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EXHIBIT 10.1
CREDIT AGREEMENT
BETWEEN
UNITED STATES EXPLORATION, INC.,
AS BORROWER,
AND
BANK OF OKLAHOMA, N.A.,
AS LENDER
August 25, 2000
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONAL PROVISIONS................................................................................1
1.1 General Definitional Provisions..........................................................................1
1.2 Specific Definitions of Terms............................................................................1
ARTICLE II. REVOLVING LINE OF CREDIT.............................................................................11
2.1 Revolving Credit Commitment.............................................................................11
2.2 Manner of Borrowing; Request for Advance; Funding.......................................................11
2.3 Use of Proceeds.........................................................................................12
2.4 Interest................................................................................................12
2.5 Extension of Revolving Loan Stated Maturity Date........................................................12
2.6 Periodic Redetermination of Revolving Rate..............................................................12
ARTICLE III. CERTAIN TERMS OF CREDIT FACILITY....................................................................12
3.1 Optional Prepayments of Principal.......................................................................12
3.2 Borrowing Base Determination and Mandatory Borrowing Base Prepayments...................................12
3.3 Calculation of Interest.................................................................................14
3.4 Manner and Application of Payments......................................................................14
3.5 Nonusage Fee............................................................................................14
3.6 Letter of Credit Fee....................................................................................14
3.7 Commitment Fee..........................................................................................14
ARTICLE IV. CONDITIONS PRECEDENT.................................................................................15
4.1 Initial Advance.........................................................................................15
4.2 All Advances............................................................................................17
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................................................17
5.1 Organization and Good Standing..........................................................................17
5.2 Authorization and Power.................................................................................18
5.3 No Conflicts or Consents................................................................................18
5.4 Enforceable Obligations.................................................................................18
5.5 Ownership of Properties.................................................................................18
5.6 Financial Condition.....................................................................................19
5.7 Solvency................................................................................................19
5.8 Full Disclosure.........................................................................................19
5.9 No Default..............................................................................................19
5.10 Material Agreements.....................................................................................19
5.11 No Litigation...........................................................................................20
5.12 Use of Proceeds; Margin Stock...........................................................................20
5.13 Taxes...................................................................................................20
5.14 Principal Office........................................................................................20
5.15 ERISA...................................................................................................20
5.16 Compliance with Law.....................................................................................20
5.17 Environmental Matters...................................................................................20
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5.18 Subsidiaries............................................................................................21
ARTICLE VI. AFFIRMATIVE COVENANTS................................................................................21
6.1 Financial Statements, Reports and Documents.............................................................21
6.2 Liens on Properties.....................................................................................23
6.3 Payment of Taxes and Other Indebtedness.................................................................23
6.4 Maintenance of Properties...............................................................................23
6.5 Notice of Default.......................................................................................23
6.6 Other Notices...........................................................................................23
6.7 Compliance with Loan Documents..........................................................................24
6.8 Compliance with Material Agreements.....................................................................24
6.9 Books and Records; Access...............................................................................24
6.10 Compliance with Law.....................................................................................24
6.11 Insurance...............................................................................................24
6.12 Authorizations..........................................................................................24
6.13 ERISA Compliance........................................................................................24
6.14 Further Assurances......................................................................................25
6.15 Maintenance of Corporate Identity.......................................................................25
6.16 Division Orders, Etc....................................................................................25
6.17 Acquisition or Formation of Subsidiaries................................................................25
6.18 Collection Account......................................................................................25
6.19 Financial Condition.....................................................................................25
6.20 Environmental Matters...................................................................................26
6.21 Other Information and Inspections.......................................................................26
6.22 Notice Concerning Directors.............................................................................26
ARTICLE VII. NEGATIVE COVENANTS..................................................................................26
7.1 Limitation on Indebtedness..............................................................................26
7.2 Liens...................................................................................................27
7.3 Alteration of Material Agreements.......................................................................27
7.4 Limitation on Sale of Property..........................................................................27
7.5 Fiscal Year and Accounting Method.......................................................................27
7.6 Liquidations, Mergers, Consolidations, Acquisitions
or Dispositions of Substantial Assets...................................................................27
7.7 No Amendments of Articles of Incorporation, Charters or Bylaws..........................................28
7.8 Restrictions on Dividends and Redemptions...............................................................28
7.9 Certain Payments........................................................................................28
7.10 Gas Imbalances..........................................................................................28
7.11 Transactions with Affiliates............................................................................28
7.12 Investments.............................................................................................28
ARTICLE VIII. EVENTS OF DEFAULT..................................................................................29
8.1 Non-Payment.............................................................................................29
8.2 Breach of Warranty......................................................................................29
8.3 Non-Performance of Certain Covenants....................................................................29
8.4 Non-Performance of Other Covenants......................................................................29
8.5 Default on Other Indebtedness...........................................................................29
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8.6 Bankruptcy, Insolvency, Etc.............................................................................29
8.7 Judgments...............................................................................................30
8.8 Plans...................................................................................................30
8.9 Security Documents......................................................................................30
8.10 Change of Control.......................................................................................30
8.11 Notice and Cure.........................................................................................30
8.12 Remedies Upon Event of Default..........................................................................30
8.13 Performance by Lender...................................................................................31
ARTICLE IX. MISCELLANEOUS........................................................................................31
9.1 Strict Compliance.......................................................................................31
9.2 Modification............................................................................................31
9.3 Accounting Reports......................................................................................31
9.4 Waivers of Rights.......................................................................................31
9.5 Payment of Expenses.....................................................................................32
9.6 Indemnity...............................................................................................32
9.7 Notices.................................................................................................33
9.8 Governing Law...........................................................................................33
9.9 Choice of Forum and Jurisdiction........................................................................33
9.10 Invalid Provisions......................................................................................33
9.11 Maximum Interest Rate...................................................................................34
9.12 Offset..................................................................................................34
9.13 Table of Contents and Headings..........................................................................34
9.14 Benefit.................................................................................................34
9.15 Multiple Counterparts...................................................................................35
9.16 Written Loan Agreement..................................................................................35
EXHIBITS
Exhibit "A" Revolving Note
Exhibit "B" Mortgage
Exhibit "C" Request for Advance
Exhibit "D" Guaranty
Exhibit "E" Permitted Liens
Exhibit "F" ▇▇▇▇▇
Exhibit "G" Title Defects
Exhibit "H" No Default Certificate
Exhibit "I" Litigation
Exhibit "J" Subsidiaries
Exhibit "K" Compliance Certificate
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CREDIT AGREEMENT
This Credit Agreement is entered into this 25th day of August, 2000, by
and between UNITED STATES EXPLORATION, INC., a Colorado corporation
("Borrower"), and Bank of Oklahoma, N.A. ("Lender"), with respect to the
following:
A. Borrower has requested that Lender establish a revolving line of
credit in the initial principal amount of $6,000,000 for Borrower to satisfy in
full all Indebtedness of Borrower to ▇▇▇▇▇▇ Mineral Group, Inc. and for the
enhancement, acquisition, and development of oil and gas reserves, and the
issuance of letters of credit in connection therewith.
B. Lender is willing to do so on the terms and conditions set forth in
this Agreement.
Accordingly, Borrower and Lender agree as follows:
ARTICLE I.
DEFINITIONAL PROVISIONS
1.1 General Definitional Provisions.
(a) Defined terms used herein in the singular shall include the
plural and vice versa.
(b) The words "hereof", "herein", "hereunder" and "hereto" and
similar terms when used in this Agreement or any other Loan Document refer to
this Agreement or such Loan Document, as applicable, as a whole and not to any
particular provision of this Agreement or such Loan Document, as applicable.
(c) All accounting terms not specifically defined in this Agreement
shall be construed in accordance with GAAP.
(d) The terms "Section" and "Article" refer to Sections and
Articles of this Agreement, and the
terms "Exhibit" and "Schedule" refer to the Exhibits and Schedules attached to
this Agreement, unless the context states or implies otherwise.
(e) The term "including" means including without limiting the
generality of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that the rule
of ejusdem generis shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
1.2 Specific Definitions of Terms. The following terms shall have the
respective meanings assigned to them in this Article One when used in this
Agreement, the Note or any other Loan Document, certificate, report or other
document made or delivered pursuant to
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this Agreement or the other Loan Documents, unless otherwise defined therein or
the context states or implies otherwise:
"Advance" means the disbursement by Lender of funds loaned pursuant to
this Agreement or any other Loan Document.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (i)
to vote ten percent (10%) or more of the securities or other ownership interest
or right (on a fully diluted basis) having ordinary voting power for the
election of directors, managers or general partners, or (ii) to direct or cause
the direction of the management and policies of such Person, whether by contract
or otherwise.
"Agreement" means this Agreement and all exhibits and schedules hereto,
as the same may be amended, modified, increased, supplemented and/or restated
from time to time hereafter.
"Applicable Margin" means the number of Basis Points per annum set
forth below, based on the applicable Borrowing Base Usage:
APPLICABLE MARGIN
APPLICABLE BORROWING BASE USAGE BASE RATE MINUS
------------------------------- -----------------
> or = to 90% 0
> or = to 75% but < 90% 25
> or = to 50% but < 75% 50
< 50% 75
"Applicable Nonusage Fee Rate" means the number of Basis Points per
annum set forth below, based on the applicable Borrowing Base Usage:
APPLICABLE BORROWING BASE USAGE APPLICABLE NONUSAGE FEE RATE
------------------------------- ----------------------------
> or = to 90% 50
> or = to 75% but < 90% 37.5
> or = to 50% but < 75% 25
< 50% 12.5
"Available Commitment Amount" shall mean, at any time, an
amount equal to the positive remainder, if any, of (i) the Revolving Credit
Commitment at such time minus (ii) the Outstanding Indebtedness at such time.
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"Average Outstanding Indebtedness" shall mean, for any period, the
average Outstanding Indebtedness for such period.
"Base Rate" means the per annum rate of interest (expressed as a
percentage) formally designated by Chase Manhattan Bank, N.A., from time to time
as its "prime rate" for the guidance of its loan officers, after taking into
consideration such factors as Chase Manhattan Bank, N.A. may from time to time
consider appropriate in its sole discretion, whether or not such prime rate is
actually charged or published and whether or not a lower or better rate of
interest is charged to other customers or borrowers. If Chase Manhattan Bank,
N.A. announces or recognizes more than one prime rate, then the Base Rate shall
be the highest of the prime rates so announced or recognized by Chase Manhattan
Bank, N.A. If Chase Manhattan Bank, N.A. ceases to publicly designate a prime
rate, then the Base Rate shall be the highest per annum rate of interest
(expressed as a percentage) as published from time to time as the "Prime Rate"
in the "Money Rates" section of The Wall Street Journal.
"Basis Point" means one one-hundredth of one percent (0.01%).
"Borrower" shall mean United States Exploration, Inc., a Colorado
corporation.
"Borrowing Base" has the meaning set forth in Section 3.2.
"Borrowing Base Redetermination Date" has the meaning provided in
Section 3.2(b).
"Borrowing Base Usage" means, (i) for the purpose of determining the
Applicable Margin, a percentage derived from a fraction determined by dividing
the Average Outstanding Indebtedness for the month preceding the Revolving Rate
Redetermination Date by the newly determined Borrowing Base, and (ii) for the
purpose of determining the Applicable Nonusage Fee Rate, a percentage derived
from a fraction determined by dividing the Average Outstanding Indebtedness for
the three-month period ending on the applicable Nonusage Fee Payment Date by the
Borrowing Base for such period.
"Business Day" means every day that Lender's administrative offices are
open to the general public for banking business in Oklahoma City, Oklahoma.
"Collateral" means all present and future tangible or intangible
assets, properties, interests, and rights in which Lender is to be granted a
Lien (whether perfected or not) including, without limitation, the Properties,
together with any other assets, properties, interests, and rights now or
hereafter securing payment of all or any part of the Indebtedness owing to
Lender.
"Contested Claims" means any Tax, Indebtedness or other claim or
liability (i) the validity or amount of which is being contested in good faith
by appropriate proceedings, (ii) for which adequate reserves, as required by
GAAP, have been established, and (iii) with respect to which any right to
foreclose, execute upon or sell any Collateral or other assets of Borrower has
not matured or has been effectively enjoined, superseded or stayed.
"Debt Service Coverage Ratio" means, as of the end of each Fiscal
Quarter, the quotient obtained by dividing (i) a numerator consisting of (a) the
annualized sum of the
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Borrower's consolidated net income for the Required Reporting Period, as defined
by GAAP, minus (b) the annualized sum of cash dividends declared or paid by
Borrower during the Required Reporting Period, plus (c) the annualized sum for
the Required Reporting Period of Borrower's depletion expense, interest expense
for current maturities of long-term debt in favor of any Person other than
Lender, depreciation expense, intangible drilling expense, intangible material,
non-recurring reworking expense, amortization expense, lease impairment expense,
and federal and state taxes, plus (d) the sum of Projected Interest Expense
(determined as of the last day of the Fiscal Quarter then ended), by (ii) a
denominator consisting of (a) one-seventh (1/7) of the Revolving Credit
Commitment as of the last day of the Fiscal Quarter then ended, plus (b) the sum
of Projected Interest Expense (determined as of the last day of the Fiscal
Quarter then ended) and current maturities of long-term debt in favor of any
Person other than Lender together with interest thereon for the Fiscal Quarter
then ended. Any dividend made in a Fiscal Quarter which is intended as the only
dividend to be made for that Fiscal Year shall not be annualized for purposes of
determining the Debt Service Coverage Ratio.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or
similar Laws or general equitable principles from time to time in effect
affecting the Rights of creditors generally.
"Default" means any Event of Default specified in Article Eight, or any
condition or event, which after notice or the passage of time, or both, would
constitute an Event of Default.
"Default Rate" means the per annum rate of interest of the Base Rate
plus five percent (5%).
"Dollars" and the sign "$" refer to currency of the United States of
America.
"Environmental and Safety Laws" means all Laws concerning the
protection and/or preservation of the environment (including, without
limitation, ambient air, and surface and subsurface soils and waters), human
health and safety, and/or wildlife.
"Environmental or Safety Liability" means any claim, demand, loss,
obligation, action, accusation, allegation, order, damage, injury, judgment,
penalty, fine, cost of enforcement, cost of remedial or corrective action, or
any other cost or expense whatsoever, including reasonable attorneys' fees and
disbursements, resulting from the violation or alleged violation of any
Environmental and Safety Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all presently effective regulations issued pursuant
thereto.
"Event of Default" has the meaning stated in Article Eight.
"Fiscal Quarter" and "Fiscal Year" refer to the respective fiscal
quarter and fiscal year of Borrower.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or
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through other appropriate boards or committees thereof and which are
consistently applied for all periods after the date hereof so as to properly
reflect the financial condition, and the results of operations and changes in
financial position, of Borrower.
"Guarantors" shall mean each Subsidiary of Borrower.
"Guaranty Agreement" means the unconditional Guaranty Agreements
substantially in the form of Exhibit "D" executed by Guarantors, as from time to
time amended, restated, supplemented, increased or otherwise modified.
"Hydrocarbon Interests" means all of Borrower's rights, titles,
interests, and estates in and to any and all oil leases; gas leases; oil and gas
leases; oil, gas and mineral leases; or other liquid or gaseous hydrocarbon
leases; pooling, communitization, and unitization agreements and orders of
Tribunals having authority; fee and term mineral interests; overriding royalty
and royalty interests; net profit interests; and production payments and
interests.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of Borrower, any qualification or exception to such opinion or certification (i)
which is of a "going concern" or similar nature, (ii) which relates to the
limited scope of examination of material matters relevant to such financial
statement, or (iii) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
Borrower to breach or be in default of any of its obligations under this
Agreement.
"Indebtedness" means all indebtedness, obligations and liabilities of
Borrower, including, without limitation and without duplication, the following:
(a) all present and future indebtedness, obligations and
liabilities of Borrower to Lender, and all renewals and extensions thereof, or
any part thereof, arising pursuant to this Agreement or pursuant to any other
Loan Document or represented by the Note, and all interest accruing thereon
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to Borrower, would accrue on such obligations), and
attorneys' fees incurred in the enforcement or collection thereof, regardless of
whether such indebtedness, obligations and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several;
(b) all liabilities, except deferred taxes, which would be
reflected on a balance sheet of Borrower, prepared in accordance with GAAP;
(c) all obligations of Borrower in respect of any letter of credit,
guaranty and any capital lease;
(d) all obligations, indebtedness and liabilities secured by any
Lien on any property or asset of Borrower; and
(e) performance guarantees and performance surety or similar bonds
provided by Borrower in the ordinary course of business.
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"Indemnified Parties" has the meaning set forth in Section 9.6.
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended, and all regulations promulgated thereunder.
"Investment" means (i) any loan or advance made by a Person to any
other Person (excluding commission, travel, moving and similar advances to
officers and employees made in the ordinary course of business), (ii) any
assumption of any liability or obligation of another Person, and (iii) any
ownership or similar interest held by a Person in any other Person.
"Laws" means any and all applicable statutes, laws, ordinances, rules,
regulations, orders, judgments, writs, injunctions or decrees of any state,
commonwealth, nation, territory, possession, province, county, parish, town,
township, village, municipality and/or Tribunal, including the common law of
each applicable jurisdiction.
"Lender" means Bank of Oklahoma, N.A.
"Lien" means any lien, mortgage, security interest, hypothecation, tax
lien, pledge, encumbrance, charge, conditional sale or title retention
arrangement, or any other interest in property designed to secure the payment of
indebtedness or the performance of an obligation, whether arising by agreement,
under any Law, or otherwise.
"Litigation" means any proceeding, claim, order, cause of action, chose
in action, lawsuit, dispute, governmental inquiry, and/or governmental
investigation asserted or threatened by any Person, or conducted before any
Tribunal, mediator or arbitrator.
"Loan" means the Revolving Loan.
"Loan Documents" means this Agreement, the Note, the Security
Documents, the Guaranty, and any and all other agreements or documents required
by Lender to be executed or delivered pursuant to the terms of this Agreement or
in connection herewith or therewith; and, with respect to this Agreement, the
Note, the Security Documents, the Guaranty and such other agreements and
documents, means any and all amendments and supplements thereto and
modifications and restatements thereof.
"Material Adverse Effect" means any circumstance or event which (i) has
any material adverse effect whatsoever upon the validity, performance,
perfection or enforceability of any of the Loan Documents or the financial
condition or business operations of Borrower, (ii) materially impairs the
ability of Borrower to fulfill its obligations under the Loan Documents, or
(iii) results in or causes a Default or an Event of Default.
"Maximum Rate" means, on any day, the highest nonusurious rate of
interest (if any) permitted by applicable Law on such day that at any time, or
from time to time, may be contracted for, taken, reserved, charged or received
on the Indebtedness evidenced by the Note under the Laws of the State of
Oklahoma or, to the extent permitted by Law, under such Laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable Laws now allow.
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"Note" means the Revolving Note, and each and every renewal and
extension thereof and replacement or substitution therefor.
"Outstanding Indebtedness" shall mean as of any date the unpaid balance
of all Advances and accrued, but unpaid interest thereon, plus the total amount
that may be drawn upon or required to be paid pursuant to the terms of all
Letters of Credit issued by Lender to Borrower.
"Permitted Encumbrances" shall mean and consist of (i) rights to
consent by, required notices to, filings with, preferential rights, rights of
first refusal or other similar rights or other actions required by any Person in
connection with the exchange, sale or conveyance of any Property and the
operations thereof if they are customarily obtained, given, made, waived or
released, as applicable, in oil and gas industry sales and purchase transactions
in connection with an exchange, sale or conveyance of oil and gas properties,
(ii) easements, rights-of-way, servitudes, permits, surface leases and other
rights in respect of surface operations, and such imperfections or
irregularities of title, if any, and agreements, which, in each of the foregoing
instances, are not substantial in character, amount or extent and do not
materially detract from the value or materially interfere with either the
present or intended use of the Property affected thereby, (iii) the matters
described without material omission in any Exhibit or Schedule attached to this
Agreement, and (iv) lessors' royalties, overriding royalties, and reversionary
or "back-in" interests of record if the net cumulative effect of such burdens
does not operate to reduce Borrower's net revenue interest in any Well to less
than the net revenue interest represented or warranted by Borrower to Lender for
such Well.
"Permitted Liens" shall mean and consist of (i) Liens granted to Lender
to secure the Indebtedness to Lender, (ii) Liens described on Exhibit "E" (and
renewals and extensions thereof) so long as the Indebtedness secured thereby and
the interest rate payable thereon is not increased or the maturity shortened,
(iii) pledges or deposits made to secure payment of workers' compensation
insurance (or to participate in any fund in connection with worker's
compensation insurance), unemployment insurance, pension or social security
programs, (iv) Liens imposed by mandatory provisions of Law such as carrier's,
materialmen's, mechanics', warehousemen's, landlord's and similar Liens arising
in the ordinary course of business, securing Indebtedness not yet due or which
qualifies as a Contested Claim, (v) Liens for Taxes, if the same are not yet due
and payable or qualify as a Contested Claim, (vi) Liens arising in the ordinary
course of business from pledges or deposits to secure public or statutory
obligations, deposits to secure (or in lieu of) surety, stay, appeal or customs
bonds, and deposits to secure the payment of Taxes, (vii) encumbrances
consisting of zoning restrictions, easements, rights-of-way, or restrictions,
provided that such items do not impair the use or ownership of any Property for
the purposes intended, and none of which are violated by existing or proposed
structure or land use, (viii) good faith deposits in connection with bids,
tenders, contracts or leases, and (ix) Liens under operating agreements
governing the operation of the Properties or under production sales agreements,
division orders, and other agreements concerning the processing, producing or
selling of hydrocarbons, which, in each of the foregoing instances, are
customary in the oil and gas operation, exploration and development industry and
arise in the ordinary course of business to secure amounts not yet due.
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"Person" includes any individual, corporation, joint venture, general
or limited partnership, limited liability company, limited liability
corporation, limited liability partnership, trust, organization, association,
other entity and Tribunal.
"Plan" means any employee benefit plan or other similar plan
participated in, contributed to or maintained by Borrower for employees, or for
which Borrower or any Guarantor could have any liability of any nature or kind
in connection therewith, which is governed or covered by ERISA, the Internal
Revenue Code or any other applicable Law.
"Projected Interest Expense" shall mean the aggregate amount of
interest that would accrue on the amount of the Outstanding Indebtedness in
existence on the last day of an applicable Fiscal Quarter at the Revolving Rate
then in effect on the last day of such Fiscal Quarter for a one-year period
following immediately thereafter.
"Properties" means all of Borrower's right, title and interest in (i)
the oil ▇▇▇▇▇ and gas ▇▇▇▇▇ described at Exhibit "F" (the "▇▇▇▇▇"); (ii) the
oil, gas, casinghead gas, condensate and other liquid or gaseous hydrocarbons
(the "Hydrocarbons") now or hereafter underlying, produced or severed from,
stored at or attributable to all or any portion of the lands described at
Exhibit "F" and/or lands, spaced, pooled and/or unitized with such lands; (iii)
the oil, gas and mineral leases, and pooling, unitization, communitization and
similar orders of Tribunals having authority now or hereafter covering, all or
any portion of the lands described at Exhibit "F" and/or lands, spaced, pooled
and/or unitized with such lands (the "Leases"); (iv) the lands described in the
Leases and the lands spaced, pooled and/or unitized therewith (the "Lands"); (v)
all personal property, real property and fixtures now or hereafter situated at,
appurtenant to, located upon or used in connection with the Lands, Leases, the
▇▇▇▇▇ and/or the Hydrocarbons, including, without limitation, all personal
property and fixtures of whatsoever kind or nature used in the exploration,
exploitation, production, treatment, processing, transportation, and/or storage
of Hydrocarbons, whether located below or above ground (the "Oil and Gas
Properties"); (vi) all production sales contracts, operating agreements, farmout
agreements, subleases, joint venture agreements, assignments, and any and all
other agreements, contracts, contract rights, chattel paper, insurance policies
and proceeds, accounts, general intangibles, licenses, files, records,
rights-of-way, title documents, and easements, covering or pertaining to the
production, sale, purchase, exchange or processing of the Hydrocarbons, the
Leases, the ▇▇▇▇▇, the Lands, the Hydrocarbon Interests and/or the Oil and Gas
Properties (the "Agreements"); (vii) the Hydrocarbon Interests; (viii) all
rents, issues, profits, proceeds, products, revenues, accounts, and other income
from or attributable to the Hydrocarbon Interests, the Leases, the ▇▇▇▇▇, the
Lands, the Oil and Gas Properties and/or the Agreements; and (ix) all other oil
and/or gas properties, rights, titles, interests and estates in which Borrower
now or hereafter has any right, title or interest (excluding drilling rigs,
automotive equipment or other personal property which may be on the Lands for
the purpose of drilling a well or for other similar temporary uses).
"Proved Developed Oil and Gas Reserves" shall mean the estimated
quantities of crude oil, natural gas, and natural gas liquids attributable to
the Hydrocarbon Interests which geological and engineering data demonstrate with
reasonable certainty can be expected to be recovered through existing oil and
gas ▇▇▇▇▇ covered by the Hydrocarbon Interests with existing equipment and
operation methods.
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"Regulation T", "Regulation U" and "Regulation X" mean Regulation T, U
or X, as the case may be, of the Board of Governors of the Federal Reserve
System, or any successor or other regulation hereafter promulgated by said Board
to replace the prior Regulation U, T or X and having substantially the same
function.
"Request for Advance" has the meaning stated in Section 2.2.
"Required Reporting Period" means the time periods set forth below,
based on the end of the Fiscal Quarter:
End of Fiscal Quarter Required Reporting Period
--------------------- --------------------------
9-30-2000 7-1-2000 through 9-30-2000
12-31-2000 7-1-2000 through 12-31-2000
3-31-2001 7-1-2000 through 3-31-2001
6-30-2001 Last four consecutive Fiscal Quarters
All Subsequent Quarters Last four consecutive Fiscal Quarters
"Revolving Commitment Period" means the period beginning on the date
hereof and ending on the Revolving Loan Termination Date.
"Revolving Credit Commitment" means the lesser of (i) $10,000,000 or
(ii) the Borrowing Base in existence from time to time.
"Revolving Loan" means the Advances made to Borrower pursuant to
Article Two, and all renewals and extensions thereof and substitutions and
replacements therefor.
"Revolving Loan Stated Maturity Date" means August 1, 2003, as such
date may, in Lender's sole discretion, be extended.
"Revolving Loan Termination Date" means the earliest of (i) the
Revolving Loan Stated Maturity Date, or (ii) the date upon which any Termination
Event occurs.
"Revolving Note" means the promissory note (in the form attached hereto
as Exhibit "A") to be delivered by Borrower to Lender pursuant to Article Two,
and all renewals and extensions thereof and substitutions and replacements
therefor.
"Revolving Rate" means the Base Rate (in effect from day-to-day) minus
0.75%, from the date hereof through November 30, 2000 and, after November 30,
2000, means the per annum rate of interest (expressed as a percentage)
redetermined in accordance with Section 2.6.
"Revolving Rate Redetermination Date" has the meaning provided in
Section 2.6.
"Rights" means rights, remedies, powers and privileges.
"Secretary" includes any Assistant Secretary.
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"Security Documents" has the meaning stated in Section 4.1(b)(iii).
"Subject Transactions" has the meaning set forth in Section 9.6.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person, (ii) any partnership or
joint venture in which such Person is a general partner or a joint venturer, and
(iii) any association, partnership, business trust, limited liability company,
limited liability partnership, limited liability corporation, joint venture, or
other non-corporate business entity, enterprise or organization which is
directly or indirectly (through one or more intermediaries) controlled by, or
more than fifty percent (50%) owned by, such Person.
"Tax or Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, withholdings or other charges of any nature
whatsoever from time to time or at any time imposed by or under any Law or any
Tribunal.
"Tangible Net Worth" means the consolidated net worth of Borrower and
its respective Subsidiaries after subtracting therefrom the aggregate amount of
any intangible assets of Borrower and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks and brand names.
"Termination Event" means (i) the occurrence of any Event of Default
described in Section 8.1, 8.5, 8.6, 8.7 or 8.8 with respect to Borrower or any
Subsidiary of Borrower, or (ii) the occurrence and continuance of any other
Event of Default and either the declaration of the Loan to be due and payable
pursuant to this Agreement, the Note or any other Loan Document or, in the
absence of such declaration, the Lender's notifying Borrower that the Revolving
Credit Commitment has been terminated.
"Title Defect" shall mean any material encumbrance, encroachment,
irregularity, defect in title, or objection to title, which, individually or in
the aggregate, based upon petroleum industry standards in Colorado, would result
in Borrower not having "defensible title" to any of the Properties. A Title
Defect shall include, without limitation, any and all Liens, rights of first
refusal, options to purchase, reversionary or "back-in" interests, adverse
claims, adverse litigation, rights vested in third parties to take production
from any oil or gas well without payment in full therefor (except for any rights
of lessors under leases to obtain production from a Well for personal, farming,
household, irrigation or other purposes if the aggregate amount taken by the
lessors does not adversely affect in any material respect the value of
Borrower's interest in the Well), rights of refund for production heretofore
taken and paid for, except as may be required in the future by any Tribunal
having authority, and assignments of production, unless same are expressly
identified at Exhibit "G." Permitted Encumbrances and Permitted Liens shall not
constitute a Title Defect. For purposes of this Agreement, the term "defensible
title" shall mean title that would be successfully defended if attacked.
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"Tribunal" means any government, any court or any governmental
department, commission, board, bureau, agency or instrumentality of the United
States or any state, province, commonwealth, nation, territory, possession,
county, parish, town, township, village or municipality, whether now or
hereafter constituted and/or existing.
"UCC" means the Uniform Commercial Code of the State of Oklahoma and of
any other state to the extent Oklahoma Law or the law of such other state
requires application of the same.
ARTICLE II.
REVOLVING LINE OF CREDIT
2.1 Revolving Credit Commitment. Subject to the terms and conditions of
this Agreement, Lender shall loan to Borrower on a revolving basis in one or
more Advances from time to time during the Revolving Commitment Period the
amounts requested by Borrower in each "Request for Advance" (as that term is
defined at Section 2.2) or any other Advances by Lender in accordance with the
terms of any other Loan Document; provided, however, that Lender shall not be
obligated to make any Advance or Advances (i) during the existence of a Default
or an Event of Default, or (ii) in excess of the Available Commitment Amount
then in effect. The initial Revolving Credit Commitment shall be $6,000,000. The
Advances made under this Section 2.1 shall be evidenced by the Revolving Note.
Notwithstanding the principal amount stated on the face of the Revolving Note,
the amount of principal actually owing on the Revolving Note at any given time
shall be the aggregate of all Advances theretofore made to Borrower, less all
payments of principal by Borrower theretofore actually received by the holder
thereof. During the Revolving Commitment Period, accrued and unpaid interest on
the Revolving Loan shall be due and payable monthly in arrears, with the first
payment commencing on September 1, 2000, and each succeeding payment due and
payable on the first Business Day of each calendar month thereafter. The unpaid
principal balance of the Revolving Loan plus accrued but unpaid interest shall
be due and payable on the Revolving Loan Termination Date.
2.1.1 Letters of Credit. Borrower may request that Letters of
Credit be issued under this Agreement. Such Letters of Credit shall be issued in
Lender's sole and absolute discretion. The issuance of Letters of Credit shall
be subject to Lender's customary policies and procedures relating to issuance of
letters of credit generally and execution by Borrower of documentation requested
by Lender and shall contain such terms and conditions and be in such form as
Lender shall determine. The total amount that may be drawn upon or required to
be paid pursuant to the terms of any such Letter of Credit shall be included in
the definition of Outstanding Indebtedness and accordingly will reduce the
Available Commitment Amount.
2.2 Manner of Borrowing; Request for Advance; Funding. Not later than
3:00 p.m., Oklahoma City, Oklahoma time on the requested date of any Advance,
Borrower shall provide Lender with written notice (herein called a "Request for
Advance") of each requested Advance in the form of Exhibit "C." Upon fulfillment
of all applicable conditions with respect to an Advance, Lender shall pay or
deliver federal or other immediately available funds to the order of Borrower at
Borrower's operating account at Lender's principal Oklahoma City, Oklahoma
office in the amount of the requested Advance.
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2.3 Use of Proceeds. The proceeds of the Revolving Loan shall be used
by Borrower to satisfy in full all indebtedness of Borrower to ▇▇▇▇▇▇ Mineral
Group, Inc. and for working capital purposes.
2.4 Interest. The unpaid principal balance of the Revolving Loan from
day-to-day outstanding shall bear interest from the date thereof to maturity at
a rate per annum which shall from day-to-day be equal to the Revolving Rate;
provided, however, after the date any principal amount of the Revolving Loan is
due and payable and remains unpaid (whether on the Revolving Loan Stated
Maturity Date, upon acceleration or otherwise), or after any other monetary
Indebtedness of Borrower to Lender shall have become due and payable and remains
unpaid, the principal of, and past-due interest on, the Revolving Loan shall
bear interest, to the extent permitted by Law, from such maturity until the date
paid at a rate per annum from day-to-day equal to the Default Rate in effect
from day-to-day. Interest on the Revolving Loan shall be calculated on the basis
of the actual days elapsed, but computed as if each year consisted of 360 days.
2.5 Extension of Revolving Loan Stated Maturity Date. Not less than
thirty (30) days prior to the Revolving Loan Stated Maturity Date, as it may be
extended from time to time, Borrower may request in writing that Lender extend
the Revolving Loan Stated Maturity Date. Lender may, but shall have no
obligation to, grant any such request and extension, in which event the terms
and conditions of this Agreement will apply during any extension period granted
by Lender, and from and after the date of any such extension the term "Revolving
Loan Stated Maturity Date" shall mean the maturity date of the Revolving Loan as
so renewed and extended.
2.6 Periodic Redetermination of Revolving Rate. The Revolving Rate
shall be redetermined by Lender on December 1, 2000 and on each April 1 and
October 1 thereafter (each being referred to as a "Revolving Rate
Redetermination Date") to be the Base Rate (from time-to-time in effect until
the next Revolving Rate Redetermination Date) minus the Applicable Margin
(determined as a function of the applicable Borrowing Base Usage).
ARTICLE III.
CERTAIN TERMS OF CREDIT FACILITY
3.1 Optional Prepayments of Principal. Borrower may, at any time or
from time to time, without premium or penalty, prepay all or a portion of the
principal balance then outstanding of the Revolving Loan together with all
accrued but unpaid interest on the Revolving Loan then outstanding at any time
or from time to time.
3.2 Borrowing Base Determination and Mandatory Borrowing Base
Prepayments. The Borrowing Base represents the maximum amount of credit that
Lender, in its sole discretion and determination, is willing to loan and have
outstanding to Borrower. The Borrowing Base shall be determined as set forth
herein and Borrower shall, without premium or penalty, be required to make
mandatory prepayments of the Revolving Loan as follows:
(a) Initial Borrowing Base. The initial Borrowing Base shall be
$6,000,000 until the earlier of December 1, 2000, or the Revolving Loan
Termination Date.
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(b) Periodic Redetermination of Borrowing Base. The Borrowing Base
will be redetermined by Lender in each of the following circumstances (each
being referred to as a "Borrowing Base Redetermination Date"): (i) on December
1, 2000 (or as promptly thereafter as is reasonably practicable), (ii) on each
April 1 and October 1 thereafter, beginning April 1, 2001 (or as promptly
thereafter as is reasonably practicable), (iii) upon the occurrence of a
Material Adverse Effect, and (iv) upon the written request by Borrower if any
circumstance or event has occurred which could reasonably be expected to result
in a material increase in the Borrowing Base upon such redetermination.
On each Redetermination Date or as soon thereafter as reasonably
practicable, Lender shall send written notice to Borrower of Lender's
redetermination of the Borrowing Base. The amount set forth in such notice shall
be effective on the date of such notice as the amount of the Borrowing Base for
all purposes of this Agreement until notice of a new Borrowing Base determined
in accordance with the provisions of this Agreement is given by Lender to
Borrower.
The amount of the Borrowing Base shall be determined by Lender in
accordance with its customary practices and standards applied generally to its
energy lending policies then in effect, including such factors as Lender, in its
sole and absolute discretion, acting in good faith, shall determine to be
appropriate, and shall be subject to approval by a loan committee designated by
Lender.
Without limiting any of Lender's other rights and remedies hereunder or
under applicable Law and without effectuating a waiver of any Event of Default
or Default then existing, if Borrower does not furnish all information, reports
and data required to be delivered pursuant to this Agreement by the applicable
date specified in this Agreement, Lender may nonetheless determine the Borrowing
Base at any amount which Lender shall determine in Lender's sole discretion, and
Lender may redetermine the Borrowing Base from time to time thereafter until
Lender receives all information, reports and data required to be delivered
pursuant to this Agreement, whereupon Lender shall designate the new Borrowing
Base (in the manner herein described) to be effective as of the date of such
determination until the next Redetermination Date.
Borrower may submit additional Properties as Collateral for inclusion
in Lender's determination of the Borrowing Base provided however, that Borrower
provides to Lender all information reasonably requested by Lender necessary for
such determination and the amount of net operating income attributable to all
such Properties, together with such other information as Lender may reasonably
request.
(c) Prepayment of Loan. If the Outstanding Indebtedness on a
Redetermination Date exceeds the Borrowing Base, Borrower shall, as determined
by Lender in its sole discretion, within thirty Business Days after Borrower's
written receipt of the redetermined Borrowing Base (i) prepay to Lender an
amount sufficient to cause the Outstanding Indebtedness to be less than or equal
to the Borrowing Base, (ii) in lieu of the prepayments provided for in this
Section 3.2(c), pledge to Lender within that thirty (30) day period, pursuant to
collateral documents in form and substance satisfactory to Lender, additional
Collateral having a value, determined by Lender in its sole discretion,
satisfactory to increase the Borrowing Base to an amount equal or exceed such
Outstanding Indebtedness, or (iii) repay the
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amount by which the Outstanding Indebtedness exceeds the Borrowing Base in six
consecutive monthly installments of principal in equal amounts commencing on the
first day of the calendar month immediately succeeding the month in which the
Borrowing Base was so redetermined. If Borrower fails to either prepay the Loan
or provide additional collateral pursuant to this Section 3.2(c) within such
thirty (30) day period, or make any such monthly installment payment, as
required by Lender in accordance with this Section 3.2(c), Lender may, at its
option, declare such failure an Event of Default.
3.3 Calculation of Interest. Interest on the Note shall be calculated
on the basis of the actual days elapsed, but computed as if each year consisted
of 360 days. For purposes of computing the Maximum Rate, interest shall be
calculated on the basis of actual days elapsed for a year consisting of 365 or
366 days, as applicable.
3.4 Manner and Application of Payments. All payments and prepayments of
principal of, and interest on, the Note shall be made by Borrower to Lender at
or before 3:00 p.m. (Oklahoma City, Oklahoma time), in federal or other
immediately available funds (or, at Borrower's option, by check, provided,
however, that principal balance reductions for payments made by check will not
occur until Lender receives available funds) at Bank of Oklahoma, N.A., 201
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any payment
received after 3:00 p.m. (Oklahoma City, Oklahoma time) shall be deemed to have
been made on the next succeeding Business Day. Should any principal of or
interest on the Loan, or any 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 and interest thereon shall be payable at the then applicable
interest rate during such extension. Each payment shall be applied first to
satisfy all unpaid expenses and fees of Lender, if any, then to unpaid and due
interest and then to principal.
3.5 Nonusage Fee. In addition to interest on the Note as provided in
this Agreement, in order to compensate Lender for maintaining funds available
for Advances, Borrower shall pay to Lender in immediately available funds a
quarterly Nonusage Fee determined by applying the Applicable Nonusage Fee Rate
to the average daily Available Commitment Amount in existence during each
calendar quarter during the Revolving Commitment Period. The quarterly Nonusage
Fee shall be payable by Borrower in arrears quarterly on the last Business Day
of March, June, September and December hereafter during the Revolving Commitment
Period, (each, a "Nonusage Fee Payment Date") commencing September 30, 2000,
with the last payment to be made at the termination of the Revolving Commitment
Period. The fee shall be calculated on the basis of a quarter consisting of 90
days, but counting the actual days elapsed (including the first day but
excluding the last day) during the period for which payable.
3.6 Letter of Credit Fee. Borrower shall pay to Lender, on issuance and
renewal of any Letter of Credit, a fee in the amount of two percent (2%) of the
stated amount of the Letter of Credit, payable in immediately available funds on
the date of issuance or renewal of the Letter of Credit.
3.7 Commitment Fee. Borrower shall pay to Lender a commitment fee in
the amount of .1875% of the Revolving Credit Commitment, and any increase
thereof. The initial commitment fee in the amount of $11,250 shall be paid on
the date of this Agreement. If the Revolving Credit Commitment is increased, the
additional commitment fee in the amount of .1875% of each increased amount shall
be paid on the date of each increase.
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ARTICLE IV.
CONDITIONS PRECEDENT
4.1 Initial Advance. The obligation of Lender to make the initial
Advance on the Revolving Loan is subject to the satisfaction of each of the
following conditions precedent (unless Lender waives such condition in writing):
(a) Commitment Fee. The initial commitment fee in the amount of
$11,250 shall have been paid to Lender in immediately available funds.
(b) No Litigation. No Litigation by any Person shall have been
instituted or threatened that (i) questions or reasonably appears to portend
subsequent questioning of the validity or legality of this Agreement, or the
transactions contemplated by this Agreement, or (ii) enjoins or prohibits or
seeks to enjoin or prohibit any of the transactions contemplated by the Loan
Documents.
(c) Documentation. Lender shall have received the following, each
in form and substance, and dated as of a date, satisfactory to Lender in
Lender's sole discretion:
(i) Revolving Note. The duly executed Revolving Note by
Borrower.
(ii) Guaranty Agreement. The duly executed Guaranty Agreement
by Guarantors.
(iii) Security Documents. The duly executed security
agreements, mortgages, including, without limitation, the form of mortgage
attached hereto at Exhibit "B," deeds of trust, chattel mortgages, collateral
assignments, modifications and extensions of Liens and other collateral
documents ("Security Documents"), which are necessary to grant to Lender first
perfected Liens (i.e., subject to no other Liens except Permitted Liens) on and
covering the Properties described at Exhibit "F" and all proceeds attributable
to such Properties.
(iv) Pledge Agreement. A duly executed pledge agreement
covering all of the issued and outstanding stock of Guarantor, together with the
original stock certificates evidencing the same, together with assignments
separate from certificate.
(v) Title Evidence. Such title opinions, title reports, and
other evidence of title to the Properties as might reasonably be requested by
Lender showing defensible title to the Properties to be in Borrower.
(vi) Borrower's Certificates. A certificate in the form of
Exhibit "H" signed by an authorized officer of Borrower stating that after
reasonable and due investigation and review of matters pertinent to the subject
matter of such certificate (i) all of the representations and warranties
contained in Article Five and in the other Loan Documents are true and correct
in all material respects as of the date of execution hereof, and (ii) no event
has
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occurred and is continuing, or would result from the making of any Loan, which
constitutes a Default or an Event of Default.
(vii) Resolutions of Borrower. Resolutions duly adopted by the
Boards of Directors of Borrower and Guarantor approving the execution, delivery,
and performance of the Loan Documents executed by Borrower and Guarantor, as
applicable, and the transactions contemplated therein, and accompanied by
certificates of the Secretary of Borrower and Guarantor stating that such
resolutions are true and correct, have not been altered or repealed, and are in
full force and effect on the date of execution hereof.
(viii) Incumbency. Signed certificates of the Secretary of
Borrower and Guarantor certifying the names of the officers authorized to sign
each of the Loan Documents, and the other documents or certificates to be
delivered by Borrower and Guarantor, as applicable, pursuant to this Agreement,
together with the true signatures of each of such officers. Lender may
conclusively rely on such certificates until Lender receives a further
certificate of the Secretary of Borrower or Guarantor canceling or amending the
prior certificate and submitting the signatures of the officers named in such
further certificate.
(ix) Official Certificates. Certificates as to incorporation,
existence and good standing of Borrower and Guarantor issued by the Secretary of
State (or other appropriate official) of the state of incorporation of Borrower
and Guarantor, as applicable and, if and to the extent requested by Lender or
its counsel, certificates of qualification and good standing (or other similar
instruments) for Borrower and Guarantor issued by the Secretaries of State of
each of the states wherein each of Borrower and Guarantor is qualified to do
business as a foreign corporation or any of the Collateral is located.
(x) Articles of Incorporation, Charter and Bylaws. Copies of
the Certificates or Articles of Incorporation of Borrower and Guarantor and all
amendments thereto, certified by the Secretary of State of the state of
incorporation of Borrower and Guarantor, as applicable, and certified by the
Secretary of Borrower and Guarantor, as applicable, as being true, correct and
complete, and a copy of the bylaws of Borrower and all amendments thereto,
certified by the Secretary of Borrower and Guarantor, as applicable, as being
true, correct and complete.
(xi) Filings. Duly executed and, as necessary, acknowledged
Security Documents, UCC-l financing statements and all other requisite filing
documents necessary to perfect the Liens granted pursuant hereto and/or the
other Loan Documents, in form satisfactory to Lender for filing with the
appropriate filing offices.
(xii) Contracts. Upon the request of Lender, a copy of any
material contracts of Borrower.
(xiii) ▇▇▇▇▇▇ Mineral Group, Inc. Documents. Properly executed
and acknowledged releases in recordable form and otherwise in form and substance
satisfactory to Lender, of all loan documents in favor of ▇▇▇▇▇▇ Mineral Group,
Inc.
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(xiv) Opinion. A favorable, signed opinion addressed to Lender
from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C., counsel to Borrower and Guarantors, in form and
substance satisfactory to Lender and its counsel.
4.2 All Advances. The obligation of Lender to make any Advances under
the Revolving Loan shall be subject to the satisfaction (or written waiver) by
Lender of each of the following additional conditions precedent:
(a) No Defaults. As of the date of the making of the Advance, there
exists no Default or Event of Default.
(b) Compliance with Agreement. Borrower has performed and complied
with all agreements and conditions contained herein and in the other Loan
Documents which are required to be performed or complied with by Borrower before
or on the date of the Advance.
(c) No Material Adverse Change. As of the date of making the
Advance, no circumstance or event that may cause a Material Adverse Effect
exists or has occurred.
(d) Request for Advance. Lender has received from Borrower a
Request for Advance by at least 3:00 p.m. on the date of the requested Advance.
(e) Representations and Warranties. The representations and
warranties contained in Article Five are true and correct in all material
respects on the date of the Advance, with the same force and effect as though
made on and as of that date.
(f) Litigation. No Litigation by any Person shall have been
instituted or threatened that (i) questions or reasonably appears to portend
subsequent questioning of the validity or legality of this Agreement, or the
transactions contemplated by this Agreement, or (ii) enjoins or prohibits or
seeks to enjoin or prohibit any of the transactions contemplated by the Loan
Documents.
(g) Debtor Laws. No proceeding under any Debtor Laws has been
commenced by or against Borrower or any Guarantor.
(h) Additional Commitment Fee. Any additional commitment fee due
from Borrower shall have been paid to Lender in immediately available funds.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement and to make the Loan,
Borrower represents and warrants to Lender as of the date hereof and hereafter
as follows:
5.1 Organization and Good Standing. Each of Borrower and Guarantor (i)
is a corporation, validly organized and existing as a corporation in good
standing under the laws of
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the state of its incorporation, (ii) has the corporate power and authority to
own its properties and assets and to transact the business in which it is
engaged, and (iii) is validly qualified as a foreign corporation and in good
standing in all states in which it is doing business, except where failure to be
so qualified will not have a Material Adverse Effect.
5.2 Authorization and Power. Each of Borrower and Guarantor has the
corporate power and the requisite authority and approvals, and has taken all
corporate action necessary, to execute, deliver, and perform the Loan Documents
to which it is a party.
5.3 No Conflicts or Consents. The execution and delivery of this
Agreement and the other Loan Documents, the consummation of any of the
transactions herein or therein contemplated, and the compliance with the terms
and provisions hereof or thereof, will not contravene or materially conflict
with any Law to which either Borrower or Guarantor is subject or any material
judgment, license, order or permit applicable to Borrower or Guarantor, or any
material contract, lease, indenture, loan agreement, mortgage, deed of trust,
partnership agreement or other agreement or instrument to which Borrower or
Guarantor is a party or by which Borrower or Guarantor may be bound, or to which
Borrower or Guarantor may be subject, or violate any provision of the charter or
bylaws of Borrower or Guarantor, which contravention or conflict would have a
Material Adverse Effect. No consent, approval, authorization or order of any
Tribunal or any other Person is required in connection with the execution,
delivery and performance by Borrower or Guarantor of the Loan Documents or to
consummate the transactions contemplated hereby or thereby, except such
approvals required by a Tribunal in connection with the operation, sale or
conveyance of oil and gas leases or any interest therein, if the same are
customarily obtained subsequent to such operation, sale or conveyance.
5.4 Enforceable Obligations. This Agreement and the other Loan
Documents have been duly executed and delivered by Borrower and Guarantor, as
applicable, to Lender, and are the legal and binding obligations of Borrower and
Guarantor, as applicable, enforceable in accordance with their respective terms,
except as such obligations are limited by Debtor Laws.
5.5 Ownership of Properties. Except for Permitted Liens and Permitted
Encumbrances, all properties and assets of Borrower, including, but not limited
to, the Properties are free and clear of any Liens and other adverse claims of a
material nature. Borrower has defensible title to its assets and properties,
including, but not limited to, the Properties except for (i) properties and
assets of de minimis value which are not reasonably necessary or useful in the
conduct of the business of Borrower and (ii) failures of the Borrower to hold
defensible title of which written notice has been given to Lender and with
respect to which Lender, in its sole discretion, in accordance with its usual
and customary lending practices, has determined that such failures in the
aggregate could not reasonably be expected to reduce the Borrowing Base by
$50,000 or more. With respect to each Well, Borrower is entitled to receive free
and clear of any Title Defects, from the date hereof throughout the remaining
duration of the productive life of such Well, the decimal share of the oil, gas
and other hydrocarbons produced from, or allocated to, such Well, which is not
less than the decimal set forth at Exhibit "F" in the column titled "NRI" for
such Well. With respect to each Well, Borrower's ownership of the Properties
associated with such Well is as of the date hereof and, based on existing
conditions, will remain throughout the remaining duration of the productive life
of the Well at least that undivided decimal interest set forth at Exhibit "F" in
the column titled "WI" for such Well, free and clear of any Title Defects. With
respect to each Well, Borrower is obligated from the date hereof and, based on
existing conditions, will remain obligated throughout the remaining duration of
the
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productive life of the Well, to bear a decimal share of all costs relating to
the operation of such Well that is not more than the decimal interest set forth
at Exhibit "F" in the column titled "WI" for such Well (unless there is at least
the same corresponding proportional increase in Borrower's net revenue interest
in such Well).
5.6 Financial Condition. The balance sheets of the Borrower and each of
its respective Subsidiaries as of December 31, 1999, and as of June 30, 2000,
and the related statements of earnings and cash flow, copies of each of which
have been delivered to Lender, (i) fairly represent the consolidated financial
condition and results of operations of Borrower and its respective Subsidiaries
as of the dates thereof and have been prepared in accordance with GAAP, (ii) all
material (individually or in the aggregate) obligations, liabilities and
Indebtedness (including contingent and indirect liabilities and obligations) of
Borrower are reflected in such financial statements, except for any liabilities
or Indebtedness incurred in the ordinary course of business between the date of
such financial statements and the date hereof, and (iii) no changes or
circumstances which would reasonably be expected to result in a Material Adverse
Effect have occurred since the date of such financial statements.
5.7 Solvency. Upon giving effect to the Note and the execution of the
Loan Documents by Borrower, and the consummation of the transactions
contemplated hereby, the fair saleable value of the assets of Borrower exceed
the amount that will be required to be paid on, or in respect to, the existing
debts and other liabilities (including contingent liabilities) of Borrower, as
they mature, and the assets of Borrower do not constitute unreasonably small
capital for Borrower to carry out its respective businesses as now conducted and
as proposed to be conducted including the capital needs of Borrower and, taking
into account the particular capital requirements of the businesses conducted by
Borrower, and projected capital requirements and capital availability thereof.
5.8 Full Disclosure. To Borrower's knowledge, there is no fact that
Borrower has not disclosed to Lender which may reasonably be expected to have a
Material Adverse Effect. No financial statement, certificate or any other
instrument or document delivered herewith or heretofore by Borrower to Lender in
connection with the negotiation, execution and consummation of this Agreement,
contained or contains any untrue statement of a material fact or omitted to
state any material fact necessary to keep the statements contained herein or
therein from being misleading.
5.9 No Default. No event has occurred and is continuing which
constitutes or, with the giving of notice or passage of time, or both, would
constitute a Default or an Event of Default.
5.10 Material Agreements. Borrower is not in breach of or default in
any respect under any agreement or any partnership agreement, indenture,
promissory note, contract, lease, loan agreement, indenture, mortgage, deed of
trust, security agreement, license, permit, franchise or other agreement or
obligation to which Borrower is a party or by which Borrower's assets or
properties are bound, except where such default would not have a Material
Adverse Effect, and Borrower is not a party to or bound by any material
contracts or agreements other than those disclosed in Borrower's filings with
the Securities and Exchange Commission or otherwise disclosed in writing to
Lender.
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5.11 No Litigation. Except for the Litigation described in Exhibit "I",
there is not any Litigation pending, or to the knowledge of Borrower threatened,
by or against Borrower or involving any of the assets of Borrower.
5.12 Use of Proceeds; Margin Stock. The proceeds of the Loan will be
used solely for the purposes specified at Section 2.3. None of such proceeds
will be used for the purpose of purchasing or carrying any margin stock, or
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry any margin stock or for any other purpose which could reasonably be
expected to violate any Law or subject Lender to any Law concerning the sale or
purchase of a security.
5.13 Taxes. All Tax returns and reports required by Law or any Tribunal
to be filed by Borrower have been timely filed or appropriate extensions have
been received, and Borrower is not delinquent thereon. All Taxes upon Borrower
or upon any properties, assets, income, franchises, or any Plan of Borrower have
been timely paid, except for Contested Claims. There is no material proposed Tax
assessment of which Borrower is aware against Borrower or any Plan, and there is
no basis of which Borrower is aware for any such assessment.
5.14 Principal Office. The principal office and place of business of
Borrower is ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Borrower
intends to maintain its principal records and books at that address. Borrower
will give Lender prior written notice if that office and/or place of business is
changed.
5.15 ERISA. To the extent applicable, Borrower is in compliance in all
material respects with all applicable provisions of ERISA and no event,
circumstance or condition exists or has occurred, with respect to any Plan that
could reasonably be expected to have or result in a Material Adverse Effect.
Each Plan has complied with and been administered in all material respects in
accordance with applicable provisions of ERISA and the Internal Revenue Code.
There has not been any complete or partial withdrawal from any Plan for which
there is, to any material extent, any withdrawal liability. As of the most
recent valuation date applicable to any Plan, neither Borrower nor any Affiliate
of Borrower will become subject to any liability under ERISA, which could
reasonably be expected to have a Material Adverse Effect, if such Borrower or
Affiliate were to withdraw completely from such Plan. Neither Borrower nor any
Affiliate of Borrower has received any notice that any Plan is "insolvent," as
such term is used in ERISA, or "reorganization," as such term is used in ERISA,
is reasonably likely to occur. Borrower has no reason to believe that the annual
cost during the term of this Agreement to Borrower and all Affiliates of
Borrower for post-retirement benefits to be provided to the current and former
employees of Borrower and all Affiliates of Borrower under all Plans will, in
the aggregate, have a Material Adverse Effect.
5.16 Compliance with Law. Borrower is in compliance with all Laws,
except where failure to comply will not (singularly or in the aggregate) have a
Material Adverse Effect.
5.17 Environmental Matters. Borrower has complied in all material
respects with all applicable Environmental and Safety Laws. Borrower is not
aware of and has not been notified of any Environmental or Safety Liability or
Environmental or Safety Liabilities which could reasonably be expected
individually or in the aggregate to result in an expenditure by, or liability
to, Borrower, exceeding $75,000. To Borrower's knowledge, there has not been any
release, discharge, spill or emission of any substance or material in violation
of any Environmental Law at, from or to any property, asset, land or facility
during any Borrower's
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ownership, use and/or operation thereof, or prior to the date that Borrower
acquired any right, title or interest in and to such property, asset, land or
facility, or conducted operations thereon or thereat.
5.18 Subsidiaries. Borrower has only the Subsidiaries listed at Exhibit
"J".
All representations and warranties of Borrower in this Article Five
shall be on-going and survive the delivery of this Agreement, the Note, and the
making of the Loan, and shall continue until payment in full of the Note and all
Indebtedness owing by Borrower to Lender, and any investigation at any time made
by or on behalf of Lender shall not diminish Lender's right to rely thereon;
provided, however, that all representations and warranties herein shall continue
for one year and one day after payment of all Indebtedness to Lender in the
event there is a disgorgement or any proceeding which might lead to a
disgorgement has occurred during such period.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as Lender has any commitment to make Advances hereunder, and
until payment in full of the Note and the Indebtedness owing by Borrower to
Lender, Borrower will perform the obligations set forth in this Article Six
(unless Lender shall otherwise consent in writing):
6.1 Financial Statements, Reports and Documents. Borrower shall deliver
to Lender each of the following:
(a) Quarterly Statements. As soon as available, and in any event
within sixty (60) days after the end of each of the first three Fiscal Quarters
of each Fiscal Year, copies of the balance sheet of Borrower, as of the end of
such quarter, and the statements of income and cash flow of Borrower for such
quarter and for the portion of the Fiscal Year ending with such period all in
reasonable detail, and certified by the chief financial officer of Borrower as
being true and correct and as having been prepared in accordance with GAAP,
subject to year-end audit adjustments.
(b) Annual Statements. As soon as available and in any event within
120 days after the close of each Fiscal Year, complete consolidated financial
statements of Borrower and its Subsidiaries together with all notes thereto,
prepared in reasonable detail in accordance with GAAP, together with an opinion
(without any Impermissible Qualifications), based on an audit using generally
accepted auditing standards, by independent certified public accountants
selected by Borrower and acceptable to Lender, stating that such consolidated
financial statements have been so prepared. These financial statements shall
contain a consolidated balance sheet as of the end of such Fiscal Year and
consolidated statements of earnings, of cash flows, and of changes in owners'
equity for such Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal year. In addition, within 120
days after the end of each Fiscal Year Borrower will furnish to Lender a
certificate in the form of Exhibit "K" signed by the President of Borrower,
stating that such financial statements are accurate and complete, stating that
such Person has reviewed the Loan Documents, all calculations required to be
made to show compliance or non-compliance with the provisions of
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Section 6.19(a), (b) and (c), and further stating that there is no condition or
event at the end of such Fiscal Year or at the time of such certificate which
constitutes a Default and specifying the nature and period of existence of any
such condition or event.
(c) Public Filings. Promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy statements sent by
Borrower or any Subsidiary of Borrower to its stockholders and all registration
statements, periodic reports and other statements and schedules filed by
Borrower or any Subsidiary with any securities exchange, the Securities and
Exchange Commission or any similar governmental authority, including any
information or estimates with respect to Borrower's oil and gas business
(including its exploration, development and production activities) which are
required to be furnished in Borrower's annual report pursuant to Sections 13 or
15(d) of the Securities Exchange Act of 1934, as amended.
(d) Compliance Certificate. Within sixty (60) days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, a certificate
executed by Borrower, containing a computation of each financial covenant set
forth at Section 6.19(a), (b) and (c) stating that a review of the activities of
Borrower during the portion of the Fiscal Year ending with such Fiscal Quarter
has been made and that to the knowledge of Borrower, Borrower observed,
performed and fulfilled each and every material obligation and covenant
contained in each of the Loan Documents (except to the extent properly waived as
provided herein), is not in Default under the Loan Documents or, if any Event of
Default or Default has occurred, specifying the nature and status thereof, in
the form of such certificate being attached hereto as Exhibit "K."
(e) Insurance Report. A report describing any material changes in
insurance coverage of Borrower required pursuant to any of the Loan Documents
within ten (10) days after Borrower has received notification of such change or
prospective change.
(f) Litigation Reports. (i) In each calendar year that there has
been any new Litigation commenced by or against Borrower or any material change
in the Litigation theretofore reported by Borrower to Lender, by January 15 of
the succeeding calendar year, complete reports by counsel to Borrower,
describing all material Litigation of Borrower and the status thereof, and (ii)
within thirty (30) days after the end of each Fiscal Quarter (except the last)
of each Fiscal Year in which a material change in reported Litigation has
occurred, reports by counsel to Borrower, describing such material changes in or
additions to the last annual Litigation report.
(g) Engineering Report. By March 1 of each year, an engineering
report (as of January 1 of such year) prepared by independent petroleum
engineers chosen by Borrower and acceptable to Lender, concerning all oil and
gas properties and interests owned by Borrower which are located in or offshore
of the United States and which have attributable to them Proved Developed Oil
and Gas Reserves. This report shall be satisfactory to Lender, shall contain
sufficient information to enable Borrower to meet the reporting requirements
concerning oil and gas reserves contained in Regulations S-K and S-X promulgated
by the Securities and Exchange Commission, shall take into account any
"over-produced" status under gas balancing arrangements, and shall contain
information and analysis comparable in scope to that contained
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in the initial engineering report delivered to Lender. This report shall
distinguish (or shall be delivered together with a certificate from an
appropriate officer of Borrower which distinguishes) those properties treated in
the report which are Collateral from those properties treated in the report
which are not Collateral.
6.2 Liens on Properties. Borrower hereby grants, bargains, sells,
assigns, delivers, transfers, conveys and mortgages all Properties unto Lender,
and grants Lender a first and prior Lien (including a security interest) in all
Properties, subject only to the Permitted Liens and Permitted Encumbrances. At
each such time that Lender requests, Borrower will execute and deliver specific
recordable Security Documents granting to Lender first perfected Liens (subject
to no other liens except Permitted Liens and Permitted Encumbrances) on and
covering all oil, gas and mineral leases (and related equipment and
appurtenances) covering each oil well and/or gas well in which Borrower has any
right, title or interest as to which Borrower has not previously executed and
delivered specific recordable Security Documents. On Lender's request, Borrower
will furnish to Lender all documents and information relating to such properties
as Lender may reasonably request, including, without limitation, title
information and opinions.
6.3 Payment of Taxes and Other Indebtedness. Except for Contested
Claims, Borrower will pay (i) all Taxes, (ii) all lawful claims (including
claims for labor, materials and supplies), which, if unpaid, might give rise to
a Lien upon any of its property, and (iii) all of its other Indebtedness,
obligations and liabilities, including, without limitation, all trade payables
owed by it to vendors, suppliers and Persons providing goods and services in the
ordinary course of business.
6.4 Maintenance of Properties. Except for properties of de minimis
value which are not reasonably necessary or useful, Borrower will regularly
operate, maintain, and develop all Properties operated by Borrower in a good and
workmanlike manner, as would a prudent operator and in accordance with all
applicable Laws (except where failure to act in accordance with such Laws,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect), and Borrower will and will cause each of its
Subsidiaries to make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times unless the Borrower determines in good faith that the
continued maintenance of any of its Properties is no longer economically
desirable. Borrower will take all reasonable action and exercise all rights and
remedies that are available to Borrower and are commercially reasonable to cause
any and all of the Properties which are not operated by Borrower to comply with
the foregoing.
6.5 Notice of Default. Borrower shall furnish to Lender, immediately
upon becoming aware of the existence of any condition or event which constitutes
or would become a Default or an Event of Default, written notice specifying the
nature and period of existence thereof and the action which that Borrower is
taking or proposes to take with respect thereto.
6.6 Other Notices. Borrower will promptly notify Lender of (i) any
change in the financial condition or business of Borrower which could reasonably
be expected to have a Material Adverse Effect, (ii) any acceleration of the
maturity of any material Indebtedness owing by Borrower (a "material"
Indebtedness being one with a monetary obligation of $100,000 or more or one
with respect to which a default thereunder would have a Material Adverse Effect,
(iii) any claim against or affecting Borrower which, if adversely determined,
might have a
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Material Adverse Effect, and (iv) the commencement of, and any material
determination in, any Litigation which might have a Material Adverse Effect.
6.7 Compliance with Loan Documents. Borrower will promptly comply with
any and all covenants and provisions of this Agreement, the Note and the other
Loan Documents to which it is a party.
6.8 Compliance with Material Agreements. Borrower will comply in all
material respects with all material agreements and any other contracts, leases,
agreements, indentures, mortgages or documents binding on it or affecting its
Properties or business, unless such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect.
6.9 Books and Records; Access. Prior to the occurrence of an Event of
Default, Borrower, upon five days' prior notice from Lender, will give any
representative of Lender access during all business hours to, and permit such
representative to, examine, copy or make excerpts from, any and all financial
and accounting books, records and documents in the possession of Borrower (or
under Borrower's control) and relating to its or its Subsidiaries' affairs, and
to inspect any of the properties of Borrower and its Subsidiaries. From and
after the occurrence of an Event of Default, Borrower, upon five days' prior
notice from Lender, will give any representative of Lender access during all
business hours to, and permit such representative to, examine, copy or make
excerpts from, any and all books, records and documents in the possession of
Borrower (or under Borrower's control) and relating to its and its Subsidiaries'
affairs, and to inspect any of the properties of Borrower. Borrower will
maintain complete and accurate books and records of its transactions in
accordance with GAAP.
6.10 Compliance with Law. Borrower and its Subsidiaries will comply in
all material respects with all Laws unless such noncompliance, individually or
in the aggregate, would not have a Material Adverse Effect.
6.11 Insurance. Borrower will maintain workers compensation or similar
insurance as may be required by applicable Laws, and public and general
comprehensive liability insurance against claims for personal injury, death or
property damage suffered upon, in or about any premises occupied by it or its
Subsidiaries or occurring as a result of the ownership, maintenance or operation
by it of the Properties, or of any automobile, truck or other vehicle, all such
insurance to be maintained with financially sound and reputable insurance
companies, against such risks and contingencies, and in such types and amounts,
as it currently maintains, and as are consistent with customary practices and
standards of companies engaged in similar businesses.
6.12 Authorizations. Borrower will promptly obtain, from time to time
at its own expense, all such licenses, authorizations, consents, permits and
approvals from Tribunals as may be required to enable it to comply with its
obligations hereunder and under the other Loan Documents.
6.13 ERISA Compliance. If and when applicable, Borrower will (i) make
prompt payment of all contributions required under all Plans and required to
meet the minimum funding standard set forth in ERISA with respect to any Plan,
(ii) notify Lender immediately of any fact which might constitute grounds for
termination of any Plan or for the appointment by the appropriate Tribunal of a
trustee to administer such Plan, together with a statement, if requested by
Lender, as to the reason therefor and the action, if any, proposed to be taken
with
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respect thereto, and (iii) furnish to Lender, upon request by Lender, such
additional information concerning any Plans as may be reasonably requested by
Lender.
6.14 Further Assurances. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all notices,
certifications and additional agreements, conveyances, deeds of trust,
mortgages, security agreements, transfers, assignments, financing statements and
other assurances, and take any and all such other action, as Lender may, from
time to time, deem reasonably necessary or proper in connection with this
Agreement or any of the other Loan Documents and Borrower's obligations
hereunder or thereunder, or for better assuring and confirming unto Lender all
or any part of the security for any of such obligations.
6.15 Maintenance of Corporate Identity. Borrower will (i) maintain
separate corporate records, books and accounts, and (ii) observe the formal
legal, financial and accounting requirements necessary for the maintenance of it
as a separate legal entity, including, but not limited to, the keeping of
corporate records, indicating that transactions are reviewed and authorized by
its Board of Directors and shareholders, as appropriate.
6.16 Division Orders, Etc. At Lender's reasonable request, Borrower
shall, within thirty (30) days from each Redetermination Date, furnish to Lender
division orders, letters-in-lieu of division orders and/or such other documents
of a similar nature satisfactory to Lender covering such of the Properties
either having new ▇▇▇▇▇ which were used in determining the then redetermined
Borrowing Base or Properties previously mortgaged hereunder which have undergone
a substantial positive change in collateral value, as reasonably determined by
Lender as Lender shall reasonably designate.
6.17 Acquisition or Formation of Subsidiaries. In the event Borrower
purchases, otherwise acquires or forms a Subsidiary (after obtaining any
necessary consent required by this Agreement), Lender, in Lender's sole
discretion, may require Borrower, as applicable, to pledge and grant to Lender
Liens covering the outstanding stock of or other ownership interest in such
Subsidiary pursuant to one or more Security Documents. Each Subsidiary shall
thereafter be deemed a Guarantor for all purposes of this Agreement and each of
the Loan Documents. Upon the request of Lender, each Subsidiary shall execute a
Guaranty and such other Security Documents, covering any or all assets and
properties of such Subsidiary, and amendments or modifications to this Agreement
or other Loan Documents, as may be reasonably required by Lender.
6.18 Collection Account. Until such time as all Indebtedness to Lender
has been fully paid and satisfied, Borrower shall at all times maintain all of
Borrower's primary operating accounts with Lender, excluding any accounts used
exclusively for any transaction qualifying for treatment under Section 1031 of
the Internal Revenue Code.
6.19 Financial Condition. On a consolidated basis, the Borrower shall
maintain:
(a) a Tangible Net Worth of at least $8,000,000;
(b) a Debt Service Coverage Ratio of at least 1.25 to 1.0;
(c) an EBITDA to Consolidated Interest Expense ratio of at least
2.5 to 1.0. As used herein, "EBITDA" means the annualized sum of the amount for
the Required
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Reporting Period of consolidated net income, Consolidated Interest Expense,
depreciation expense, depletion expense, amortization expense, federal and state
income taxes, exploitation and abandonment expense and other non-cash charges
and expenses, and "Consolidated Interest Expense" means the annualized sum of
the amount for the Required Reporting Period of total interest expense, whether
paid or accrued, including without limitation all commissions, discounts and
other fees and charges owed with respect to Letters of Credit.
6.20 Environmental Matters. Borrower will comply in all material
respects with all Environmental and Safety Laws and shall obtain, at or prior to
the time required by applicable Environmental and Safety Laws, all
environmental, health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such authorizations in full force
and effect. Borrower shall deliver to Lender a written notice promptly upon
Borrower receiving or otherwise learning of any potential or actual
Environmental or Safety Liability affecting Borrower, which individually or in
the aggregate might have a Material Adverse Effect, or the release or threatened
release, emission, spill or discharge in significant quantities of any substance
or material into the environment which Borrower is required by any applicable
Environmental and Safety Law to report to a Tribunal. Borrower shall promptly
notify Lender of any unpermitted release or threatened release, spill or
discharge of more than 100 barrels of oil, drilling fluids or brine into the
environment.
6.21 Other Information and Inspections. Borrower will furnish to Lender
any information which Lender may from time to time request in writing concerning
any covenant, provision or condition of the Loan Documents or any matter in
connection with Borrower's businesses and operations. Borrower will permit
representatives appointed by Lender (including independent accountants,
auditors, agents, attorneys, appraisers and any other Persons) to visit and
inspect during normal business hours any of Borrower's property, including its
books of account, other books and records, and any facilities or other business
assets, and to make copies therefrom and photocopies and photographs thereof,
and to write down and record any information such representatives obtain, and
Borrower shall permit Lender or its representatives to investigate and verify
the accuracy of the information furnished to Lender in connection with the Loan
Documents and to discuss all such matters with its officers, employees and
representatives.
6.22 Notice Concerning Directors. As far in advance as is reasonably
practicable of the election of any Person who is not currently a member of the
Board of Directors of Borrower to such Board, Borrower will furnish to Lender
written information as to the identity of such proposed director and such
biographical information as Lender might reasonably request.
ARTICLE VII.
NEGATIVE COVENANTS
Unless Lender shall otherwise consent in writing, so long as Lender has
any commitment to make Advances hereunder and until payment in full of the Notes
and the Indebtedness to Lender, Borrower agrees that:
7.1 Limitation on Indebtedness. Neither Borrower nor any Subsidiary
will incur, create, assume, have outstanding, guarantee or otherwise be or
become, directly or indirectly, liable in respect of any Indebtedness, except
(i) Indebtedness arising pursuant to this
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Agreement, (ii) accounts payable that are either unsecured or secured solely by
Permitted Liens and (a) are incurred in the ordinary course of business, (b) are
payable on terms customary in the trade, and (c) are paid within 120 days of the
date of invoice, or are Contested Claims, (iii) Indebtedness of Borrower not to
exceed $250,000 in the aggregate at any time outstanding, or (iv) operator's
bonds posted in the ordinary course of Borrower's business to satisfy
governmental requirements not to exceed $250,000 in the aggregate at any time.
7.2 Liens. Neither Borrower nor any Subsidiary will (i) grant, create,
incur, permit or suffer to exist any Lien (except Permitted Liens) upon any of
its property, revenues or assets, whether now or hereafter acquired, including,
without limitation, the Collateral or (ii) agree with any Person (other than in
this Agreement and the other Loan Documents) that Borrower or any Subsidiary
will not grant, create, incur, permit or suffer to exist any Lien upon any of
its property or assets, except for Permitted Liens.
7.3 Alteration of Material Agreements. Neither Borrower nor any
Subsidiary will consent to or permit any alteration, amendment, modification,
release, waiver or termination of any material agreement to which it is a part
in any manner which would have a Material Adverse Effect or which could impair
any Lien of Lender.
7.4 Limitation on Sale of Property. Neither Borrower nor any Subsidiary
will sell, assign, exchange, transfer, lease, sublease or discount any assets,
including, without limitation, any Properties, accounts receivable, and capital
stock of any Subsidiary other than (i) sales of Hydrocarbons in the ordinary
course of Borrower's business, (ii) sales or other dispositions of obsolete or
damaged Oil and Gas Properties, or Oil and Gas Properties having a limited
remaining useful value, or Oil and Gas Properties which are no longer needed for
any Borrower's ordinary business or which are being replaced by Oil and Gas
Properties of at least comparable value and utility, (iii) sales of Properties
not exceeding in any Fiscal Year $200,000 in the aggregate, (iv) the resale of
certain Properties, which are not included in the Borrowing Base and which are
acquired after the date hereof for resale to third-parties at not less than the
purchase price for such properties or interests therein paid by Borrower
therefor and (v) sale of land in Texas owned by Borrower which is currently
listed for sale, and sublease of a portion of Borrower's office space in Denver,
Colorado. For any and all other sales of Properties, Borrower shall have first
obtained the prior written consent of Lender and the Borrowing Base shall be
reduced upon each such permitted sale in an amount equal to the Borrowing Base
value attributed to such Properties by Lender at the date of any such sale and a
substantial amount of the proceeds of such sale or sales shall be used to reduce
the outstanding balance of the Loan,
7.5 Fiscal Year and Accounting Method. Borrower will not change its
Fiscal Year or method of accounting except as required by applicable Law or
without the written consent of Lender.
7.6 Liquidations, Mergers, Consolidations, Acquisitions or Dispositions
of Substantial Assets. Borrower shall not, and Borrower shall not permit any
Subsidiary of Borrower to, liquidate or dissolve, consolidate with or merge into
any other Person or permit any other Person to consolidate with or merge into or
with Borrower or any Subsidiary of Borrower, except as follows:
(a) (i) Borrower is the corporation that results from such merger
or consolidation (the "surviving corporation"), (ii) immediately after the
consummation of the proposed merger or consolidation, and after giving effect
thereto, the surviving corporation will
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not have outstanding any Indebtedness or have its Property subject to any Lien,
which, in either instance, is not permitted pursuant to this Agreement, and
(iii) immediately after the consummation of the proposed merger or
consolidation, and after giving effect thereto, no Default or Event of Default
would exist; and
(b) any such Subsidiary may liquidate or dissolve voluntarily into,
and may merge with and into, Borrower or any other Subsidiary of Borrower, and
the assets or stock of any Subsidiary may be purchased or otherwise acquired by
Borrower or any other Subsidiary of Borrower, provided, that no Subsidiary
(which does not become a party to this Agreement) may merge into any other
Subsidiary which is not a party to this Agreement nor may the stock, ownership
interest or assets of a Subsidiary that does not become a party to this
Agreement be acquired by any other Subsidiary which is not a party to this
Agreement.
7.7 No Amendments of Articles of Incorporation, Charters or Bylaws.
Neither Borrower nor any Subsidiary will amend its certificate of incorporation
or bylaws in any way which might cause a Material Adverse Effect.
7.8 Restrictions on Dividends and Redemptions. Borrower will not
directly or indirectly declare or make, or incur any liability to make, or set
aside any sum of money or assets to make, any dividends or redemptions of stock
during any Fiscal Year, except Borrower may declare dividends payable only in
its common stock.
7.9 Certain Payments. Borrower shall not use any of the proceeds of the
Revolving Loan to make any payments pursuant to the Loan Documents.
7.10 Gas Imbalances. Borrower shall not and shall not permit any
Subsidiary of Borrower to incur or suffer to exist liabilities for gas
imbalances in excess of $500,000 in the aggregate for Borrower and Subsidiaries
of Borrower.
7.11 Transactions with Affiliates. Borrower shall not, and Borrower
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates,
other than the Cost and Expenses Sharing Agreement between Borrower and ▇▇▇▇▇▇
Mineral Group, Inc. dated August 7, 1997, a true and correct copy of which has
been provided to Lender, unless (i) such arrangement or contract is fair and
equitable to Borrower or such Subsidiary, as applicable, (ii) is an arrangement
or contract of the kind which would be entered into by a prudent Person in the
position of Borrower or such Subsidiary, as applicable, with a Person which is
not one of its Affiliates, and (iii) is not a loan, advance or other extension
of credit, which when added together with all other loans, advances and
extensions of credit to other Affiliates of Borrower, exceed $50,000.
7.12 Investments. Borrower will not, and will not permit any of its
Subsidiaries to, make, incur, assume or suffer to exist any Investment in any
other Person, except (i) Borrower's current Investment in its current
Subsidiary, and (ii) short-term Investments with Lender for cash management
purposes.
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ARTICLE VIII.
EVENTS OF DEFAULT
Each of the following events, circumstances or occurrences described in
this Article Eight shall constitute an "Event of Default:"
8.1 Non-Payment. Failure to pay when due any principal of, or interest
on, the Note, or any fee, expense or other payment required under this Agreement
or any of the Loan Documents.
8.2 Breach of Warranty. Any representation or warranty made by Borrower
or Guarantor under this Agreement, any of the other Loan Documents or in any
certificate or statement furnished or made to Lender in connection herewith or
with the Loan hereunder, shall prove to be untrue or inaccurate as of the date
on which such representation or warranty is made and such misrepresentation or
breach of warranty or the effect thereof could reasonably be expected to have a
Material Adverse Effect.
8.3 Non-Performance of Certain Covenants. Borrower breaches or defaults
in the performance of any of Borrower's covenants, obligations or agreements
contained in Section 3.2(c), Section 6.19 and/or Article Seven.
8.4 Non-Performance of Other Covenants. Borrower breaches or defaults
in the performance of any of Borrower's covenants, obligations or agreements
contained in Article Six (except Section 6.19), any other covenant, obligation
or agreement provided in this Agreement (except Section 3.2(c)), or in any of
the other Loan Documents, and such breach or default could reasonably be
expected to have a Material Adverse Effect.
8.5 Default on Other Indebtedness. Borrower or Guarantor defaults (i)
in the payment of any Indebtedness in excess of $250,000 or (ii) in the payment
or performance of any bond, debenture, note, other evidence of Indebtedness,
loan agreement or credit agreement and such default, in either case, continues
for more than the period of grace, if any, specified therein.
8.6 Bankruptcy, Insolvency, Etc. (a) Borrower or Guarantor shall (i)
apply for or consent to the appointment of a receiver, trustee, custodian,
intervenor or liquidator of all or a substantial part of its assets, (ii) file a
voluntary petition in bankruptcy or file a petition or answer seeking
reorganization of an arrangement with creditors or to take advantage of any
Debtor Laws, (iii) admit in writing that it is unable to pay its debts as they
become due or generally not pay its debts as they become due, (iv) make a
general assignment for the benefit of creditors, (v) file an answer admitting
the material allegations of, or consent to, or default in answering, a petition
filed against it in any bankruptcy, reorganization or insolvency proceeding or
(vi) take corporate action for the purpose of effecting any of the foregoing; or
(b) (i) an involuntary petition or complaint is filed against Borrower or
Guarantor seeking bankruptcy or reorganization of Borrower or Guarantor, or the
appointment of a receiver, custodian, trustee, intervenor or liquidator for
Borrower or Guarantor, or for all or substantially all of Borrower's or
Guarantor's assets, and such petition or complaint is not dismissed within sixty
(60) days of the filing thereof, or (ii) an order, judgment or decree shall be
entered by any Tribunal approving a petition or complaint seeking reorganization
of Borrower or appointing a receiver, custodian, trustee, intervenor or
liquidator for Borrower or Guarantor, or of all or substantially all of
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Borrower's or Guarantor's assets, as applicable, and such order, judgment or
decree continues unstayed for a period of sixty (60) days.
8.7 Judgments. Any final non-appealable judgment(s) or order(s) for the
payment of money in excess of $500,000 in the aggregate shall be rendered
against Borrower and/or Guarantor, and such judgment, order, orders, or
judgments shall not be satisfied or discharged at least five days prior to the
date on which any of Borrower's and/or Guarantor's assets could be lawfully sold
pursuant to legal means to satisfy such judgment.
8.8 Plans. Any of the following events shall occur with respect to any
Plan:
(a) The institution of any steps by any Person to terminate a Plan
if, as a result of such termination, Borrower could be required to make a
contribution to the Plan, or could reasonably expect to incur a liability or
obligation to the Plan, in excess of $100,000;
(b) A contribution failure occurs with respect to any Plan
sufficient to give rise to a Lien under ERISA or other applicable Law; or
(c) Any default, violation or breach of any provision of any Plan
or ERISA, which could reasonably be expected to have a Material Adverse Effect
upon Borrower.
8.9 Security Documents. Any Security Document shall for any reason not,
or cease to, create a valid and perfected superior Lien against any Collateral
having a fair market value of at least $75,000 purported to be covered thereby
as against any and all other Liens, except Permitted Liens.
8.10 Change of Control. Any of the following shall occur: (a) ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall cease to own (actually or beneficially) at least five percent (5%)
of the issued and outstanding capital stock of Borrower, or to be the chief
executive officer and a director of Borrower, (b) a majority of the members of
the Board of Directors of Borrower are not Qualifying Directors (as defined
below), or (c) any Person (or group of Persons which is deemed a "person" for
the purpose of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) acquires more than forty percent (40%) of the outstanding stock of
Borrower having ordinary voting power for the election of directors. As used
herein, Qualifying Director means (i) any member of the Board of Directors as of
the date hereof and (ii) any Person elected to fill a vacancy created by the
death, resignation, failure to stand for reelection or removal of any Person
described in clause (i) and this clause (ii) whose nomination or election was
approved by a majority of the Persons described in clause (i) and this clause
(ii) who were serving on the Board of Directors at the time of such nomination
or election.
8.11 Notice and Cure. Upon learning of the occurrence of a Default
described in Section 8.2, Section 8.3, Section 8.4, or Section 8.9, Lender shall
provide Borrower with written notice of such Default, and, as the result of such
Default, Lender may not accelerate the Notes or exercise any Rights pursuant to
any of the Loan Documents, and, such Default will not constitute an "Event of
Default," unless such Default is not remedied to the reasonable satisfaction of
Lender within thirty (30) days after Borrower's receipt of such notice.
8.12 Remedies Upon Event of Default. If an Event of Default occurs and,
if applicable, continues beyond any applicable cure period, then Lender may
exercise any one or more of the following Rights, and any other Rights provided
in any of the Loan Documents as
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Lender, in its sole discretion, may deem necessary or appropriate: (i) terminate
its commitment to lend hereunder, (ii) declare the principal of, and all
interest then accrued on, the Notes and any other liabilities under any of the
Loan Documents to be forthwith due and payable, whereupon the same shall
forthwith become due and payable without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate or other notice of
any kind, all of which Borrower hereby expressly waives, anything contained
herein or in the Notes to the contrary notwithstanding, (iii) reduce any claim
to judgment, and/or (iv) without notice of default or demand, pursue and enforce
any of Lender's Rights under the Loan Documents or otherwise provided under or
pursuant to any applicable Law or agreement; provided, however, that if any
Event of Default specified in Section 8.6 shall occur, the principal of, and all
interest then accrued on, the Note and other liabilities hereunder shall
thereupon become due and payable automatically and concurrently therewith, and
Lender's obligations to lend shall immediately terminate hereunder, without any
further action by Lender and without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate or other notice of
any kind, all of which Borrower hereby expressly waives.
8.13 Performance by Lender. Should Borrower fail to perform any
covenant, duty or agreement contained herein or in any of the other Loan
Documents within any applicable cure period provided herein or in any of the
other Loan Documents, Lender may perform or attempt to perform such covenant,
duty or agreement on behalf of Borrower. Lender will give Borrower notice of
such performance or attempted performance. Borrower shall, at the request of
Lender, promptly pay any amount expended by Lender or its agents in such
performance or attempted performance to Lender at its principal office, together
with interest thereon at the Default Rate. Notwithstanding the foregoing, it is
expressly understood that Lender assumes no liability or responsibility for the
performance of any duties of Borrower hereunder or under any of the Loan
Documents or other control over the management and affairs of Borrower.
ARTICLE IX.
MISCELLANEOUS
9.1 Strict Compliance. If any action or failure to act by Borrower
violates or breaches any covenant or obligation of Borrower contained herein or
any other Loan Document, then such breach or violation shall not be excused by
the fact that such action or failure to act would otherwise be permitted by any
covenant (or exception to any covenant) other than the covenant violated.
9.2 Modification. All modifications, consents, amendments or waivers of
any provision of any Loan Document, or consent to any departure by Borrower
therefrom, shall be effective only if the same is in writing and signed by
Lender and then shall be effective only in the specific instance and for the
specific purpose for which given.
9.3 Accounting Reports. All financial reports furnished by Borrower
pursuant to this Agreement shall be prepared in such form and such detail as
shall be reasonably satisfactory to Lender, and shall be prepared in accordance
with GAAP.
9.4 Waivers of Rights. Lender's failure to exercise or delay in
exercising any Right shall not operate as a waiver thereof, and Lender's single
or partial exercise of any Right shall not preclude any other or further
exercise thereof or the exercise of any other Right. No
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notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other instances without such notice or
demand.
9.5 Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within thirty (30) days after any invoice or other statement or notice) pay: (i)
all reasonable costs and expenses incurred by or on behalf of Lender (including
without limitation, attorneys' fees but excluding overhead and other similar
administrative costs) in connection with (a) the negotiation, preparation,
execution and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (b) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (c) the borrowings hereunder and
other action reasonably required in the course of administration hereof, (d)
monitoring or confirming (or preparation or negotiation of any document related
to) Borrower's compliance with any covenants or conditions contained in this
Agreement or in any Loan Document, and (ii) all reasonable costs and expenses
incurred by or on behalf of Lender (including without limitation, attorneys'
fees, consultants' fees and accounting fees) in connection with the defense or
enforcement of any of the Loan Documents (including this section), specifically
including, without limitation, all costs and expenses incurred with respect to
any bankruptcy, insolvency or reorganization proceeding in which Borrower is a
party, regardless of whether Lender ultimately prevails in such bankruptcy,
insolvency or reorganization proceeding.
9.6 Indemnity. Borrower hereby indemnifies, and agrees to defend and
save harmless Lender and its officers, directors, employees, agents and
attorneys, and each of them (the "Indemnified Parties"), from and against all
claims, actions, suits and other legal proceedings commenced or asserted by any
third parties against any of the Indemnified Parties, and all damages, costs,
losses, interest, charges, counsel fees and other expenses and penalties
incurred by any of the Indemnified Parties in connection therewith, except the
Indemnified Parties' overhead and other similar administrative costs, as a
result of or arising out of the execution and delivery by Borrower of any
commitment letter or any of the Loan Documents, or the consummation or
performance of the transactions contemplated thereby or hereby (collectively,
the "Subject Transactions") by Borrower, or any act or failure to act by any of
the Indemnified Parties, taken or failed to be taken by such Indemnified Parties
in reliance upon any representation, warranty, covenant or promise made by
Borrower to Lender in connection with the Subject Transactions, including,
without limitation, damages, costs and expenses incurred by any of the
Indemnified Parties in investigating, preparing for, defending against,
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 or any other Law of any
jurisdiction.
Borrower hereby indemnifies, and agrees to defend and save harmless the
Indemnified Parties from and against all claims, actions, suits and other legal
proceedings, damages, costs, interest, charges, counsel fees and other expenses
and penalties which any of the Indemnified Parties may sustain or incur by
reason of or arising out of any Environmental Liability relating to the
Properties. This Agreement is intended to protect and indemnify the Indemnified
Parties against all risks involved in the Subject Transactions, all of which
risks are hereby assumed by Borrower. Notwithstanding anything to the contrary
contained in this Section
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9.6, Borrower does not indemnify the Indemnified Parties against losses,
liabilities, damages, claims, costs and expenses incurred by any of the
Indemnified Parties which arise directly from their willful misconduct, bad
faith or negligence. The obligations of Borrower under this Section 9.6 shall
survive any termination of this Agreement and payment of the Note as respects
any act or failure to act occurring prior to such termination or the assertion
of any claim based upon any event or circumstance occurring prior to such
termination.
9.7 Notices. Except for telephonic notices specifically permitted
herein, any notices or other communications required or permitted to be given by
this Agreement or any other Loan Documents and instruments referred to herein
must be (i) given in writing and personally delivered or mailed by prepaid
certified or registered mail, or (ii) made by telex delivered or transmitted, to
the party to whom such notice of communication is directed, to the address of
such party as follows: (a) Borrower: United States Exploration, Inc., Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (b) Lender:
Bank of Oklahoma, N.A., Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President, 201 ▇▇▇▇▇▇
▇. ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any notice to be mailed
or personally delivered may be mailed or delivered to the addresses provided
above. Any such notice or other communication shall be deemed to have been given
(whether actually received or not) on the day it is mailed or personally
delivered as aforesaid or, if transmitted by telex, on the day that such notice
is transmitted as aforesaid; provided, however, that any telephonic or other
notice received by Lender after 4:00 P.M. (Oklahoma time) on any day shall be
deemed to have been given on the next succeeding day. Any party may change its
address for purposes of this Agreement by giving notice of such change to the
other party or parties pursuant to this Section 9.7.
9.8 Governing Law. This Agreement has been negotiated and is being
executed and delivered, in the state of Oklahoma and the substantive Laws of
such state and the applicable federal Laws of the United States of America shall
govern the validity, construction, enforcement and interpretation of this
Agreement and all of the other Loan Documents, except to the extent the Laws of
any jurisdiction where Collateral is located require application of such Laws
with respect to such Collateral.
9.9 Choice of Forum and Jurisdiction. The obligations of Borrower for
payment of all amounts due under this Agreement and the Loan Documents are
performable in Oklahoma County, Oklahoma, and all other obligations of Borrower
under this Agreement and the Loan Documents are performable in Oklahoma. Any
suit, action or proceeding against Borrower with respect to this Agreement, the
Note, the other Loan Documents or any judgment entered by any court in respect
thereof, may be brought in the courts of the State of Oklahoma, County of
Oklahoma, or in the United States courts located in the State of Oklahoma as
Lender may elect, and Borrower hereby submits to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding. Borrower
hereby irrevocably waives any objections which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement, the Note or any other Loan Document brought in the courts
located in the State of Oklahoma, County of Oklahoma, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
9.10 Invalid Provisions. If any provision of any Loan Document is held
to be illegal, invalid or unenforceable under present or future Laws during the
term of this Agreement,
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such provision shall be fully severable; such Loan Document shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of such Loan Document; and the remaining provisions of such
Loan Document shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance from such
Loan Document. The fact that any provision hereof is held to be illegal,
invalid, or unenforceable shall not solely for such reason be an Event of
Default.
9.11 Maximum Interest Rate. Regardless of any provision contained in
any of the Loan Documents, Lender shall never be entitled to contract for,
charge, receive, collect or apply as interest on the Note any amount in excess
of the Maximum Rate, and, in the event that Lender ever receives, collects or
applies as interest any such excess, the amount which would be excessive
interest shall be deemed to be a partial prepayment of principal and treated
hereunder as such; and, if, the principal amount of the Note is paid in full,
any remaining excess shall forthwith be paid to Borrower. In determining whether
or not the interest paid or payable under any specific contingency exceeds the
Maximum Rate, Borrower and Lender 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, (ii) exclude voluntary and mandatory
prepayments and the effects thereof, and (iii) amortize, prorate, allocate and
spread the total amount of interest throughout the entire contemplated term of
the Note; provided that, if the Note are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, Lender shall refund
to Borrower the amount of such excess or credit the amount of such excess
against the principal amount of the Note and, in such event, Lender shall not be
subject to any penalties provided by any Laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum Rate.
9.12 Offset. Borrower hereby grants to Lender the right of offset to
secure repayment of the Indebtedness owing to Lender, upon any and all moneys,
securities, and other properties and assets, and the proceeds therefrom, now or
hereafter held or received by or in transit to Lender or any of Lender's agents,
from or for the account of Borrower, except such portions of the accounts or
deposits of Borrower, which have been specifically designated by Borrower to
Lender that they are for the benefit of Persons other than Borrower, and any and
all claims of Borrower against Lender at any time existing. Lender shall only be
entitled to exercise such right of offset upon the occurrence of any Event of
Default.
9.13 Table of Contents and Headings. The table of contents and section
headings are for convenience of reference only and shall in no way affect the
interpretation of this Agreement.
9.14 Benefit. Without Lender's prior written consent, Borrower may not
transfer or assign any rights and obligations hereunder or under any other Loan
Documents and, subject to such restriction, the provisions hereof and of the
other Loan Documents shall extend to and be binding upon the successors and
assigns of Borrower. All covenants and agreements contained herein by or on
behalf of any of the parties hereto shall bind and inure to the benefit of, and
be enforceable by, the respective successors and assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the benefit of,
and be enforceable by, the holder or holders of the Note. The parties do not
intend the benefits of the Loan Documents to inure to any third party, nor shall
the Loan Documents be construed to make or render Lender liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned
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by Borrower, or for debts or claims accruing to any such persons against
Borrower. Notwithstanding anything contained in the Loan Documents or any
conduct or course of conduct by any or all of the parties hereto, before or
after signing this Agreement, nothing in any Loan Document shall be construed as
creating any right, claim or cause of action against Lender, or any of Lender's
officers, directors, agents or employees, in favor of any materialman, supplier,
contractor, subcontractor, or purchaser or lessee of any property owned by
Borrower, nor in favor of any other Person other than Borrower.
9.15 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same agreement, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
9.16 Written Loan Agreement. This Agreement represents the final
agreement between Lender and Borrower as respects the subject matter hereof, and
may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no other written or oral agreements between
the parties, except as may be referenced in this Agreement or any of the other
Loan Documents.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
BORROWER: UNITED STATES EXPLORATION, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
LENDER: BANK OF OKLAHOMA, N.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
Exhibit "A" Revolving Note
Exhibit "B" Mortgage
Exhibit "C" Request for Advance
Exhibit "D" Guaranty
Exhibit "E" Permitted Liens
Exhibit "F" ▇▇▇▇▇
Exhibit "G" Title Defects
Exhibit "H" No Default Certificate
Exhibit "I" Litigation
Exhibit "J" Subsidiaries
Exhibit "K" Compliance Certificate
41
EXHIBITS OMITTED
