumulative and may be exercised singly or concurrently. A waiver by Lenders of
any right or remedy on any occasion will not be a bar to the exercise of any
right or remedy on any subsequent occasion.
12.03. AMENDMENT AND WAIVERS. Any provision of this Agreement, the
Notes or the other Loan Documents may be amended or waived if, but only if such
amendment or waiver is in writing and is signed by Borrower and Majority Lenders
(and, if the rights or duties of Administrative Agent are affected thereby, by
Administrative Agent); PROVIDED THAT no amendment or waiver shall, unless signed
by all Lenders, (a) modify the voting percentages of Lenders, (b) release a
guarantor or any part of the Collateral (other
Amended and Restated Credit Agreement - Page 69
<PAGE> 77
than as contemplated hereby), (c) amend or waive any of the provisions of
ARTICLE 4 or the definitions contained in SECTION 1.01 applicable thereto, or
(d) change the definitions of Majority Lenders or Required Lenders; and FURTHER
PROVIDED THAT no amendment or waiver shall, unless signed by each Lender
directly affected thereby, (i) increase the Commitment of such Lender or subject
any Lender to any additional obligation, (ii) forgive any of the principal of or
reduce the rate of interest on any Loan or any fees hereunder, (iii) postpone
the date fixed for any payment of principal of or interest on any Loan or any
fees hereunder, (iv) change a Lender's Commitment Percentage except as otherwise
provided for in this Agreement, or (v) change the number or percentage of
Lenders required to take any action under this SECTION 12.03 or any other
provision of this Agreement.
12.04. SURVIVAL. All representations, warranties, and covenants made by
Borrower herein or in any certificate or other instrument delivered by it or in
its behalf under the Loan Documents shall be considered to have been relied upon
by Lenders and shall survive the delivery to Lenders of the Loan Documents or
the extension of the Loans (or any part thereof), regardless of any
investigation made by or on behalf of Lenders.
12.05. LIMITATION ON INTEREST. Regardless of any provision contained in
the Loan Documents, Lenders shall never be entitled to contract for, charge,
receive, collect, or apply, as interest on the Loans, any amount in excess of
the Maximum Lawful Rate, and in the event Lenders ever contract for, charge,
receive, collect or apply as interest any excess, the amount which would be
deemed excessive interest shall be deemed a partial prepayment of principal and
treated hereunder as such; and if the Loans are paid in full, any remaining
excess shall promptly be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Lawful Rate, Borrower and Lenders shall, to the extent permitted under
applicable law, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof and (c) amortize, prorate, allocate and spread, in equal parts,
the total amount of the interest throughout the entire contemplated term of the
Notes, so that the interest rate is the Maximum Lawful Rate throughout the
entire term of the Notes; PROVIDED, HOWEVER, THAT if the unpaid principal
balance thereof is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest contracted for, charged or
received for the actual period of existence thereof exceeds the Maximum Lawful
Rate, Lenders shall refund to Borrower or any Subsidiary, as appropriate, the
amount of the excess and, in that event, Lenders shall, to the fullest extent
permitted under applicable law, not be subject to any penalties provided by any
laws for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Lawful Rate.
12.06. INVALID PROVISIONS. If any provision of the Loan Documents is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term thereof, the provision shall be fully severable, the
Loan Documents shall be construed
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<PAGE> 78
and enforced as if the illegal, invalid, or unenforceable provision had never
comprised a part thereof, and the remaining provisions thereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom. Furthermore, in lieu of
the illegal, invalid, or unenforceable provision there shall be added
automatically as a part of the Loan Documents a provision as similar in terms to
the illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.07. WAIVER OF CONSUMER CREDIT LAW. Pursuant to Article 15.10(b) of
Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended,
Borrower agrees that Chapter 15 shall not govern or in any manner apply to the
Loans.
12.08. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
otherwise transfer any of its rights under this Agreement.
(b) Each Lender may transfer or assign all or any part of its
interest in Loans and its interest herein to any of its Affiliates regardless of
the term of the transfer or assignment. Each Lender may transfer or assign all
or any part of its interest in Loans to any commercial bank which is a member of
the Federal Reserve System and has combined capital and surplus and undivided
profits of not less than $100,000,000. Notwithstanding the foregoing, no Lender
shall transfer or assign all or any part of its Loans under this Agreement to
any Person other than an Affiliate of such Lender without the prior written
approval of Borrower and Agents, the approval to not be unreasonably withheld;
PROVIDED THAT Borrower's consent will not be required if a Default or Event of
Default has occurred and is continuing. As to each assignment of Loans permitted
by this Agreement, Borrower releases the assigning Lender from its obligations
under this Agreement as to the portion of the Loans assigned.
(c) Any Lender may (subject to the provisions of this section,
in accordance with applicable law, in the ordinary course of its business, and
at any time) sell to one or more Persons participating interests in its portion
of the Obligations. The seller Lender remains a "Lender" under the Loan, the
participant does not become a "Lender" under the Loan Documents, and the selling
Lender's obligations under the Loan Documents remain unchanged. The selling
Lender remains solely responsible for the performance of its obligations and
remains the holder of its share of the outstanding Loan for all purposes under
the Loan Documents. Borrower and each Agent shall continue to deal solely and
directly with the selling Lender in connection with that Lender's rights and
obligations under the Loan Documents, and each Lender must retain the sole right
and responsibility to enforce due obligations of Borrower. Participants have no
rights under the Loan Documents except certain voting rights as provided below.
Amended and Restated Credit Agreement - Page 71
<PAGE> 79
No Lender may sell any participating interest under which the participant has
any rights to approve any amendment, modification, or waiver of any Loan
Document except as to matters requiring the approval of all Lenders as set forth
in SECTION 12.03.
(d) Each Lender shall have the right to disclose any
information in its possession regarding Borrower or any Subsidiary, or regarding
the Collateral, to any transferee, participant, potential transferee, or
potential participant of any of the Loans or any part thereof; PROVIDED THAT
such Persons agree to be bound by the provisions of SECTION 12.16.
(e) Nothing herein shall prohibit a Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
12.09. FOREIGN LENDERS, PARTICIPANTS, AND ASSIGNEES. Each Lender,
participant (by accepting a participation interest under this Agreement), and
assignee (by executing an assignment and assumption agreement in a form
acceptable to Agents) that is not organized under the laws of the United States
of America or one of its states (a) represents to Administrative Agent and
Borrower that (i) no Taxes assessed by any Governmental Authority in the United
States are required to be withheld by Administrative Agent or Borrower with
respect to any payments to be made to it in respect of the Obligations and (ii)
it has furnished to Administrative Agent and Borrower two duly completed copies
of either U. S. Internal Revenue Service Form 4224, Form 1006, Form W-8, or
other form acceptable to Administrative Agent that entitles it to exemption from
U.S. federal withholding Tax on all interest payments under the Loan Documents,
and (b) covenants to (i) provide Administrative Agent and Borrower a new Form
4224, Form 1001, Form W-8, or other form acceptable to Administrative Agent upon
the expiration or obsolescence of any previously delivered form according to
applicable laws and regulations, duly executed and completed by it, and (ii)
comply from time to time with all applicable laws and regulations with regard to
the withholding Tax exemption. If any of the foregoing is not true or the
applicable forms are not provided, then Borrower and Administrative Agent
(without duplication) may deduct and withhold from interest payments under the
Loan Documents any United States federal income Tax at the maximum rate under
the Code without reimbursement pursuant to SECTION 10.07.
12.10. NOTICES. All notices, requests, or other communications required
or permitted to be given by this Agreement or any other Loan Documents must be
in writing (including by facsimile transmission) and unless otherwise expressly
provided herein, shall be deemed to have been duly given or made (a) in the case
of delivery by hand or by courier service, when delivered, (b) in the case of
delivery by mail, three Business Days after being deposited in the mails,
postage prepaid, or (c) in the case of delivery by facsimile transmission, when
sent and receipt has been confirmed, addressed as follows in the case of
Borrower and Agents, and as set forth in SCHEDULE 2 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
representative parties hereto:
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<PAGE> 80
Borrower: Range Resources Corporation
500 Throckmorton Street, Suite 1900
Fort Worth, Texas 76102
Attention: Rodney L. Waller
Telephone No.: (817) 870-2601
Fax No.: (817) 870-0075
Administrative Agent: Bank One, Texas, N.A.
1717 Main Street, 4th Floor
Dallas, Texas 75201
Attention: W. Mark Cranmer
Telephone No.: (214) 290-2212
Fax No.: (214) 290-3431
Syndication Agent: Chase Bank of Texas, N.A.
2200 Ross Avenue
Dallas, Texas 75266-6197
Attn: Dale S. Hurd
Telephone No.: (214) 965-2583
Fax No.: (214) 965-2389
Documentation Agent: Bank of America, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202-3714
Attn: J. Scott Fowler
Telephone No.: (214) 209-3747
Fax No.: (214) 209-1285
Notwithstanding the foregoing, any notice, request, or demand to or upon
Administrative Agent or Lenders pursuant to SECTIONS 2.02, 2.07, or 2.09 shall
not be effective until received.
12.11. REPORTS AND CERTIFICATES. All reports and certificates of
Borrower required by this Agreement must be in form and substance satisfactory
to Administrative Agent and made under oath before a notary public by an
authorized corporate officer or representative of Borrower.
12.12. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA AND SHALL BE PERFORMED IN TARRANT COUNTY, TEXAS.
Amended and Restated Credit Agreement - Page 73
<PAGE> 81
12.13. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG LENDERS, AGENTS, AND BORROWER AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF LENDERS, AGENTS, OR BORROWER. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN LENDERS, AGENTS, AND BORROWER.
12.14. WAIVER OF JURY TRIAL. BORROWER , AGENTS, AND LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS AND FOR
ANY COUNTERCLAIM THEREIN.
12.15. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when Administrative Agent shall have received
counterparts hereof signed by all of the parties hereto or, in the case of any
Lender as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from that Lender of execution of a counterpart hereof by that
Lender.
12.16. CONFIDENTIALITY. In the event that Borrower provides to
Administrative Agent or Lenders written confidential information belonging to
Borrower, if Borrower shall denominate such information in writing as
"confidential", Administrative Agent and Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without Administrative Agent or Lenders breaching their obligation of
confidence to Borrower, (iii) are previously known by Administrative Agent or
Lenders from some source other than Borrower, (iv) are hereafter developed by
Administrative Agent or Lenders without using Borrower's information, (v) are
hereafter obtained by or available to Administrative Agent or Lenders from a
third party who owes no obligation of confidence to Borrower with respect to
such information or through any other means other than through disclosure by
Borrower, (vi) are disclosed with Borrower's consent, (vii) must be disclosed
either pursuant to any Governmental Requirement or to Persons regulating the
activities of Administrative Agent or Lenders, or (viii) as may be required by
law or regulation or order of any Governmental Authority in any judicial,
arbitration, or governmental proceeding. Further, Administrative Agent or a
Lender may disclose any such information to any other Lender, any independent
petroleum engineers or consultants, any independent certified public
accountants, any legal counsel employed by such Person in connection with this
Agreement or any Security Instrument, including
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<PAGE> 82
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
participants) in the Loans; PROVIDED, HOWEVER, THAT Administrative Agent or
Lenders shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon
Administrative Agent or the Lenders hereunder. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall cease five years
from the date the information was furnished, unless Borrower requests in writing
at least 30 days prior to the expiration of such five year period, to maintain
the confidentiality of such information for an additional five year period.
Executed in Fort Worth, Texas, on the date first set forth above.
BORROWER:
RANGE RESOURCES CORPORATION
By:
----------------------------------
Rodney L. Waller,
Senior Vice President
AGENTS:
BANK ONE, TEXAS, N.A.,
as Administrative Agent and a Lender
By:
------------------------------------
W. Mark Cranmer, Vice President
CHASE BANK OF TEXAS, N.A.,
as Syndication Agent and a Lender
By:________________________________
Name:
Title:
BANK OF AMERICA, N.A.,
as Documentation Agent and a Lender
By:______________________________
J. Scott Fowler, Managing Director
Amended and Restated Credit Agreement - Page 75
<PAGE> 83
BANKERS TRUST COMPANY
By:______________________________
Name:____________________________
Title:
OTHER LENDERS:
PNC BANK, NATIONAL ASSOCIATION
By:_______________________________
Name:____________________________
Title:_____________________________
BANKBOSTON, N.A.
By:______________________________
Name:____________________________
Title:_____________________________
CIBC INC.
By:______________________________
Name:____________________________
Title:_____________________________
WELLS FARGO BANK (TEXAS), N.A.
By:______________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:______________________________
Name:____________________________
Title:_____________________________
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<PAGE> 84
ABN AMRO BANK N.V.
By:
Name:
Title:
By:
Name:
Title:
BANK OF SCOTLAND
By:______________________________
Name:____________________________
Title:_____________________________
THE SANWA BANK, LIMITED
By:______________________________
Name:____________________________
Title:_____________________________
Amended and Restated Credit Agreement - Page 77
<PAGE> 85
SCHEDULE 1
COMMITMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------- -------------------------- -----------------------------------
LENDER COMMITMENT COMMITMENT PERCENTAGE
- ---------------------------------------------------- -------------------------- -----------------------------------
<S> <C> <C>
Bank One, Texas, N.A. $25,312,500 11.25%
- ---------------------------------------------------- -------------------------- -----------------------------------
Bank of America, N.A. $25,312,500 11.25%
- ---------------------------------------------------- -------------------------- -----------------------------------
Chase Bank of Texas, N.A. $25,312,500 11.25%
- ---------------------------------------------------- -------------------------- -----------------------------------
Bankers Trust Company $20,812,500 9.25%
- ---------------------------------------------------- -------------------------- -----------------------------------
PNC Bank, National Association $19,687,500 8.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
BankBoston, N.A. $19,687,500 8.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
CIBC Inc. $19,687,500 8.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
Wells Fargo Bank (Texas), N.A. $19,687,500 8.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
Credit Lyonnais New York Branch $19,687,500 8.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
ABN AMRO Bank N.V. $11,250,000 5.00%
- ---------------------------------------------------- -------------------------- -----------------------------------
Bank of Scotland $10,125,000 4.50%
- ---------------------------------------------------- -------------------------- -----------------------------------
The Sanwa Bank, Limited $ 8,437,500 3.75%
- ---------------------------------------------------- -------------------------- -----------------------------------
Total Commitment $225,000,000 100.00%
- ---------------------------------------------------- -------------------------- -----------------------------------
</TABLE>
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<PAGE> 86
<TABLE>
<CAPTION>
SCHEDULE 2
ADDRESSES FOR NOTICES
<S> <C>
Range Resources Corporation Bank One, Texas, N.A.
500 Throckmorton Street, Suite 1900 1717 Main Street, 4th Floor
Fort Worth, Texas 76102 Dallas, Texas 75201
Attention: Rodney L. Waller Attention: W. Mark Cranmer
Telephone No.: (817) 870-2601 Telephone No.: (214) 290-2212
Fax No.: (817) 870-2316 Fax No.: (214) 290-3431
ABN AMRO Bank N.V. CIBC Inc.
208 South LaSalle Street, Suite 1500 Two Paces West, 2727 Paces Ferry Road, Suite 1200
Chicago, Illinois 60604-1003 Atlanta, Georgia 30339
Attention: Connie Podgorny Attention: Kathryn S. McGovern
Telephone No.: (312) 992-5110 or 5121 Telephone No.: (770) 319-4999
Fax No.: (312) 992-5111 Fax No.: (770) 319-4950
ABN AMRO Bank N.V. CIBC Inc.
c/o ABN AMRO North America, Inc. 1600 Smith, Suite 3100
Three Riverway, Suite 1700 Houston, Texas 77002
Houston, Texas 77056 Attention: Russell Otts
Attention: Jamie Conn Telephone No.: (713) 650-2595
Telephone No.: (713) 964-3356 Fax No.: (713) 650-7675
Fax No.: (713) 961-1699
BankBoston, N.A. Chase Bank of Texas, N.A.
100 Federal Street, Mail Stop 01-08-04 2200 Ross Avenue, 3rd Floor
Boston, Massachusetts 02110 Dallas, Texas 75201
Attention: Allison Rossi Attn: Dale S. Hurd
Telephone No.: (617) 434-9061 Telephone No.: (214) 965-2583
Fax No.: (617) 434-3652 Fax No.: (214) 965-2389
Bankers Trust Company Credit Lyonnais New York Branch
130 Liberty Street, 30th Floor 1000 Louisiana, Suite 5360
New York, New York 10006 Houston, Texas 77002
Attention: Terence Neafsey Attention: Nicole Johnson
Telephone No.: (212) 250-2771 Telephone No.: (713) 753-8711
Fax No.: (212) 250-2923 Fax No.: (713) 751-0307
Bankers Trust Company PNC Bank, National Association
909 Fannin, Suite 3000 One PNC Plaza, 3rd Floor, 249 Fifth Ave.
Houston, Texas 77010 Pittsburgh, Pennsylvania 15222-2707
Attention: Jonathan S. Schwartz Attention: Robert J. Tiskus
Telephone No.: (713) 759-6718 Telephone No.: (412) 762-9245
Fax No.: (713) 759-6708 Fax No.: (412) 762-2571
Bank of America, N.A. The Sanwa Bank, Limited
901 Main Street, 64th Floor 55 East 52nd Street
Dallas, Texas 75202-3714 New York, New York 10055
Attn: J. Scott Fowler Attention: Larry Murphy
Telephone No.: (214) 209-3747 Telephone No.: (212) 339-6380
Fax No.: (214) 209-1285 Fax No.: (212) 754-2360
Bank of Scotland The Sanwa Bank, Limited
565 Fifth Avenue Houston Representative Office
New York, New York 10017 1200 Smith Street, Suite 2670
Attention: Annie Glynn Houston, Texas 77002
Telephone No.: (212) 450-0871 Attention: Clyde L. Redford
Fax No.: (212) 557-9460 Telephone No.: (713) 652-3190
Fax No.: (713) 654-1462
Bank of Scotland Wells Fargo Bank (Texas), N.A.
1750 Two Allen Center 1000 Louisiana, 4th Floor
1200 Smith Street Houston, Texas 77002
Houston, Texas 77002-4312 Attention: Roger Fruendt
Attention: Richard Butler Telephone No.: (713) 319-1403
Telephone No.: (713) 651-1870 Fax No. (713) 739-1076
Fax No.: (713) 651-9714
</TABLE>
79
<PAGE> 87
SCHEDULE 3
----------
LIST OF SUBSIDIARIES
1. DOMAIN ENERGY INTERNATIONAL CORPORATION,
a British Virgin Islands corporation,
!100% owned by Range Energy Ventures Corporation;
2. ENERGY ASSETS OPERATING COMPANY, a Delaware corporation,
!100% owned by Range Resources Corporation;
3. GULFSTAR ENERGY, INC., a Delaware corporation,
!100% owned by Range Energy Ventures Corporation;
4. GULFSTAR SEISMIC, INC., a Delaware corporation,
!100% owned by Gulfstar Energy, Inc.
5. RRC OPERATING COMPANY, an Ohio corporation,
!100% owned by Range Resources Corporation;
6. Range Energy I, Inc., a Delaware corporation,
!100% owned by Range Production Company;
7. RANGE ENERGY FINANCE CORPORATION, a Delaware corporation,
!100% owned by Range Energy Ventures Corporation;
8. RANGE ENERGY SERVICES COMPANY, a Delaware corporation,
!100% owned by Range Resources Corporation;
9. RANGE ENERGY VENTURES CORPORATION, a Delaware corporation,
!100% owned by Range Resources Corporation;
10. RANGE GAS COMPANY, a Delaware corporation,
!100% owned by Range Resources Corporation;
11. RANGE GATHERING & PROCESSING COMPANY, a Delaware corporation,
!100% owned by Range Resources Corporation;
12. RANGE HOLDCO, INC., a Delaware corporation,
!100% owned by Range Resources Corporation;
80
<PAGE> 88
13. RANGE OFFSHORE, L.P., an Ohio limited partnership,
!owned by RRC Operating Company (1%) and Range HoldCo, Inc. (99%);
14. RANGE PIPELINE SYSTEMS, L.P., a Texas limited partnership,
!owned by Range Gathering & Processing Company (1%) and
Range Gas Company (99%);
15. RANGE PRODUCTION I, L.P., a Texas limited partnership,
!owned by Range Production Company (1%) and Range Energy I, Inc. (99%);
16. RANGE PRODUCTION COMPANY, a Delaware corporation,
!100% owned by Range Energy Ventures Corporation; and
17. RANGE RESOURCES, L.L.C., an Oklahoma limited liability company,
!owned by Range Production Company (1.71%) and
Range HoldCo, Inc. (98.29%).
81
<PAGE> 1
Exhibit 10.2
CREDIT AGREEMENT
AMONG
GREAT LAKES ENERGY PARTNERS, L.L.C., AS BORROWER
AND
BANK ONE, TEXAS, N.A.
AND THE INSTITUTIONS NAMED HEREIN
AS LENDERS
AND
BANK ONE, TEXAS, N.A.,
AS ADMINISTRATIVE AGENT
CHASE BANK OF TEXAS, N.A.,
AS SYNDICATION AGENT,
BANKERS TRUST COMPANY,
AS DOCUMENTATION AGENT
THE BANK OF NOVA SCOTIA
AND CREDIT LYONNAIS NEW YORK BRANCH,
AS MANAGING AGENTS
BANC ONE CAPITAL MARKETS, INC.,
AS CO-LEAD ARRANGER
AND
CHASE SECURITIES INC.,
AS CO-LEAD ARRANGER
SEPTEMBER 30, 1999
<PAGE> 2
TABLE OF CONTENTS
Page No.
1. Definitions 1
2. Commitments of the Lenders 12
(a) Terms of Commitment 12
(b) Procedure for Borrowing 12
(c) Letters of Credit 13
(d) Procedure for Obtaining Letters of Credit 14
(e) Voluntary Reduction of Commitment 14
(f) Several Obligations 14
(g) Type and Number of Advances 15
(h) Monthly Commitment Reduction 15
3. Notes Evidencing Loans. 15
(a) Form of Notes 15
(b) Issuance of Additional Notes 15
(c) Interest Rate 15
(d) Payment of Interest 16
(e) Payment of Principal 16
(f) Payment to Lenders 16
(g) Sharing of Payments, Etc. 16
(h) Non-Receipt of Funds by the Administrative Agent 16
4. Interest Rates. 17
(a) Options 17
(b) Interest Rate Determination 18
(c) Conversion Option 18
(d) Recoupment 18
(e) Interest Rates Applicable After Default 18
5. Special Provisions Relating to Loans 19
(a) Unavailability of Funds or Inadequacy of Pricing 19
(b) Change in Laws 19
(c) Increased Cost or Reduced Return 19
(d) Discretion of Lender as to Manner of Funding 21
(e) Breakage Fees 22
6. Collateral Security 22
7. Borrowing Base 23
(a) Initial Borrowing Base and Monthly Commitment Reduction 23
(b) Subsequent Determinations of Borrowing Base 23
<PAGE> 3
8. Fees 25
(a) Unused Commitment Fee 25
(b) The Letter of Credit Fee 25
(c) Agency Fees 25
9. Prepayments 25
(a) Voluntary Prepayments 25
(b) Mandatory Prepayments 26
10. Representations and Warranties 26
(a) Creation and Existence. 26
(b) Power and Authority. 26
(c) Binding Obligations 27
(d) No Legal Bar or Resultant Lien 27
(e) No Consent 27
(f) Financial Condition 27
(g) Liabilities 27
(h) Litigation 28
(i) Titles, Etc 28
(j) Defaults 28
(k) Casualties; Taking of Properties 28
(l) Use of Proceeds; Margin Stock 28
(m) Location of Business and Offices 29
(n) Compliance with the Law 29
(o) No Material Misstatements 29
(p) Not A Utility 29
(q) ERISA 29
(r) Public Utility Holding Company Act 29
(s) Subsidiaries 30
(t) Environmental Matters 30
(u) Liens 30
(v) Year 2000 Compliance 30
(w) Indebtedness 31
(x) Assets 31
11. Conditions of Lending 31
12. Affirmative Covenants 34
(a) Financial Statements and Reports 34
(b) Certificates of Compliance 35
(c) Accountants' Certificate 35
(d) Taxes and Other Liens 35
(e) Compliance with Laws 36
(f) Further Assurances 36
(g) Performance of Obligations 36
(h) Insurance 36
ii
<PAGE> 4
(i) Accounts and Records 37
(j) Right of Inspection 37
(k) Notice of Certain Events 38
(l) ERISA Information and Compliance 38
(m) Environmental Reports and Notices 38
(n) Compliance and Maintenance 39
(o) Operation of Properties 39
(p) Compliance with Leases and Other Instruments 39
(q) Certain Additional Assurances Regarding
Maintenance and Operations of Properties 40
(r) Sale of Certain Assets/Prepayment of Proceeds 40
(s) Title Matters 40
(t) Curative Matters 41
(u) Change of Principal Place of Business 41
(v) Year 2000 Compatibility 41
(w) Sale of Equity 42
(x) Subsidiary 42
13. Negative Covenants 42
(a) Negative Pledge 42
(b) Current Ratio 42
(c) Total Debt to EBITDAX 42
(d) Consolidations and Mergers 43
(e) Debts, Guaranties and Other Obligations 43
(f) Distributions or Dividends 43
(g) Loans and Advances 44
(h) Sale or Discount of Receivables 44
(i) Nature of Business 44
(j) Transactions with Affiliates 44
(k) Rate Management Transactions 44
(l) Investments 44
(m) Amendment to Certificate of Formation or
Limited Liability Company Agreement 44
(n) Payment or Pre-Payment of Other Indebtedness 45
(o) Sale of Interests in Subsidiaries 45
14. Events of Default 45
15. The Agents and the Lenders 47
(a) Appointment and Authorization 47
(b) Note Holders 48
(c) Consultation with Counsel 49
(d) Documents 49
(e) Resignation or Removal of Administrative Agent 49
(f) Responsibility of Administrative Agent 49
(g) Independent Investigation 51
<PAGE> 5
(h) Indemnification 51
(i) Benefit of Section 15 52
(j) Pro Rata Treatment 52
(k) Assumption as to Payments 52
(l) Other Financings 52
(m) Interests of Lenders 53
(n) Investments 53
16. Exercise of Rights 53
17. Notices 54
18. Expenses 54
19. Indemnity 54
20. Governing Law 55
21. Invalid Provisions 55
22. Maximum Interest Rate 55
23. Amendments 56
24. Multiple Counterparts 56
25. Conflict 56
26. Survival 56
27. Parties Bound 56
28. Assignments and Participations 57
(a) Assignments 57
(b) Participations 58
(c) Financial Information 58
(d) Assignees' and Participants' Indemnity 58
29. Choice of Forum: Consent to Service of Process and Jurisdiction 58
30. Waiver of Jury Trial 59
31. Other Agreements 59
32. Financial Terms 59
iv
<PAGE> 6
EXHIBITS
- --------
Exhibit "A" - Notice of Borrowing
Exhibit "B" - Note
Exhibit "C" - Unlimited Guaranty
Exhibit "D" - Certificate of Compliance
Exhibit "E" - Assignment and Acceptance Agreement
Exhibit "F" - Pre-Approved Hedging Counterparties
SCHEDULES
Schedule 1 - Liens
Schedule 2 - Financial Condition
Schedule 3 - Liabilities
Schedule 4 - Litigation
Schedule 5 - Subsidiaries' Addresses
Schedule 6 - Owners
Schedule 7 - Environmental Matters
Schedule 8 - Title Matters
Schedule 9 - Curative Matters
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (hereinafter referred to as the "Agreement")
executed as of the 30th day of September, 1999, by and among GREAT LAKES ENERGY
PARTNERS, L.L.C., a Delaware limited liability company (hereinafter referred to
as "Borrower") and BANK ONE, TEXAS, N.A. ("Bank One"), CHASE BANK OF TEXAS, N.A.
("Chase"), BANKERS TRUST COMPANY ("BT") THE BANK OF NOVA SCOTIA ("Scotiabank"),
BANK OF SCOTLAND ("BOS") and CREDIT LYONNAIS NEW YORK BRANCH ("CL") and each of
the financial institutions which is a party hereto (as evidenced by the
signature pages to this Agreement) or which may from time to time become a party
hereto pursuant to the provisions of Section 28 hereof or any successor or
assignee thereof (hereinafter collectively referred to as "Lenders", and
individually, "Lender"), Bank One, as Administrative Agent, Chase, as
Syndication Agent, BT, as Documentation Agent and Scotiabank as Managing Agent.
W I T N E S S E T H:
WHEREAS, Borrower has requested the Lenders make available to it a
revolving loan facility in amounts of up to $275,000,000; and
WHEREAS, the Lenders have agreed to make such facility available to
Borrower.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. DEFINITIONS. When used herein the terms "Administrative Agent", "Agreement",
"Bank One", "Borrower", "BT", "Chase", "Documentation Agent", "Lender",
"Lenders", and "Syndication Agent" shall have the meanings indicated above. When
used herein the following terms shall have the following meanings:
ADMINISTRATIVE AGENT means Bank One, Texas, N.A. or any successor
Administrative Agent.
ADVANCE OR ADVANCES means a loan or loans hereunder.
AFFILIATE means any Person which, directly or indirectly, controls, is
controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as
used with respect to any Person, shall mean a member of the board of
directors, a partner or an officer of such Person, or any other Person with
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the
ownership (of record, as trustee, or by proxy) of voting shares,
partnership interests or voting rights, through a management contract or
otherwise. Any Person owning or controlling, directly or indirectly, ten
percent or more of the voting shares, partnership interests or voting
rights, or other equity interest of another Person shall be deemed to be an
Affiliate of such Person.
<PAGE> 8
AGENTS means the Administrative Agent, the Syndication Agent and the
Documentation Agent.
ALTERNATE BASE RATE shall mean, as of any date, a rate of interest per
annum equal to the higher of (i) the Corporate Base Rate for such date, and
(ii) the sum of the Federal Funds Effective Rate for such date plus
one-half of one percent (.50%) per annum.
ASSIGNMENT AND ACCEPTANCE means a document substantially in the form
of Exhibit "E" hereto.
BASE RATE shall mean, as of any date, the sum of the Alternate Base
Rate plus the Base Rate Margin.
BASE RATE LOANS shall mean any loan during any period which bears
interest based upon the Alternate Base Rate or which would bear interest
based upon the Alternate Base Rate if the Maximum Rate ceiling was not in
effect at that particular time.
BASE RATE MARGIN shall be:
(i) three-quarters of one percent (.75%) per annum whenever the
Borrowing Base Usage is equal to or greater than 90%;
(ii) five-eighths of one percent (.625%) per annum whenever the
Borrowing Base Usage is equal to or greater than 75%, but less than
90%;
(iii) one-half of one percent (.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50% but less than
75%; or
(iv) one-quarter of one percent (.25%) per annum whenever the
Borrowing Base Usage is less than 50%.
BORROWING BASE means the value assigned by the Lenders from time to
time to the Oil and Gas Properties pursuant to Section 7 hereof. Until the
next determination of the Borrowing Base pursuant to Section 7(b) hereof,
the Borrowing Base shall be $195,000,000.
BORROWING BASE ASSETS shall mean, as of any date, (i) Oil and Gas
Properties either (A) given economic value in the most recent engineering
report provided to the Lenders pursuant to Section 6 hereof, or (B) other
material proved producing Oil and Gas Properties, and (ii) gas pipelines
and gas gathering systems which are owned by the Borrower and its
subsidiaries.
BORROWING BASE USAGE shall mean, as of any date, all amounts
outstanding on the Loan plus all outstanding Letters of Credit, divided by
the Borrowing Base.
2
<PAGE> 9
BORROWING DATE means the date elected by Borrower pursuant to Section
2(b) hereof for an Advance on the Loan.
BUSINESS DAY shall mean (i) with respect to any borrowing, payment or
note selection of Eurodollar Loans, a day (other than Saturdays or Sundays)
on which banks are legally open for business in Dallas, Texas and New York,
New York and on which dealings in United States dollars are carried on in
the London interbank market, and (ii) for all other purposes a day (other
than Saturdays and Sundays) on which banks are legally open for business in
Dallas, Texas.
CHANGE OF CONTROL shall occur if Marbel HoldCo, Inc. and Range HoldCo,
Inc. or their Affiliates cease to beneficially own and control at least
sixty-six and two-thirds (66-2/3%) of the membership interests of Borrower.
COMMITMENT shall mean (A) for all Lenders, the LESSER of (i)
$275,000,000 or (ii) the Borrowing Base, as reduced or increased from time
to time pursuant to Sections 2 and 7 hereof, and (B) as to any Lender, its
obligation to make Advances hereunder on the Loans and purchase
participations in Letters of Credit issued hereunder by the Administrative
Agent in amounts not exceeding, in the aggregate, an amount equal to such
Lender's Commitment Percentage times the total Commitment as of any date.
The Commitment of each Lender hereunder shall be adjusted from time to time
to reflect assignments made by such Lender pursuant to Section 28 hereof.
Each reduction in the Commitment shall result in a Pro Rata reduction in
each Lender's Commitment.
COMMITMENT PERCENTAGE shall mean, for each Lender, the percentage
derived by dividing its Commitment at the time of the determination by the
Commitment of all Lenders at the time of determination. The Commitment
Percentage of each Lender hereunder shall be adjusted from time to time to
reflect assignments made by such Lender pursuant to Section 28 hereof.
CONSOLIDATED CURRENT ASSETS means the total of the consolidated
current assets determined in accordance with GAAP, plus, as of any date,
the unused availability on the Commitment.
CONSOLIDATED CURRENT LIABILITIES means the total of consolidated
current obligations as determined in accordance with GAAP, excluding
therefrom, as of any date, current maturities due on the Loans.
CONSOLIDATED EBITDAX shall mean Consolidated Net Income (excluding
gains and losses from asset sales, extraordinary and non-recurring gains
and losses and non-recurring formation costs) plus the sum of (i) income
tax expense (but excluding income tax expense relating to the sales or
other disposition of assets, including capital stock, the gains and losses
from which are excluded in the determination of Consolidated Net Income),
plus (ii) Consolidated Interest Expense, plus (iii) depreciation, depletion
and amortization expense, plus (iv) exploration expenses.
3
<PAGE> 10
CONSOLIDATED INTEREST EXPENSE shall mean the aggregate amount of cash
and non-cash interest expense (including capitalized interest) of Borrower
as determined on a consolidated basis in accordance with GAAP in respect of
all indebtedness, excluding (i) accrued and unpaid interest to intercompany
indebtedness and (ii) amortization of deferred financing costs.
CONSOLIDATED NET INCOME shall mean Borrower's consolidated net income
after income taxes calculated in accordance with GAAP.
CONSOLIDATED TOTAL DEBT means, as of any date, without duplication,
(i) all obligations for borrowed money or for the purchase price of
property, (ii) all obligations evidenced by bonds, debentures, notes, or
other similar instruments, (iii) all other indebtedness (including
obligations under capital leases, other than usual and customary oil and
gas leases) on which interest charges are customarily paid or accrued, (iv)
all guarantees, (v) the unfunded or unreimbursed portion of all letters of
credit, (vi) any indebtedness or other obligation secured by a Lien on
assets, whether or not assumed, and (vii) all liability as a general
partner of a partnership for obligations of that partnership of the nature
described in (i) through (vii) preceding.
CORPORATE BASE RATE means a rate per annum equal to the Corporate Base
Rate announced by Administrative Agent from time to time, changing when and
as said Corporate Base Rate changes.
DEFAULT means all the events specified in Section 14 hereof,
regardless of whether there shall have occurred any passage of time or
giving of notice, or both, that would be necessary in order to constitute
such event as an Event of Default.
DEFAULT RATE shall mean a default rate of interest determined in
accordance with Section 4(e) hereof.
DEFAULTING LENDER is used herein as defined in Section 3(f) hereof.
DOCUMENTATION AGENT means Bankers Trust Company or any successor
Documentation Agent.
EFFECTIVE DATE means the date of this Agreement.
ELIGIBLE ASSIGNEE means any of (i) a Lender or any Affiliate of a
Lender; (ii) a commercial bank organized under the laws of the United
States, or any state thereof, and having a combined capital and surplus of
at least $100,000,000; (iii) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such
country, and having a combined capital and surplus of at least
$100,000,000.00, provided that such bank is acting through a branch or
agency located in the United States; (iv) a Person that
4
<PAGE> 11
is primarily engaged in the business of commercial lending and that
(A) is a subsidiary of a Lender, (B) a subsidiary of a Person of which a
Lender is a subsidiary, or (C) a Person of which a Lender is a subsidiary;
(v) any other entity (other than a natural person) which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which
extends credit or buys loans as one of its businesses, including, but not
limited to, insurance companies, mutual funds, and lease financing
companies; and (vi) with respect to any Lender that is a fund that invests
in loans, any other fund that invests in loans and is managed by the same
investment advisor of such Lender or by an Affiliate of such investment
advisor (and treating all such funds so managed as a single Eligible
Assignee); provided, however, that any Affiliate of Borrower that acquires
an interest in any of the Commitment Loans shall not be entitled to vote as
a Lender.
ENGINEERED VALUE is used herein as defined in Section 6 hereof.
ENVIRONMENTAL LAWS means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, ET
SEQ., the Resource Conservation and Recovery Act, as amended by the
Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A. Section 6901, ET
SEQ., the Clean Water Act, 33 U.S.C.A. Section 1251, ET SEQ., the Clean
Air Act, 42 U.S.C.A Section 1251, ET SEQ., the Toxic Substances Control
Act, 15 U.S.C.A. Section 2601, ET SEQ., The Oil Pollution Act of 1990, 33
U.S.G. Section 2701, ET SEQ., and all other laws, statutes, codes, acts,
ordinances, orders, judgments, decrees,injunctions, rules, regulations,
orders, permits and restrictions of any federal, state, county, municipal
and other governments, departments, commissions, boards, agencies, courts,
authorities, officials and officers, domestic or foreign, relating to oil
pollution, air pollution, water pollution, noise control and/or the
handling, discharge, disposal or recovery of on-site or off-site asbestos,
radioactive materials, spilled or leaked petroleum products, distillates
or fractions and industrial solid waste or "hazardous substances" as
defined by 42 U.S.C. Section 9601, ET SEQ., as amended, as each of the
foregoing may be amended from time to time.
ENVIRONMENTAL LIABILITY means any claim, demand, obligation, cause of
action, order, violation, damage, injury, judgment, penalty or fine, cost
of enforcement, cost of remedial action or any other costs or expense
whatsoever, including reasonable attorneys' fees and disbursements,
resulting from the violation or alleged violation of any Environmental Law
or the release of any substance into the environment which is required to
be remediated by a regulatory agency or governmental authority or the
imposition of any Environmental Lien (as hereinafter defined) which could
reasonably be expected to individually or in the aggregate have a Material
Adverse Effect.
ENVIRONMENTAL LIEN means a Lien in favor of any court, governmental
agency or instrumentality or any other Person (i) for any Environmental
Liability or (ii) for damages arising from or cost incurred by such court
or governmental agency or instrumentality or other person in response to a
release or threatened release of asbestos or "hazardous substance" into the
environment, the imposition of which Lien could reasonably be expected to
have a Material Adverse Effect.
5
<PAGE> 12
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
EURODOLLAR BASE RATE shall mean, with respect to any Eurodollar Loan
for the relevant Interest Period, the rate determined by the Administrative
Agent to be the rate at which the Administrative Agent offers to place
deposits in U.S. dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two (2) Business Days
prior to the first date of such Interest Period, in the approximate amount
of the Administrative Agent's relevant Eurodollar Loan and having a
maturity equal to such Interest Period.
EURODOLLAR LOANS mean any Advance during any period which bears
interest at the Eurodollar Rate, or which would bear interest at such rate
if the Maximum Rate ceiling was not in effect at a particular time.
EURODOLLAR MARGIN shall be:
(i) two percent (2%) per annum whenever the Borrowing Base
Usage is equal to or greater than 90%;
(ii) one and seven-eighths percent (1.875%) per annum
whenever the Borrowing Base Usage is equal to or greater than
75%, but less than 90%;
(iii) one and three-quarters percent (1.75%) per annum
whenever the Borrowing Base Usage is equal to or greater than
50%, but less than 75%; or
(iv) one and one-half percent (1.50%) per annum whenever the
Borrowing Base Usage is less than 50%.
EURODOLLAR RATE means, with respect to a Eurodollar Loan for the
relevant Interest Period, the sum of (i) the quotient of (A) the Eurodollar
Base Rate applicable to such Interest Period, divided by (B) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest
Period, plus the Eurodollar Margin. The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16th of one percent if the rate is not such a
multiple.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Dallas, Texas time) on such day on such
transactions received by the Administrative Agent from three (3) Federal
funds brokers of recognized standing selected by the Administrative Agent
in its sole discretion.
6
<PAGE> 13
FINANCIAL STATEMENTS means balance sheets, income statements,
statements of cash flow and appropriate footnotes and schedules, prepared
in accordance with GAAP.
GAAP means generally accepted accounting principles, consistently
applied.
GUARANTORS means all Subsidiaries of Borrower.
GUARANTIES means unlimited guaranties of the Guarantors in the form of
Exhibit "C" hereto.
INTEREST PAYMENT DATE shall mean the last day of each calendar month
in the case of Base Rate Loans and, in the case of Eurodollar Loans, the
last day of the applicable Interest Period, and if such Interest Period is
longer than three (3) months, at three-month intervals following the first
day of such Interest Periods.
INTEREST PERIOD shall mean with respect to any Eurodollar Loan (i)
initially, the period commencing on the date such Eurodollar Loan is made
and ending one (1), two (2), three (3), six (6), nine (9) or twelve (12)
months thereafter as selected by the Borrower pursuant to Section 4(a)(ii),
and (ii) thereafter, each period commencing on the day following the last
day of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one (1), two (2), three (3), six (6), nine (9) or twelve
(12) months thereafter, as selected by the Borrower pursuant to Section
4(a)(ii); provided, however, that (i) if any Interest Period would
otherwise expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day unless the result of such
extension would be to extend such Interest Period into the next calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day, (ii) if any Interest Period begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) such Interest Period shall end on the last Business Day of
a calendar month, and (iii) any Interest Period which would otherwise
expire after the Maturity Date shall end on such Maturity Date.
LETTERS OF CREDIT is used herein as defined in Section 2(c) hereof.
LIEN means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character. LOANS means an Advance or Advances made under the Commitment.
LOAN DOCUMENTS means this Agreement, the Notes, the Security
Instruments and all other documents executed in connection with the
transaction described in this Agreement.
MAJORITY LENDERS means Lenders holding 66-2/3% or more of the
Commitments or if the Commitments have been terminated, Lenders holding
66-2/3% of the outstanding Loans.
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MANAGING AGENT means the Bank of Nova Scotia and Credit Lyonnais New
York Branch and any successor Managing Agent.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (i)
the assets or properties, liabilities, financial condition, business,
operations, affairs or circumstances of the Borrower, (ii) the ability of
the Borrower to carry out its businesses as of the date of this Agreement
or as proposed at the date of this Agreement to be conducted, (iii) the
ability of Borrower to perform fully and on a timely basis its obligations
under any of the Loan Documents, or (iv) the validity or enforceability of
any of the Loan Documents or the rights and remedies of the Administrative
Agent or the Lenders thereunder.
MATURITY DATE shall mean September 30, 2002.
MAXIMUM RATE means at any particular time in question, the maximum
non-usurious rate of interest which under applicable law may then be
charged on the Note. If such Maximum Rate changes after the date hereof,
the Maximum Rate shall be automatically increased or decreased, as the case
may be, without notice to Borrower from time to time as the effective date
of each change in such Maximum Rate.
MONTHLY COMMITMENT REDUCTION is used herein as defined in Section 2(h)
hereof.
NOTES means the Notes described in Section 3 hereof, substantially in
the form of Exhibit "B" hereto issued or to be issued hereunder to each
Lender, respectively, to evidence the indebtedness to such Lender arising
by reason of the Advances on the Loan, together with all modifications,
renewals and extensions thereof or any part thereof.
OIL AND GAS PROPERTIES means all oil, gas and mineral properties and
interests, related personal properties (excluding gas pipelines and gas
gathering systems), in which Borrower grants to the Lenders a first and
prior lien and security interest pursuant to Section 6 hereof.
OTHER FINANCING is used herein as defined in Section 15(l) hereof.
PAYOR is used herein as defined in Section 3(h)hereof.
PERMITTED LIENS shall mean (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens; (ii) sales
contracts or other arrangements for the sale of production of oil, gas or
associated liquid or gaseous hydrocarbons which would not (when considered
cumulatively with the matters discussed in clause (i) above) deprive
Borrower of any material right in respect of Borrower's assets or
properties (except for rights customarily granted with respect to such
contracts and arrangements); (iii) statutory Liens for taxes or other
assessments that are not yet delinquent (or that, if delinquent, are being
contested in good faith by appropriate proceedings, levy and execution
thereon having been stayed and continue to be stayed and for which Borrower
has set aside on its books adequate reserves in accordance with GAAP); (iv)
easements, rights of way,
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servitudes, permits, surface leases and other rights in respect to
surface operations, pipelines, grazing, logging, canals, ditches,
reservoirs or the like, conditions, covenants and other restrictions, and
easements of streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other easements and rights of way on, over or in
respect of Borrower's assets or properties and that do not individually or
in the aggregate, cause a Material Adverse Effect; (v) materialmen's,
mechanic's, repairman's, employee's, warehousemen's, landlord's, carrier's,
pipeline's, contractor's, sub-contractor's, operator's, non-operator's
(arising under operating or joint operating agreements), and other Liens
(including any financing statements filed in respect thereof) incidental to
obligations incurred by Borrower in connection with the construction,
maintenance, development, transportation, storage or operation of
Borrower's assets or properties to the extent not delinquent (or which, if
delinquent, are being contested in good faith by appropriate proceedings
and for which Borrower has set aside on its books adequate reserves in
accordance with GAAP); (vi) all contracts, agreements and instruments, and
all defects and irregularities and other matters affecting Borrower's
assets and properties which were in existence at the time Borrower's assets
and properties were originally acquired by Borrower and all routine
operational agreements entered into in the ordinary course of business,
which contracts, agreements, instruments, defects, irregularities and other
matters and routine operational agreements are not such as to, individually
or in the aggregate, interfere materially with the operation, value or use
of Borrower's assets and properties, considered in the aggregate; (vii)
liens in connection with workmen's compensation, unemployment insurance or
other social security, old age pension or public liability obligations;
(viii) legal or equitable encumbrances deemed to exist by reason of the
existence of any litigation or other legal proceeding or arising out of a
judgment or award with respect to which an appeal is being prosecuted in
good faith and levy and execution thereon have been stayed and continue to
be stayed; (ix) rights reserved to or vested in any municipality,
governmental, statutory or other public authority to control or regulate
Borrower's assets and properties in any manner, and all applicable laws,
rules and orders from any governmental authority; (x) landlord's liens;
(xi) Liens incurred pursuant to the Security Instruments; and (xii) Liens
existing at the date of this Agreement which have been disclosed to Lenders
in Schedule "1" hereto.
PERSON means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
PLAN means any plan subject to Title IV of ERISA and maintained by
Borrower, or any such plan to which Borrower is required to contribute on
behalf of its employees.
PRE-APPROVED CONTRACTS as used herein shall mean any contracts or
agreements entered into in connection with any Rate Management Transaction
designed (i) to hedge, forward, sell or swap crude oil or natural gas or
otherwise sell up to 80% of the Borrower's anticipated production from
proved, developed producing reserves of crude oil, and/or 80% of the
Borrower's anticipated production from proved, developed producing reserves
of natural gas, during the period from the immediately preceding settlement
date (or the
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<PAGE> 16
commencement of the term of such hedge transactions if there is no
prior settlement date) to such settlement date, and (ii) with one or more
of the counterparties to the hedging agreement listed on Exhibit "F"
hereto.
PRO RATA OR PRO RATA PART means for each Lender, (i) for all purposes
where no Loan is outstanding, such Lender's Commitment Percentage and (ii)
otherwise, the proportion which the portion of the outstanding Loans owed
to such Lender bears to the aggregate outstanding Loans owed to all Lenders
at the time in question.
RATE MANAGEMENT TRANSACTION means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into
between Borrower and Administrative Agent or the Lenders which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, forward exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect
to any of these transactions) or any combination thereof, whether linked to
one or more interest rates, foreign currencies, commodity prices, equity
prices or other financial measures.
REGULATION D shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto and other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
REIMBURSEMENT OBLIGATIONS means, at any time, the obligations of the
Borrower in respect of all Letters of Credit then outstanding to reimburse
amounts paid by any Lender in respect of any drawing or drawings under a
Letter of Credit.
RELEASE PRICE is used herein as defined in Section 12(r) hereof.
REQUIRED LENDERS means Lenders holding 75% or more of the Commitments
or if the Commitments have been terminated, Lenders holding 75% of the
outstanding Loans.
REQUIRED PAYMENT is used herein as defined in Section 3(h) hereof.
RESERVE REQUIREMENT means, with respect to any Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D or
Eurocurrency liabilities.
SECURITY INSTRUMENTS is used collectively herein to mean this
Agreement, all Deeds of Trust, Mortgages, Security Agreements, Assignments
of Production and Financing Statements and other collateral documents
covering the Oil and Gas Properties and related personal property,
equipment, oil and gas inventory and proceeds of the foregoing, all such
documents to be in form and substance satisfactory to Administrative Agent.
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SUBSIDIARY means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by Borrower or
another subsidiary.
SYNDICATION AGENT means Chase Bank of Texas, N.A. or any successor
Syndication Agent.
TOTAL OUTSTANDINGS means, as of any date, the sum of (i) the total
principal balance outstanding on the Notes, plus (ii) the total face amount
of all outstanding Letters of Credit, plus (iii) the total amount of all
unpaid Reimbursement Obligations.
TRANCHE means a set of Eurodollar Loans made by the Lenders at the
same time and for the same Interest Period.
UNSCHEDULED REDETERMINATIONS means a redetermination of the Borrowing
Base made at any time other than on the dates set for the regular
semi-annual redetermination of the Borrowing Base which are made (A) at the
request of Borrower (but only one between Borrowing Base redeterminations)
(B) at the request of Majority Lenders (but only once between Borrowing
Base redeterminations), provided, however, that Majority Lenders may
require an Unscheduled Redetermination at any time it appears to
Administrative Agent or Majority Lenders, in the exercise of their
reasonable discretion, that either (i) there has been a material decrease
in the value of the Oil and Gas Properties, or (ii) an event has occurred
which is reasonably expected to have a Material Adverse Effect.
UNUSED COMMITMENT FEE RATE shall be:
(i) one-half of one percent (.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 75%;
(ii) three-eighths of one percent (.375%) per annum whenever
the Borrowing Base Usage is equal to or greater than 50% but less
than 75% and
(iii) one-fourth of one percent (.25%) per annum whenever
the Borrowing Base Usage is less than 50%.
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1. COMMITMENTS OF THE LENDERS.
(a) TERMS OF COMMITMENT. On the terms and conditions hereinafter set forth, each
Lender agrees severally to make Advances to the Borrower from time to time
during the period beginning on the Effective Date and ending on the Maturity
Date in such amounts as the Borrower may request up to an amount not to exceed,
in the aggregate principal amount outstanding at any time, the Commitment less
Total Outstandings. The obligation of the Borrower hereunder shall be evidenced
by this Agreement and the Notes issued in connection herewith, said Notes to be
as described in Section 3 hereof. Notwithstanding any other provision of this
Agreement, no Advance shall be required to be made hereunder if any Default or
Event of Default (as hereinafter defined) has occurred and is continuing. Each
Advance under the Commitment shall be an aggregate amount of at least $1,000,000
or any whole multiples of $100,000 in excess thereof. Irrespective of the face
amount of the Note or Notes, the Lenders shall never have the obligation to
Advance any amount or amounts in excess of the Commitment or to increase the
Commitment.
(a) PROCEDURE FOR BORROWING. Whenever the Borrower desires an Advance hereunder,
it shall give Administrative Agent telegraphic, telex, facsimile or telephonic
notice ("Notice of Borrowing") of such requested Advance, which in the case of
telephonic notice, shall be promptly confirmed in writing. Each Notice of
Borrowing shall be in the form of Exhibit "A" attached hereto and shall be
received by Administrative Agent not later than 12:00 noon Dallas, Texas time,
(i) one Business Day prior to the Borrowing Date in the case of the Base Rate
Loan, or (ii) three Business Days prior to any proposed Borrowing Date in the
case of Eurodollar Loans. Each Notice of Borrowing shall specify (i) the
Borrowing Date (which shall be a Business Day), (ii) the principal amount to be
borrowed, (iii) the portion of the Advance constituting Base Rate Loans and/or
Eurodollar Loans, (iv) if any portion of the proposed Advance is to constitute
Eurodollar Loans, the initial Interest Period selected by Borrower pursuant to
Section 4 hereof to be applicable thereto, and (v) the date upon which such
Advance is required. Upon receipt of such Notice, Administrative Agent shall
advise each Lender thereof; provided, that if the Lenders have received at least
one (1) day's notice of such Advance prior to funding of a Base Rate Loan, or at
least three (3) days' notice of each Advance prior to funding in the case of a
Eurodollar Loan, each Lender shall provide Administrative Agent at its office at
1717 Main Street, Dallas, Texas 75201, not later than 1:00 p.m., Dallas, Texas
time, on the Borrowing Date, in immediately available funds, its pro rata share
of the requested Advance, but the aggregate of all such fundings by each Lender
shall never exceed such Lender's Commitment. Not later than 2:00 p.m., Dallas,
Texas time, on the Borrowing Date, Administrative Agent shall make available to
the Borrower at the same office, in like funds, the aggregate amount of such
requested Advance. Neither Administrative Agent nor any Lender shall incur any
liability to the Borrower in acting upon any Notice referred to above which
Administrative Agent or such Lender believes in good faith to have been given by
a duly authorized officer or other person authorized to borrow on behalf of
Borrower or for otherwise acting in good faith under this Section 2(b). Upon
funding of Advances by Lenders in accordance with this Agreement, pursuant to
any such Notice, the Borrower shall have effected Advances hereunder.
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(a) LETTERS OF CREDIT. On the terms and conditions hereinafter set forth, the
Administrative Agent shall from time to time during the period beginning on the
Effective Date and ending on the Maturity Date upon request of Borrower issue
standby and/or commercial Letters of Credit for the account of Borrower (the
"Letters of Credit") in such face amounts as Borrower may request, but not to
exceed in the aggregate face amount at any time outstanding the sum of Twenty
Million Dollars ($20,000,000.00). The face amount of all Letters of Credit
issued and outstanding hereunder shall be considered as Advances on the
Commitment for Borrowing Base purposes and all payments made by the
Administrative Agent on such Letters of Credit shall be considered as Advances
under the Notes. Each Letter of Credit issued for the account of Borrower
hereunder shall (i) be in favor of such beneficiaries as specifically requested
by Borrower, (ii) have an expiration date not exceeding the earlier of (a) one
year or (b) the Maturity Date, and (iii) contain such other terms and provisions
as may be required by issuing Lender. Each Lender (other than Administrative
Agent) agrees that, upon issuance of any Letter of Credit hereunder, it shall
automatically acquire a participation in the Administrative Agent's liability
under such Letter of Credit in an amount equal to such Lender's Commitment
Percentage of such liability, and each Lender (other than Administrative Agent)
thereby shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and shall be unconditionally obligated to
Administrative Agent to pay and discharge when due, its Commitment Percentage of
Administrative Agent's liability under such Letter of Credit. The Borrower
hereby unconditionally agrees to pay and reimburse the Administrative Agent for
the amount of each demand for payment under any Letter of Credit that is in
substantial compliance with the provisions of any such Letter of Credit at or
prior to the date on which payment is to be made by the Administrative Agent to
the beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind. Upon receipt from any beneficiary of any Letter of
Credit of any demand for payment under such Letter of Credit, the Administrative
Agent shall promptly notify the Borrower of the demand and the date upon which
such payment is to be made by the Administrative Agent to such beneficiary in
respect of such demand. Forthwith upon receipt of such notice from the
Administrative Agent, Borrower shall advise the Administrative Agent whether or
not it intends to borrow hereunder to finance its obligations to reimburse the
Administrative Agent, and if so, submit a Notice of Borrowing as provided in
Section 2(b) hereof. If Borrower fails to so advise Administrative Agent and
thereafter fails to reimburse Administrative Agent, the Administrative Agent
shall notify each Lender of the demand and the failure of the Borrower to
reimburse the Administrative Agent, and each Lender shall reimburse the
Administrative Agent for its Commitment Percentage of each such draw paid by the
Administrative Agent and unreimbursed by the Borrower. All such amounts paid by
Administrative Agent and/or reimbursed by the Lenders shall be treated as an
Advance or Advances under the Commitment, which Advances shall be immediately
due and payable and shall bear interest at the Maximum Rate.
(a) PROCEDURE FOR OBTAINING LETTERS OF CREDIT. The amount and date of issuance,
renewal, extension or reissuance of a Letter of Credit pursuant to the
Commitments shall be designated by Borrower's written request delivered to
Administrative Agent at least three (3) Business Days prior to the date of such
issuance, renewal, extension or reissuance. Concurrently with or promptly
following the delivery of the request for a Letter of Credit, Borrower shall
execute and deliver to the Administrative Agent an application and agreement
with respect to the
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Letters of Credit, said application and agreement to be in the form used by the
Administrative Agent. The Administrative Agent shall not be obligated to issue,
renew, extend or reissue such Letters of Credit if (A) the amount thereon when
added to the face amount of the outstanding Letters of Credit plus any
Reimbursement Obligations exceeds Twenty Million Dollars ($20,000,000.00) or (B)
the amount thereof when added to the Total Outstandings would exceed the
Commitment. Borrower agrees to pay the Administrative Agent for the benefit of
the Lenders commissions for issuing the Letters of Credit (calculated separately
for each Letter of Credit) in an amount equal to the Eurodollar Margin
multiplied by the maximum face amount of the Letter of Credit. Borrower further
agrees to pay Administrative Agent for its own account an additional fronting
fee equal to one-quarter of one percent (.25%) per annum multiplied times the
maximum face amount of each Letter of Credit. Such commissions shall be payable
prior to the issuance of each Letter of Credit and thereafter on each
anniversary date of such issuance while such Letter of Credit is outstanding.
Such commissions and fronting fee will be calculated based on the basis of a
year consisting of 360 days.
(a) VOLUNTARY REDUCTION OF COMMITMENT. The Borrower may at any time, or from
time to time, upon not less than three (3) Business Days' prior written notice
to Administrative Agent, reduce or terminate the Commitment; provided, however,
that (i) each reduction in the Commitment must be in the amount of $1,000,000 or
more, in increments of $1,000,000 and (ii) each reduction must be accompanied by
a prepayment of the Notes in the amount by which the outstanding principal
balance of the Notes exceeds the Commitment as reduced pursuant to this Section
2.
(a) SEVERAL OBLIGATIONS. The obligations of the Lenders under the Commitments
are several and not joint. The failure of any Lender to make an Advance required
to be made by it shall not relieve any other Lender of its obligation to make
its Advance, and no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender. No Lender shall be
required to lend hereunder any amount in excess of its legal lending limit.
(a) TYPE AND NUMBER OF ADVANCES. Any Advance under the Commitment may be a Base
Rate Loan or a Eurodollar Loan, or a combination thereof, as selected by the
Borrower pursuant to Section 4 hereof. The total number of Tranches which may be
outstanding at any time shall never exceed four (4).
(a) MONTHLY COMMITMENT REDUCTION. The Borrowing Base and the Commitment shall be
reduced as of the first day of each month by $1,000,000 (the "Monthly Commitment
Reduction") per month beginning on December 1, 1999 with like reductions
continuing on the first day of each month thereafter through April 1, 2000. If
as a result of any such Monthly Commitment Reduction, the Total Outstandings
ever exceed the Commitment then in effect, the Borrower shall make the mandatory
prepayment of principal required pursuant to Section 9(b) hereof.
1. NOTES EVIDENCING LOANS. The loans described above in Section 2 shall be
evidenced by promissory notes of Borrower as follows:
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(a) FORM OF NOTES. The Loans shall be evidenced by a Note or Notes in the
aggregate face amount of $275,000,000, and shall be in the form of Exhibit "B"
hereto with appropriate insertions (each a " Note"). Notwithstanding the face
amount of the Notes, the actual principal amount due from the Borrower to
Lenders on account of the Notes, as of any date of computation, shall be the sum
of Advances then and theretofore made on account thereof, less all principal
payments actually received by Lenders in collected funds with respect thereto.
Although the Notes may be dated as of the Effective Date, interest in respect
thereof shall be payable only for the period during which the loans evidenced
thereby are outstanding and, although the stated amount of the Notes may be
higher, the Notes shall be enforceable, with respect to Borrower's obligation to
pay the principal amount thereof, only to the extent of the unpaid principal
amount of the Loans. Irrespective of the face amount of the Notes, no Lender
shall ever be obligated to advance on the Commitment any amount in excess of its
Commitment then in effect.
(a) ISSUANCE OF ADDITIONAL NOTES. At the Effective Date there shall be
outstanding Notes in the aggregate face amount of $275,000,000. From time to
time new Notes may issued to other Lenders as such Lenders become parties to
this Agreement. Upon request from Administrative Agent, the Borrower shall
execute and deliver to Administrative Agent any such new or additional Notes.
From time to time as new Notes are issued the Administrative Agent shall require
that each Lender exchange its Note(s) for newly issued Note(s) to better reflect
the extent of each Lender's Commitments hereunder.
(a) INTEREST RATES. The unpaid principal balance of the Notes shall bear
interest from time to time as set forth in Section 4 hereof.
(a) PAYMENT OF INTEREST. Interest on the Notes shall be payable on each Interest
Payment Date.
(a) PAYMENT OF PRINCIPAL. Principal of the Note or Notes shall be due and
payable to the Administrative Agent for the ratable benefit of the Lenders on
the Maturity Date unless earlier due in whole or in part as a result of an
acceleration of the amount due or pursuant to the mandatory prepayment
provisions of Section 9(b) hereof.
(a) PAYMENT TO LENDERS. Each Lender's Pro Rata Part of payment or prepayment of
the Loans shall be directed by wire transfer to such Lender by the
Administrative Agent at the address provided to the Administrative Agent for
such Lender for payments no later than 2:00 p.m., Dallas, Texas, time on the
Business Day such payments or prepayments are deemed hereunder to have been
received by Administrative Agent; provided, however, in the event that any
Lender shall have failed to make an Advance as contemplated under Section 2
hereof (a "Defaulting Lender") and the Administrative Agent or another Lender or
Lenders shall have made such Advance, payment received by Administrative Agent
for the account of such Defaulting Lender or Lenders shall not be distributed to
such Defaulting Lender or Lenders until such Advance or Advances shall have been
repaid in full to the Lender or Lenders who funded such Advance or Advances. Any
payment or prepayment received by Administrative Agent at any time after 12:00
noon, Dallas, Texas, time on a Business Day shall be deemed to have been
received on the next
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<PAGE> 22
Business Day. Interest shall cease to accrue on any principal as of the end of
the day preceding the Business Day on which any such payment or prepayment is
deemed hereunder to have been received by Administrative Agent. If
Administrative Agent fails to transfer any principal amount to any Lender as
provided above, then Administrative Agent shall promptly direct such principal
amount by wire transfer to such Lender together with interest thereon with
respect of the period commencing on the date one (1) day after such amount was
made available to the Administrative Agent until the date the Administrative
Agent pays such principal amount to the Lender at the rate applicable to such
portion of the applicable loan.
(a) SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment (whether
voluntary, involuntary, or otherwise) on account of the Loans, (including,
without limitation, any set-off) which is in excess of its Pro Rata Part of
payments on either of the Loans, as the case may be, obtained by all Lenders,
such Lender shall purchase from the other Lenders such participation as shall be
necessary to cause such purchasing Lender to share the excess payment pro rata
with each of them; provided that, if all or any portion of such excess payment
is thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of the recovery. The
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of offset) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
(a) NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the Administrative
Agent shall have been notified by a Lender or the Borrower (the "Payor") prior
to the date on which such Lender is to make payment to the Administrative Agent
of the proceeds of a Loan to be made by it hereunder or the Borrower is to make
a payment to the Administrative Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Administrative Agent, the
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Administrative Agent, the recipient
of such payment shall, on demand, pay to the Administrative Agent the amount
made available to it together with interest thereon in respect of the period
commencing on the date such amount was made available by the Administrative
Agent until the date the Administrative Agent recovers such amount at the rate
applicable to such portion of the applicable Loan.
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1. INTEREST RATES.
(a) OPTIONS.
(i) BASE RATE LOANS. On all Base Rate Loans the Borrower agrees to pay interest
on the Notes calculated on the basis of the actual days elapsed in a year
consisting of 360 days with respect to the unpaid principal amount of each Base
Rate Loan from the date the proceeds thereof are made available to Borrower
until maturity (whether by acceleration or otherwise), at a varying rate per
annum equal to the lesser of (i) the Maximum Rate (defined herein), or (ii) the
sum of the Base Rate plus the Base Rate Margin. Subject to the provisions of
this Agreement as to prepayment, the principal of the Notes representing Base
Rate Loans shall be payable as specified in Section 3(d) hereof and the interest
in respect of each Base Rate Loan shall be payable on each Interest Payment
Date. Past due principal and, to the extent permitted by law, past due interest
in respect to each Base Rate Loan, shall bear interest, payable on demand, at a
rate per annum equal to the Maximum Rate.
(i) EURODOLLAR LOANS. On all Eurodollar Loans the Borrower agrees to pay
interest calculated on the basis of a year consisting of 360 days with respect
to the unpaid principal amount of each Eurodollar Loan from the date the
proceeds thereof are made available to Borrower until maturity (whether by
acceleration or otherwise), at a varying rate per annum equal to the lesser of
(i) the Maximum Rate, or (ii) the Eurodollar Rate plus the Eurodollar Margin.
Subject to the provisions of this Agreement with respect to prepayment, the
principal of the Notes shall be payable as specified in Section 3(d) hereof and
the interest with respect to each Eurodollar Loan shall be payable on each
Interest Payment Date. Past due principal and, to the extent permitted by law,
past due interest shall bear interest, payable on demand, at a rate per annum
equal to the Maximum Rate. Upon three (3) Business Days' written notice prior to
the making by the Lenders of any Eurodollar Loan (in the case of the initial
Interest Period therefor) or the expiration date of each succeeding Interest
Period (in the case of subsequent Interest Periods therefor), Borrower shall
have the option, subject to compliance by Borrower with all of the provisions of
this Agreement, as long as no Event of Default exists, to specify whether the
Interest Period commencing on any such date shall be a one (1), two (2), three
(3), six (6) or nine (9) month period. If Administrative Agent shall not have
received timely notice of a designation of such Interest Period as herein
provided, Borrower shall be deemed to have elected to convert all maturing
Eurodollar Loans to Base Rate Loans.
(a) INTEREST RATE DETERMINATION. The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The Administrative Agent shall
give prompt notice to the Borrower and the Lenders of each rate of interest so
determined and its determination thereof shall be conclusive absent error.
(a) CONVERSION OPTION. Borrower may elect from time to time (i) to convert all
or any part of its Eurodollar Loans to Base Rate Loans by giving Administrative
Agent irrevocable notice of such election in writing prior to 10:00 a.m.
(Dallas, Texas time) on the conversion date and such conversion shall be made on
the requested conversion date, provided that any such
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conversion of a Eurodollar Loan shall only be made on the last day of the
Eurodollar Interest Period with respect thereof, (ii) to convert all or any part
of its Base Rate Loans to Eurodollar Loans by giving the Administrative Agent
irrevocable written notice of such election three (3) Business Days prior to the
proposed conversion and such conversion shall be made on the requested
conversion date or, if such requested conversion date is not a Business Day, on
the next succeeding Business Day. Any such conversion shall not be deemed to be
a prepayment of any of the loans for purposes of this Agreement on the Notes.
(a) RECOUPMENT. If at any time the applicable rate of interest selected pursuant
to Sections 4(a)(i) or 4(a)(ii) above shall exceed the Maximum Rate, thereby
causing the interest on the Notes to be limited to the Maximum Rate, then any
subsequent reduction in the interest rate so selected or subsequently selected
shall not reduce the rate of interest on the Notes below the Maximum Rate until
the total amount of interest accrued on the Note equals the amount of interest
which would have accrued on the Notes if the rate or rates selected pursuant to
Sections 4(a)(i) or (ii), as the case may be, had at all times been in effect.
(a) INTEREST RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in this Section 4, during the continuance of a Default or an
Event of Default the Majority Lenders may, at their option, by notice from
Administrative Agent to the Borrower (which notice may be revoked at the option
of the Majority Lenders notwithstanding the provisions of Section 15 hereof,
which requires all Lenders to consent to changes in interest rates) declare that
no Advance may be made as, converted into, or continued as a Eurodollar Loan.
During the continuance of an Event of Default, the Majority Lenders, may, at
their option, by notice from Administrative Agent to the Borrower (which notice
may be revoked at the option of Majority Lenders notwithstanding the provisions
of Section 15 hereof, which requires all Lenders to consent to changes in
interest rates) declare that (i) each Eurodollar Loan shall bear interest for
the remainder of the applicable Interest Period at the rate otherwise applicable
to such Interest Period plus two percent (2%) per annum and (ii) each Base Rate
Loan shall bear interest at the rate otherwise applicable to such Interest
Period plus two percent (2%), provided that, during the continuance of an Event
of Default under Section 14(f) or 14(g), the interest rate set forth in clauses
(i) and (ii) above shall be applicable to all outstanding Loans without any
election or action on the part of the Administrative Agent or any Lender.
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1. SPECIAL PROVISIONS RELATING TO LOANS.
(a) UNAVAILABILITY OF FUNDS OR INADEQUACY OF PRICING. In the event that, in
connection with any proposed Eurodollar Loan, the Administrative Agent
determines, which determination shall, absent manifest error, be final,
conclusive and binding upon all parties, due to changes in circumstances since
the date hereof, adequate and fair means do not exist for determining the
Eurodollar Rate or such rate will not accurately reflect the costs to the
Lenders of funding Eurodollar Loan for such Eurodollar Interest Period, the
Administrative Agent shall give notice of such determination to the Borrower and
the Lenders, whereupon, until the Administrative Agent notifies the Borrower and
the Lenders that the circumstances giving rise to such suspension no longer
exist, the obligations of the Lenders to make, continue or convert a Loan into a
Eurodollar Loan shall be suspended, and all loans to Borrower shall be Base Rate
Loans during the period of suspension.
(a) CHANGE IN LAWS. If at any time any new law or any change in existing laws or
in the interpretation of any new or existing laws shall make it unlawful for any
Lender to make or continue to maintain or fund a Eurodollar Loan hereunder, then
such Lender shall promptly notify Borrower in writing and such Lender's
obligation to make, continue or convert Loans into Eurodollar Loans under this
Agreement shall be suspended until it is no longer unlawful for such Lender to
make or maintain Eurodollar Loans. Upon receipt of such notice, Borrower shall
either repay the outstanding Eurodollar Loan owed to the Lenders, without
penalty, on the last day of the current Interest Periods (or, if any Lender may
not lawfully continue to maintain and fund such Eurodollar Loan, immediately),
or Borrower may convert such Eurodollar Loan at such appropriate time to Base
Rate Loan.
(a) INCREASED COST OR REDUCED RETURN.
(i) If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency:
(A) shall subject such Lender to any tax,
duty, or other charge with respect to any Eurodollar
Loan, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts
payable to such Lender under this Agreement or its
Notes in respect of any Eurodollar Loan (other than
franchise taxes and taxes imposed on the overall net
income of such Lender);
(B) shall impose, modify, or deem applicable
any reserve, special deposit, assessment, or similar
requirement (other than reserve requirements, if any,
taken into account in the determination of the
Eurodollar Rate) relating to any extensions of credit
or other assets of, or
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any deposits with or other liabilities or commitments
of, such Lender, including the Commitment of such
Lender hereunder; or
(C) shall impose on such Lender or on the
London interbank market any other condition affecting
this Agreement or its Notes or any of such extensions
of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost
to such Lender of making, converting into, continuing, or
maintaining any Eurodollar Loan or to reduce any sum received
or receivable by such Lender under this Agreement or its Notes
with respect to any Eurodollar Loan, then Borrower shall pay
to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction.
If any Lender requests compensation by Borrower under this
Section 5(c), Borrower may, by notice to such Lender (with a
copy to Administrative Agent), suspend the obligation of such
Lender to make or continue Eurodollar Loans, or to convert all
or part of the Base Rate Loan owing to such Lender to a
Eurodollar Loan, until the event or condition giving rise to
such request ceases to be in effect (in which case the
provisions of Section 5(c) shall be applicable); PROVIDED that
such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(i) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.
(i) Each Lender shall promptly notify Borrower and Administrative Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 5(c) and will
designate a separate lending office, if applicable, if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section 5(c) shall furnish to Borrower and
Administrative Agent a statement setting forth the additional amount or amounts
to be paid to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Lender may use any reasonable averaging
and attribution methods.
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(i) Any Lender giving notice to the Borrower through the Administrative Agent,
pursuant to Sections 3(k) or 5(c) shall give to the Borrower a statement signed
by an officer of such Lender setting forth in reasonable detail the basis for,
and the calculation of such additional cost, reduced payments or capital
requirements, as the case may be, and the additional amounts required to
compensate such Lender therefor.
(i) Within five (5) Business Days after receipt by the Borrower of any notice
referred to in Sections 3(k) or 5(c), the Borrower shall pay to the
Administrative Agent for the account of the Lender issuing such notice such
additional amounts as are required to compensate such Lender for the increased
cost, reduce payments or increase capital requirements identified therein, as
the case may be.
(a) DISCRETION OF LENDER AS TO MANNER OF FUNDING. Notwithstanding any provisions
of this Agreement to the contrary, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loan in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Lender had actually funded and
maintained each Eurodollar Loan through the purchase of deposits having a
maturity corresponding to the last day of the Eurodollar Interest Period
applicable to such Eurodollar Loan and bearing an interest rate to the
applicable interest rate for such Eurodollar Period.
(a) BREAKAGE FEES. Without duplication under any other provision hereof, if any
Lender incurs any loss, cost or expense including, without limitation, any loss
of profit and loss, cost, expense or premium reasonably incurred by reason of
the liquidation or re-employment of deposits or other funds acquired by such
Lender to fund or maintain any Eurodollar Loan or the relending or reinvesting
of such deposits or amounts paid or prepaid to the Lenders as a result of any of
the following events other than any such occurrence as a result in the change of
circumstances described in Sections 5(a) and (b):
(i) any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of its
Eurodollar Interest Period (whether by acceleration,
prepayment or otherwise);
(ii) any failure to make a principal payment of a
Eurodollar Loan on the due date thereof; or
(iii) any failure by the Borrower to borrow,
continue, prepay or convert to a Eurodollar Loan on the dates
specified in a notice given pursuant to Section 2(c) or 4(c)
hereof;
then the Borrower shall pay to such Lender such amount as will
reimburse such Lender for such loss, cost or expense. If any Lender
makes such a claim for compensation, it shall furnish to Borrower and
Administrative Agent a statement setting forth the amount of such loss,
cost or expense in reasonable detail (including an explanation of the
basis for
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and the computation of such loss, cost or expense) and the amounts
shown on such statement shall be conclusive and binding absent
manifest error.
1. COLLATERAL SECURITY. To secure the performance by Borrower and the Guarantors
of their respective obligations hereunder, and under the Notes, the Guaranties
and Security Instruments, whether now or hereafter incurred, matured or
unmatured, direct or contingent, joint or several, or joint and several,
including extensions, modifications, renewals and increases thereof, and
substitutions therefore, Borrower and each Guarantor shall grant and assign to
Administrative Agent for the ratable benefit of the Lenders a first and prior
Lien on certain of its Oil and Gas Properties, certain related equipment, oil
and gas inventory, stock and membership interest in Borrower's subsidiaries, and
proceeds of the foregoing. The Oil and Gas Properties herewith or hereafter
mortgaged to the Administrative Agent shall represent not less than 80% of the
Engineered Value (as hereinafter defined) of Borrower's and Guarantors' Oil and
Gas Properties as of the Effective Date. All Rate Management Agreements shall be
secured by the Collateral and repaid on a pari passu basis with the indebtedness
and obligations of the Borrower and the Guarantors under the Loan Documents. All
Oil and Gas Properties and other collateral in which Borrower and the Guarantors
herewith grant or hereafter grants to Administrative Agent for the ratable
benefit of the Lenders a first and prior Lien (to the satisfaction of the
Administrative Agent) in accordance with this Section 6, as such properties and
interests are from time to time constituted, are hereinafter collectively called
the "Collateral".
The granting and assigning of such security interests and Liens by
Borrower and the Guarantors shall be pursuant to Security Instruments in form
and substance reasonably satisfactory to the Administrative Agent. Concurrently
with the delivery of each of the Security Instruments or within a reasonable
time thereafter, Borrower and the Guarantors shall furnish to the Administrative
Agent mortgage and title opinions and other title information satisfactory to
Administrative Agent with respect to the title and Lien status of Borrower's and
Guarantors' interests in not less than 80% of the Engineered Value of the Oil
and Gas Properties covered by the Security Instruments as Administrative Agent
shall have designated. "Engineered Value" for this purpose shall mean future net
revenues discounted at the discount rate being used by the Administrative Agent
as of the date of any such determination utilizing the pricing parameters used
in the engineering report furnished to the Administrative Agent for the ratable
benefit of the Lenders, pursuant to Sections 7 and 12 hereof. Borrower and the
Guarantors will cause to be executed and delivered to the Administrative Agent,
in the future, additional Security Instruments if the Administrative Agent
reasonably deems such are necessary to insure perfection or maintenance of
Lenders' security interests and Liens in the Oil and Gas Properties or any part
thereof.
1. BORROWING BASE.
(a) INITIAL BORROWING BASE AND MONTHLY COMMITMENT REDUCTION. At the Effective
Date, the Borrowing Base shall be $195,000,000 and the Monthly Commitment
Reduction shall be $1,000,000 per month beginning December 1, 1999.
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(a) SUBSEQUENT DETERMINATIONS OF BORROWING BASE. Subsequent determinations of
the Borrowing Base shall be made by the Lenders at least semi-annually on April
1 and October 1 of each year beginning April 1, 2000 or as Unscheduled
Redeterminations. The Borrower shall furnish to the Lenders as soon as possible
but in any event no later than March 1 of each year, beginning March 1, 2000,
with (i) an engineering report in form and substance satisfactory to the
Administrative Agent prepared by Wright & Company or another independent
petroleum engineering firm acceptable to Administrative Agent covering at least
80% of the Oil and Gas Properties and (ii) an engineering report in form and
substance acceptable to Administrative Agent prepared by Borrower's in-house
engineering staff covering the remaining 20% of the Oil and Gas Properties, both
of said engineering reports to utilize economic and pricing parameters used by
Administrative Agent as established from time to time, together with such other
information concerning the value of the Oil and Gas Properties as the
Administrative Agent shall deem necessary to determine the value of the Oil and
Gas Properties. Each such engineering report required to be furnished by March 1
of each year shall be dated as of December 31 of the preceding year. By
September 1 of each year, or within thirty (30) days after either (i) receipt of
notice from Administrative Agent that the Lenders require an Unscheduled
Redetermination, or (ii) the Borrower gives notice to Administrative Agent of
its desire to have an Unscheduled Redetermination performed, the Borrower shall
furnish to the Lenders an engineering report in form and substance satisfactory
to Administrative Agent prepared by Borrower's in-house engineering staff
valuing all of the Oil and Gas Properties utilizing economic and pricing
parameters used by the Administrative Agent as established from time to time,
together with such other information, reports and data concerning the value of
the Oil and Gas Properties as Administrative Agent shall deem reasonably
necessary to determine the value of such Oil and Gas Properties. Each such
engineering report required to furnished by September 1 of each year, shall be
dated as of the preceding June 30. Administrative Agent shall by notice to the
Borrower no later than April 1 and October 1 of each year, or within a
reasonable time thereafter (herein called the "Determination Date"), notify the
Borrower of the designation by the Lenders of the new Borrowing Base for the
period beginning on such Determination Date and continuing until, but not
including, the next Determination Date. If an Unscheduled Redetermination is
made by the Lenders, the Administrative Agent shall notify the Borrower within a
reasonable time after receipt of all requested information of the new Borrowing
Base, and such new Borrowing Base shall continue until the next Determination
Date. If the Borrower does not furnish all such information, reports and data by
any date specified in this Section 7(b), unless such failure is of no fault of
the Borrower, the Lenders may nonetheless designate the Borrowing Base at such
amount which the Lenders in their discretion determine and may redesignate the
Borrowing Base from time to time thereafter until the Lenders receive all such
information, reports and data, whereupon the Lenders shall designate a new
Borrowing Base as described above. The procedure for determining the Borrowing
Base at each redetermination shall be that the Agents shall determine the
Borrowing Base and submit the same to the Lenders. If, at any time, the Agents
cannot otherwise agree upon the Borrowing Base to be recommended, the Borrowing
Base to be recommended by the Agents shall be determined based upon the weighted
arithmetic average of the amounts proposed by each Agent. Said proposals to be
weighted according to each Agent's Commitment. Increases in the Borrowing Base
will require approval of all Lenders, but all other changes to the Borrowing
Base will be subject to approval by Required Lenders; provided, however, that
notwithstanding the foregoing, the Borrowing Base to be redetermined as of April
1, 2000 shall
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require the approval of all Lenders. If any redetermined Borrowing Base is not
approved by the required percentage of Lenders within twenty (20) days after it
is submitted to the Lenders by the Agents, the Administrative Agent shall notify
each of the Lenders that the proposed Borrowing Base has not been approved and
each Lender will submit within ten (10) days thereafter its proposed Borrowing
Base. The redetermined Borrowing Base shall be then determined based upon the
weighted arithmetic average of the proposed amounts submitted by each Lender,
said proposals to be weighted according to each Lender's Commitment. Each Lender
shall determine the amount of its proposed Borrowing Base based upon the loan
collateral value which such Lender in its discretion (using such methodology,
assumptions and discounts rates as such Lender customarily uses in assigning
collateral value to oil and gas properties, oil and gas gathering systems, gas
processing and plant operations) assigns to such Oil and Gas Properties of the
Borrower at the time in question and based upon such other credit factors
consistently applied (including, without limitation, the assets, liabilities,
cash flow, business, properties, prospects, management and ownership of the
Borrower and its affiliates) as such Lender customarily considers in evaluating
similar oil and gas credits, but such Lender in its discretion shall not be
required to give any additional positive value to any Oil and Gas Property over
the current economic and pricing parameters used by such Lender for such
Determination Date which additional value is derived directly from a hedging,
forward sale or swap agreement covering such Oil and Gas Property as of the date
of such determination. If at any time any of the Oil and Gas Properties are
sold, the Borrowing Base then in effect shall automatically be reduced by a sum
equal to the amount of prepayment required to be made pursuant to Section 12(r)
hereof. The Borrowing Base shall be additionally reduced from time to time
pursuant to the provisions of Section 2(e) hereof. It is expressly understood
that the Lenders have no obligation to designate the Borrowing Base at any
particular amount, except in the exercise of their discretion, whether in
relation to the Commitment or otherwise. Provided, however, that the Lenders
shall not have the obligation to designate a Borrowing Base in an amount in
excess of the Commitment.
1. FEES.
(a) UNUSED COMMITMENT FEE. The Borrower shall pay to Administrative Agent for
the ratable benefit of the Lenders an unused commitment fee (the "Unused
Commitment Fee") equivalent to the Unused Commitment Fee Rate times the daily
average of the unadvanced amount of the Commitment. Such Unused Commitment Fee
shall be calculated on the basis of a year consisting of 360 days. The Unused
Commitment Fee shall be payable in arrears on the last Business Day of each
calendar quarter beginning December 31, 1999 with the final fee payment due on
the Maturity Date for any period then ending for which the Unused Commitment Fee
shall not have been theretofore paid. In the event the Commitment terminates on
any date prior to the end of any such monthly period, the Borrower shall pay to
the Administrative Agent for the ratable benefit of the Lenders, on the date of
such termination, the total Unused Commitment Fee due for the period in which
such termination occurs.
(a) THE LETTER OF CREDIT FEE. Borrower shall pay to the Administrative Agent the
Letter of Credit fees required above in Section 2(d).
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a) AGENCY FEES. The Borrower shall pay to the Administrative Agent certain fees
for acting as Administrative Agent hereunder in amounts to be negotiated between
the Borrower and the Administrative Agent.
1. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Subject to the provisions of Section 5(g) hereof, the
Borrower may at any time and from time to time, without penalty or premium,
prepay the Notes, in whole or in part. Each such prepayment shall be made on at
least three (3) Business Days' notice to Administrative Agent in the case of
Eurodollar Loans and not later than 11:00 a.m., Dallas, Texas time, in the case
of Base Rate Loans and shall be in a minimum amount of (i) $500,000 or any whole
multiples of $100,000 in excess thereof (or the unpaid balance of the Notes,
whichever is less), for Base Rate Loans, and (ii) $1,000,000 or any whole
multiple of $100,000 in excess thereof (or the unpaid balance of the Notes,
whichever is less), on Eurodollars Loans, plus accrued interest thereon to the
date of prepayment.
(a) MANDATORY PREPAYMENTS.
(i) BORROWING BASE DEFICIENCY. In the event the Total
Outstandings ever exceed the Borrowing Base as determined by Lenders
pursuant to Section 7(b) hereof, the Borrower shall either (A) within
ninety (90) days after notification from the Administrative Agent, by
instruments reasonably satisfactory in form and substance to the
Lender, provide the Administrative Agent with collateral with value
and quality in amounts satisfactory to all of the Lenders in their
discretion in order to increase the Borrowing Base by an amount at
least equal to such excess, or (B) prepay, without premium or penalty,
the principal amount of the Notes in an amount, of 50% of such excess
plus accrued interest thereon to the date of prepayment within ninety
(90) days after such notification, and the remaining amount of such
excess plus accrued interest thereon within one hundred eighty (180)
days after such notification. If the Total Outstandings ever exceed
the Commitment as a result of a Monthly Commitment Reduction or any
other required reduction in the Commitment, then in such event,
Borrower shall immediately prepay the principal amount of the Notes in
an amount at least equal to such excess plus accrued interest to the
date of prepayment.
(ii) SALE OF ASSETS AND/OR EQUITY. The prepayments required to be
made pursuant to the provisions of Sections 12(r) and 12(w) hereof.
1. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to enter into
this Agreement, the Borrower hereby represents and warrants to the Lenders
(which representations and warranties will survive the delivery of the Notes)
that:
(a) CREATION AND EXISTENCE. Borrower and Oceana Exploration Company, L.C. are
both limited liability companies duly organized, validly existing and in good
standing under the laws of the jurisdiction in which they were formed and are
duly qualified in all jurisdictions
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wherein failure to qualify may result in a Material Adverse Effect. Ohio
Intrastate Gas Transmission Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which is was
formed and is duly qualified in all jurisdictions wherein failure to qualify may
result in a Material Adverse Effect. Borrower and each of its Subsidiaries has
all power and authority to own their respective properties and assets and to
transact the business in which they are engaged.
(a) POWER AND AUTHORITY. Borrower is duly authorized and empowered to create and
issue the Notes; and Borrower and each of its Subsidiaries is duly authorized
and empowered to execute, deliver and perform their respective Loan Documents,
including this Agreement; and all action on Borrower's part requisite for the
due creation and issuance of the Notes on Borrower's and each Subsidiary's part
for the due execution, delivery and performance of their respective Loan
Documents, including this Agreement, has been duly and effectively taken.
(a) BINDING OBLIGATIONS. This Agreement does, and the Notes and other Loan
Documents upon their creation, issuance, execution and delivery will, constitute
valid and binding obligations of Borrower, enforceable in accordance with their
respective terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency, or similar debtor relief laws now or hereafter in effect
and relating to or affecting the enforcement of creditors' rights generally).
The Guaranties, upon their execution and delivery will constitute valid and
binding obligations of the Guarantors, enforceable in accordance with their
respective terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency, or similar debtor relief laws now or hereafter in effect
and relating to or affecting the enforcement of creditors' rights generally).
(a) NO LEGAL BAR OR RESULTANT LIEN. The Notes and the Loan Documents, including
this Agreement, do not and will not, to the best of the Borrower's knowledge
violate any provisions of any contract, agreement, law, regulation, order,
injunction, judgment, decree or writ to which Borrower or any Subsidiary is
subject, or result in the creation or imposition of any lien or other
encumbrance upon any assets or properties of Borrower or any Subsidiary, other
than those contemplated by this Agreement.
(a) NO CONSENT. The execution, delivery and performance by Borrower of the Notes
and the Loan Documents, including this Agreement, and the execution, delivery
and performance by the Guarantors of their respective Guaranties, do not require
the consent or approval of any other person or entity, including without
limitation any regulatory authority or governmental body of the United States or
any state thereof or any political subdivision of the United States or any state
thereof except for consents required for federal, state and, in some instances,
private leases, right of ways and other conveyances or encumbrances of oil and
gas leases, which consents have been obtained by the Borrower or its
Subsidiaries, as the case may be.
(a) FINANCIAL CONDITION. No change from the pro forma financial information
furnished by Borrower to the Agents has occurred which is reasonably expected to
have a Material Adverse Effect, except as disclosed to the Lenders in Schedule
"2" attached hereto.
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(a) LIABILITIES. Neither Borrower nor any Subsidiary has any material liability,
direct or contingent, except as disclosed to the Lenders in the Financial
Statements and on Schedule "3" attached hereto. No unusual or unduly burdensome
restrictions, restraint, or hazard exists by contract, law or governmental
regulation or otherwise relative to the business, assets or properties of
Borrower or any Subsidiary which is reasonably expected to have a Material
Adverse Effect.
(a) LITIGATION. Except as described in the Financial Statements, or as otherwise
disclosed to the Lenders in Schedule "4" attached hereto, there is no
litigation, legal or administrative proceeding, investigation or other action of
any nature pending or, to the knowledge of the officers of Borrower threatened
against or affecting Borrower or any Subsidiary which involves the possibility
of any judgment or liability not fully covered by insurance, and which is
reasonably expected to have a Material Adverse Effect.
(a) TITLES, ETC. Borrower and each Subsidiary has good and defensible title to
their respective assets, including without limitation, the Oil and Gas
Properties, free and clear of all liens or other encumbrances except Permitted
Liens.
(a) DEFAULTS. Neither Borrower nor any Subsidiary is in default and no event or
circumstance has occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default under any loan or credit agreement,
indenture, mortgage, deed of trust, security agreement or other agreement or
instrument to which Borrower or any Subsidiary is a party in any respect that
would be reasonably expected to have a Material Adverse Effect. No Default or
Event of Default hereunder has occurred and is continuing.
(a) CASUALTIES; TAKING OF PROPERTIES. Since the dates of the pro forma financial
statements of the Borrower delivered to Lenders, neither the business nor the
assets or properties of Borrower or any Subsidiary has been affected (to the
extent it is reasonably likely to cause a Material Adverse Effect), as a result
of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike
or other labor disturbance, embargo, requisition or taking of property or
cancellation of contracts, permits or concessions by any domestic or foreign
government or any agency thereof, riot, activities of armed forces or acts of
God or of any public enemy.
(a) USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Commitment may be used by
the Borrower for the purposes of (i) working capital, (ii) Letters of Credit,
and (iii) general corporate purposes. Borrower is not engaged principally or as
one of its important activities in the business of extending credit for the
purpose of purchasing or carrying any "margin stock " as defined in Regulation U
of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of said
Regulation U.
Neither Borrower, any Subsidiary nor any other Person or
entity acting on behalf of Borrower or any Subsidiary has taken or will
take any action which might cause the loans hereunder or any of the
Loan Documents, including this Agreement, to violate Regulation U or
any other regulation of the Board of Governors of the Federal Reserve
System or to
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violate the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter
be in effect.
(a) LOCATION OF BUSINESS AND OFFICES. The principal place of business and chief
executive offices of the Borrower is located at the address stated in Section 17
hereof. The principal place of business and chief executive office of each of
the Subsidiaries is located at the addresses shown on Schedule "5" hereto.
(a) COMPLIANCE WITH THE LAW. To the best of Borrower's knowledge, neither
Borrower or any Subsidiary:
(i) is in violation of any law, judgment, decree, order, ordinance, or
governmental rule or regulation to which Borrower, or any of its assets or
properties are subject; or
(i) has failed to obtain any license, permit, franchise or other governmental
authorization necessary to the ownership of any of its assets or properties or
the conduct of its business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(a) NO MATERIAL MISSTATEMENTS. No information, exhibit or report furnished by
Borrower to the Lenders in connection with the negotiation of this Agreement or
in the preparation of the offering memo contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
(a) NOT A UTILITY. Borrower is not an entity engaged in the State of Texas in
the (i) generation, transmission, or distribution and sale of electric power;
(ii) transportation, distribution and sale through a local distribution system
of natural or other gas for domestic, commercial, industrial, or other use;
(iii) provision of telephone or telegraph service to others; (iv) production,
transmission, or distribution and sale of steam or water; (v) operation of a
railroad; or (vii) provision of sewer service to others.
(a) ERISA. Borrower and each Subsidiary is in compliance in all material
respects with the applicable provisions of ERISA, and no "reportable event", as
such term is defined in Section 403 of ERISA, has occurred with respect to any
Plan of Borrower or any Subsidiary.
(a) PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a "holding company", or
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a"subsidiary company" of a "holding company", or a "public
utility" subject to the registration requirements of the Public Utility Holding
Company Act of 1935, as amended.
(a) SUBSIDIARIES. Ohio Intrastate Gas Transmission Company and Oceana
Exploration Company, L.C. are the only Subsidiaries of Borrower as of the
Effective Date. Borrower is owned by the parties shown on Schedule "6" hereto.
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(a) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule "7", neither Borrower
nor any Subsidiary (i) has received notice or otherwise learned of any
Environmental Liability which would be reasonably likely to individually or in
the aggregate have a Material Adverse Effect arising in connection with (A) any
non-compliance with or violation of the requirements of any Environmental Law or
(B) the release or threatened release of any toxic or hazardous waste into the
environment, (ii) has received notice of any threatened or actual liability in
connection with the release or notice of any threatened release of any toxic or
hazardous waste into the environment which would be reasonably likely to
individually or in the aggregate have a Material Adverse Effect or (iii) has
received notice or otherwise learned of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any toxic or hazardous waste into the environment for
which Borrower or any Subsidiary is or may be liable which may reasonably be
expected to result in a Material Adverse Effect.
(a) LIENS. Except (i) as disclosed on Schedule "1" hereto and (ii) for Permitted
Liens, the assets and properties of the Borrower and each Subsidiary are free
and clear of all liens and encumbrances.
(a) YEAR 2000 COMPLIANCE. Borrower represents and warrants to Lenders that:
(i) It will use its best efforts to cause all devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology (jointly and severally the "Systems") necessary for Borrower and each
Subsidiary to carry on its respective business as presently conducted and as
contemplated to be conducted in the future to be Year 2000 Compliant within a
period of time calculated to result in no material disruption of any of
Borrower's or its Subsidiaries' business operations. For purposes of these
provisions, "Year 2000 Compliant" means that such Systems are designed to be
used prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(i) Borrower and each Subsidiary has: (A) undertaken, or will undertake, an
inventory, review, and assessment of all areas within its business and
operations that could be adversely affected by the failure of Borrower or any
Subsidiary to be Year 2000 Compliant on a timely basis; (B) developed, or will
develop, a plan and time line for becoming Year 2000 Compliant on a timely
basis; (C) to date, implemented, or will implement, that plan in accordance with
that timetable in all material respects on a best-efforts basis.
(i) Borrower and each Subsidiary has either made, or will make, written inquiry
of each of its vendors, and has obtained, or will obtain, in writing
confirmations from all such persons, as to whether such persons have initiated
programs to become Year 2000 Compliant and on the basis of such confirmations.
Borrower reasonably believes that all such persons will be or become so
compliant. For purposes hereof, "vendors" refers to those vendors of Borrower or
any Subsidiary whose business failure would, with reasonable probability, result
in a Material Adverse Effect.
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(i) The fair market value of all Collateral pledged to Lenders to secure the
Loan and the Notes and all of Borrower's obligations hereunder are not and shall
not be less than currently anticipated or subject to deterioration in value
because of the failure of such Collateral to be Year 2000 Compliant.
(a) INDEBTEDNESS. At the Effective Date, Borrower's Consolidated Total Debt does
not exceed $ 190,000,000,which includes indebtedness transferred to Borrower in
connection with its organization.
(a) ASSETS. All assets, including, but not limited to the Collateral indicated
in the Borrower's pro forma financial statement or other information furnished
to the Administrative Agent and the Lenders are to be owned by Borrower and its
Subsidiaries are, in fact, owned by Borrower or one of its Subsidiaries as of
the Effective Date.
1. CONDITIONS OF LENDING.
(a) The effectiveness of this Agreement, and the obligation to make the initial
Advance or issue any initial Letter of Credit under the Commitment shall be
subject to satisfaction of the following conditions precedent:
(i) EXECUTION AND DELIVERY. The Borrower has executed and delivered the
Agreement, the Notes and other required Loan Documents, all in form and
substance satisfactory to the Administrative Agent;
(i) LEGAL OPINION. The Administrative Agent shall have received from Borrower's
and the Guarantors' legal counsel a favorable legal opinion in form and
substance satisfactory to it (i) as to the matters set forth in Subsections
10(a), (b), (c), (d), (e) and (h) hereof, (ii) as to the matters required below
in Sections 11(a)(vii) and (ii) as to such other matters as Administrative Agent
or its counsel may reasonably request;
(i) RESOLUTIONS. The Administrative Agent shall have received appropriate
certified resolutions of Borrower and each Guarantor;
(i) GOOD STANDING. The Administrative Agent shall have received evidence of
existence and good standing for Borrower and each Guarantor;
(i) INCUMBENCY. The Administrative Agent shall have received a signed
certificate of Borrower and each Guarantor, certifying the names of the officers
of Borrower and each Guarantor authorized to sign loan documents on behalf of
Borrower and each Guarantor, together with the true signatures of each such
officer. The Administrative Agent may conclusively rely on such certificate
until the Administrative Agent receives a further certificate of Borrower or any
Guarantor canceling or amending the prior certificate and submitting signatures
of the officers named in such further certificate;
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(i) CORPORATE AND LIMITED LIABILITY COMPANY DOCUMENTS. The Administrative Agent
shall have received copies of (i) the Certificates of Formation of Borrower and
any limited liability company Subsidiary and all amendments thereto, certified
by the Secretary of State of the State of its organization, and a copy of the
Limited Liability Company Agreements of Borrower and any limited liability
company Subsidiary and all amendments thereto, certified by one or more officers
of Borrower as being true, correct and complete and (ii) Articles of
Incorporation of any corporate Subsidiary and all amendments thereto, certified
by the Secretary of State of the State of its organization, and a copy of the
Bylaws of such Subsidiaries, and all amendments thereto, certified by one or
more officers of such Subsidiary as being true, correct and complete;
(i) COMPLETION OF ALL MERGERS, ETC. The Administrative Agent shall have received
an opinion of counsel from Borrower's counsel to the effect that all mergers and
transfers entered into or in connection with the formation of Borrower and the
acquisition by the Borrower of all of the equity ownership of the Subsidiaries
have been completed, are in compliance with, and not in violation of, all
applicable laws, regulations and agreements and are binding on all of the
parties thereto.
(i) ASSETS OF BORROWER. The Administrative Agent shall have received
satisfactory evidence that all the assets that are purported to be owned by the
Borrower and its Subsidiaries pursuant to pro forma financial statements and
other information delivered to the Lenders are in fact owned by Borrower and its
Subsidiaries.
(i) MORTGAGE AND TITLE. The Administrative Agent shall have received executed
mortgages and other collateral documents satisfactory to it covering at least
50% of the Oil and Gas Properties required to be mortgaged pursuant to Section 6
hereof with the remaining 50% of the required mortgages to be executed and
delivered within sixty (60) days thereafter. In addition, the Administrative
Agent and its counsel shall have satisfactorily completed title review covering
50% of the PW10 of such mortgaged Oil and Gas Properties with the remaining 50%
to be completed within sixty (60) days thereafter;
(i) ENVIRONMENTAL REPORT. The Administrative Agent shall have received a copy of
the Borrower's environmental report showing any and all material environmental
matters and concerns relating to the Borrower and/or any of its assets,
including all assets merged into or transferred to the Borrower in connection
with the formation of the Borrower, said report to be in form and substance
satisfactory to the Administrative Agent;
(i) REPRESENTATION AND WARRANTIES. The representations and warranties of
Borrower under this Agreement are true and correct in all material respects as
of such date, as if then made (except to the extent that such representations
and warranties related solely to an earlier date);
(i) NO EVENT OF DEFAULT. No Event of Default shall have occurred and be
continuing nor shall any event have occurred or failed to occur which, with the
passage of time or service of notice, or both, would constitute an Event of
Default;
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(i) OTHER DOCUMENTS. Administrative Agent shall have received such other
instruments and documents incidental and appropriate to the transaction provided
for herein as Administrative Agent or its counsel may reasonably request, and
all such documents shall be in form and substance reasonably satisfactory to the
Administrative Agent; and
(i) LEGAL MATTERS SATISFACTORY. All legal matters incident to the consummation
of the transactions contemplated hereby shall be reasonably satisfactory to
special counsel for Administrative Agent retained at the expense of the
Borrower.
(a) The obligation of the Lenders to make any Advance or issue any Letter of
Credit under the Commitment (including the initial Advance) shall be subject to
the following additional conditions precedent that, at the date of making each
such Advance and after giving effect thereto:
(i) REPRESENTATION AND WARRANTIES. The representations and warranties of
Borrower under this Agreement are true and correct in all material respects as
of such date, as if then made (except to the extent that such representations
and warranties related solely to an earlier date);
(i) NO EVENT OF DEFAULT. No Event of Default shall have occurred and be
continuing nor shall any event have occurred or failed to occur which, with the
passage of time or service of notice, or both, would constitute an Event of
Default;
(i) OTHER DOCUMENTS. Administrative Agent shall have received such other
instruments and documents incidental and appropriate to the transaction provided
for herein as Administrative Agent or its counsel may reasonably request, and
all such documents shall be in form and substance reasonably satisfactory to the
Administrative Agent; and
(i) LEGAL MATTERS SATISFACTORY. All legal matters incident to the consummation
of the transactions contemplated hereby shall be reasonably satisfactory to
special counsel for Administrative Agent retained at the expense of Borrower.
1. AFFIRMATIVE COVENANTS. A deviation from the provisions of this Section 12
shall not constitute an Event of Default under this Agreement if such deviation
is consented to in writing by Majority Lenders prior to the date of deviation.
The Borrower will at all times comply with the covenants contained in this
Section 12 from the date hereof and for so long as the Commitments are in
existence or any amount is owed to the Administrative Agent or the Lenders under
this Agreement or the other Loan Documents.
(a) FINANCIAL STATEMENTS AND REPORTS. Borrower shall promptly furnish to the
Administrative Agent from time to time upon request such information regarding
the business and affairs and financial condition of Borrower, as the
Administrative Agent may reasonably request, and will furnish to the
Administrative Agent:
(i) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available, and in any event
within ninety (90) days after the close of each fiscal year beginning with the
fiscal year ended
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December 31, 1999, the annual audited consolidated and consolidating Financial
Statements of Borrower, prepared in accordance with GAAP accompanied by an
unqualified opinion rendered by an independent accounting firm reasonably
acceptable to the Administrative Agent;
(i) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in any event
within forty-five (45) days after the end of each fiscal quarter of each year,
beginning with the fiscal quarter ended March 31, 2000, the quarterly unaudited,
consolidated and consolidating Financial Statements of Borrower prepared in
accordance with GAAP;
(i) REPORT ON PROPERTIES. As soon as available and in any event on or before
March 1 and September 1 of each calendar year, and at such other times as any
Lender, in accordance with Section 7 hereof, may request, the engineering
reports required to be furnished to the Administrative Agent under such Section
7 on the Oil and Gas Properties;
(i) ADDITIONAL INFORMATION. Promptly upon request of the Administrative Agent
from time to time any additional financial information or other information that
the Administrative Agent may reasonably request.
All such reports, information, balance sheets and Financial Statements
referred to in Subsection 12(a) above shall be in such detail as the
Administrative Agent may reasonably request and shall be prepared in a
manner consistent with the Financial Statements.
(a) CERTIFICATES OF COMPLIANCE. Concurrently with the furnishing of the annual
audited Financial Statements pursuant to Subsection 12(a)(i) hereof and the
quarterly unaudited Financial Statements pursuant to Subsection 12(a)(ii) hereof
for the months coinciding with the end of each calendar quarter, Borrower will
furnish or cause to be furnished to the Administrative Agent a certificate in
the form of Exhibit "D" attached hereto, signed by the President, Chief
Financial Officer, Treasurer or Controller of Borrower, (i) stating that
Borrower has fulfilled in all material respects its obligations under the Notes
and the Loan Documents, including this Agreement, and that all representations
and warranties made herein and therein continue (except to the extent they
relate solely to an earlier date) to be true and correct in all material
respects (or specifying the nature of any change), or if a Default has occurred,
specifying the Default and the nature and status thereof; (ii) to the extent
requested from time to time by the Administrative Agent, specifically affirming
compliance of Borrower in all material respects with any of its representations
(except to the extent they relate solely to an earlier date) or obligations
under said instruments; (iii) setting forth the computation, in reasonable
detail as of the end of each period covered by such certificate, of compliance
with Sections 13(b) and (c); and (iv) containing or accompanied by such
financial or other details, information and material as the Administrative Agent
may reasonably request to evidence such compliance.
(a) ACCOUNTANTS' CERTIFICATE. Concurrently with the furnishing of the annual
audited Financial Statement pursuant to Section 12(a)(i) hereof, Borrower will
furnish a statement from the firm of independent public accountants which
prepared such Financial Statement to the effect that nothing has come to their
attention to cause them to believe that there existed on the date of
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such statements any Event of Default and specifically calculating Borrower's
compliance with Sections 13(b) and (c) of this Agreement.
(a) TAXES AND OTHER LIENS. The Borrower will pay and discharge, and will cause
each Subsidiary to pay and discharge, promptly all taxes, assessments and
governmental charges or levies imposed upon the Borrower or any Subsidiary, or
upon the income or any assets or property of Borrower or any Subsidiary, as well
as all claims of any kind (including claims for labor, materials, supplies and
rent) which, if unpaid, might become a Lien or other encumbrance upon any or all
of the assets or property of Borrower or any Subsidiary and which could
reasonably be expected to result in a Material Adverse Effect; provided,
however, that neither Borrower nor any Subsidiary shall be required to pay any
such tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings diligently conducted, levy and execution thereon have been stayed
and continue to be stayed and if Borrower or such Subsidiary shall have set up
adequate reserves therefor, if required, under GAAP.
(a) COMPLIANCE WITH LAWS. Borrower will observe and comply, and will cause each
of its Subsidiaries to observe and comply, in all material respects, with all
applicable laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, orders and restrictions relating to
environmental standards or controls or to energy regulations of all federal,
state, county, municipal and other governments, departments, commissions,
boards, agencies, courts, authorities, officials and officers, domestic or
foreign.
(a) FURTHER ASSURANCES. The Borrower will cure promptly any defects in the
creation and issuance of the Notes and the execution and delivery of the Notes
and the Loan Documents, including this Agreement. The Borrower will cause the
Guarantors to promptly cure any defects in the issuance of the Guaranties. The
Borrower at its sole expense will promptly execute and deliver, and will cause
its Subsidiaries to execute and deliver, to Administrative Agent upon its
reasonable request all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
in this Agreement, or to correct any omissions in the Notes or more fully to
state the obligations set out herein. The Borrower shall cause each existing
Subsidiary and each new Subsidiary to execute and deliver Guaranties to
Administrative Agent. The Borrower shall and shall cause each of its
Subsidiaries to pledge to Administrative Agent, for the ratable benefit of the
Lenders, as security for the obligations under the Loan Documents, any interest
in a Subsidiary.
(a) PERFORMANCE OF OBLIGATIONS. The Borrower will pay the Notes and other
obligations incurred by it hereunder according to the reading, tenor and effect
thereof and hereof; and Borrower will, and will cause each of its Subsidiaries
to, do and perform every act and discharge all of the obligations provided to be
performed and discharged by the Borrower under the Loan Documents, including
this Agreement, at the time or times and in the manner specified.
(a) INSURANCE. The Borrower and each Subsidiary will have in force as of the
Effective Date and will continue to maintain insurance with financially sound
and reputable insurers with respect to its assets against such liabilities,
fires, casualties, risks and contingencies and in such
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types and amounts as is customary in the case of persons engaged in the same or
similar businesses and similarly situated. Upon request of the Administrative
Agent, the Borrower will furnish or cause to be furnished to the Administrative
Agent from time to time a summary of the insurance coverage of Borrower and each
Subsidiary in form and substance satisfactory to the Administrative Agent, and,
if requested, will furnish the Administrative Agent copies of the applicable
policies. Upon demand by Administrative Agent any insurance policies covering
any such property shall be endorsed (i) to provide that such policies may not be
canceled, reduced or affected in any manner for any reason without fifteen (15)
days prior notice to Administrative Agent, (ii) to provide for insurance against
fire, casualty and other hazards normally insured against, in the amount of the
full value (less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated business and properties) of the property
insured, and (iii) to provide for such other matters as the Administrative Agent
may reasonably require. The Borrower shall at all times maintain, and shall
cause each Subsidiary to maintain, adequate insurance with respect to all of its
assets, including but not limited to, the Oil and Gas Properties or any
collateral against its liability for injury to persons or property, which
insurance shall be by financially sound and reputable insurers and shall without
limitation provide the following coverages: comprehensive general liability
(including coverage for damage to underground resources and equipment, damage
caused by blowouts or cratering, damage caused by explosion, damage to
underground minerals or resources caused by saline substances, broad form
property damage coverage, broad form coverage for contractually assumed
liabilities and broad form coverage for acts of independent contractors),
worker's compensation and automobile liability. The Borrower shall at all times
maintain, and shall cause each Subsidiary owning Oil and Gas Properties, to
maintain cost of control of well insurance with respect to the Oil and Gas
Properties which shall insure the Borrower and such Subsidiary against seepage
and pollution expense; redrilling expense; and cost of control of well; fires,
blowouts, etc., if deemed economical in the reasonable discretion of the
Borrower and such Subsidiary. Additionally, the Borrower shall at all times
maintain, and cause its Subsidiaries to maintain, adequate insurance with
respect to all of its other assets and wells in accordance with prudent business
practices.
(a) ACCOUNTS AND RECORDS. Borrower will keep books, records and accounts and
will cause each Subsidiary to keep books, records and accounts, in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and activities, prepared in a manner consistent with
prior years, subject to changes suggested by Borrower's or any Subsidiary's
auditors.
(a) RIGHT OF INSPECTION. Borrower will permit, and will cause each Subsidiary to
permit, any officer, employee or agent of the Lenders to examine Borrower's or
any Subsidiary's books, records and accounts, and take copies and extracts
therefrom, all at such reasonable times during normal business hours and as
often as the Lenders may reasonably request. The Lenders will use best efforts
to keep all Confidential Information (as herein defined) confidential and will
not disclose or reveal the Confidential Information or any part thereof other
than (i) as required by law, and (ii) to the Lenders', and the Lenders'
subsidiaries', Affiliates, officers, employees, legal counsel and regulatory
authorities or advisors to whom it is necessary to reveal such information for
the purpose of effectuating the agreements and undertakings specified herein or
as otherwise required in connection with the enforcement of the Lenders' and the
Administrative Agent's rights
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and remedies under the Notes, this Agreement and the other Loan Documents. As
used herein, "Confidential Information" means information about the Borrower or
any Subsidiary furnished by the Borrower or any Subsidiary to the Lenders, but
does not include information (i) which was publicly known, or otherwise known to
the Lenders (except not in violation of any confidentiality agreement), at the
time of the disclosure, (ii) which subsequently becomes publicly known through
no act or omission by the Lenders (except not in violation of any
confidentiality agreement), or (iii) which otherwise becomes known to the
Lenders, other than through disclosure by the Borrower.
(a) NOTICE OF CERTAIN EVENTS. The Borrower shall, and shall cause each
Subsidiary to, promptly notify the Administrative Agent if Borrower or any
Subsidiary learns of the occurrence of (i) any event which constitutes an Event
of Default together with a detailed statement by Borrower of the steps being
taken to cure such Event of Default; (ii) any legal, judicial or regulatory
proceedings affecting Borrower or any Subsidiary, or any of the assets or
properties of Borrower or any Subsidiary which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect; (iii) any dispute
between Borrower, any Subsidiary and any governmental or regulatory body or any
other Person or entity which, if adversely determined, might reasonably be
expected to cause a Material Adverse Effect; (iv) any other matter which in
Borrower's reasonable opinion could have a Material Adverse Effect.
(a) ERISA INFORMATION AND COMPLIANCE. The Borrower will, and will cause each
Subsidiary to, promptly furnish to the Administrative Agent immediately upon
becoming aware of the occurrence of any "reportable event", as such term is
defined in Section 4043 of ERISA, or of any "prohibited transaction", as such
term is defined in Section 4975 of the Internal Revenue Code of 1954, as
amended, in connection with any Plan or any trust created thereunder, a written
notice signed by the chief financial officer of Borrower or such Subsidiary
specifying the nature thereof, what action Borrower or any such Subsidiary is
taking or proposes to take with respect thereto, and, when known, any action
taken by the Internal Revenue Service with respect thereto.
(a) ENVIRONMENTAL REPORTS AND NOTICES. The Borrower will, and will cause each
Subsidiary to, deliver to the Administrative Agent (i) promptly upon its
becoming available, one copy of each report sent by Borrower or any Subsidiary
to any court, governmental agency or instrumentality pursuant to any
Environmental Law, (ii) notice, in writing, promptly upon Borrower's or any
Subsidiary's receipt of notice or otherwise learning of any claim, demand,
action, event, condition, report or investigation indicating any potential or
actual liability arising in connection with (x) the non-compliance with or
violation of the requirements of any Environmental Law which reasonably could be
expected to have a Material Adverse Effect; (y) the release or threatened
release of any toxic or hazardous waste into the environment which reasonably
could be expected to have a Material Adverse Effect or which release Borrower or
any Subsidiary would have a duty to report to any court or government agency or
instrumentality, or (iii) the existence of any Environmental Lien on any
properties or assets of Borrower or any Subsidiary, and Borrower shall
immediately deliver, and shall cause any such Subsidiary to immediately deliver,
a copy of any such notice to Administrative Agent.
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(a) COMPLIANCE AND MAINTENANCE. The Borrower will, and will cause each
Subsidiary to, (i) observe and comply in all material respects with all
Environmental Laws; (ii) except as provided in Subsections 12(o) and 12(p)
below, maintain the Oil and Gas Properties and other assets and properties in
good and workable condition at all times and make all repairs, replacements,
additions, betterments and improvements to the Oil and Gas Properties and other
assets and properties as are needed and proper so that the business carried on
in connection therewith may be conducted properly and efficiently at all times
in the opinion of the Borrower or any Subsidiary exercised in good faith; (iii)
take or cause to be taken whatever actions are necessary or desirable to prevent
an event or condition of default by Borrower or any Subsidiary under the
provisions of any gas purchase or sales contract or any other contract,
agreement or lease comprising a part of the Oil and Gas Properties or other
collateral security hereunder which default could reasonably be expected to
result in a Material Adverse Effect; and (iv) furnish Administrative Agent upon
request evidence satisfactory to Administrative Agent that there are no Liens,
claims or encumbrances on the Oil and Gas Properties, except laborers',
vendors', repairmen's, mechanics', worker's, or materialmen's liens arising by
operation of law or incident to the construction or improvement of property if
the obligations secured thereby are not yet due or are being contested in good
faith by appropriate legal proceedings or Permitted Liens.
(a) OPERATION OF PROPERTIES. Except as provided in Subsection 12(p) and (q)
below, the Borrower will and will cause each Subsidiary to, operate, or use
reasonable efforts to cause to be operated, all Oil and Gas Properties in a
careful and efficient manner in accordance with the practice of the industry and
in compliance in all material respects with all applicable laws, rules, and
regulations, and in compliance in all material respects with all applicable
proration and conservation laws of the jurisdiction in which the properties are
situated, and all applicable laws, rules, and regulations, of every other agency
and authority from time to time constituted to regulate the development and
operation of the properties and the production and sale of hydrocarbons and
other minerals therefrom; provided, however, that the Borrower and any such
Subsidiary shall have the right to contest in good faith by appropriate
proceedings, the applicability or lawfulness of any such law, rule or regulation
and pending such contest may defer compliance therewith, as long as such
deferment shall not subject the properties or any part thereof to foreclosure or
loss.
(a) COMPLIANCE WITH LEASES AND OTHER INSTRUMENTS. The Borrower will, and will
cause each Subsidiary to, pay or cause to be paid and discharge all rentals,
delay rentals, royalties, production payment, and indebtedness required to be
paid by Borrower or any Subsidiary (or required to keep unimpaired in all
material respects the rights of Borrower or any Subsidiary in the Oil and Gas
Properties) accruing under, and perform or cause to be performed in all material
respects each and every act, matter, or thing required of Borrower or any
Subsidiary by each and all of the assignments, deeds, leases, subleases,
contracts, and agreements in any way relating to Borrower or any Subsidiary or
any of the Oil and Gas Properties and do all other things necessary of Borrower
or any Subsidiary to keep unimpaired in all material respects the rights of
Borrower or any Subsidiary thereunder and to prevent the forfeiture thereof or
default thereunder; provided, however, that nothing in this Agreement shall be
deemed to require Borrower or any Subsidiary to perpetuate or renew any oil and
gas lease or other lease by payment of rental or delay rental or by commencement
or continuation of operations nor to prevent Borrower or any Subsidiary from
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abandoning or releasing any oil and gas lease or other lease or well thereon
when, in any of such events, in the opinion of Borrower or any Subsidiary
exercised in good faith, it is not in the best interest of the Borrower or such
Subsidiary to perpetuate the same.
(a) CERTAIN ADDITIONAL ASSURANCES REGARDING MAINTENANCE AND OPERATIONS OF
PROPERTIES. With respect to those Oil and Gas Properties which are being
operated by operators other than the Borrower or its Subsidiaries, the Borrower
or its Subsidiaries shall not be obligated to perform any undertakings
contemplated by the covenants and agreement contained in Subsections 12(o) or
12(p) hereof which are performable only by such operators and are beyond the
control of the Borrower or its Subsidiaries; however, the Borrower agrees to
promptly take, and cause each Subsidiary to take, all reasonable actions
available under any operating agreements or otherwise to bring about the
performance of any such material undertakings required to be performed
thereunder.
(a) SALE OF CERTAIN ASSETS/PREPAYMENT OF PROCEEDS. The Borrower or any
Subsidiary will immediately pay over to the Administrative Agent for the ratable
benefit of the Lenders as a prepayment of principal on the Notes, an amount
equal to 100% of the "Release Price" received by Borrower or any Subsidiary from
the sale of Borrowing Base Assets. The term "Release Price" as used herein shall
mean the Borrowing Base value assigned to the Borrowing Base Assets sold as of
the last Borrowing Base determination. Any such prepayment of principal on the
Notes required by this Section 12(r), shall not be in lieu of, but shall be in
addition to, any mandatory prepayment of principal required to be paid pursuant
to Section 9(b) hereof.
(a) TITLE MATTERS. Within sixty (60) days after the Effective Date with respect
to the Oil and Gas Properties the title to which were not examined prior to the
Effective Date and to the Oil and Gas Properties referred to on Schedule "8"
hereto, furnish, and cause its Subsidiaries to furnish, Administrative Agent
with title opinions and/or title information reasonably satisfactory to
Administrative Agent showing good and defensible title of Borrower or any
Subsidiary to such Oil and Gas Properties subject only to the Permitted Liens.
As to any Oil and Gas Properties hereafter mortgaged to Administrative Agent,
Borrower will, and will cause each Subsidiary to, promptly (but in no event more
than thirty (30) days following such mortgaging), furnish Administrative Agent
with title opinions and/or title information reasonably satisfactory to
Administrative Agent showing good and defensible title of Borrower or any such
Subsidiary to such Oil and Gas Properties subject only to Permitted Liens.
(a) CURATIVE MATTERS. Within sixty (60) days after the Effective Date with
respect to matters listed on Schedule "9" and, thereafter, within sixty (60)
days after receipt by Borrower from Administrative Agent or its counsel of
written notice of title defects the Administrative Agent reasonably requires to
be cured, Borrower shall, and shall cause each Subsidiary to, either (i) provide
such curative information, in form and substance satisfactory to Administrative
Agent, or (ii) substitute Oil and Gas Properties of value and quality
satisfactory to the Administrative Agent for all of Oil and Gas Properties for
which such title curative was requested but upon which Borrower or any
Subsidiary elected not to provide such title curative information, and, within
sixty (60) days of such substitution, provide title opinions or title
information satisfactory to the Administrative Agent covering the Oil and Gas
Properties so substituted. If the Borrower or any
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Subsidiary fails to satisfy (i) or (ii) above within the time specified, the
loan collateral value assigned by the Lenders to the Oil and Gas Properties for
which such curative information was requested shall be deducted from the
Borrowing Base resulting in a reduction thereof.
(a) CHANGE OF PRINCIPAL PLACE OF BUSINESS. Borrower shall, and shall cause each
Subsidiary to, give Administrative Agent at least thirty (30) days prior written
notice of its intention to move its principal place of business from the address
set forth in Section 17 hereof.
(a) YEAR 2000 COMPATIBILITY. Borrower covenants and agrees with Lenders that it
will:
(i) Furnish such additional information, statements and other reports with
respect to Borrower's and its Subsidiaries' activities, course of action and
progress towards becoming Year 2000 Compliant as Lenders may reasonably request
from time to time;
(i) In the event of any change in circumstances that causes or will likely cause
any of Borrower's representations and warranties with respect to its being or
becoming Year 2000 Compliant to no longer be true (hereinafter, referred to as a
"Change in Circumstances") then Borrower shall promptly, and in any event within
ten (10) days of receipt of information regarding a Change in Circumstances,
provide Lenders with written notice (the "Notice") that describes in reasonable
detail the Change in Circumstances and how such Change in Circumstances caused
or will likely cause Borrower's representations and warranties with respect to
being or becoming Year 2000 Compliant no longer to be true. Borrower shall,
within ten (10) days of a request, also provide Lenders with any additional
information Lenders reasonably request of Borrower in connection with the Notice
and/or a Change in Circumstances.
(a) SALE OF EQUITY. The Borrower or any Subsidiary will immediately pay over to
the Administrative Agent for the ratable benefit of the Lenders as a prepayment
of principal on the Notes, an amount equal to 100% of the proceeds (net of
direct costs of sale) received by Borrower or any Subsidiary from the sale of
any equity interest in, or securities of, the Borrower or any such Subsidiary.
(a) SUBSIDIARY. Borrower will acquire all of the issued and outstanding voting
securities of Gas Transport, Inc. within one-hundred and twenty (120) days of
the Effective Date.
1. NEGATIVE COVENANTS. A deviation from the provisions of this Section 13 shall
not constitute an Event of Default under this Agreement if such deviation is
consented to in writing by Majority Lenders prior to the date of deviation. The
Borrower will at all times comply with the covenants contained in this Section
13 from the date hereof and for so long as the Commitment is in existence or any
amount is owed to the Administrative Agent or the Lenders under this Agreement
or the other Loan Documents.
(a) NEGATIVE PLEDGE. Borrower shall not, and shall not allow its Subsidiaries
to, without the prior written consent of the Lenders:
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(i) create, incur, assume or permit to exist any Lien, security interest or
other encumbrance on any of its assets or properties except Permitted Liens; or
(i) sell, lease, transfer or otherwise dispose of, in any fiscal year, any of
its assets except for (A) sales, leases, transfers or other dispositions made in
the ordinary course of Borrower's oil and gas businesses, (B) sales made with
the consent of Majority Lenders which are made pursuant to, and in full
compliance with, Section 12(r) hereof; and (C) sales, leases or transfers or
other dispositions (including those referred to in Section 13(a)(ii)(B)) made by
Borrower and its Subsidiaries which do not exceed $10,000,000 in the aggregate
during any fiscal year.
(a) CURRENT RATIO. Borrower shall not allow its ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.0 to 1.0 as of the
end of any fiscal quarter.
(a) TOTAL DEBT TO EBITDAX. The Borrower will not allow its ratio of Consolidated
Total Debt to Consolidated EBITDAX to be less than (i) 4.75 to 1.0 as of the end
of the calendar quarters ended December 31, 1999, March 31, 2000 and June 30,
2000; (ii) 4.50 to 1.0 for the calendar quarter ended September 30, 2000; (iii)
4.25 to 1.0 for the calendar quarter ended December 31, 2000; and (iv) 4.0 to
1.0 as of the end of any calendar quarter thereafter beginning with the calendar
quarter ending March 31, 2001. For each calendar quarter through June 30, 2000,
EBITDAX will be annualized from October 1, 1999 through the end of the period
being calculated. Thereafter, beginning September 30, 2000 the ratio shall be
calculated on a trailing four-quarters basis.
(a) CONSOLIDATIONS AND MERGERS. Borrower will not, and will not allow any of its
Subsidiaries to, consolidate or merge with or into any other Person, except that
Borrower or any such Subsidiary may merge with another Person if Borrower or
such Subsidiary is the surviving entity in a non-hostile merger and if, after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing.
(a) DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Without the consent of Majority
Lenders, Borrower will not, and will not allow any of its Subsidiaries to,
incur, create, assume or in any manner become or be liable in respect of any
indebtedness, nor will Borrower or any Subsidiary guarantee or otherwise in any
manner become or be liable in respect of any indebtedness, liabilities or other
obligations of any other person or entity, whether by agreement to purchase the
indebtedness of any other person or entity or agreement for the furnishing of
funds to any other person or entity through the purchase or lease of goods,
supplies or services (or by way of stock purchase, capital contribution, advance
or loan) for the purpose of paying or discharging the indebtedness of any other
person or entity, or otherwise, except that the foregoing restrictions shall not
apply to:
(i) the Notes and any renewal or increase thereof, or other indebtedness of the
Borrower and any Subsidiary heretofore disclosed to Lenders in the Borrower's
Financial Statements or on Schedule "4" hereto; or
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i) taxes, assessments or other government charges which are not yet due or are
being contested in good faith by appropriate action promptly initiated and
diligently conducted, if such reserve as shall be required by GAAP shall have
been made therefor and levy and execution thereon have been stayed and continue
to be stayed; or
(i) indebtedness not exceeding in the aggregate outstanding at any time the sum
of $10,000,000; or
(i) any renewals or extensions of any of the foregoing.
(a) DISTRIBUTIONS OR DIVIDENDS. Borrower will not (i) declare or pay any cash
distribution, or dividend; (ii) purchase, redeem or otherwise acquire for value
any of its stock now or hereafter outstanding; (iii) return any capital to its
stockholders, or (iv) make any distribution of its assets to its stockholders as
such, except the foregoing shall not apply to cash distributions to its owners
in amounts not exceeding such owners' income tax and franchise tax liability
(calculated at the highest of such owner's actual tax rates) directly
attributable to Borrower's income; provided, however, that immediately before
and after giving effect thereto no (A) Default or Event of Default or (B)
Borrowing Base deficiency or requirement to make any mandatory prepayment of
principal pursuant to Section 9(b) hereof, shall exist.
(a) LOANS AND ADVANCES. Borrower shall not, and shall not allow any Subsidiary
to, make or permit to remain outstanding any loans or advances to or in any
person or entity, except that the foregoing restriction shall not apply to:
(i) loans or advances to any person, the material details of which have been set
forth in the Financial Statements of the Borrower or any Subsidiary heretofore
furnished to Lenders; or
(i) loans or advances not exceeding $1,000,000 a year in the aggregate.
(a) SALE OR DISCOUNT OF RECEIVABLES. Borrower will not, nor will Borrower allow
any of its Subsidiaries to, discount or sell with recourse, or sell for less
than the greater of the face or market value thereof, any of its notes
receivable or accounts receivable.
(a) NATURE OF BUSINESS. Borrower will not, nor will Borrower allow any of its
Subsidiaries to, permit any material change to be made in the character of its
business as carried on at the date hereof.
(a) TRANSACTIONS WITH AFFILIATES. Borrower will not, nor will Borrower allow any
of its Subsidiaries to, enter into any transaction with any Affiliate, except
transactions upon terms that are no less favorable to it than would be obtained
in a transaction negotiated at arm's length with an unrelated third party.
(a) RATE MANAGEMENT TRANSACTIONS. Borrower will not, and will not permit any
Subsidiary to, enter into any Rate Management Transaction, except the foregoing
prohibitions
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shall not apply to (x) non-speculative transactions consented to in
writing by the Administrative Agent, or (y) Pre-Approved Contracts.
(a) INVESTMENTS. Borrower shall not make, nor will Borrower allow any of its
Subsidiaries to make, any investments in any person or entity, except such
restriction shall not apply to investments not exceeding $3,000,000 in the
aggregate per year for Borrower and all of its Subsidiaries.
(a) AMENDMENT TO CERTIFICATE OF FORMATION OR LIMITED LIABILITY COMPANY
AGREEMENT. Without the consent of the Administrative Agent, Borrower will not
permit any material amendment to, or any material alteration of, its Certificate
of Formation or Limited Liability Company Agreement. Borrower will not allow any
Subsidiary to make any material amendment or alteration to any of their
Certificates of Formation, Articles of Incorporation, Limited Liability Company
Agreements or Bylaws. Borrower shall provide a copy of any such amendment,
whether the same requires consent or not pursuant to this Section 13(l), to the
Administrative Agent as soon as reasonably possible after adoption thereof.
(a) PAYMENT OR PRE-PAYMENT OF OTHER INDEBTEDNESS. Except as otherwise provided
for in this Agreement, Borrower shall not make, nor allow any of its
Subsidiaries to make, any unscheduled principal payments or redeem any of its
indebtedness (other than indebtedness owed the Lenders hereunder), or redeem any
of its equity unless such payment, prepayment, redemption or purchase is
approved by Majority Lenders.
(a) SALE OF INTERESTS IN SUBSIDIARIES. Other than as may be permitted under
Section 13(d) hereof, Borrower will not sell or otherwise transfer any its
ownership interests in any of its Subsidiaries.
(p) ACQUISITION OR FORMATION OF SUBSIDIARIES. Except for the
acquisition of the voting securities of Gas Transport, Inc. by Borrower as
required pursuant to the provisions of Section 12(x) hereof, Borrower will
not, nor allow any of its Subsidiaries to, acquire or form any Subsidiary
unless Administrative Agent shall have consented to such in writing and
Borrower and such Subsidiary have complied with Section 12(f) hereof.
1. EVENTS OF DEFAULT. Any one or more of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) The Borrower shall fail to pay when due or declared due the principal of,
and the interest on, the Notes, or any fee or any other indebtedness of the
Borrower incurred pursuant to this Agreement or any other Loan Document; or
(a) Any representation or warranty made by Borrower under this Agreement, or in
any certificate or statement furnished or made to the Lenders pursuant hereto,
or in connection herewith, or in connection with any document furnished
hereunder, shall prove to be untrue in any material respect as of the date on
which such representation or warranty is made (or deemed made), or any
representation, statement (including financial statements), certificate, report
or
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other data furnished or to be furnished or made by Borrower under any Loan
Document, including this Agreement, proves to have been untrue in any material
respect, as of the date as of which the facts therein set forth were stated or
certified; or
(a) Default shall be made in the due observance or performance of any of the
covenants or agreements of the Borrower or any Subsidiary contained in the Loan
Documents, including this Agreement (excluding covenants contained in Section
12(m) or Section 13 of the Agreement for which there is no cure period), and
such default shall continue for more than thirty (30) days; or
(a) Default shall be made in the due observance or performance of the covenants
of Borrower contained in Section 12(m) or Section 13 of this Agreement; or
(a) Default shall be made in respect of any obligation for borrowed money, other
than the Notes, for which Borrower or any of its Subsidiaries is liable
(directly, by assumption, as guarantor or otherwise), or any obligations secured
by any mortgage, pledge or other security interest, lien, charge or encumbrance
with respect thereto, on any asset or property of Borrower or any of its
Subsidiaries or in respect of any agreement relating to any such obligations
unless Borrower or any of its Subsidiaries is not liable for same (i.e., unless
remedies or recourse for failure to pay such obligations is limited to
foreclosure of the collateral security therefor), and if such default shall
continue beyond the applicable grace period, if any; or
(a) Borrower or any of its Subsidiaries shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking an appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action authorizing the foregoing; or
(a) An involuntary case or other proceeding, shall be commenced against Borrower
or any of its Subsidiaries seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered against Borrower or any of its Subsidiaries under the federal
bankruptcy laws as now or hereinafter in effect; or
(a) A final judgment or order for the payment of money in excess of $1,500,000
(or judgments or orders aggregating in excess of $1,500,000) shall be rendered
against Borrower or any of its Subsidiaries and such judgments or orders shall
continue unsatisfied and unstayed for a period of thirty (30) days; or
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(a) In the event the Total Outstandings shall at any time exceed the Borrowing
Base established for the Notes, and the Borrower shall fail to comply with the
provisions of Section 9(b) hereof; or
(a) A Change of Control shall occur; or
(a) An Event of Default shall have occurred under any agreement entered into in
connection with a Rate Management Transaction.
Upon occurrence of any Event of Default specified in Subsections 14(f)
and (g) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of the Borrower hereunder, shall
become immediately due and payable all without notice and without presentment,
demand, protest, notice of protest or dishonor or any other notice of default of
any kind, all of which are hereby expressly waived by the Borrower. In any other
Event of Default, the Administrative Agent, upon request of Majority Lenders,
shall by notice to the Borrower declare the principal of, and all interest then
accrued on, the Notes and any other liabilities hereunder to be forthwith due
and payable, whereupon the same shall forthwith become due and payable without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which the Borrower hereby
expressly waives, anything contained herein or in the Notes to the contrary
notwithstanding. Nothing contained in this Section 14 shall be construed to
limit or amend in any way the Events of Default enumerated in the Notes, or any
other document executed in connection with the transaction contemplated herein.
Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrower or any of its Subsidiaries, (any such notice being
expressly waived by the Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by any of the Lenders to or for the credit
or the account of the Borrower or any of its Subsidiaries against any and all of
the indebtedness of the Borrower or any Subsidiaries under the Notes and the
Loan Documents, including this Agreement, irrespective of whether or not the
Lenders shall have made any demand under the Loan Documents, including this
Agreement or the Notes and although such indebtedness may be unmatured. Any
amount set-off by any of the Lenders shall be applied against the indebtedness
owed the Lenders by the Borrower pursuant to this Agreement and the Notes. The
Lenders agree promptly to notify the Borrower and the affected Subsidiary after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lenders may
have.
1. THE AGENTS AND THE LENDERS.
(a) APPOINTMENT AND AUTHORIZATION. Each Lender hereby appoints Administrative
Agent as its nominee and Administrative Agent, in its name and on its behalf:
(i) to act as nominee for and on behalf of such Lender in and under all Loan
Documents; (ii) to arrange the means whereby the funds of Lenders are to be made
available to the Borrower under the Loan
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Documents; (iii) to take such action as may be requested by any Lender under the
Loan Documents (when such Lender is entitled to make such request under the Loan
Documents); (iv) to receive all documents and items to be furnished to Lenders
under the Loan Documents; (v) to be the secured party, mortgagee, beneficiary,
and similar party in respect of, and to receive, as the case may be, any
collateral for the benefit of Lenders; (vi) to promptly distribute to each
Lender all material information, requests, documents and items received from the
Borrower under the Loan Documents; (vii) to promptly distribute to each Lender
such Lender's Pro Rata Part of each payment or prepayment (whether voluntary, as
proceeds of insurance thereon, or otherwise) in accordance with the terms of the
Loan Documents and (viii) to deliver to the appropriate Persons requests,
demands, approvals and consents received from Lenders. Each Lender hereby
authorizes Administrative Agent to take all actions and to exercise such powers
under the Loan Documents as are specifically delegated to Administrative Agent
by the terms hereof or thereof, together with all other powers reasonably
incidental thereto. With respect to its Commitments hereunder and the Notes
issued to it, Administrative Agent and any successor Administrative Agent shall
have the same rights under the Loan Documents as any other Lender and may
exercise the same as though it were not the Administrative Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include
Administrative Agent and any successor Administrative Agent in its capacity as a
Lender. Administrative Agent and any successor Administrative Agent and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of and generally engage in any kind of business with the Borrower and
any person which may do business with the Borrower, all as if Administrative
Agent and any successor Administrative Agent was not Administrative Agent
hereunder and without any duty to account therefor to the Lenders; provided
that, if any payments in respect of any property (or the proceeds thereof) now
or hereafter in the possession or control of Administrative Agent which may be
or become security for the obligations of the Borrower arising under the Loan
Documents by reason of the general description of indebtedness secured or of
property contained in any other agreements, documents or instruments related to
any such other business shall be applied to reduction of the obligations of the
Borrower arising under the Loan Documents, then each Lender shall be entitled to
share in such application according to its pro rata part thereof. Each Lender,
upon request of any other Lender, shall disclose to all other Lenders all
indebtedness and liabilities, direct and contingent, of the Borrower to such
Lender as of the time of such request.
(a) NOTE HOLDERS. From time to time as other Lenders become a party to this
Agreement, Administrative Agent shall obtain execution by the Borrower of
additional Notes in amounts representing the Commitment of each such new Lender,
up to an aggregate face amount of all Notes not exceeding $275,000,000. The
obligation of such Lender shall be governed by the provisions of this Agreement,
including but not limited to, the obligations specified in Section 2 hereof.
From time to time, Administrative Agent may require that the Lenders exchange
their Notes for newly issued Notes to better reflect the Commitments of the
Lenders. Administrative Agent may treat the payee of any Note as the holder
thereof until written notice of transfer has been filed with it, signed by such
payee and in form satisfactory to Administrative Agent.
(a) CONSULTATION WITH COUNSEL. Lenders agree that Administrative Agent may
consult with legal counsel selected by Administrative Agent and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel. LENDERS ACKNOWLEDGE
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THAT GARDERE & WYNNE, L.L.P. IS COUNSEL FOR BANK ONE, BOTH AS ADMINISTRATIVE
AGENT AND AS A LENDER, AND THAT SUCH FIRM DOES NOT REPRESENT ANY OF THE OTHER
LENDERS IN CONNECTION WITH THIS TRANSACTION.
(a) DOCUMENTS. Administrative Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value of any of
the Loan Documents or any other instrument or document furnished pursuant
thereto or in connection therewith, and Administrative Agent shall be entitled
to assume that the same are valid, effective, enforceable and genuine and what
they purport to be.
(a) RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below,
Administrative Agent may resign at any time by giving written notice thereof to
Lenders and the Borrower, and Administrative Agent may be removed at any time
with or without cause by all Lenders (other than Administrative Agent). If no
successor Administrative Agent has been so appointed by Majority Lenders (and
approved by the Borrower) and has accepted such appointment within 30 days after
the retiring Administrative Agent's giving of notice of resignation or removal
of the retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of Lenders, appoint a successor Administrative Agent. Any
successor Administrative Agent must be approved by Borrower, which approval will
not be unreasonably withheld. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent, as the case may be, shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 15
shall continue in effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Administrative Agent. To be
eligible to be an Administrative Agent hereunder the party serving, or to serve,
in such capacity must own a Pro Rata Part of the Commitments equal to the level
of Commitment required to be held by any Lender pursuant to Section 28 hereof.
(a) RESPONSIBILITY OF ADMINISTRATIVE AGENT. It is expressly understood and
agreed that the obligations of Administrative Agent under the Loan Documents are
only those expressly set forth in the Loan Documents as to each and that
Administrative Agent, shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless Administrative Agent has actual
knowledge of such fact or has received notice from a Lender or the Borrower that
such Lender or the Borrower considers that a Default or an Event of Default has
occurred and is continuing and specifying the nature thereof. Neither
Administrative Agent nor any of its directors, officers, attorneys or employees
shall be liable for any action taken or omitted to be taken by them under or in
connection with the Loan Documents, except for its or their own gross negligence
or willful misconduct. Administrative Agent shall not incur liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything which it may do or refrain from doing in the reasonable exercise of its
judgment, or which may seem to it to be necessary or desirable.
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Administrative Agent shall not be responsible to Lenders for
any of the Borrower's recitals, statements, representations or
warranties contained in any of the Loan Documents, or in any
certificate or other document referred to or provided for in, or
received by any Lender under, the Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
or any of the Loan Documents or for any failure by the Borrower to
perform any of its obligations hereunder or thereunder. Administrative
Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care.
The relationship between Administrative Agent and each Lender
is only that of Administrative Agent and principal and has no fiduciary
aspects. Nothing in the Loan Documents or elsewhere shall be construed
to impose on Administrative Agent any duties or responsibilities other
than those for which express provision is therein made. In performing
its duties and functions hereunder, Administrative Agent does not
assume and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation or responsibility toward or any relationship
of agency or trust with or for the Borrower or any of its beneficiaries
or other creditors. As to any matters not expressly provided for by the
Loan Documents, Administrative Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of all Lenders and such
instructions shall be binding upon all Lenders and all holders of the
Notes; provided, however, that Administrative Agent shall not be
required to take any action which is contrary to the Loan Documents or
applicable law.
Administrative Agent shall have the right to exercise or
refrain from exercising, without notice or liability to the Lenders,
any and all rights afforded to Administrative Agent by the Loan
Documents or which Administrative Agent may have as a matter of law;
provided, however, Administrative Agent shall not (i) except as
provided in Section 7(b) hereof, without the consent of Required
Lenders designate the amount of the Borrowing Base (except for increase
thereof) or (ii) without the consent of Majority Lenders, take any
other action with regard to amending the Loan Documents, waiving any
default under the Loan Documents or taking any other action with
respect to the Loan Documents which requires consent of Majority
Lenders. Provided further, however, that no amendment, waiver, or other
action shall be effected pursuant to the preceding clause (ii) without
the consent of all Lenders which: (i) would increase the Borrowing Base
or decrease the Monthly Commitment Reduction, (ii) would reduce any
fees hereunder, or the principal of, or the interest on, any Lender's
Note or Notes, (iii) would postpone any date fixed for any payment of
any fees hereunder, or any principal or interest of any Lender's Note
or Notes, (iv) would materially increase any Lender's obligations
hereunder or would materially alter Administrative Agent's obligations
to any Lender hereunder, (v) would release Borrower from its obligation
to pay any Lender's Note or Notes, (vi) would change the definition of
Majority or Required Lenders, (vii) would amend, modify or
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change any rovision of this Agreement requiring the consent of all the
Lenders, (viii) would waive any of the conditions precedent to the
Effective Date or the making of any Loan or issuance of any Letter of
Credit or (ix) would extend the Maturity Date or (x) would amend this
sentence or the previous sentence. Administrative Agent shall not have
liability to Lenders for failure or delay in exercising any right or
power possessed by Administrative Agent pursuant to the Loan Documents
or otherwise unless such failure or delay is caused by the gross
negligence of the Administrative Agent, in which case only the
Administrative Agent responsible for such gross negligence shall have
liability therefor to the Lenders.
(a) INDEPENDENT INVESTIGATION. Each Lender severally represents and warrants to
the Agents that it has made its own independent investigation and assessment of
the financial condition and affairs of the Borrower in connection with the
making and continuation of its participation hereunder and has not relied
exclusively on any information provided to such Lender by the Agents in
connection herewith, and each Lender represents, warrants and undertakes to
Agents that it shall continue to make its own independent appraisal of the
credit worthiness of the Borrower while the Notes are outstanding or its
commitments hereunder are in force. The Agents shall not be required to keep
themselves informed as to the performance or observance by the Borrower of this
Agreement or any other document referred to or provided for herein or to inspect
the properties or books of the Borrower. Other than as provided in this
Agreement, the Agents shall not have any duty, responsibility or liability to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower which may come into the
possession of Administrative Agent.
(a) INDEMNIFICATION. Lenders agree to indemnify the Agents, ratably according to
their respective Commitments on a Pro Rata basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any proper and reasonable kind or nature
whatsoever which may be imposed on, incurred by or asserted against any of the
Agents in any way relating to or arising out of the Loan Documents or any action
taken or omitted by Administrative Agent under the Loan Documents, provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from any of the Agent's gross negligence or willful
misconduct. Each Lender shall be entitled to be reimbursed by the Agents for any
amount such Lender paid to the Agents under this Section 15(h) to the extent the
Agents have been reimbursed for such payments by the Borrower or any other
Person. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO APPLY TO AND
PROTECT THE AGENTS FROM THE CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT
LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON THE AGENTS AS WELL AS FROM THE
CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE,
CONTRIBUTING OR CONCURRING CAUSE OF ANY SUCH LIABILITY.
(a) BENEFIT OF SECTION 15. The agreements contained in this Section 15 are
solely for the benefit of Administrative Agent and the Lenders and are not for
the benefit of, or to be relied upon by, the Borrower, any affiliate of the
Borrower or any other person.
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<PAGE> 55
(a) PRO RATA TREATMENT. Subject to the provisions of this Agreement, each
payment (including each prepayment) by the Borrower and collection by Lenders
(including offsets) on account of the principal of and interest on the Notes and
fees provided for in this Agreement, payable by the Borrower shall be made Pro
Rata; provided, however, in the event that any Defaulting Lender shall have
failed to make an Advance as contemplated under Section 3 hereof and
Administrative Agent or another Lender or Lenders shall have made such Advance,
payment received by Administrative Agent for the account of such Defaulting
Lender or Lenders shall not be distributed to such Defaulting Lender or Lenders
until such Advance or Advances shall have been repaid in full to the Lender or
Lenders who funded such Advance or Advances.
(a) ASSUMPTION AS TO PAYMENTS. Except as specifically provided herein, unless
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to Lenders hereunder that the Borrower will not
make such payment in full, Administrative Agent may, but shall not be required
to, assume that the Borrower has made such payment in full to Administrative
Agent on such date and Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to Administrative Agent, each Lender
shall repay to Administrative Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to Administrative Agent, at the interest rate applicable to such portion
of the Loan.
(a) OTHER FINANCINGS. Without limiting the rights to which any Lender otherwise
is or may become entitled, such Lender shall have no interest, by virtue of this
Agreement or the Loan Documents, in (a) any present or future loans from,
letters of credit issued by, or leasing or other financial transactions by, any
other Lender to, on behalf of, or with the Borrower (collectively referred to
herein as "Other Financings") other than the obligations hereunder; (b) any
present or future guarantees by or for the account of the Borrower which are not
contemplated by the Loan Documents; (c) any present or future property taken as
security for any such Other Financings; or (d) any property now or hereafter in
the possession or control of any other Lender which may be or become security
for the obligations of the Borrower arising under any loan document by reason of
the general description of indebtedness secured or property contained in any
other agreements, documents or instruments relating to any such Other
Financings.
(a) INTERESTS OF LENDERS. Nothing in this Agreement shall be construed to create
a partnership or joint venture between Lenders for any purpose. The Agents,
Lenders and the Borrower recognize that the respective obligations of Lenders
under the Commitments shall be several and not joint and that neither the Agents
nor any of Lenders shall be responsible or liable to perform any of the
obligations of the other under this Agreement. Each Lender is deemed to be the
owner of an undivided interest in and to all rights, titles, benefits and
interests belonging and accruing to Administrative Agent under the Security
Instruments, including, without limitation, liens and security interests in any
collateral, fees and payments of principal and interest by the Borrower under
the Commitments on a Pro Rata basis. Each Lender shall perform all
49
<PAGE> 56
duties and obligations of Lenders under this Agreement in the same proportion as
its ownership interest in the Loans outstanding at the date of determination
thereof.
(a) INVESTMENTS. Whenever Administrative Agent in good faith determines that it
is uncertain about how to distribute to Lenders any funds which it has received,
or whenever Administrative Agent in good faith determines that there is any
dispute among the Lenders about how such funds should be distributed,
Administrative Agent may choose to defer distribution of the funds which are the
subject of such uncertainty or dispute. If Administrative Agent in good faith
believes that the uncertainty or dispute will not be promptly resolved, or if
Administrative Agent is otherwise required to invest funds pending distribution
to the Lenders, Administrative Agent may invest such funds pending distribution
(at the risk of the Borrower). All interest on any such investment shall be
distributed upon the distribution of such investment and in the same proportions
and to the same Persons as such investment. All monies received by
Administrative Agent for distribution to the Lenders (other than to the Person
who is Administrative Agent in its separate capacity as a Lender) shall be held
by the Administrative Agent pending such distribution solely as Administrative
Agent for such Lenders, and Administrative Agent shall have no equitable title
to any portion thereof.
1. EXERCISE OF RIGHTS. No failure to exercise, and no delay in exercising, on
the part of the Administrative Agent or the Lenders, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right. The rights of the Administrative Agent and the Lenders hereunder shall be
in addition to all other rights provided by law. No modification or waiver of
any provision of the Loan Documents, including this Agreement, or the Notes nor
consent to departure therefrom, shall be effective unless in writing, and no
such consent or waiver shall extend beyond the particular case and purpose
involved. No notice or demand given in any case shall constitute a waiver of the
right to take other action in the same, similar or other circumstances without
such notice or demand.
1. NOTICES. Any notices or other communications required or permitted to be
given by this Agreement or any other documents and instruments referred to
herein must be given in writing (which may be by facsimile transmission) and
must be personally delivered or mailed by prepaid certified or registered mail
to the party to whom such notice or communication is directed at the address of
such party as follows: (a) BORROWER: GREAT LAKES ENERGY PARTNERS, L.L.C., 125
State Route 43, Hartville, Ohio 44632, Attention: Thomas W. Stoelk, Chief
Financial Officer, Facsimile No. (330) 877-4586; (b) Administrative Agent: BANK
ONE, TEXAS, N.A., 1717 Main Street, Dallas, Texas 75201, Facsimile No. (214)
290-2332, Attention: Wm. Mark Cranmer, Vice President. Any such notice or other
communication shall be deemed to have been given (whether actually received or
not) on the day it is personally delivered or delivered by facsimile as
aforesaid or, if mailed, on the third day after it is mailed as aforesaid. Any
party may change its address for purposes of this Agreement by giving notice of
such change to the other party pursuant to this Section 17. Any notice required
to be given to the Lenders shall be given to the Administrative Agent and
distributed to all Lenders by the Administrative Agent.
50
<PAGE> 57
1. EXPENSES. The Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Administrative Agent, including reasonable fees
and disbursements of special counsel for the Administrative Agent, in connection
with the preparation of this Agreement, any waiver or consent hereunder or any
amendment hereof or any default or Event of Default or alleged default or Event
of Default hereunder, (ii) all reasonable and necessary out-of-pocket expenses
of the Administrative Agent, including reasonable fees and disbursements of
special counsel for the Administrative Agent in connection with the preparation
of any participation agreement for a participant or participants requested by
the Borrower or any amendment thereof and (iii) if an Event of Default occurs
and is continuing, all reasonable and necessary out-of-pocket expenses incurred
by the Lenders, including fees and disbursements of counsel, in connection with
such default and Event of Default and collection and other enforcement
proceedings resulting therefrom. THE BORROWER HEREBY ACKNOWLEDGES THAT GARDERE &
WYNNE, L.L.P. IS SPECIAL COUNSEL TO BANK ONE, AS ADMINISTRATIVE AGENT AND AS A
LENDER, UNDER THIS AGREEMENT AND THAT IT IS NOT COUNSEL TO, NOR DOES IT
REPRESENT THE BORROWER IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THIS
AGREEMENT. The Borrower is relying on separate counsel in the transaction
described herein. The Borrower shall indemnify the Lenders against any transfer
taxes, document taxes, assessments or charges made by any governmental authority
by reason of the execution, delivery and filing of the Loan Documents. The
obligations of this Section 18 shall survive any termination of this Agreement,
the expiration of the Loans and the payment of all indebtedness of the Borrower
to the Lenders hereunder and under the Notes.
1. INDEMNITY. The Borrower agrees to indemnify and hold harmless the Agents and
the Lenders and their respective officers, employees, agents, attorneys and
representatives (singularly, an "Indemnified Party", and collectively, the
"Indemnified Parties") from and against any loss, cost, liability, damage or
expense (including the reasonable fees and out-of-pocket expenses of counsel to
the Lenders, including all local counsel hired by such counsel) ("Claim")
incurred by the Lenders in investigating or preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect of
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law, federal or state environmental
law, or any other statute of any jurisdiction, or any regulation, or at common
law or otherwise, which is alleged to arise out of or is based upon any acts,
practices or omissions or alleged acts, practices or omissions of the Borrower
or its agents or arises in connection with the duties, obligations or
performance of the Indemnified Parties in negotiating, preparing, executing,
accepting, keeping, completing, countersigning, issuing, selling, delivering,
releasing, assigning, handling, certifying, processing or receiving or taking
any other action with respect to the Loan Documents and all documents, items and
materials contemplated thereby even if any of the foregoing arises out of an
Indemnified Party's ordinary negligence. The indemnity set forth herein shall be
in addition to any other obligations or liabilities of the Borrower to the
Agents and the Lenders hereunder or at common law or otherwise, and shall
survive any termination of this Agreement, the expiration of the Loans and the
payment of all indebtedness of the Borrower to the Lenders hereunder and under
the Notes, provided that the Borrower shall have no obligation under this
Section to the Lenders with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of the Lenders. If any Claim is asserted
against any Indemnified Party, the Indemnified Party shall endeavor to notify
the Borrower of such Claim (but failure to do so shall not affect the
indemnification herein made except to the extent of the
51
<PAGE> 58
actual harm caused by such failure). The Indemnified Party shall have the right
to employ, at the Borrower's expense, counsel of the Indemnified Parties'
choosing and to control the defense of the Claim. The Borrower may at its own
expense also participate in the defense of any Claim. Each Indemnified Party may
employ separate counsel in connection with any Claim to the extent such
Indemnified Party believes it reasonably prudent to protect such Indemnified
Party. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO APPLY TO AND
PROTECT EACH INDEMNIFIED PARTY FROM THE CONSEQUENCES OF ANY LIABILITY INCLUDING
STRICT LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON ADMINISTRATIVE AGENT AS
WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT
NEGLIGENCE IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.
1. GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN DALLAS, DALLAS COUNTY, TEXAS, AND THE SUBSTANTIVE
LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
1. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
of this Agreement, such provisions shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement.
1. MAXIMUM INTEREST RATE. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the
Lenders shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and in the event any Lender ever receives, collects or applies as interest
any such excess, or if an acceleration of the maturities of any Notes or if any
prepayment by the Borrower results in the Borrower having paid any interest in
excess of the Maximum Rate, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Notes for
which such excess was received, collected or applied, and, if the principal
balance of such Note is paid in full, any remaining excess shall forthwith be
paid to the Borrower. All sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of the indebtedness evidenced by the Notes and/or
this Agreement shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the Maximum Rate. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum Rate
of interest permitted by law, the Borrower and the Lenders shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium, rather than as interest; and (ii) exclude
voluntary prepayments and the effect thereof; and (iii) compare the total amount
of interest contracted for, charged or received with the total amount of
interest which could be contracted for, charged or received throughout the
entire contemplated term of the Note at the Maximum Rate.
52
<PAGE> 59
1. AMENDMENTS. This Agreement may be amended only by an instrument in writing
executed by an authorized officer of the party against whom such amendment is
sought to be enforced.
1. MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical separate counterparts, each of which for all purposes is to be deemed
an original, but all of which shall constitute, collectively, one agreement. No
party to this Agreement shall be bound hereby until a counterpart of this
Agreement has been executed by all parties hereto.
1. CONFLICT. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the Loan Documents, the terms or provisions
contained in this Agreement shall be controlling.
1. SURVIVAL. All covenants, agreements, undertakings, representations and
warranties made in the Loan Documents, including this Agreement, the Notes or
other documents and instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.
1. PARTIES BOUND. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns, heirs, legal
representatives and estates, provided, however, that the Borrower may not,
without the prior written consent of all of the Lenders, assign any rights,
powers, duties or obligations hereunder.
53
<PAGE> 60
1. ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Each Lender shall have the right to sell, assign or transfer
all or any part of its Note or Notes, its Commitment and its rights and
obligations hereunder to one or more Affiliates, banks, financial institutions,
pension plans, insurance companies, investment funds, or similar Persons who are
Eligible Assignees or to a Federal Reserve Bank; PROVIDED, that in connection
with each sale, assignment or transfer (other than to an Affiliate, a Lender or
a Federal Reserve Bank), shall require the consent of Administrative Agent and
the Borrower, which consents will not be unreasonably withheld; provided,
however, that if an Event of Default has occurred and is continuing, the consent
of the Borrower shall not be required. Any such assignee, transferee or
recipient shall have, to the extent of such sale, assignment, or transfer, the
same rights, benefits and obligations as it would if it were such Lender and a
holder of such Note, Commitment and rights and obligations, including, without
limitation, the right to vote on decisions requiring consent or approval of all
Lenders, Required Lenders or Majority Lenders and the obligation to fund its
Commitment; provided, that (1) each such sale, assignment, or transfer (other
than to an Affiliate, a Lender or a Federal Reserve Bank) shall be in an
aggregate principal amount not less than $5,000,000, (2) each remaining Lender
shall at all times maintain Commitment then outstanding in an aggregate
principal amount at least equal to $5,000,000; (3) each such sale, assignment or
transfer shall be of a Pro Rata portion of such Lender's Commitment, (4) no
Lender may offer to sell its Note or Notes, Commitment, rights and obligations
or interests therein in violation of any securities laws; and (5) no such
assignments (other than to a Federal Reserve Bank) shall become effective until
the assigning Lender and its assignee delivers to Administrative Agent and
Borrower an Assignment and Acceptance and the Note or Notes subject to such
assignment and other documents evidencing any such assignment. An assignment fee
in the amount of $3,500 for each such assignment (other than to an Affiliate, a
Lender or the Federal Reserve Bank) will be payable to Administrative Agent by
assignor or assignee. Within five (5) Business Days after its receipt of copies
of the Assignment and Acceptance and the other documents relating thereto and
the Note or Notes, the Borrower shall execute and deliver to Administrative
Agent (for delivery to the relevant assignee) a new Note or Notes evidencing
such assignee's assigned Commitment and if the assignor Lender has retained a
portion of its Commitment, a replacement Note in the principal amount of the
Commitment retained by the assignor (except as provided in the last sentence of
this paragraph (a) such Note or Notes to be in exchange for, but not in payment
of, the Note or Notes held by such Lender). On and after the effective date of
an assignment hereunder, the assignee shall for all purposes be a Lender, party
to this Agreement and any other Loan Document executed by the Lenders and shall
have all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party thereto (except that an Affiliate of
Borrower shall not have the right to vote as a Lender on matters that other
Lenders have the right to vote on under the provisions of the Agreement), and no
further consent or action by Borrower, Lenders or the Administrative Agent shall
be required to release the transferor Lender with respect to its Commitment
assigned to such assignee and the transferor Lender shall henceforth be so
released.
(a) PARTICIPATIONS. Each Lender shall have the right to grant participations in
all or any part of such Lender's Notes and Commitment hereunder to one or more
pension plans, investment funds, insurance companies, financial institutions or
other Persons, provided, that:
54
<PAGE> 61
(i) each Lender granting a participation shall retain the right to vote
hereunder, and no participant shall be entitled to vote hereunder on decisions
requiring consent or approval of Lenders, Required Lenders or Majority Lenders
(except as set forth in (iii) below);
(i) in the event any Lender grants a participation hereunder, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note or Notes
for all purposes under the Loan Documents, and Administrative Agent, each Lender
and Borrower shall be entitled to deal with the Lender granting a participation
in the same manner as if no participation had been granted; and
(i) no participant shall ever have any right by reason of its participation to
exercise any of the rights of Lenders hereunder, except that any Lender may
agree with any participant that such Lender will not, without the consent of
such participant (which consent may not be unreasonably withheld) consent to any
amendment or waiver requiring approval of all Lenders.
(a) FINANCIAL INFORMATION. It is understood and agreed that any Lender may
provide to assignees and participants and prospective assignees and participants
financial information and reports and data concerning Borrower's properties and
operations which was provided to such Lender pursuant to this Agreement.
(a) ASSIGNEES' AND PARTICIPANTS' INDEMNITY. Upon the reasonable request of
either Administrative Agent or Borrower, each Lender will identify those to whom
it has assigned or participated any part of its Notes and Commitment, and
provide the amounts so assigned or participated.
1. CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS AND JURISDICTION. THE
OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS
COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER WITH RESPECT
TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF,
MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY OF DALLAS, OR IN THE
UNITED STATES COURTS LOCATED IN DALLAS COUNTY, TEXAS AND THE BORROWER HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY
SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN SAID COURT BY THE
MAILING THEREOF BY LENDER BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE BORROWER, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS PROVIDED IN SECTION
17. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN THE
STATE OF TEXAS, COUNTY OF DALLAS, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM
55
<PAGE> 62
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
1. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
1. OTHER AGREEMENTS. THIS WRITTEN CREDIT AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
1. FINANCIAL TERMS. All accounting terms used in this Agreement which are not
specifically defined herein shall be construed in accordance with GAAP.
56
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
GREAT LAKES ENERGY PARTNERS, L.L.C.,
a Delaware limited liability company
BY ITS MEMBERS:
MARBEL HOLDCO, INC.
By:
Name:
Title:
RANGE HOLDCO, INC.
By:
Name: John H. Pinkerton
Title: President
ADMINISTRATIVE AGENT:
BANK ONE, TEXAS, N.A.
By:
Name: Wm. Mark Cranmer
Title: Vice President
SYNDICATION AGENT:
CHASE BANK OF TEXAS, N.A.
By:
Name:
Title:
57
<PAGE> 64
DOCUMENTATION AGENT:
BANKERS TRUST COMPANY
By:
Name:
Title:
MANAGING AGENTS:
58
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,289
<SECURITIES> 3,219
<RECEIVABLES> 95,230
<ALLOWANCES> 0
<INVENTORY> 9,562
<CURRENT-ASSETS> 80,904
<PP&E> 954,201
<DEPRECIATION> (325,936)
<TOTAL-ASSETS> 775,785
<CURRENT-LIABILITIES> 51,261
<BONDS> 0
0
1,150
<COMMON> 375
<OTHER-SE> 135,565
<TOTAL-LIABILITY-AND-EQUITY> 775,785
<SALES> 108,611
<TOTAL-REVENUES> 161,244
<CGS> 34,856
<TOTAL-COSTS> 39,245
<OTHER-EXPENSES> 121,181
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,579
<INCOME-PRETAX> 818
<INCOME-TAX> 1,594
<INCOME-CONTINUING> (776)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,430
<CHANGES> 0
<NET-INCOME> 1,654
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
