First Amended and Restated Credit Agreement
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REVOLVING LINE OF CREDIT
OF UP TO $150,000,000.00
AMONG
BANK ONE, NA
As Administrative Agent, LC Issuer and a Bank,
UNION BANK OF CALIFORNIA, N.A.
As Syndication Agent and a Bank,
GUARANTY BANK, FSB and HIBERNIA NATIONAL BANK
Each As a Co-Agent and as a Bank,
OTHER FINANCIAL
INSTITUTIONS AND BANKS,
As Banks,
ULTRA RESOURCES, INC.
As Borrower
AND
BANC ONE CAPITAL MARKETS, INC.
As Lead Arranger and Sole Book Manager
March 1, 2002
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITION........................................................................... 1
ARTICLE II.
THE LOANS AND LETTERS OF CREDIT...................................................... 16
2.01 The Commitment............................................. 16
2.02 Notice and Manner of Borrowing............................. 17
2.03 Payment Procedure.......................................... 18
2.04 Payments of Interest under the Notes....................... 18
2.05 General Provisions Relating to Interest.................... 19
2.06 Borrowing Base Determination............................... 20
2.07 Mandatory Prepayment Due to a Loan Excess.................. 21
2.08 Other Mandatory Prepayments................................ 22
2.09 Prepayment and Conversion.................................. 22
2.10 Increased Cost of Loans.................................... 22
2.11 Change of Law.............................................. 24
2.12 Mitigation: Mandatory Assignment........................... 25
2.13 Pro Rata Treatment and Payments............................ 25
2.14 Sharing of Payments and Setoffs............................ 25
2.15 Advances to Satisfy Obligations of the Borrower............ 26
2.16 Assignment of Production................................... 26
2.17 Commitment Fee............................................. 26
2.18 Addition/Deletion of Borrowing Base Oil & Gas Properties... 26
2.19 Adjustment to Aggregate Commitment Amount.................. 27
2.20 Facility LCs............................................... 27
ARTICLE III.
CONDITIONS........................................................................... 31
3.01 General Conditions to Closing and to all Disbursements..... 31
3.02 Deliveries at the Closing.................................. 32
3.03 Documents Required for Subsequent Disbursements Involving
Additional Borrowing Base Oil and Gas Properties..... 34
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES....................................................... 34
4.01 Existence.................................................. 34
4.02 Due Authorization.......................................... 34
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4.03 Valid and Binding Obligations.............................. 35
4.04 Scope and Accuracy of Financial Statements................. 35
4.05 Title to Borrowing Base Oil and Gas Properties............. 35
4.06 Oil and Gas Leases......................................... 35
4.07 Oil and Gas Contracts...................................... 36
4.08 Producing Wells............................................ 36
4.09 Purchasers of Production................................... 36
4.10 Authorizations and Consents................................ 36
4.11 Environmental Laws......................................... 36
4.12 Compliance with Laws, Rules, Regulations and Orders........ 37
4.13 Liabilities, Litigation and Restrictions................... 37
4.14 Existing Indebtedness...................................... 38
4.15 Material Commitments....................................... 38
4.16 Margin Stock............................................... 38
4.17 Proper Filing of Tax Returns and Payment of Taxes Due...... 38
4.18 ERISA...................................................... 38
4.19 Investment Company Act Compliance.......................... 39
4.20 Public Utility Holding Company Act Compliance.............. 39
4.21 Insurance.................................................. 39
4.22 Material Misstatements and Omissions....................... 39
ARTICLE V.
AFFIRMATIVE COVENANTS............................................................... 39
5.01 Use of Funds............................................... 39
5.02 Maintenance and Access to Records.......................... 39
5.03 Quarterly Unaudited Financial Statements................... 40
5.04 Annual Audited Financial Statements........................ 40
5.05 Compliance Certificate..................................... 40
5.06 Statement of Material Adverse Change....................... 40
5.07 Title Defects.............................................. 40
5.08 Additional Information..................................... 40
5.09 Compliance with Laws and Payment of Assessments
and Charges................................................ 41
5.10 Maintenance of Existence and Good Standing................. 41
5.11 Further Assurances......................................... 41
5.12 Initial Expenses of the Bank............................... 41
5.13 Subsequent Expenses of the Administrative Agent
and the Arranger.................................... 41
5.14 Maintenance of Tangible Property........................... 42
5.15 Maintenance of Insurance................................... 42
5.16 Inspection of Tangible Assets/Right of Audit............... 42
5.17 Payment of Note and Performance of Obligations............. 42
5.18 Borrowing Base............................................. 42
5.19 Compliance with Environmental Laws......................... 43
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5.20 INDEMNIFICATION............................................. 43
5.21 Transactions with Affiliates................................ 45
5.22 Leases...................................................... 45
5.23 Operation of Borrowing Base Oil and Gas Properties.......... 45
5.24 Change of Purchasers of Production.......................... 45
5.25 Payment of Taxes, Etc....................................... 45
5.26 Notice of Litigation........................................ 46
5.27 Notice of Events of Default................................. 46
5.28 Notice of Change of Principal Offices....................... 46
5.29 Changes in Management....................................... 46
5.30 Employee Benefit Plans...................................... 46
5.31 Payment of Obligations...................................... 46
5.32 Annual Budget............................................... 46
ARTICLE VI.
NEGATIVE COVENANTS................................................................... 47
6.01 Other Indebtedness.......................................... 47
6.02 Loans or Advances........................................... 47
6.03 Mortgages or Pledges of Assets.............................. 47
6.04 Sales of Assets............................................. 47
6.05 Dividends................................................... 47
6.06 Retire Stock................................................ 47
6.07 Payment of Accounts Payable................................. 47
6.08 Investments................................................. 47
6.09 Changes in Structure or Business............................ 48
6.10 Pooling or Unitization...................................... 48
6.11 Hedge Agreements............................................ 48
6.12 Capital Stock of Borrower................................... 48
6.13 Margin Stock................................................ 48
6.14 Minimum Tangible Net Worth.................................. 48
6.15 Current Ratio............................................... 49
6.16 EBITDA to Interest Ratio.................................... 49
ARTICLE VII.
EVENTS OF DEFAULT.................................................................... 49
7.01 Enumeration of Events of Default............................ 49
7.02 Rights Upon Unmatured Event of Default...................... 52
7.03 Rights Upon Default......................................... 52
7.04 Remedies.................................................... 53
7.05 Right of Set-off............................................ 53
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ARTICLE VIII.
THE ADMINISTRATIVE AGENT............................................................ 53
8.01 Authorization and Action.................................... 53
8.02 Administrative Agent's Reliance, Etc........................ 53
8.03 The Administrative Agent and Affiliates..................... 54
8.04 Bank Credit Decision........................................ 54
8.05 Administrative Agent's Indemnity............................ 54
8.06 Successor Administrative Agent.............................. 55
8.07 Notice of Default........................................... 56
ARTICLE IX.
MISCELLANEOUS....................................................................... 56
9.01 Security Interests in Deposits and Right of Offset
or the Banker's Lien............................... 56
9.02 Survival of Representations, Warranties and Covenants....... 56
9.03 Notices and Other Communications............................ 56
9.04 Parties in Interest......................................... 57
9.05 Successors and Assigns; Participation; Purchasing Banks..... 57
9.06 Renewals and Extensions..................................... 60
9.07 No Waiver by the Administrative Agent, the Banks
or the LC Issuer................................... 60
9.08 GOVERNING LAW............................................... 60
9.09 Incorporation of Exhibits and Schedules..................... 60
9.10 Survival Upon Unenforceability.............................. 60
9.11 Rights of Third Parties..................................... 60
9.12 Amendments or Modifications................................. 61
9.13 Agreement Construed as an Entirety.......................... 61
9.14 Number and Gender........................................... 62
9.15 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS................... 62
9.16 Controlling Provision Upon Conflict......................... 62
9.17 Time, Place and Method of Payments.......................... 62
9.18 Termination................................................. 62
9.19 Non-Application of Chapter 346 of Texas Finance Code........ 63
9.20 Counterpart Execution....................................... 63
9.21 Power of Attorney........................................... 63
9.22 Amended and Restated Agreement.............................. 63
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EXHIBITS
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EXHIBIT A Borrowing Base Oil and Gas Properties
EXHIBIT B Form of Revolving Note
EXHIBIT C Compliance Certificate
EXHIBIT D Security Instruments
EXHIBIT E Request for Advance
SCHEDULES
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Schedule 1.01(b) Commitment Amount and Aggregate Commitment
Schedule 4.01 Information Regarding the Borrower and its Subsidiaries
Schedule 4.07 Certain Oil and Gas Contracts
Schedule 4.09 List of Purchasers of Production
Schedule 4.11 Environment Impact Statement
Schedule 4.14 Existing Indebtedness
Schedule 4.15 Material Commitments
Schedule 4.21 Insurance Certificates
Schedule 9.05(d) Commitment Transfer Supplement
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (this "Agreement"), executed March 1, 2002, is by and
between ULTRA RESOURCES, INC., a Wyoming corporation ("Borrower"), the several
banks and financial institutions from time to time parties to this Credit
Agreement (the "Banks," such term to include all undersigned Banks and all other
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financial institutions which subsequently become parties to this Agreement in
accordance with Section 9.05 hereof), BANK ONE, NA, a national banking
association ("Bank One") as a Bank, as the LC Issuer (hereinafter defined) and
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as Administrative Agent for the Banks (in such latter capacity and together with
its successors and permitted assigns in such capacity, the "Administrative
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Agent").
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W I T N E S S E T H
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WHEREAS, Borrower, Borrower's affiliate Ultra Petroleum (USA) Inc., and
Bank One entered into that certain Credit Agreement dated March 22, 2000, as
amended by that certain First Amendment to Credit Agreement dated July 19, 2001
by and between Borrower and Bank One as Lender, (the "Prior Credit Agreement");
WHEREAS, Borrower has requested that Bank One and the other Banks amend and
restate the Prior Credit Agreement, and the Banks are willing to do so in
accordance with the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Banks, the LC Issuer, the Administrative Agent and the
Borrower agree as follows:
ARTICLE I.
DEFINITIONS
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As used in this Agreement, the following terms shall have the meanings
indicated:
"ABR" means a fluctuating rate of interest equal to the higher of (i) a
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rate per annum equal to the prime rate of interest announced from time to time
by Bank One or its parent (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes, and (ii) the sum of
the Federal Funds Effective Rate most recently determined by the Administrative
Agent plus one-half percent (1/2%) per annum.
"ABR Loan" means any Loan from time to time for which interest thereon is
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to be computed on the basis of the ABR plus the ABR Margin, as elected by
Borrower pursuant to Section 2.04 hereof.
"ABR Margin" means the applicable margin set forth in the Pricing Grid
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under the caption, "ABR Margin," determined based on the Utilization Percentage
prevailing from time to time.
"Administrative Agent" means Bank One, NA, as Administrative Agent for the
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Banks hereunder and under the other Loan Documents, and each successor
Administrative Agent.
"Affiliate" means, as applied to any Person, any other Person, directly or
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indirectly, controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common control
with"), as applied to any Person, means either: (a) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract, or otherwise, or (b) the legal or beneficial ownership of or voting
rights with respect to twenty percent (20%) or more of the equity interest in
such Person.
"Aggregate Commitment Amount" means the lesser of: (a) the Borrowing Base
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in effect from time to time, or (b) the amount stated as the Aggregate
Commitment Amount on Schedule 1.01(b) attached hereto, as the same may be
amended from time to time as provided in this Agreement.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
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of the Outstanding Credit Exposure of all the Banks.
"Agreement" means this Credit Agreement, as the same may be amended or
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supplemented from time to time.
"Applicable Law" means that law in effect from time to time and applicable
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to the Notes which lawfully permits the charging and collection of the highest
permissible lawful, non-usurious rate of interest on the Notes, including laws
of the State of Texas and laws of the United States of America; Chapter 303 of
the Texas Finance Code shall be included in the laws of the State of Texas in
determining Applicable Law; and for the purpose of applying said Chapter 303 to
the Notes, the interest ceiling applicable to the Notes under said Chapter 303
shall be the indicated weekly rate ceiling from time to time in effect.
"Applicable Margin" means the applicable LIBOR Margin or ABR Margin
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provided for in the Pricing Grid set forth below based upon the Utilization
Percentage.
"Arranger" means Banc One Capital Markets, Inc., in its capacity as lead
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arranger and sole book manager.
"Bank(s)" means any of the banks signatory to this Agreement, their
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successors and, upon the effective date after registration with the
Administrative Agent pursuant to Section 9.05 of a Commitment Transfer
Supplement executed by a Purchasing Bank, such Purchasing Bank.
"Borrower" has the meaning stated therefor in the preamble of this
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Agreement.
"Borrowing" means a group of Loans made by the Banks to Borrower on a
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single date.
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"Borrowing Base" means the maximum loan amount with respect to the
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Borrowing Base Oil and Gas Properties, as determined by the Administrative Agent
and approved by the Required Banks from time to time in accordance with Section
2.06 of this Agreement.
"Borrowing Base Oil and Gas Properties" means those Oil and Gas Properties
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of the Borrower that are subject to the liens created by the Security
Instruments, together with the additional Borrowing Base Oil and Gas Properties
that are described in Exhibit "A" attached hereto and made a part hereof, as
such Exhibit "A" may be amended from time to time.
"Breakage Costs" means all reasonable losses, expenses and liabilities
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(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
any Bank to fund its LIBOR Loans but excluding loss of anticipated profit with
respect to any LIBOR Loans) which such Bank sustains: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a borrowing of
LIBOR Loans does not occur on a date specified therefor in a Request for
Advance; (ii) if any repayment or conversion of any LIBOR Loans occurs on a date
which is not the last day of an Interest Period applicable thereto; (iii) if any
prepayment of any LIBOR Loans is not made on any date specified in a notice of
prepayment given by Borrower; or (iv) as a consequence of any default by the
Borrower to repay LIBOR Loans when required by the terms of this Agreement.
"Business Day" means a day other than a Saturday, Sunday or legal holiday
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for commercial banks under the laws of the State of Texas, provided that with
respect to transactions under this Agreement relating to LIBOR Loans, such day
must also be a Eurodollar Business Day.
"Change of Control" means any of the following events: (a) any "person" or
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"group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) has become, directly or
indirectly, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all such shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), by way of merger, consolidation or otherwise, of a majority or more of
the common stock of Borrower on a fully-diluted basis, after giving effect to
the conversion and exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are then currently
convertible or exercisable) or (b) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the board of
directors of the Borrower cease for any reason to constitute a majority of the
directors of the Borrower then in office unless (i) such new directors were
elected by a majority of the directors of the Borrower who constituted the board
of directors of the Borrower at the beginning of such period (or by directors so
elected) or (ii) the reason for such directors failing to constitute a majority
is a result of retirement by directors due to age, death or disability.
"Closing" has the meaning provided in Section 3.01.
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"Co-Agent" means Hibernia National Bank and Guaranty Bank, FSB,
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respectively, and each successor to such agent position.
3
"Commitment" means, as to any Bank, the obligation of such Bank to make
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Loans to, and participate in Facility LCs issued upon the application of, the
Borrower in an aggregate amount at any one time outstanding not to exceed the
lesser of (i) such Bank's Commitment Amount and (ii) such Bank's Percentage
Share of the Borrowing Base then in effect.
"Commitment Amount" means at any time, for any Bank, the amount set forth
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opposite such Bank's name on Schedule 1.01(b) under the heading "Commitment
Amount," as such amount may be changed as provided in this Agreement.
"Commitment Transfer Supplement" means a Commitment Transfer Supplement
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executed by Administrative Agent and a Purchasing Bank substantially in the form
of Schedule 9.05(d) and registered with the Administrative Agent pursuant to
Section 9.05(d) hereof.
"Compliance Certificate" means the certificate of the President or other
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Responsible Officer of the Borrower submitted to the Administrative Agent from
time to time pursuant to this Agreement and attesting to the financial covenants
and stating, to such officer's knowledge, whether or not an Event of Default or
an Unmatured Event of Default has occurred and is continuing and, if such an
event has occurred, the actions being taken by the Borrower, to remedy such
situation and that GAAP has been used in the preparation of the Financial
Statements, which certificate shall be in the form attached hereto as Exhibit
"C."
"Consolidated Financial Statements" means, as of any reporting period, the
---------------------------------
consolidated and consolidating Financial Statements of Ultra Petroleum Corp. and
its Subsidiaries, prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of any reporting period,
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Stockholders' Equity, less the sum of:
(A) Goodwill, including any amounts, however designated on the
Consolidated Financial Statements, representing the excess of the
purchase price paid for assets or stock acquired over the value
assigned thereto on the books of Ultra Petroleum Corp.;
(B) Patents, trademarks, trade names, and copyrights;
(C) Any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet;
(D) Loans and advances to stockholders, directors, officers, or
employees, except for reasonable business travel expenses
advanced to employees in the ordinary course of business; and
(E) Any other amount in respect of an intangible that should be
classified as an asset on the consolidated balance sheet of the
Consolidated Financial Statements in accordance with GAAP.
4
"COPAS" means the Accounting Procedure Joint Operations Recommended by the
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Council of Petroleum Accountants, with respect to onshore and offshore
operations, respectively, including the most current versions thereof and any
other recent versions thereof commonly in use.
"Credit Extension" means the making of a Loan or the issuance of a Facility
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LC hereunder.
"Credit Extension Date" means the date on which a Loan is advanced or a
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Facility LC is issued.
"Current Assets" means at any time, all assets, that should in accordance
--------------
with GAAP, be classified as current assets on a consolidated balance sheet of
Borrower, plus the then current availability under the aggregate Commitments.
----
"Current Liabilities" means all liabilities which would, in accordance with
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GAAP, be included as current liabilities plus short term liabilities (which have
been reclassified as non-current) to be refinanced with the Aggregate Commitment
Amount on a consolidated balance sheet of Ultra Petroleum Corp. as of the date
of calculation less current maturities on the Obligations.
"Current Ratio" means the ratio derived from dividing Current Assets by
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Current Liabilities.
"Dollars" and "$" means dollars in lawful currency of the United States of
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America.
"EBITDA" means, for any reporting period, net income on a consolidated
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basis before deductions for interest expense, taxes, depreciation, depletion,
amortization and other non-cash expenses, less non-cash income.
"Environmental Laws" means (a) the following federal laws as they may be
------------------
cited, referenced and amended from time to time: the Clean Air Act, the Clean
Water Act, the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Endangered Species Act, the
Resource Conservation and Recovery Act, the Occupational Safety and Health Act,
the Hazardous Materials Transportation Act, the Superfund Amendments and
Reauthorization Act, the Toxic Substances Control Act, and the Oil Pollution Act
of 1990; (b) any and all environmental statutes of any state in which property
of the Borrower is situated, as they may be cited, referenced and amended from
time to time; (c) any rules or regulations promulgated under or adopted pursuant
to the above federal and state laws; and (d) any other federal, state or local
statute or any requirement, rule, regulation, code, ordinance or order adopted
pursuant thereto, including, without limitation, those relating to the
generation, transportation, treatment, storage, recycling, disposal, handling or
release of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
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which together with the Borrower would be treated as a single employer under
Section 4001 of ERISA.
5
"Eurodollar Business Day" means a day on which dealings are carried on in
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the LIBOR Market.
"Event of Default" means any of the events specified in Section 7.01 of
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this Agreement.
"Facility LC" is defined in Section 2.20(A).
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"Facility LC Application" is defined in Section 2.20(C).
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"Facility Termination Date" means March 1, 2005.
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"Federal Funds Effective Rate" means, for any day, the weighted average of
----------------------------
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published by the Federal
Reserve Bank of New York for such day on the next succeeding Business Day or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Statements" means the statements of the financial condition of
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the indicated Person, on a consolidated basis, as at the point in time and for
the period indicated and consisting of at least a balance sheet, income
statement and statement of cash flows, all expressed in terms of United States
Dollars, and when the foregoing are audited, accompanied by the certification of
such Person's independent certified public accountants and footnotes to any of
the foregoing, all of which shall be prepared in accordance with GAAP applied on
a basis consistent with that of the preceding year, except for any inconsistency
that results from changes in GAAP from year to year.
"Floating Rate" means a per annum interest rate determined by reference to
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the following schedule:
. LIBOR + LIBOR Margin at Borrower's option pursuant to Section
2.04, or
ABR + ABR Margin
. After the occurrence and during the continuation of an Event of
Default, the Floating Rate determined in accordance with the
forgoing schedule shall, in each case, be increased by two
percent (2%) per annum, not to exceed the Maximum Rate.
"GAAP" means generally accepted accounting principles in Canada, applied on
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a consistent basis, as defined in the Handbook of the Canadian Institute of
Chartered Accountants, and which are applicable as of the date of Closing,
except that solely for purposes of the definition of Financial Statements
herein, changes in GAAP from time to time (if any) shall be applied and
reflected in the Financial Statements. Accounting principles are applied on a
"consistent basis" when the accounting principles observed in a current period
are comparable in all material respects to those accounting principles applied
in a preceding period.
6
"Guarantor(s)" means, individually and collectively, Ultra Petroleum Corp.,
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a Yukon Territory of Canada corporation, and UP Energy Corporation, a Nevada
corporation.
"Guaranty" means the unlimited guaranty agreement of Borrower's Obligation
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to Banks under this Agreement, in form and in substance satisfactory to the
Administrative Agent, duly executed by each Guarantor.
"Hazardous Substances" means flammables, explosives, radioactive materials,
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hazardous wastes, asbestos or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum and petroleum
products and associated oil or natural gas exploration, production and
development wastes or any substances defined as "hazardous substances,"
"hazardous materials," "hazardous wastes" or "toxic substances" under the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Toxic Substances Control Act, as amended, or
any other Environmental Laws now or hereafter enacted or promulgated by any
regulatory authority or governmental body, but only to the extent any such law
is or becomes applicable to the Borrower or any of its property.
"Hedge Agreement" means any swap agreement, cap, collar, floor, exchange
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transaction, forward agreement or exchange or protection agreement related to
Hydrocarbons or interest rates, or any option with respect to such transaction,
as more specifically provided in those certain master swap agreements on
International Swaps and Derivatives Association forms and the schedules thereto
and any confirmations thereunder entered into by Borrower with any other Person.
"Hydrocarbons" means crude oil, condensate, natural gas, natural gas
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liquids and other hydrocarbons.
"Increased Costs" has the meaning stated therefor in Section 2.10 (A)(3) of
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this Agreement.
"Indebtedness" means, as to any Person, without duplication (a) all items
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of indebtedness or liability for borrowed money which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet as at the date as of which Indebtedness is to be
determined, (b) indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance existing on or encumbering property owned by the Person whose
Indebtedness is being determined, whether or not the indebtedness secured
thereby shall have been assumed, (c) all indebtedness of others which such
Person has directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), discounted with
recourse, agreed (contingently or otherwise) to purchase or repurchase or
otherwise acquire, or in respect of which such Person has agreed to supply or
advance funds (whether by way of loan, purchase of securities or capital
contribution, through a commitment to pay for property or services regardless of
the nondelivery of such property or the nonfurnishing of such services or
otherwise), or in respect of which such Person has otherwise become directly or
7
indirectly liable, contingently or otherwise, whether now existing or hereafter
arising, and (d) all leases (excluding Leases constituting Oil and Gas
Properties) that, in accordance with GAAP, should not be reflected on the
Borrower's balance sheet.
"Interest Period" means as to any LIBOR Loan the period commencing on and
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including the date of such Loan (or on the effective date of the election
pursuant to Section 2.04(B) by which such Loan became a LIBOR Loan) and ending
on and including the day preceding the numerically corresponding day (or if
there is no such numerically corresponding day, the last day) in the 1/st/,
2/nd/, 3/rd/ or 6/th/ calendar month after the date of such Loan, as selected
by the Borrower in accordance with Section 2.04(B), and after such selected
month, such period commencing on and including the day immediately following the
last day of the then ending Interest Period for such Loan and ending on and
including the day preceding the day numerically corresponding to the first day
of such Interest Period (or if there is no such numerically corresponding day,
the last day), in the 1/st/, 2/nd/, 3/rd/ or 6/th/ calendar month after the
first day of such Interest Period, as so selected by the Borrower; provided,
however, that if any Interest Period would otherwise end on a day immediately
prior to a day that is not a Business Day it shall be extended so as to end on
the day immediately prior to the next succeeding Business Day unless the same
would fall in a different calendar month, in which case such Interest Period
shall end on the day immediately preceding the first Business Day immediately
preceding such next succeeding Business Day.
"Investment" in any Person means any stock, bond, note or other evidence of
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Indebtedness or any other security (other than current trade and customer
accounts) of, or loan to, such Person.
"Laws" means all ordinances, statutes, rules, regulations, orders,
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injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LC Fee" is defined in Section 2.20(D).
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"LC Issuer" means Bank One (or any subsidiary or Affiliate of Bank One
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designated by Bank One and reasonably acceptable to Borrower) in its capacity as
issuer of Facility LCs hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
--------------
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"LC Payment Date" is defined in Section 2.20(E).
---------------
"Leases" means oil and gas leases and all oil, gas and mineral leases
------
constituting any part of the Borrowing Base Oil and Gas Properties.
"LIBOR" means, with respect to each Interest Period, the rate of interest
-----
per annum at which deposits of not less than $1,000,000.00 in United States
dollars are offered in the LIBOR Market for a period of time equal or comparable
to such Interest Period and in an amount equal to or comparable to the principal
amount of the LIBOR Loan to which such Interest Period relates as
8
appearing on Reuters Screen FRBD as of 11:00 AM (London time) two (2) Business
Days before the first day of the applicable Interest Period, as adjusted for
maximum statutory reserves, provided, however, that if such rate is not
available on Reuters Screen FRBD, then within five (5) Business Days of receipt
of notification, the Administrative Agent and the Borrower shall enter into good
faith negotiations for a period of fifteen (15) days (or such shorter period as
is required to agree to the alternative basis) with a view to agreeing on an
alternative basis for determining the rate of interest applicable to LIBOR
Loans, and if no alternative basis is agreed within the fifteen (15) day period,
the LIBOR Loan shall be deemed to have converted to an ABR Loan as of the end of
the last Interest Period.
"LIBOR Loan" means any Loan from time to time for which interest thereon is
----------
to be computed at a Floating Rate based on LIBOR plus the LIBOR Margin, as
elected by Borrower pursuant to Section 2.04 hereof.
"LIBOR Margin" means the applicable margin set forth in the Pricing Grid
------------
under the caption, "LIBOR Margin," determined based on the Utilization
Percentage prevailing from time to time.
"LIBOR Market" means the London interbank offered interest rate market
------------
created by major London clearing banks for deposits in United States dollars.
"Limitation Period" means any period while any amount remains owing on the
-----------------
Notes when interest on such amount, calculated at the applicable rate prescribed
on the Notes, plus any fees payable hereunder and deemed to be interest under
applicable Law, would exceed the Maximum Rate.
"Loan" means, singly, any advance by the Banks to the Borrower pursuant to
----
this Agreement and "Loans" means, cumulatively, the aggregate sum of all money
-----
advanced by the Banks to the Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Notes, the Facility LC
--------------
Applications, the Security Instruments, the Guaranties, any Hedge Agreements in
which Administrative Agent or any Bank (or any of their respective Affiliates)
is a counterparty to Borrower and all other promissory notes, security
agreements, and other instruments, documents, and agreements executed and
delivered pursuant to or in connection with this Agreement, as such instruments,
documents, and agreements may be amended, modified, renewed, extended, or
supplemented from time to time.
"Loan Excess" means, at any point in time, the amount, if any, by which the
-----------
Aggregate Outstanding Credit Exposure exceeds the Aggregate Commitment Amount
then in effect.
"Marketable Title" means good and defensible title, as set forth, qualified
----------------
and/or limited on Exhibit "A," free and clear of all mortgages, liens and
encumbrances, except for Permitted Encumbrances.
"Material Adverse Change" means any change in the business, property,
-----------------------
condition (financial or otherwise) or results of operations of the Borrower or
either Guarantor which has a Material
9
Adverse Effect, including, but not limited to, Administrative Agent, any Bank,
the LC Issuer or any Responsible Officer of Borrower acquiring knowledge of any
facts or circumstances that differ from the facts and/or circumstances
represented in Article IV of this Agreement or in any other Loan Document
(including, but not limited to, any such facts and circumstances represented
based on the knowledge of Borrower or its Responsible Officer), if such actual
facts and circumstances, compared to the facts and circumstances so represented,
would have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
business, property, condition (financial or otherwise), results of operations of
the Borrower or either Guarantor, or (ii) the ability of the Borrower or a
Guarantor to perform its obligations under the Loan Documents to which it is a
party.
"Maximum Rate" means the maximum rate of non-usurious interest permitted
------------
from day to day by Applicable Law, including Chapter 303 of the Texas Finance
Code (and as the same may be incorporated by reference in other Texas statutes),
but otherwise without limitation, that rate based upon the "indicated weekly
rate ceiling."
"Modify" and "Modification" are defined in Section 2.20(A).
------ ------------
"Multi-employer Plan" means a plan described in Section 4001(a)(3) of ERISA
-------------------
which covers employees of the Borrower or any ERISA Affiliate.
"Net Income" means, for any period, the net income (or loss) of the
----------
Borrower on a consolidated basis after allowances for taxes for such period,
determined in accordance with GAAP; provided that there shall be excluded from
such net income (to the extent otherwise included therein) the net income of any
Person in which the Borrower has an interest (which interest does not cause the
net income of such other Person to be consolidated with the net income of the
Borrower in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower.
"Note" and "Notes" means, individually, a promissory note issued by
---- -----
Borrower payable to the order of a Bank evidencing the Loans made by that Bank
pursuant to Section 2.01 hereof and being substantially in the form of the note
attached as Exhibit B hereto, together with any and all further renewals,
---------
extensions for any period, increases or rearrangements thereof, and means
collectively all of such Notes.
"Obligations" means all obligations, indebtedness, and liabilities of the
-----------
Borrower to the Banks and the LC Issuer, now existing or hereafter arising under
this Agreement and the other Loan Documents, including, but not limited to, the
Indebtedness evidenced by the Notes and the Reimbursement Obligations, and all
interest accruing thereon and all reasonable attorneys' fees and other expenses
in the administration, enforcement or collection thereof.
"Oil and Gas Properties" means fee, leasehold or other interests in or
----------------------
under mineral estates or oil, gas and other liquid or gaseous hydrocarbon leases
with respect to properties situated in the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
10
interests, net profits interests, production payment interests and mineral fee
interests, together with contracts executed in connection therewith and all
tenements, hereditaments, appurtenances and properties, real or personal,
appertaining, belonging, affixed or incidental thereto.
"Outstanding Credit Exposure" means, as to any Bank at any time, the sum of
---------------------------
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Percentage Share of the LC Obligations at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Percentage Share" means, as to any Bank, a fraction (expressed as a
----------------
percentage), the numerator of which shall be such Bank's Commitment Amount, and
the denominator of which shall be the Aggregate Commitment Amount stated on
Schedule 1.01(b) attached hereto.
"Permitted Asset Sales" means (a) sales, leases, assignments, transfers or
---------------------
disposals of, in one or any series of related transactions, (i) all or any
portion of Borrower's assets, whether now owned or hereafter acquired, including
transfers to Affiliates, which, in the aggregate, do not exceed $5,000,000.00
during any period beginning on the date of Administrative Agent's written notice
to Borrower pursuant to Section 2.06 of a Borrowing Base redetermination (except
that the first such period shall begin at Closing) and ending on the date of the
next such written notice from Administrative Agent to Borrower or (ii) surplus,
worn out or obsolete equipment of nominal value to Borrower, and (b) sales of
Hydrocarbons in the ordinary course of business.
"Permitted Encumbrances" means:
----------------------
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other like liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable;
(C) Pledges or deposits in connection with or to secure workmen's
compensation, unemployment insurance, pensions or other employee
benefits;
(D) Encumbrances consisting of covenants, zoning restrictions,
rights, easements, liens, governmental environmental permitting
and operation restrictions, operating restrictions under leases
consistent with other leases in the same geographical area,
operating constraints under the Environmental Impact Statement
described on Schedule 4.12, the exercise by governmental bodies
or third parties of eminent domain or condemnation rights, or any
other restrictions on the use of real property, none of which
materially impairs the use of such property by the Borrower in
the operation of its business, and
11
none of which is violated in any material respect by existing or
proposed operations;
(E) Liens of operators and/or co-working interest owners under joint
operating agreements or similar contractual arrangements with
respect to the Borrower's proportionate share of the expense of
exploration, development and operation of oil, gas and mineral
leasehold or fee interests owned jointly with others, to the
extent that same relate to sums not yet overdue, or if they
relate to sums that are overdue, then to the extent that the same
are being contested in good faith by appropriate proceedings and
execution of the associated lien has been stayed, either pursuant
to agreement of the lien claimant or by a valid order of a court
having jurisdiction;
(F) Liens securing surety or other bonds required in the normal
course of business and Liens on cash deposits securing Permitted
Hedge Agreements, not to exceed $2,000,000.00 in the aggregate at
any time in effect;
(G) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so
long as levy and execution thereon have been stayed and continue
to be stayed and they do not, in the aggregate, materially
detract from the value of the property of the Borrower, or
materially impair the use thereof in the operation of its
business:
(1) Claims or liens for taxes, assessments, or charges due and
payable and subject to interest or penalty;
(2) Claims, liens, and encumbrances upon, and defects of title
to, real or personal property, including any attachment of
personal or real property or other legal process prior to
adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal;
(H) Liens securing payment and performance of the Obligations;
(I) Liens securing purchase money obligations included in the
definition of Permitted Indebtedness if such liens encumber only
the property for which such purchase money obligation was
incurred; and
(J) Inchoate liens in respect of royalty owners.
12
"Permitted Hedge Agreement" means any Hedge Agreement which Borrower enters
-------------------------
into with or through a counterparty that has a credit rating of at least "A-" by
Standard and Poors or "A\\3\\" by Moody's Investment Service, together with the
confirmations which Borrower may hereafter enter into with or through such
counterparty covering, in the aggregate, among all such Hedge Agreements, not
more than seventy-five percent (75%) of the Proved Reserves that are (i)
attributable to Borrower's interest in the Borrowing Base Oil and Gas Properties
and (ii) projected to be produced during the term(s) of such Hedge Agreement(s).
"Permitted Indebtedness" means:
----------------------
(A) The Loans and Facility LCs;
(B) Unsecured current accounts payable incurred in the ordinary
course of business which are (i) not more than sixty (60) days
overdue, or (ii) being contested in good faith by appropriate
proceedings, or (iii) the subject of usual and customary review
and evaluation;
(C) Extensions of credit from suppliers or contractors who are not
Affiliates of Borrower for the performance of labor or services
or the provision of supplies or materials under applicable
contracts or agreements in connection with Borrower's oil and
gas exploration and development activities, which are not overdue
or are being contested in good faith by appropriate proceedings;
(D) Letters of credit or performance bonds required to be obtained by
the Borrower in the normal course of its business to assure the
proper plugging and abandonment of oil or gas drilling or
production locations or bonds required by any governmental agency
or instrumentality in the normal course of the Borrower's
business;
(E) Borrower's (i) purchase money obligations; (ii) capital lease
obligations; and (iii) other obligations supporting Borrower's
acquisition or use of any capital asset that had not been
acquired and was not in use by Borrower as of the date of the
Closing; of up to Five Million Dollars ($5,000,000) in the
aggregate outstanding at any time, so long as no such obligation
under clauses (i) through (iii) exceeds the fair market value of
the respective asset(s) thereby acquired or used;
(F) Income taxes payable that are not overdue;
(G) Accrued abandonment liabilities;
(H) Indebtedness arising out of Permitted Hedge Agreements; and
(I) Other Indebtedness incurred by the Borrower not to exceed, in the
aggregate at any time outstanding, Two Million Dollars
($2,000,000.00).
13
"Person" means an individual, company, corporation, partnership, joint
------
venture, limited liability company, trust, association, unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means, at any time, any employee benefit plan which is covered by
----
ERISA and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pricing Grid" means the following table:
------------
=====================================================================
Utilization
Percentage LIBOR Margin ABR Margin Commitment Fee
=====================================================================
** 90% 225 b.p. 125 b.p. 50.0 b.p.
---------------------------------------------------------------------
** 75% * 90% 200 b.p. 100 b.p. 37.5 b.p.
---------------------------------------------------------------------
** 50% * 75% 175 b.p. 75 b.p. 37.5 b.p.
---------------------------------------------------------------------
* 50% 150 b.p. 50 b.p. 37.5 b.p.
=====================================================================
* Denotes less than
** Denotes more than or equal to
"Prior Credit Agreement" has the meaning stated therefor in the first
----------------------
recital of this Agreement.
"Prior Note" means the Note held by Bank One as of the Closing, which
----------
was issued by Borrower to Bank One pursuant to the Prior Credit Agreement,
together with all deferrals, renewals, extensions, amendments, modifications or
rearrangements thereof.
"Production Revenue" means revenues of the Borrower from the sale of its
------------------
oil and gas production minus any applicable oil and gas production taxes and
-----
royalties.
"Prohibited Transaction" means any transaction set forth in Section 406 of
----------------------
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended from time
to time.
"Purchasing Bank" shall have the meaning assigned to that term in Section
---------------
9.05 hereof.
"Proved Reserves" means the estimated quantities of crude oil, condensate,
---------------
natural gas liquids and natural gas which geological and engineering data
demonstrate with reasonable certainty to be recoverable by primary producing
mechanisms in future years from known reservoirs underlying lands or interests
therein constituting Oil and Gas Properties, under existing economic and
operating conditions. Reserves which can be produced economically through
application of improved recovery techniques (i.e., fluid injection) will be
included in Proved Reserves when successful testing by a pilot project or the
operation of an installed program in the reservoir provides support for the
engineering analysis on which the pilot project or installed program was based.
In general, the economic productivity of the estimated proved reserves is
supported by actual production or a conclusive formation test; however, in
certain instances proved reserves are assigned to reservoirs on the basis of a
combination of electrical and other type logs and core analyses which
14
indicate these reservoirs are analogous to similar reservoirs in the same field
which are producing or have demonstrated the ability to produce on a formation
test.
"PW9" means the present worth of future net income, discounted to
---
present value at the simple interest rate of nine percent (9%) per year.
"Reimbursement Obligations" means, at any time, the aggregate of all
-------------------------
obligations of the Borrower then outstanding under Section 2.20 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Reportable Event" means any of the events set forth in Section 4043
----------------
of ERISA.
"Request for Advance" means the written or verbal (confirmed in
-------------------
writing within one (1) Business Day) request by the Borrower to the
Administrative Agent for an advance by the Banks pursuant to this Agreement,
which Request for Advance shall be in substantially the form attached hereto as
Exhibit "E", signed by an authorized officer of the Borrower and which shall
include a statement of the amount requested to be advanced, the date of the
requested advance and such other information as the Administrative Agent in its
reasonable discretion deems necessary.
"Required Banks" means, at any time, Banks holding at least sixty-six
--------------
and two-thirds percent (66 2/3%) of the Aggregate Commitment Amount or, if the
Aggregate Commitment Amount has been terminated, Banks having at least sixty-six
and two-thirds percent (66 2/3%) of the Aggregate Outstanding Credit Exposure.
"Required Number" means: in the case of notices hereunder (i) relative
---------------
to borrowings, prepayments, elections of LIBOR Loans, selections of Interest
Periods for, or other transactions in respect of, LIBOR Loans: by 10:00 a.m.,
Central Standard Time on the third Business Day prior to the proposed activity;
or (ii) relative to all transactions in respect of ABR Loans: the same Business
Day by 1:00 p.m., Central Standard Time; it being understood, however, that in
the case of notices involving transactions in respect of more than one type of
Loan (such as a change in type of Loan in accordance with Section 2.04(B)),
"Required Number" means that number of days, as indicated above in respect of
---------------
the Loans involved, which would constitute the longest applicable period of
time.
"Reserve Report" means a report prepared by a company engineer or an
--------------
independent petroleum engineer or firm of engineers satisfactory to the
Administrative Agent in the reasonable exercise of its discretion regarding the
Proved Reserves attributable to the Borrowing Base Oil and Gas Properties, using
the criteria and parameters required by and acceptable to the Securities and
Exchange Commission, and incorporating the present cost of appropriate plugging
and abandonment obligations to be incurred in the future, taking into account
any plugging and abandonment fund required to be accrued or established by
Borrower out of cash flow from the Borrowing Base Oil and Gas Properties covered
by such report with respect to such future obligations.
"Responsible Officer" means, as to any Person, its president, chief
-------------------
executive officer and any senior vice president, provided that if any such
officer's position does not exist within a Person or
15
if two or more of such positions are held by the same individual, then such term
shall mean each of the three most senior duly elected and acting officers of
such Person.
"Security Instruments" means the security instruments described on
--------------------
Exhibit "D," in form and substance satisfactory to the Administrative Agent, to
be executed by Borrower pursuant to Section 3.01, and the Security Instruments
as defined in the Prior Credit Agreement, each of which shall continue to secure
Borrower's Obligations, and any and all other instruments or documents hereafter
executed in connection with or as security for the payment of the Notes and
performance of the Obligations.
"Stockholders' Equity" means, at any time, the sum of the following
--------------------
accounts set forth on the Consolidated Financial Statements, prepared in
accordance with GAAP: (A) the par or stated value of all outstanding capital
stock (common and preferred); (B) capital surplus including paid in capital; and
(C) retained earnings.
"Subsidiary" means, as to any Person, any corporation in which such
----------
Person, directly or indirectly through its Subsidiaries, owns more than fifty
percent (50%) of the stock of any class or classes having by the terms thereof
the ordinary voting power to elect a majority of the directors of such
corporation, and any partnership, association, joint venture, or other entity in
which such Person, directly or indirectly through its Subsidiaries, has more
than a fifty percent (50%) equity interest at the time.
"Syndication Agent" means Union Bank of California, and each successor
-----------------
to such agent position.
"Transfer Order Letters" means the letters in lieu of division or
----------------------
transfer orders, in form acceptable to the Administrative Agent.
"Unmatured Event of Default" means any event or occurrence which
--------------------------
solely with: (a) the lapse of any applicable grace period as stated or expressly
referred to in Article VII hereof, or (b) the giving of notice required by this
Agreement, or (c) both, will ripen into an Event of Default.
"Utilization Percentage" means the percentage of the Aggregate
----------------------
Commitment Amount represented by the aggregate principal amount of all Credit
Extensions outstanding from time to time.
Undefined Terms. Undefined financial accounting terms used in this
---------------
Agreement shall be defined according to GAAP.
ARTICLE II.
THE LOANS AND LETTERS OF CREDIT
-------------------------------
2.01 The Commitment. From and including the date of this Agreement
--------------
and prior to the Facility Termination Date, each Bank severally agrees, on the
terms and conditions set forth in this
16
Agreement, to (i) make Loans to the Borrower and (ii) participate in Facility
LCs issued upon the request of the Borrower, provided that, after giving effect
to the making of each Loan and the issuance of each Facility LC, such Bank's
Outstanding Credit Exposure shall not exceed its Commitment. The Loans advanced
by each Bank to the Borrower shall be evidenced by the Banks' respective Notes
from the Borrower. Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow up to the Aggregate Commitment Amount at any time
prior to the Facility Termination Date. All Commitments to extend credit
hereunder shall expire on the Facility Termination Date. The LC Issuer will
issue Facility LCs hereunder on the terms and conditions set forth in Section
2.20.
2.02 Notice and Manner of Borrowing.
------------------------------
(a) The amount and date of each Credit Extension shall be
designated in a Request for Advance executed by Borrower, to be received by the
Administrative Agent at least the Required Number of, but not more than ten
(10), Business Days prior to the date of such Credit Extension, which date shall
be a Business Day. The Administrative Agent shall promptly advise the Banks and,
if applicable, the LC Issuer, of any Request for Advance given pursuant to this
Section 2.02, of each Bank's Percentage Share of any requested Borrowing and, if
applicable, the amount requested for any Facility LC by telephone, confirmed
promptly in writing, or telecopier. Upon satisfaction of the applicable
conditions set forth in Article III, each Borrowing shall be made at the office
of the Administrative Agent, and shall be funded prior to 3:00 o'clock p.m.,
Houston, Texas time, on the day so requested in immediately available funds in
the amount so requested.
(b) Each Bank shall make each Loan to be made by it hereunder on
the date of the proposed Borrowing by wire transfer of immediately available
funds to the Administrative Agent in Houston, Texas, not later than 2:00 p.m.,
Houston, Texas time, and upon fulfillment of the applicable conditions set forth
in Article III, the Administrative Agent will make such funds available to
Borrower shall direct to the Administrative Agent from time to time or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Banks as soon as practicable. Unless the Administrative Agent shall
have received notice from a Bank prior to the date of any proposed Borrowing
that such Bank will not make available to the Administrative Agent such Bank's
Percentage Share of such Borrowing, the Administrative Agent may assume that
such Bank has made its Percentage Share available to the Administrative Agent on
the date of such Borrowing in accordance with this paragraph (b) and the
Administrative Agent may, in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If, and to the extent that, such
Bank shall not have made its Percentage Share available to the Administrative
Agent, such Bank and Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to Borrower
until the date such amount is repaid to the Administrative Agent at (i) in the
case of Borrower, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate. If such Bank shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part of
such Borrowing for purposes of this Agreement.
17
2.03 Payment Procedure. All payments and prepayments made by
-----------------
Borrower under this Agreement shall be made to the Administrative Agent at its
office specified in Section 9.03 for the account of the Banks in immediately
available funds before 11:00 a. m., Houston, Texas time, on the date that such
payment is required to be made. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to such payments or
prepayments ratably to the Banks (and if the payment relates to amounts owed to
a particular Bank only, in like funds to such Bank), in each case, to be applied
in accordance with the terms of this Agreement. Borrower hereby authorizes the
Administrative Agent, if and to the extent payment or prepayment (including
prepayments required pursuant to Section 2.11 hereof) is not made when due
hereunder or under the Notes or any other Loan Document, to charge from time to
time against Borrower's account with the Administrative Agent any amount so due.
Any payment received and accepted by the Administrative Agent (or any branch or
Affiliate thereof) after such time shall be considered for all purposes
(including the calculation of interest, to the extent permitted by law) as
having been made on the next following Business Day.
2.04 Payments of Interest under the Notes. Subject to the terms
------------------------------------
and provisions of this Agreement, interest on the Loan, calculated at the
Floating Rate, shall be due and payable as follows:
(A) Interest on ABR Loans shall be calculated on the basis
of a 365/366-day year, as applicable, and on LIBOR Loans on the basis
of a 360-day year, in each case counting the actual number of days
elapsed. Interest on the outstanding principal balance of the Loans
shall accrue for each day at either a Floating Rate based on ABR plus
the ABR Margin for such day for ABR Loans, or a Floating Rate based on
LIBOR for the Interest Period which includes such day plus the LIBOR
Margin for such day for LIBOR Loans, all as elected and specified
(including specification as to length of Interest Period, as permitted
by the definition of that term, with respect to any election of a
Floating Rate based on LIBOR) by the Borrower in accordance with
Section 2.04(B); provided that:
(1) In the absence of an election by the Borrower of a
Floating Rate based on LIBOR plus the LIBOR Margin, or,
having made such election, but upon the Required Number of
days prior to the end of the then current Interest Period
the Borrower fails or is not entitled under the terms of
this Agreement to elect to continue a Floating Rate based on
LIBOR plus the LIBOR Margin and specify the applicable
Interest Period therefor, then upon the expiration of such
then current Interest Period, interest on the Loans shall
accrue for each day at a Floating Rate based on ABR plus the
ABR Margin for such day, until the Borrower, pursuant to
Section 2.04(B), elects a different Floating Rate and
specifies the Interest Period for the Loans.
(2) Interest accruing on any LIBOR Loan during any
Interest Period shall be payable on the first Business Day
of the next Interest Period except that: (a) with respect to
LIBOR Loans for which Borrower has selected an Interest
Period of six (6) months, interest will be payable on the
first Business Day following the ninetieth (90/th/) day
after the commencement of such Interest Period and on the
first Business Day of the next Interest Period, (b) interest
will be payable on the Facility
18
Termination Date on any LIBOR Loan with an Interest Period ending
on the Facility Termination Date; and provided that (c) all
--------
accrued interest on any LIBOR Loan converted or prepaid pursuant
to Section 2.11 shall be paid immediately upon such prepayment or
conversion.
(B) By at least the Required Number of days prior to the advance
of any Loan hereunder, the Borrower shall select the initial Floating Rate
to be charged on such Loan, and from time to time thereafter the Borrower
may elect, on at least the Required Number of days irrevocable prior
written (or verbal, promptly confirmed by written) notice to the
Administrative Agent, an initial Floating Rate for any additional Loan, or
to change the Floating Rate on any Loan to any other Floating Rate
(including, when applicable, the selection of the Interest Period);
provided that; (i) the Borrower shall not select an Interest Period that
--------
extends beyond the Facility Termination Date; (ii) except as otherwise
provided in Section 2.11 no such change from a Floating Rate based on LIBOR
plus the LIBOR Margin to another Floating Rate shall become effective on a
day other than the day, which must be a Business Day, next following the
last day of the Interest Period last effective for such LIBOR Loan; (iii)
any elections made by the Borrower pursuant to this Section 2.04(B) shall
be in the amount of $1,000,000, plus any additional increment of
$1,000,000, or such lesser amount as constitutes the balance of all Loans
then outstanding hereunder; (iv) notwithstanding anything herein to the
contrary, the Borrower may not make any election under this Section 2.04(B)
that would result in Loans outstanding based on more than six (6) different
LIBORs without the consent of the Required Banks to do so; and (v) the
first day of each Interest Period as to a LIBOR Loan shall be a Business
Day.
(C) Interest on ABR Loans shall be paid monthly in arrears on
the first Business Day of each calendar month (for the immediately
preceding month) commencing with the month following any month during which
interest begins to accrue at a Floating Rate based on ABR plus the ABR
Margin, as elected by Borrower pursuant to Section 2.04(B), and on the date
the principal of such Loans shall be due (on the stated Facility
Termination Date, on acceleration, or otherwise).
2.05 General Provisions Relating to Interest. It is the intention of
---------------------------------------
the parties hereto to comply strictly with the usury Laws of the State of Texas
and the United States of America and, in this connection, there shall never be
collected, charged or received on any sums advanced hereunder interest in excess
of the Maximum Rate. For purposes of Chapter 303 of the Texas Finance Code, as
amended, the Borrower agrees that the maximum rate to be charged shall be the
"indicated (weekly) rate ceiling" as defined in said Chapter, provided that the
Bank may also rely to the extent permitted by applicable Laws of the State of
Texas or the United States of America, on alternative maximum rates of interest
under other applicable Laws of the State of Texas or the United States of
America applicable to the Loans, if greater. Notwithstanding anything herein or
in the Notes to the contrary, during any Limitation Period, the interest rate to
be charged on amounts evidenced by the Notes shall be the Maximum Rate and the
obligation of the Borrower for any fees payable hereunder and deemed to be
interest under applicable Law shall be suspended. During any period or periods
of time following a Limitation Period, to the extent permitted by applicable
Laws of the State of Texas or the United States of America, the interest rate to
be charged hereunder shall remain at the
19
Maximum Rate until such time as there has been paid to each Bank (a) the amount
of interest in excess of the Maximum Rate that such Bank would have received
during the Limitation Period had the interest rate remained at the relevant
rates specified in the Note, and (b) all interest and fees otherwise due to such
Bank but for the effect of such Limitation Period.
If under any circumstances the aggregate amounts paid on the Notes or
under this Agreement include amounts which by Law are deemed interest and which
would exceed the amount permitted if the Maximum Rate were in effect, the
Borrower stipulates that such payment and collection will have been and will be
deemed to have been, to the extent permitted by applicable Laws of the State of
Texas or the United States of America, the result of mathematical error on the
part of both the Borrower and the Banks, and each Bank shall promptly refund the
amount of such excess (to the extent only of such interest payments above the
Maximum Rate which could lawfully have been collected and retained) upon
discovery of such error by such Bank or notice thereof from the Borrower.
2.06 Borrowing Base Determination. The Borrowing Base in effect as
----------------------------
of the Closing is Eighty Million Dollars ($80,000,000.00) based upon the
Netherland Sewell Report dated effective January 1, 2002, relative to the Proved
Reserves attributable to the Borrowing Base Oil and Gas Properties described on
Exhibit "A," which has been provided to Administrative Agent prior to Closing.
The Borrowing Base shall be re-determined from time to time pursuant
to the following provisions of this Section. On or before each October 1 and
April 1, commencing October 1, 2002, until the Facility Termination Date, the
Borrower shall furnish to the Administrative Agent a Reserve Report, which shall
set forth, as of each preceding July 1 or January 1, as applicable, the Proved
Reserves attributable to the Borrowing Base Oil and Gas Properties. Each
October Reserve Report may be prepared by the Borrower's own engineers and shall
be certified by the President or other Responsible Officer of the Borrower.
Each April Reserve Report shall be a complete report prepared by independent
reservoir engineers acceptable to Administrative Agent relating to the Proved
Reserves attributable to the Borrowing Base Oil and Gas Properties. Upon
receipt of each such Reserve Report, the Administrative Agent shall, within
forty-five (45) days following the delivery of such Reserve Report, make a
determination of the Borrowing Base which shall become effective upon approval
by the Required Banks and subsequent written notification from the
Administrative Agent to the Borrower, and which, subject to the other provisions
of this Agreement, shall be the Borrowing Base until the effective date of the
next redetermination of the Borrowing Base as set forth in this Section 2.06.
The Administrative Agent may, subject to approval of the Required Banks, and
must, upon the request of the Required Banks, redetermine the Borrowing Base at
any time, and from time to time, which redetermination shall become effective
upon approval by the Required Banks and subsequent written notification from the
Administrative Agent to the Borrower and which, subject to the other provisions
of this Agreement, shall be the basis on which the Borrowing Base shall
thereafter be calculated until the effective date of the next redetermination of
the Borrowing Base, as set forth in this Section.
The Administrative Agent shall have the right to initiate one
unscheduled redetermination of the Borrowing Base between any two consecutive
scheduled redeterminations thereof by
20
requesting in writing, not more than once between any two consecutive scheduled
deliveries of Reserve Reports, that the Borrower provide an unscheduled Reserve
Report regarding the Proved Reserves attributable to the Borrowing Base Oil and
Gas Properties with an effective date not more than ninety (90) days prior to
Borrower's delivery of such Reserve Report to Administrative Agent, and such
Reserve Report shall be delivered to Administrative Agent within ninety (90)
days after Borrower's receipt of such written request. The Borrower shall have
the right to request, by written notice to Administrative Agent, one unscheduled
redetermination of the Borrowing Base between any two consecutive scheduled
redeterminations thereof, subject to contemporaneously providing to
Administrative Agent a Reserve Report with an effective date not more than
ninety (90) days prior to the date of such notice.
If at any time the Required Banks cannot otherwise agree on a
redetermination of the Borrowing Base, then the Borrowing Base, shall be set on
the basis of the Administrative Agent's calculation of the "weighted arithmetic
average" (as hereinafter calculated) of the Borrowing Base, as determined by
each individual Bank and communicated to Administrative Agent in writing.
However, the amount of the Borrowing Base shall never be increased at any time
without the unanimous consent of the Banks, notwithstanding anything else herein
to the contrary. For purposes of this paragraph, the "weighted arithmetic
average" of the Borrowing Base shall be determined by first multiplying the
Borrowing Base proposed in writing to Administrative Agent by each Bank by such
Bank's Percentage Share, and then adding the results of each such calculation,
with the resultant sum being the Borrowing Base.
The Borrowing Base shall represent the Required Banks' approval of the
Administrative Agent's determination, in accordance with their customary lending
practices, of the maximum loan amount with respect to the Borrowing Base Oil and
Gas Properties and the Borrower acknowledges, for purposes of this Agreement,
such determination by the Administrative Agent as being the maximum loan amount
with respect to the Borrowing Base Oil and Gas Properties. In making any
redetermination of the Borrowing Base, the Administrative Agent and the Banks
shall apply the parameters and other credit factors consistently applied then
generally being utilized by the Administrative Agent and each such Bank,
respectively, for Borrowing Base redeterminations for other similarly situated
borrowers. The Borrower, Required Banks and the Administrative Agent
acknowledge that (a) due to the uncertainties of the oil and gas extraction
process, the Borrowing Base Oil and Gas Properties are not subject to evaluation
with a high degree of accuracy and are subject to potential rapid deterioration
in value, and (b) for this reason and the difficulties and expenses involved in
liquidating and collecting against the Borrowing Base Oil and Gas Properties,
the Administrative Agent's determination of the maximum loan amount with respect
to the Borrowing Base Oil and Gas Properties contains an equity cushion, which
equity cushion is acknowledged by the Borrower as essential for the adequate
protection of the Banks.
2.07 Mandatory Prepayment Due to a Loan Excess. Within sixty (60)
-----------------------------------------
days after receipt of written notice from Administrative Agent that a Loan
Excess exists, including, but not limited to, any notice establishing a
redetermined Borrowing Base that is less than the Aggregate Outstanding Credit
Exposure, Borrower shall either (i) prepay the principal of the Notes in an
aggregate amount at least equal to such Loan Excess or (ii) add to the Borrowing
Base Oil and Gas Properties additional Oil and Gas Properties of the Borrower
sufficient in value, as determined pursuant to
21
Section 2.06, to increase the Borrowing Base to equal the unpaid principal
amount of the Aggregate Outstanding Credit Exposure.
2.08 Other Mandatory Prepayments.
---------------------------
(A) On each date on which the Borrower sells any of its
Borrowing Base Oil and Gas Properties, other than Permitted Asset
Sales, the Borrowing Base will be automatically reduced to the loan
value (determined in accordance with the procedures for determining
the Borrowing Base) of the remaining Borrowing Base Oil and Gas
Properties, and the Borrower shall be required to make the prepayment,
if any, required pursuant to Section 2.07.
(B) Except to the extent otherwise provided in Section
2.08(A), if on any date the Outstanding Credit Exposure exceeds the
amount of the then effective Aggregate Commitment, the Borrower shall
be required to immediately prepay the Loans by the amount of such
excess.
2.09 Prepayment and Conversion. Upon the Required Number of days
-------------------------
written notice to the Administrative Agent, the Borrower may, without the
payment of penalty or premium, prepay the principal of the Loans or voluntarily
convert the applicable Floating Rate of any Loan prior to the termination of the
applicable Interest Period in whole or in part, from time to time. Any partial
payment or conversion of ABR Loans shall be made in the sum of not less than
$1,000,000, and any partial payment or conversion of LIBOR Loans shall be made
in the sum of not less than $1,000,000 or any $1,000,000 increment in addition
thereto. With respect to any such prepayment or conversion of any LIBOR Loan the
Borrower agrees to pay to the Banks upon the request of the Administrative Agent
such amount or amounts as will compensate the Banks for Breakage Costs,
excluding, however, any such Breakage Costs resulting from a payment or
prepayment made more than sixty (60) days prior to the Administrative Agent's
request for payment of Breakage Costs. The payment of any such Breakage Costs to
the Banks shall be made within thirty (30) days of a request therefor from
Administrative Agent. If LIBOR cannot be determined on the date of such
prepayment, the Administrative Agent shall calculate LIBOR by interpolating
LIBOR in effect immediately prior to the prepayment and LIBOR in effect
immediately after the prepayment.
2.10 Increased Cost of Loans.
-----------------------
(A) Notwithstanding any other provisions herein, if as a
result of any regulatory change after the date hereof
(1) the basis of taxation of payments to any Bank of the
principal of, or interest on, any LIBOR Loan or any other
amounts due under this Agreement in respect of any such LIBOR
Loan (except for taxes imposed on the overall net income or
receipts of such Bank, and franchise or other taxes imposed
generally on such Bank), by the jurisdiction (or any political
subdivision therein) in which the Bank has its principal office
(if such other taxes do not specifically affect the cost to the
Bank of making the Loans) is changed;
22
(2) any reserve, special deposit, or similar requirement
(including without limitation any reserve requirement under
regulations of the Board of Governors of the Federal Reserve System)
against assets of, deposits with, or for the account of, or credit
extended by such Bank, is imposed, increased, modified, or deemed
applicable; or
(3) any other condition affecting this Agreement or any
LIBOR Loan is imposed on such Bank or (in the case of LIBOR Loans) the
LIBOR Market; and the result of any of the foregoing is to increase
the actual direct cost to such Bank of making or maintaining any such
LIBOR Loan (and such increase shall not have been compensated by a
corresponding increase in the interest rate applicable to the
respective Loans) by an amount deemed by such Bank to be material
(such increases in cost and reductions in amounts receivable being
herein called "Increased Costs"), then the Borrower shall pay such
Bank, within thirty (30) days after its written demand, such
additional amount or amounts as will compensate such Bank for those
Increased Costs. No Bank will demand to be compensated by Borrower for
such Increased Costs unless such Bank generally makes such demands to
its other LIBOR Loan customers who are similarly situated. A
certificate of such Bank setting forth the basis for the determination
of such amount necessary to compensate such Bank as aforesaid
(including a representation by such Bank that it is generally making
demands as required by the preceding sentence), accompanied by
documentation showing reasonable support for such increased costs or
reduced sums received by such Bank, shall be delivered to the Borrower
and shall be conclusive, save for manifest error, as to such
determination and such amount. The affected Bank shall notify the
Borrower, as promptly as practicable after such Bank obtains knowledge
of any Increased Costs or other sums payable pursuant to this Section
2.10 and determines to request compensation therefor, or any event
occurring after the Closing which will entitle such Bank to
compensation pursuant to this Section; provided that, notwithstanding
anything herein to the contrary, the Borrower shall not be obligated
for the payment of any Increased Costs or other sums payable pursuant
to this Section 2.10 to the extent such Increased Costs or other sums
accrued more than 90 days prior to the date upon which the Borrower
was given such notice. If the Borrower is required to indemnify or pay
additional amounts pursuant to this Section 2.10, then the Bank will
take such action as in the reasonable judgment of the Bank (i) will
eliminate or reduce any such additional payment which may thereafter
accrue and (ii) is not otherwise commercially unreasonable. The Bank
shall use its reasonable efforts to obtain in a timely fashion any
refund, deduction or credit of any taxes paid or reimbursed by the
Borrower pursuant to this Section 2.10. If the Bank receives a benefit
in the nature of a refund, deduction or credit (including a refund in
the form of a deduction from or credit against taxes that are
otherwise payable by the Bank) of any taxes with respect to which the
Borrower has made a payment under Section 2.10, the Bank agrees to
reimburse the Borrower to the extent of the benefit of such refund,
deduction or credit promptly after the Bank reasonably determines that
such refund deduction or credit has become final; provided, however,
-------- -------
that nothing contained in this paragraph shall require the Bank to
make available its tax
23
returns (or any other information relating to its taxes which it
deems to be confidential) or to attempt to obtain any such
refund, deduction or credit, which attempt would be inconsistent
with any reporting position otherwise taken by the Bank on its
tax returns.
(B) Notwithstanding the foregoing provisions of this Section
2.10, in the event that by reason of any regulatory change any Bank
either (i) incurs Increased Costs based on, or measured by, the excess
above a specified level of the amount of a category of deposits or
other liabilities of such Bank that includes deposits by reference to
which the interest rate on LIBOR Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets
of such Bank that includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
that it may hold, then, if such Bank so elects by written notice to
the Borrower, the obligation of such Bank to make or convert Loans of
any other type into LIBOR Loans hereunder shall be suspended until the
earlier of the date such regulatory change ceases to be in effect or
the date the Borrower and such Bank agree upon an alternative method
of determining the interest rate payable by the Borrower on LIBOR
Loans, and all LIBOR Loans of such Bank then outstanding shall be
converted into an ABR Loan (if not otherwise prohibited under the
terms of this Agreement) at such Bank's option.
2.11 Change of Law. Notwithstanding any other provision herein, in the
-------------
event that any change in any applicable law or in the interpretation or
administration thereof shall make it unlawful for the Banks to (i) honor any
commitment it may have hereunder to make any LIBOR Loan, then such commitment
shall terminate, or (ii) maintain any LIBOR Loan, then all LIBOR Loans of the
Banks then outstanding shall be repaid and converted to ABR Loans (unless the
Banks' obligations to fund Loans hereunder has been suspended by any other
provisions of this Agreement) at the Borrower's option in accordance with the
election procedures set forth in Section 2.04(B); provided, however, that prior
--------
to the effective date of such election, interest shall be calculated at the ABR.
Any remaining commitment of the Banks hereunder to make LIBOR Loans (but not
other Loans) shall be suspended so long as they are prohibited by any applicable
law. Upon the occurrence of any such change, the Administrative Agent shall
promptly notify the Borrower thereof, and shall furnish to the Borrower in
writing evidence thereof certified by the Administrative Agent.
Any repayment or conversion of any LIBOR Loan which is required under
this Section 2.11 or under 2.04(B) shall be effected by payment thereof,
together with accrued interest thereon, on demand, and concurrently there shall
occur the borrowing of the corresponding ABR Loan as provided herein.
If any repayment to the Banks of any LIBOR Loan (including conversions
thereof) is made under this Section 2.11 on a day other than a day otherwise
scheduled for a payment of principal of or interest on such Loan, the Borrower
shall pay to the Banks upon its request of the Administrative Agent such amount
or amounts as will compensate the Banks for Breakage Costs, excluding, however,
any such Breakage Costs resulting from a prepayment or conversion made more than
sixty (60) days prior to the Administrative Agent's request for payment of
Breakage Costs. The payment
24
of any such Breakage Costs to the Banks shall be made within thirty (30) days of
a request therefor from Administrative Agent.
2.12 Mitigation: Mandatory Assignment. Each Bank shall use
--------------------------------
reasonable efforts to avoid or mitigate any Increased Cost or suspension of the
availability of an interest rate under Sections 2.09 through 2.10 above, to the
greatest extent practicable (including transferring the Loans to another lending
office or Affiliate of a Bank) unless, in the opinion of such Bank, such efforts
would be likely to have an adverse effect upon it. In the event a Bank makes a
request to the Borrower for additional payments in accordance with Sections 2.09
or 2.10, then, provided that no Event of Default has occurred and is continuing
--------
at such time, the Borrower may, at its own expense and in its sole discretion,
require such Bank to transfer and assign in whole (but not in part), without
recourse, all of its interests, rights and obligations under this Agreement to
an assignee which shall assume such assigned obligations (which assignee may be
another Bank, if a Bank accepts such assignment); provided that (a) such
--------
assignment shall not conflict with any law, rule or regulation or order of any
court or other governmental authority and (b) the Borrower or such assignee
shall have paid to the Administrative Agent for the account of the assigning
Bank in immediately available funds the principal of and interest accrued to the
date of such payment on the portion of the Loans hereunder held by such
assigning Bank and all other amounts owed to such assigning Bank hereunder,
including amounts owed pursuant to Sections 2.09 and 2.10 hereof.
2.13 Pro Rata Treatment and Payments. Each Borrowing by Borrower
-------------------------------
from the Banks hereunder, each payment by Borrower on account of any fee
hereunder and any reduction of the Commitments of the Banks shall be made pro
rata according to the respective Percentage Shares of the Banks. Each payment
(including each prepayment) by Borrower on account of principal of and interest
on the Loans shall be made pro rata according to the respective outstanding
principal amounts of the Loans then held by the Banks. The Administrative Agent
shall distribute such payments to the Banks promptly upon receipt in like funds
as received.
2.14 Sharing of Payments and Setoffs. Each Bank agrees that if it
-------------------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
Borrower (pursuant to Section 9.01 or otherwise), including, but not
limited to, a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Bank under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by similar means, obtain payment (voluntary
or involuntary) in respect of any Loan or Loans (other than pursuant to Section
2.10) as a result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of the Loans of any other
Bank, it shall simultaneously purchase from such other Banks at face value a
participation in the Loans of such other Banks, so that the aggregate unpaid
principal amount of Loans and participations in Loans held by each Bank shall be
in the same proportion to the aggregate unpaid principal amount of all Loans
then outstanding as the principal amount of its Loans prior to such exercise of
banker's lien, setoff, counterclaim or other event was to the principal amount
of all Loans outstanding prior to such exercise of banker's lien, setoff,
counterclaim or other event; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.14 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
25
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest.
2.15 Advances to Satisfy Obligations of the Borrower. The
-----------------------------------------------
Administrative Agent or any Bank may, but shall not be obligated to, make
advances hereunder for the benefit of the Banks and apply same to the
satisfaction of any condition, warranty, representation or covenant of the
Borrower contained in this Agreement, and the funds so advanced and applied
shall be part of the Loan proceeds advanced under this Agreement and evidenced
by the Notes.
2.16 Assignment of Production. Certain of the Security Instruments
------------------------
covering the Borrowing Base Oil and Gas Properties contain an assignment unto
and in favor of Administrative Agent for the benefit of the Banks of all oil,
gas and other minerals produced and to be produced from or attributable to the
Borrowing Base Oil and Gas Properties together with all of the revenues and
proceeds attributable to such production, and such Security Instruments further
provide that all such revenues and proceeds which may be so collected by
Administrative Agent for the benefit of the Banks pursuant to the assignment
shall be applied to the payment of the Notes and the satisfaction of all other
Indebtedness to be secured by such Security Instruments. The Borrower hereby
appoints the Administrative Agent as its Administrative Agent and attorney-in-
fact until this Agreement has been terminated in accordance with Section 9.18
hereof for purposes of completing the Transfer Order Letters delivered to the
Administrative Agent pursuant to Section 3.02(B) hereof, which power is coupled
with an interest and is not revocable.
2.17 Commitment Fee. As consideration for the commitment of the
--------------
Banks to make Credit Extensions to the Borrower through the Facility Termination
Date pursuant to this Agreement, the Borrower agrees to pay to the
Administrative Agent for the account of the Banks within five (5) Business Days
of receipt of the Administrative Agent's statement as to quarterly periods
ending March 31, June 30, September 30 and December 31 of each year (except the
first period shall be for a period of time from the Closing to March 31, 2002)
during the period commencing on the date of this Agreement to and including the
Facility Termination Date and at the Facility Termination Date, a commitment fee
equal to the percentage per annum specified in the Pricing Grid based on the
Utilization Percentage (computed on the basis of a year of 360 days) multiplied
by an amount equal to the daily average excess, if any, of the Aggregate
Commitment Amount over the Outstanding Credit Exposure, throughout the period
from the Closing Date or previous calculation date provided above, whichever is
later, to the relevant calculation date or the Facility Termination Date, as the
case may be.
2.18 Addition/Deletion of Borrowing Base Oil and Gas Properties.
--------------------------------------------------------
The Borrower may, from time to time upon written notice to the Administrative
Agent, propose to add Oil and Gas Properties of the Borrower to the Borrowing
Base Oil and Gas Properties. Any such proposal to add Oil and Gas Properties of
the Borrower to the Borrowing Base Oil and Gas Properties shall be accompanied
by a Reserve Report applicable to such properties that conforms to the
requirements of Section 2.06, and evidence sufficient to establish that the
Borrower has Marketable Title to such Oil and Gas Properties, and any such
addition shall become effective at such time as: (a) the Administrative Agent,
with the approval of the Banks, has made a determination of the amount by which
the Borrowing Base would be increased as the result of such addition and (b) the
conditions
26
set forth in Article III hereof, to the extent they are applicable to such
additional Oil and Gas Properties of the Borrower, have been satisfied. In
determining the increase in the Borrowing Base pursuant to this Section, the
Administrative Agent and the Banks shall apply the parameters and other credit
factors set forth in Section 2.06, above.
2.19 Adjustment to Aggregate Commitment Amount. At any time that
-----------------------------------------
Borrower proposes to increase the Borrowing Base by adding additional Oil and
Gas Properties to the Borrowing Base Oil and Gas Properties pursuant to Section
2.18, Borrower may also request that Banks increase the amount of the Aggregate
Commitment Amount stated on Schedule 1.01(b). At any time that Borrower makes
such a request it shall promptly provide Administrative Agent with such
financial information as Administrative Agent may request to assist the
Administrative Agent in evaluating such request. Following the receipt of such
information from Borrower, within forty-five (45) days of such request the
Administrative Agent shall, with the unanimous approval of the Banks and in the
normal course of its business, make a redetermination of the Aggregate
Commitment Amount, which shall become effective upon written notification from
the Administrative Agent to Borrower of the new Aggregate Commitment Amount
based on the parameters and other credit factors set forth in Section 2.06,
above. The Borrower may upon written notice to Administrative Agent, not sooner
than one hundred eighty (180) days subsequent to the last such action by
Borrower, amend the definition of the Aggregate Commitment Amount by reducing
the amount set forth in such definition. Upon such reduction, the Banks shall
not be obligated to make Credit Extensions in excess of such reduced Aggregate
Commitment Amount.
2.20 Facility LCs.
------------
(A) Issuance. The LC Issuer hereby agrees, on the terms and
--------
conditions set forth in this Agreement, to issue standby letters of
credit (each, a "Facility LC") and to renew, extend, increase,
decrease or otherwise modify each Facility LC ("Modify," and each such
action a "Modification"), from time to time from and including the
date of this Agreement and prior to the Facility Termination Date upon
the request of the Borrower; provided that immediately after each such
Facility LC is issued or Modified, (i) the aggregate amount of the
outstanding LC Obligations shall not exceed $5,000,000.00 and (ii) the
Aggregate Outstanding Credit Exposure shall not exceed the Aggregate
Commitment Amount. Facility LC's issued pursuant to the Prior Credit
Agreement and outstanding as of the Closing of this Agreement shall
also constitute Facility LCs hereunder. No Facility LC shall have an
expiry date later than the earlier of (x) the fifth Business Day prior
to the Facility Termination Date and (y) one year after its issuance.
(B) Participations. Upon the issuance or Modification by
--------------
the LC Issuer of a Facility LC in accordance with this Section 2.20,
the LC Issuer shall be deemed, without further action by any party
hereto, to have unconditionally and irrevocably sold to each Bank, and
each Bank shall be deemed, without further action by any party hereto,
to have unconditionally and irrevocably purchased from the LC Issuer,
a participation in such Facility LC (and each Modification thereof)
and the related LC Obligations in proportion to its Percentage Share.
27
(C) Notice. Subject to Section 2.20(A), the Borrower shall give
------
the LC Issuer notice prior to 10:00 a.m. (Houston, Texas time) at least two
Business Days prior to the proposed date of issuance or Modification of
each Facility LC, specifying the beneficiary, the proposed date of issuance
(or Modification) and the expiry date of such Facility LC, and describing
the proposed terms of such Facility LC and the nature of the transactions
proposed to be supported thereby. Upon receipt of such notice, the LC
Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Bank, of the contents
thereof and of the amount of such Bank's participation in such proposed
Facility LC. The issuance or Modification by the LC Issuer of any Facility
LC shall, in addition to the conditions precedent set forth in Article III
(the satisfaction of which the LC Issuer shall have no duty to ascertain),
be subject to the conditions precedent that such Facility LC shall be
satisfactory to the LC Issuer and that the Borrower shall have executed and
delivered such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall have
reasonably requested (each, a "Facility LC Application"). In the event of
any conflict between the terms of this Agreement and the terms of any
Facility LC Application, the terms of this Agreement shall control.
(D) LC Fees. The Borrower shall pay to the Administrative Agent,
-------
for the account of the Banks ratably in accordance with their respective
Percentage Shares, with respect to each Facility LC, a letter of credit fee
at a rate equal to the then otherwise applicable LIBOR Margin per annum on
the average daily undrawn stated amount under such Facility LC, such fee to
be payable in arrears on or before the first Business Day of each calendar
month (each such fee described in this sentence an "LC Fee"). The Borrower
shall also pay to the LC Issuer for its own account (x) at the time of
issuance of each Facility LC, a fronting fee calculated at the rate of
fifteen (15) basis points per annum, and (y) documentary and processing
charges in connection with the issuance or Modification of and draws under
Facility LCs in accordance with the LC Issuer's standard schedule for such
charges as in effect from time to time; except that upon the occurrence and
during the continuation of a default under the Agreement, the fee on any
outstanding Facility LC shall increase by two percent (2%).
(E) Administration; Reimbursement by Banks. Upon receipt from
--------------------------------------
the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Administrative Agent and the
Administrative Agent shall promptly notify the Borrower and each other Bank
as to the amount to be paid by the LC Issuer as a result of such demand and
the proposed payment date (the "LC Payment Date"). The responsibility of
the LC Issuer to the Borrower and each Bank shall be only to determine that
the documents (including each demand for payment) delivered under each
Facility LC in connection with such presentment shall be in conformity in
all material respects with such Facility LC. The LC Issuer shall endeavor
to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any
gross negligence or willful misconduct by the LC Issuer, each Bank shall be
unconditionally and irrevocably liable without regard to the occurrence of
any Default or any condition precedent whatsoever, to reimburse the LC
Issuer on demand for (i) such Bank's Percentage Share of the amount
28
of each payment made by the LC Issuer under each Facility LC to the extent
such amount is not reimbursed by the Borrower pursuant to Section 2.20(F)
below, plus (ii) interest on the foregoing amount to be reimbursed by such
Bank, for each day from the date of the LC Issuer's demand for such
reimbursement (or, if such demand is made after 11:00 a.m. (Houston, Texas
time) on such date, from the next succeeding Business Day) to the date on
which such Bank pays the amount to be reimbursed by it, at a rate of
interest per annum equal to the Federal Funds Effective Rate for the first
three Business Days and, thereafter, at a rate of interest equal to the
Floating Rate based on ABR.
(F) Reimbursement by Borrower. The Borrower shall be irrevocably and
-------------------------
unconditionally obligated to reimburse the LC Issuer on the applicable LC
Payment Date for any amounts paid by the LC Issuer upon any drawing under
any Facility LC, without presentment, demand, protest or other formalities
of any kind; provided that neither the Borrower nor any Bank shall hereby
be precluded from asserting any claim for direct (but not consequential)
damages suffered by the Borrower or such Bank to the extent, but only to
the extent, caused by (i) the willful misconduct or gross negligence of the
LC Issuer in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC or (ii) the LC
Issuer's failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and
conditions of such Facility LC. All such amounts paid by the LC Issuer and
remaining unpaid by the Borrower shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum of 2% plus the
rate applicable to ABR Loans for such day if such day falls after such LC
Payment Date. The LC Issuer will pay to each Bank ratably in accordance
with its Percentage Share all amounts received by it from the Borrower for
application in payment, in whole or in part, of the Reimbursement
Obligation in respect of any Facility LC issued by the LC Issuer, but only
to the extent such Bank has made payment to the LC Issuer in respect of
such Facility LC pursuant to Section 2.20(E). Subject to the terms and
conditions of this Agreement (including without limitation the submission
of a Request for Advance in compliance with Section 2.02 and the
satisfaction of the applicable conditions precedent set forth in Article
III), the Borrower may request a Loan hereunder for the purpose of
satisfying any Reimbursement Obligation.
(G) Obligations Absolute. The Borrower's obligations under this
--------------------
Section 2.20 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the LC Issuer, any
Bank or any beneficiary of a Facility LC. The Borrower further agrees with
the LC Issuer and the Banks that the LC Issuer and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, any of
its Affiliates, the beneficiary of any Facility LC or any financing
institution or other party to whom any Facility LC may be transferred or
any claims or defenses whatsoever of the Borrower or of any of its
Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay
29
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Facility LC. The Borrower agrees that
any action taken or omitted by the LC Issuer or any Bank under or in
connection with each Facility LC and the related drafts and documents, if
done without gross negligence or willful misconduct, shall be binding upon
the Borrower and shall not put the LC Issuer or any Bank under any
liability to the Borrower. Nothing in this Section 2.20(G) is intended to
limit the right of the Borrower to make a claim against the LC Issuer for
damages as contemplated by the proviso to the first sentence of Section
2.20(F).
(H) Actions of LC Issuer. The LC Issuer shall be entitled to
--------------------
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts
selected by the LC Issuer. The LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Required Banks as it
reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.20, the LC Issuer shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request
of the Required Banks, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Banks and any future holders
of a participation in any Facility LC.
(I) Indemnification. The Borrower hereby agrees to indemnify and
---------------
hold harmless each Bank, the LC Issuer and the Administrative Agent, and
their respective directors, officers, agents and employees from and against
any and all claims and damages, losses, liabilities, costs or expenses
which such Bank, the LC Issuer or the Administrative Agent may incur (or
which may be claimed against such Bank, the LC Issuer or the Administrative
Agent by any Person whatsoever) by reason of or in connection with the
issuance, execution and delivery or transfer of or payment or failure to
pay under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities,
costs or expenses which the LC Issuer may incur by reason of or in
connection with (i) the failure of any other Bank to fulfill or comply with
its obligations to the LC Issuer hereunder (but nothing herein contained
shall affect any rights the Borrower may have against any defaulting Bank)
or (ii) by reason of or on account of the LC Issuer issuing any Facility LC
which specifies that the term "Beneficiary" included therein includes any
successor by operation of law of the named Beneficiary, but which Facility
LC does not require that any drawing by any such successor Beneficiary be
accompanied by a copy of a legal document, satisfactory to the LC Issuer,
evidencing the appointment of such successor Beneficiary; provided that the
Borrower shall not be required to indemnify any Bank, the LC Issuer or the
Administrative Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (x) the willful
misconduct or gross negligence of the LC Issuer in determining whether a
request
30
presented under any Facility LC complied with the terms of such Facility LC
or (y) the LC Issuer's failure to pay under any Facility LC after the
presentation to it of a request strictly complying with the terms and
conditions of such Facility LC. Nothing in this Section 2.20(I) is intended
to limit the obligations of the Borrower under any other provision of this
Agreement.
(J) Banks' Indemnification. Each Bank shall, ratably in
----------------------
accordance with its Percentage Share, indemnify the LC Issuer, its
affiliates and their respective directors, officers, agents and employees
(to the extent not reimbursed by the Borrower) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such indemnitees'
gross negligence or willful misconduct or the LC Issuer's failure to pay
under any Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of the Facility LC) that such
indemnitees may suffer or incur in connection with this Section 2.20 or any
action taken or omitted by such indemnitees hereunder.
(K) Rights as a Bank. In its capacity as a Bank, the LC Issuer
----------------
shall have the same rights and obligations as any other Bank.
ARTICLE III.
CONDITIONS
----------
The obligation of the Banks to make the Credit Extensions is subject to the
following conditions precedent:
3.01 General Conditions to Closing and to all Disbursements. At the
------------------------------------------------------
time of the execution and delivery of this Agreement by all parties who are
designated as signatories on the signature pages of this Agreement (the
"Closing") and at each subsequent Credit Extension:
(A) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing, unless, with respect to any such Unmatured
Event of Default, Borrower provides evidence satisfactory to the Banks that
such Unmatured Event of Default shall, contemporaneously with or promptly
after such Credit Extension, be cured with funds advanced pursuant to the
Credit Extension;
(B) The representations and warranties contained in Article IV
of this Agreement shall be true and correct in all material respects as
though such representations and warranties had been made on such date,
except such as are expressly limited to a prior date, which shall have been
true and correct in all material respects as of such prior date;
(C) The Administrative Agent and the Banks shall have been, and
shall continue to be, satisfied, in their good faith discretion, that the
Borrower holds Marketable Title to the Borrowing Base Oil and Gas
Properties, and that such ownership includes record title to an undivided
net revenue interest in the production from each such Borrowing Base Oil
and Gas
31
Property that is not less than, as well as an undivided working interest in
each Borrowing Base Oil and Gas Property that is not greater than (unless
there is a corresponding increase in the net revenue interest attributed to
such party therein), the net revenue interest therein and the working
interest therein, respectively, attributed to the Borrower on Exhibit "A,"
subject to the limitations and qualifications on such exhibit (or
attributed to Borrower in any Security Instrument applicable to any Oil and
Gas Property that is added to the Borrowing Base Oil and Gas Properties in
connection with any subsequent funding after the Closing); provided,
however, that for purposes of Closing, Administrative Agent and Banks
intend to have confirmed, to their reasonable satisfaction, the status of
Borrower's title to Borrowing Base Oil and Gas Properties comprising
approximately ninety percent (90%) of the PW9 (based on the most recent
Borrowing Base evaluation by the Administrative Agent) of the Proved
Reserves that are attributable to those Borrowing Base Oil and Gas
Properties that, as of Closing, are made subject to Security Instruments in
favor of Administrative Agent; such determination by Administrative Agent
and the Banks, however, shall not relieve Borrower from the ongoing
obligation to comply with all of its representations, warranties and
covenants herein and in the Security Instruments regarding Borrower's title
to all Borrowing Base Oil and Gas Properties.
(D) No Material Adverse Change shall have occurred since the
date of the latest audited Consolidated Financial Statements provided to
the Administrative Agent;
(E) All of the Security Instruments previously delivered with
respect to the Borrowing Base Oil and Gas Properties shall have remained in
full force and effect, except to the extent released pursuant to the terms
of this Agreement; and
(F) All legal matters incidental thereto shall be reasonably
satisfactory to each Bank's designated legal counsel.
3.02 Deliveries at the Closing. The Borrower shall have duly
-------------------------
delivered or caused to be delivered to the Administrative Agent, prior to or
contemporaneously with the Closing, the following:
(A) The Notes payable to each respective Bank, along with each
of the Security Instruments covering any Borrowing Base Oil and Gas
Properties not already covered by valid and continuing Security Instruments
in favor of Administrative Agent; provided, however, that Administrative
Agent and the Banks intend to proceed with Closing (subject to all other
conditions in this Article III) if Borrowing Base Oil and Gas Properties
comprising approximately ninety percent (90%) of the Proved Reserves
attributable to all of the Borrowing Base Oil and Gas Properties are made
subject to Security Instruments in favor of Administrative Agent, but
Borrower is not thereby relieved from its obligation to execute and
deliver, upon request from Administrative Agent at any time, additional
Security Instruments covering any and all Borrowing Base Oil and Gas
Properties not previously covered by valid and continuing Security
Instruments, with the exception of the Borrowing Base Oil and Gas
Properties comprising any field (considered by the Administrative Agent
32
to be a "field" in its most recent Borrowing Base evaluation pursuant to
Section 2.06) that has a PW9 of $10,000 or less.
(B) Transfer Order Letters applicable to the production of oil
and gas from any Borrowing Base Oil and Gas Properties for which Transfer
Order letters have not previously been delivered to the Administrative
Agent;
(C) The results of a Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against the
Borrower in the Offices of the Secretary of State of the State of Wyoming
and each State in which any of the Borrowing Base Oil and Gas Properties
are located or deemed to be located, such search to be as of a date no more
than ten (10) days prior to the date of Closing.
(D) A certified (as of the date of the Closing) copy of
resolutions of Borrower's Board of Directors authorizing the execution,
delivery, and performance of this Agreement, the Notes, and each other Loan
Document to be delivered by Borrower pursuant hereto;
(E) A certificate (dated the date of the Closing) of Borrower's
corporate secretary as to the incumbency and signatures of the officers of
the Borrower signing this Agreement, the Notes, and each other Loan
Document to be delivered by Borrower pursuant hereto;
(F) A copy, certified as of the most recent date practicable by
the Secretary of State of the state in which Borrower is incorporated, of
the Borrower's certificate of incorporation, together with a certificate
(dated the date of the Closing) of the Borrower's corporate secretary to
the effect that such certificate of incorporation has not been amended
since the date of the aforesaid certification;
(G) Certificates, as of the most recent dates practicable, of
the Secretary of State of each state in which the Borrower is qualified as
a foreign corporation, and the department of revenue or taxation of each of
the foregoing states, as to the good standing of the Borrower;
(H) A Compliance Certificate, dated the date of the Closing;
(I) Payment of the Administrative Agent's attorneys' fees upon
receipt of a reasonably detailed invoice pursuant to Section 5.12 hereof;
(J) A legal opinion or opinions of outside counsel to the
Borrower and each Guarantor, addressed to Administrative Agent, the Banks,
the Arranger and the LC Issuer, in form and substance reasonably
satisfactory to the Administrative Agent, covering, among other matters
reasonably requested by Administrative Agent or its counsel, the matters
addressed in Sections 4.01, 4.02, 4.03, 4.19 and 4.20 hereof as to
Borrower, and Section 4.(d) of each Guaranty as to each respective
Guarantor; and
(K) Duly executed counterparts to the Guaranty of each
respective Guarantor.
33
3.03 Documents Required for Subsequent Disbursements Involving
---------------------------------------------------------
Additional Borrowing Base Oil and Gas Properties. As of the time of funding any
- ------------------------------------------------
additional advances to Borrower that have been approved by the Banks pursuant to
Section 2.01 and are made in conjunction with the addition of Oil and Gas
Properties owned by the Borrower to the Borrowing Base Oil and Gas Properties,
the Borrower shall have duly delivered to the Administrative Agent: (i) the
Security Instruments that are necessary or appropriate, in the reasonable
opinion of the Administrative Agent, relating to such additional Oil and
Properties, provided that Borrower understands and agrees that Administrative
Agent will require Borrowing Base Oil and Gas Properties that include any well
from which Proved Reserves may be produced and each prospective drilling unit
comprised of Proved Reserves that are undeveloped to have attributable thereto
at least 80 contiguous acres of land covered by a Lease that is made subject to
the Security Instruments, and (ii) Transfer Order Letters applicable to the
production of oil and gas from the such additional Borrowing Base Oil and Gas
Properties.
3.04 Subject to the satisfaction of the conditions stated in Sections
3.01 and 3.02 above, Bank One will execute and deliver an assignment of notes
and liens whereby it assigns the Prior Note and the liens under the security
documents executed pursuant to the Prior Credit Agreement from Bank One (in its
capacity as the sole lender under the Prior Credit Agreement) to Bank One, as
Administrative Agent for the benefit of the Banks and the LC Issuer, under the
terms of this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Administrative Agent and the Banks to enter into this
Agreement and to make the Credit Extensions hereunder, each Borrower represents
and warrants to the Administrative Agent and the Banks that:
4.01 Existence. The Borrower is a corporation, duly organized, legally
---------
existing, and in good standing under the Laws of the State of Wyoming, the
Borrower has the lawful power to own its properties and to engage in the
businesses that it conducts, and is duly qualified and in good standing as a
foreign corporation in the jurisdictions wherein the nature of the business
transacted by it or property owned by it makes such qualification necessary,
other than those jurisdictions where the failure to so qualify will not have a
Material Adverse Effect; the states in which the Borrower is qualified to do
business are set forth in Schedule 4.01; the addresses of all places of business
of the Borrower are as set forth in Schedule 4.01; the Borrower has not changed
its name, been the surviving company in a merger, acquired any business, or
changed its principal executive office within five (5) years and one (1) month
prior to the date hereof, except as disclosed on Schedule 4.01.
4.02 Due Authorization. The execution and delivery by the Borrower of
-----------------
this Agreement and the borrowings hereunder; the execution and delivery by the
Borrower of the Notes, the Security Instruments, and the other Loan Documents to
which it is a party; and the repayment by the
34
Borrower of the Indebtedness evidenced by the Notes and interest and fees
provided in the Notes and this Agreement are (a) within the corporate power of
the Borrower; (b) have been duly authorized by all necessary corporate action,
and (c) do not and will not (i) require the consent of any regulatory authority
or governmental body, (ii) contravene or conflict with any provision of Law or
of the articles of incorporation or bylaws of the Borrower, (iii) contravene or
conflict with any indenture, instrument or other agreement to which the Borrower
is a party or by which its property may be presently bound or encumbered, or
(iv) result in or require the creation or imposition of any mortgage, lien,
pledge, security interest, charge or other encumbrance in, upon or of any of the
properties or assets of the Borrower under any such indenture, instrument or
other agreement, other than under any of the Security Instruments.
4.03 Valid and Binding Obligations. This Agreement, the Notes, and the
-----------------------------
Security Instruments , and the other Loan Documents to which Borrower is a
party, when duly executed and delivered, will be legal, valid and binding
obligations of and enforceable against the Borrower, in accordance with their
respective terms (subject to any applicable bankruptcy, insolvency or other Laws
of general application affecting creditors' rights, general equitable
principles, whether considered in a proceeding in equity or at law, and judicial
decisions interpreting any of the foregoing).
4.04 Scope and Accuracy of Financial Statements. All Financial
------------------------------------------
Statements submitted and to be submitted to the Administrative Agent hereunder
are and will be complete and correct in all material respects, are and will be
prepared in accordance with GAAP consistently applied, and do and will fairly
reflect the consolidated financial condition and the results of the operations
of Ultra Petroleum Corp. and its Subsidiaries in all material respects as of the
dates and for the period stated therein (subject only to normal year-end audit
adjustments with respect to such unaudited interim statements of Ultra Petroleum
Corp.), and no Material Adverse Change has occurred since the effective date of
the latest audited Consolidated Financial Statements delivered to Administrative
Agent.
4.05 Title to Borrowing Base Oil and Gas Properties. The Borrower has
----------------------------------------------
Marketable Title to the working and net revenue interests in the Borrowing Base
Oil and Gas Properties as set forth on Exhibit "A". Except as set forth in the
instruments and agreements, if any, more particularly described in Exhibit "A"
hereto, all such shares of production which the Borrower is entitled to receive,
and shares of expenses which the Borrower is obligated to bear, are not subject
to change, except for changes attributable to future elections by the Borrower
not to participate in operations proposed pursuant to customary forms of
applicable joint operating agreements, and except for changes attributable to
changes in participating areas under any federal units wherein participating
areas may be formed, enlarged or contracted in accordance with the rules and
regulations of the applicable governmental authority.
4.06 Oil and Gas Leases. The Leases which constitute any part of the
------------------
Borrowing Base Oil and Gas Properties are in full force and effect as to those
portions thereof that comprise the Borrowing Base Oil and Gas Properties.
35
4.07 Oil and Gas Contracts. Except: (a) as set forth on Schedule
---------------------
4.07 attached hereto, and (b) as may subsequently occur and be disclosed by
Borrower in the next Compliance Certificate delivered by Borrower after such
occurrence pursuant to Section 5.05 hereof, the Borrower is not obligated, by
virtue of any prepayment under any contract providing for the sale by the
Borrower of Hydrocarbons which contains a "take-or-pay" clause or under any
similar prepayment agreement or arrangement, including, without limitation, "gas
balancing agreements", to deliver a material amount of Hydrocarbons produced
from the Borrowing Base Oil and Gas Properties at some future time without then
or thereafter receiving full payment therefor (i.e., in the case of oil, not in
----
excess of sixty (60) days, and in the case of gas, not in excess of ninety (90)
days). Except: (a) as set forth on Schedule 4.07 attached hereto, and (b) as may
subsequently occur and be disclosed by Borrower in the next Compliance
Certificate delivered by Borrower after such occurrence pursuant to Section 5.05
hereof, the Borrowing Base Oil and Gas Properties are not subject to any
contractual, or other arrangement for the sale of crude oil which cannot be
canceled on ninety (90) days' (or less) notice, unless the price provided for
therein is equal to or greater than the prevailing market price in the vicinity.
The Borrowing Base Oil and Gas Properties are not subject to any regulatory
refund obligation and no facts exist which might cause the same to be imposed.
4.08 Producing Wells. All producing wells that constitute part
---------------
of the Borrowing Base Oil and Gas Properties: (a) have been, during all times
that any such wells were operated by Borrower or its Affiliates, and (b) to the
knowledge of the Borrower, have been at all other times; drilled, operated and
produced in conformity with all applicable Laws, rules, regulations and orders
of all regulatory authorities having jurisdiction, are subject to no penalties
on account of past production, and are bottomed under and are producing from,
and the well bores are wholly within, the Borrowing Base Oil and Gas Properties,
or on Oil and Gas Properties which have been pooled, unitized or communitized
with the Borrowing Base Oil and Gas Properties, except to the extent that any
noncompliance with the representations set forth in this Section would not have
a Material Adverse Effect.
4.09 Purchasers of Production. The names and business addresses
------------------------
of the Persons who: (a) have purchased any of the Borrower's interests in oil
and gas produced from the Borrowing Base Oil and Gas Properties during the six
calendar months preceding the Closing, and (b) are considered by Borrower to be
potential future purchasers of Borrower's interest in oil and gas produced from
the Borrowing Base Oil and Gas Properties, are identified on Schedule 4.09
attached hereto.
4.10 Authorizations and Consents. No authorization, consent,
---------------------------
approval, exemption, franchise, permit or license of, or filing with, any
governmental or public authority or any third party is required to authorize, or
is otherwise required in connection with the valid execution and delivery by the
Borrower of this Agreement, the Notes, and the Security Instruments, or any
other instrument contemplated hereby, the repayment by the Borrower of advances
against the Notes and interest and fees provided in the Notes and this
Agreement, or the performance by the Borrower of its obligations under any of
the foregoing.
4.11 Environmental Laws. Except to the extent that the failure to
------------------
do so would not have and would not be expected to have a Material Adverse
Effect, the Borrower (a) is and has in the past been in compliance with all
Environmental Laws and all permits, requests and notifications relating
36
to health, safety or the environment applicable to the Borrower or any of its
properties, assets, operations and businesses; (b) has obtained and adhered to
and currently possesses all necessary permits and other approvals, including
interim status under the Federal Resource Conservation and Recovery Act,
necessary to store, dispose of and otherwise handle Hazardous Substances and to
operate its properties, assets and businesses; (c) has reported, to the extent
required by all federal, state and local statutes, Laws, ordinances,
regulations, rules, permits, judgments, orders and decrees, all past and present
sites owned and/or operated by the Borrower where any Hazardous Substance has
been released, treated, stored or disposed of and (d) has not used, stored, or
Released any Hazardous Substance in excess of amounts allowed by Environmental
Law. To the best knowledge and belief of Borrower, there is (x) no location on
any property currently or previously owned or operated by the Borrower where
Hazardous Substances are known to have entered or are likely to enter into the
soil or groundwater on such property, other than releases of oil or natural gas
in the ordinary course of business none of which releases (i) either
individually, or in the aggregate, has had or may be expected to have a Material
Adverse Effect or (ii) has violated or may be expected to violate any
Environmental Laws, except for any such violation that has not had and would not
be expected to have a Material Adverse Effect, and (y) no on-site or off-site
location to which the Borrower has released or transported Hazardous Substances
or arranged for the transportation or disposal of Hazardous Substances, which is
or is likely to be the subject of any federal, state, local or foreign
enforcement action or any investigation which could lead to any material claims
against any such entity for any clean-up cost, remedial work, damage to natural
resources, common law or legal liability, including, but not limited to, claims
under Comprehensive Environmental Response, Compensation, and Liability Act. All
Environmental Impact Statements, orders or decrees specifically applicable to
Borrower or any of its Oil and Gas Properties with respect to operations to be
conducted on any of such Oil and Gas Properties are described on Schedule 4.11
attached hereto. For the purposes of this Section, references to "the Borrower"
shall include all predecessors, successors-in-interest of the Borrower;
provided, that with respect to the Borrower's properties or assets, the
- --------
foregoing representations as to predecessors and successors-in-interest are
limited to the knowledge of the Borrower.
4.12 Compliance with Laws, Rules, Regulations and Orders. Except
---------------------------------------------------
to the extent that the failure to comply would not materially interfere with the
conduct of the business of the Borrower, the Borrower has complied with all
applicable Laws with respect to: (1) the conduct of its business; and (2) the
use, maintenance, and operation of the Borrowing Base Oil and Gas Properties and
personal properties owned or leased by it in the conduct of its business; except
as expressly set forth on Exhibit "A" hereto, the Borrower possesses all
licenses, approvals, registrations, permits and other authorizations necessary
to enable it to carry on its business in all material respects as now conducted,
and all such licenses, approvals, registrations, permits and other
authorizations are in full force and effect; and the Borrower has no reason to
believe that the Borrower will be unable to obtain the renewal of any such
licenses, approvals, registrations, permits and other authorizations.
4.13 Liabilities, Litigation and Restrictions. Except as
----------------------------------------
disclosed in the Financial Statements, the Borrower does not have any
liabilities, direct or contingent, which would have a Material Adverse Effect.
There is no litigation or other action of any nature pending before any court,
governmental instrumentality, regulatory authority or arbitral body or, to the
knowledge of the Borrower threatened against or affecting the Borrower which
might reasonably be expected to
37
result in any material, adverse change in the Borrower, or its business or
assets. To the best of the Borrower's knowledge, no unduly burdensome
restriction, restraint or hazard exists by contract or Law that would have a
Material Adverse Effect.
4.14 Existing Indebtedness. All Indebtedness of the Borrower
---------------------
consisting of liability to repay borrowed money or to pay money to become due on
capital leases is described in the most recent Financial Statements of Borrower
delivered to Administrative Agent prior to the Closing and from time to time
thereafter; and Borrower is not in default with respect to any of its existing
Indebtedness.
4.15 Material Commitments. Except as described in Schedule 4.15
--------------------
hereto and in filings made by Borrower with the Securities Exchange Commission,
(a) the Borrower does not have any material leases (other than oil and gas
leases), contracts or commitments of any kind (including, without limitation,
employment agreements; collective bargaining agreements; powers of attorney;
distribution arrangements; patent license agreements; contracts for future
purchase or delivery of goods or rendering of services; bonuses, pension and
retirement plans; or accrued vacation pay, insurance and welfare agreements);
(b) to the best of the Borrower's knowledge, all parties to all such material
leases, contracts, and other commitments to which the Borrower is a party have
complied with the provisions of such leases, contracts, and other commitments;
and (c) to the best of the Borrower's knowledge, no party is in default under
any thereof and no event has occurred that but for the giving of notice or the
passage of time, or both, would constitute a default, except for defaults and
events that have not had and would not be expected to have a Material Adverse
Effect.
4.16 Margin Stock. The Borrower is not engaged principally, or
------------
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U, or X of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any extension of credit under this Agreement will
be used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock. Neither the Borrower nor
any Person acting on its behalf has taken any action that might cause the
transactions contemplated by this Agreement or the Notes to violate Regulations
T, U, or X or to violate the Securities Exchange Act of 1934, as amended.
4.17 Proper Filing of Tax Returns and Payment of Taxes Due.
-----------------------------------------------------
Except as otherwise permitted herein, the Borrower has filed all federal, state,
and local tax returns and other reports required by any applicable Laws to have
been filed prior to the date hereof, has paid or caused to be paid all taxes,
assessments, and other governmental charges that are due and payable prior to
the date hereof, and has made adequate provision for the payment of such taxes,
assessments, or other charges accruing but not yet payable, except where the
failure to do so would not have a Material Adverse Effect; the Borrower has no
knowledge of any material deficiency or additional assessment in connection with
any taxes, assessments, or charges not provided for on its books.
4.18 ERISA. The Borrower is in compliance in all material
-----
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction has occurred and is continuing with respect to any
plan; no notice of intent to terminate a plan has been filed, nor has any plan
been terminated; no circumstances exist which constitute grounds under Section
4042 of
38
ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administrate a plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multi-Employer
Plan; the Borrower and each ERISA Affiliate has met its minimum funding
requirements under ERISA with respect to all of its plans and the present value
of all vested benefits under each plan exceeds the fair market value of all plan
assets allocable to such benefits, as determined on the most recent valuation
date of the plan and in accordance with the provisions of ERISA and the
regulations thereunder for calculating the potential liability of the Borrower
or any ERISA Affiliate to the PBGC or the plan under Title IV of ERISA; and
neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC under ERISA.
4.19 Investment Company Act Compliance. The Borrower is not
---------------------------------
directly or indirectly controlled by, or acting on behalf of, any, Person which
is an "Investment Company," within the meaning of the Investment Company Act of
1940, as amended.
4.20 Public Utility Holding Company Act Compliance. The Borrower
---------------------------------------------
is not a "holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.21 Insurance. The Borrower Maintains insurance with respect to
---------
the properties and business of the Borrower providing coverage for such
liabilities, casualties, risks and contingencies and in such amounts as is
customary in the industry. The insurance coverage reflected on the Certificate
of Insurance attached hereto as Schedule 4.21 is in full force and effect, and
all premiums due thereon have been paid.
4.22 Material Misstatements and Omissions. No representation or
------------------------------------
warranty by or with respect to the Borrower contained herein or in any
certificate or other document furnished by the Borrower pursuant hereto contains
any untrue statement of a material fact or omits to state a material fact
necessary to make such representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE V.
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants so long as any Indebtedness of the Borrower to any
Bank remains unpaid under this Agreement, or any Obligations of the Borrower to
any Bank or the LC Issuer remain unsatisfied, or any Bank remains obligated to
make advances hereunder, to:
5.01 Use of Funds. Use funds advanced hereunder for the purposes
------------
of (A) extending, rearranging and renewing existing debt, (B) making
acquisitions of Oil and Gas Properties, and (C) funding Borrower's other lawful
corporate purposes.
5.02 Maintenance and Access to Records. Keep adequate records in
---------------------------------
accordance with good accounting practices, of all of the transactions of the
Borrower so that at any time, and from time to
39
time, such records present fairly the financial condition of the Borrower which
may be readily determined and, at the Administrative Agent's reasonable request,
make all financial records and records relating to the Borrowing Base Oil and
Gas Properties available for the Administrative Agent's inspection and permit
the Administrative Agent to make and take away copies thereof.
5.03 Quarterly Unaudited Financial Statements. Deliver to the
----------------------------------------
Administrative Agent, on or before the sixtieth (60th) day after the end of each
calendar quarter, unaudited Consolidated Financial Statements, as at the end of
such period and from the beginning of such fiscal year to the end of the
respective period, as applicable, which Consolidated Financial Statements shall
be certified by the president or chief financial officer of Ultra Petroleum
Corp. as being true and correct, subject to changes resulting from year-end
audit adjustments.
5.04 Annual Audited Financial Statements. Deliver to the
-----------------------------------
Administrative Agent, on or before the one hundred twentieth (120th) day after
the close of each fiscal year of Ultra Petroleum Corp. a copy of annual audited
Consolidated Financial Statements, together with the report and opinion thereon
of KPMG or such other firm of independent certified public accountants
acceptable to the Administrative Agent at its reasonable discretion.
5.05 Compliance Certificate. At Closing, at the time of delivery
----------------------
of the certified but unaudited Consolidated Financial Statements pursuant to
Section 5.03 above, and at the time of the delivery of the annual audited
Consolidated Financial Statements pursuant to Section 5.04 above, deliver to the
Administrative Agent a Compliance Certificate.
5.06 Statement of Material Adverse Change. Deliver to the
------------------------------------
Administrative Agent, promptly upon any Responsible Officer of the Borrower
having knowledge of any Material Adverse Change (or any event or circumstance
that would result in any such Material Adverse Change) in the condition,
financial or otherwise, of Borrower or of any Guarantor, a statement of a
Responsible Officer of the Borrower, setting forth the change in condition or
event or circumstance likely to result in any such change and the steps being
taken by the Borrower and/or Guarantor with respect to such change in condition
or event or circumstance.
5.07 Title Defects. Cure any title defects of the Borrowing Base
-------------
Oil and Gas Properties material in value, in the reasonable opinion of the
Administrative Agent, within sixty (60) days after receipt of written notice
thereof from Administrative Agent and, in the event any title defects are not
cured in a timely manner, pay all related costs and fees reasonably incurred ny
the Administrative Agent for the account of the Banks to do so; provided,
however, the Borrower may remove any of its Oil and Gas Properties from the
Borrowing Base Oil and Gas Properties so long as the Indebtedness evidenced by
the Notes is less than or equal to the Borrowing Base (determined by the Banks
in accordance with Section 2.06 exclusive of such Oil and Gas Properties)
5.08 Additional Information. Furnish to the Administrative Agent
----------------------
copies of all information, if any, filed with the Securities Exchange Commission
by the Borrower or either Guarantor and all information routinely provided by
the Borrower or either Guarantor to its shareholders, generally. Furnish to the
Administrative Agent, promptly upon the Administrative Agent's reasonable
request, such additional financial or other information in Borrower's or either
Guarantor's possession or to
40
which Borrower or either Guarantor has access, without incurring material costs,
concerning the assets, liabilities, operations, and transactions of the
Borrower, including, without limitation, information concerning title to any of
the Borrowing Base Oil and Gas Properties.
5.09 Compliance with Laws and Payment of Assessments and Charges.
-----------------------------------------------------------
Materially comply with all applicable statutes and government regulations,
including, without limitation, ERISA, and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien other than a Permitted Encumbrance against
its property, except any of the foregoing being contested in good faith and as
to which accruals satisfactory to the Administrative Agent, in its reasonable
discretion, have been provided.
5.10 Maintenance of Existence and Good Standing. Maintain the
------------------------------------------
Borrower's corporate existence and good standing in the jurisdiction of its
organization, and maintain the Borrower's qualification and good standing in all
other jurisdictions wherein the property now owned or hereafter acquired or
business now or hereafter conducted by Borrower necessitates same, other than
those jurisdictions wherein the failure to so qualify will not have a Material
Adverse Effect on the Borrower.
5.11 Further Assurances. Promptly cure any defects in the
------------------
execution and delivery of this Agreement, the Notes, the Security Instruments,
or any other Loan Document referred to herein or executed in connection with the
Notes, and upon the reasonable request of the Administrative Agent promptly
execute and deliver to the Administrative Agent all such other and further
instruments as may be reasonably required by the Administrative Agent from time
to time in compliance with the covenants and agreements made in this Agreement.
Without limiting the generality of the foregoing, upon the reasonable request of
the Administrative Agent, Borrower shall promptly execute and deliver to the
Administrative Agent amendments of the Security Instruments existing under the
Prior Credit Agreement to provide that references in any of such Security
Instruments to the Prior Credit Agreement shall include references to this
Agreement, as amended from time to time, and references in any such Security
Instrument to the Prior Note shall be amended to include references to the Notes
delivered pursuant to this Agreement, and any further notes issued in
substitution therefor or in renewal, extension, increase or rearrangement
thereof.
5.12 Initial Expenses of the Bank. Pay prior to or at Closing all
----------------------------
documented reasonable fees and expenses of Porter & Hedges, L.L.P., the special
legal counsel for the Administrative Agent incurred directly and solely in
connection with the preparation of this Agreement, the Notes, the Guaranty, the
Security Instruments, and any other Loan Document referred to herein or executed
directly and solely in connection with the Notes, the satisfaction of the
conditions precedent set forth in Article III of this Agreement and the
consummation of the transactions contemplated in this Agreement.
5.13 Subsequent Expenses of the Administrative Agent and the
-------------------------------------------------------
Arranger. Upon request, promptly reimburse the Administrative Agent and the
- --------
Arranger and any Bank for all documented amounts reasonably expended, advanced
or incurred by the Administrative Agent, the Arranger or any such Bank to
collect the Notes or to enforce the rights of the Administrative Agent, the
Arranger or such Banks under this Agreement, the Notes, the Guaranty, the
Security Instruments, or any other
41
Loan Document referred to herein or executed in connection with the Notes, which
amounts shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrower by the Administrative Agent and which amounts will
include, but not be limited to, (a) all court costs, (b) reasonable attorneys'
fees, (c) fees of auditors and accountants, (d) investigation expenses, (e)
internal fees of the Administrative Agent's in-house legal counsel, (f) fees and
expenses incurred in connection with the Administrative Agent's and any such
Bank's participation as a member of the creditors committee in a case commenced
under Title 11 of the United States Code or other similar Law of the United
States, the State of Texas or any other jurisdiction, (g) fees and expenses
incurred in connection with lifting the automatic stay prescribed in (S)(S)362
Title 11 of the United States Code, and (h) fees and expenses incurred in
connection with any action pursuant to (S)(S)1129 Title 11 of the United States
Code, reasonably incurred by the Administrative Agent and/or any such Bank in
connection with the collection of any sums due under this Agreement, together
with interest at the Floating Rate per annum, calculated on a basis of a year of
three hundred sixty (360) days on each such amount from the date of notification
to the Borrower that the same was expended, advanced or incurred by the
Administrative Agent and/or any such Bank until, but not including, the date it
is repaid to the Administrative Agent or such Bank, with the obligations under
this Section 5.13, surviving the non-assumption of this Agreement in a case
commenced under Title 11 of the United States Code or other similar Law of the
United States, the State of Texas or any other jurisdiction and being binding
upon the Borrower or a trustee, receiver or liquidator of any such party
appointed in any such case.
5.14 Maintenance of Tangible Property. Maintain all of its
--------------------------------
tangible property relating to the Borrowing Base Oil and Gas Properties in good
repair and condition and make all necessary replacements thereof and operate
such property in a good and workmanlike manner in accordance with standard
industry practices, unless the failure to do so would not have a Material
Adverse Effect on the Borrower or the value of any Borrowing Base Oil and Gas
Property.
5.15 Maintenance of Insurance. Continue to maintain, or cause to
------------------------
be maintained, insurance with respect to the properties and business of the
Borrower against such liabilities, casualties, risks and contingencies and in
such amounts as is customary in the industry and furnish to the Administrative
Agent annually after the execution of this Agreement certificates evidencing
such insurance.
5.16 Inspection of Tangible Assets/Right of Audit. Permit any
--------------------------------------------
authorized representative of the Administrative Agent or any Bank to visit and
inspect (at the risk of the Administrative Agent, such Bank and/or such
representative) any tangible asset of the Borrower, and/or to audit the books
and records of the Borrower during normal business hours, at the expense of the
Administrative Agent or such Bank and during normal business hours following
reasonable advance notice.
5.17 Payment of Note and Performance of Obligations. Pay the
----------------------------------------------
Notes according to the reading, tenor and effect thereof, as modified hereby,
and do and perform every act and discharge all of the Obligations provided to be
performed and discharged hereunder.
5.18 Borrowing Base. Maintain a Borrowing Base in compliance with
--------------
Section 2.07 such that the amount of the Outstanding Credit Exposure will not,
at any time other than during applicable
42
grace periods expressly set forth elsewhere in this Agreement, exceed the
Aggregate Commitment Amount.
5.19 Compliance with Environmental Laws. To the extent necessary
----------------------------------
to avoid a Material Adverse Effect, comply with any and all requirements of Law,
including, without limitation, Environmental Laws, (a) applicable to any natural
or environmental resource or media located on, above, within, in the vicinity
of, related to or affected by any Borrowing Base Oil and Gas Properties or any
other property of the Borrower, or (b) applicable to the performance or conduct
of its operations, including, without limitation, all permits, licenses,
registrations, approvals and authorizations, and, in this regard, comply with,
and require all employees, crew members, agents, contractors and subcontractors
(pursuant to appropriate contractual provisions) and future lessees (pursuant to
appropriate lease provisions) of the Borrower while such Persons are acting
within the scope of their relationship with the Borrower, to so comply with, all
applicable requirements of Law, including, without limitation, applicable
Environmental Laws, and other applicable requirements with respect to the
property of the Borrower, and the operation thereof necessary or appropriate to
enable the Borrower to fulfill its obligations under all applicable requirements
of Law, including, without limitation, Environmental Laws, applicable to the
use, generation, handling, storage, treatment, transport and disposal of any
Hazardous Substances now or hereafter located or present on or under any such
property.
5.20 INDEMNIFICATION. INDEMNIFY AND HOLD THE ADMINISTRATIVE
---------------
AGENT, THE BANKS AND THE LC ISSUER AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE
FOR THE BENEFIT OF THE ADMINISTRATIVE AGENT, THE BANKS AND THE LC ISSUER (EACH
AN "INDEMNIFIED PERSON") UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST
ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED
ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER, WHETHER PRIOR TO OR
DURING THE TERM HEREOF, AND WHETHER BY THE BORROWER OR ANY PREDECESSOR IN TITLE,
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER, (D) ANY CONTAMINATION OF ANY PROPERTY
43
OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING,
STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER
OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER WHILE SUCH
PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER,
IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN
ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND
ENFORCEMENT OF ANY LOAN DOCUMENT, ANY ALLEGATION BY ANY BENEFICIARY OF A LETTER
OF CREDIT OF A WRONGFUL DISHONOR BY THE ADMINISTRATIVE AGENT, THE BANKS OR THE
LC ISSUER OF A CLAIM OR DRAFT PRESENTED THEREUNDER, OR ANY OTHER ACT OR OMISSION
IN CONNECTION WITH OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY OF THE FOREGOING IN
THIS SECTION ARISING FROM NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF
THE ADMINISTRATIVE AGENT, THE BANKS OR THE LC ISSUER OR ANY OF THEIR RESPECTIVE
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, OR
AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE ADMINISTRATIVE AGENT, THE BANKS
OR THE LC ISSUER UNDER ANY SECURITY INSTRUMENT; PROVIDED THAT THE BORROWER SHALL
HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO ANY OF
THE FOREGOING IN THIS SECTION TO THE EXTENT SAME ARISE FROM THE GROSS NEGLIGENCE
OR WILFUL MISCONDUCT OF ANY INDEMNIFIED PERSON WITH THE FOREGOING INDEMNITY
SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS CREDIT
AGREEMENT, UNLESS ALL SUCH OBLIGATIONS HAVE BEEN SATISFIED WHOLLY IN CASH FROM
THE BORROWER AND NOT BY WAY OF REALIZATION AGAINST ANY COLLATERAL OR THE
CONVEYANCE OF ANY PROPERTY IN LIEU THEREOF, PROVIDED THAT SUCH INDEMNITY SHALL
--------
NOT EXTEND TO ANY ACT OR OMISSION BY THE ADMINISTRATIVE AGENT, THE BANKS OR THE
LC ISSUER AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS-IN-FACT AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE
ADMINISTRATIVE AGENT, THE BANKS OR THE LC ISSUER UNDER ANY SECURITY INSTRUMENT
WITH RESPECT TO ANY PROPERTY THROUGH THE EXERCISE OF ADMINISTRATIVE AGENT'S, ANY
BANK'S OR THE LC ISSUER'S REMEDIES HEREUNDER OR UNDER ANY OF THE SECURITY
DOCUMENTS SUBSEQUENT TO THE ADMINISTRATIVE AGENT, ANY BANK OR THE LC ISSUER
BECOMING THE OWNER OF SUCH PROPERTY AND WITH RESPECT TO WHICH PROPERTY SUCH
CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE, PROCEEDING, ORDER,
JUDGMENT, ACTION, OR REQUIREMENT ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE
THERETO BY THE ADMINISTRATIVE AGENT, ANY BANK OR THE LC ISSUER OR OTHER PERSON.
44
5.21 Transactions with Affiliates. Conduct all transactions with
----------------------------
any Affiliate of the Borrower on an arm's-length basis (provided that such
transactions are otherwise permitted by the terms of this Agreement).
5.22 Leases. Keep and continue all Leases comprising the
------
Borrowing Base Oil and Gas Properties and related contracts and agreements
relating thereto in full force and effect in accordance with the terms thereof
and not permit the same to lapse or otherwise become impaired for failure to
comply with the obligations thereof, whether express or implied; provided,
--------
however, that this provision shall not prevent the Borrower from abandoning and
- -------
releasing any such Leases upon their termination as the result of cessation of
production in paying quantities that did not result from the Borrower's failure
to maintain such production as a reasonably prudent operator.
5.23 Operation of Borrowing Base Oil and Gas Properties. Operate
--------------------------------------------------
or, to the extent that the right of operation is vested in others, exercise all
reasonable efforts to require the operator to operate the Borrowing Base Oil and
Gas Properties and all wells drilled thereon and that may hereafter be drilled
thereon, continuously and in a prudent and workmanlike manner and in accordance
with all Laws of the State in which the Borrowing Base Oil and Gas Properties
are situated and the United States of America, as well as all rules,
regulations, and Laws of any governmental agency having jurisdiction to regulate
the manner in which the operation of the Borrowing Base Oil and Gas Properties
shall be carried on, and comply with all terms and conditions of the Leases it
now holds, and any assignment or contract obligating the Borrower in any way
with respect to the Borrowing Base Oil and Gas Properties, except for any such
non-compliance that would not have a Material Adverse Effect; but nothing herein
shall be construed to empower the Borrower to bind the Administrative Agent or
any Bank to any contract obligation, or render the Administrative Agent or any
Bank in any way responsible or liable for bills or obligations incurred by the
Borrower.
5.24 Change of Purchasers of Production. On or before each
----------------------------------
anniversary of the Closing, and at any other time that the Administrative Agent
may so request in writing, the Borrower shall notify the Administrative Agent in
writing of the identity and address of each Person who: (a) has purchased any of
the Borrower's interests in oil and gas produced from the Borrowing Base Oil and
Gas Properties during the six calendar months preceding such anniversary of the
Closing, and (b) are considered by Borrower to be potential future purchasers of
Borrower's interest in oil and gas produced from the Borrowing Base Oil and Gas
Properties and, if requested by the Administrative Agent, shall provide the
Administrative Agent with Transfer Order Letters executed by the Borrower and
addressed to such purchasers of production.
6.25 Payment of Taxes, Etc. Pay or cause to be paid when due, all
---------------------
taxes, assessments, and charges or levies imposed upon it, or on its property,
or which it is required to withhold and pay, except where contested in good
faith by appropriate proceedings with adequate reserves therefor having been set
aside on its books, provided, however, that the Borrower shall pay or cause to
be paid all such taxes, assessments, charges, or levies forthwith whenever
foreclosure on any lien that may have attached (or security therefor) appears
imminent.
45
5.26 Notice of Litigation. Give immediate notice to the
--------------------
Administrative Agent of any litigation or proceeding in which it or any
Guarantor is a party if an adverse decision therein would require it or any
Guarantor to: (a) pay more than, and/or (b) deliver, forfeit or otherwise lose
ownership of assets the value of which exceeds, and/or (c) take any action or
refrain from taking any action the result of which causes it or any Guarantor to
incur losses or damages in excess of, $1,000,000 in the combined aggregate
(whether or not any such payment, loss or damages is considered to be covered by
insurance).
5.27 Notice of Events of Default. Notify the Administrative
---------------------------
Agent immediately if it becomes aware of the occurrence of any Event of Default
or of any fact, condition, or event that only with the giving of notice or
passage of time or both, would become an Event of Default or if it becomes aware
of any Material Adverse Change (including, without limitation, proceedings in
bankruptcy, insolvency, reorganization, or the appointment of a receiver or
trustee).
5.28 Notice of Change of Principal Offices. Notify the
-------------------------------------
Administrative Agent thirty (30) days in advance of any change in the location
of the principal offices of Borrower or any Guarantor.
5.29 Changes in Management. Notify the Administrative Agent of
---------------------
any change in the senior management of Borrower or any Guarantor existing as of
the date hereof.
5.30 Employee Benefit Plans. Fund its Plan(s) in accordance with
----------------------
no less than the minimum funding standards of 29 U.S.C.A. (S)(S) 1082 (Section
302 of ERISA); furnish the Administrative Agent, promptly after the filing or
receiving of the same, with copies of any reports or other statements filed
with, or notices or other communications received from, the United States
Department of Labor, the PBGC, or the Internal Revenue Service with respect to
any such Plan; promptly advise the Administrative Agent of the occurrence of any
Reportable Event or Prohibited Transaction with respect to any such Plan and the
action the Borrower proposes to take with respect thereto; and promptly advise
the Administrative Agent when the Borrower knows or has reason to believe that
the PBGC or the Borrower has instituted or will institute proceedings under
Title IV of ERISA to terminate any such Plan and the action the Borrower
proposes to take with respect thereto.
5.31 Payment of Obligations. Promptly pay (or renew and extend)
----------------------
all of its Indebtedness as it becomes due unless such Indebtedness is contested
in good faith by appropriate proceedings.
5.32 Annual Budget. On or before April 1/st/ of each year,
-------------
beginning on or before April 1, 2003, Borrower shall prepare and provide to the
Administrative Agent a comprehensive budget for the calendar year beginning as
of the immediately preceding January 1, which shall include, but shall not
necessarily be limited to, all projected capital expenditures, lease operating
expenditures, revenues from the sale or other disposition of Hydrocarbons, Hedge
Agreement receipts and payments, and all other reasonably foreseeable material
budgetary information.
46
ARTICLE VI.
NEGATIVE COVENANTS
------------------
Without the prior written consent of the Administrative Agent and the
Required Banks and so long as any part of the principal or interest on the Notes
shall remain unpaid or any Bank remains obligated to make advances hereunder,
Borrower covenants that it will not:
6.01 Other Indebtedness. Incur, create, assume or suffer to exist
------------------
any Indebtedness, whether by way of loan or the issuance or sale of securities
except Permitted Indebtedness.
6.02 Loans or Advances. Make or agree to make or allow to remain
-----------------
outstanding any loans or advances to any Person, except: (a) advances or
extensions of credit in the form of accounts receivable incurred in the ordinary
course of business, (b) loans or advances permitted by Section 6.18, and (c)
provided no Event of Default or Unmatured Event of Default has occurred and is
continuing: (i) other loans or advances not exceeding $1,000,000, in the
aggregate, at any time outstanding, and (ii) loans or advances to Guarantor as
and to the extent necessary to enable Guarantor to retire or redeem any capital
stock of Guarantor, to the extent required pursuant to the terms of any employee
incentive compensation plan of Guarantor that was in effect at Closing and
disclosed to Administrative Agent in writing at or prior to Closing.
6.03 Mortgages or Pledges of Assets. Create, incur, assume or
------------------------------
permit to exist, any mortgage, pledge, security interest, lien or encumbrance on
any of its properties or assets (now owned or hereafter acquired), except for
Permitted Encumbrances.
6.04 Sales of Assets. Except for Permitted Asset Sales, sell,
---------------
lease, assign, transfer or otherwise dispose of, in one or any series of related
transactions, all or any portion of its Oil and Gas Properties or other material
assets, whether now owned or hereafter acquired, including transfers to
Affiliates, nor enter into any arrangement, directly or indirectly, with any
Person to sell and rent or lease back as lessee such property or any part
thereof which is intended to be used for substantially the same purpose or
purposes as the property sold or transferred.
6.05 Dividends. Declare or pay any distribution on any capital
---------
stock of Borrower.
6.06 Retire Stock. Retire or redeem any capital stock of
------------
Borrower.
6.07 Payment of Accounts Payable. Allow any account payable to
---------------------------
remain unpaid more than sixty (60) days after due date, except such as are (i)
being contested in good faith and as to which adequate provision or accrual has
been made, or (ii) the subject of usual and customary review and evaluation.
6.08 Investments. Make Investments in or purchase or otherwise
-----------
acquire all or substantially all of the assets of any Person, or any shares of
stock of, or similar interest in, any other Person, if the result of such action
would impair the ability of the Borrower to perform any of its Obligations
pursuant to this Agreement, including, without limitation, the obligation to
repay the Indebtedness
47
evidenced by the Notes, except that the Borrower may invest in instruments that
are investment grade, short-term commercial paper.
6.09 Changes in Structure or Business. Consolidate or merge with
--------------------------------
or purchase (for cash or securities) all or substantially all of the assets or
capital stock of any corporation, firm, association or enterprise, or allow any
such entity to be merged into the Borrower, or change the basic business
operations of the Borrower, unless all of the following conditions are
satisfied: (a) Borrower has provided Administrative Agent complete and detailed
information relating to such merger or purchase at least fifteen (15) days in
advance thereof, (b) Borrower is the survivor of such merger or the acquiror in
any such purchase, and (c) such merger or purchase will not otherwise constitute
or result in an Event of Default or Unmatured Event of Default under any other
provisions of this Agreement.
6.10 Pooling or Unitization. Voluntarily pool or unitize all or
----------------------
any part of the Borrowing Base Oil and Gas Properties where the pooling or
unitization would result in the diminution of the Borrower's net revenue
interest in production from the pooled or unitized lands, without the Required
Banks' prior consent, which will not be unreasonably withheld. Any unitization,
pooling or communitization or other action or instrument in violation of this
Section 6.10 shall be of no force or effect against any Bank.
6.11 Hedge Agreements. Except for Permitted Hedge Agreements,
----------------
enter into or become obligated under any contract for sale for future delivery
of Hydrocarbons other than normal production contracts entered into in the
Borrower's normal course of business (whether or not the subject Hydrocarbons
are to be delivered), forward contract, Hedging Agreement, futures contract or
any other similar agreement, without the prior written consent of the Required
Banks, acting in their reasonable discretion.
6.12 Capital Stock of Borrower. Without the prior written consent
-------------------------
of the Required Banks, acting in their reasonable discretion, (a) issue, redeem,
purchase, retire or otherwise acquire for value any of its capital stock or
grant, issue, purchase, retire or otherwise acquire for value any warrant,
right, or option pertaining thereto or other security convertible into any of
the foregoing, or (b) permit any transfer, sale, redemption, retirement, or
other change in the ownership of the outstanding capital stock of the Borrower;
except for the issuance or transfer of the Borrower's capital stock which does
not result in a Change of Control or otherwise constitute or result in an Event
of Default under any other provisions of this Agreement.
6.13 Margin Stock. Directly or indirectly apply any part of the
------------
proceeds of the Loans to the purchasing or carrying of any "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder.
6.14 Minimum Tangible Net Worth. Permit Consolidated Tangible Net
--------------------------
Worth to be less than $80,000,000.00, plus 75% of Ultra Petroleum Corp.'s
----
positive consolidated Net Income, if any, accrued during each calendar quarter
subsequent to September 30, 2001, calculated cumulatively as of the end of each
fiscal quarter of Ultra Petroleum Corp. beginning with the quarter ending
48
December 31, 2001, with no reduction for negative Net Income during any such
quarter, plus 100% of any increase in Stockholders' Equity resulting from the
sale or issuance of stock in Ultra Petroleum Corp or any of its Subsidiaries
subsequent to September 30, 2001.
6.15 Current Ratio. (a) Permit as of the end of any fiscal
-------------
quarter the Current Ratio to be less than 1.00 to 1.00, calculated based on the
Consolidated Financial Statements, and (b) permit as of the end of any fiscal
quarter Borrower's Current Ratio to be less than 1.00 to 1.00, calculated based
solely on the consolidating financial statements relative to Borrower, which
constitute a part of the Consolidated Financial Statements.
6.16 EBITDA to Interest Ratio. (a) Permit, as of the end of any
------------------------
fiscal quarter, the ratio of EBITDA to total interest expense on all
Indebtedness, calculated based on the Consolidated Financial Statements, to be
less than 4.5 to 1.0, calculated on a rolling four-quarter basis, and (b)
permit, as of the end of any fiscal quarter, the ratio of Borrower's EBITDA to
Borrower's total interest expense on all of Borrower's Indebtedness, calculated
based solely on the consolidating financial statements relative to Borrower,
which constitute a part of the Consolidated Financial Statements, to be less
that 4.5 to 1.0, calculated on a rolling four-quarter basis..
6.17 General and Administrative Expenses. Permit, for any fiscal
-----------------------------------
quarter, general and administrative expenses to be greater than 25% of gross
Production Revenue, calculated based on the Consolidated Financial Statements.
6.18 Intercompany Transfers. Permit the Borrower or any of its
----------------------
Affiliates to invest in, loan to or transfer to Sino-American Energy Corporation
an amount greater than Seventeen Million Five Hundred Thousand Dollars
($17,500,000) during the calendar year ending December 31, 2002 without the
prior written approval of the Required Banks; and thereafter permit the Borrower
or any of its Affiliates to invest in or transfer to Sino-American Energy
Corporation an amount greater than Twenty-Five Million Dollars ($25,000,000)
during each subsequent calendar year without the prior written approval of the
Required Banks; provided that in no event shall any such transfers to Sino-
American Energy Corporation be permitted if either: (i) an Event of Default has
occurred and is continuing pursuant to any of Sections 7.01(a), (d), (e), (f),
(g), (h), (i) or (j) hereof; (ii) Administrative Agent has given Borrower
written notice that a Loan Excess has occurred and is continuing; (iii) the
Current Ratio calculated pursuant to Section 6.15 (a) or (b) is, or as the
result of the making of such investment, loan or transfer would become, less
than 0.85 to 1.00; (iv) the EBITDA to Interest Ratio calculated pursuant to
Section 6.16 (a) or (b) is, or as the result of the making of such investment,
loan or transfer would become, less than 3.0 to 1.0; or (v) Administrative Agent
has accelerated the maturity of Borrower's Obligations as provided in Section
7.03.
ARTICLE VII.
EVENTS OF DEFAULT
-----------------
7.01 Enumeration of Events of Default. Any of the following
--------------------------------
events shall be considered an Event of Default as that term is used herein:
49
(a) Default shall be made by the Borrower in the payment of any
installment of principal or interest (including, without
limitation, any mandatory prepayments payable pursuant to
either Section 2.07 or 2.08 of this Agreement) on the Notes,
any LC Fee or any other monetary obligation (other than
Reimbursement Obligations) payable hereunder when due,
including without limitation, any other fee due to
Administrative Agent, LC Issuer or any Bank hereunder within
five (5) days after such payment was due, or in the payment
of any Reimbursement Obligation within one Business Day
after the same becomes due;
(b) Default shall be made by the Borrower or any Guarantor in
the due observance or performance of any affirmative
covenant required in this Agreement, the Notes, the
Guaranty, the Facility LC Applications or the Security
Instruments or any other Loan Documents and such default
continues for more than thirty (30) days after the earlier
of: (i) any Responsible Officer of Borrower or any Guarantor
having knowledge thereof, or (ii) Borrower or Guarantor
receiving written notice thereof from the Administrative
Agent;
(c) Default shall be made by the Borrower or any Guarantor in
the due observance or performance of any negative covenant
required in this Agreement, the Notes, the Guaranty, the
Facility LC Applications or the Security Instruments or any
other Loan Documents;
(d) Any representation or warranty made herein by the Borrower
or made in the Guaranty by either Guarantor proves to have
been untrue in any respect material to the Borrower or such
Guarantor, respectively, or any representation, statement
(including Financial Statements), certificate or data
furnished or made by the Borrower or any Guarantor to the
Administrative Agent in connection herewith proves to have
been untrue in any respect material to the Borrower or the
Guarantor, respectively, as of the date the facts therein
set forth were stated or certified;
(e) (x) Default shall be made by the Borrower or either
Guarantor (as principal or other surety) in payment or
performance of any bond, debenture, note or other evidence
of Indebtedness for borrowed money, or under any credit
agreement, loan agreement, indenture, promissory note or
similar agreement or instrument executed in connection with
any of the forgoing, relating to any Indebtedness in an
aggregate amount of One Million Dollars ($1,000,000.00) or
more, and such default shall remain unremedied for in excess
of the period of grace, if any, with respect thereto,
entitling the payee thereof to accelerate the maturity of
such Indebtedness; or (y) Default shall be made by Sino-
American Energy Corporation (as principal or other surety)
in payment or performance of any bond, debenture, note or
other evidence of Indebtedness for borrowed money, or under
any credit agreement, loan agreement,
50
indenture, promissory note or similar agreement or
instrument executed in connection with any of the forgoing,
relating to any Indebtedness in an aggregate amount of One
Million Dollars ($1,000,000.00) or more, and such default
shall remain unremedied for in excess of the period of
grace, if any, with respect thereto, entitling the payee
thereof to accelerate the maturity of such Indebtedness, and
the payee of such Indebtedness has, or alleges in written
notice to Borrower or either Guarantor that it has, recourse
against Borrower or either Guarantor for the collection of
such Indebtedness;
(f) The Borrower or either Guarantor (i) discontinues its usual
business or applies for or consents to the appointment of a
receiver, trustee or liquidator of it or all or a
substantial part of its assets, or (ii) files a voluntary
petition commencing a case under Title 11 of the United
States Code, seeking liquidation, reorganization or
rearrangement or taking advantage of any bankruptcy,
insolvency, debtor's relief or other similar Law of the
United States the State of Texas or any other jurisdiction,
or (iii) makes a general assignment for the benefit of
creditors, or (iv) is unable, or admits in writing its
inability to pay its debts generally as they become due, or
(v) files an answer admitting the material allegations of a
petition filed against it in any case commenced under Title
11 of the United States Code or any reorganization,
insolvency, conservatorship or similar proceeding under any
bankruptcy, insolvency, debtor's relief or other similar Law
of the United States, the State of Texas or any other
jurisdiction;
(g) An order, judgment or decree shall be entered against the
Borrower or either Guarantor by any court of competent
jurisdiction or by any other duly authorized authority, on
the petition of a creditor or otherwise, granting relief
under Title 11 of the United States Code or under any
bankruptcy, insolvency, debtor's relief or other similar Law
of the United States, the State of Wyoming, the State of
Nevada, the Yukon Territory of Canada, or any other
jurisdiction, approving a petition seeking reorganization or
an arrangement of its debts or appointing a receiver,
trustee, conservator, custodian or liquidator of it or all
or any substantial part of its assets, and the failure to
have such order, judgment or decree dismissed within thirty
(30) days of its entry;
(h) the Borrower or either Guarantor has concealed, removed, or
permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its
creditors or any of them; or has made or suffered a transfer
of any of its property which would be characterized as a
fraudulent conveyance under bankruptcy or similar Laws; or
has made any transfer of its property to or for the benefit
of a creditor at a time when other creditors similarly
situated have not been paid; or has suffered or permitted,
while insolvent, any creditor to obtain a lien upon any of
its property through legal proceedings or distraint which is
not vacated within thirty (30) days from the date thereof;
51
(i) the Liens under the Security Instruments are not, or they
cease to be, perfected first priority Liens subject to only
Permitted Encumbrances, or any of the Loan Documents or the
rights or remedies of the Administrative Agent, the Banks or
the LC Issuer are not, or they cease to be, valid and
enforceable; or
(j) a Material Adverse Change has occurred and the same remains
unremedied for in excess of 30 days after the earlier of:
(i) any Responsible Officer of Borrower or any Guarantor
having knowledge thereof, or (ii) Borrower receiving written
notice thereof from the Administrative Agent.
7.02 Rights Upon Unmatured Event of Default. At any time that there exists
--------------------------------------
an Unmatured Event of Default, any obligation of the Banks and the LC Issuer to
make Credit Extensions shall be suspended: (a) unless, with respect to any such
Unmatured Event of Default, Borrower provides evidence satisfactory to the Banks
that such Unmatured Event of Default shall, contemporaneously with or promptly
after such Credit Extension, be cured with funds advanced pursuant to the Credit
Extension, or (b) unless and until the Administrative Agent, with the approval
of the Required Banks and the LC Issuer, shall reinstate the same in writing,
the Unmatured Event of Default shall have been waived by the Administrative
Agent, with approval of the Required Banks and the LC Issuer, or the relevant
Unmatured Event of Default shall have been remedied prior to ripening into an
Event of Default.
7.03 Rights Upon Default. Upon the happening of an Event of Default
-------------------
specified in Subsections 7.01 (f) or (g), the obligations of the Banks and the
LC Issuer to make Credit Extensions hereunder shall automatically terminate and
all Obligations then outstanding hereunder and the interest accrued thereon
shall automatically become immediately due and payable without any election or
action on the part of the Administrative Agent, any Bank or the LC Issuer. Upon
the happening and during the continuation of any other Event of Default, the
Administrative Agent may, or upon the request of the Required Banks subject to
Section 9.12, the Administrative Agent shall terminate or suspend the
obligations of the Banks and the LC Issuer to make Credit Extensions hereunder,
or declare the Obligations to be immediately due and payable, or both, and upon
such declaration with respect to the Obligations they shall become immediately
due and payable. In either case, the entire principal and interest shall
thereupon become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate maturity or notice of acceleration of
maturity) and without presentment, demand, protest, notice of protest or other
notice of default or dishonor of any kind, except as provided to the contrary
elsewhere herein, all of which are hereby expressly waived by the Borrower.
If, within thirty (30) days after acceleration of the maturity of the
Obligations or termination of the obligations of the Banks and LC Issuer to make
Credit Extensions hereunder as the result of any Event of Default (other than
any Event of Default specified in subsections 7.01(f) or (g)) and before any
judgement or decree for the payment of the Obligations due shall have been
obtained or entered, the Required Banks (in their sole discretion) shall direct
with respect to the Obligations relating to the Loans or the LC Issuer (in its
sole discretion) shall direct with respect to Obligations
52
relating to Facility LCs, the Administrative Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
7.04 Remedies. After any acceleration, as provided for in Section 7.03,
--------
the Administrative Agent, the Banks and the LC Issuer shall have, in addition to
the rights and remedies given them by this Agreement and the Security
Instruments, all those allowed by all applicable Laws.
7.05 Right of Set-off. Upon the occurrence of any Event of Default, each
----------------
Bank may, and is hereby authorized by the Borrower, at any time and from time to
time, to the fullest extent permitted by applicable Laws, without advance notice
to the Borrower (any such notice being expressly waived by the Borrower), set-
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by such Bank to or for the credit or the account of the Borrower against
any or all of the Obligations of the Borrower now or hereafter existing, whether
or not such Obligations have matured and irrespective of whether such Bank may
have exercised any other rights that they have or may have with respect to such
Obligations, including, without limitation, any acceleration rights. Each Bank
agrees promptly to notify the Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 7.05
are in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which the Banks may have.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT
------------------------
8.01 Authorization and Action. Each Bank hereby irrevocably appoints and
------------------------
authorizes the Administrative Agent to act on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are specifically
delegated to or required of the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement or the other Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and, as between the Administrative Agent and the Banks, shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Banks, and such instructions shall be binding upon all Banks and all
holders of Notes; provided, however, that the Administrative Agent shall not be
--------
required to take any action which exposes such Administrative Agent to personal
liability or which is contrary to this Agreement, the other Loan Documents or
applicable law. The Administrative Agent is authorized to release Collateral
from the Security Instruments in connection with any sale, lease, assignment,
transfer or other disposition thereof permitted by Section 6.04.
8.02 Administrative Agent's Reliance, Etc. Neither the Administrative
------------------------------------
Agent nor any of its directors, officers, agents or employees shall be liable to
any Bank for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents (i) with the consent
or at the request of the Required Banks or (ii) in the absence of its or their
own gross negligence or willful misconduct (it being the express intention of
the parties that the
53
Administrative Agent and its directors, officers, agents and employees shall
have no liability for actions and omissions under this Section 8.02 resulting
from their sole ordinary or contributory negligence). Without limitation of the
generality of the foregoing, the Administrative Agent: (i) may treat the payee
of each Note as the holder thereof until the Administrative Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Administrative Agent; (ii) may consult with legal
counsel (including counsel for Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Bank and shall not be responsible to any Bank for any statements, warranties
or representations made in or in connection with this Agreement or the other
Loan Documents; (iv) except as otherwise expressly provided herein, shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other Loan
Documents or to inspect the property (including the books and records) of
Borrower; (v) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall incur no liability under or
in respect of this Agreement or the other Loan Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopier, cable or telex) reasonably believed by it to be genuine
and signed or sent by the proper party or parties; and (vii) the provisions of
this Section 8.02 shall survive the termination of this Agreement and/or the
payment or assignment of any of the Indebtedness under this Agreement.
8.03 The Administrative Agent and Affiliates. With respect to its
---------------------------------------
Commitment, the Credit Extensions made by it and the Note issued to it as a
Bank, the Administrative Agent shall have the same rights and powers under this
Agreement or the other Loan Documents as any other Bank and may exercise the
same as though it were not the Administrative Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include the Administrative Agent in
its individual capacity. The Administrative Agent and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with Borrower and any Person who may do business
with or own securities of Borrower, all as if the Administrative Agent were not
the Administrative Agent and without any duty to account therefor to the Banks.
8.04 Bank Credit Decision. Each Bank acknowledges and agrees that it has,
--------------------
independently and without reliance upon the Administrative Agent or any other
Bank and based on the Financial Statements referred to in Sections 5.03 and 5.04
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
8.05 Administrative Agent's Indemnity. The Administrative Agent shall
--------------------------------
not be required to take any action hereunder or to prosecute or defend any suit
in respect of this Agreement or the other Loan Documents unless indemnified to
the Administrative Agent's satisfaction by the Banks
54
against loss, cost, liability and expense. If any indemnity furnished to the
Administrative Agent shall become impaired, it may call for additional indemnity
and cease to do the acts indemnified against until such additional indemnity is
given. In addition, the Banks agree to indemnify the Administrative Agent (to
the extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them (or if no Notes are at
the time outstanding, ratably according to either (i) the respective amounts of
their Commitments, or (ii) if no Commitments are outstanding, the respective
amounts of the Commitments immediately prior to the time the Commitments ceased
to be outstanding), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Administrative Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the
Administrative Agent under this Agreement or the other Loan Documents
(including, without limitation, any action taken or omitted under Article II of
this Agreement); provided, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Each Bank agrees, however, that it expressly
intends, under this Section 8.05, to indemnify the Administrative Agent ratably
as aforesaid for all such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements arising out of or
resulting from the Administrative Agent's ordinary or contributory negligence.
Without limitation of the foregoing, each Bank agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including reasonable counsel fees) incurred by the
Administrative Agent in connection with the preparation, execution,
administration, or enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other Loan Documents to the
extent that the Administrative Agent is not reimbursed for such expenses by
Borrower. The provisions of this Section 8.05 shall survive the termination of
this Agreement and/or the payment or assignment of any of the Indebtedness under
this Agreement.
8.06 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign at any time by giving thirty (30) days advance written notice thereof to
the Banks and Borrower and may be removed as Administrative Agent under this
Agreement and the other Loan Documents at any time with or without cause by the
Required Banks. Upon any such resignation or removal, the Required Banks with
the concurrence of Borrower shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 calendar days after the retiring Administrative Agent's giving of
notice of resignation or the Required Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks and with the concurrence of Borrower, appoint a successor
Administrative Agent. Upon the acceptance of any appointment as Administrative
Agent hereunder and under the other Loan Documents by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Administrative Agent's resignation or removal as
Administrative Agent hereunder and under the other Loan Documents, the
55
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
8.07 Notice of Default. The Administrative Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Event of Default hereunder
unless the Administrative Agent shall have received notice from a Bank or
Borrower referring to this Agreement, describing such Event of Default and
stating that such notice is a "notice of default." If the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Banks; provided, however, if such notice is received from a Bank, the
-------- -------
Administrative Agent also shall give notice thereof to Borrower. The
Administrative Agent shall be entitled to take action or refrain from taking
action with respect to such Event of Default as provided in Section 8.01 and
Section 8.02.
ARTICLE IX.
MISCELLANEOUS
-------------
9.01 Security Interests in Deposits and Right of Offset or the Banker's
------------------------------------------------------------------
Lien. The Borrower hereby transfers, assigns, pledges and grants to each Bank a
- ----
security interest (as security for the payment and/or performance of the
Obligations of the Borrower, with such interest of each Bank to be
retransferred, reassigned and/or released by such Bank at the expense of the
Borrower upon payment in full and/or complete performance by the Borrower of all
such Obligations) and the right, exercisable at such time as any obligation
hereunder shall mature, whether by acceleration of maturity or otherwise, of
offset or banker's lien against all funds or other property of the Borrower now
or hereafter or from time to time on deposit with or in the possession of such
Bank, including, without limitation, all certificates of deposit and other
depository accounts.
9.02 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Notes and this
Agreement and shall remain in force and effect so long as any debt is
outstanding under the Notes, or any renewal or extension of this Agreement or
the Notes, or the Banks remain obligated to make advances hereunder.
9.03 Notices and Other Communications. Notices, requests and
--------------------------------
communications hereunder shall be in writing and shall be sufficient in all
respects if delivered to the relevant address indicated below (including
delivery by registered or certified United States mail, facsimile, telex,
telegram or hand):
(A) If to the
Borrower: ULTRA RESOURCES, INC.
16801 Greenspoint Park, Suite 370
Houston, Texas 77060
Attention: Mr. Fox Benton
Telecopy: (281) 876-2831
56
If to a
Guarantor: ULTRA PETROLEUM CORPORATION, and
UP ENERGY CORPORATION
16801 Greenspoint Park, Suite 370
Houston, Texas 77060
Attention: Mr. Fox Benton
Telecopy: (281) 876-2831
with a copy
to: ULTRA RESOURCES, INC.
1200 Summit Avenue, Suite 700
Fort Worth, Texas 76102
Attention: Ms. Charlotte Kauffman
Telecopy: (817) 335-2434
(B) If to the
Administrative Agent or
the Banks: BANK ONE, NA
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Stephen M. Shatto
Any party may, by proper written notice hereunder to the other, change the
individuals or addresses to which such notices to it shall thereafter be sent.
9.04 Parties in Interest. All covenants and agreements herein contained
-------------------
by or on behalf of the Borrower shall be binding upon the Borrower and its
successors and assigns and inure to the benefit of the Administrative Agent and
the Banks and their respective successors and assigns.
9.05 Successors and Assigns; Participation; Purchasing Banks.
-------------------------------------------------------
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and permitted
assigns of such party; and all covenants, promises and agreements by or on
behalf of Borrower, the Administrative Agent or the Banks that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and permitted assigns. Borrower may not assign or
transfer any of its rights or obligations hereunder without the written
consent of all the Banks.
(b) Each Bank may, without the consent of Borrower, sell
participations to one or more banks or other financial institutions in all
or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of
its Commitment, the Loans owing to it, and the Notes held by it); provided,
--------
however, that (i) the selling Bank's obligations under this Agreement and
-------
the other Loan Documents shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) Borrower, the
57
Administrative Agent, and the other Banks shall continue to deal solely and
directly with the selling Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, (iv) the
selling Bank shall remain the holder of its Note(s) for all purposes of
this Agreement, and (v) no participant under any such participation shall
have any right to approve any amendment or waiver of any provision of this
Agreement or any Note, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent
would reduce to the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any regularly scheduled payment of principal of,
or interest on, the Notes or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation.
(c) With the prior written consent of Borrower and the Administrative
Agent, each Bank may assign to one or more banks or other entities (a
"Purchasing Bank"), all or a portion of its interests, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment and the same portion
of the Loans at the time owing to it and the Notes held by it); provided,
--------
however, that (i) each such assignment shall be of a constant, and not a
-------
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement and the other Loan Documents, (ii) after giving effect
to such assignment, the Purchasing Bank's Commitment must be at least
$5,000,000 (either solely as the result of such assignment or as the result
of multiple assignments from two or more assigning Banks), (iii) the
parties to each such assignment shall execute and deliver to the
Administrative Agent a Commitment Transfer Supplement together with any
Notes subject to such Commitment Transfer Supplement, (iv) the assigning
Bank shall pay to Administrative Agent an assignment fee of $3,500, (v) an
assigning Bank shall not assign a portion of such Bank's Commitment in an
amount less than an amount equal to the lesser of such Bank's Commitment
----
hereunder and $5,000,000 and (vi) if the assigning Bank has retained any
Commitment hereunder, such assigning Bank's Commitment shall be at least
$5,000,000 after giving effect to such assignment. Upon such execution and
delivery, from and after the effective date specified in each Commitment
Transfer Supplement, which effective date shall be at least five Business
Days after the execution thereof (x) the Purchasing Bank thereunder shall
be a party hereto and, to the extent herein provided in such, have the
rights and obligations of a Bank hereunder and (y) the assignor Bank
thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement and the other Loan Documents
(and, in the case of a Commitment Transfer Supplement covering all of the
remaining portion of an assigning Bank's rights and obligations under this
Agreement and the other Loan Documents, such Bank shall cease to be a party
hereto). Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment of Percentage
Shares arising from the purchase by such Purchasing Bank of all or a
portion of the rights and obligations of such assigning Bank under this
Agreement, the Notes and the other Loan Documents.
58
(d) The Administrative Agent shall maintain at its office a copy of
each Commitment Transfer Supplement delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitment
Amount of, and principal amount of the Loans owing to, each Bank from time
to time (the "Register"). The entries in the Register shall be conclusive,
in the absence of manifest error, and Borrower, the Administrative Agent,
and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
an assigning Bank and a Purchasing Bank together with any Notes subject to
such Commitment Transfer Supplement and the written consent to such
Commitment Transfer Supplement, the Administrative Agent shall (i) accept
such Commitment Transfer Supplement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Banks
and Borrower. Within five (5) Business Days after receipt of such notice,
Borrower shall, at its own expense, execute and deliver to the
Administrative Agent, in exchange for the surrendered Notes, replacement
Notes dated as of the effective date of such surrendered Notes and
otherwise substantially in the form of the Notes replaced thereby payable
to the order of such Purchasing Bank in an amount equal to the Commitment
assumed by it pursuant to such Commitment Transfer Supplement and, if the
assigning Bank has retained any Commitment hereunder, replacement Notes
dated as of the effective date of the surrendered Notes and otherwise
substantially in the form of the Notes replaced thereby payable to the
order of the assigning Bank in an amount equal to the Commitment of such
assigning Bank retained by it hereunder. Such replacement Notes shall be in
an aggregate principal amount equal to the aggregate principal amount of
such surrendered Notes. Contemporaneously with the delivery of the
replacement Notes, the canceled Notes shall be returned to Borrower marked
"Replaced."
(f) Each Bank agrees to hold any confidential information which it
may receive from the Borrower pursuant to this Agreement in confidence,
except for disclosure (i) to its Affiliates and to other Banks and their
respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Bank, (iii) to regulatory officials, (iv) to
any Person as requested pursuant to or as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to
which such Bank is a party, (vi) to such Bank's direct or indirect
contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, and
(vii) permitted by this Section. Notwithstanding any other provision
herein, any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.05,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower furnished to such Bank by
or on behalf of Borrower; provided, that prior to any such disclosure, each
--------
such assignee or participant or proposed assignee or participant shall
agree to preserve the confidentiality of any confidential information
relating to Borrower received from such Bank to the same extent as required
by this Section.
59
(g) Assignment to Federal Reserve Bank. Notwithstanding any other
----------------------------------
language in this Agreement, any Bank may at any time assign all or any
portion of its rights under this Agreement and the Notes to a Federal
Reserve Bank as collateral in accordance with Regulation A and the
applicable operating circular of such Federal Reserve Bank.
9.06 Renewals and Extensions. All provisions of this Agreement relating
-----------------------
to the Notes shall apply with equal force and effect to each and all promissory
notes hereafter executed which in whole or in part represent a renewal,
extension, amendment, modification or rearrangement of any part of the
Indebtedness originally represented by the Notes.
9.07 No Waiver by the Administrative Agent, the Banks or the LC Issuer.
-----------------------------------------------------------------
No course of dealing on the part of the Administrative Agent, the Banks or the
LC Issuer, their officers or employees, nor any failure or delay by the
Administrative Agent, any Bank or the LC Issuer with respect to exercising any
of its rights, powers or privileges under this Agreement, the Notes, the
Facility LC Applications, the Security Instruments, or any other instrument
referred to herein or executed in connection with the Notes shall operate as a
waiver thereof. The rights and remedies of the Administrative Agent, the Banks
and the LC Issuer under this Agreement, the Notes, the Facility LC Applications,
the Security Instruments, or any other instrument referred to herein or executed
in connection with the Notes shall be cumulative and the exercise or partial
exercise of any such right or remedy shall not preclude the exercise of any
other right or remedy.
No Credit Extensions hereunder shall constitute a waiver of any of the
covenants or warranties of the Borrower contained herein or of any of the
conditions to the Banks' or the LC Issuer's obligation to make further Credit
Extensions hereunder. In the event that the Borrower is unable to satisfy any
such covenant, warranty or condition, no such Credit Extension shall have the
effect of precluding the Banks or the LC Issuer from thereafter declaring such
inability to be an Event of Default as hereinabove provided.
9.08 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE DEEMED TO BE
-------------
CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS.
9.09 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
---------------------------------------
attached to this Agreement are incorporated herein for all purposes and shall be
considered a part of this Agreement.
9.10 Survival Upon Unenforceability. In the event any one or more of the
------------------------------
provisions contained in this Agreement, the Notes, the Security Instruments, or
in any other instrument referred to herein or executed in connection with the
Notes shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof or of any other instrument referred to herein or
executed in connection herewith.
9.11 Rights of Third Parties. All provisions herein are imposed solely
-----------------------
and exclusively for the benefit of the Administrative Agent, the Banks, the LC
Issuer and Borrower and no other Person shall have standing to require
satisfaction of such provisions in accordance with their terms or be
60
entitled to assume that any Bank will refuse to make advances in the absence of
strict compliance with any or all thereof. Any or all of such provisions may be
freely waived in whole or in part by the Administrative Agent, the Banks and the
LC Issuer at any time if in their discretion they deem it advisable to do so.
9.12 Amendments or Modifications. Subject to the provisions of this
---------------------------
Section, the Required Banks (or the Administrative Agent with the consent in
writing of the Required Banks) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Banks or the Borrower
hereunder or waiving any Event of Default hereunder; provided, however, that:
(a) no such supplemental agreement shall, without the consent of all of
the Banks:
(i) Extend the final maturity of any Loan, postpone any regularly
scheduled payment of principal of any Loan, forgive all or any
portion of the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon;
(ii) Reduce the percentage specified in the definition of Required
Banks;
(iii) Extend the Facility Termination Date, or reduce the amount or
extend the payment date for, the mandatory payments required
under Sections 2.07 or 2.08, or increase the Aggregate
Commitment Amount or the Commitment of any Bank hereunder, or
permit the Borrower to assign its rights under this Agreement;
(iv) Amend the requirement that the Borrowing Base may be increased
only with the consent of all Banks;
(v) Release any Guarantor of any Loan or, except as provided in the
Security Instruments, release all or substantially all of the
Borrowing Base Oil and Gas Properties; or
(vi) Amend this Section 9.12; and
(b) no amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent.
9.13 Agreement Construed as an Entirety. This Agreement, for convenience
----------------------------------
only, has been divided into Articles and Sections and it is understood that the
rights, powers, privileges, duties and other legal relations of the parties
hereto shall be determined from this Agreement as an entirety and without regard
to the aforesaid division into Articles and Sections and without regard to
headings prefixed to said Articles or Sections.
61
9.14 Number and Gender. Whenever the context requires, reference herein
-----------------
made to the single number shall be understood to include the plural and likewise
the plural shall be understood to include the singular. Words denoting sex
shall be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the
general, but shall be construed as cumulative.
9.15 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS AGREEMENT, TOGETHER
-----------------------------------------
WITH THE NOTES, THE FACILITY LC APPLICATIONS, THE SECURITY INSTRUMENTS, AND ANY
OTHER WRITTEN INSTRUMENTS EXECUTED PURSUANT TO THIS AGREEMENT REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF, UNLESS SUCH PRIOR AGREEMENT IS EXPRESSLY
CONTINUED IN EFFECT UNDER THE TERMS HEREOF. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
9.16 Controlling Provision Upon Conflict. In the event of a conflict
-----------------------------------
between the provisions of this Agreement and those of the Notes, the Facility LC
Applications, the Security Instruments or any other instrument referred to
herein or executed in connection with the Notes, the provisions of this
Agreement shall control; provided if any of the Facility LC Applications or
Security Instruments contain any representations, warranties, or covenants of
the Borrower that are in addition to or are more restrictive on the Borrower
than those set forth in this Agreement, such additional or more restrictive
representations, warranties, and covenants shall control.
9.17 Time, Place and Method of Payments. All payments required pursuant
----------------------------------
to this Agreement or the Notes shall be made in immediately available funds;
shall be deemed received by the Administrative Agent on the next Business Day
following receipt if such receipt is after 4:00 p.m., on any Business Day, and
shall be made at the principal banking quarters of the Administrative Agent in
Houston, Texas.
9.18 Termination. This Agreement and the Aggregate Commitment Amount may
-----------
be canceled by the Borrower without premium or penalty prior to the Facility
Termination Date upon at least ten (10) days' prior written notice, provided,
--------
that the Obligations that are then due and payable are paid and performed in
full to the satisfaction of the Administrative Agent and the Banks; provided,
--------
however that any such cancellation hereunder shall not terminate any
- -------
obligations, representations or warranties of the Borrower to the Administrative
Agent and/or the Banks hereunder and under other Loan Documents that survive
beyond the Facility Termination Date. Upon the earlier to occur of the (i) the
Facility Termination Date, and (ii) cancellation of this Agreement and the
Aggregate Commitment Amount prior thereto in accordance with this Section 9.18
and upon payment and performance in full of the Obligations that are due and
payable to the satisfaction of the Banks, the Administrative Agent agrees, at
the Borrower's request and sole cost and expense, to execute and deliver any
such lien release documents and other documentation
62
reasonably requested by the Borrower to release or terminate the Administrative
Agent's liens and security interests hereunder and under the other Loan
Documents.
9.19 Non-Application of Chapter 346 of Texas Finance Code. The provisions
----------------------------------------------------
of Chapter 346 of the Texas Finance Code are specifically declared by the
parties hereto not to be applicable to this Agreement or any of the other
Security Instruments or to the transactions contemplated hereby.
9.20 Counterpart Execution. This Agreement may be executed as one
---------------------
instrument signed by all parties or in separate counterparts hereof, each of
which counterparts shall be considered an original and all of which shall be
deemed to be one instrument, and any signed counterpart shall be deemed
delivered by the party signing it if sent to any other party hereto by
electronic facsimile transmission.
9.21 Power of Attorney. To the fullest extent permitted by Law and until
-----------------
this Agreement is terminated in accordance with Section 9.18 hereof, Borrower
hereby appoints Administrative Agent as its attorney-in-fact (without requiring
the Administrative Agent to act as such) to execute any Security Instrument in
the name of the Borrower, and to perform all other acts that the Administrative
Agent deems appropriate to perfect and continue its liens, security interests,
and other rights in, and to protect and preserve, the Borrowing Base Oil and Gas
Properties and other collateral covered by or described in (or, as evidenced by
this Agreement, intended to have been covered by) any of the Security
Instruments, but only to the extent required of Borrower under the terms of this
Agreement.
9.22 Amended and Restated Agreement. This Agreement amends, extends,
------------------------------
rearranges and restates the Prior Credit Agreement. All Security Instruments
(as defined and executed pursuant to the Prior Credit Agreement) shall also
constitute Security Instruments as defined in this Agreement, and they shall
continue to secure all Obligations of Borrower to the Administrative Agent, the
Banks and the LC Issuer hereunder.
[Signature pages 64 and 65 follow]
63
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER
ULTRA RESOURCES, INC.
By: /s/ Michael D. Watford
----------------------------------------
Michael D. Watford
President and Chief Executive Officer
ADMINISTRATIVE AGENT, LC ISSUER AND BANK:
BANK ONE, NA
By: /s/ Stephen Shatto
---------------------------------------
Stephen Shatto
Vice President
SYNDICATION AGENT AND BANK:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Randy Osterberg
---------------------------------------
Randy Osterberg
Senior Vice President
By: /s/ Ali Ahmed
---------------------------------------
Ali Ahmed
Vice President
64
CO-AGENT AND BANK:
HIBERNIA NATIONAL BANK
By: /s/ Spencer Gagnet
----------------------------------------
Spencer Gagnet
Senior Vice President
CO-AGENT AND BANK:
GUARANTY BANK, FSB
By: /s/ Richard E. Menchaca
----------------------------------------
Richard E. Menchaca
Vice President
BANK:
COMPASS BANK
By: /s/ Murray Brasseux
----------------------------------------
Murray Brasseux
Executive Vice President
65
EXHIBIT "A"
BORROWING BASE
OIL AND GAS PROPERTIES
----------------------
This Exhibit A (together with the Borrowing Base Oil and Gas Properties, as
defined in this Agreement) sets forth the description of the Borrowing Base Oil
& Gas Properties covered by the Agreement to which this Exhibit is attached.
All of the terms defined in the Agreement are used in this Exhibit with the same
meanings given therein.
This Exhibit and the Agreement cover and include the following:
(a) All of Borrower's right, title and interest in and to the oil,
gas and mineral leases described herein (collectively the ALeases") and
lands described in and subject to such Leases (collectively the ALands"),
regardless of any surface acreage and/or depth limitations set forth in
this Exhibit, and all of Borrower's right, title and interest in and to any
of the oil, gas and minerals in, on or under the Lands described on this
Exhibit, including, without limitation, all contractual rights, fee
interests, leasehold interests, overriding royalty interests, non-
participating royalty interests, mineral interests, production payments,
net profits interests, or any other interest measured by or payable out of
production of oil, gas or other minerals from the Leases and/or Lands
described herein; and
(b) All of the foregoing interests of the Borrower as such interests
may be enlarged by the discharge of any payments out of production or by
the removal of any charges or encumbrances together with the Borrower's
interests in, to and under or derived from all renewals and extensions of
any oil, gas and mineral leases described herein, it being specifically
intended hereby that any new oil and gas lease (i) in which an interest is
acquired by the Borrower after the termination or expiration of any oil and
gas lease, the interests of the Borrower in, to and under or derived from
which are subject to the lien and security interest hereof, and (ii) that
covers all or any part of the property described in and covered by such
terminated or expired Leases, shall, to the extent, and only to the extent
such new oil and gas lease may cover such property, be considered a renewal
or extension of such terminated or expired lease; and
(c) All right, title and interest of Borrower in, to and under or
derived from any operating, farmout, and bidding agreements, assignments
and subleases, whether or not described in this Exhibit, to the extent, and
only to the extent, that such agreements, assignments and subleases (i)
cover or include any of the Borrower's present right, title and interest in
and to the leases and/or lands described in this Exhibit, or (ii) cover or
include any other undivided interests now or hereafter held by the Borrower
in, to and under the described leases and/or lands, including, without
limitation, any future operating, farmout and bidding agreements,
assignments, subleases and pooling, unitization and communitization
agreements and the units created thereby (including, without limitation all
units formed under orders, regulations, rules or other official acts of any
governmental body
1
or agency having jurisdiction) to the extent and only to the extent that
such agreements, assignments, subleases, or units cover or include the
described leases and/or lands; and
(d) All right, title, and interest of the Borrower in, to and under
or derived from all presently existing and future advance payment
agreements, oil, casinghead gas and gas sales, exchange, and processing
contracts and agreements including, without limitation, those contracts and
agreements that are described on this Exhibit to the extent, and only to
the extent, those contracts and agreements cover or include the described
Leases and/or Lands herein; and
(e) All right, title and interest of the Borrower in, to and under or
derived from all existing and future permits, licenses, easements and
similar rights and privileges that relate to or are appurtenant to any of
the described Leases and/or Lands.
Notwithstanding the intention of this Agreement to cover all of the right,
title and interest of Borrower in and to the described leases and/or lands,
except as expressly set forth herein Borrower hereby specifically warrants and
represents that the interests covered by this Exhibit are not greater than the
working interest nor less than the net revenue interest, overriding royalty
interest, net profit interest, production payment interest or other interest
payable out of or measured by production set forth in connection with each oil
and gas well described in this Exhibit. In the event the Borrower owns any
other or greater interest, such additional interest shall also be covered by and
included in this Agreement. The designation "Working Interest" or "W.I." means
an interest owned in an oil, gas, and mineral lease (including operating rights
and/or record title interest in oil and gas leases issued pursuant to the Outer
Continental Shelf Lands Act) that determines the cost bearing percentage of the
owner of such interest. The designation "Net Revenue Interest" or "NRI" means
net revenue interest, or that portion of the production attributable to the
owner of a working interest after deduction for all royalty burdens, overriding
royalty burdens, or other burdens on production, except severance, production,
windfall profits and other similar taxes. The designation "Overriding Royalty
Interest" or "ORRI" means an interest in production which is free of any
obligation for the expense of exploration, development and production, bearing
only its pro rata share of severance, production, windfall profits and other
similar taxes.
2
EXHIBIT "A"
SUBLETTE COUNTY, WYOMING
INSOFAR AND ONLY
LEASE INSOFAR AS LEASE
PROPERTY NAME WI NRI LEASE LESSEE DATE COVERS
Stud Horse Butte 13-14 18.84% 14.51% BLM WYW-127194 LIBERTY PETROLEUM 7/1/92 29N-108-14-S/2SW
Stud Horse Butte 1-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-N/2NE
Stud Horse Butte 7-21 14.34% 11.48% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SWNE
Stud Horse Butte 8-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SENE
Stud Horse Butte 9-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-NESE
Stud Horse Butte 1O-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-NWSE
Stud Horse Butte 11-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-N/2SW
Stud Horse Butte 13-21 14.84% 11.87% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SWSW
Stud Horse Butte 14-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SESW
Stud Horse Butte 15-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SWSE
Stud Horse Butte 16-21 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-SESE
Stud Horse Butte 1-23 22.55% 18.04% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NENE
Stud Horse Butte 2-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NWNE
Stud Horse Butte 3-23 25.10% 20.08% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NENW
Stud Horse Butte 4-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NWNW
Stud Horse Butte 5-23 23.81% 19.05% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SWNW
Stud Horse Butte 6-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SENW
Stud Horse Butte 7-23 25.32% 20.25% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SWNE
Stud Horse Butte 8-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SENE
Stud Horse Butte 9-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NESE
Stud Horse Butte 10-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NWSE
Stud Horse Butte 11-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NESW
Stud Horse Butte 12-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-NWSW
Stud Horse Butte 13-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SWSW
Stud Horse Butte 14-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SESW
Stud Horse Butte 15-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SWSE
Stud Horse Butte 16-23 63.75% 51.OO% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-23-SESE
Stud Horse Butte 1-24 16.59% 13.27% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NENE
1
INSOFAR AND ONLY
LEASE INSOFAR AS LEASE
PROPERTY NAME WI NRI LEASE LESSEE DATE COVERS
Stud Horse Butte 2-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NWNE
Stud Horse Butte 3-24 20.88% 16.71% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NENW
Stud Horse Butte 4-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NWNW
Stud Horse Butte 5-24 15.03% 12.03% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SWNW
Stud Horse Butte 6-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SENW
Stud Horse Butte 7-24 23.09% 18.47% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SWNE
Stud Horse Butte 8-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SENE
Stud Horse Butte 9-24 19.67% 15.73% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NESE
Stud Horse Butte 10-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-l08-24-NWSE
Stud Horse Butte 11-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NESW
Stud Horse Butte 12-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-NWSW
Stud Horse Butte 13-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SWSW
Stud Horse Butte 14-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SESW
Stud Horse Butte 15-24 21.52% 17.21% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SWSE
Stud Horse Butte 16-24 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-24-SESE
Stud Horse Butte Acreage 63.75% 51.00% BLM WYW-118155 ONAGER ENTERPRISES 12/1/89 29N-108-21-NW
Sherlock Federal 15-8 85.00% 66.30% BLM WYW-130234 H P MCLISH 9/1/93 33N-109W-8-S/2SE
Gannett 13-16 50.00% 40.00% ST WY 94-00293 CENEX INC 6/2/94 33N-109W-16-S/2SW
Pinedale 8-20 31.87% 26.37% BLM WYW-08593 GWEN KIEF 10/1/51 33N-109W-20-N/2SW
Stewart Point 3-28 9.67% 7.56% BLM WYW-08592 GWEN KEIF 10/1/51 33N-109W-28-N/2NW
Stewart Point 16-29 31.87% 24.92% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-29-SESE
Stewart Point 6-32 50.00% 38.85% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 33N-109W-32-S/2NW
Stewart Point 11-33 31.69% 24.76% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-33-E/2SW
Mesa 1-7 0.00% 0.43% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-7-N/2NE
Mesa 3-7 0.00% 0.32% BLM WYW-15315 MARY ALICE GUENZEL 6/1/52 32N-109W-7-NENW
Mesa 7-7 0.00% 0.25% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-7-S/2NE
Mesa 13-5 6.06% 4.61% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-5-SWSW
Mesa 15-6 6.11% 4.65% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-6-S/2SE
Mesa 5-8 7.36% 5.60% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-W/2NW
Mesa 7-8 27.34% 21.50% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-S/2NE
Mesa 15-8 42.50% 33.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-S/2SE
Mesa 3-20 42.50% 31.06% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-N/2NW
Mesa 11-20 27.03% 19.21% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-N/2SW
2
INSOFAR AND ONLY
LEASE INSOFAR AS LEASE
PROPERTY NAME WI NRI LEASE LESSEE DATE COVERS
Mesa 10-21D 19.38% 19.52% BLM WYW-135124 MERIDIAN OIL INC 2/1/95 32N-109W-21-NWSE
Mesa 9-21D 19.38% 19.52% BLM WYW-135124 MERIDIAN OIL INC 2/1/95 32N-109W-21-NESE
Mesa l6-21D 19.38% 19.52% BLM WYW-135124 MERIDIAN OIL INC 2/1/95 32N-109W-21-SESE
New Fork 11-24-Non Consent 0.00% 0.00% BLM WYW-06269 DONALD B ANDERSON 6/1/51 31N-109W-24-NESW
Mesa 3-22d 42.50% 33.71% BLM WYW-015317 R L MANNING 6/1/52 32N-109W-22-N/2NW
Pinedale 4A 63.75% 53.29% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-S/2NW
Cottonwood 32-33 100.00% 80.58% BLM WYW-114059 SHAMA KAFAR LIMITED 1/1/89 32N-111W-33-S/2NE
Lizard Head 11-8 75.00% 60.00% BLM WYW-118158 ONAGER ENTERPRISES 12/1/89 31N-108W-8-N/2SW
Riverside 2-2 85.00% 66.69% BLM WYW-06270 DONALD B. ANDERSON 6/1/51 31N-l09W-2-N/2NE
Riverside 1-4 68.00% 56.10% BLM WYW-143046 HIGH PLAINS ASSOC. 10/1/97 31N-109W-4-N/2NE
New Fork 7-3 15.94% 12.84% BLM WYW-06270 DONALD B. ANDERSON 6/1/51 31N-109W-3-S/2NE
Pinedale 13-l9 0.00% 1.28% BLM WYW-144993 FLOYD H SCHROEDER 6/1/51 31N-108W-19-S/2SW
Lizard Head 13-28 60.00% 48.00% BLM WYW-118159 ONAGER ENTERPRISES 12/1/89 31N-108W-28-S/2SW
Pinedale 13-2a 0.00% 1.28% BLM WYW-06270 DONALD B ANDERSON 6/1/51 31N-109W-2-S/2SW
Lovatt Draw 15-8 100.00% 80.00% BLM WYW-118166 ONAGER ENTERPRISES 12/1/89 31N-109W-8-S/2SE
Pinedale 1-14 0.00% 1.28% BLM WYW-06269 DONALD B ANDERSON 6/1/51 31N-109W-14-N/2NE
New Fork 13-10 0.00% 1.28% BLM WYW-15314 EDWIN L GUENZEL 6/1/52 30N-108W-10-S/2SW
Warbonnet 5-23 42.50% 31.21% BLM WYW-15314 EDWIN L GUENZEL 6/1/52 30N-108W-23-S/2NW
Warbonnet 9-23 37.50% 30.00% BLM WYW-118157 ONAGER ENTERPRISES 12/1/89 30N-108W-23-NESE
Warbonnet 15-23 37.50% 30.00% BLM WYW-118157 ONAGER ENTERPRISES 12/1/89 30N-108W-23-SWSE
Warbonnet 1-26d 42.50% 32.93% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-26-NENE
Warbonnet 2-26d 42.50% 32.70% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-26-NWNE
Warbonnet 8-26 42.50% 32.57% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-109W-26-S/2NE
Warbonnet 4-26 42.50% 33.03% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-26-N/2NW
Warbonnet 6-23 42.50% 31.06% BLM WYW-15314 EDWIN L GUENZEL 6/1/52 30N-108W-23-SENW
Warbonnet 7-4 85.00% 65.84% BLM WYW-015316 FRED M MANNING JR 6/1/52 30N-108W-4-S/2NE
Mesa 2-28d 42.50% 34.57% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-28-NWNE
Mesa 9-7 9.39% 7.48% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-7-N/2SE
Boulder 5-19 85.00% 66.69% BLM WYW-144993 FLOYD H SCHROEDER 6/1/51 31N-l08W-19-S/2NW
Stewart Point 9-29 31.36% 24.49% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-29-NESE
Stewart Point 9-33 31.1O% 24.28% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-33-E/2SE
Mesa 7-28 42.50% 34.58% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-28-SWNE
0477342.01
3
INSOFAR AND ONLY
LEASE INSOFAR AS LEASE
PROPERTY NAME WI NRI LEASE LESSEE DATE COVERS
Mesa 8-28 42.50% 34.58% BLM WYW-06286 DONALD B ANDERSON 6/l/51 32N-109W-28-SENE
Stewart Point 1-20 31.88% 25.50% BLM WYW-015315 MARY ALICE GUENZEL 6/l/52 33N-109W-20-N/2NE
Stewart Point 3-20 31.88% 25.50% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 33N-109W-20-N/2NW
Stewart Point 7-20 31.88% 25.50% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 33N-109W-20-S/2NE
Stewart Point 9-20 31.88% 25.50% BLM WYW-015315 MARY ALICE GUENZEL 6/l/52 33N-109W-20-N/2SE
Stewart Point 13-21 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-21-S/2SW
Stewart Point 5-28 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-28-S/2NW
Stewart Point 7-29 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-29-S/2NE
Stewart Point 15-29 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-29-SWSE
Stewart Point 13-28 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-28-SWSW
Stewart Point 12-28 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-28-NWSW
Stewart Point 10-29 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-29-NWSE
Stewart Point 2-32 33.75% 27.00% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-32-N/2NE
Stewart Point 13-33 31.88% 25.50% BLM WYW-08592 GWEN KIEF 10/1/51 33N-109W-33-W/2SW
Mesa 9-6 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-6-N/2SE
Mesa 11-6 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-6-N/2SW
Mesa 11-7 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-7-E/2SW
Mesa 15-7 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-7-S/2SE
Mesa 13-8 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-S/2SW
Mesa 3-8 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-E/2NW
Mesa 9-8 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-8-N/2SE
Mesa 11-8 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-1OSW-8-NESW
Mesa 1-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-N/2NE
Mesa 13-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-S/2SW
Mesa 11-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-N/2SW
Mesa 5-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-S/2NW
Mesa 7-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-SWNE
Mesa 15-17 27.63% 22.10% BLM WYW-08589 JEAN HARMON 10/1/51 32N-109W-17-S/2SE
Mesa 5-20 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-S/2NW
Mesa 7-20 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-S/2NE
Mesa 15-20 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-S/2SE
Mesa 5-21 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-21-S/2NW
4
INSOFAR AND ONLY
LEASE INSOFAR AS LEASE
PROPERTY NAME WI NRI LEASE LESSEE DATE COVERS
Mesa 1-20 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-N/2NE
Mesa 9-20 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-20-N/2SE
Mesa 15-21 19.38% 15.50% BLM WYW-135124 MERIDIAN OIL INC 2/1/95 32N-109W-21-SWSE
Mesa 14-21 27.63% 22.10% BLM WYW-015315 MARY ALICE GUENZEL 6/1/52 32N-109W-21-S/2SW
Mesa 1-28 42.50% 34.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-28-NENE
Mesa 9-28 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-28-NESE
Mesa 12-27 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-27-N/2SW
Mesa 10-28 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-28-NWSE
Mesa 2-34 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-N/2NE
Mesa 4-34 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-N/2NW
Mesa 10-34 63.87% 51.00% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-N/2SE
Mesa 12-34 15.94% 12.75% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-N/2SW
Riverside 6-2 63.87% 51.00% BLM WYW-06770 DONALD B ANDERSON 6/1/51 31N-109W-2-S/2NW
Riverside 11-2 15.94% 12.75% BLM WYW-06770 DONALD B ANDERSON 6/1/51 31N-109W-2-N/2SW
Riverside 9-3 63.87% 51.00% BLM WYW-06770 DONALD B ANDERSON 6/1/51 31N-109W-3-N/2SE
Riverside 1-10 63.87% 51.00% BLM WYW-143657 ULTRA RESOURCES INC 12/1/97 31N-109W-10-N/2NE
Riverside 3-11 63.87% 51.00% BLM WYW-143656 ULTRA RESOURCES INC 12/1/97 31N-109W-11-N/2NW
Riverside 1-3 15.94% 12.75% BLM WYW-06770 DONALD B ANDERSON 6/1/51 31N-109W-3-N/2NE
Riverside 3-3 63.87% 51.00% BLM WYW-06770 DONALD B ANDERSON 6/1/51 31N-109W-3-N/2NW
Mesa 13-34 15.94% 12.75% BLM WYW-06286 DONALD B ANDERSON 6/1/51 32N-109W-34-S/2SW
Warbonnet 1-22 85.00% 68.00% BLM WYW-15314 EDWIN L GUENZEL 6/1/52 30N-108W-22-N/2NE
Warbonnet 4-23 42.50% 34.00% BLM WYW-15314 EDWIN L GUENZEL 6/1/52 30N-108W-23-N/2NW
Warbonnet 10-23 37.50% 30.00% BLM WYW-118157 ONAGER ENTERPRISES 12/1/89 30N-108W-23-NWSE
Warbonnet 11-23 37.50% 30.00% BLM WYW-118157 ONAGER ENTERPRISES 12/1/89 30N-108W-23-N/2SW
Warbonnet 4-25 42.50% 34.00% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-25-NWNW
Warbonnet 6-25 85.00% 68.00% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-25-SENW
Warbonnet 5-25 85.00% 68.00% BLM WYW-016158 PHIL D HELMIG 7/1/52 30N-108W-25-SWNW
Warbonnet 16-23 37.50% 30.00% BLM WYW-118157 ONAGER ENTERPRISES 12/1/89 30N-108W-23-SESE
5
EXHIBIT "B"
REVOLVING NOTE
--------------
$________________ Houston, Texas March 1, 2002
On the dates hereinafter prescribed, for value received, ULTRA RESOURCES,
INC., a Wyoming corporation, (herein called "Borrower"), having an address at
16801 Greenspoint Park, Suite 370, Houston, Texas 77060, promises to pay to the
order of ___________ (herein called "Bank"), at its principal offices at
__________________________________, (i) the principal amount of U.S.
___________________________________ DOLLARS ($_______________) or the principal
amount advanced pursuant to the terms of the Credit Agreement (defined herein)
as of the date of maturity hereof, whether by acceleration or otherwise,
whichever may be the lesser, and (ii) interest on the principal balance from
time to time advanced and remaining unpaid from the date of the advance until
maturity at a rate of interest equal to lesser of (a) the "Floating Rate" (as
defined and calculated in the Credit Agreement), or (b) the Maximum Rate (as
defined and calculated in the Credit Agreement). Any increase or decrease in
interest rate resulting from a change in the Maximum Rate shall be effective
immediately when such change becomes effective, without notice to the Borrower,
unless Applicable Law (as defined in the Credit Agreement) requires that such
increase or decrease not be effective until a later time, in which event such
increase or decrease shall be effective at the earliest time permitted under the
provisions of such law.
Notwithstanding the foregoing, if during any period the Floating Rate
exceeds the Maximum Rate, the rate of interest in effect on this Note shall be
limited to the Maximum Rate during each such period, but at all times thereafter
the rate of interest in effect on this Note shall be the Maximum Rate or, if
there is no Maximum Rate, the Agreed Maximum Rate (as defined below), until the
total amount of interest accrued on this Note equals the total amount of
interest which would have accrued hereon if the Floating Rate had at all times
been in effect.
This Note is a revolving credit note and it is contemplated that by reason
of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrence, this Note shall remain valid and
in full force and effect as to each principal advance made hereunder subsequent
to each such occurrence. Each principal advance and each payment hereof made
pursuant to this Note shall be reflected by the Bank's records and the aggregate
unpaid amounts reflected by such records shall constitute rebuttably presumptive
evidence of the principal and unpaid, accrued interest remaining outstanding on
this Note.
"Agreed Maximum Rate" means a per annum rate of seven and three-fourths
percent (7.75%) plus the Floating Rate from time to time in effect, which Agreed
Maximum Rate shall apply only during any period while there is no Maximum Rate
applicable to this Note.
_________________________
Borrower's Initials
1
Other capitalized terms used herein, that are not defined herein, shall
have the meanings prescribed therefor in the Credit Agreement.
The Borrower and the Bank hereby agree that Chapter 346 of the Texas
Finance Code, shall not apply to this Note or the loan transaction evidenced by,
and referenced in, the Credit Agreement (hereinafter defined) in any manner,
including without limitation, to any account or arrangement evidenced or created
by, or provided for in, this Note.
The principal sum of this Note, after giving credit for unadvanced
principal, if any, remaining at final maturity, shall be due and payable on or
before March 1, 2005; interest to accrue upon the principal sum from time to
time owing and unpaid hereunder shall be due and payable as provided in the
Credit Agreement; provided, however, the final installment of interest hereunder
shall be due and payable not later than the maturity of the principal sum
hereof, howsoever such maturity may be brought about.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this Note.
The Bank and the Borrower specifically intend and agree to limit contractually
the interest payable on this Note to not more than an amount determined at the
Maximum Rate. Therefore, none of the terms of this Note or any other
instruments pertaining to or securing this Note shall ever be construed to
create a contract to pay interest at a rate in excess of the Maximum Rate, and
neither the Borrower nor any other party liable herefor shall ever be liable for
interest in excess of that determined at the Maximum Rate, and the provisions of
this paragraph shall control over all provisions of this Note or of any other
instruments pertaining to or securing this Note. If any amount of interest
taken or received by the Bank shall be in excess of the maximum amount of
interest which, under Applicable Law, could lawfully have been collected on this
Note, then the excess shall be deemed to have been the result of a mathematical
error by the parties hereto and shall be refunded promptly to the Borrower. All
amounts paid or agreed to be paid in connection with the indebtedness evidenced
by this Note which would under Applicable Law be deemed Ainterest" shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout the full term of this Note.
This Note is secured by all security agreements, collateral assignments,
mortgages and lien instruments executed by the Borrower (or by any other party)
in favor of Bank One, NA, as Administrative Agent for the Bank, including those
executed simultaneously herewith, those executed heretofore and those hereafter
executed, and including specifically and without limitation the Security
Instruments described and defined in that certain Credit Agreement dated as of
March 22, 2000 by and between Borrower, Ultra Petroleum (USA) Inc., and Bank
One, Texas, National Association, as amended by that certain First Amendment to
Credit Agreement dated as of July 19, 2001 by and between Borrower and Bank One,
NA, and as amended and restated by that certain First Amended and Restated
Credit Agreement dated March 1, 2002 by and among Borrower, Bank One,
_________________________
Borrower's Initials
2
NA, as the Administrative Agent, as a Bank and as LC Issuer, and the several
other banks and financial institutions who are from time to time party thereto
as Banks (the "Credit Agreement").
This Note is the Revolving Note issued pursuant to the Credit Agreement.
Reference is hereby made to the Credit Agreement for a statement of the rights
and obligations of the holder of this Note and the duties and obligations of the
Borrower in relation thereto; but neither this reference to the Credit Agreement
nor any provisions thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay any outstanding and unpaid principal of and
interest on this Note when due, in accordance with the terms of the Credit
Agreement. Each advance and each payment made pursuant to this Note shall be
reflected by notations made by the Bank on its records and the aggregate unpaid
amounts reflected by the notations on the records of the Bank shall be deemed
rebuttably presumptive evidence of the principal amount owing under this Note.
In the event of default in the payment when due of any of the principal of
or any interest on this Note, or in the event of default under the terms of the
Credit Agreement or any of the Security Instruments, or if any event occurs or
condition exists which authorizes the acceleration of the maturity of this Note
under any agreement made by the Borrower, the Bank (or other holder of this
Note) may, at its option, without presentment or demand or any notice to the
Borrower or any other person liable herefor, declare the unpaid principal
balance of and accrued interest on this Note to be immediately due and payable.
If this Note is collected by suit or through the Probate or Bankruptcy
Court, or any judicial proceeding, or if this Note is not paid at maturity,
however such maturity may be brought about, and is placed in the hands of an
attorney for collection, then the Borrower agrees to pay reasonable and
documented attorneys' fees, not to exceed 10% of the full amount of principal
and interest owing hereon at the time this Note is placed in the hands of an
attorney.
The Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, notice of intent to accelerate maturity, notice of acceleration of
maturity, and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, and agree to any substitution,
exchange or release of any such security or the release of any party primarily
or secondarily liable hereon and further agrees that it will not be necessary
for the Bank, in order to enforce payment of this Note by them, to first
institute suit or exhaust its remedies against any Borrower or others liable
herefor, or to enforce its rights against any security herefor, and consent to
any one or more extensions or postponements of time of payment of this Note on
any terms or any other indulgences with respect hereto, without notice thereof
to any of them. The Bank may transfer this Note, and the rights and privileges
of the Bank under this Note shall inure to the benefit of the Bank's
representatives, successors or assigns.
This Note amends, extends, rearranges and restates that certain Reducing
Revolving Note executed effective as of July 19, 2001, in the original principal
amount of $100,000,000.00 executed
_________________________
Borrower's Initials
3
by ULTRA RESOURCES, INC. and payable to the order of Bank One, NA, which itself
amended, extended, rearranged and restated that certain Reducing Revolving Note
dated March 22, 2000, in the face amount of $40,000,000.00 executed by ULTRA
PETROLEUM (USA) INC. and ULTRA RESOURCES, INC., payable to the order of Bank
One, Texas, National Association, (the "Prior Notes"). All liens and security
interests that exist to secure the indebtedness evidenced by that Prior Notes
shall continue in force and effect to secure the indebtedness evidenced by this
Note.
Executed as of the date and year first set forth above.
ULTRA RESOURCES, INC.
Attest:
______________________________ By:__________________________
Charlotte H. Kauffman Michael D. Watford
Secretary President and CEO
4
EXHIBIT "C"
Compliance Certificate
----------------------
I, the President of ULTRA RESOURCES, INC. (the "Company"), pursuant to
Section 5.05 of the First Amended and Restated Credit Agreement dated as of
March 1, 2002, by and among the Company, BANK ONE, NA, as Administrative Agent,
a Bank and the LC Issuer, and the other Banks that become party thereto (the
"Agreement") do hereby certify, as of the date hereof, that to my knowledge:
(a) No Event of Default (as defined in the Agreement) or Unmatured Event
Of Default (as defined in the Agreement) has occurred and is
continuing except for the following events (include actions taken to
cure such situations):
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________________________________________________________;
(b) No Material Adverse Change has occurred since the effective date of
the latest audited consolidated Financial Statements of the Company
delivered to the Administrative Agent;
(c) Except as otherwise stated in the Schedule, if any, attached hereto,
each of the representations and warranties of the Company contained in
Article IV of the Agreement is true and correct in all respects
[include on the attached Schedule, if any, any qualifications to the
representations in Section 4.07 of the Agreement that have occurred
since the date of the last Compliance Certificate]; and
(d) The Company's consolidated financial condition for the quarter ending
__________ is as follows:
1
Actual
Date or Time Required Ratio or Ratio or
Financial Covenant Period Amount Amount
======================== ============== ====================================== ===========
(a) Consolidated Tangible Term of Loan not * $80,000,000.00 plus 75% of
---- _______
Net Worth Ultra Petroleum Corp.'s (as defined
in the Agreement) positive
consolidated Net Income, if any,
accrued during each calendar quarter
subsequent to 9/30/01, calculated
cumulatively as of the end of each
fiscal quarter of Ultra Petroleum
Corp. beginning with the quarter
ending 12/31/01, with no reduction
for negative Net Income during any
such quarter, plus 100% of any
increase in Stockholder=s Equity
resulting from the sale or issuance
of stock in Ultra Petroleum Corp. or
any of its Subsidiaries subsequent to
12/31/01.
(b) Current Ratio for any Term of Loan not * 1.00 to 1.00, calculated based ________
fiscal quarter on both: (a) the Consolidated
Financial Statements (as defined in
the Agreement), and (b) the
consolidating financial statements
applicable to Borrower, which form a
part of the Consolidated Financial
Statements.
(c) Ratio of EBITDA to Term of Loan not * 4.50 to 1.00, calculated on a ________
interest expense on all rolling four (4) quarter basis and
Indebtedness as of the based on both: (a) the Consolidated
end of each fiscal Financial Statements, and (b) the
quarter consolidating financial statements
applicable to Borrower, which form a
part of the Consolidated Financial
Statements.
(d) General & Term of Loan not ** 25% of gross Production _______
Administrative Expenses Revenue, calculated based on the
Consolidated Financial Statements
* Less than
** More than
2
Actual
Date or Time Required Ratio or Ratio or
Financial Covenant Period Amount Amount
======================== ============== ====================================== ===========
(e) Intercompany Transfers During not ** $17,500,00.00, without the _______
to Sino-American Energy calendar year prior written approval of the
Corporation 2002 Required Banks
(f) Intercompany Transfers During each not ** $25,000,000.00, without the _______
to Sino-American Energy calendar year prior written approval of the
Corporation beginning Required Banks
with calendar
year 2003
This certificate is executed this _____ day of_________,_____.
ULTRA RESOURCES, INC.
By:________________________________
________________________________
President and CEO
* Less than
** More than
3
EXHIBIT "D"
SECURITY INSTRUMENTS
--------------------
The Security Instruments securing the Borrower's Obligations and
Indebtedness to the Banks shall include the following, each in form and
substance satisfactory to the Administrative Agent, on behalf of the Banks:
1. ACT(s) OF MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING AND
ASSIGNMENT OF PRODUCTION covering the Borrowing Base Oil and Gas Properties
situated in the State of Wyoming, the personal property and equipment therein
and thereon, the production of oil, gas, and other minerals therefrom, and all
of the products and proceeds thereof, such Mortgages to be duly executed by
Borrower with respect to all of the Borrowing Base Oil and Gas Properties.
2. SECURITY AGREEMENT granting the Administrative Agent, on behalf of
the Banks, a first priority security interest in all of the Borrower's
as-extracted oil and gas, accounts, equipment, machinery, fixtures, inventory,
chattel paper, documents, instruments and general intangibles relating to or
arising out of the Oil and Borrowing Base Oil and Gas Properties and the
business of the Borrower, whether now owned or hereafter acquired, and all
products and proceeds thereof.
3. FINANCING STATEMENTS in connection with the Security Instruments
described in the preceding paragraphs, in form and number satisfactory to the
Administrative Agent, on behalf of the Banks, as the Administrative Agent may
specify from time to time (including additional or supplemental financing
statements, amendments thereto, and continuation statements thereof).
4. PRIOR SECURITY INSTRUMENTS. All Security Instruments (as defined in
the Prior Credit Agreement) shall continue to secure Borrower's Obligations
arising under this Agreement.
5. OTHER SECURITY INSTRUMENTS. Such other instruments as are necessary
or appropriate from time to time, in the good faith opinion of the
Administrative Agent, to perfect to the satisfaction of the Administrative Agent
the Banks' liens, security interests, and other rights in the Borrowing Base Oil
and Gas Properties and in any and all other collateral covered by or described
in (or, as evidenced by the Agreement, intended to have been covered by) any of
the other Security Instruments described above.
1
EXHIBIT "E"
REQUEST FOR ADVANCE
-------------------
I, the undersigned officer of ULTRA RESOURCES, INC. (the "Company"),
pursuant to Section 2.01 of the First Amended and Restated Credit Agreement
dated as of March 1, 2002, as amended from time to time (the "Agreement"), by
and between BANK ONE, NA ("Administrative Agent"), the banks and other financial
institutions from time to time parties to the Agreement (the "Banks"), the LC
Issuer, and the Company, do hereby make the requests indicated below on this
____ day of _________, 200__:
[_] 1. Loans:
(a) Amount of new Loan: $____________
(b) Requested funding date: _________, 200_
(c) $____________ of such Loan is to be an ABR Loan;
$____________ of such Loan is to be a LIBOR Loan.
Requested Interest Period for LIBOR Loan: ________ months.
[_] 2. Continuation or conversion of LIBOR Loan maturing on ______, 200_:
(a) Amount to be continued as a LIBOR Loan is $ ___________, with
an Interest Period of __ months;
(b) Amount to be converted to an ABR Loan is $ ________.
[_] 3. Conversion of Prime Rate Loan:
(a) Requested conversion date: ________ , 200__.
(b) Amount to be converted to a LIBOR Loan is $ __________ ,
with an Interest Period of __ months.
4. The undersigned certifies that the funds advanced from the Banks
to the Company pursuant to paragraphs 1 through 3 hereof, as
applicable, shall be used by the Company solely for the purposes
permitted by the Agreement.
1
5. The undersigned certifies that to my knowledge after reasonable
inquiry into the applicable facts, as of the date hereof, the
Company is in compliance with all of the representations,
warranties, terms, conditions and covenants contained in the
Agreement and no Event of Default or Unmatured Event of Default
has occurred and is continuing under the Agreement.
6. The undersigned certifies that to my knowledge after reasonable
inquiry into the applicable facts, as of the date hereof, no
Material Adverse Change has occurred since the effective date of
the latest audited Financial Statements of the Company delivered
to the Administrative Agent;
This certificate is executed this ____ day of ___________, 200__.
ULTRA RESOURCES, INC.
By: __________________________________
Name:_________________________________
Title:________________________________
2
Schedule 1.01(b)
----------------
Commitment Amounts and Aggregate Commitment Amount
--------------------------------------------------
Percentage Commitment
Bank Share Amount
---- ----- ------
Bank One, NA 26.250% $39,375,000.00
Union Bank of California, N.A. 23.750% $35,625,000.00
Hibernia National Bank 21.250% $31,875,000.00
Guaranty Bank, FSB 21.250% $31,875,000.00
Compass Bank 7.500% $11,250,000.00
-----------------
Aggregate Commitment Amount: $150,000,000.00
---------------------------
1
SCHEDULE 4.01
INFORMATION REGARDING THE BORROWER AND ITS SUBSIDIARIES
. States qualified to do business in: Wyoming, Texas and Colorado
. Addresses of places of business:
16801 Greenspoint Park Drive 304 Inverness Way South
Suite 370 Suite 295
Houston, Texas 77060 Englewood, Colorado 80112
1200 Summit Avenue
Suite 700
Fort Worth, Texas 76102
. Name change, merger, acquired business:
January 16, 2001 Ultra Petroleum Corp. merged with Pendaries Petroleum Ltd.
through an amalgamation with Ultra Petroleum Corp. the surviving entity.
July 16, 2001 Ultra Petroleum Corp. and its subsidiaries Ultra Resources,
Inc., Ultra Petroleum (USA) Inc., Pendaries Petroleum Ltd. and Sino-
American Energy Corporation effectuated a reorganization in which Ultra
Petroleum Corp., as the parent now owns 100% of UP Energy Corporation, a
Nevada corporation which owns 100% of Ultra Resources, Inc. and 100% of
Sino-American Energy Corporation. Thus Ultra Petroleum (USA) Inc. merged
into Ultra Resources, Inc. and Pendaries Petroleum Ltd. was dissolved.
SCHEDULE 4.07
OIL AND GAS CONTRACTS
None
SCHEDULE 4.09
PURCHASE OF PRODUCTION
Duke Energy Field Services
Gregory C. Scoggin -- Manager, Business Development - Wyoming
370 17/th/ Street
Suite 900
Denver, CO 80202
303/605-1685 Phone
303/605-1671 Fax
Questar Energy Trading
John Ruskauff -- Senior Marketing Representative
180 East 100 South
P.O. Box 45601
Salt Lake City, UT 84145-0601
801/324-2612 Phone
801/599-6447 Cell
Sempra Energy Trading
Damon Suter, Vice President
1516 Brookhollow Drive
Santa Ana, CA 92705
714/241-1500 Phone
714/430-9210 Fax
714/264-4371 Cell
Headquarters:
58 Commerce Road
Stamford, CT 06902
203/355-5062 Phone
203/355-5010 Fax
Western Gas Resources, Inc.
Mark Malinowski, Sr. Marketing Representative
Rocky Mountain Region
12200 N. Pecos Street
Denver, CO 80234
303/452-5603 Phone
303/450-8356 Direct
303/457-9748 Fax
SCHEDULE 4.11
ENVIRONMENT IMPACT STATEMENT
The Environmental Impact Statement for Pinedale Anticline Oil and Gas
Exploration and Development Project, Sublette County, Wyoming prepared by the
Bureau of Land Management was previously delivered to Bank One, NA on March 22,
2000 by Ultra Resources, Inc. in regards to closing on the original Credit
Agreement dated March 22, 2000.
SCHEDULE 4.14
EXISTING INDEBTNESS
Bank One Texas N. A. - $50MM
SCHEDULE 4.15
MATERIAL COMMITMENTS
None
SCHEDULE 4.21
INSURANCE CERTIFICATE
See Attached
Client#: 41509 ULTRA
- ------------------------------------------------------------------------------------------------------------------------------------
ACORD(TM) CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YY)
02/28/01
- ------------------------------------------------------------------------------------------------------------------------------------
PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND
Higginbotham & Assoc., Inc. CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
P.O. Box 908 CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE
Fort Worth, TX 76101 AFFORDED BY THE POLICIES BELOW.
817 336-2377 ---------------------------------------------------------------
INSURERS AFFORDING COVERAGE
- ------------------------------------------------------------------------------------------------------------------------------------
INSURED INSURER A: St. Paul Surplus Lines Ins Co.
---------------------------------------------------------------
Ultra Resources, Inc. INSURER B: St. Paul Fire & Marine Ins Co.
---------------------------------------------------------------
304 Inverness Way South, Suite 295 INSURER C:
Englewood, CO 80112 ---------------------------------------------------------------
INSURER D:
---------------------------------------------------------------
INSURER E:
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGES
- ------------------------------------------------------------------------------------------------------------------------------------
THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING
ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY
PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH
POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE POLICY EXPIRATION
TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
- ------------------------------------------------------------------------------------------------------------------------------------
A GENERAL LIABILITY MU05531493 06/26/01 06/26/02 EACH OCCURRENCE $ 1,000,000
[X] COMMERCIAL GENERAL LIABILITY -----------------------------------------
[_] CLAIMS MADE [X] OCCUR FIRE DAMAGE (Any one fire) $ 100,000
_______________________ -----------------------------------------
MED EXP (Any one person) $ 5,000
_______________________ -----------------------------------------
PERSONAL & ADV INJURY $ 1,000,000
-----------------------------------------
GENERAL AGGREGATE $ 2,000,000
-----------------------------------------
PRODUCTS-COMP/OP AGG $ 1,000,000
GEN'L AGGREGATE LIMIT APPLIES PER: -----------------------------------------
[_] POLICY [_] PROJECT [_] LOC
- ------------------------------------------------------------------------------------------------------------------------------------
A AUTOMOBILE LIABILITY MU05531493 06/26/01 06/26/02
[_] ANY AUTO COMBINED SINGLE LIMIT
[_] ALL OWNED AUTOS (Ea accident) $ 1,000,000
[_] SCHEDULED AUTOS -----------------------------------------
[X] HIRED AUTOS BODILY INJURY
[X] NON-OWNED AUTOS (Per person) $
_______________________ -----------------------------------------
BODILY INJURY
(Per accident) $
-----------------------------------------
PROPERTY DAMAGE
(Per accident) $
- ------------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY-EA ACCIDENT $
[_] ANY AUTO -----------------------------------------
EA ACC $
-------------------------
OTHER THAN
AUTO ONLY: AGG $
- ------------------------------------------------------------------------------------------------------------------------------------
A EXCESS LIABILITY MU05571008 06/26/01 06/26/02 EACH OCCURRENCE $10,000,000
[X] OCCUR [_] CLAIMS MADE -----------------------------------------
[_] DEDUCTIBLE AGGREGATE $10,000,000
[X] RETENTION $10000 -----------------------------------------
$
-----------------------------------------
$
-----------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION AND WC STATU- OTH-
EMPLOYERS' LIABILITY TORY LIMITS ER
-----------------------------------------
E.L. EACH ACCIDENT $
-----------------------------------------
E.L. DISEASE-EA EMPLOYEE $
-----------------------------------------
E.L. DISEASE-POLICY LIMIT $
- ------------------------------------------------------------------------------------------------------------------------------------
A OTHER Control of MU05504887 06/26/01 06/26/02 $10,000,000 Drilling
Well $ 5,000,000 Producing
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISIONS
Blanket Waiver of Subrogation and Blanket Additional Insured, as regards GL and Umbrella, if required by written contract.
GL & Umbrella policies include XCU coverages.
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER ADDITIONAL INSURED; INSURER LETTER CANCELLATION
- ------------------------------------------------------------------------------------------------------------------------------------
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
Bank One, NA EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL
as Administrative Agent 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,
Attn: Steven Shatto BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY
910 Travis, 6th Floor KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES.
Houston, Texas 77002 --------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ James R. Rid
- ------------------------------------------------------------------------------------------------------------------------------------
ACORD 25-S (7/97) 1 of 2 #S75138/M65525 LOC (C) ACORD CORPORATION 1988
COMMITMENT TRANSFER SUPPLEMENT
------------------------------
THIS COMMITMENT TRANSFER SUPPLEMENT (this "Commitment Transfer
Supplement") dated as of the date set forth in Item 1 of Schedule I hereto, is
----------
among the Transferor Bank set forth in Item 2 of Schedule I hereto (the
----------
"Transferor Bank"), each Purchasing Bank set forth in Item 3 of Schedule 1 (each
--------------- ----------
a "Purchasing Bank"), and BANK ONE, N.A., as Administrative Agent for the Banks
---------------
under, and as defined in, the Credit Agreement described below (in such
capacity, the "Administrative Agent").
--------------------
RECITALS
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 9.05(c) of the First Amended and Restated
---------------
Credit Agreement dated as of March 1, 2002, by and among ULTRA RESOURCES, INC.,
a Wyoming corporation ("Borrower"), the Transferor Bank and the other Banks
--------
party thereto and the Administrative Agent (as from time to time amended,
supplemented or otherwise modified in accordance with the terms thereof, the
"Credit Agreement"; terms defined therein being used herein as therein defined);
----------------
WHEREAS, each Purchasing Bank (if it is not already a Bank party to the
Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
GENERAL TERMS
Section 1. Upon receipt by the Administrative Agent of five
counterparts of this Commitment Transfer Supplement, to each of which is
attached a fully completed Schedule I and Schedule II, and each of which has
---------- -----------
been executed by the Transferor Bank, each Purchasing Bank (and any other person
required by the Credit Agreement to execute this Commitment Transfer
Supplement), the Administrative Agent will transmit to the Borrower, the
Transferor Bank and each Purchasing Bank a Transfer Effective Notice,
substantially in the form of Schedule III to this Commitment Transfer Supplement
------------
(a "Transfer Effective Notice"). Such Transfer Effective Notice shall set forth,
-------------------------
inter alia, the date on which the transfer effected by this Commitment Transfer
- ----- ----
Supplement shall become effective (the "Transfer Effective Date"), which date
-----------------------
shall be at least five (5) Business Days following the date of such Transfer
Effective Notice. From and after the Transfer Effective Date each Purchasing
Bank shall be a Bank party to the Credit Agreement for all purposes thereof.
Section 2. At or before 12:00 Noon, local time of the Transferor Bank,
on the Transfer Effective Date, each Purchasing Bank shall pay to the Transferor
Bank, in immediately available funds, an amount equal to the purchase price, as
agreed between the Transferor Bank and such Purchasing Bank (the "Purchase
--------
Price"), of the portion being purchased by such Purchasing Bank (such Purchasing
- -----
Bank's "Purchased Percentage") of the outstanding Credit Extensions and other
--------------------
amounts owing to the Transferor Bank under the Credit Agreement and the Notes.
Effective upon receipt by the Transferor Bank of the Purchase Price from a
Purchasing Bank, the Transferor Bank hereby irrevocably sells, assigns and
transfers to such Purchasing Bank, without recourse, representation or warranty,
and each Purchasing Bank hereby irrevocably purchases, takes and assumes from
the Transferor Bank, such Purchasing Bank's Purchased Percentage of the
Commitment of the Transferor Bank and the presently outstanding Credit
Extensions and other amounts owing to the Transferor Bank under the Credit
Agreement and the Notes together with all instruments, documents and collateral
security pertaining thereto.
Section 3. The Transferor Bank has made arrangements with each
Purchasing Bank with respect to (a) the portion, if any, to be paid, and the
date or dates for payment, by the Transferor Bank to such Purchasing Bank of any
fees heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date, and (b) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.
Section 4. (a) All principal payments that would otherwise be payable
from and after the Transfer Effective Date to or for the account of the
Transferor Bank pursuant to the Credit Agreement and the Notes shall, instead,
be payable to or for the account of the Transferor Bank and the Purchasing
Banks, as the case may be, in accordance with their respective interests as
reflected in this Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue
for the account of the Transferor Bank from and after the Transfer Effective
Date pursuant to the Credit Agreement and the Notes shall, instead, accrue for
the account of, and be payable to, the Transferor Bank and the Purchasing Banks,
as the case may be, in accordance with their respective interests as reflected
in this Commitment Transfer Supplement.
(c) In the event that any amount of interest, fees or other amounts
accruing prior to the Transfer Effective Date was included in the Purchase Price
paid by any Purchasing Bank, the Transferor Bank and each Purchasing Bank will
make appropriate arrangements for payment by the Transferor Bank to such
Purchasing Bank of such amount upon receipt thereof from the Borrower.
Section 5. On or prior to the Transfer Effective Date, the Transferor
Bank will deliver to the Administrative Agent its Note. Within five (5) Business
Days after Borrower's receipt of notice from Administrative Agent of
Administrative Agent's receipt of this Commitment Transfer Supplement, the
Borrower will deliver to the Administrative Agent, in exchange for the
surrendered Note from the Transferor Bank, a new Note for each Purchasing Bank
and the Transferor Bank, to
-2-
the extent the Transferor Bank has retained any of its Commitment, in each case
in principal amounts reflecting, in accordance with the Credit Agreement, their
respective Commitment Amounts (as adjusted pursuant to this Commitment Transfer
Supplement). As provided in Section 9.05(e) of the Credit Agreement, each such
---------------
new Note shall be dated the date of the original Note delivered pursuant to the
Credit Agreement (the "Effective Date"). Promptly after the Transfer Effective
--------------
Date, the Administrative Agent will send to each of the Transferor Bank and the
Purchasing Banks its new Note and will send to the Borrower the superseded Note
of the Transferor Bank, marked "Canceled" or "Replaced" as appropriate.
Section 6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) conformed copies of all documents in the
Transferor Bank's possession that were delivered to the Administrative Agent on
the Effective Date in satisfaction of the conditions precedent set forth in the
Credit Agreement.
Section 7. Each of the parties to this Commitment Transfer Supplement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Commitment Transfer Supplement.
Section 8. By executing and delivering this Commitment Transfer
Supplement, the Transferor Bank and each Purchasing Bank confirm to and agree
with each other and the Administrative Agent and the Banks as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Notes, any other Loan Document or any other instrument or
document furnished pursuant thereto; (ii) the Transferor Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Credit Agreement, the Notes, any
other Loan Document or any other instrument or document furnished pursuant
hereto; (iii) each Purchasing Bank confirms that it has received a copy of the
Credit Agreement, together with copies of the Financial Statements referred to
in Section 3.1(D), the Financial Statements delivered pursuant to Sections 5.03
-------------- -------------
and 5.04, if any, and such other documents and information as it has deemed
- --------
appropriate to make its own credit analysis and decision to enter into this
Commitment Transfer Supplement; (iv) each Purchasing Bank will, independently
and without reliance upon the Administrative Agent, the Transferor 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 the Credit Agreement; (v) each Purchasing Bank appoints
and authorizes the Administrative Agent to take such action as Administrative
Agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, all in accordance with Article
-------
VIII of the Credit Agreement; and (vi) each Purchasing Bank agrees that
- ----
-3-
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank.
Section 9. Each party hereto represents and warrants to and agrees with
the Administrative Agent that it is aware of and will comply with the provision
of Section 2.16 of the Credit Agreement.
------------
Section 10. Schedule II hereto sets forth the revised Commitment
-----------
Amounts and Percentage Shares of the Transferor Bank and each Purchasing Bank as
well as administrative information with respect to each Purchasing Bank.
SECTION 11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item I of Schedule I hereto.
----------
-4-
Schedule I to
Commitment Transfer Supplement
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
-------------------
Re: First Amended and Restated Credit Agreement dated as of March 1,
2002 among Ultra Resources, Inc., the Banks, and Bank One, N.A.,
as Administrative Agent for the Banks thereunder.
Item 1 (Date of Commitment Transfer
Supplement): [Insert date of Commitment Transfer
Supplement]
Item 2 (Transferor Bank): [Insert name of Transferor Bank]
Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]]
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement): _________________, as Transferor Bank
By:___________________________________
Title:________________________________
_________________, as Purchasing Bank
By:___________________________________
Title:________________________________
__________________, as Purchasing Bank
By:___________________________________
Title:________________________________
CONSENTED TO AND ACKNOWLEDGED:
ULTRA RESOURCES, INC.
By:___________________________________
Title:________________________________
BANK ONE, NA,
as Administrative Agent
By:___________________________________
Title:________________________________
[Consents Required only when
Purchasing Bank is not already
a Bank or Affiliate thereof]
ACCEPTED FOR RECORDATION
IN REGISTER:
BANK ONE, NA,
as Administrative Agent
By:___________________________________
Title:________________________________
-2-
Schedule II to
Commitment Transfer Supplement
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
----------------------------------
[Name of Transferor Bank]
Revised Commitment Amount: $_____________
-------------------------
Revised Commitment Percentage: ______________
-----------------------------
[Name of Purchasing Bank]
New Commitment Amount: $_____________
---------------------
New Commitment Percentage: ______________
-------------------------
Address for Notices:
- -------------------
[address]
Attention:______________
Telex:__________________
Answer back:____________
Telephone:______________
Telecopier:_____________
Lending Office:
- --------------
________________________
________________________
________________________
[Form of Transfer Effective Notice]
Schedule III to
Commitment Transfer Supplement
To: [Insert Name of Borrower, Transferor Bank and each Purchasing
Bank]
The undersigned, as Administrative Agent under the First Amended and
Restated Credit Agreement dated as of March 1, 2002, among Ultra Resources, Inc.
("Borrower"), the Banks and other financial institutions from time to time
parties thereto and Bank One, N.A., as Administrative Agent, acknowledges
receipt of five executed counterparts of a completed Commitment Transfer
Supplement, as described in Schedule I hereto. [Note: attach copy of Schedule
I from Commitment Transfer Supplement.] Terms defined in such Commitment
Transfer Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be [Insert fifth Business Day
following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver its Note to the Administrative Agent on or
before the Transfer Effective Date.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the fifth
(5/th/) Business Day from its receipt of this notice, in return for the
Note surrendered to the Administrative Agent by the Transferor Bank, the
following Notes [Describe each Note for Transferor Bank and Purchasing Bank
as to principal amount and payee], dated [March 1, 2002].
4. Pursuant to such Commitment Transfer Supplement each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or
before 12:00 Noon on the Transfer Effective Date in immediately available
funds.
Very truly yours,
BANK ONE, NA, as Administrative Agent
By:________________________________________
Title:_____________________________________