FIFTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
THIS FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN
AGREEMENT, dated as of July 31, 1997 ("this Agreement"), is entered into among
EQUITY COMPRESSION SERVICES CORPORATION, an Oklahoma corporation, formerly known
as Xxxxxxx Energy Corporation ("ECS"), SUNTERRA ENERGY CORPORATION, an Oklahoma
corporation ("Sunterra"), EQUITY COMPRESSORS, INC., an Oklahoma corporation
("Equity") and OUACHITA ENERGY CORPORATION, a Delaware corporation ("Ouachita
Energy") (ECS, Sunterra, Equity and Ouachita Energy being collectively referred
to as the "Borrowers") and BANK OF OKLAHOMA, NATIONAL ASSOCIATION, a national
banking association (the "BOK").
W I T N E S S E T H:
A. WHEREAS, the Borrowers have requested BOK to consent to the
transactions contemplated by that certain (i) Asset Purchase and Sale Agreement
dated as of May 15, 1997, among Ouachita Energy Partners, Ltd., a Louisiana
corporation ("Ouachita Partners"), Ouachita Compression Group, LLC, a Louisiana
limited liability company ("Ouachita Compression") as Sellers, Xxxxxx X. Xxxxx
("Shareholder"), OEC Acquisition Corporation ("Acquisition"), as Purchaser and
ECS (the "Asset Purchase Agreement"), (ii) Agreement and Plan of Merger dated as
of May 15, 1997, among Acquisition, Ouachita Energy Corporation, a Louisiana
corporation ("OEC"), the Shareholder and ECS (the "Merger Agreement"), and
(iii) June 24, 1997 letter of confirmation from The Prudential Insurance Company
of America ("Prudential") to ECS concerning the purchase by Prudential of
(a) $5,000,000 principal amount Senior Floating Rate Secured Term Notes due 2004
("Senior Notes"), (b) $15,000,000 principal amount Secured Senior Subordinated
Notes due 2007 ("Subordinated Pru Notes"); and (c) purchase warrants to purchase
1,000,000 shares of common stock of ECS (the "Warrants"); all pursuant to one or
more comprehensive Note Purchase Agreement(s) between Prudential (or one or more
of its subsidiaries or affiliates) and ECS (collectively the "Note Purchase
Agreements"); and (iv) this Agreement, including without limitation, adding
Ouachita Energy, the corporation surviving the merger of OEC and Acquisition, as
a Borrower hereunder, resetting the initial Bank Borrowing Base of the Borrowers
to $20,000,000 from the Closing Date through November 30, 1997, and increasing
the maximum aggregate Commitments of the Banks (each of the Persons listed as
Banks on the signature page hereto, including BOK in its capacity as a Bank and
such other Persons who may from time to time own a Percentage Interest in the
Bank Obligations) to $40,000,000; subject, however, in all respects to BOK's
Commitment hereunder not in excess of $20,000,000;
B. WHEREAS, BOK is willing to so modify and increase the Bank
Borrowing Base to the Borrowers to $20,000,000 from the Closing Date hereof to
November 30, 1997, and BOK is further willing to consent to the transactions
contemplated in clauses (i), (ii) and (iii) of Recital A above of this Agreement
and increase the maximum aggregate Commitments to $40,000,000, subject in all
respects to BOK's Commitment hereunder not in excess of $20,000,000 and subject
to Borrowers' agreement to such additional Bank(s), Assignee(s) or Credit
Participant(s) as may be obtained by the mutual consent of BOK and Borrowers in
accordance with the provisions of Articles X and XI hereof, all further subject
to the terms, conditions, uses and provisions hereinafter set forth, all of
which are material to BOK and without which BOK would not be willing to enter
into this Agreement; and
C. WHEREAS, ECS and Equity, INTER ALIA, and the Bank are
parties to that certain First Amended and Restated Revolving Credit and Term
Loan Agreement dated as of July 14, 1993, as modified by the Modification
thereto dated as of September 24, 1993, the Second Amended and Restated
Revolving Credit and Term Loan Agreement dated as of April 13, 1994, as modified
by
the Modification thereto dated as of December 30, 1994, the Third Amended and
Restated Revolving Credit and Term Loan Agreement dated as of September 1, 1996,
as modified by various modification agreements thereto dated as of March 31,
1996, October 1, 1996, and December 16, 1996, respectively, and the Fourth
Amended and Restated Revolving Credit and Term Loan Agreement dated as of March
31, 1997 (all of the foregoing being collectively referred to as the "Prior Loan
Agreements"), and in connection with the Borrowers' requested restructure and
modification of the Revolving Credit Commitment therein described and defined,
the Borrowers and the Bank desire to amend, modify and restate the Prior Loan
Agreements by the terms of this Agreement; and
D. WHEREAS, pursuant to the Merger Agreement and Asset
Purchase Agreement, Ouachita Energy will become a wholly owned subsidiary of
ECS, and the successor in interest to and record title holder of the assets
acquired by Acquisition and previously owned by Ouachita Partners, Ouachita
Compression and OEC, as well as certain assets previously owned individually the
Shareholder; and
E. WHEREAS, pursuant to the Note Purchase Agreements,
Prudential will purchase the Senior Notes, the Subordinated Notes and the
Warrants and the Bank, as a Lender and as the Collateral Agent for the Lenders
under the Security Instruments, and Prudential and all other Noteholders, as
Lenders, will, INTER ALIA, enter into the Intercreditor Agreement dated as of
even date herewith concerning INTER ALIA, their respective rights and
obligations with respect to security interests in and mortgage liens against the
Collateral in favor of the Agent for the ratable benefit of the Bank, the
holders of the Senior Notes and, on a junior and subordinate basis, the holders
of the Subordinated Notes;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, receipt
of which is acknowledged by the parties hereto, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
When used herein, the following terms shall have the following
meanings:
1.1 "ADDITIONAL COVENANT" shall mean any affirmative or
negative covenant or similar restriction applicable to the Borrowers or any
Subsidiary (regardless of whether such provision is labeled or otherwise
characterized as a covenant) the subject matter of which either (i) is similar
to that of the covenants in Article VII of this Agreement, or related
definitions in Article I of this Agreement, but contains one or more
percentages, amounts or formulas that is more restrictive than those set forth
herein or more beneficial to the holder or holders of the Indebtedness created
or evidenced by the document in which such covenant or similar restriction is
contained (and such covenant or similar restriction shall be deemed an
"Additional Covenant" only to the extent that it is more restrictive or more
beneficial) or (ii) is different from the subject matter of the covenants in
Article VII of this Agreement, or related definitions in Article I of this
Agreement.
1.2 "ADDITIONAL DEFAULT" shall mean any provision contained in
any document or instrument creating or evidencing Indebtedness of the Borrowers
which permits the holder or holders of Indebtedness to accelerate (with the
passage of time or giving of notice or both) the maturity thereof or otherwise
requires the Borrowers or any Subsidiary to purchase such Indebtedness prior to
the stated maturity thereof and which either (i) is similar to the Defaults and
Events of Default
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contained in Article IX of this Agreement, or related definitions in Article
I of this Agreement, but contains one or more percentages, amounts or
formulas that is more restrictive or has a xxxxxxx xxxxx period than those
set forth herein or is more beneficial to the holder or holders of such other
Indebtedness (and such provision shall be deemed an "Additional Default" only
to the extent that it is more restrictive, has a xxxxxxx xxxxx period or is
more beneficial) or (ii) is different from the subject matter of the Defaults
and Events of Default contained in Article IX of this Agreement, or related
definitions in Article I of this Agreement.
1.3 "ADJUSTED GROSS PROCEEDS" shall mean (i) all proceeds
received by Sunterra during the applicable period, whether directly or
indirectly, from purchasers of Hydrocarbons produced from the Mortgaged
Property, PLUS (ii) all amounts which Sunterra was entitled to receive during
such period but which were offset by the purchaser of production or an
intermediary against obligations (other than ordinary operating expenses) owing
by Sunterra; LESS the amount of all gathering, severance and windfall profits
taxes required to be paid by Sunterra with respect to said proceeds and all
royalty and overriding royalty payments to third parties and all ordinary and
necessary operating expenses paid by Sunterra with respect to the Mortgaged
Property, excluding only such expenses that (i) qualify as capitalized items
under GAAP or (ii) are defined or described in the energy industry as workover
expenses or costs.
1.4 "ADMINISTRATIVE AGENT" shall mean BOK as appointed by the
Banks pursuant to Section 10.2 hereof.
1.5 "AFFILIATE" shall mean any Person which, directly or
indirectly, controls, or is controlled by, or is under common control with,
another Person and any partner, officer or employee of any such Persons, except
a Subsidiary. For purposes of this definition, "control" shall mean the power,
directly or indirectly, to direct or in effect cause the direction of the
management and policies of such Person whether by contract or otherwise.
1.6 "AIRCRAFT CHATTEL MORTGAGE" shall have the meaning ascribed
thereto in Section 5.1(e) hereof.
1.7 "APPLICABLE PRIME RATE" shall mean the annual rate of
interest announced by Chase Manhattan Bank, National Association, New York, New
York ("Chase") from time to time as its prime or base rate, which rate shall be
the rate used by Chase as a base or standard for pricing purposes and which
shall not necessarily be its "best" or lowest rate, as adjusted pursuant to the
provisions of Section 2.2 hereof. Should Chase cease to announce a prime or
base rate or should it be merged, consolidated, liquidated or dissolved in such
a manner that it loses its separate corporate identity, then the Applicable
Prime Rate shall be the Prime Rate published by the WALL STREET
JOURNAL(Southwest Edition) in its "Money Rates" column or a similar rate if such
rate ceases to be published. Any changes in the Applicable Prime Rate shall be
effective as of the date of the change.
1.8 "ASSIGNEE(S)" shall have the meaning ascribed thereto in
Section 11.2 hereof.
1.9 "BANK" shall initially mean only BOK and "BANKS" shall mean
each of the Persons listed as Banks on the signature page hereto, including BOK
in its capacity as a Bank and such other Persons who may from time to time own a
Percentage Interest in the Credit Obligations in accordance with Article X
hereof, but the term "Bank" shall not include any Bank Participant.
1.10 "BANK BORROWING BASE" shall mean the LESSER of (i) the
Commitments or (ii) the Revolving Credit Borrowing Base calculated in accordance
with the provisions of Section 2.4 hereof (regardless of whether calculated
before or after the Conversion Date) minus the total outstanding principal
balance of the Senior Notes.
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1.11 "BANK NOTE" shall mean the Borrowers' joint and several
$40,000,000 promissory note in the form of EXHIBIT "A" annexed hereto, to be
delivered to the order of BOK pursuant to Section 2.2 hereof, together with any
and all extensions, renewals, modifications, substitutions and changes in form
thereof which may be from time to time and for any term or terms effected.
1.12 "BANK OBLIGATIONS" shall mean and include any and all: (i)
indebtedness, obligations and liabilities of the Borrowers to any Bank incurred
or which may be incurred or purportedly incurred hereafter pursuant to the terms
of this Agreement or any of the other Loan Documents, and any replacements,
amendments, extensions, renewals, substitutions, amendments and increases in
amount thereof, including such amounts as may be evidenced by the Bank Note and
all lawful interest, late charges, service fees, commitment fees, fees in lieu
of balances, letter of credit fees and other charges, and all reasonable costs
and expenses incurred in connection with the preparation, filing and recording
of the Loan Documents, including attorneys fees and legal expenses; (ii) all
reasonable costs and expenses paid or incurred by the Collateral Agent or any
Bank, including attorneys fees, in enforcing or attempting to enforce collection
of any Indebtedness and in enforcing or realizing upon or attempting to enforce
or realize upon any collateral or security for any Indebtedness, including
interest on all sums so expended by the Banks accruing from the date upon which
such expenditures are made until paid, at an annual rate equal to the Default
Rate; and (iii) all sums expended by the Collateral Agent or any Bank in curing
any Event of Default or Default of the Borrowers under the terms of this
Agreement, the other Loan Documents or any other writing evidencing or securing
the payment of the Bank Note together with interest on all sums so expended by
the Collateral Agent or any Bank accruing from the date upon which such
expenditures are made until paid, at an annual rate equal to the Default Rate.
1.13 "BOK BORROWING BASE" shall mean the LESSER of (i) the BOK
Commitment or (ii) BOK's Percentage Interest in the Bank Borrowing Base.
1.14 "BOK COMMITMENT" shall mean BOK's portion of the
Commitments which shall not exceed $20,000,000 unless and until BOK, with
Borrowers' written consent, agrees in writing to increase such BOK Commitment
above $20,000,000 pursuant to the provisions of Articles X and XI hereof.
1.15 "BUSINESS DAY" shall mean a day other than a Saturday,
Sunday or a day upon which banks in the State of Oklahoma are closed to business
generally.
1.16 "CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles, would be
required to be capitalized on the books of the Borrowers or any Subsidiary,
taken at the amount thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles.
1.17 "CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, together with all
regulations and rulings promulgated with respect thereto.
1.18 "CHANGE IN CONTROL" shall mean the failure of the members
of the Control Group to own, on a fully diluted basis, at least 41% of the
combined voting power of all then issued and outstanding Voting Stock of ECS,
together with any one or more of the following: (i) the failure of the members
of the Board of Directors of ECS existing on the Closing Date to constitute a
majority of the members of the Board of Directors of ECS, or (ii) the failure of
the members of the Control Group to own, on a fully diluted basis, the largest
voting block of the outstanding Voting Stock of ECS or (iii) the failure of
either or both of the Persons holding the offices of President and Chief
Financial Officer of ECS as of the Closing Date to continue to hold such
offices.
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1.19 "CLOSING DATE" shall mean August 5, 1997, or such later
date as the parties to this Agreement agree in writing.
1.20 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.21 "COLLATERAL" shall have the meaning assigned to that term
in Article V of this Agreement.
1.22 "COLLATERAL AGENT" shall mean BOK, in its capacity as
Collateral Agent for each Bank and for the holders of the Senior Notes and the
Subordinated Notes, as provided under the Intercreditor Agreement, and its
successors and assigns as such Collateral Agent.
1.23 "COMMITMENTS" shall mean at any time prior to the
Conversion Date the aggregate amount of the Revolving Credit Commitment(s)
extended hereunder to the Borrowers by the Banks in the maximum principal
amount of $40,000,000.
1.24 "COMPRESSOR OPERATING INCOME" shall mean the sum of
Equity's and Ouachita Energy's rental/maintenance fees and revenues less the sum
of direct compressor rental and operating expenses per GAAP.
1.25 "CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to
any period, the sum (without duplication) of the following (in each case,
eliminating all offsetting debits and credits between and among the Borrowers
and all other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Borrowers and all imputed interest
expense for the Warrants in accordance with GAAP) all interest and prepayment
charges in respect to Indebtedness of the Borrowers (including imputed interest
in respect of Capitalized Lease Obligations and net costs of Swaps) deducted in
determining consolidated net income for such period, together with all interest
capitalized or deferred during such period and not deducted in determining
consolidated net income for such period.
1.26 "CONTROL GROUP" shall mean those record or beneficial
owners of ECS listed on Exhibit F attached hereto.
1.27 "CONVERSION DATE" shall mean March 31, 1999 or such later
date as the Banks shall agree to in writing.
1.28 "COVERAGE RATIO" shall have the meaning ascribed
thereto in Section 2.2 hereof.
1.29 "CREDIT PARTICIPANT" is defined in Section 11.2 of this
Agreement.
1.30 "CURRENT ASSETS" shall mean the value of the current assets
of the Borrowers and their Subsidiaries determined in accordance with GAAP on a
consolidated basis.
1.31 "CURRENT LIABILITIES" shall mean the amount of current
liabilities of the Borrowers and their Subsidiaries determined in accordance
with GAAP on a consolidated basis.
1.32 "CURRENT RATIO" shall mean the ratio of Current Assets to
Current Liabilities.
1.33 "DEBT SERVICE" shall mean, with respect to any period, the
sum of the following for the Borrowers, determined on a consolidated basis in
accordance with GAAP: (i) Consolidated Interest Expense for such period and
(ii) all payments of principal in respect of Indebtedness (including the
principal component of any payments in respect of Capitalized Lease Obligations)
but excluding voluntary principal payments on the Bank Note prior to the
Conversion Date.
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1.34 "DEFAULT RATE" shall mean the Applicable Prime Rate plus
four percentage points (4%).
1.35 "EBITDA" shall mean, for any period, the sum of (i) net
income for the Borrowers, determined on a consolidated basis in accordance with
GAAP, PLUS (ii) to the extent deducted in the determination of consolidated net
income, (a) all provisions for federal, state and other income tax,
(b) Consolidated Interest Expense and (c) provisions for depreciation and
amortization, LESS extraordinary items, gains on sales of assets and income from
discontinued operations, which in the aggregate will be deducted only to the
extent they are positive.
1.36 "ENVIRONMENTAL LAWS" shall mean Laws, including without
limitation federal, state or local Laws, ordinances, rules, regulations,
interpretations and orders of courts or administrative agencies or authorities
relating to pollution or protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface and subsurface
strata), including without limitation CERCLA, XXXX, RCRA, HSWA, OPA, HMTA, TSCA
and other Laws relating to (i) Polluting Substances or (ii) the manufacture,
processing, distribution, use, treatment, handling, storage, disposal or
transportation of Polluting Substances.
1.37 "ERISA" shall mean the Federal Employee Retirement Income
Security Act of 1974, as amended, together with all regulations and rulings
promulgated with respect thereto.
1.38 "ERISA AFFILIATE" shall mean any corporation which is a
member of the same controlled group of corporations as ECS within the meaning of
Section 414(b) of the Code, or any trade or business which is under common
control with ECS within the meaning of Section 414(c) of the Code.
1.39 "EVENT OF DEFAULT" shall mean any of the events specified
in Section 9.1 of this Agreement, and "DEFAULT" shall mean any event, which
together with any lapse of time or giving of any notice, or both, would
constitute an Event of Default.
1.40 "FINISHED GOODS" shall mean that portion of the Inventory
which constitutes natural gas compressor units completed for lease or sale by
Equity or Ouachita Energy.
1.41 "GAAP" shall mean generally accepted accounting principles
applied on a consistent basis in all material respects to those applied in the
preceding period, unless the Borrowers' outside accountants reasonably determine
that there should be a different application based upon relevant accepted
Financial Accounting Standards. Unless otherwise indicated herein, all
accounting terms will be defined according to GAAP.
1.42 "GUARANTEE" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any indebtedness, lease, dividend or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with,
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or that the holders of such obligation will be protected against loss in
respect thereof. The amount of any Guarantee shall be equal to the
outstanding principal amount of the obligation guaranteed or such lesser
amount to which the maximum exposure of the guarantor shall have been
specifically limited.
1.43 "GUARANTY AGREEMENTS" shall mean Guaranty Agreements, dated
as of July 31, 1997, made by each of Equity, Sunterra and Ouachita Energy, each
in favor of Prudential and all subsequent holders of the Senior Notes or
Subordinated Notes, as applicable, substantially in the form of EXHIBIT C to the
Senior Note Agreement and EXHIBIT D to the Subordinated Note Agreement, and all
Guaranty Agreements hereafter executed by any Subsidiary as contemplated under
Section 7.35 hereof as each may be amended, supplemented and otherwise modified
from time to time.
1.44 "HEREBY", "HEREIN", "HEREOF", "HEREUNDER" and similar such
terms shall mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears.
1.45 "HMTA" shall mean the Hazardous Materials Transportation
Act, as amended, together with all regulations and rulings promulgated with
respect thereto.
1.46 "HSWA" shall mean the Hazardous and Solid Waste Amendments
of 1984, as amended, together with all regulations and rulings promulgated with
respect thereto.
1.47 "HYDROCARBONS" shall have the meaning assigned to that term
in the Mortgage.
1.48 "INDEBTEDNESS" shall mean, with respect to any Person or
consolidated group of Persons, without duplication, (i) all items (excluding
items of contingency reserves or of reserves for deferred income taxes) which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person or consolidated group of
Persons as of the date on which Indebtedness is to be determined; (ii) all
indebtedness secured by any Lien on, or payable out of the proceeds of
production from, any property or asset owned or held by such Person subject
thereto, whether or not the Indebtedness secured thereby shall have been
assumed; (iii) redemption obligations in respect of mandatorily redeemable
preferred stock; (iv) Swaps; (v) unfunded pension liabilities; (vi) contingent
obligations as an account party in respect of letters of credit; and
(vii) guarantees of Indebtedness of other Persons of the types described in the
foregoing clauses (i) through (vi).
1.49 "INTERCREDITOR AGREEMENT" shall have the meaning ascribed
thereto in Section 6.1(m) hereof.
1.50 "INVENTORY" shall mean and include all of Equity's and
Ouachita Energy's natural gas compressor units and other goods intended for sale
or lease, all Raw Materials, Work In Process, Finished Goods, packaging, labels,
advertising materials and all supplies of every kind or nature which are used or
may be used in manufacturing, selling, leasing, packing, shipping, advertising,
leasing or furnishing of goods (including natural gas compressor units), whether
now owned or hereafter acquired and wherever located.
1.51 "LAWS" shall mean all statutes, laws, ordinances,
regulations, orders, writs, injunctions, or decrees of the United States, any
state or commonwealth, any municipality, any foreign country, any territory or
possession, or any Tribunal.
1.52 "LENDERS" shall mean the Noteholders and each Bank, and
their respective participants, successors and assigns.
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1.53 "LETTERS OF CREDIT" shall mean any and all letters of
credit issued by the Bank pursuant to the request of any of the Borrowers in
accordance with the provisions of Section 2.2.5 hereof which at any time remain
outstanding and subject to draw by the beneficiary, whether in whole or in part.
1.54 "LETTER OF CREDIT EXPOSURE" means, at any date, the sum of
(a) the aggregate face amount of all drafts that may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding, PLUS
(b) the aggregate face amount of all drafts that the Letter of Credit Issuer has
previously accepted under Letters of Credit but has not paid.
1.55 "LETTER OF CREDIT ISSUER" means, for any Letter of Credit,
BOK, or in the event BOK does not for any reason issue a requested Letter of
Credit, another Bank designated by BOK to issue such Letter of Credit in
accordance with Section 2.2.5 of this Agreement.
1.56 "LIEN" shall mean any mortgage, pledge, security interest,
assignment, encumbrance, lien (statutory or otherwise), contractual deposit
arrangement or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
production payment, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction or other type or similar form of public notice under the Laws
of any jurisdiction for the purpose, or having the effect of, protecting a
creditor against loss or securing the payment or performance of an obligation).
1.57 "LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Security Instruments and all other documents, instruments and certificates
executed and delivered to the Collateral Agent on behalf of the Lenders by the
Borrowers pursuant to the terms of this Agreement.
1.58 "LOANS" shall mean all advances made and Letter of Credit
draws funded hereunder pursuant to the Revolving Credit Commitment, including
all sums evidenced by the Bank Note.
1.59 "MORTGAGED PROPERTY" shall mean the property covered by the
Oil and Gas Mortgage defined in Section 5.1(b) of this Agreement.
1.60 "MORTGAGES" shall mean the Aircraft Chattel Mortgage, Oil
and Gas Mortgage and the Real Estate Mortgage, collectively.
1.61 "MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA).
1.62 "NET WORTH" shall mean, on any date as of which the amount
thereof is to be determined, the sum of the following determined on a
consolidated basis in accordance with GAAP:
(a) The amount of stated capital (less cost
of treasury shares),
PLUS
(b) The amount of surplus and retained
earnings (or, in the case of surplus or retained
earnings deficit, minus the amount of such
deficit).
1.63 "NOTE" shall mean the Bank Note.
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1.64 "NOTE PURCHASE AGREEMENTS" shall collectively mean the
Senior Note Agreement and the Subordinated Note Agreement.
1.65 "NOTEHOLDERS" shall mean Prudential and the other holders
of the Pru Notes.
1.66 "OBB RATIO" shall have the meaning ascribed thereto in
Section 2.2.1 hereof.
1.67 "OIL AND GAS MORTGAGE" shall have the meaning assigned to
that term in Section 5.1(b) hereof.
1.68 "OPA" shall mean the Oil Pollution Act of 1990, as amended,
together with all regulations and rulings promulgated with respect thereto.
1.69 "OUACHITA ASSETS" shall mean the Property as described and
defined in the Asset Purchase Agreement.
1.70 "PBGC" shall mean the Pension Benefit Guaranty Corporation
or any successor entity.
1.71 "PERCENTAGE INTEREST" is defined in Section 10.1 hereof.
1.72 "PERSON" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, and a government or any department, agency or political
subdivision thereof.
1.73 "PLAN" shall mean any "employee pension benefit plan" (as
such term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by ECS or any ERISA
Affiliate.
1.74 "PLEDGE AGREEMENTS" shall have the meaning ascribed thereto
in Section 5.1(d) hereof below.
1.75 "POLLUTING SUBSTANCES" shall mean all pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
and shall include, without limitation, any flammable explosives, radioactive
materials, oil, hazardous materials, hazardous or solid wastes, hazardous or
toxic substances or related materials defined in CERCLA/XXXX, RCRA/HSWA and in
the HMTA; provided, in the event either CERCLA/XXXX, RCRA/HSWA or HMTA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and,
provided further, to the extent that the Laws of any State or other Tribunal
establish a meaning for "hazardous substance, "hazardous waste," "hazardous
material," "solid waste" or "toxic substance" which is broader than that
specified in CERCLA/XXXX, RCRA/HSWA, or HMTA, such broader meaning shall apply.
1.76 "PRU NOTES" shall mean the Senior Notes and the
Subordinated Notes.
1.77 "PRUDENTIAL" shall mean The Prudential Insurance Company of
America or any one or more of its affiliates or subsidiaries that are parties to
either of the Note Purchase Agreements.
1.78 "PRUDENTIAL OBLIGATIONS" shall mean all obligations of ECS
and its Subsidiaries to Prudential or the Noteholders under the Note Purchase
Agreements and the Guaranty Agreements.
1.79 "RAW MATERIALS" shall mean that portion of the Inventory
which constitutes parts, components, accessories and materials to become a part
of the Finished Goods.
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1.80 "RCRA" shall mean the Resource Conservation and Recovery
Act of 1976, as amended, together with all regulations and rulings promulgated
with respect thereto.
1.81 "REAL ESTATE MORTGAGES" shall have the meaning ascribed
thereto in Section 5.1(c).
1.82 "REGISTER" is defined in Section 11.1.3 of this Agreement.
1.83 "REQUIRED BANKS" with respect to any approval, consent,
modification, waiver or other action to be taken by the Administrative Agent or
the Banks under the Loan Documents which require action by the Required Banks,
such Banks that own 66 2/3% of the outstanding Percentage Interests (it being
stipulated that notwithstanding BOK's Percentage Interest set forth in
Section 10.1 hereof, that for so long as BOK is the only Bank under this
Agreement, BOK shall be deemed to be the holder of 100% of the outstanding
Percentage Interest for purposes of the definition of "Required Banks" as
contemplated hereby), except only as otherwise provided in Section 10.6 of this
Agreement.
1.84 "RESPONSIBLE OFFICER" shall mean the chief executive
officer, chief operating officer, chief financial officer or chief accounting
officer of a Transaction Party or any other officer of such Transaction Party
involved principally in its financial administration or its controllership
function.
1.85 "REVOLVING CREDIT BORROWING BASE" shall mean an amount
equal to the sum of (x) the LESSER of (i) fifty percent (50%) of the aggregate
sum of Equity's and Ouachita Energy's most recent compressor parts inventory
book value determined pursuant to GAAP (lower of cost or market value) or (ii)
$1,000,000; plus (y) a multiple equal to five (5) times the aggregate sum of
Borrowers' compressor fleets most recent six (6) month trailing Compressor
Operating Income (per GAAP), adjusted quarterly effective as of the first day of
each March, June, September and December commencing as of December 1, 1997,
based on the last day of each calendar quarter (initially the calendar quarter
ending September 30, 1997), all pursuant to the provisions hereof but, at the
Banks' sole discretion, future fleet acquisitions by Borrowers requiring a
Revolving Credit Loan advance under Article II hereof may be included in the
Revolving Credit Borrowing Base following each Bank's review and approval of the
data submitted by Borrowers in support thereof; plus (z) the Oil and Gas
Collateral Borrowing Base (as redetermined semi-annually in accordance with
Section 4.1 hereof as rolled forward to the next Oil and Gas Borrowing Base
determination date (either May 31 or November 30 as the case may be).
1.86 "REVOLVING CREDIT COMMITMENT" shall mean the agreement of
the Banks (initially only BOK) to make Revolving Credit Loans under Article II
of this Agreement in the maximum outstanding principal amount of $40,000,000
pursuant to the terms and conditions hereof and subject to the limitations
hereof, from the Closing Date until the Conversion Date, or such later date as
the Banks may extend the Commitments to make Revolving Credit Loans by an
extension in writing, unless earlier terminated pursuant to the terms hereof.
1.87 "REVOLVING CREDIT LOANS" shall mean the advances to the
Borrowers described in Article II of this Agreement, including the sum of
unfunded, outstanding Letters of Credit issued pursuant thereto.
1.88 "XXXX" shall mean the Superfund Amendments and
Reauthorization Act of 1987, as amended, together with all regulations and
rulings promulgated with respect thereto.
1.89 "SECURITY AGREEMENT" shall have the meaning assigned to
that term in Article V of this Agreement.
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1.90 "SECURITY INSTRUMENTS" shall mean the Aircraft Chattel
Mortgage, the Oil and Gas Mortgage, the Real Estate Mortgages, the Declaration
(defined in Section 5.1), the Security Agreement, the Pledge Agreements, the
Guaranty Agreements and all other financing statements, assignments, security
agreements, pledges, lien entry forms, documents or writings and any and all
amendments, modifications and supplements thereto or restatements thereof,
granting, conveying, assigning, transferring or in any manner providing the Bank
with a security interest in any property as security for the repayment of all or
any part of the Bank Obligations.
1.91 "SENIOR NOTE AGREEMENT" shall mean the Senior Note
Agreement between ECS and Prudential dated as of July 31, 1997 (pertaining to
the Senior Notes).
1.92 "SENIOR NOTES" shall mean the Senior Notes (in the maximum
aggregate principal amount of $5,000,000) issued by ECS pursuant to the Senior
Note Agreement.
1.93 "SENIOR OBLIGATIONS" shall mean the Bank Obligations and
the Senior Prudential Obligations.
1.94 "SENIOR PRUDENTIAL OBLIGATIONS" shall mean the obligations
of ECS to Prudential and the other Noteholders under the Senior Notes pursuant
to the Senior Note Agreement.
1.95 "SGA" shall mean Selling, General and Administrative
Expenses of Borrowers, on a consolidated basis (per GAAP).
1.96 "SPECIFIED SALES PROCEEDS" shall mean:
(a) with respect to the sale of any of the Mortgaged
Property, the greater of (i) sixty-five percent (65%) of the
sales price of such Mortgaged Property, or (ii) sixty-five
percent (65%) of the discounted present worth of the Mortgaged
Property being sold as evaluated and determined by the most
recent semi-annual engineering report required by Section 4.1
hereof. (In the event the oil and gas properties sold were not
individually evaluated in the most recent engineering reports,
65% of the sales proceeds thereof shall be deemed the Specified
Sales Proceeds thereof); and
(b) with respect to the sale of any compressor unit, the
greater of (i) sixty-five percent (65%) of the sales price of
such compressor unit; or (ii) sixty-five percent (65%) of the
market value thereof stated in the most recent compressor
appraisal provided pursuant to Section 2.9 hereof.
1.97 "SUBORDINATED NOTE AGREEMENT" shall mean that certain
Subordinated Note and Warrant Purchase Agreement between ECS and Prudential
dated as of July 31, 1997 (pertaining to the Subordinated Notes and the
Warrants).
1.98 "SUBORDINATED NOTES" shall mean the Subordinated Notes (in
the maximum aggregate principal amount of $15,000,000) issued by ECS pursuant to
the Subordinated Note Agreement.
1.99 "SUBORDINATED PRUDENTIAL OBLIGATIONS" shall mean the
obligations of ECS and its Subsidiaries to Prudential and the other Noteholders
under the Subordinated Notes, Guaranty Agreements and the Warrants pursuant to
the Subordinated Note Agreement.
1.100 "SUBSIDIARY" shall mean (i) any corporation, at least
50% of the total combined voting power of all classes of Voting Stock of which
shall, at the time as of which any determination is being made, be owned by ECS
either directly or through Subsidiaries, and (ii) any partnership, joint venture
or similar entity if at least a 50% interest in the profits or capital thereof
is owned by
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ECS, either directly or through Subsidiaries (unless such entity can and does
ordinarily take major business actions without the prior approval, direct or
indirect, of ECS).
1.101 "SWAPS" shall mean with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this Agreement, the
amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
1.102 "TANGIBLE NET WORTH" shall mean Net Worth MINUS all
assets which would be classified as intangible assets under GAAP, including
(without limitation) good will, patents, franchises, organization costs,
research and development costs, covenants not to compete and other deferred
charges.
1.103 "TAXES" shall mean all taxes, assessments, fees, or
other charges or levies from time to time or at any time imposed by any Laws or
by any Tribunal.
1.104 "TERMINATION EVENT" shall mean (i) a Reportable Event
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a Reportable Event not subject to the provision for 30-day notice to the
PBGC under such regulations), or (ii) the withdrawal of the Borrowers or any of
their ERISA Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC, or (v) any other event or
condition that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
1.105 "TOTAL LENDER/CAPITALIZED LEASE OBLIGATIONS" shall
mean the amount of all long term debt liabilities established pursuant to this
Agreement and the Note Purchase Agreements plus all current maturities of long
term Indebtedness of the Borrowers plus Capitalized Lease Obligations, all
determined in accordance with GAAP on a consolidated basis.
1.106 "TOTAL REVENUES" shall mean the total gross revenues
of Borrowers on a consolidated basis (per GAAP).
1.107 "TRANSACTION PARTIES" shall mean ECS, Equity, Sunterra
and Ouachita Energy.
1.108 "TRIBUNAL" shall mean any municipal, state,
commonwealth, Federal, foreign, territorial or other sovereign, governmental
entity, governmental department, court, commission, board, bureau, agency or
instrumentality.
1.109 "TSCA" shall mean the Toxic Substances Control Act,
as amended, together with all regulations and rulings promulgated with respect
thereto.
1.110 "VOTING STOCK" shall mean, with respect to any
corporation, any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
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1.111 "WARRANTS" shall mean the Common Stock Purchase
Warrants (evidencing rights to purchase an aggregate amount of 1,000,000 shares
of common stock of ECS) issued by ECS pursuant to the Subordinated Note
Agreement.
1.112 "WHOLLY-OWNED" means, as applied to any Subsidiary of
any Person, a Subsidiary at least 98% (by vote or value) of the outstanding
equity interests (other than directors' qualifying shares, if required by law)
of all classes, taken together as a whole, of which are at the time owned by
such Person or by one or more of its Wholly-Owned Subsidiaries or by such person
and one or more of the Wholly-Owned Subsidiaries.
1.113 "WORK IN PROCESS" shall mean that portion of Inventory
of Borrowers, including natural gas compressors, upon which manufacturing,
assembling, fabricating or processing work has commenced but which does not yet
constitute Finished Goods.
ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references
in this Agreement to "GAAP" shall be deemed to refer to generally accepted
accounting principles in effect in the United States at the time of application
thereof. Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all unaudited financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Borrowers and their Subsidiaries delivered pursuant to clause
(b) of Section 7.6 or, if no such statements have been so delivered, the most
recent audited financial statements referred to in Section 8.3 hereof.
ARTICLE II
REVOLVING CREDIT LOAN
2.1 REVOLVING CREDIT LOANS. Subject to recalculation of the
Revolving Credit Borrowing Base as defined in Section 2.4 hereof, the Banks
agree, upon the terms and subject to the conditions hereinafter set forth,
severally in accordance with their respective Percentage Interests and
Commitments to make Revolving Credit Loans from time to time, on or after the
Closing Date to the Borrowers jointly in an outstanding principal amount not to
exceed the Bank Borrowing Base, the unpaid principal balance of which Revolving
Credit Loans is convertible to a sixty (60) month term loan on March 31, 1999
(the "Conversion Date"), pursuant to Section 2.2.2 hereof.
2.2 BANK NOTE. Concurrent with the closing hereof, the
Borrowers will execute and deliver to the order of BOK their joint and several
replacement promissory note in the original principal amount of $40,000,000, a
copy of which is annexed hereto as EXHIBIT "A" and hereby made a part hereof
(hereinafter referred to as the "Bank Note"), bearing interest payable monthly
on the last day of every month commencing August 31, 1997, on unpaid balances of
principal from time to time outstanding and on any past due interest at a
variable annual rate as follows:
2.2.1. THROUGH MAY 31, 1999. Initially from the Closing
Date through August 31, 1997, at a variable annual rate equal from day to day to
Applicable Prime Rate minus .25% and thereafter equal from day to day to the
Applicable Prime Rate less, if applicable, the percentage set forth below, such
variable annual rate being adjustable quarterly as of the close of the second
month after each calendar quarter (based on the immediately preceding calendar
quarter end financial statement calculations and data) commencing as of August
31, 1997 (for the calendar quarter ended June 30, 1997) as follows:
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OBB Ratio Applicable Interest Rate
--------- ------------------------
> 80% Applicable Prime Rate
-
> 60% but < 80% Applicable Prime Rate
minus .25%
< 60% Applicable Prime Rate
- minus .50%
As used herein "OBB Ratio" shall mean the ratio of the average daily outstanding
borrowings under the Bank Note for the most recently completed calendar quarter
from the Closing Date (including unfunded portions of outstanding Letters of
Credit issued hereunder) until the Conversion Date divided by the average daily
Bank Borrowing Base as herein established and redetermined from time to time.
2.2.2 AFTER MAY 31, 1999. The unpaid and outstanding
principal balance of the Bank Note shall be converted on March 31, 1999 to a
term loan ("Convertible Term Loan") payable in fifty-nine (59) consecutive
monthly principal payments each equal to one-sixtieth (1/60th) of the LESSER of
the convertible amount or the Bank Borrowing Base as redetermined as of December
31, 1998 (the "Redetermined Borrowing Base") payable on the last day of each
calendar month commencing April 30, 1999, with the remaining principal and all
accrued interest due and payable at final maturity on March 31, 2004. All
payments received shall be applied first to accrued interest and then to the
outstanding principal amount owing on the Bank Note. The variable annual rate of
interest payable upon the indebtedness evidenced by the Bank Note from and
including April 1, 1999, is subject to quarterly adjustment on the close of the
second month after each calendar quarter (based on the immediately preceding
calendar quarter end financial statement calculations and data) commencing as of
May 31, 1999 (for the calendar quarter ended March 31, 1999), pursuant to the
Coverage Ratio described below:
Coverage Ratio Applicable Interest Rate
-------------- ------------------------
< 1.30 to 1 Applicable Prime Rate
-
> 1.30 to 1 but < 1.50 to 1 Applicable Prime Rate
- minus .25%
> 1.50 to 1 Applicable Prime Rate
minus .50%
As used herein "Coverage Ratio" shall mean for Borrowers the following:
EBITDA for previous 6 month
DIVIDED BY Previous 6 months of Bank Note principal and interest payments
PLUS any other term indebtedness principal and interest payments
for same 6 month period
2.2.3. QUARTERLY CERTIFICATES. No later than each February
28, May 31, August 31 and November 30 of each year, commencing as of May 31,
1999, Borrowers shall submit to the Collateral Agent a quarterly certification
signed by the Chief Financial Officer of ECS demonstrating the Borrowers'
calculations of such Coverage Ratio in reasonable detail acceptable to each
Bank.
2.2.4. PAYMENTS/ADVANCES. Prior to the Conversion Date, the
Borrowers may from time to time make prepayments of principal without premium or
penalty, provided that on or after April 1, 1999, interest on the amount
prepaid, accrued to the prepayment date, shall be paid on such prepayment date
shall accompany such prepayment. The Borrowers may not reborrow any amounts
paid or prepaid on the Bank Note on or after March 31, 1999. All payments and
prepayments shall be made in lawful money of the United States of America. All
outstanding principal of and unpaid
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accrued interest on the Bank Note not previously paid hereunder shall be due
and payable at final maturity on March 31, 2004, unless such final maturity
shall be extended by each Bank in writing or accelerated pursuant to the
terms hereof. After maturity (whether by acceleration or otherwise) the Bank
Note shall bear interest at the Default Rate, payable on demand. Interest
shall be calculated on the basis of a year of 365 days but assessed for the
actual number of days elapsed in each accrual period. In no event shall the
outstanding and unpaid principal amount advanced on the Bank Note exceed
$20,000,000 until November 30, 1997 (the "Initial Redetermined Borrowing Base
Date") without the express prior written consent of each Bank.
2.2.5. LETTERS OF CREDIT. Upon the Borrowers' application
from time to time by use of BOK's standard form Letter of Credit Application
Agreement and subject to the terms and provisions therein and herein set forth,
BOK agrees to issue standby letters of credit on behalf of the Borrowers under
the BOK Commitment in an aggregate unfunded amount not in excess of $500,000,
provided that (i) no letters of credit shall be issued on behalf of or on the
account of Borrowers with an expiry date later than March 31, 1999 and (ii) no
letter of credit will be issued on behalf of or for the account of the Borrowers
if at the time of issuance the outstanding amount of all unpaid Revolving Credit
Loans (including the aggregate outstanding and unfunded amount of unexpired
letters of credit then existing) under the Commitments as evidenced by the Bank
Note plus the maximum amount of such Letter of Credit then being requested would
exceed the Bank Borrowing Base. If any letter of credit is drawn upon at any
time, each amount drawn, whether a full or partial draw thereon, shall be
automatically reflected by the Bank as an advance on the Bank Note effective as
of the date of BOK's honoring the sight draft. In consideration of BOK's
agreement to issue standby letters of credit hereunder, the Borrowers agree to
pay to BOK letter of credit fees equal to one and one-half percentage points
(1.5%) per annum on the face amount of each letter of credit, which such fee
shall be due and payable to BOK at the time of issuance of each applicable
letter of credit.
2.2.6 BANKS' PARTICIPATION IN LETTERS OF CREDIT. Upon the
issuance of any Letter of Credit, a participation therein, in an amount equal to
each Bank's Percentage Interest, shall automatically be deemed granted by the
Letter of Credit Issuer to each Bank on the date of such issuance and the Banks
shall automatically be obligated, as set forth in Section 10.4, to reimburse the
Letter of Credit Issuer to the extent of their respective Percentage Interests
for all obligations incurred by the Letter of Credit Issuer to third parties in
respect of such Letter of Credit not reimbursed by the Borrowers. The Letter of
Credit Issuer will send to each Bank a confirmation regarding the participations
in Letters of Credit outstanding during such month.
2.2.7 PRESENTATION. The Letter of Credit Issuer may accept
or pay any draft presented to it, regardless of when drawn and whether or not
negotiated, if such draft, the other required documents and any transmittal
advice are presented to the Letter of Credit Issuer and dated on or before the
expiration date of the Letter of Credit under which such draft is drawn. Except
insofar as instructions actually received may be given by the Borrowers in
writing expressly to the contrary with regard to, and prior to, the Letter of
Credit Issuer's issuance of any Letter of Credit for the account of the
Borrowers and such contrary instructions are reflected in such Letter of Credit,
to the maximum extent permitted by law the Letter of Credit Issuer may honor as
complying with the terms of the Letter of Credit and with this Agreement any
drafts or other documents otherwise in order signed or issued by an
administrator, executor, conservator, trustee in bankruptcy, debtor in
possession, assignee for benefit of creditors, liquidator, receiver or other
legal representative of the party authorized under such Letter of Credit to draw
or issue such drafts or other documents.
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2.2.8 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any subsequent revisions thereof approved by a
Congress of the International Chamber of Commerce and adhered to by the Letter
of Credit Issuer (the "UNIFORM CUSTOMS AND PRACTICE"), shall be binding on the
Borrowers and the Letter of Credit Issuer except to the extent otherwise
provided herein, in any Letter of Credit or in any other Loan Document.
Anything in the Uniform Customs and Practice to the contrary notwithstanding:
(a) Neither the Borrowers nor any beneficiary of any
Letter of Credit shall be deemed an agent of any Letter of
Credit Issuer.
(b) With respect to each Letter of Credit, neither any
Letter of Credit Issuer nor its correspondents shall be
responsible, except to the extent required by law, for or shall
have any duty to ascertain:
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any endorsements;
(iii) delay in giving, or failure to give, notice
of arrival, notice of refusal of documents or of
discrepancies in respect of which any Letter of Credit
Issuer refuses the documents or any other notice, demand
or protest;
(iv) the performance by any beneficiary under any
Letter of Credit of such beneficiary's obligations to the
Borrowers;
(v) inaccuracy in any notice received by the Letter
of Credit Issuer;
(vi) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any instrument, draft,
certificate or other document required by such Letter of
Credit to be presented before payment of a draft, or the
office held by or the authority of any Person signing any
of the same; or
(vii) failure of any instrument to bear
any reference or adequate reference to such Letter of
Credit, or failure of any Person to note the amount of any
instrument on the reverse of such Letter of Credit or to
surrender such Letter of Credit or to forward documents in
the manner required by such Letter of Credit.
(c) Except as otherwise required by law, the occurrence of
any of the events referred to in the Uniform Customs and
Practice or in the preceding clauses of this Section 2.2.8 shall
not affect or prevent the vesting of any of the Letter of Credit
Issuer's rights or powers hereunder or the Borrowers' obligation
to make reimbursement of amounts paid under any Letter of Credit
or any draft accepted thereunder.
(d) The Borrowers will promptly examine (i) each Letter of
Credit (and any amendments thereof) sent to it by a Letter of
Credit Issuer and (ii) all instruments and documents delivered
to it from time to time by such Letter of Credit Issuer. The
Borrowers will notify the Letter of Credit Issuer of any claim
of noncompliance by notice actually received within three
Business Days after receipt of any of the foregoing documents,
the Borrowers being conclusively deemed to have waived any such
claim against such Letter of Credit Issuer and its
correspondents unless such notice is given. The Letter of
Credit
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Issuer shall have no obligation or responsibility to send
any such Letter of Credit or any such instrument or document to
the Borrowers.
(e) In the event of any conflict between the provisions of
this Agreement and the Uniform Customs and Practice and
Article 5 of the Uniform Commercial Code, the provisions of this
Agreement shall govern to the maximum extent permitted by
applicable law.
2.2.9 SUBROGATION. Upon any payment by a Letter of Credit
Issuer under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the Borrowers with respect to such payment, the Letter of
Credit Issuer shall be entitled to be subrogated to, and to acquire and retain,
the rights which the Person to whom such payment is made may have against the
Borrowers, all for the benefit of the Banks. The Borrowers will take such
action as the Letter of Credit Issuer may reasonably request, including
requiring the beneficiary of any Letter of Credit to execute such documents as
the Letter of Credit Issuer may reasonably request, to assure and confirm to the
Letter of Credit Issuer such subrogation and such rights, including the rights,
if any, of the beneficiary to whom such payment is made in accounts receivable,
inventory and other properties and assets of the Borrowers.
2.2.10 MODIFICATION, CONSENT. If the Borrowers request or
consent in writing to any modification or extension of any Letter of Credit, or
waive any failure of any draft, certificate or other document to comply with the
terms of such Letter of Credit, and if the Letter of Credit Issuer consents
thereto, the Letter of Credit Issuer shall be entitled to rely on such request,
consent or waiver. This Agreement shall be binding upon the Borrowers with
respect to such Letter of Credit as so modified or extended, and with respect to
any action taken or omitted by such Letter of Credit Issuer pursuant to any such
request, consent or waiver.
2.3.1. REVOLVING CREDIT ADVANCES. Each Revolving Credit Loan
requested by the Borrowers hereunder shall (i) be requested from the
Administrative Agent telephonically by ECS (as agent and attorney-in-fact for
all of the Borrowers) or in writing by ECS pursuant to a Loan Advance Request
delivered to the Administrative Agent, the form of which is annexed hereto as
EXHIBIT "B-1", no later than 11:00 o'clock A.M. (applicable current time in
Tulsa, Oklahoma) on the date upon which the advance is to be made; (ii) be in
the amount of $10,000 or an integral multiple thereof (unless the amount then
available to borrow is less than $10,000, in which event an advance may be made
in the amount available); (iii) not cause the aggregate outstanding and unpaid
principal amount of the Bank Note to exceed the Bank Borrowing Base; and (iv) be
advanced by such Bank on the applicable date, provided the request is timely
made in accordance with Section 2.3.1(i) hereof and all other conditions of
funding are met. Borrowers hereby jointly and severally irrevocably appoint ECS
as the Borrowers' duly authorized agent and attorney in fact for all purposes
hereunder in connection with Revolving Credit Loans and applications for the
issuance of letters of credit pursuant to this Article II, including (without
limitation) the execution and delivery to the Administrative Agent for and on
behalf of the Borrowers of all Loan Advance Requests and letters of credit
applications. In consideration of the Banks permitting telephonic requests for
advances, Borrowers state that they fully understand the risk attendant thereto,
agree to accept all such risk and hold the Administrative Agent and the Banks
harmless from any loss which any of the Borrowers may incur by reason of an
advance being made in response to a telephonic request whether such is caused by
mistake or negligence of the Administrative Agent or the Banks or otherwise,
unless it is judicially established that such loss was due to the gross
negligence and wanton disregard of the Administrative Agent or the Banks. All
advances made by the Banks shall, for mutual convenience, be deposited to
Borrowers' joint general deposit account No. 207937943 with BOK or a comparable
joint general deposit account with an affiliated financial institution of BOK
acceptable thereto (the "General Account"), and neither the Administrative Agent
nor the Banks shall have any responsibility to monitor the distribution of such
advances in any other respect.
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2.3.2. PAYMENTS/VOLUNTARY PREPAYMENTS. All advances made by
each Bank on the Bank Note and all payments or prepayments of principal and
interest thereon made by the Borrowers shall be recorded by each Bank in its
records, and the aggregate unpaid principal amount so recorded shall be
conclusive evidence of the principal amount owing and unpaid on the Bank Note.
The failure to so record shall not, however, limit or otherwise affect the
obligations of the Borrowers hereunder or under the Bank Note to repay the
principal amount of each Revolving Credit Loan together with all interest
accrued thereon. If additional lines or blanks shall be needed for the purpose
of recording advances or payments on the schedule, one or more additional
schedules may be annexed to the Bank Note and shall become a part thereof. All
payments and prepayments shall be made in lawful money of the United States of
America. Any payments or prepayments on the Bank Note received by BOK after
2:00 o'clock P.M. (applicable current time in Tulsa, Oklahoma) shall be deemed
to have been made on the next succeeding Business Day. All outstanding
principal of and accrued interest on the Bank Note not previously paid hereunder
shall be converted to the Convertible Term Loan on the Conversion Date, unless
such maturity shall be extended by each Bank in writing or accelerated pursuant
to the terms of the Intercreditor Agreement and hereof.
2.4 REVOLVING CREDIT BORROWING BASE. The Borrowers will not
request, nor will they accept, the proceeds of any Revolving Credit Loans or
advance under the Bank Note at any time when the amount thereof, together with
the unpaid principal amount of the Revolving Credit Note and outstanding but
unfunded letters of credit, exceeds the Bank Borrowing Base or, in the case of
an advance requested to fund an acquisition (asset or stock), the terms thereof
do not fully satisfy the requirements of Section 2.8 hereof below. Through
November 30, 1997, the Initial Redetermined Borrowing Base Date, the Revolving
Credit Borrowing Base shall in no event exceed $27,300,000. Each of the BOK
Borrowing Base, the Bank Borrowing Base and the Revolving Credit Borrowing Base
shall be redetermined initially as of the Initial Redetermined Borrowing Base
Date (November 30, 1997) and as of any subsequent quarterly redetermined
borrowing base date (each February 28 or 29, May 31, August 31 and November 30)
and as of the effective date of any sale(s) pursuant to Sections 3.1 or 3.2
hereof.
2.5 VARIANCE FROM BANK BORROWING BASE. Any Revolving Credit
Loan shall be conclusively presumed to have been made to the Borrowers by each
Bank under the terms and provisions hereof and shall be secured by all of the
Collateral and security described or referred to herein or in the Security
Instruments, whether or not such loan conforms in all respects to the terms and
provisions hereof. If the Banks should (for the convenience of the Borrowers or
for any other reason) make loans or advances which would cause the unpaid
principal amount of the Bank Note to exceed the amount of the BOK Borrowing Base
(for so long as BOK is the only Bank hereunder) or the Bank Borrowing Base, no
such variance, change or departure shall prevent any such loan or loans from
being secured by the Collateral and security created or intended to be created
herein or in the Security Instruments. None of the BOK Borrowing Base, the Bank
Borrowing Base nor the Revolving Credit Borrowing Base shall in any manner limit
the extent or scope of the Collateral and security granted for the repayment of
the Bank Note (or any other Bank Obligations) or limit the amount of
indebtedness under the Bank Note (or any other Bank Obligations) to be secured.
2.6 REVOLVING CREDIT MANDATORY PREPAYMENTS. The Borrowers
shall make mandatory prepayments from time to time on the Bank Note as required
by Section 4.2 hereof below. Borrowers also shall make mandatory prepayments on
the Bank Note concurrent with and at each time prepayments are made under
paragraph 4(B) of the Senior Note Agreement, the amount of which such
prepayments to the Administrative Agent on the Bank Note shall be ratable and
pari passu with the prepayments on the Senior Notes in accordance with the
Intercreditor Agreement.
2.7 AMENDMENT FEE/COMMITMENT FEES. Borrower shall pay a
$20,000 non-refundable amendment fee to BOK on the Closing Date. From the
Closing Date until the earlier of the Conversion Date or the date the Revolving
Credit Commitment is terminated, the Borrowers shall
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pay ratably to the Administrative Agent for the benefit of the Banks, as a
commitment fee for their Commitments, an amount equal to three-eights of one
percentage point (0.375%) per annum of the amount by which the then
applicable Bank Borrowing Base exceeds the outstanding unpaid principal
balance of the Bank Note from time to time computed daily on the basis of a
calendar year of 365 days but assessed for the actual number of days elapsed
during each accrual period. Such fee shall be payable quarterly as the same
accrues on the fifteenth (15th) day after the end of each quarter-annual
period ending March 31, June 30, September 30 and December 31, commencing
October 15, 1997 (for that portion of the calendar quarter from the Closing
Date through such September 30, 1997 fiscal quarter ending date), and at the
Conversion Date of the Bank Note, whether by acceleration or otherwise. The
amount of Commitment Fees payable for each such a quarter shall be paid by a
debit to the joint General Account of Borrowers (as more particularly
described in Section 2.3 hereof) in such amount. For the purposes of this
Section 2.7 and Section 12.9 hereof, Borrowers hereby jointly appoint BOK
their attorney-in-fact for the execution and performance of such debit, and
hereby absolve the Banks of any loss or negligence arising by virtue of its
exercise of such power, except for gross negligence or willful misconduct.
Said power shall be deemed a power coupled with an interest and shall be
irrevocable.
2.8 SPECIAL ACQUISITION BORROWING BASE MID-PERIOD ADJUSTMENTS.
The Borrowers may request the Banks to undertake a review and possible
adjustment of the Revolving Credit Borrowing Base other than at one of the
regularly scheduled redetermination dates pursuant hereto ("Mid-Period
Adjustment"). A Mid-Period Adjustment may be requested by the Borrowers to
adjust the Revolving Credit Borrowing Base as a result of a completed
acquisition, a prospective acquisition, or otherwise. The undertaking of any
such Mid-Period Adjustment shall be at the Banks' sole discretion.
Notwithstanding the foregoing, to the extent Borrowers request the Banks to
undertake more than one (1) Mid-Period Adjustment during any consecutive twelve
(12) month period, the Banks shall be entitled to collect a reasonable fee for
each such additional Mid-Period Adjustment not to exceed $1,000 each. In the
event a Mid-Period Adjustment is requested by the Borrowers to include in the
Revolving Credit Borrowing Base, prior to the consummation of an acquisition,
the value of assets to be acquired in such acquisition, in addition to the
requirements of Section 2.4 hereof above, such Mid-Period Adjustment and any
requested Revolving Credit Loan advance is subject to satisfaction of each of
the following conditions precedent: (i) no Change in Control has occurred or
will result from the contemplated acquisition, and (ii) the Administrative
Agent's review and approval of the assets being acquired (in accordance with the
Revolving Credit Borrowing Base formula then in effect).
2.9 ANNUAL APPRAISAL OF COMPRESSORS. During April of each
calendar year, commencing as of April, 1998, detailed and comprehensive current
annual orderly liquidation value appraisals of the combined compressor unit
lease fleets of Borrowers prepared at the sole cost and expense of the Borrowers
by an outside third party appraiser acceptable to the Collateral Agent shall be
delivered to the Collateral Agent.
ARTICLE III
SALE PROCEEDS/PREPAYMENTS
3.1 PROCEEDS OF SALE OF MORTGAGED PROPERTY. In the event any
interest in any of the Mortgaged Property is sold prior to the Conversion Date,
all net sales proceeds of any such sale or sales in excess of $250,000 in the
aggregate (including any prior sales permitted hereunder) during any consecutive
twelve (12) month period shall be applied initially in reduction of the
principal balance of the Bank Note; provided, however, to the extent a Revolving
Credit Borrowing Base deficiency pursuant to Section 4.2 hereof results from or
is caused thereby, such portion of the net
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sales proceeds as are necessary to satisfy the Section 4.2 deficiency shall
be applied ratably between the Senior Obligations in accordance with their
respective outstanding principal amounts (as adjusted by the election of the
Noteholders of the Senior Notes not to take their ratable share of such
prepayments) prior to application of the remainder of such net proceeds as a
principal prepayment on the Bank Note; and further PROVIDED, HOWEVER, no such
sale or sales in excess of $250,000 in the aggregate during any consecutive
twelve (12) month time period shall occur without the prior written consent
of the Banks and the Collateral Agent. For purposes of this section, "sale
proceeds" shall mean the gross sales price of such Mortgaged Property. Such
sale(s) of Mortgaged Property in excess of $250,000 singularly or in the
aggregate prior to the Conversion Date shall effect an automatic reduction of
the Oil and Gas Collateral Borrowing Base in such amount and shall also
permit the Banks, at their option, to effect a redetermination thereof, in
accordance with the provisions of Section 4.1 hereof, excluding the Mortgaged
Property being sold.
3.2 SALE OF COMPRESSOR UNITS. In the event any of the
compressor units of Borrowers are sold prior to the Conversion Date, all net
sales proceeds of any such compressor unit sale or sales in excess of $1,000,000
in the aggregate (including any prior sales permitted hereunder) during any
consecutive twelve (12) month period shall be applied initially in reduction of
the principal balance of the Bank Note; provided, however, if a Revolving Credit
Borrowing Base deficiency pursuant to Section 4.2 hereof results from or is
caused thereby, such portion of the net sales proceeds as are necessary to
satisfy the Section 4.2 deficiency shall be applied ratably between the Senior
Obligations in accordance with their respective outstanding principal amounts
(as adjusted by the election of the Noteholders of the Senior Notes not to take
their ratable share of such prepayments) prior to application of the remainder
of such net proceeds as a principal prepayment on the Bank Note; and PROVIDED,
HOWEVER, no such sale or sales in excess of $1,000,000 in the aggregate during
any consecutive twelve (12) month time period shall occur without the prior
written consent of the Bank and the Collateral Agent. For purposes of this
section, "sales proceeds" shall mean the net sales price of such compressor
units. Such sale(s) of compressor unit(s) in excess of $1,000,000 singularly or
in the aggregate prior to the Conversion Date shall effect an automatic
reduction of the Revolving Credit Borrowing Base and shall also permit the
Banks, at their option, to effect a redetermination thereof in accordance with
the provisions of Section 2.4 hereof, excluding the unit(s) being sold.
3.3 SALES OF MORTGAGED PROPERTY/COMPRESSOR UNITS AFTER
CONVERSION DATE. In the event any interest in any of the Mortgaged Property or
compressor units of Borrowers are sold after Conversion Date, the Specified
Sales Proceeds of each such sale or sales shall be remitted by Borrowers to the
Collateral Agent for distribution by the Collateral Agent to the Lenders in
accordance with the priorities set forth in the Intercreditor Agreement (i.e.,
ratably between the holders of the Bank Note and the Noteholders of the Senior
Notes and in extinguishment of all Bank Obligations and Senior Prudential
Obligations in accordance with their respective outstanding principal amounts
(as adjusted by the election of the Noteholders of the Senior Notes not to take
their ratable share of such prepayments) prior to any distribution thereof to
the holders of the Subordinated Notes), such remittance to be in addition to and
not in lieu of any prepayment obligations of Borrowers pursuant to Section 4.2
hereof; provided, however, no such sale or sales in excess of $1,000,000 in the
aggregate during any consecutive twelve (12) month time period shall occur
without the prior written consent of the Bank and the Collateral Agent.
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ARTICLE IV
OIL AND GAS COLLATERAL BORROWING BASE
4.1 SEMI-ANNUAL ENGINEERING REPORTS (OIL AND GAS PROPERTIES).
(a) The Borrowers shall deliver to BOK at the Borrowers' cost
by each April 20 and October 20, commencing October 20, 1997 such current data,
reports and engineering information as is necessary or appropriate for BOK's
engineers or any other independent petroleum engineer acceptable to the Bank to
compile and prepare by each May 31 and November 30 (commencing November 30,
1997) an engineering report in form and substance satisfactory to BOK,
evaluating the proven producing oil and gas reserves attributable to Sunterra's
aggregate interest in the Mortgaged Property (as defined in subsection (b)
below), together with the expenses attributable thereto. The engineering data
and information furnished to BOK by or on behalf of the Sunterra shall be
accompanied by such other information as shall be requested by BOK in order for
it to make its determination of the Oil and Gas Collateral Borrowing Base, and
by a certificate of the Borrowers certifying that Sunterra has good and
defensible title to the Mortgaged Properties valued and that payments are being
received from purchasers of production with respect to said interests. At any
time after thirty (30) days of the receipt of such information and in no event
later than each May 31 and November 30 (commencing November 30, 1997) BOK, on
behalf of the Banks, shall (i) make a determination of the present worth, using
such pricing and discount factor as it deems appropriate pursuant to BOK's then
applicable energy lending and engineering policies, procedures and pricing
parameters, of the future net revenue estimated by BOK to be received by
Sunterra from production from the Mortgaged Properties so evaluated, multiplied
by a percentage then determined by BOK to be appropriate on the basis of BOK's
then applicable energy lending criteria; and (ii) report in writing subject to
Prudential's right on behalf of the Noteholders to review the same upon
submission thereto by the Administrative Agent not less than ten (10) days prior
to the applicable May 31 and November 30 redetermination date. If Prudential's
determination differs from the Banks' determination and the Banks and Prudential
are unable to reach an agreement concerning the amount of the redetermined Oil
and Gas Borrowing Base by the then applicable May 31 or November 30, as the case
may be, the lower of the two Oil and Gas Borrowing Base valuation amounts shall
be automatically set by the Administrative Agent and forwarded to the Borrowers
as the redetermined amount of such evaluated oil and gas properties (the "Oil
and Gas Collateral Borrowing Base"). The good faith determinations of BOK and
Prudential in such respects shall be conclusive.
(b) The term "Mortgaged Property" shall refer only to such
properties covered by the Oil and Gas Mortgage (or a supplemental mortgage or
deed of trust, duly executed, acknowledged and delivered by Sunterra to the
Collateral Agent in form satisfactory to counsel for the Banks) and which
properties are, at the time:
(i) Particularly and adequately
described under the Oil and Gas Mortgage or other
supplemental mortgage or deed of trust;
(ii) Completed or developed (in the case of
oil and gas leases) to the extent that value is
being assigned to them by BOK in connection with
such evaluation and BOK has determined that such
properties are capable of producing oil or gas in
commercial quantities; and
(iii) Approved as to title to the satisfaction
of the Collateral Agent.
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4.2 COLLATERAL DEFICIENCY. Should the unpaid outstanding
principal balance of the Senior Obligations (including the unfunded portion of
outstanding Letters of Credit issued by BOK or other Banks pursuant hereto) be
greater than the Revolving Credit Borrowing Base in effect at such time, the
Collateral Agent shall notify the Borrowers in writing of the existence and
amount of such deficiency. Within fifteen (15) days from and after the date of
any such deficiency notice the Borrowers shall notify the Collateral Agent in
writing of their election to:
(a) Make ratable prepayments upon the Bank
Note and the Senior Notes to the extent of such
deficiency (unless the Noteholders of the Senior
Notes elect not to take such prepayment pursuant
to paragraph 4(B)(ii) of the Senior Note Purchase
Agreement) in an amount sufficient to reduce the
unpaid principal amount of the Senior Obligations
to an amount equal to or less than the amount of
the Revolving Credit Borrowing Base; or
(b) Make ratable mandatory equal monthly
principal prepayments on the Bank Note and Senior
Notes to the extent of such deficiency (unless
the Noteholders of the Senior Notes elect not to
take such prepayment pursuant to
paragraph 4(B)(ii) of the Senior Note Purchase
Agreement) due on the next six (6) successive
monthly interest installment due dates on the
Bank Note equal in an aggregate amount that will
reduce the outstanding principal balance of the
Senior Obligations to the projected Revolving
Credit Borrowing Base as of the next immediate
semi-annual redetermination of the Oil and Gas
Collateral Borrowing Base in accordance with the
provisions of Sections 2.4 and 4.1(a) hereof.
All of prepayments made pursuant to paragraphs (a) and/or (b) of this
Section 4.2 with respect to the Bank Note shall be made to the Administrative
Agent. If the Borrowers shall have elected to make a prepayment under Section
4.2(a) hereof, such prepayment shall be due within fifteen (15) days after the
Borrowers shall have notified the Collateral Agent of such election.
ARTICLE V
SECURITY
5.1 COLLATERAL. The repayment of the Bank Obligations and the
Prudential Obligations shall be secured by the following (the collateral
described herein and in the Security Instruments being collectively referred to
as the "Collateral"):
(a) A continuing security interest
pertaining thereto of first priority in, and/or
assignment, as security, of:
(i) all of the natural gas
compressor units and fleets of each of the
Borrowers, including such compressor fleets
of Borrowers more particularly described on
Schedule 3 annexed to the Security Agreement
including all equipment, machinery, tools,
blueprints, plans and fixtures, whether now
owned or hereafter acquired and all spare
parts, Raw Materials, accessories,
components, replacements or substitutions
thereof and therefor;
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(ii) all of the Equipment and
Inventory of each of the Borrowers, wherever
located and whether now owned or hereafter
acquired, including without limitation, all
vehicles and other types of rolling stock,
all airplanes, and all materials, parts,
spare parts, components and supplies of
every kind and description, of the
Borrowers, including all such Equipment and
Inventory located at (x) the fabrication
maintenance facilities in Columbia, Xxxxxx
County, Mississippi, and West Monroe,
Ouachita Parish, Louisiana, (y) the yards
and/or storage areas of Borrowers as more
particularly described on Schedule 4 annexed
to the Security Agreement and at all other
locations wherever they may be;
(iii) all accounts, lease receivables,
reimbursements, notes receivable, contracts,
contract rights, general intangibles, chattel paper,
documents and instruments arising out of the sale,
lease or management of compressor units or
compressor fleets or services rendered and any and
all agreements for the sale or lease of compressor
units or products or furnishing of services
pertaining thereto by any of the Borrowers,
including without limitation, all employment
agreements, lease fleet agreements, sales contracts
and purchase orders;
(iv) all general intangibles of any
one, more or all of the Borrowers, whether
now owned or hereafter acquired, including
without limitation the following arising out
of, in connection with or pertaining to the
lease, sale, maintenance, construction or
transportation of natural gas compressor
units:
(a) all lease and sales
contracts, purchase orders and employee
agreements;
(b) all processes, formulae,
scientific and/or technical
information, trade secrets, customer
lists, plans, reports, samples,
prototypes, know-how, all items in
application, development or other
pending status and all similar items
which are used in connection with
Borrowers' conduct of their natural gas
compressor business; and
(c) all of Borrowers' rights,
titles, interests, and benefits under
all partnerships and joint venture
agreements between any of the Borrowers
and any other Person and under all
leases of natural gas compressors units
(whether as lessor or lessee);
provided, however, that neither the
Collateral Agent nor the Banks hereby
assume any liabilities, obligations or
responsibilities in connection
therewith;
(v) all fixtures, furniture and
equipment of Borrowers, now owned or
hereafter acquired, all additions,
accessions, and substitutions thereto and
therefor, and all accessories, parts and
equipment now or hereafter affixed or used
in connection with
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(i) Equity's real property located in
Columbia, Xxxxxx County, Mississippi, or
Equity leasehold interest in real property
located in Oklahoma City, Oklahoma County,
Oklahoma, and in or near Kilgore, Texas,
and (ii) Ouachita Energy's real property
in West Monroe, Ouachita Parish,
Louisiana, respectively, and described on
schedules attached to the Security
Agreement, and all goods and other
fixtures, furniture and equipment acquired
with the proceeds thereof;
(vi) all cash, money, certificates
of deposit, time deposits and demand
deposits of any one, more or all of
Borrowers, at any time in the possession or
control of the Bank;
(vii) all ledgers, journals, books,
records, vouchers, shipping tickets,
receipts, sales memoranda, contracts,
partnership agreements, joint venture
agreements, correspondence and other
writings, data or papers evidencing or
relating to the items or types of collateral
described above in subsections (i) through
(vi), inclusive; and
(viii) all products and proceeds of
and all replacements, additions,
substitutions, accessories, appurtenances,
and parts for, the items or types of
collateral described above in subsections
(i) through (vii), inclusive, whether now
owned or hereafter acquired including,
without limitation insurance proceeds.
(b) A first mortgage lien in and to
Sunterra's Mortgaged Property as more
particularly described in the Mortgage, Deed of
Trust, Security Agreement, Financing Statement
and Assignment (with power of sale) dated as of
June 11, 1993, as amended by the First Amended
and Supplemental Mortgage, Deed of Trust,
Security Agreement, Financing Statement and
Assignment (with Power of Sale) dated as of April
13, 1994, as further amended by the Second
Amended and Supplemental Mortgage, Deed of Trust
and Assignment (with Power of Sale) dated as of
September 1, 1995, as further amended by the
Third Amended and Supplemental Mortgage, Deed of
Trust and Assignment (with Power of Sale) dated
as of March 31, 1997, and as further amended by
the Amended and Restated Mortgage, Deed of Trust,
Security Agreement, Financing Statement and
Assignment (with Power of Sale) dated as of even
date herewith, and which instruments collectively
cover and encumber producing oil, gas and other
leasehold and mineral interests situated in
Arkansas, Oklahoma and Texas (collectively the
"Oil and Gas Mortgage");
(c) A (i) first priority Deed of Trust,
Assignment of Rents, Security Agreement and
Financing Statement (with power of sale) in and
to Equity's fabrication maintenance facility in
Columbia, Xxxxxx County, Mississippi and
(ii) first priority Multiple Indebtedness
Mortgage Collateral Assignment and Security
Agreement in and to Ouachita Energy's fabrication
facility in West Monroe, Ouachita Parish,
Louisiana (collectively the "Real Estate
Mortgages");
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(d) Pledges and assignments of all capital
stock in the Borrowers other than ECS and of all
subsequently acquired or organized Subsidiaries
of ECS in the form of the Pledge Agreement(s)
described and defined in the Note Purchase
Agreements (the "Pledge Agreements"); and
(e) A first chattel mortgage lien and
security interest in that certain 58P Beech
Turbocharge under Federal Aviation Administration
registration number N831JB, Aircraft Serial No.
TJ-279 (the "Aircraft Chattel Mortgage").
The foregoing mortgage liens, security interests,
pledges and assignments shall be granted to the
Collateral Agent, for the Banks and the
Noteholders, as Secured Party, pursuant to the
terms of (i) the Security Agreement and
Assignment dated as of June 11, 1993, as amended
by the First Amended and Restated Security
Agreement and Assignment dated as of July 14,
1993, as further amended by the Second Amended
and Restated Security Agreement and Assignment
dated as of April 13, 1994, as further amended by
the Third Amended and Restated Security Agreement
and Assignment dated as of September 1, 1995, as
further amended by the Fourth Amended and
Restated Security Agreement and Assignment dated
as of March 31, 1997, and as further amended by
the Fifth Amended and Restated Security Agreement
and Assignment dated as of even date herewith and
in form and content acceptable to the Collateral
Agent and its legal counsel (collectively the
"Security Agreement"); (ii) the Oil and Gas
Mortgage; (iii) the Real Estate Mortgages
(including that certain Declaration of
Immobilization by Ouachita Energy to be filed in
Ouachita Parish, Louisiana (the "Declaration"));
(iv) the Pledge Agreement(s); and (v) the
Aircraft Chattel Mortgage; and the Borrowers
shall execute such financing statements, letters
in lieu of production forms, assignments, notices
and other documents and instruments as shall be
necessary or appropriate to perfect the mortgage
liens and security interests thus created.
The Borrowers hereby acknowledge that all of the Collateral is granted to the
Collateral Agent as security for the repayment of all of the Bank Obligations
and the Prudential Obligations and that the Senior Obligations shall be secured
ratably on a PARI PASSU basis pursuant to the Intercreditor Agreement and
further that the Subordinated Prudential Obligations shall be secured on a
subordinated and junior basis, inferior and subject in all respects to the prior
rights of the Senior Obligations. If the Bank Note and all of the Pru Notes are
paid in full or satisfied, but any portion of the Bank Obligations or the
Prudential Obligations remain unsatisfied, the Collateral Agent may retain its
security interest in all of the Collateral until the remaining Bank Obligations
and the Prudential Obligations are paid in full, even if the value of the
Collateral far exceeds the amount of Bank Obligations and the Prudential
Obligations outstanding.
5.2 LOCKBOX. Borrowers shall establish and maintain a joint
lockbox in either BOK or a BOK affiliated financial institution acceptable to
the Banks (the "Lockbox") pursuant to an agreement in form and substance
satisfactory to the Banks which shall provide, in part, that: (a) Borrowers
shall deposit all checks and other instruments with respect to their accounts
and lease receivables, compressor management, maintenance, sales or rental
proceeds and fees as well as all oil and gas production run checks (including,
without limitation, the Mortgaged Properties) in the form received by them in
the Lockbox, concerning which Lockbox none of the Borrowers shall have any
access or right of withdrawal, (b) unless otherwise directed in writing by the
Xxxxxxxxxxxxxx
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Xxxxx, Xxxxxxxxx shall direct all of their account debtors, natural gas
compressor fleet/unit lessees, customers and purchasers of production to make
all payments in respect to their accounts receivable directly to the Lockbox,
(c) the Administrative Agent shall deposit all collected items received by it
to the General Account provided no Default shall have occurred and be
continuing, and (d) if an Event of Default shall have occurred and be
continuing, all such payments may be applied to the Bank Obligations and the
Prudential Obligations, at such times and in such priorities and order, as
set forth in the Intercreditor Agreement and upon termination of the
Intercreditor Agreement, otherwise as the Administrative Agent may elect.
ARTICLE VI
CONDITIONS PRECEDENT TO LOANS
6.1 CONDITIONS PRECEDENT TO INITIAL REVOLVING CREDIT LOAN. The
obligation of each Bank to make the initial Revolving Credit Loan under the
Revolving Credit Commitment, is subject to the satisfaction of all of the
following conditions on or prior to the Closing Date (in addition to the other
terms and conditions set forth herein):
(a) NO DEFAULT. There shall exist no Event
of Default or Default on the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The
representations, warranties and covenants set
forth in Article VIII shall be true and correct
on and as of the Closing Date, with the same
effect as though made on and as of the Closing
Date.
(c) BORROWERS' CERTIFICATES. Each of the
Borrowers shall have delivered to BOK a
Certificate, dated as of the Closing Date, and
signed by the President or Vice President and the
Secretary of each of the Borrowers certifying (i)
to the matters covered by the conditions
specified in subsections (a) and (b) of this
Section 6.1, (ii) that the Borrowers have
performed and complied with all agreements and
conditions required to be performed or complied
with by them prior to or on the Closing Date,
(iii) to the name and signature of each officer
of each of the Borrowers authorized to execute
and deliver the Loan Documents and any other
documents, certificates or writings and to borrow
under this Agreement, and (iv) to such other
matters in connection with this Agreement which
BOK shall determine to be advisable. BOK may
conclusively rely on such Certificate until it
receives notice in writing to the contrary.
(d) PROCEEDINGS. On or before the Closing
Date, all corporate proceedings of each of the
Borrowers shall be taken in connection with the
transactions contemplated by the Loan Documents
and shall be satisfactory in form and substance
to BOK and its counsel; and BOK shall have
received certified copies, in form and substance
satisfactory to BOK and its counsel, of the
Articles or Certificate of Incorporation and By-Laws
of each of the Borrowers and the resolutions of the
Board of Directors of each of the Borrowers, as adopted,
authorizing the execution and delivery of the Loan Documents,
the borrowings under this Agreement, and the granting
of the security
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interests in the Collateral pursuant to the Security
Instruments, to secure the payment of the Bank
Obligations and the Prudential Obligations.
(e) SECURITY INSTRUMENTS. The Borrowers
(including without limitation, Ouachita Energy)
shall have delivered to the Collateral Agent, the
Security Instruments, appropriately executed by
all parties, attested, sealed, witnessed and
acknowledged to the satisfaction of the
Collateral Agent and dated as of the Closing
Date, together with such financing statements,
lien entry forms, pledges, stock powers, aircraft
chattel mortgages, and other documents as shall
be necessary and appropriate to perfect the
Collateral Agent's security interests in the
Collateral covered by said Security Instruments.
(f) AMENDMENT FEE. The Borrowers shall
have paid to BOK the $20,000 non-refundable
amendment fee.
(g) OIL AND GAS MORTGAGE. ECS, Sunterra,
and Ouachita Energy shall have executed and
delivered the Oil and Gas Mortgage described in
Section 5.1(b) hereof above to the Collateral
Agent (and where applicable to the Trustee) in
multiple recordable form counterparts as
reasonably required by the Collateral Agent.
(h) REAL ESTATE MORTGAGES. Borrowers shall
have delivered to the Collateral Agent the Real
Estate Mortgages in multiple recordable form
counterparts as reasonably required by the
Collateral Agent.
(i) AIRCRAFT CHATTEL MORTGAGE. Borrowers
shall have delivered to the Collateral Agent the
Aircraft Chattel Mortgage in multiple recordable
form counterparts as reasonably required by the
Collateral Agent.
(j) TITLE. Borrowers shall have provided
the Collateral Agent with evidence satisfactory
to the Collateral Agent and its legal counsel
that Borrowers have valid, merchantable title to
the Collateral, including (without limitation)
title reports, title opinions (division order or
otherwise regarding the Mortgaged Property,
updated title opinion concerning the Mississippi
real property encumbered by the Real Estate
Mortgage and mortgage title insurance concerning
the Louisiana real property encumbered by the
Real Estate Mortgages) and true and complete duly
executed releases and termination or,
alternatively (if acceptable to BOK and
Prudential) assignments (in recordable form) from
the prior record holders or owner(s) thereof
pertaining to all of the Collateral and where
applicable pursuant to the Asset Purchase
Agreement evidencing transfer of lawful title
thereto from the predecessor of Ouachita Energy
or the applicable Seller therein described and
defined to the applicable Borrowers.
(k) OPINION OF BORROWERS' COUNSEL. BOK
shall have received from Borrowers' counsel,
Schlanger, Mills, Xxxxx & Xxxxxxxxx, L.L.P., and
from Xxxxxx & Xxxxxxx and Xxxxxx & Xxxxxxxx,
local counsel in Oklahoma and Louisiana,
respectively, favorable closing opinions,
satisfactory in form, scope and substance to BOK
and its counsel and the Collateral Agent.
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(l) SECURITY AGREEMENT. Each of the
Borrowers shall execute and deliver to the
Collateral Agent the Fifth Amended and Restated
Security Agreement described in Section 5.1
hereof above and ECS shall have executed and
delivered to the Collateral Agent the Pledge
Agreements, with all schedules and exhibits to
each thereof completed to the Collateral Agent's
satisfaction and applicable UCC financing
statements duly executed and delivered by the
appropriate Borrowers as deemed necessary or
appropriate by the Collateral Agent to perfect
the mortgage liens and security interest in the
Collateral in favor of the Collateral Agent.
(m) INTERCREDITOR AGREEMENT/PRUDENTIAL.
Each Bank (including BOK individually and as
Collateral Agent), the Borrowers and Prudential
and any other Noteholders shall have entered into
an Intercreditor Agreement in form and substance
satisfactory to the Bank. The Note Purchase
Agreement(s) as executed and delivered between
Prudential and ECS shall be acceptable to the
Banks, including without limitation, Prudential's
acquisition of the Senior Notes, the Subordinated
Notes and the Warrants in accordance with the
Note Purchase Agreements.
(n) OUACHITA MATTERS. The Merger Agreement
and the Asset Purchase Agreement shall be closed
concurrently herewith and become effective in
accordance with their respective terms,
provisions and conditions or otherwise in a
manner satisfactory to BOK in its sole
discretion.
(o) OTHER INFORMATION. BOK shall have
received such other information, documents and
assurances as shall be reasonably requested
thereby, including without limitation, applicable
Form UCC-11 or equivalent reports, judgment and
tax lien searches concerning Borrowers and the
Collateral, certificates of insurance naming the
Collateral Agent as loss payee and as mortgagee,
such other information with respect to the
natural gas compressor fleets/units of Borrowers
as shall be requested by the Collateral Agent and
such documentation satisfactory in form and
substance to the Collateral Agent demonstrating
that the Loans advanced hereunder as evidenced by
the Bank Note at all times (including without
limitation the prepayment provisions of Paragraph
4 of the Senior Note Agreement) rank pari passu
in right of payment with the Senior Notes and are
at all times (including without limitation the
prepayment provisions of Paragraph 4 of the
Subordinated Note Agreement) paramount, senior
and prior in right of payment with the
Subordinated Notes.
6.2 CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOANS. None
of the Banks shall be obligated to make any Revolving Credit Loan or convert the
Bank Note on the Conversion Date as contemplated by Sections 2.1 and 2.2 hereof
(i) if at such time any Event of Default shall have occurred or any Default
shall have occurred and be continuing; (ii) if any of the representations,
warranties and covenants contained in Article VIII of this Agreement shall be
false or untrue in any material respect on the date of such loan, as if made on
such date; or (iii) unless the Bank Borrowing Base will support the additional
Revolving Credit Loan being requested. Each request by the Borrowers for an
additional Revolving Credit Loan shall constitute a representation by the
Borrowers that there is not at the time of such request an Event of Default or a
Default, and that all
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representations, warranties and covenants in Article VIII of this Agreement
are true and correct on and as of the date of each such request.
ARTICLE VII
COVENANTS
The Borrowers covenant and agree with each Bank that from the
date hereof and so long as this Agreement is in effect (by extension, amendment
or otherwise) and until payment in full of all Bank Obligations and the
performance of all other obligations of the Borrowers under this Agreement,
unless each Bank shall otherwise consent in writing:
7.1 PAYMENT OF TAXES AND CLAIMS. Each of the Borrowers will
pay and discharge or cause to be paid and discharged all Taxes imposed upon the
income or profits of the Borrowers or upon the property, real, personal or
mixed, or upon any part thereof, belonging to the Borrowers before the same
shall be in default, and all lawful claims for labor, rentals, materials and
supplies which, if unpaid, might become a Lien upon its property or any part
thereof; PROVIDED HOWEVER, that none of the Borrowers shall be required to pay
and discharge or cause to be paid or discharged any such Tax, assessment or
claim so long as the validity thereof shall be contested in good faith by
appropriate proceedings, and adequate book reserves shall be established with
respect thereto, and each of the Borrowers shall pay such Tax, charge or claim
before any property subject thereto shall become subject to execution.
7.2 MAINTENANCE OF CORPORATE EXISTENCE. Each of the Borrowers
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and will
continue to conduct and operate its business substantially as being conducted
and operated presently. Each of the Borrowers will become and remain qualified
to conduct business in each jurisdiction where the nature of the business or
ownership of property by such Borrower may require such qualification.
7.3 PRESERVATION OF PROPERTY. Each of the Borrowers will at
all times maintain, preserve and protect all franchises and trade names and keep
all the remainder of its properties which are used or useful in the conduct of
its respective businesses whether owned in fee or otherwise, or leased, in good
repair and operating condition; from time to time make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto so that the business carried on in connection therewith may be properly
and advantageously conducted at all times; and comply with all material leases
to which it is a party or under which it occupies property so as to prevent any
material loss or forfeiture thereunder.
7.4 INSURANCE. Each of the Borrowers will keep or cause to be
kept adequately insured by financially sound and reputable insurers its plants,
equipment, compressor units (whether owned or leased) motor vehicles, and all
other property of a character usually insured by businesses engaged in the same
or similar businesses. Upon demand by the Bank any insurance policies covering
the Collateral shall be endorsed to provide for payment of losses to the Bank as
its interest may appear, to provide that such policies may not be canceled,
reduced or affected in any manner for any reason without thirty days prior
notice to the Bank, and to provide for any other matters which the Bank may
reasonable require; and such insurance shall be against fire, casualty and any
other hazards normally insured against and shall be in the amount of the full
value (less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated businesses and properties) of the property
insured. The Borrowers shall at all times maintain adequate insurance against
damage to persons or property, which insurance shall be by financially sound and
reputable insurers and shall, without limitation, provide the following
coverages: comprehensive general liability
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(including, without limitation, coverage, where applicable, damage caused by
explosion, broad form property damage coverage, broad form coverage for
contractually independent contractors), worker's compensation, products
liability and automobile liability.
7.5 COMPLIANCE WITH APPLICABLE LAWS. Each of the Borrowers
will comply with the requirements of all applicable Laws and orders of any
Tribunal and obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business.
7.6 FINANCIAL STATEMENTS AND REPORTS.
(a) QUARTERLY OPERATING STATEMENTS. The
Borrowers shall maintain a standard system of
accounting and shall furnish to the
Administrative Agent as soon as practicable after
the end of the first three quarters of each
fiscal year, commencing with the quarter ending
June 30, 1997, and in any event within forty-five
(45) days after the end of each said quarter,
copies for each of the Banks of consolidated and
consolidating statements of income, stockholders'
equity and cash flows for Borrowers and
consolidating and consolidated balance sheet for
Borrowers which shall be certified on behalf of
Borrowers by the chief financial officer or
other authorized officer of Borrowers to have
been prepared in accordance with GAAP
consistently applied and to fairly present the
financial condition of Borrowers for such period
(on a consolidated and consolidating basis), all
in reasonable detail.
(b) ANNUAL FINANCIAL STATEMENTS. As soon
as practicable after the end of each fiscal year
of Borrowers and in any event within one-hundred
twenty (120) days thereafter (but in no event
later than delivery to the Required Holder(s)
pursuant to Paragraph 5A(ii) of the Senior Note
Agreement), the Borrowers shall furnish to the
Administrative Agent copies for each of the Banks
of the following financial statements (on a
consolidated and consolidating basis), together
with a report thereon on and an unqualified
opinion, prepared in accordance with GAAP of
reputable independent certified public
accountants of recognized standing selected by
Borrowers and acceptable to the Administrative
Agent:
(i) A balance sheet of Borrowers at
the end of such year prepared on a
consolidated and consolidating basis,
(ii) A statement of income of
Borrowers for such year prepared on a
consolidated and consolidating basis, and
(iii) A statement of cash flows of
Borrowers for such year prepared on a
consolidated and consolidating basis,
setting forth in each case in comparative form
the figures for the previous fiscal year, if
applicable, all in reasonable detail. The report
of the independent certified public accountants
shall contain a certification that in the course
of the audit necessary for the certification of
such financial statements, they have obtained no
knowledge of any Event of Default or Default as
defined herein, or, if any Event of Default or
Default existed or exists, specifying the nature
and period of existence
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thereof; provided, however, that such accountants shall
not be liable to the Administrative Agent, the Collateral
Agent or the Banks by reason of their failure to obtain
knowledge of any such Event of Default or Default which
would not be disclosed in the course of an audit
conducted in accordance with generally accepted auditing
standards.
(c) QUARTERLY CERTIFICATES. As soon as available
and in any event within forty-five (45) days after the
end of each of the first three calendar quarters of each
year, concurrently with the furnishing of the applicable
quarterly statements pursuant to subsection 7.6(a), there
shall be furnished to the Administrative Agent copies for
each of the Banks of (i) a borrowing base certificate
signed by the chief financial officer of ECS in the form
annexed hereto as EXHIBIT "B-2" (the "Borrowing Base
Certificate") and (ii) a certificate signed by the Chief
Financial Officer of ECS detailing such information and
data concerning Borrowers' compressor fleets as are
necessary to provide the calculations required by clause
(y) of Section 2.4 hereof and further stating that: (a)
the financial statements were prepared (subject to year
end audit adjustments) in conformity with GAAP,
consistently applied; (b) a review of the activities of
Borrowers for the period covered by the financial
statements has been made under his supervision with a
view to determining whether Borrowers have kept,
observed, performed and fulfilled all of their
obligations under this Agreement, the other Loan
Documents and every other document or instrument referred
to herein; and (c) no Event of Default or an event which
with the passage of time or notice, or both, could become
an Event of Default has occurred, and is continuing, or a
statement describing the nature, period of existence and
status of any such event(s) if existing. Such
certificates shall fully demonstrate the method of all
calculations therein contained insofar as compliance with
financial covenants hereof are concerned but shall not be
qualified or limited because of restricted or limited
examination of any material portion of Borrowers' records
by the party preparing such quarterly statements.
(d) ANNUAL/SPECIAL COVENANT CERTIFICATES.
Concurrently with the furnishing of the financial
statements pursuant to 7.6(b), there shall be furnished
to the Administrative Agent copies of each of the Banks
of a separate certificate signed by the chief financial
officer of ECS stating that: (a) the financial statements
were prepared in conformity with GAAP on a basis
consistently applied, and (b) no Event of Default or an
event which with the passage of time or notice, or both,
could become an Event of Default has occurred, and is
continuing, and status of any such event(s) if existing.
Such certificate shall not be qualified or limited
because of restricted or limited examination of any
material portion of Borrowers' records by the party
preparing such annual statements. All certificates of
Borrowers submitted pursuant to this Agreement in
connection with compliance with certain financial or
other covenants herein contained, including, without
limitation, Sections 7.19, 7.20, 7.21, 7.22, 7.32 and
7.33 hereof, shall fully demonstrate the method of
calculations therein contained.
(e) SPECIAL AUDITING REPORTS. Promptly upon
receipt thereof, the Borrowers shall deliver to the
Administrative Agent copies
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for each of the Banks of each report submitted to
any of the Borrowers, by independent accountants in
connection with any annual, interim or special audit
made by them of the books and records of any one,
more or all of the Borrowers, including, without
limitation, any comment letter submitted by such
accountants to management in connection with their
audit.
(f) BUDGETS AND PROJECTIONS. Promptly upon
completion thereof on an annual basis within
sixty (60) days following each fiscal year end,
the Borrowers shall deliver to the Administrative
Agent copies for each of the Banks of each
operating budget and projection of financial
performance prepared for the Borrowers.
(g) PERIODIC REPORTS. Promptly upon their
becoming available, copies for each of the Banks
of all financial statements, reports, notices or
proxy statements sent by any of the Borrowers to
their stockholders and all registration
statements, periodic reports and other statements
and schedules filed by the Borrowers with any
securities exchange, the Securities and Exchange
Commission or any similar state or federal
governmental authority shall be delivered to the
Administrative Agent.
(h) OTHER REPORTS. Borrowers shall
concurrently deliver to the Administrative Agent
any other notices, statements, reports or
certificates delivered to Significant Holder(s)
under or pursuant to Paragraph 5A of the Senior
Note Agreement.
7.7 ENVIRONMENTAL COVENANTS. Borrowers will immediately
notify the Collateral Agent of and provide the Collateral Agent with copies of
any notifications of discharges or releases or threatened releases or discharges
of a Polluting Substance on, upon, into or from the Collateral which are given
or required to be given by or on behalf any of the Borrowers to any federal,
state or local Tribunal if any of the foregoing may materially and adversely
affect any of the Borrowers or any part of the Collateral, and such copies of
notifications shall be delivered to the Collateral Agent at the same time as
they are delivered to the Tribunal. Borrowers further agree promptly to
undertake and diligently pursue to completion any appropriate and legally
required or authorized remedial containment and cleanup action in the event of
any release or discharge or threatened release or discharge of a Polluting
Substance on, upon, into or from the Collateral. At all times while owning and
operating the Collateral, the Borrowers will maintain and retain complete and
accurate records of all releases, discharges or other disposal of Polluting
Substances on, onto, into or from the Collateral, including, without limitation,
records of the quantity and type of any Polluting Substances disposed of on or
off the Collateral.
7.8 ENVIRONMENTAL INDEMNITIES. Borrowers hereby agree to
indemnify, defend and hold harmless the Collateral Agent and the Banks and each
of their respective officers, directors, employees, agents, consultants,
attorneys, contractors and each of its affiliates, successors or assigns, or
transferees from and against, and reimburse said Persons in full with respect
to, any and all loss, liability, damage, fines, penalties, costs and expenses,
of every kind and character, including reasonable attorneys' fees and court
costs, known or unknown, fixed or contingent, occasioned by or associated with
any claims, demands, causes of action, suits and/or enforcement actions,
including any administrative or judicial proceedings, and any remedial, removal
or response actions ever asserted, threatened, instituted or requested by any
Persons, including any Tribunal, arising out of or related to: (a) the breach
of any representation or warranty of Borrowers contained in Section 8.16 set
forth herein; (b) the failure of Borrowers to perform any of their covenants
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contained in Section 7.7 hereunder; (c) the ownership, construction, occupancy,
operation, use of the Collateral prior to the earlier of the date on which (i)
the Bank Obligations and obligations secured hereby have been paid and performed
in full and the Security Instruments have been released, or (ii) the Collateral
has been sold by Collateral Agent following Collateral Agent's ownership of the
Collateral by way of foreclosure of the Liens granted pursuant hereto, deed in
lieu of such foreclosure or otherwise (the "Release Date"); provided, however,
this indemnity shall not apply with respect to matters caused by or arising
solely from the Collateral Agent's activities during any period of time the
Collateral Agent acquires ownership of the Collateral.
7.9 SEMI-ANNUAL PRODUCTION REPORTS. At the Bank's request,
Sunterra shall furnish to the Collateral Agent as soon as practicable after the
end of each calendar semi-annual period, and in any event within thirty (30)
days after the calendar semi-annual period end, a production report and an
expense report for such quarter, certified by Sunterra's chief financial officer
as being true, correct and complete, showing on a lease by lease basis (i) the
gross proceeds from the sale of Hydrocarbons produced from the Mortgaged
Property (including additional properties mortgaged subsequent to the Closing
pursuant to Section 4.2 above) owned by Sunterra, (ii) the severance, production
ad valorem taxes and gathering taxes deducted from or paid from the Mortgaged
Property proceeds, (iii) the Adjusted Gross Proceeds, (iv) the quantity of
Hydrocarbons produced and sold from the Mortgaged Property and the number and
identity of xxxxx operated, drilled or abandoned, and (v) for each of the xxxxx
such operating and other expense and net income information pertaining to the
Mortgaged Property owned by Sunterra as the Collateral Agent may request
including, without limitation, a listing of material royalty liabilities and
obligations on a lease by lease basis.
7.10 NOTICE OF DEFAULT. Immediately upon the happening of any
condition or event which constitutes an Event of Default or Default or any
default or event of default under any other loan, mortgage, financing or
security agreement, the Borrowers will give the Collateral Agent a written
notice thereof specifying the nature and period of existence thereof and what
actions, if any, the Borrowers are taking and propose to take with respect
thereto.
7.11 NOTICE OF LITIGATION. Immediately upon becoming aware of
the existence of any action, suit or proceeding at law or in equity before any
Tribunal, an adverse outcome in which would (i) materially impair the ability of
any of the Borrowers to carry on its business substantially as now conducted,
(ii) materially and adversely affect the condition (financial or otherwise) of
any of the Borrowers, or (iii) result in monetary damages in excess of $100,000,
the Borrowers will give the Collateral Agent a written notice specifying the
nature thereof and what actions, if any, the Borrowers are taking and propose to
take with respect thereto.
7.12 NOTICE OF CLAIMED DEFAULT. Immediately upon becoming aware
that the holder of any note or any evidence of indebtedness or other security of
any of the Borrowers has given notice or taken any action with respect to a
claimed default or event of default thereunder, if the amount of the note or
indebtedness exceeds $50,000 the Borrowers will give the Collateral Agent a
written notice specifying the notice given or action taken by such holder and
the nature of the claimed default or event of default thereunder and what
actions, if any, the Borrowers are taking and propose to take with respect
thereto.
7.13 NOTICE OF CHANGE OF MANAGEMENT. Within five (5) days after
any change in executive management of the Borrowers, including any officers of
any of the Borrowers holding the office of President, Chairman or chief
financial officer thereof, or the occurrence of a Change in Control, the
Borrowers shall give written notice thereof to the Administrative Agent,
together with a description of the reasons for the management/officer change.
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7.14 REQUESTED INFORMATION. With reasonable promptness, the
Borrowers will give the Collateral Agent such other data and information
relating to the Borrowers as from time to time may be reasonably requested by
the Collateral Agent.
7.15 FIELD AUDITS. The Collateral Agent shall be permitted to
conduct, at its own expense, an annual field audit of the Borrowers' accounts
and books and records relating thereto. Each field audit shall be conducted by
agents of the Bank, whether employees of the Collateral Agent or third-party
agents selected by the Collateral Agent. The Borrowers shall fully cooperate
with the Collateral Agent and its agents in connection with such field audits.
7.16 INSPECTION. The Borrowers will keep complete and accurate
books and records with respect to the Collateral and their other properties,
businesses and operations and will permit employees and representatives of the
Collateral Agent to audit, inspect and examine the same and to make copies
thereof and extracts therefrom during normal business hours. All such records
shall be at all times kept and maintained at the chief executive offices of the
Borrowers in Dallas, Texas. Upon any Default or Event of Default, the Borrowers
will surrender all of such records relating to the Collateral to the Collateral
Agent upon receipt of any request therefor from the Bank.
7.17 MAINTENANCE OF EMPLOYEE BENEFIT PLANS. The Borrowers will
maintain each employee benefit plan as to which they may have any liability or
responsibility in compliance with ERISA and all other Laws applicable thereto.
7.18 DISPOSITION/NEGATIVE PLEDGE RE ENCUMBRANCE OF COLLATERAL
AND OTHER ASSETS. Except as otherwise permitted by Article III hereof insofar
as the permitted sale(s) of compressor units, Mortgaged Property or other items
or types of Collateral of Borrowers are concerned, Borrowers will not sell or
encumber any of the Collateral and Borrowers will not sell, lease, transfer,
scrap or otherwise dispose of or mortgage, pledge, grant a security interest in
or otherwise encumber any of Borrowers' other oil and gas mining or mineral
properties or assets, whether for replacement or not, unless such sale or
disposition shall be in the ordinary course of business and for a full and fair
consideration, subject only to the Borrowers' limited right to sell up to
$100,000 worth in the aggregate of its properties or assets (other than and
expressly excluding compressors, oil and gas leasehold, mining or other mineral
interests wherever located) in the ordinary course of business during any
calendar year without obtaining the Collateral Agent's prior written consent.
In no event shall any of the Borrowers cause or permit the voluntary or
involuntary pledge, mortgage or other encumbrance, attachment or levy of or
against any of the properties or assets of whatsoever nature or type to any
Person (financial institution or otherwise) except to the Collateral Agent as
contemplated hereby.
7.19 MAXIMUM DEBT TO TANGIBLE NET WORTH RATIO. The Borrowers
will not at any time during any fiscal year period set forth below permit the
ratio of consolidated Total Lender/Capitalized Lease Obligations to their
consolidated Tangible Net Worth to be greater than the ratio set forth opposite
such fiscal year period below:
Fiscal Year Maximum Ratio
----------- -------------
Fiscal Years 1997 and 1998 1.6 to 1
Fiscal Year 1999 through
Fiscal Year 2004 1.4 to 1
7.20 MINIMUM CURRENT RATIO. The Borrowers will not at any time
during any fiscal year period set forth below permit their Current Ratio to be
less than the rates set forth opposite such fiscal year period below:
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Minimum
Fiscal Year Current Ratio
----------- -------------
Fiscal Year 1997 1.1 to 1
Fiscal Year 1998 through
Fiscal Year 2004 .6 to 1
7.21 MINIMUM DEBT SERVICE COVERAGE RATIO. Borrowers will
not permit the ratio of (i) EBITDA for the most recently ended two (2) fiscal
quarters to (ii) Debt Service for such two (2) fiscal quarters to be less than
(x) 2.25 to 1 from the Closing Date until the Conversion Date or (y) 1.5 to 1
from and after such Conversion Date.
7.22 CAPITAL EXPENDITURES. The Borrowers agree not to make or
permit any capital expenditures in any fiscal year subsequent to the fiscal year
in which the Conversion Date occurs for the acquisition, construction, expansion
or improvements of capital assets (whether owned or leased or otherwise) during
fiscal year that aggregate in excess of $3,000,000 for such applicable period or
commit for any such capital expenditure which, if made in the applicable period
for delivery and payment for such applicable period, would result in gross
capital expenditures in excess of the $3,000,000 aggregate limitation herein set
forth.
7.23 LIMITATION ON OTHER INDEBTEDNESS. The Borrowers will not
create, incur, assume, become or be liable in any manner in respect of, or
suffer to exist, any indebtedness whether evidenced by a note, bond, debenture,
agreement, letter of credit or similar or other obligation, or accept any
deposits or advances of any kind, except (i) trade payables and current
indebtedness (other than for borrowed money) incurred in, and deposits and
advances accepted in, the ordinary course of business; (ii) indebtedness
incurred for the acquisition of assets secured by purchase money security
interests not exceeding $500,000 in the aggregate during any fiscal year of the
Borrowers with a cumulative aggregate amount not in excess of $750,000 at any
time outstanding; (iii) the Bank Obligations; and (iv) such other Indebtedness
as defined and permitted in Paragraph 6(C)(2) of the respective Note Purchase
Agreements.
7.24 LIMITATION ON LIENS. The Borrowers will not create or
suffer to exist any Lien upon any of their assets, whether real or personal
property, except purchase money security interests securing indebtedness
incurred for the acquisition of assets and only to the extent such purchase
money lien is confined solely to the item or items of property so acquired and
Liens in favor of the Collateral Agent securing the Bank Obligations, the
Prudential Obligations and such other Liens as defined in and permitted pursuant
to Paragraph 6(C)(1) of the respective Note Purchase Agreements.
7.25 CONTINGENT LIABILITIES; ADVANCES. Except for the items
described on EXHIBIT "C" attached hereto the Borrowers will not either directly
or indirectly otherwise, (i) guarantee, become surety for, discount, endorse,
agree (contingently or otherwise) to purchase, repurchase or otherwise acquire
or supply or advance funds in respect of, or otherwise become or be contingently
liable upon the indebtedness, obligation or liability of any Person, (ii)
guarantee the payment of any dividends or other distributions upon the stock of
any corporation, (iii) discount or sell with recourse or for less than the face
value thereof, any of its notes receivable, accounts receivable or chattel
paper; (iv) loan, agree to loan, or advance money to any Person; or (v) enter
into any agreement for the purchase or other acquisition of any goods, products,
materials or supplies, or for the making of any shipments or for the payment of
services, if in any such case payment therefor is to be made regardless of the
non-delivery of such goods, products, materials or supplies or the non-
furnishing of the transportation of services; provided, however that the
foregoing shall not be applicable to endorsement of negotiable instruments
presented to or deposited with a bank for collection or deposit in the ordinary
course of business or to loan, advance or guarantee amounts not in excess of
$200,000 in the aggregate during any fiscal year.
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7.26 MERGER, CONSOLIDATION. The Borrowers will not merge or
consolidate with or into any other Person; or permit any other Person to
consolidate with or merge into any of the Borrowers (except only for the merger
contemplated by the Merger Agreement between Acquisition and OEC, with Ouachita
Energy being the survivor thereof, consolidation between or among existing
Subsidiaries); or adopt or effect any plan of reorganization, recapitalization,
liquidation or dissolution.
7.27 DIVIDENDS. The Borrowers will not declare, pay or become
obligated to declare or pay any cash or other dividends on any class of their
capital stock now or hereafter outstanding, make any distribution of cash or
property to holders of any shares of such stock, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, any shares of any class of their
capital stock now or hereafter outstanding.
7.28 CHANGE OF FISCAL YEAR. None of the Borrowers will change
its fiscal year from its present fiscal year (fiscal year ending December 31).
7.29 CHANGE OF BUSINESS. None of the Borrowers will engage in
any business activity substantially different from or unrelated to present
business activities and operations.
7.30 ARTICLES OF INCORPORATION; BY-LAWS; CORPORATE NAME AND
ASSUMED NAMES. The Borrowers will not amend, alter, modify or restate their
Articles or Certificate of Incorporation or By-Laws in any way which would (i)
change the corporate name or adopt a trade name for any of the Borrowers; or
(ii) in any manner adversely affect the Borrowers' obligations or covenants to
the Bank hereunder or under any of the other Loan Documents.
7.31 TRANSACTIONS WITH AFFILIATES. The Borrowers will not enter
into any transaction, including (without limitation) the purchase, sale or
exchange of property or the rendering or furnishing of any service with any
Affiliate of any of the Borrowers, except transactions in the ordinary course of
the businesses of Borrowers and upon fair and reasonable terms no less favorable
than Borrowers would obtain in a transaction for the same purpose with a Person
that is not an Affiliate of any of the Borrowers; provided, however, ECS or an
approved Subsidiary thereof, shall be permitted to enter into as many as three
(3) certain compressor leasing partnerships or compressor limited liability
companies with BOK Capital Services, Inc. ("BCS"), an affiliate of BOK, in which
BCS would provide not more than $6,000,000 in the form of capital or loans to
each such partnership or limited liability company entity (which such loans, if
any, shall be non-recourse to ECS), all as contemplated in summary terms by
BCS's March 26, 1997 commitment letter to ECS.
7.32 SGA TO TOTAL REVENUES. The Borrowers will not permit the
percentage of their aggregate SGA expenses (per GAAP) to Total Revenues (per
GAAP) as calculated quarterly for the previous two (2) fiscal quarters to exceed
(i) 22% through the fiscal quarter ending December 31, 1997, and (ii) from and
including the fiscal quarter ending March 31, 1998, 19%.
7.33 PARTS INVENTORY. Borrowers shall not permit their
aggregate compressor parts inventories to exceed $5,000,000 book value at any
time calculated pursuant to GAAP.
7.34 MAINTENANCE OF INSURANCE. The Borrowers will carry and
maintain insurance (subject to customary deductibles and retentions) in at least
such amounts and against such liabilities and hazards and by such methods as
customarily maintained by other companies operating similar businesses. The
Collateral Agent and the holder of the Note shall be named as additional
insureds, and the Collateral Agent shall be named as loss payee, on each
insurance policy obtained or maintained by the Borrowers with respect to their
properties and businesses.
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7.35 COLLATERAL; NEW SUBSIDIARIES. The Borrowers shall execute
any and all documents, financing statements, agreements and instruments, and
take all action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust), that may be required under applicable
law, or which the Banks or the Collateral Agent may reasonably request in order
to effectuate the transactions contemplated by the Loan Documents and in order
to grant, preserve, protect and perfect the validity and first priority of the
security interest and Liens created or purported to be created by the Security
Instruments. In addition, at the cost and expense of the Borrowers, the
Borrowers will (i) cause each subsequently acquired or organized Subsidiary
(contemporaneously with such acquisition or organization) to execute and deliver
a Guarantee in favor of the holders of the Bank Note, (ii) pursuant to the
applicable Pledge Agreement, deliver or cause a Subsidiary to deliver to the
Collateral Agent a certificate representing all capital stock of, or other
equity interests in, such subsequently acquired or organized Subsidiary,
together with an undated stock power or assignment, executed in blank by a
Responsible Officer (or take or cause a Subsidiary) to take such other actions
as are necessary to provide the Collateral Agent with a first priority perfected
pledge or security interest in such capital stock or other equity interests),
and (iii) cause such Subsidiary to secure payment of the Note and performance
and observance of all other obligations of the Borrowers and its Subsidiaries
under the Loan Documents by pledging or creating, or causing to be pledged or
created, first priority perfected security interests and Liens with respect to
such of its assets and properties as the Collateral Agent shall designate (it
being understood that it is the intent of the parties that such obligations
shall be secured by, among other things, substantially all the property and
assets of the Borrowers and their Subsidiaries (now or hereafter acquired or
created), including, without limitation, real and other properties acquired
subsequent to the Closing Date). Such security interest and Liens will be
created under the Security Instruments and other security agreements, mortgages,
deeds of trust and other instruments and documents in form, scope and substance
satisfactory to the Banks and the Collateral Agent, and the Borrowers will
deliver or cause to be delivered to the Collateral Agent, all such instruments
and documents (including, without limitation, legal opinions, title insurance
policies, surveys and lien searches) as the Banks or the Collateral Agent shall
request to evidence compliance with this Section 7.35. The Borrowers agree to
provide from time to time such evidence as the Banks or the Collateral Agent
shall request as to the perfection and priority status of each such security
interest and Lien.
7.36 ENFORCEMENT OF ACQUISITION DOCUMENTS. The Borrowers will
enforce, and will cause each of their Subsidiaries parties thereto to enforce,
all covenants, agreements and other obligations contained in the Acquisition
Documents (the Asset Purchase Agreement and the Merger Agreement) which are
binding upon the other parties thereto and which survive the consummation of the
Acquisition (the merger and the asset acquisitions as contemplated by the
Acquisition Documents), including, without limitation, all indemnification
obligations.
7.37 SALE OR DISCOUNT OF RECEIVABLES. Borrowers will not sell
with resource, discount (other than to the extent of finance and interest
charges included therein) or otherwise sell for less than face value thereof,
any of its notes or accounts receivable, except notes or accounts receivable the
collection of which is doubtful in accordance with general accepted accounting
principles.
7.38 MOST FAVORED LENDER STATUS. After the Closing Date, the
Borrowers will not and will not permit any one or more of their Subsidiaries to
enter into, assume or otherwise be bound or obligated under any agreement
creating or evidencing Indebtedness in excess of $500,000 in the aggregate or
any agreement executed and delivered in connection with any Indebtedness in
excess of $500,000 in the aggregate containing one or more Additional Covenants
or Additional Defaults, unless prior written consent to such agreement shall
have been obtained pursuant to Section 12.15 hereof; PROVIDED, HOWEVER, in the
event the Borrowers or any Subsidiary shall enter into, assume or otherwise
become bound by or obligated under any such agreement without the prior written
consent of the holder of the Bank Note, the terms of this Agreement shall,
without any further action on the
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part of the Borrowers or any of the holder of the Bank Note, be deemed to be
amended automatically to include each Additional Covenant and each Additional
Default contained in such agreement, but only for so long as such Additional
Covenants and Additional Defaults remain in effect with respect to such other
agreement. The Borrowers further covenant to promptly execute and deliver at
its expense (including, without limitation, the fees and expenses of counsel
for the holder of the Bank Note) an amendment to this Agreement in form and
substance satisfactory to the Banks evidencing the amendment of this
Agreement to include such Additional Covenants and Additional Defaults,
provided that the execution and delivery of such amendment shall not be a
precondition to the effectiveness of such amendment as provided for in this
paragraph 7.38, but shall merely be for the convenience of the parties hereto.
7.39 OTHER AGREEMENTS/AMENDMENTS. The Borrowers will not (a)
enter into or permit to exist any agreement (i) which would cause an Event of
Default or a Default hereunder; or (ii) which contains any provision which would
be violated or breached by the performance of Borrowers' obligations hereunder
or under any of the other Loan Documents or (b) amend or modify or permit the
amendment or modification of the Pru Notes, the Note Purchase Agreements or the
GUARANTY Agreements or Security Documents therein described and defined,
including without limitation the Senior Note Documents and the Subordinated Note
Documents.
7.40 ACQUISITIONS. Without the prior written consent of the
Administrative Agent, the Borrowers will not acquire from any other Person
assets or capital stock (even if the Borrowers have available cash or borrowing
capacity under the Revolving Credit Borrowing Base) to the extent that more than
$5,000,000 of the consideration to be paid by the Borrowers for the acquisition
is to be paid in cash at the time of the acquisition or within twelve months
thereafter.
7.41 CHANGE IN CONTROL. No Change in Control shall have
occurred.
7.42 PREPAYMENTS ON SUBORDINATED NOTES. Borrowers will not make
any voluntary prepayments on any of the Subordinated Notes.
7.43 PAYMENT OF BANK OBLIGATIONS. The Borrowers hereby agree to
pay, when due and owing, all Bank Obligations, whether or not evidenced by the
Bank Note.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make the
Revolving Credit Loans to the Borrowers under the provisions hereof, and in
consideration thereof, the Borrowers represent, warrant and covenant as follows:
8.1 ORGANIZATION AND QUALIFICATION. Each of the Borrowers is a
corporation duly organized, validly existing, and in good standing under the
Laws of its respective jurisdiction of incorporation, and is duly licensed and
in good standing as a foreign corporation in each jurisdiction in which the
nature of the business transacted or the property owned is such as to require
licensing or qualification as such. Equity, Sunterra and Ouachita Energy are
Wholly Owned Subsidiaries of ECS and ECS has no other Subsidiaries, except
Equity Leasing Corporation, an Oklahoma corporation, which is currently inactive
and owns no assets.
8.2 LITIGATION. Except for the action described on EXHIBIT "D"
attached hereto, there is no action, suit, investigation or proceeding
threatened or pending before any Tribunal against or affecting any of the
Borrowers or any properties or rights of any of the Borrowers which, if
adversely
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determined, would result in a liability of greater than $100,000 or would
otherwise result in any material adverse change in the business or condition,
financial or otherwise, of any of the Borrowers. None of the Borrowers is in
default with respect to any judgment, order, writ, injunction, decree, rule
or regulation of any Tribunal.
8.3 FINANCIAL STATEMENTS. The Borrowers' most recent
consolidated unaudited financial statements which have been furnished to the
Banks have been prepared in conformity with GAAP, show all material liabilities,
direct and contingent, and fairly present the consolidated financial condition
of the Borrowers as of the date of such statements and the results of their
operations for the period then ended, and since the date of such statements
there has been no material adverse change in the business, financial condition
or operations of any of the Borrowers.
8.4 CONFLICTING AGREEMENTS AND OTHER MATTERS. None of the
Borrowers is in default in the performance of any obligation, covenant, or
condition in any agreement to which it is a party or by which it is bound. None
of the Borrowers is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition. None of the Borrowers
is a party to or otherwise subject to any contract or agreement which restricts
or otherwise affects the right or ability of any of the Borrowers to execute the
Loan Documents or the performance of any of their respective terms. Neither the
execution nor delivery of any of the Loan Documents, nor fulfillment of nor
compliance with their respective terms and provisions will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien (except those created by the Loan Documents) upon any of the properties or
assets of any of the Borrowers pursuant to, or require any consent, approval or
other action by or any notice to or filing with any Tribunal (other than routine
filings after the Closing Date with the Securities and Exchange Commission, any
securities exchange and/or state blue sky authorities) pursuant to, the charter
or By-Laws of any of the Borrowers, any award of any arbitrator, or any
agreement, instrument or Law to which any of the Borrowers is subject.
8.5 CORPORATE AUTHORIZATION. The respective Boards of
Directors of each of the Borrowers have duly authorized the execution and
delivery of each of the Loan Documents and the performance of their respective
terms. No other consent or corporate action of any other Person, except for the
Banks and the Noteholders, is required as a prerequisite to the validity and
enforceability of the Loan Documents.
8.6 PURPOSES. None of the Borrowers is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System) and no part of the
proceeds of any borrowing hereunder will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock. If requested by the Banks, the Borrowers will furnish to the
Banks a statement in conformity with the requirements of Federal Reserve Form U-
1, referred to in Regulation U, to the foregoing effect. None of the Borrowers
or any agent acting on behalf of any thereof has taken or will take any action
which might cause this Agreement, or the Note to violate any regulation of the
Board of Governors of the Federal Reserve System (including Regulations G, T, U
and X) or to violate any securities laws, state or federal, in each case as in
effect now or as the same may hereafter be in effect.
8.7 COMPLIANCE WITH APPLICABLE LAWS. The Borrowers are in
compliance with all Laws, ordinances, rules, regulations and other legal
requirements applicable to them and the business conducted by them, the
violation of which could or would have a material adverse effect on their
business or condition, financial or otherwise. Neither the ownership of any
capital stock of any of the Borrowers, nor any continued role of any Person in
the management or other affairs of any of the Borrowers (i) will result or could
result in the Borrowers' noncompliance with any Laws,
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ordinances, rules, regulations and other legal requirements applicable to the
Borrowers, or (ii) could or would have a material adverse effect on the
business or condition, financial or otherwise, of any one, more or all of the
Borrowers.
8.8 POSSESSION OF FRANCHISES, LICENSES. Each of the Borrowers
possesses all franchises, certificates, licenses, permits and other
authorizations from governmental political subdivisions or regulatory
authorities, free from burdensome restrictions, that are necessary in any
material respect for the ownership, maintenance and operation of their
respective properties and assets, and none of the Borrowers is in violation of
any thereof in any material respect.
8.9 LEASES. The Borrowers enjoy peaceful and undisturbed
possession of all leases necessary in any material respect for the operation of
their respective properties and assets, none of which contains any unusual or
burdensome provisions which might materially affect or impair the operation of
such properties and assets. All such leases are valid and subsisting and are in
full force and effect.
8.10 TAXES. The Borrowers have filed all Federal, state and
other income tax returns which are required to be filed and have paid all Taxes,
as shown on said returns, and all Taxes due or payable without returns and all
assessments received to the extent that such Taxes or assessments have become
due. All Tax liabilities of each of the Borrowers are adequately provided for
on the books of the Borrowers, including interest and penalties. No income tax
liability of a material nature has been asserted by taxing authorities for Taxes
in excess of those already paid.
8.11 DISCLOSURE. Neither this Agreement nor any other Loan
Document or writing furnished to the Bank by or on behalf of any of the
Borrowers in connection herewith contains any untrue statement of a material
fact nor do such Loan Documents and writings, taken as a whole, omit to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. There is no fact known to any of the Borrowers and not
reflected in the financial statements or exhibits hereto provided to the Banks
which materially adversely affects or in the future may materially adversely
affect the business, property, or assets, or financial condition of any of the
Borrowers which has not been set forth in this Agreement, in the Loan Documents
or in other documents furnished to the Banks by or on behalf of the Borrowers
prior to the date hereof in connection with the transactions contemplated
hereby.
8.12 INVESTMENT COMPANY ACT REPRESENTATION. None of the
Borrowers is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
8.13 PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT;
INTERSTATE COMMERCE ACT; OTHER REGULATION. Neither the Borrowers, any of their
Subsidiaries nor any Person controlling the Borrowers or any of their
Subsidiaries is subject to regulation under the Public Utilities Holding Company
Act of 1935, as amended, the Federal Power Act, as amended, the Interstate
Commerce Act, as amended, any state public utilities code, as amended from time
to time, or any other federal or state statute or regulation, as amended from
time to time, which limits the ability of (i) the Borrowers to issue the Bank
Note or (ii) the Borrowers or any of their Subsidiaries to perform its
respective obligations under this Agreement, the other Loan Documents or the
Acquisition Documents.
8.14 ERISA. Since the effective date of Title IV of ERISA, no
Reportable Event has occurred with respect to any Plan. For the purposes of
this section the term "Reportable Event" shall mean an event described in
Section 4043(b) of ERISA. For the purposes hereof the term "Plan" shall mean
any plan subject to Title IV of ERISA and maintained for employees of the
Borrowers, or of any member of a controlled group of corporations, as the term
"controlled group of corporations"
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is defined in Section 1563 of the Internal Revenue Code of 1986, as amended
(the "Code"), of which any of the Borrowers is a part. Each Plan established
or maintained by any of the Borrowers is in material compliance with the
applicable provisions of ERISA, and the Borrowers have filed all reports
required by ERISA and the Code to be filed with respect to each Plan. The
Borrowers have met all requirements with respect to funding Plans imposed by
ERISA or the Code. Since the effective date of Title IV of ERISA there have
not been any nor are there now existing any events or conditions that would
permit any Plan to be terminated under circumstances which would cause the
lien provided under Section 4068 of ERISA to attach to the assets of the
Borrowers. The value of each Plan's benefits guaranteed under Title IV of
ERISA on the date hereof does not exceed the value of such Plan's assets
allocable to such benefits on the date hereof.
8.15 FISCAL YEAR. The fiscal years of the respective Borrowers
end as of December 31 of each year.
8.16 TITLE TO PROPERTIES; AUTHORITY. Borrowers have full power,
authority and legal right to own and operate the properties which they now own
and operate, and to carry on the lines of business in which it is now engaged,
and Sunterra has good and marketable title to the Mortgaged Property in
corporate capacity subject to no Lien of any kind except Liens permitted by this
Agreement. Sunterra owns a working interest and net revenue interest in the oil
and gas leasehold estate for the Mortgaged Property of not less than the amounts
set forth on a well by well basis on EXHIBIT "E" attached to the Fourth Amended
and Restated Revolving Credit and Term Loan Agreement dated as of March 31, 1997
(the "Fourth Amended Agreement"). Borrowers have full power, authority and
legal right to execute and deliver and to perform and observe the provisions of
this Agreement and the other Loan Documents. ECS and Sunterra further represent
to the Collateral Agent and Banks that any and all after acquired interest in
any one or more of the Mortgaged Property being concurrently or subsequently
assigned of record to Borrowers is and shall be deemed encumbered by the Oil and
Gas Mortgage in all respects.
8.17 ENVIRONMENTAL REPRESENTATIONS. To the best of
Borrowers' knowledge and belief, upon reasonable and good faith inquiry
exercised with due diligence and in accordance with normal industry standards:
(a) Borrowers are not subject to any
liability or obligation relating to (i) the
environmental conditions on, under or about the
Collateral, including, without limitation, the
soil and ground water conditions at the location
of any of the Borrowers' properties, or (ii) the
use, management, handling, transport, treatment,
generation, storage, disposal, release or
discharge of any Polluting Substance;
(b) Borrowers have not obtained and are not
required to obtain or make application for any
permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings,
improvements, facilities, fixtures and equipment
forming a part of the Collateral by reason of any
Environmental Laws;
(c) Borrowers have taken all steps
necessary to determine and has determined that no
Polluting Substances have been disposed of or
otherwise released on, onto, into, or from the
Collateral (the term "release" shall have the
meanings specified in CERCLA/XXXX, and the term
"disposal" or "disposed" shall have the meanings
specified in RCRA/HSWA; provided, in the event
either CERCLA/XXXX or RCRA/HSWA is amended so as
to broaden the meaning of any term defined
thereby, such broader meaning shall apply
subsequent to the
-41-
effective date of such amendment and provided
further, to the extent that the laws of any State or
Tribunal establish a meaning for "release,"
"disposal" or "disposed" which is broader than that
specified in CERCLA/XXXX, RCRA/HSWA or other
Environmental Laws, such broader meaning shall
apply);
(d) There are no PCB's or asbestos-
containing materials, whether in the nature of
thermal insulation products such as pipe boiler
or breech coverings, wraps or blankets or
sprayed-on or trowelled-on products in, on or
upon the Collateral; and
(e) There is no urea formaldehyde foam
insulation ("UFFI") in, on or upon the
Collateral.
8.18 OIL AND GAS CONTRACTS. All contracts, agreements and
leases related to any of the oil and gas mining, mineral or leasehold properties
and all contracts, agreements, instruments and leases to which any one, more or
all of the Borrowers are a party, are valid and effective in accordance with
their respective terms, and all agreements included in the oil and gas mining,
mineral or leasehold properties in the nature of oil and/or gas purchase
agreements, and oil and/or gas sale agreements are in full force and effect and
are valid and legally binding obligations of the parties thereto and all
payments due thereunder have been made, except for those suspended for
reasonable cause in the ordinary course of business; and, there is not under any
such contract, agreement or lease any existing default by any party thereto or
any event which, with notice or lapse of time, or both, would constitute such
default, other than minor defaults which, in the aggregate, would result in
losses or damages of more than $100,000 to any one, more or all of the
Borrowers.
8.19 NATURAL GAS POLICY ACT AND NATURAL GAS ACT COMPLIANCE.
To the best of Borrowers' knowledge, all material filings and approvals under
the Natural Gas Policy Act of 1978, as amended, and the Natural Gas Act, as
amended, or with the Federal Energy Regulatory Commission (the "FERC") or
required under any rules or regulations adopted by the FERC which are necessary
for the operation of Borrowers' businesses or the Collateral in the manner in
which they are presently being operated have been made and the terms of the
agreements and contractual rights included in the Borrowers' businesses or the
Collateral do not conflict with or contravene any such Law, rule or regulation.
8.20 TAKE OR PAY OBLIGATIONS, PREPAYMENTS, BTU ADJUSTMENTS
AND BALANCING PROBLEMS. To the best of the Borrowers' knowledge, after diligent
inquiry, there is no take or pay obligation under any gas purchase agreement
comprising a portion of the Collateral which is not matched by a commensurate
and corresponding pay or take obligation binding upon the purchaser under a
corresponding gas sales agreement such that with respect to the ownership and
operation of the businesses of any of the Borrowers or the Collateral, any such
obligation in favor of any seller under any gas purchase agreement to which any
one, more or all of the Borrowers are a "buyer" is matched by a corresponding
obligation on the part of "purchasers" under corresponding gas sales agreements
pursuant to which any one, more or all the Borrowers are the "seller". None of
the Borrowers nor the Collateral is subject to requirements to make BTU
adjustments or effect gas balancing in favor of third parties which would result
in any one, more or all of the Borrowers being required to (i) deliver gas at a
price below that established in applicable gas sales agreements or on behalf of
and for the benefit of third parties in exchange or to otherwise compensate for
prior above market or above contract purchases of gas from any one, more or all
of the Borrowers or their predecessors in interest, or (ii) balance in kind by
allowing other owners in the Collateral to make up the past imbalances in gas
sales, or (iii) balance in cash by paying other owners of the collateral for the
past gas imbalances except for the matters described on EXHIBIT "E" hereto which
have been disclosed to the Collateral Agent and the Banks.
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8.21 GAS PURCHASE OBLIGATIONS IN EXCESS OF GAS SALES RIGHTS. The
ownership and operation of the business operations of Borrowers or the
Collateral have not resulted or will not result in the existence of minimum
purchase obligations under any gas purchase agreement (relating to the volume
of gas to be taken thereunder or the price to be paid with respect thereto
for the duration of any such gas purchase agreement) which are not matched by
corresponding and commensurate rights to sell all such gas under applicable
gas sales agreements at prices in excess of the amount to be paid therefor
under gas purchase agreements (without regard to costs associated with
transporting any such gas and risks of volume "shrinkage" occurring in the
transportation process).
ARTICLE IX
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder (whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of Law or otherwise):
(a) The Borrowers shall fail to timely make any payment or
prepayment of principal on the due date thereof or, within five (5)
days of the due date thereof, any interest due on the Bank Note, or
fail to pay any other Bank Obligations within ten (10) days after the
same shall become due and payable (whether by extension, renewal,
acceleration or otherwise); or
(b) Any representation or warranty of the Borrowers made
herein or in any writing furnished in connection with or pursuant to
any of the Loan Documents shall have been false or misleading in any
material respect on the date when made and continues to have a material
adverse effect on one or more of the Borrowers or their respective
financial capacity or business operations; or
(c) The Borrowers shall fail to duly observe, perform or comply
with any covenant, agreement or term (other than payment provisions
which are governed by Section 9.1(a) hereof) contained in this
Agreement or any of the Loan Documents and such default or breach shall
have not been cured or remedied within the earlier of thirty (30) days
after any of the Borrowers shall know (or should have known) of its
occurrence or twenty (20) days following receipt of notice thereof from
the Collateral Agent; or
(d) Any of the Borrowers shall default in the payment of principal
or of interest on any other obligation for money borrowed or received
as an advance (or any Capitalized Lease Obligations or obligation under
any conditional sale or other title retention agreement, or any
obligation issued or assumed as full or partial payment for property
whether or not secured by purchase money Lien, or any obligation under
notes payable or drafts accepted representing extensions of credit) in
excess of $100,000 beyond any grace period provided with respect
thereto, including without limitation, the Note Purchase Agreements, or
shall default in the performance of any other agreement, term or
condition contained in the Note Purchase Agreements or any
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agreement under which such obligation is created (or if any other
default under any such agreement shall occur and be continuing beyond
any period of grace provided with respect thereto) if the effect of
such default is to cause the holder or holders of such obligation (or a
trustee on behalf of such holder or holders) to accelerate the due date
of such obligation prior to its scheduled date of maturity; or
(e) Any of the following: (i) any of the Borrowers shall become
insolvent or unable to pay its debts as they mature, make an assignment
for the benefit of creditors or admit in writing its inability to pay
its debts generally as they become due or fail generally to pay its
debts as they mature; or (ii) an order for relief, judgment or decree
is entered in respect of any of the Borrowers under any bankruptcy,
reorganization, compromise, arrangement, insolvency, dissolution,
liquidation or similar law, whether now or hereinafter in effect; and
such order, judgment or decree is not dismissed or discharged within
sixty (60) days from the date of entry; or (iii) any of the Borrowers
shall petition or apply to any Tribunal for the appointment of a
trustee, receiver, custodian or liquidator of any of the Borrowers or
of any substantial part of the assets of any of the Borrowers, or shall
commence any proceedings relating to any of the Borrowers under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debts, dissolution, or liquidation Law of any
jurisdiction, whether now or hereafter in effect; or (iv) any such
petition or application shall be filed, or any such proceedings shall
be commenced, of a type described in subsection (iii) above, against
any of the Borrowers and any of the Borrowers by any act shall indicate
its approval thereof, consent thereto or acquiescence therein, or an
order, judgment or decree shall be entered appointing any such trustee,
receiver, custodian or liquidator, or approving the petition in any
such proceedings, and such order, judgment or decree shall remain
unstayed and in effect, if being vigorously contested, for more than
sixty (60) days; or (v) any order, judgment or decree shall be entered
in any proceedings against any of the Borrowers decreeing the
dissolution of any of the Borrowers and such order, judgment or decree
shall remain unstayed and in effect for more than sixty (60) days; or
(vi) any order, judgment or decree shall be entered in any proceedings
against any of the Borrowers decreeing a split-up of any of the
Borrowers which requires the divestiture of a substantial part of the
assets of any of the Borrowers, and such order, judgment or decree
shall remain unstayed and in effect for more than sixty (60) days; or
(vii) any of the Borrowers shall fail to make timely payment or deposit
of any amount of tax required to be withheld by any of the Borrowers
and paid to or deposited to or to the credit of the United States of
America pursuant to the provisions of the Internal Revenue Code of
1986, as amended, in respect of any and all wages and salaries paid to
employees of any one or more or all of the Borrowers for a tax deposit
amount in excess of $10,000; or
(f) Any final judgment or order or series of judgments or orders
on the merits for the payment of money in an amount in excess of
$250,000 shall be outstanding against any of the Borrowers, and such
judgment shall remain unstayed pending appeal and in effect and unpaid
-44-
for more than thirty (30) days, or within thirty (30) days after
expiration of any such stay, such judgment(s) or order(s) are not
discharged; or
(g) Any Termination Event with respect to a Plan shall have
occurred and, within thirty (30) days after the occurrence thereof, (a)
such Termination Event (if correctable) shall not have been corrected
and (b) the then present value of such Plan's vested benefits exceeds
the then current value of assets accumulated in such Plan by more than
the amount of $250,000 (or in the case of a Termination Event involving
the withdrawal of a "substantial employer" (as defined in Section
4001(a)(2) of ERISA), the withdrawing employer's proportionate share of
such excess shall exceed such amount); or
(h) The Borrowers or any of their ERISA Affiliates as employer
under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an aggregate
amount exceeding $250,000; or
(i) Any Event of Default occurs (after the expiration of any
applicable grace or curative period) under any of the Pru Notes, either
of the Note Purchase Agreements or any of the Guaranty Agreements.
9.2 REMEDIES. Upon the occurrence of any Event of Default referred to
in Section 9.1(e) the Commitments shall immediately terminate and the Bank
Note and all other Bank Obligations shall be immediately due and payable,
without notice of any kind. Upon the occurrence of any other Event of
Default, and without prejudice to any right or remedy of the Banks under this
Agreement or the Loan Documents or under applicable Law of under any other
instrument or document delivered in connection herewith, the Banks may (i)
declare the Commitments terminated or (ii) declare the Commitments terminated
and declare the Bank Note and the other Bank Obligations, or any part
thereof, to be forthwith due and payable, whereupon the Bank Note and the
other Bank Obligations, or such portion as is designated by the Banks shall
forthwith become due and payable, without presentment, demand, notice or
protest of any kind, all of which are hereby expressly waived by all of the
Borrowers. No delay or omission on the part of the Collateral Agent or the
Banks in exercising any power or right hereunder or under the Bank Note, the
Loan Documents or under applicable law shall impair such right or power or be
construed to be a waiver of any default or any acquiescence therein, nor
shall any single or partial exercise by the Collateral Agent or the Bank of
any such power or right preclude other or further exercise thereof or the
exercise of any other such power or right by the Collateral Agent or the
Bank. In the event that all or part of the Bank Obligations becomes or is
declared to be forthwith due and payable as herein provided, the Banks,
subject only to the Intercreditor Agreement, shall have the right to set off
the amount of all the Bank Obligations of the Borrowers owing to such Bank
against, and shall have, and is hereby granted by all of the Borrowers, a
lien upon and security interest in, all property of each of the Borrowers in
such Bank's possession at or subsequent to such default, regardless of the
capacity in which such Bank possesses such property, including but not
limited to any balance or share of any deposit, collection or agency account.
After Default all proceeds received by the Banks may be applied to the Bank
Obligations in such order of application and such proportions as the Banks,
in its discretion, shall choose, subject only to the Intercreditor Agreement.
At any time after the occurrence of any Event of Default, the Collateral
Agent or the Bank may, at its option, cause an audit of any and/or all of the
books, records and documents of all of the Borrowers to be made by auditors
satisfactory to the Banks at the expense of the Borrowers. The Collateral
Agent shall have, and may exercise, each and every right and remedy granted
to the Banks for default under the terms
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of the Security Instruments and the other Loan Documents in accordance with
the terms and provisions of the Intercreditor Agreement.
ARTICLE X
LOAN OPERATIONS
10.1 INTERESTS IN LOANS/COMMITMENTS. The percentage interest of BOK and
each other Bank that may hereafter become an Assignee or Credit Participant
pursuant to Article XI hereof for Bank Obligation amounts in excess of the
BOK Commitment or, alternatively, subject to BOK's consent, extends to
Borrowers hereunder Commitments not in excess of $20,000,000 in the aggregate
(in addition to the existing $20,000,000 BOK Commitment) to be evidenced by
an additional Bank Note jointly and severally issued hereunder by Borrowers
to the order of such additional Bank in form and content similar to the Bank
Note annexed hereto as Exhibit A (in which event such existing $40,000,000
Bank Note would be reissued concurrently therewith in a correspondingly
reduced original principal amount) (in no event shall all Bank Notes issued
hereunder exceed $40,000,000 in the aggregate), in the Revolving Credit
Loans and Letters of Credit, and the Commitments, shall be computed based on
the maximum principal amount for each Bank as follows:
BANK MAXIMUM COMMITMENT AMOUNT PERCENTAGE INTEREST
BOK $ 20,000,000 50.00%
Other Bank(s)
hereafter extending
Commitment(s) or
as Assignee(s)
(other than a Credit
Participant(s)
pursuant to
Article XI below) $ 20,000,000 50.00%
------------ -------
Total $ 40,000,000 100.00%
The foregoing percentage interests, as from time to time in effect and
reflected in the Register, are referred to as the Percentage Interest with
respect to all or any portion of the Revolving Credit Loans and Letters of
Credit, and the Commitments. BOK has no obligation to increase the BOK
Commitment above either its existing Percentage Interest or the maximum
amount of $20,000,000 and any future determination of BOK to increase the BOK
Commitment shall be in its sole and absolute discretion and subject to BOK
obtaining Assignee(s) or Credit Participant(s) under Article XI hereof for
all amounts of the Commitments in excess of the existing $20,000,000 BOK
Commitment.
10.2 ADMINISTRATIVE AGENT'S AUTHORITY TO ACT. Each of the Banks
appoints and authorizes BOK to act for the Banks as Administrative Agent in
connection with the transactions contemplated by this Agreement and the other
Loan Documents on the terms set forth herein. In acting hereunder, the
Administrative Agent is acting for the account of BOK to the extent of its
Percentage Interest and for the account of each other Bank to the extent of
such Bank's Percentage Interest, and all action in connection with the
enforcement of, or the exercise of any remedies (other than the Banks' rights
of set-off as provided herein or in any other Loan Document) in respect of
the Loans and the Indebtedness shall be taken by the Administrative Agent in
accordance with the Intercreditor Agreement.
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10.3 BORROWERS TO PAY ADMINISTRATIVE AGENT. The Borrowers shall be
fully protected in making all payments in respect of the Bank Note evidencing
the Credit Obligations to the Administrative Agent, in relying upon consents,
modifications and amendments executed by the Administrative Agent purportedly
on the Banks' behalf, and in dealing with the Administrative Agent as herein
provided. Upon three (3) Business Days notice, the Administrative Agent may
charge the accounts of the Borrowers, on the dates when the amounts thereof
become due and payable, with the amounts of the principal of and interest on
the Loans, including any amounts paid by the Administrative Agent to third
parties under Letters of Credit or drafts presented thereunder, commitment
fees, Letter of Credit issuance fees and processing/application fees
pertaining thereto and all other fees and amounts owing under any Loan
Document.
10.4 BANK OPERATIONS FOR ADVANCES, LETTERS OF CREDIT.
10.4.1 ADVANCES. On the funding date for each Loan, each Bank
shall advance to the Administrative Agent in immediately available
funds such Bank's Percentage Interest in the portion of a Loan advanced
on such funding date prior to 1:00 P.M. (Tulsa, Oklahoma time). If
such funds are not received at such time, but all applicable conditions
set forth in Article VI have been satisfied, each Bank authorizes and
requests the Administrative Agent to advance for such Bank's account,
pursuant to the terms hereof, the Bank's respective Percentage Interest
in such portion of such Loan and agrees to reimburse the Administrative
Agent in immediately available funds for the amount thereof prior to
3:00 p.m. (Tulsa, Oklahoma time) on the day any portion of such Loan is
advanced hereunder; provided, however, that the Administrative Agent is
not authorized to make any such advance for the account of any Bank who
has previously notified the Administrative Agent in writing that such
Bank will not be performing its obligations to make further advances
hereunder; and provided, further, that the Administrative Agent shall
be under no obligation to make any such advance.
10.4.2 LETTERS OF CREDIT. Each of the Banks authorizes and
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.2.5 and agrees to purchase a participation in
each of such Letters of Credit in an amount equal to its Percentage
Interest in the amount of each such Letter of Credit. Promptly upon
the request of any Letter of Credit Issuer, each Bank shall reimburse
such Letter of Credit Issuer in immediately available funds for such
Bank's Percentage Interest in the amount of all obligations to third
parties incurred by the Letter of Credit Issuer in respect of each
Letter of Credit and each draft accepted under a Letter of Credit to
the extent not timely reimbursed by the Borrowers. Each Letter of
Credit Issuer will notify each Bank (and the Administrative Agent if
the Administrative Agent is not the Letter of Credit Issuer) of the
issuance of each Letter of Credit, the amount and date of payment of
any draft drawn or accepted under a Letter of Credit and whether in
connection with the payment of any such draft the amount thereof was
added to the Revolving Credit Loan or was reimbursed by the Borrowers.
10.4.3 ADMINISTRATIVE AGENT TO ALLOCATE PAYMENTS. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, reimbursement of amounts paid by each
Letter of Credit Issuer to third parties under Letters of Credit or
drafts presented thereunder, commitment fees, Letter of Credit issuance
fees and other fees under this Agreement (except for the standard
Letter of Credit application/processing fees of any Letter of Credit
Issuer), which shall not be shared by the Banks shall, as a matter of
convenience, be made by the Borrowers to the applicable Letter of
Credit Issuer or the applicable Administrative Agent, as the case may
be. The share of each Bank shall be credited to such Bank by the
Administrative Agent in immediately available funds in such manner that
the principal amount of the Loans constituting Credit
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Obligations to be paid shall be paid proportionately in accordance with
the Banks' respective Percentage Interests in such Loans, except as
otherwise provided in this Agreement.
10.4.4 DELINQUENT BANKS; NONPERFORMING BANKS. In the event that
any Bank fails to reimburse the Administrative Agent pursuant to
Section 10.4.1 for the Percentage Interest of such Bank (a "Delinquent
Bank") in any credit advanced by the Administrative Agent pursuant
hereto, overdue amounts (the "Delinquent Payment") due from the
Delinquent Bank to the Administrative Agent shall bear interest,
payable by the Delinquent Bank on demand, at a per annum rate equal to
(a) the Federal Funds Rate for the first three days overdue and (b) the
sum of two percentage points (2%) PLUS the Federal Funds Rate for any
longer period. Such interest shall be payable to the Administrative
Agent for its own account for the period commencing on the date of the
Delinquent Payment and ending on the date the Delinquent Bank
reimburses the Administrative Agent on account of the Delinquent
Payment (to the extent not paid by the Borrowers as provided below) and
the accrued interest thereon (the "Delinquency Period"), whether
pursuant to the assignments referred to below or otherwise. Upon notice
by the Administrative Agent, the Borrowers will pay to the
Administrative Agent the principal (but not the interest) portion of
the Delinquent Payment. During the Delinquency Period, in order to
make reimbursements for the Delinquent Payment and accrued interest
thereon, the Delinquent Bank shall be deemed to have assigned to the
Administrative Agent all interest, commitment fees and other payments
made by the Borrowers hereunder that would have thereafter otherwise
been payable under the Loan Documents to the Delinquent Bank. During
any other period in which any Bank is not performing its obligations to
extend credit under Article II hereof (a "Nonperforming Bank"), the
Nonperforming Bank shall be deemed to have assigned to each Bank that
is not a Nonperforming Bank (a "Performing Bank") all principal and
other payments made by the Borrowers that would have thereafter
otherwise been payable thereunder to the Nonperforming Bank. The
Administrative Agent shall credit a portion of such payments to each
Performing Bank in an amount equal to the Percentage Interest of such
Performing Bank in an amount equal to the Percentage Interest of such
Performing Bank divided by one minus the Percentage Interest of the
Nonperforming Bank until the respective portions of the Loans owed to
all the Banks are the same as the Percentage Interests of the Banks
immediately prior to the failure of the Nonperforming Bank to perform
its obligations under Article II hereof. The foregoing provisions
shall be in addition to any other remedies the Administrative Agent,
the Performing Banks or the Borrowers may have under law or equity
against the Delinquent Bank as a result of the Delinquent Payment or
against the Nonperforming Bank as a result of its failure to perform
its obligations under Article II hereof.
10.5 SHARING OF PAYMENTS. To the extent permitted by applicable Bank
regulatory and legal requirements and subject to the provisions of the
Intercreditor Agreement, each Bank agrees that (i) if by exercising any right
of set-off or counterclaim or otherwise, it shall receive payment of (a) a
proportion of the aggregate amount due with respect to its Percentage
Interest in the Loans and Letter of Credit Exposure which is greater than (b)
the proportion received by any other Bank in respect of the aggregate amount
due with respect to such other Bank's Percentage Interest in the Loans and
Letter of Credit Exposure and (ii) if such inequality shall continue for more
than 10 days, the Bank receiving such proportionately greater payment shall
purchase participations in the Percentage Interests in the Loans and Letter
of Credit Exposure held by the other Banks, and such other adjustments shall
be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is
recovered from such Bank through bankruptcy proceedings or otherwise), as may
be required so that all such payments of principal and interest with respect
to the Loans and Letter of Credit Exposure held by the Banks shall be shared
by the Banks pro rata in accordance with their respective Percentage
Interests; PROVIDED, HOWEVER, that this Section 10.5 shall not impair the
right of any Bank to exercise any right of set-off or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
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Indebtedness of Borrowers other than Borrowers' Indebtedness with respect to
the Loans and Letter of Credit Exposure. Each Bank that grants a
participation in the Loans and Commitments to a Credit Participant shall
require as a condition to the granting of such participation that such Credit
Participant agree to share payments received in respect of the Indebtedness
as provided in this Section 10.5. The provisions of this Section 10.5 are
for the sole and exclusive benefit of the Banks and no failure of any Bank to
comply with the terms hereof shall be available to any of the Borrowers as a
defense to the payment of the Loans.
10.6 AMENDMENTS, CONSENTS, WAIVERS. Except as otherwise set forth
herein and subject to the Intercreditor Agreement, the Collateral Agent may
(and upon the written request of the Required Banks the Administrative Agent
shall) take or refrain from taking any action under this Agreement or any
other Loan Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Loan Document or any Default or
Event of Default, all of which actions shall be binding upon all of the
Banks; PROVIDED, HOWEVER, that:
(i) Without the written consent of the Banks owning at least two thirds
(2/3) of the Percentage Interests (other than Delinquent Banks during the
existence of a Delinquency Period so long as such Delinquent Bank is treated
the same as the other Banks with respect to any actions enumerated below), no
written modification of, amendment to, consent with respect to, waiver of
compliance with or waiver of a Default under, any of the Loan Documents shall
be made, including without limitation, Section 9.1 of this Agreement, the
related defined terms or this Section 10.6(a) shall be made.
(ii) Without the written consent of such Banks as own 100% of the
Percentage Interests (other than Delinquent Banks during the existence of a
Delinquency Period so long as such Delinquent Bank is treated the same as the
other Banks with respect to any actions enumerated below):
(a) No reduction shall be made in (A) the amount of principal of any
of the Loans or reimbursement obligations for payments made under
Letters of Credit, (B) the interest rate on the Loans or (C) the Letter
of Credit issuance fees (excluding, however, Letter of Credit
processing/application fees, the amount of which shall be within the
sole discretion of each Letter of Credit Issuer) or commitment
(non-usage) fees.
(b) No change shall be made in the stated time of payment of all or
any portion of any of the Loans or interest thereon or reimbursement of
payments made under Letters of Credit or fees relating to any of the
foregoing payable to all of the Banks and no waiver shall be made of
any Default under Section 9.1(a).
(c) No increase shall be made in the amount, or extension of the
term, of the Commitments.
(d) Except as otherwise provided in the Intercreditor Agreement, no
alteration shall be made of the Banks' rights of set-off contained
herein or in the other Loan Documents.
(e) Except as otherwise provided in the Intercreditor Agreement, no
release of any Collateral shall be made (except that the Collateral
Agent may release particular items of Collateral in dispositions
permitted by the Security Instruments in accordance with the terms and
provisions of the Intercreditor Agreement and may release all
Collateral upon payment in full of the Loans evidenced by the Bank Note
and termination of the Commitments together with payment of all of the
Pru Notes without the written consent of the Banks).
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(f) No amendment to or modification of this Section 10.6(ii) shall be
made.
10.7 ADMINISTRATIVE AGENT'S RESIGNATION. The Administrative Agent may
resign at any time by giving at least 30 days' prior written notice of its
intention to do so to each other of the Banks and the Borrowers and upon the
appointment by the Required Banks of a successor Administrative Agent
satisfactory to the Borrowers. If no successor Administrative Agent shall
have been so appointed and shall have accepted such appointment within 45
days after the retiring Administrative Agent's giving of such notice of
resignation, then the retiring Administrative Agent may with the consent of
the Borrowers, which shall not be unreasonably withheld, appoint a successor
Administrative Agent which shall be a bank or a trust Borrowers organized
under the laws of the United States of America or any state thereof and
having a combined capital, surplus and undivided profit of at least
$50,000,000; PROVIDED, HOWEVER, that any successor Administrative Agent
appointed under this sentence may be removed upon the written request of the
Required Banks, which request shall also appoint a successor Administrative
Agent satisfactory to the Borrowers. Upon the appointment of a new
Administrative Agent hereunder, the term "Administrative Agent" shall for all
purposes of this Agreement thereafter mean such successor. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, or the
removal hereunder of any successor Administrative Agent, the provisions of
this Agreement shall continue to inure to the benefit of such Administrative
Agent as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
10.8 CONCERNING THE ADMINISTRATIVE AGENT.
10.8.1 ACTION IN GOOD FAITH. The Administrative Agent and its
officers, directors, employees and agents shall be under no liability
to any of the Banks or to any future holder of any interest in the
Indebtedness for any action or failure to act taken or suffered in good
faith, and any action or failure to act in accordance with an opinion
of its counsel shall conclusively be deemed to be in good faith. The
Administrative Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, on instructions given to the
Administrative Agent by the Required Holders of the Bank Note
evidencing the Bank Obligations as provided in this Agreement.
10.8.2 NO IMPLIED DUTIES. The Administrative Agent shall have and
may exercise such powers as are specifically delegated to the
Administrative Agent under this Agreement or any other Loan Document
together with all other powers incidental thereto. The Administrative
Agents shall have no implied duties to any Person or any obligation to
take any action under this Agreement or any other Loan Document except
for action specifically provided for in this Agreement or any other
Loan Document to be taken by the Administrative Agent. Before taking
any action under this Agreement or any other Loan Document, the
Administrative Agent may request an appropriate specific indemnity
satisfactory to it from each Bank in addition to the general indemnity
provided for in Section 10.11. Until the Administrative Agent has
received such specific indemnity, the Administrative Agent shall not be
obligated to take (although such Administrative Agent may in its sole
discretion take) any such action under this Agreement or any other Loan
Document. Each Bank confirms that the Administrative Agent does not
have a fiduciary relationship to them under the Loan Documents. The
Borrowers and its Subsidiaries party hereto confirm that neither the
Administrative Agent nor any other Bank has a fiduciary relationship to
them under the Loan Documents.
10.8.3 VALIDITY. The Administrative Agent shall not be responsible
to any Bank or any future holder of any interest in the Loans and
Indebtedness (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Loan Document, (b) for any
recitals, reports, representations, warranties or statements contained
in or made in connection with this Agreement or any other Loan
Document, (c) for the existence or value of any assets
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included in any security for the Loans and Indebtedness, (d) for the
effectiveness of any Lien purported to be included in the Collateral,
(e) for the specification or failure to specify any particular assets
to be included in the Collateral, or (f) unless the Administrative
Agent shall have failed to comply with Section 10.8.1, for the
perfection of the security interests in the Collateral.
10.8.4 COMPLIANCE. The Administrative Agent shall not be obligated
to ascertain or inquire as to the performance or observance of any of
the terms of this Agreement or any other Loan Document; and in
connection with any extension of credit under this Agreement or any
other Loan Document, the Administrative Agent shall be fully protected
in relying on a certificates of the Borrowers as to the fulfillment by
the Borrowers of any conditions to such extension of credit.
10.8.5 EMPLOYMENT ADMINISTRATIVE AGENT AND COUNSEL. The
Administrative Agent may execute any of their respective duties as
Administrative Agent under this Agreement or any other Loan Document by
or through employees, agents and attorneys-in-fact and shall not be
responsible to any of the Banks, the Borrowers for the default or
misconduct of any such Administrative Agent or attorneys-in-fact
selected by the Administrative Agent acting in good faith. The
Administrative Agent shall be entitled to advice of counsel concerning
all matters pertaining to the agency hereby created and its duties
hereunder or under any other Loan Document.
10.8.6 RELIANCE ON DOCUMENTS AND COUNSEL. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying,
upon any affidavit, certificate, cablegram, consent, instrument,
letter, notice, order, document, statement, telecopy, telegram, telex
or teletype message or writing reasonably believed in good faith by the
Administrative Agent to be genuine and correct and to have been signed,
sent or made by the Person in question, including any telephonic or
oral statement made by such Person, and, with respect to legal matters,
upon an opinion or the advice of counsel selected by such
Administrative Agent.
10.8.7 ADMINISTRATIVE AGENT'S REIMBURSEMENT. Each of the Banks
severally agrees to reimburse the Administrative Agent, in the amount
of such Bank's Percentage Interest, for any reasonable expenses not
reimbursed by the Borrowers (without limiting the obligation of the
Borrowers to make such reimbursement): (a) for which the Administrative
Agent are entitled to reimbursement by the Borrowers under this
Agreement or any other Loan Document, and (b) after the occurrence of a
Default, for any other reasonable expenses incurred by the
Administrative Agent on the Banks' behalf in connection with the
enforcement of the Banks' rights under this Agreement or any other Loan
Document.
10.9 RIGHTS AS A BANK. With respect to any Loan(s) or advance(s)
extended by it hereunder, the Administrative Agent shall have the same
rights, obligations and powers hereunder as any other Bank and may exercise
such rights and powers as though it were not an Administrative Agent, and
unless the context otherwise specifies, the Administrative Agent shall be
treated in their respective individual capacities as though they were not the
Administrative Agent hereunder. Without limiting the generality of the
foregoing, the Percentage Interest of the Administrative Agent shall be
included in any computations of Percentage Interests. The Administrative
Agent and its Affiliates may accept deposits from, lend money to, act as
trustee for and generally engage in any kind of banking or trust business
with the Borrowers, any of its Subsidiaries or any Affiliate of any of them
and any Person who may do business with or own an equity interest in the
Borrowers, any of its Subsidiaries or any Affiliate of any of them, all as if
the Administrative Agent were not the Administrative Agent and without any
duty to account therefor to the other Banks.
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10.10 INDEPENDENT CREDIT DECISION. Each of the Banks acknowledges that
it has independently and without reliance upon either of the Administrative
Agent, based on the financial statements and other documents referred to in
Section 8.3, on the other representations and warranties contained herein and
on such other information with respect to the Borrowers and their
Subsidiaries as such Bank deemed appropriate, made such Bank's own credit
analysis and decision to enter into this Agreement and to make the extensions
of credit provided for hereunder. Each Bank represents to the Administrative
Agent that such Bank will continue to make its own independent credit and
other decisions in taking or not taking action under this Agreement or any
other Loan Document. Each Bank expressly acknowledges that neither the
Administrative Agent nor any of its respective officers, directors,
employees, agent, attorneys-in-fact or Affiliates has made any
representations or warranties to such Bank, and no act by the Administrative
Agent taken under this Agreement or any other Loan Document, including any
review of the affairs of the Borrowers and their Subsidiaries, shall be
deemed to constitute any representation or warranty by either of the
Administrative Agent. Except for notices, reports and other documents
expressly required to be furnished to each Bank by the Administrative Agent
under this Agreement or any other Loan Document, the Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit
or other information concerning the business, operations, property,
condition, financial or otherwise, or creditworthiness of the Borrowers or
any Subsidiary which may come into the possession of the Administrative Agent
or any of their respective officers, directors, employees, agent,
attorneys-in-fact or Affiliates.
10.11 INDEMNIFICATION. The holders of the Indebtedness shall indemnify
the Administrative Agent and its respective officers, directors, employees
and Administrative Agent (to the extent not reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so), pro rata in
accordance with their respective Percentage Interests, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time be imposed on, incurred by or asserted against either
of the Administrative Agent or such Persons relating to or arising out of
this Agreement, any other Loan Document, the transactions contemplated hereby
or thereby, or any action taken or omitted by the Administrative Agent in
connection with any of the foregoing; PROVIDED, HOWEVER, that the foregoing
shall not extend to actions or omissions which are taken by the
Administrative Agent with gross negligence or willful misconduct.
ARTICLE XI
ASSIGNMENTS/PARTICIPATIONS
11. SUCCESSORS AND ASSIGNS; BANK ASSIGNMENT AND PARTICIPATIONS. Any
reference in this Agreement to any party hereto shall be deemed to include
the successors and assigns of such party, and all covenants and agreements by
or on behalf of the Borrowers, the Administrative Agent or the Banks that are
contained in this Agreement or any other Loan Documents shall bind and inure
to the benefit of their respective successors and assigns; PROVIDED, HOWEVER,
that (a) the Borrowers may not assign their rights or obligations under this
Agreement, and (b) the Banks shall be not entitled to assign their respective
Percentage Interests in the Loans evidenced by the Bank Note hereunder except
as set forth below in this Section 11.
11.1 ASSIGNMENTS BY BANKS.
11.1.1 ASSIGNEES AND ASSIGNMENT PROCEDURES. Each Bank may (i)
without the consent of the Administrative Agent or the Borrowers if the
proposed assignee is already a Bank hereunder or a Wholly Owned
Subsidiary of the same corporate parent of which the assigning Bank is
a Subsidiary, or (ii) otherwise with the consents of the Administrative
Agent and (so long as no Event of Default exists) the Borrowers (which
consents will not be
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unreasonably withheld), in compliance with applicable laws in
connection with such assignment, assign to one or more commercial banks
or other financial institutions (each, an "Assignee") all or a portion
of its interests, rights and obligations under this Agreement and the
other Loan Documents, including all or a portion, which need not be pro
rata among the Loans and the Letter of Credit Exposure, of its
Commitments, the portion of the Loans and Letter of Credit Exposure at
the time owing to it and the Bank Note held by it, but excluding its
rights and obligations as one of the Administrative Agent; PROVIDED,
HOWEVER, that:
(i) the aggregate amount of the Commitments of the assigning Bank
subject to each such assignment to any Assignee other than another Bank
(determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall be
not less than $1,000,000 and in increments of $500,000; and
(ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance (the
"Assignment and Acceptance") in the form satisfactory to the
Administrative Agent and the Collateral Agent, together with the Note
or Notes subject to such assignment.
Upon acceptance and recording pursuant to Section 11.1.4, from and
after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five (5) Business Days after
the execution thereof unless waived in writing by the Administrative
Agent):
(A) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Bank under this Agreement; and
(B) the assigning Bank shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Bank's
rights and obligations under this Agreement, such Bank shall
cease to be a party hereto but shall continue to be entitled
to any fees accrued for its account hereunder and not yet
paid).
11.1.2 TERMS OF ASSIGNMENT AND ACCEPTANCE. By executing and
delivering an Assignment and Acceptance, the assigning Bank and
Assignee shall be deemed to confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished
pursuant hereto;
(b) such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrowers and their Subsidiaries or the performance or observance
by the Borrowers or any of their Subsidiaries of any of its obligations
under this Agreement, any other Loan Document or any other instrument
or document furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent quarterly or annual
financial statements delivered
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pursuant hereto and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance;
(d) such Assignee will independently and without reliance upon the
Administrative Agent, such assigning Bank or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Administrative Agent to
take such action as Administrative Agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and
(f) such Assignee agrees that it will perform in accordance with the
terms of this Agreement all the obligations which are required to be
performed by it as a Bank.
11.1.3 REGISTER. The Administrative Agent shall maintain at its main
Tulsa, Oklahoma banking office a register (the "REGISTER") for the
recordation of (a) the names and addresses of the Banks and the Assignees
which assume rights and obligations pursuant to an assignment under Section
11.1.1, (b) the Percentage Interest of each such Bank as set forth in
Section 10.1 and (c) the amount of the Loans and Letter of Credit Exposure
owing to each Bank from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Banks may treat each Person whose name is
registered therein for all purposes as a party to this Agreement. The
Register shall be available for inspection by the Borrowers or any Bank at
any reasonable time and from time to time upon reasonable prior notice.
11.1.4 ACCEPTANCE OF ASSIGNMENT AND ASSUMPTION. Upon its receipt of
a completed Assignment and Acceptance executed by an assigning Bank and an
Assignee, in exchange for the Bank Note subject to such assignment,
together with the Bank Note or Bank Notes subject to such assignment, and
the processing and recordation fee referred to in Section 11.1.1, the
Administrative Agent shall (a) accept such Assignment and Acceptance, (b)
record the information contained therein in the Register and (c) give
prompt notice thereof to the Borrowers. Within five (5) Business Days
after receipt of notice, the Borrowers, at its own expense, shall execute
and deliver to the Administrative Agent, in exchange for the surrendered
Bank Note or Bank Notes, a new Bank Note or Bank Notes to the order of such
Assignee in a principal amount equal to the applicable Commitments and
Loans assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained Commitments and Loans, a new Bank Note or Bank
Notes to the order of such assigning Bank in a principal amount equal to
the applicable Commitments and its Percentage Interest in the Loans
retained by it. Such new Bank Note or Bank Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Bank Note or Bank Notes, and shall be dated the date of the
surrendered Bank Note or Bank Notes which it or they replace. All such
Notes so replaced shall be delivered by the Administrative Agent to the
Borrowers or, alternatively, at the Administrative Agent's election, marked
appropriately to evidence the replacement thereof by such replacement Bank
Note(s).
11.1.5 FEDERAL RESERVE BANK. Notwithstanding the foregoing
provisions of this Section 11, any Bank may at any time pledge or assign
all or any portion of such Bank's rights under this Agreement and the other
Loan Documents to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such
pledge or assignment shall release such Bank from such Bank's obligations
hereunder or under any other Loan Document.
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11.1.6 FURTHER ASSURANCES. The Borrowers and their Subsidiaries shall
sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the benefits
of the rights created by the Loan Documents.
11.2 CREDIT PARTICIPANTS. Each Bank may, without the consent of the
Borrowers and with the consent of the Administrative Agent, in compliance with
applicable laws in connection with such participation, sell to one or more
commercial banks or other financial institutions (each a "Credit Participant")
participations in all or a portion of its interests, rights and obligations
under this Agreement and the other Loan Documents (including all or a portion of
its Percentage Interest in the Commitments, the Loans and Letter of Credit
Exposure owing to it and the Notes held by it); PROVIDED, HOWEVER, that:
(i) such Bank's obligations under this Agreement shall remain unchanged;
(ii) such Bank shall remain solely responsible to the other parties hereto
for the performance of such obligations;
(iii) the Credit Participant shall be entitled to the benefit of any
cost protection provisions contained in the Credit Agreement, but shall not be
entitled to receive any greater payment thereunder than the selling Bank would
have been entitled to receive with respect to the interest so sold if such
interest had not been sold; and
(iv) the Borrowers, the Administrative Agent and the other Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement, and such Bank shall retain
the sole right as one of the Banks to vote with respect to the enforcement of
the obligations of the Borrowers relating to the Loans and Letter of Credit
Exposure and the approval of any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications, consents or
waivers described in Section 10.6(ii)).
Borrowers agree, to the fullest extent permitted by applicable law, that any
Credit Participant and any Bank purchasing a participation from another Bank
pursuant to Section 11.1 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Bank were the direct creditor of the Borrowers and a Bank
hereunder in the amount of such participation. Upon receipt of notice of the
address of each Credit Participant, the Borrowers shall thereafter supply such
Credit Participants with the same information and reports communicated to the
Banks. The Borrowers hereby acknowledge and agree that Credit Participants
shall be deemed a holder of the applicable Bank Notes to the extent of their
respective participation, and the Borrowers hereby waive its right, if any, to
offset amounts owing to the Borrowers from the Banks against each Credit
Participant's portion of the applicable Bank Notes.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. Unless otherwise provided herein, all notices, requests,
consents and demands shall be in writing and shall be either hand-delivered (by
courier or otherwise) or mailed by certified mail, postage prepaid, to the
respective addresses specified below, or, as to any party, to such other address
as may be designated by it in written notice to the other parties:
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If to the Borrowers, to:
Equity Compression Services Corporation
0000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxx, Chief Financial Officer
with a copy to:
Schlanger, Mills, Xxxxx & Xxxxxxxxx, L.L.P.
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxx
If to the Bank, to:
Bank of Oklahoma, National Association
P. O. Box 2300
Bank of Oklahoma Tower
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Energy Department - 8th Floor
with a copy to:
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
000 Xxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. XxXxxxxxx
ECS is hereby designated and appointed and shall serve as agent for all of the
Borrowers insofar as notices hereunder are concerned and notice to ECS shall be
deemed notice to each of the Borrowers with the same force and effect as if each
such Borrower were individually notified in accordance herewith. All notices,
requests, consents and demands hereunder will be effective when hand-delivered
to the applicable notice address set forth above or when mailed by certified
mail, postage prepaid, addressed as aforesaid.
12.2 PLACE OF PAYMENT. All sums payable hereunder shall be paid in
immediately available funds to the Administrative Agent, at its principal
banking offices at Bank of Oklahoma Tower, One Xxxxxxxx Center in Tulsa,
Oklahoma, or at such other place as the Administrative Agent shall notify the
Borrowers in writing. If any interest, principal or other payment falls due on
a date other than a Business Day, then (unless otherwise provided herein) such
due date shall be extended to the next succeeding Business Day, and such
extension of time will in such case be included in computing interest, if any,
in connection with such payment.
12.3 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations
and warranties made herein shall survive the execution and the delivery of Loan
Documents. All statements contained in any certificate or other instrument
delivered by any of the Borrowers hereunder shall be deemed to constitute
representations and warranties by all of the Borrowers.
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12.4 PARTIES IN INTEREST. All covenants, agreements and obligations
contained in this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto.
12.5 GOVERNING LAW AND JURISDICTION. This Agreement and the Bank Note
shall be deemed to have been made or incurred under the Laws of the State of
Oklahoma and shall be construed and enforced in accordance with and governed by
the Laws of Oklahoma.
12.6 SUBMISSION TO JURISDICTION. THE BORROWERS HEREBY CONSENT TO THE
JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA
COUNTY, OKLAHOMA AND WAIVE ANY OBJECTION WHICH BORROWERS MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY
SUCH COURT AND WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY OF THEM,
AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER
DIRECTED TO ANY OF THEM AT THE ADDRESS SET FORTH IN SUBSECTION 12.1 HEREOF AND
THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR THREE (3) BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER.
12.7 MAXIMUM INTEREST RATE. Regardless of any provision herein, the Banks
shall never be entitled to receive, collect or apply, as interest on the Bank
Obligations any amount in excess of the maximum rate of interest permitted to be
charged by the Banks by applicable Oklahoma Law, and, in the event the Banks
shall ever receive, collect or apply, as interest, any such excess, such amount
which would be excessive interest shall be applied to other Bank Obligations and
then to the reduction of principal; and, if all other Bank Obligations and
principal are paid in full, then any remaining excess shall forthwith be paid to
Equity on behalf of all of the Borrowers.
12.8 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise, and no delay
in exercising, on the part of the Banks, any right, power or privilege hereunder
or under any other Loan Document or applicable Law shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
of the Banks. The rights and remedies herein provided are cumulative and not
exclusive of any other rights or remedies provided by any other instrument or by
law. No amendment, modification or waiver of any provision of this Agreement or
any other Loan Document shall be effective unless the same shall be in writing
and signed by the Banks. No notice to or demand on the Borrowers in any case
shall entitle the Borrowers to any other or further notice or demand in similar
or other circumstances.
12.9 COSTS. The Borrowers agree to pay to BOK on demand all reasonable
costs, fees and expenses (including without limitation reasonable attorneys fees
and legal expenses) incurred or accrued by BOK, individually or as
Administrative Agent or as Collateral Agent, in connection with the negotiation,
preparation, execution, delivery, filing, recording and administration of this
Agreement, the Security Instruments and the other Loan Documents, or any
amendment, waiver, consent or modification thereto or thereof, or any
enforcement thereof. The Borrowers further agree that all such fees and
expenses shall be paid regardless of whether or not the transactions provided
for in this Agreement are eventually closed and regardless of whether or not any
or all sums evidenced by the Bank Note are advanced to the Borrowers by BOK.
Upon Borrowers' failure to pay all such costs and expenses within ten (10)
days of the BOK's submission of invoices therefore, BOK shall pay such costs and
expenses by debit to the joint General Account of Borrowers without further
notice to Borrowers.
12.10 WAIVER OF JURY. BORROWERS FULLY, VOLUNTARILY, KNOWINGLY
INTENTIONALLY AND EXPRESSLY WAIVE ANY RIGHT TO A TRIAL
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BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THE
BANK NOTE, THIS AGREEMENT, THE SECURITY INSTRUMENTS OR OTHER LOAN DOCUMENTS
OR UNDER ANY AMENDMENT, SUPPLEMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED (OR WHICH MAY IN THE FUTURE BE DELIVERED) BASED HEREON, ARISES OUT
OF, UNDER, OR IN CONNECTION HEREWITH OR THE BANK NOTE, THE SECURITY
INSTRUMENTS OR OTHER LOAN DOCUMENTS OR ARISING FROM ANY TRANSACTIONS OR
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE BORROWERS, THE BANK OR THE COLLATERAL AGENT. BORROWERS AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. THE BORROWERS ACKNOWLEDGE THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANK AND THE COLLATERAL AGENT TO ENTER INTO THIS AGREEMENT.
12.11 FULL AGREEMENT. This Agreement and the other Loan Documents
contain the full agreement of the parties and supersede all negotiations and
agreements prior to the date hereof, including the Prior Agreement which is
replaced in its entirety by this Agreement.
12.12 HEADINGS. The article and section headings of this Agreement are
for convenience of reference only and shall not constitute a part of the text
hereof nor alter or otherwise affect the meaning hereof.
12.13 SEVERABILITY. The unenforceability or invalidity as determined
by a Tribunal of competent jurisdiction, of any provision or provisions of this
Agreement shall not render unenforceable or invalid any other provision or
provisions hereof.
12.14 EXCEPTIONS TO COVENANTS. The Borrowers shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
12.15 CONSENT TO AMENDMENTS. This Agreement and any of the other Loan
Documents may be amended, and the Borrowers may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, if
the Borrowers shall obtain the written consent to such amendment, action or
omission to act, of the Banks except that, without the written consent of the
Banks and any other holder or holders of the Bank Note at the time outstanding,
no amendment to this Agreement shall change the maturity of the Bank Note, or
change the principal of, or the rate or time of payment of interest on any Bank
Note, or affect the time, amount or allocation of any prepayments, or change the
proportion of the principal amount of the Bank Note required with respect to any
consent, amendment, waiver or declaration. Each holder of the Bank Note at the
time or thereafter outstanding shall be bound by any consent authorized by this
Section 12.15, whether or not the Bank Note shall have been marked to indicate
such consent, but any Bank Note issued thereafter may bear a notation referring
to any such consent. No course of dealing between the Borrowers and any holder
of the Bank Note nor any delay in exercising any rights hereunder or under the
Note shall operate as a waiver of any rights of any holder of the Bank Note. As
used herein and in the Bank Note, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended,
modified or supplemented.
12.16 CONFIDENTIAL TREATMENT. Under the terms of this Agreement and
certain of the other Loan Documents, the Collateral Agent is granted a security
interest in, inspection rights with respect to or other rights in certain data,
files, records and other materials which are proprietary to any or all of the
Borrowers or which constitute or contain confidential information and trade
secrets
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(collectively referred to as "Confidential Material"). The Collateral Agent
hereby covenants and agrees that, except for disclosure of the terms and
provisions hereof to Prudential or upon an Event of Default, and then only to
the extent appropriate to protect its interests in such Confidential
Material, the Collateral Agent will use its reasonable appropriate efforts to
maintain the confidential status thereof.
12.17 CONFLICT WITH SECURITY INSTRUMENTS. To the extent the terms and
provisions of any of the Security Instruments are in conflict with the terms and
provisions hereof, this Agreement shall be deemed controlling.
12.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amended and
Restated Revolving Credit and Term Loan Agreement to be duly executed and
delivered in Tulsa, Oklahoma, effective as of the day and year first above
written.
"Borrowers"
EQUITY COMPRESSION SERVICES
CORPORATION, an Oklahoma corporation
By
----------------------------------
Xxxxxxx X. Xxxxxx, President
"ECS"
OUACHITA ENERGY CORPORATION,
a Delaware corporation
By
----------------------------------
Xxxxxxx X. Xxxxxx, President
"Ouachita Energy"
SUNTERRA ENERGY CORPORATION,
an Oklahoma corporation
By
----------------------------------
Xxxxxxx X. Xxxxxx, President
"Sunterra"
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EQUITY COMPRESSORS, INC.,
an Oklahoma corporation
By
----------------------------------
Xxxxxxx X. Xxxxxx, President
"Equity"
"BOK"
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION
By
----------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
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EXHIBIT LIST
------------
Exhibit A - $40,000,000 Bank Note (Section 2.2)
Exhibit B-1 - Revolving Loan Advance Request (Section
2.3.1)
Exhibit B-2 - Borrowing Base Certificate (Section 7.6(c))
Exhibit C - Liabilities (Section 7.25)
Exhibit D - Pending Litigation (Section 8.2)
Exhibit E - Take or Pay Disputes (Section 8.20)
Exhibit F - Control Group (Section 1.26)
FIFTH AMENDED AND RESTATED
REVOLVING CREDIT AND
TERM LOAN AGREEMENT
Dated as of
July 31, 1997
among
EQUITY COMPRESSION SERVICES CORPORATION
SUNTERRA ENERGY CORPORATION
EQUITY COMPRESSORS, INC.
AND
OUACHITA ENERGY CORPORATION
"Borrowers"
and
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
"BANK"
EXHIBIT C
LIABILITIES
(Section 7.25)
There are no long-term liabilities of the Borrowers except the deferred tax
liability as recorded.
EXHIBIT D
PENDING LITIGATION
(Section 8.2)
NONE
EXHIBIT E
Take or Pay Disputes
(Section 8.20)
The Borrowers are not involved in any take or pay disputes.
EXHIBIT F
Control Group
(Section 1.26)
