Exhibit 10.1
______________________________________________________________________________
CREDIT AGREEMENT
AMONG
CEP-M PURCHASE, LLC
AMEGY BANK NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
AND LETTER OF CREDIT ISSUER
AND
THE LENDERS SIGNATORY HERETO
NOVEMBER 19, 2010
______________________________________________________________________________
REVOLVING LINE OF CREDIT AND LETTER OF CREDIT FACILITY
OF UP TO $75,000,000
______________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION 1
1.1 Terms Defined Above 1
1.2 Additional Defined Terms 1
1.3 Undefined Financial Accounting Terms 16
1.4 References 16
1.5 Articles and Sections 17
1.6 Number and Gender 17
1.7 Incorporation of Schedules and Exhibits 17
1.8 Negotiated Transaction 17
ARTICLE II TERMS OF FACILITY 17
2.1 Revolving Line of Credit and Letter of Credit Facility 17
2.2 Limitations on Interest Periods 21
2.3 Limitation on Types of Loans 21
2.4 Use of Loan Proceeds and Letters of Credit 21
2.5 Interest 22
2.6 Repayment of Loans and Interest 22
2.7 Outstanding Amounts 23
2.8 Taxes and Time, Place, and Method of Payments 23
2.10 Borrowing Base and Monthly Reduction Amount. 27
2.11 Mandatory Prepayments 28
2.12 Voluntary Prepayments and Conversions of Loans 28
2.13 Commitment Fees 29
2.14 Engineering Fees and Expenses 29
2.15 Additional Fees 29
2.16 Loans to Satisfy Obligations 30
2.17 General Provisions Relating to Interest 30
2.18 Yield Protection 31
2.21 Regulatory Change 34
2.22 Letters in Lieu of Transfer Orders or Division Orders 34
2.23 Power of Attorney 34
2.24 Security Interest in Accounts; Right of Offset 35
2.25 Defaulting Lenders. 35
ARTICLE III CONDITIONS 36
3.1 Receipt of Loan Documents and Other Items 36
3.2 Each Loan 39
3.3 Issuance of Letters of Credit 40
ART ICLE IV REPRESENTATIONS AND WARRANTIES 41
4.1 Due Authorization 41
4.2 Existence 41
4.3 Valid and Binding Obligations 41
4.4 Security Documents 42
4.5 Title to Oil and Gas Properties 42
4.6 Scope and Accuracy of Financial Statements 42
4.7 No Material Adverse Effect or Default 42
4.8 No Material Misstatements 42
4.9 Liabilities, Litigation and Restrictions 42
4.10 Authorizations; Consents 42
4.11 Compliance with Laws 43
4.12 ERISA 43
4.13 Environmental Laws 43
4.14 Compliance with Federal Reserve Regulations 43
4.15 Investment Company Act 43
4.16 Proper Filing of Tax Returns; Payment of Taxes Due 43
4.17 Refunds 44
4.18 Gas Contracts 44
4.19 Intellectual Property 44
4.20 Casualties or Taking of Property 44
4.21 Principal Location 44
4.22 Subsidiaries 44
4.23 Compliance with Anti-Terrorism Laws 44
4.24 Identification Numbers 45
4.25 Solvency 45
ARTICLE V AFFIRMATIVE COVENANTS 46
5.1 Maintenance of and Access to Records 46
5.2 Quarterly Financial Statements and Compliance Certificates 46
5.3 Annual Financial Statements and Compliance Certificate 46
5.4 Oil and Gas Reserve Reports and Production Reports 46
5.5 Title Opinions; Title Defects; Mortgaged Properties 47
5.6 Notices of Certain Events 48
5.7 Letters in Lieu of Transfer Orders or Division Orders 48
5.8 Commodity Hedging 48
5.9 Joinder Agreements, Guaranties and Additional Security Documents 49
5.10 Additional Information 49
5.11 Compliance with Laws 49
5.12 Payment of Assessments and Charges 49
5.13 Maintenance of Existence or Qualification and Good Standing 49
5.14 Payment of Notes; Performance of Obligations 50
5.15 Further Assurances 50
5.16 Initial Expenses of Agent 50
5.17 Subsequent Expenses of Agent and Lenders 50
5.18 Operation of Oil and Gas Properties 50
5.19 Maintenance and Inspection of Properties 51
5.20 Maintenance of Insurance 51
5.21 Environmental Indemnification 51
5.22 General Indemnification 52
5.23 Evidence of Compliance with Anti-Terrorism Laws 53
5.24 Operating Accounts 53
ARTICLE VI NEGATIVE COVENANTS 53
6.1 Indebtedness 53
6.2 Contingent Obligations 53
6.3 Liens 54
6.4 Sales of Assets 54
6.5 Leasebacks 54
6.6 Sale or Discount of Receivables 54
6.7 Loans or Advances 54
6.8 Investments 55
6.9 Dividends and Distributions 55
6.10 Issuance of Equity; Changes in Structure 55
6.11 Transactions with Affiliates 55
6.12 Lines of Business 56
6.13 Plan Obligation 56
6.14 Current Ratio 56
6.15 Leverage Ratio 56
6.16 Interest Coverage Ratio 56
6.17 Anti-Terrorism Laws 56
ARTICLE VII EVENTS OF DEFAULT 57
7.1 Enumeration of Events of Default 57
7.2 Remedies 59
ARTICLE IX MISCELLANEOUS 64
9.1 Assignments; Participations 64
9.2 Survival of Representations, Warranties, and Covenants 66
9.3 Notices and Other Communications 66
9.4 Parties in Interest 67
9.5 Renewals; Extensions 67
9.6 Rights of Third Parties 67
9.7 No Waiver; Rights Cumulative 67
9.8 Survival Upon Unenforceability 67
9.9 Amendments; Waivers 67
9.10 Controlling Agreement 68
9.11 Disposition of Collateral 68
9.12 Governing Law 68
9.13 Waiver of Right to Jury Trial 68
9.14 Waiver of Class Action 68
9.15 Jurisdiction and Venue 69
9.16 Integration 69
9.17 Waiver of Punitive and Consequential Damages 69
9.18 Counterparts 69
9.19 USA Patriot Act Notice 69
9.20 Contribution and Indemnification 70
9.21 Tax Shelter Regulations 70
LIST OF SCHEDULES
Schedule 4.8 - Liabilities and Litigation
Schedule 4.13 - Environmental Matters
Schedule 4.17 - Refunds
Schedule 4.18 - Gas Contracts
Schedule 4.20 - Casualties
Schedule 4.22 - Subsidiaries
Schedule 4.24 - Taxpayer Identification and Organization Numbers
LIST OF EXHIBITS
Exhibit I - Form of Note
Exhibit II - Form of Borrowing Request
Exhibit III - Form of Compliance Certificate
Exhibit IV - Facility Amounts
Exhibit V - Form of Opinion of Counsel
Exhibit VI - Form of Assignment Agreement
CREDIT AGREEMENT
This CREDIT AGREEMENT is made and entered into effective the 19th day of
November, 2010, by and among CEP-M PURCHASE, LLC, a Delaware limited liability
company (the "Borrower"), each lender that is a signatory hereto or becomes a
signatory hereto as provided in Section 9.1 (individually, together with its
successors and assigns, a "Lender" and collectively, together with their
respective successors and assigns, the "Lenders"), and AMEGY BANK NATIONAL
ASSOCIATION, a national banking association ("Amegy"), as administrative agent
for the Lenders, the issuing bank for letters of credit issued hereunder and as
collateral agent for the Lenders and any other Approved Hedge Counterparties (as
defined hereinafter) under certain circumstances hereunder (in such capacities,
together with its successors in such capacities pursuant to the terms hereof,
the "Agent").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
ARTICLE I
---------
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement, each of the
terms "Agent," "Amegy," "Borrower" and "Lenders" shall have the meaning assigned
to such term hereinabove.
1.2 Additional Defined Terms. As used in this Credit Agreement, each of the
following terms shall have the meaning assigned thereto in this Section 1.2 or
in Sections referred to in this Section 1.2, unless the context otherwise
requires:
"Acquisition" shall mean the transaction which is the subject of that certain
Purchase and Sale Agreement dated effective July 1, 2010 between Pennaco Energy,
Inc., a Delaware corporation, as Seller, and the Borrower, as Purchaser.
"Additional Amount" shall have the meaning assigned to such term in Section 2.8.
"Additional Costs" shall mean costs which are attributable to the obligation of
the Agent or any Lender to make or its making or maintaining any Loan, or any
reduction in any amount receivable by the Agent or such Lender in respect of any
such obligation or any LIBO Rate Loan, resulting from any Regulatory Change
which (a) changes the basis of taxation of any amounts payable to the Agent or
such Lender under this Agreement or any Note in respect of any LIBO Rate Loan
(other than taxes imposed on the overall net income of the Agent or such Lender
or its Applicable Lending Office (including franchise or similar taxes) for any
such LIBO Rate Loan), (b) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio, or similar requirements (other than the Reserve
Requirement utilized in the determination of the Adjusted LIBO Rate for such
Loan) relating to any extensions of credit or other assets of, or any deposits
with or other liabilities of, the Agent or such Lender (including LIBO Rate
Loans and Dollar deposits in the London interbank market in connection with LIBO
Rate Loans), or the
Commitment of the Agent or such Lender, or the London interbank market, or (c)
imposes any other condition affecting this Agreement or any Note or any of such
extensions of credit, liabilities, or Commitments.
"Adjusted Base Rate" shall mean, an interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent to be the greater
of (a) the Base Rate and (b) the sum of the Federal Funds Rate plus one half
percent (0.50%).
"Adjusted LIBO Rate" shall mean, for any Interest Period for any LIBO Rate Loan,
an interest rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to the quotient of (a) the LIBO Rate
for such Interest Period for such Loan divided by (b) the remainder of 1.00
minus the Reserve Requirement for such Loan for such Interest Period, but in no
event less than one percent (1.00%).
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly, controlling, or under common control with, such Person, and includes
any "affiliate" of such Person within the meaning of Rule 12b-2 promulgated by
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, with "control," as used in this definition, meaning possession,
directly or indirectly, of the power to direct or cause the direction of
management, policies or action through ownership of voting securities, contract,
voting trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships; provided, however, that in no event shall the Agent or any Lender
be deemed an Affiliate of the Borrower.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, restated or otherwise modified from time to time.
"Anti-Terrorism Laws" shall mean any laws relating to terrorism or money
laundering, including Executive Order No. 13224 and the USA Patriot Act.
"Applicable Lending Office" shall mean, for each Lender and type of Loan, the
lending office of such Lender (or an affiliate of such Lender) designated for
such type of Loan on the signature pages hereof or in an Assignment Agreement or
such other office of such Lender (or an affiliate of such Lender) as such Lender
may from time to time specify to the Agent and the Borrower as the office by
which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean on any day and as to each LIBO Rate Loan or Base
Rate Loan under the Facility, as the case may be, outstanding on such day, the
amount determined by reference to the following table:
Borrowing Base Applicable Margin
Utilization LIBO RateLoans Base Rate Loans
--------------- --------------- ----------------
80% 3.75% 1.25%
--------------- --------------- ----------------
50%80% 3.50% 1.00%
--------------- --------------- ----------------
25%50% 3.25% 0.75%
--------------- --------------- ----------------
25% 3.00% 0.50%
--------------- --------------- ----------------
provided, however, during any period while there exists any Deficiency, the
relevant amount above shall be increased by two percent (2.00%).
"Approved Fund" shall mean any (a) investment company, fund, trust,
securitization vehicle or conduit that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business or (b) any Person
(other than a natural person) which temporarily warehouses loans for any Lender
or any entity described in the preceding clause (a) and that, with respect to
each of the preceding clauses (a) and (b), is administered or managed by (i) a
Lender, (ii) an Affiliate of a Lender or (iii) a Person (other than a natural
person) or an Affiliate of a Person (other than a natural person) that
administers or manages a Lender.
"Approved Hedge Counterparty" shall mean any Lender or an Affiliate of any
Lender.
"Assignment Agreement" shall mean each Assignment Agreement, substantially in
the form of Exhibit VI, with appropriate insertions.
"Available Commitment" shall mean, at any time, an amount equal to the
remainder, if any, of (a) the Commitment Amount in effect at such time minus (b)
the sum of the Loan Balance at such time plus the L/C Exposure at such time.
"Base Rate" shall mean the interest rate announced by Amegy from time to time as
its prime rate or its general reference rate of interest, which Base Rate shall
change upon any change in such announced or published general reference interest
rate and which Base Rate may not be the lowest interest rate charged by Amegy.
"Base Rate Loan" shall mean any Loan and any portion of the Loan Balance which
the Borrower has requested, in the initial Borrowing Request for such Loan or a
subsequent Borrowing Request for such portion of the Loan Balance, bear interest
on the basis of the Adjusted Base Rate, or which pursuant to the terms hereof is
otherwise required to bear interest on the basis of the Adjusted Base Rate.
"Benefited Lender" shall have the meaning assigned to such term in Section
2.9(c).
"Blocked Person" shall have the meaning assigned to such term in Section
4.23(b).
"Borrowing Base" shall mean, at any time, the amount stated in Section 2.10(a)
and each other amount established and in effect from time to time in accordance
with the provisions of Section 2.10.
"Borrowing Base Utilization" shall mean (a) the sum of (i) the Loan Balance plus
(ii) the L/C Exposure divided by (b) the Commitment Amount then in effect.
"Borrowing Request" shall mean each written request, substantially in the form
attached hereto as Exhibit II, by the Borrower to the Agent for a borrowing or
conversion pursuant to Section 2.1 or Section 2.12, each of which shall:
(a) be signed by a Responsible Officer of the Borrower;
(b) specify the amount and type of the Loan requested or to be converted
and the date of the borrowing or conversion (which shall be a Business Day);
(c) when requesting a Base Rate Loan, be delivered to the Agent no later
than 11:00 a.m., Central Standard or Central Daylight Savings Time, as the case
may be, on the Business Day preceding the requested borrowing or conversion; and
(d) when requesting a LIBO Rate Loan, be delivered to the Agent no later
than 11:00 a.m., Central Standard or Central Daylight Savings Time, as the case
may be, the third Business Day preceding the requested borrowing or conversion
and designate the Interest Period requested with respect to such Loan.
"Business Day" shall mean a day other than a Saturday, Sunday, legal holiday for
commercial banks under the laws of the State of Texas, or any other day when
banking is suspended in the State of Texas and, with respect to all requests,
notices and determinations in connection with, and payments of principal and
interest on, LIBO Rate Loans, which is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
"Business Entity" shall mean a corporation, partnership, joint venture, limited
liability company, joint stock association, business trust or other business
entity.
"Closing" shall mean the establishment of the Facility.
"Closing Date" shall mean the date of this Agreement.
"Collateral" shall mean the Mortgaged Properties and any other Property now or
at any time used or intended as security for the payment or performance of all
or any portion of the Obligations, including any Property that was considered in
determining or redetermining the Borrowing Base and expressly including "as
extracted collateral" as defined in the UCC or the Uniform Commercial Code of
any other applicable state.
"Commitment Amount" shall mean, subject to the applicable provisions of this
Agreement and the right of the Borrower to reduce such amount on an irrevocable
basis by written notice to the Agent at any time (provided, however, the
Borrower shall not be entitled to any reduction to an amount less than the sum
of the then existing Loan Balance and L/C Exposure), the lesser of (a) the sum
of the Facility Amounts of the Lenders or (b) the Borrowing Base in effect at
such time.
"Commitment Fees" shall mean the fees payable to the Agent (for the account of
the Lenders) by the Borrower pursuant to the provisions of Section 2.13.
"Commitment Period" shall mean the period from and including the Closing Date
to, but not including, the Commitment Termination Date.
"Commitments" shall mean the several obligations of the Lenders to make Loans to
or for the benefit of the Borrower and the obligation of the Agent to issue and
the Lenders to participate in Letters of Credit pursuant to applicable
provisions of this Agreement.
"Commitment Termination Date" shall mean the earlier of (a) November 19, 2013,
and (b) the date the Commitments are terminated pursuant to the provisions of
Section 7.2.
"Commodity Hedge Agreements" shall mean crude oil, natural gas or other
hydrocarbon floor, collar, cap, price protection or hedge agreements.
"Commonly Controlled Entity" shall mean any Person which is under common control
with the Borrower within the meaning of Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate, substantially in the form
attached hereto as Exhibit III, executed by a Responsible Officer of the
Borrower and furnished to the Agent from time to time in accordance with the
provisions of Section 5.2 or Section 5.3, as the case may be.
"Contingent Obligation" shall mean, as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, or other obligations of any other Person (for purposes of this
definition, a "primary obligation") in any manner, whether directly or
indirectly, including any obligation of such Person, regardless of whether such
obligation is contingent, (a) to purchase any primary obligation or any Property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any primary obligation, or (ii) to
maintain working or equity capital of any other Person in respect of any primary
obligation, or otherwise to maintain the net worth or solvency of any other
Person, (c) to purchase Property, securities or services primarily for the
purpose of assuring the owner of any primary obligation of the ability of the
Person primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any Contingent
Obligation being deemed to be equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith.
"Contribution Percentage" shall mean, for each party obligated to make a payment
due pursuant to the provisions of Section 9.20, the percentage obtained by
dividing such party's Obtained Benefit by the aggregate Obtained Benefits of the
Borrower and all of the Guarantors.
"Credit Parties" shall mean, collectively, the Borrower and the Guarantors.
"Current Assets" shall mean all assets which would, in accordance with GAAP, be
included as current assets on a consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as of the date of calculation, after deducting
adequate reserves in each case in which a reserve is proper in accordance with
GAAP, plus the then current Available Commitment, but excluding non-cash
derivative current assets arising from Commodity Hedge Agreements and Interest
Rate Hedge Agreements.
"Current Liabilities" shall mean all liabilities which would, in accordance with
GAAP, be included as current liabilities on a consolidated balance sheet of the
Borrower and its consolidated Subsidiaries, but excluding current maturities in
respect of the Obligations, both
principal and interest, and non-cash derivative current liabilities arising from
Commodity Hedge Agreements and Interest Rate Hedge Agreements.
"Default" shall mean any event or occurrence which with the lapse of time or the
giving of notice or both would become an Event of Default.
"Default Rate" shall mean a daily interest rate equal to the per annum interest
rate equal to the sum of (i) Adjusted Base Rate for each relevant day plus (ii)
the Applicable Margin plus (iii) two percent (2%) converted to a daily rate on
the basis of a year of 365 or 366 days, as the case may be, and the rate so
determined for each relevant day being applied on the basis of actual days
elapsed (including the first day, but excluding the last day) during the period
for which interest is payable at the Default Rate, but in no event shall the
Default Rate exceed the Highest Lawful Rate.
"Defaulting Lender" means any Lender that (a) has failed to fund any portion of
any Loan required to be funded by it hereunder within one Business Day of the
date required to be funded by it hereunder unless such failure has been cured,
(b) has otherwise failed to pay over to the Agent or any Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute or unless such failure has been
cured or (c) has been deemed, or whose parent or Affiliate has been deemed,
insolvent or become the subject of a bankruptcy or insolvency proceeding.
"Deficiency" shall have the meaning assigned to such term in Section 2.11.
"Dollars" and "$" shall mean dollars in lawful currency of the United States of
America.
"Domestic Subsidiary" shall mean any Subsidiary of the Borrower or any of the
Guarantors that is organized under the laws of the United States of America or
any state thereof or the District of Columbia.
"EBITDA" shall mean, for any period for which the amount thereof is to be
determined for the Borrower, in each case on a consolidated basis for Borrower
and its consolidated Subsidiaries, Net Income for such period (but excluding (i)
unrealized gains or losses or charges in respect of Commodity Hedge Agreements
(including those under GAAP arising from the application of FAS 133), (ii) and
extraordinary or non-recurring income items and, to the extent reasonably
acceptable to the Agent, expense items and (iii) deferred financing costs
written off, including equity discounts and premiums paid in connection with any
early extinguishment of Indebtedness permitted pursuant to this Agreement, plus,
in each case to the extent deducted in the determination of Net Income for such
period and without duplication of any item in more than one category, each of
the following for such period: (a) Interest Expense, (b) Taxes, (c)
depreciation and amortization expenses and (d) other non-cash expenses,
including write-downs of non-current assets and unrealized non-cash losses
resulting from foreign currency balance sheet adjustments required under GAAP,
and minus, to the extent credited in the determination of Net Income for such
period, non-cash credits for such period.
"Environmental Complaint" shall mean any written or oral complaint, order,
directive, claim, citation, notice of environmental report or investigation, or
other notice by any Governmental Authority or any other Person with respect to
(a) air emissions, (b) spills, releases,
or discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal systems
servicing any Property of the Borrower, (c) solid or liquid waste disposal, (d)
the use, generation, storage, transportation, or disposal of any Hazardous
Substance, or (e) other environmental, health or safety matters affecting any
Property of the Borrower or the business conducted thereon.
"Environmental Laws" shall mean (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 Hazardous Materials Transportation
Act, the Occupational Safety and Health Act, the Oil Pollution Act, the Resource
Conservation and Recovery Act, the Superfund Amendments and Reauthorization Act,
and the Toxic Substances Control Act; (b) any and all equivalent 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 equivalent federal, state, or local statute or any requirement,
rule, regulation, code, ordinance, or order adopted pursuant thereto, including
those relating to the generation, transportation, treatment, storage, recycling,
disposal, handling, or release of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, and the
regulations thereunder and interpretations thereof.
"Event of Default" shall mean any of the events specified in Section 7.1.
"Excess Payments" shall have the meaning assigned to such term in Section 9.20.
"Excluded Taxes" shall mean, with respect to any and all payments to the Agent,
any Lender or any other recipient of any payment to be made by or on account of
any Obligation, net income taxes, branch profits taxes, franchise and excise
taxes (to the extent imposed in lieu of net income taxes), and all interest,
penalties and liabilities with respect thereto, imposed on the Agent or any
Lender.
"Executive Order No. 13224" shall mean Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
"Facility" shall mean the credit facility extended to the Borrower pursuant to
this Agreement.
"Facility Amount" shall mean, for each Lender and at any point in time, the
amount set forth opposite the name of such Lender on Exhibit IV under the
caption "Facility Amounts," as modified from time to time to reflect assignments
permitted by Section 9.1 or otherwise pursuant to the terms hereof.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of Dallas,
Texas, on the Business Day next succeeding such day, provided that (a) if the
day for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to Amegy on such day on such
transactions as determined by the Agent.
"Financial Statements" shall mean consolidated financial statements of the
Borrower and its consolidated Subsidiaries as at the point in time and for the
period indicated, including all notes thereto, and consisting of at least a
balance sheet and related statements of operations, member's equity and cash
flows and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a nationally-recognized
or regionally-recognized firm of independent certified public accountants or
other independent certified public accountants acceptable to the Agent and
footnotes to any of the foregoing, all of which, unless otherwise indicated,
shall be prepared in accordance with GAAP consistently applied and in
comparative form with respect to the corresponding period of the preceding
fiscal year.
"Foreign Lender" shall have the meaning assigned to such term in Section 2.8.
"GAAP" shall mean generally accepted accounting principles established by
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants and in effect in the United States from time to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other political
subdivision and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government.
"Guaranties" shall mean, collectively, those certain agreements, each styled
"Guaranty", entered into after the Closing Date by newly formed Domestic
Subsidiaries of the Borrower or any of the Guarantors in favor of the Agent for
the benefit of the Lenders in form and substance reasonably satisfactory to the
Agent.
"Guarantors" shall mean any and all future Domestic Subsidiaries of the Borrower
or any of the Guarantors existing as of the Closing Date or formed thereafter.
"Hazardous Substances" shall mean flammables, explosives, radioactive materials,
hazardous wastes, asbestos, or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum, petroleum
products, 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, the Superfund Amendments
and Reauthorization Act, the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Toxic Substances Control Act, or any
other Requirement of Law.
"Highest Lawful Rate" shall mean, as to any Lender, the maximum non-usurious
interest rate, if any (or, if the context so requires, an amount calculated at
such rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under laws applicable to such Lender, as such
laws are presently in effect or, to the extent allowed by applicable law, as
such laws may hereafter be in effect and which allow a higher maximum
non-usurious interest rate than such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication, (a) all
liabilities (excluding capital, surplus, reserves for deferred income taxes,
deferred compensation liabilities, other deferred liabilities and credits and
asset retirement obligations) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet,
(b) all obligations of such Person evidenced by bonds, debentures, promissory
notes, or similar evidences of indebtedness, (c) all other indebtedness of such
Person for borrowed money, and (d) all obligations of others, to the extent any
such obligation is secured by a Lien on the assets of such Person (whether or
not such Person has assumed or become liable for the obligation secured by such
Lien), (e) all direct or contingent obligations of such Person under letters of
credit, banker's acceptances, surety bonds, and similar instruments and (f) net
obligations of such Person under any Commodity Hedge Agreements or Interest Rate
Hedge Agreements.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section 5.21.
"Insolvency Proceeding" shall mean application (whether voluntary or instituted
by another Person) for or the consent to the appointment of a receiver, trustee,
conservator, custodian, or liquidator of any Person or of all or a substantial
part of the Property of such Person, or the filing of a petition (whether
voluntary or instituted by another Person) 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.
"Intellectual Property" shall mean patents, patent applications, trademarks,
tradenames, copyrights, technology, know-how, and processes.
"Interest Expense" shall mean, for any period for which the amount thereof is to
be determined, any and all expenses relating to the accrual of interest on
Indebtedness of the Borrower and its consolidated Subsidiaries, including
interest expense attributable to capitalized leases.
"Interest Period" shall mean, subject to the limitations set forth in Section
2.2, with respect to any LIBO Rate Loan, a period commencing on the date such
Loan is made or converted from a Loan of another type pursuant to this Agreement
or the last day of the next preceding Interest Period with respect to such Loan
and ending on the numerically corresponding day in the calendar month that is
one, two, three or, if available, six months thereafter, as the Borrower may
request in the Borrowing Request for such Loan.
"Interest Rate Hedge Agreements" shall mean interest rate floor, collar, cap,
rate protection or hedge agreements.
"Investment" in any Person shall mean any stock, bond, note, or other evidence
of Indebtedness, or any other security (other than current trade and customer
accounts) of, investment or partnership interest in or loan to, such Person.
"Joinder Agreement" shall mean each agreement, in form and substance reasonably
acceptable to the Agent, pursuant to which a Domestic Subsidiary of the Borrower
or any of the Guarantors makes certain representations and warranties to the
Agent and the Lenders and agrees to be bound by the covenants in Article V and
Article VI as if such were stated to be applicable to it and which agreement
shall constitute a Loan Document.
"L/C Exposure" shall mean, at any time, the then aggregate maximum amount
available to be drawn under outstanding Letters of Credit plus, prior to the
making of any related Letter of Credit Payments in respect of such Letters of
Credit, the aggregate of all unpaid reimbursement obligations in respect of such
Letters of Credit.
"L/C Sublimit" shall mean $500,000.
"Lender Default" shall have the meaning assigned to such term in Section 2.25.
"Letter of Credit" shall mean any standby letter of credit issued for the
account of the Borrower pursuant to Section 2.1(d).
"Letter of Credit Application" shall mean the standard letter of credit
application employed by Amegy, as the issuer of the Letters of Credit, from time
to time in connection with its issuance of letters of credit.
"Letter of Credit Payment" shall mean any payment made by Amegy on behalf of the
Lenders under a Letter of Credit, to the extent that such payment has not been
repaid by the Borrower.
"LIBO Rate" shall mean, with respect to any Interest Period for any LIBO Rate
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) that appears on Reuters Reference LIBOR01 (or any successor thereto) for
Interest Periods of one month, two months, three months or six months,
respectively (or if such shall not be available, any successor or similar
service selected by the Agent and the Borrower) as of approximately 11:00 a.m.,
Central Standard or Central Daylight Savings Time, as the case may be, on the
day two Business Days prior to the first day of such Interest Period for Dollar
deposits in an amount comparable to the principal amount of such LIBO Rate Loan
and having a term comparable to the Interest Period for such LIBO Rate Loan. If
neither Reuters nor any successor or similar service is available, the term
"LIBO Rate" shall mean, with respect to any Interest Period for any LIBO Rate
Loan, the rate per annum (rounded upwards if necessary, to the nearest 1/16 of
1%) quoted by the Agent at approximately 11:00 a.m., London time (or as soon
thereafter as practicable) two Business Days prior to the first day of the
Interest Period for such LIBO Rate Loan for the offering to Amegy by leading
banks in the London interbank market of Dollar deposits in an
amount comparable to the principal amount of such LIBO Rate Loan and having a
term comparable to the Interest Period for such LIBO Rate Loan.
"LIBO Rate Loan" shall mean any Loan and any portion of the Loan Balance which
the Borrower has requested, in the initial Borrowing Request for such Loan or a
subsequent Borrowing Request for such portion of the Loan Balance, bear interest
on the basis of the Adjusted LIBO Rate and which are permitted by the terms
hereof to bear interest on the basis of the Adjusted LIBO Rate.
"Lien" shall mean any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of such Property, whether such interest
is based on common law, statute, or contract, and including, but not limited to,
the lien or security interest arising from a mortgage, ship mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt, or a
lease, consignment, or bailment for security purposes (other than true leases or
true consignments), liens of mechanics, materialmen, and artisans, maritime
liens and reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Property which secure an obligation owed to, or a claim
by, a Person other than the owner of such Property (for the purpose of this
Agreement, the Borrower shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes).
"Limitation Period" shall mean, with respect to any Lender, any period while any
amount remains owing on the Note payable to such Lender and interest on such
amount, calculated at the applicable interest rate, plus any fees or other sums
payable to such Lender under any Loan Document and deemed to be interest under
applicable law, would exceed the amount of interest which would accrue at the
Highest Lawful Rate.
"Loan" shall mean any loan made by any Lender to or for the benefit of the
Borrower pursuant to this Agreement and any payment made by Amegy, on behalf of
any Lender, under a Letter of Credit.
"Loan Balance" shall mean, at any point in time, the aggregate outstanding
principal balance of the Notes at such time.
"Loan Documents" shall mean this Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Security Documents, any Joinder
Agreements, any Guaranties and all other documents and instruments now or
hereafter delivered pursuant to the terms of or in connection with this
Agreement, the Notes, the Letter of Credit Applications, the Letters of Credit
or the Security Documents, and all renewals and extensions of, amendments and
supplements to, and restatements of, any or all of the foregoing from time to
time in effect.
"Material Adverse Effect" shall mean (a) any material and adverse effect on the
business, operations, assets, properties, liabilities (actual or contingent) or
financial condition of the Borrower on a consolidated basis with its
consolidated Subsidiaries, (b) any material and adverse effect upon the
Collateral, including any material and adverse effect upon the value or
impairment of the Borrower's ownership of the Collateral, (c) any material
adverse effect on the validity or enforceability of any Loan Document or (d) any
material adverse effect on the rights or remedies of the Agent, the Lenders or
any other Secured Party under any Loan Document.
"Monthly Reduction Amount" shall mean, at any time, the amount determined as
such by the Agent (with the approval of the Lenders as required by the
provisions of Section 9.9) and then in effect in accordance with the provisions
of Section 2.10.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the Borrower
subject to a perfected first priority Lien (subject only to Permitted Liens) in
favor of the Agent, as security for the Obligations.
"Net Income" shall mean, for any relevant period, the net income of the Borrower
and its consolidated Subsidiaries during such period, determined in accordance
with GAAP.
"Non-Defaulting Lender" shall have the meaning assigned to such term in Section
2.25.
"Notes" shall mean, collectively, the promissory notes of the Borrower each
payable to a Lender in the face amount of up to the Facility Amount of the
relevant Lender and in the form attached hereto as Exhibit I with all blanks in
such form completed appropriately, together with all renewals, extensions for
any period, increases and rearrangements thereof.
"Notice of Termination" shall have the meaning assigned to such term in Section
2.20.
"Obligations" shall mean, without duplication of the same amount in more
than one category, (a) all Indebtedness of the Borrower evidenced by the Notes,
(b) the obligation of the Borrower to provide to or reimburse the Agent, as the
issuer of the Letters of Credit, as the case may be, for amounts payable, paid
or incurred with respect to Letters of Credit, (c) the undrawn, unexpired amount
of all outstanding Letters of Credit, (d) the obligation of the Borrower for the
payment of Commitment Fees and other fees pursuant to the provisions of this
Agreement and (e) all other obligations and liabilities of the Borrower to the
Agent or the Lenders, now existing or hereafter incurred, under, arising out of
or in connection with any Loan Document, and to the extent that any of the
foregoing includes or refers to the payment of amounts deemed or constituting
interest, only so much thereof as shall have accrued, been earned and which
remains unpaid at each relevant time of determination.
"Obtained Benefit" shall mean the aggregate amount of benefits, both direct and
indirect, obtained by any of the Borrower and the Guarantors from the extension
of credit to the Borrower under this Agreement and not repaid by the Borrower or
any of the Guarantors.
"OFAC" shall mean the Office of Foreign Assets Control of the United States
Department of the Treasury or any successor Governmental Authority.
"Oil and Gas Properties" shall mean fee, leasehold, or other interests in or
under mineral estates or oil, gas, and other liquid or gaseous hydrocarbon
leases, including undivided interests in any such property rights owned jointly
with others, with respect to Properties situated in the United States or
offshore from any State of the United States, including overriding royalty and
royalty interests, leasehold estate 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 appertaining, belonging, affixed, or incidental thereto.
"Other Taxes" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Parent" means Current Energy Partners Corporation, a Delaware corporation.
"Percentage Share" shall mean, as to each Lender, the percentage which such
Lender's Facility Amount constitutes of the sum of the Facility Amounts of all
Lenders.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or other
governmental charges or levies not yet due or which (if foreclosure, distraint,
sale, or other similar proceedings shall not have been initiated) are being
contested in good faith by appropriate proceedings, and such reserve as may be
required by GAAP shall have been made therefor, (b) Liens in connection with
workers' compensation, unemployment insurance or other social security (other
than Liens created by Section 4068 of ERISA), old-age pension, employee
benefits, or public liability obligations which are not yet due or which are
being contested in good faith by appropriate proceedings, if such reserve as may
be required by GAAP shall have been made therefor, (c) Liens in favor of
vendors, carriers, warehousemen, repairmen, mechanics, workmen, materialmen,
constructors, laborers, landlords or similar Liens arising by operation of law
in the ordinary course of business in respect of obligations that are not yet
due or which are being contested in good faith by appropriate proceedings, if
such reserve as may be required by GAAP shall have been made therefor, (d) Liens
in favor of operators and non-operators under joint operating agreements or
similar contractual arrangements arising in the ordinary course of the business
of the Borrower to secure amounts owing, which amounts are not yet due or are
being contested in good faith by appropriate proceedings, if such reserve as may
be required by GAAP shall have been made therefor, (e) Liens under production
sales agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and selling
hydrocarbons securing obligations not constituting Indebtedness and provided
that such Liens do not secure obligations to deliver hydrocarbons at some future
date without receiving full payment therefor within 90 days of delivery, (f)
covenants, liens, rights, easements, rights of way, restrictions, and other
similar encumbrances , and minor defects in the chain of title which are
customarily accepted in the oil and gas financing industry, none of which
interfere with the ordinary conduct of the business of the Borrower or
materially detract from the value or use of the Property to which they apply,
(g) Liens securing the purchase price of Property, including vehicles and
equipment, acquired by the Borrower in the ordinary course of business
(including Liens existing under conditional sale or title retention contracts),
provided that such Liens cover only the acquired Property and the aggregate
unpaid purchase price secured by such Liens does not exceed $100,000, (h) Liens
securing leases of equipment, provided that, as to any particular lease, the
Lien covers only the relevant leased equipment and secures only amounts which
are not yet due and payable under the relevant lease or are being contested in
good faith by appropriate proceedings and such reserve as may be required by
GAAP shall have been made therefor, (i) Liens in favor or for the benefit of
providers of such Commodity Hedge Agreements and Interest Rate Hedge Agreements
approved by the Agent securing Indebtedness of the Borrower in respect of
Commodity Hedge Agreements and Interest Rate Hedge Agreements permitted pursuant
to the provisions of Section 6.1, (j) rights of offset or statutory banker's
Liens arising in the ordinary course of business in favor of commercial banks,
provided that, any such Lien shall only extend to deposits and property in
possession of such commercial bank and its Affiliates, (k) Liens securing
judgments permitted under Section 7.1(i), (l) good-faith pledges or deposits
made in the ordinary course of business to secure (i) the performance of bids,
tenders, trade contracts (other than for the repayment of borrowed money) or
leases, (ii) statutory obligations, or (iii) surety or appeal bonds, indemnity,
performance, or other similar bonds, which, in the aggregate under this clause
(l), do not exceed $500,000 and (m) Liens in favor of the Agent and other Liens
expressly permitted hereunder or in the Security Documents.
"Person" shall mean an individual, Business Entity, trust, unincorporated
organization, Governmental Authority or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is covered by
Title IV of ERISA and in respect of which the Borrower or any Commonly
Controlled Entity of any 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.
"Principal Office" shall mean the office of the Agent in Houston, Texas located
at 0000 Xxxx Xxx Xxxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000 or such other office
as the Agent may designate in writing to the Borrower and/or the Lenders from
time to time.
"Property" shall mean any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal
Reserve System (or any successor).
"Regulatory Change" shall mean, with respect to any Lender, the passage,
adoption, institution, or amendment of any federal, state, local, or foreign
Requirement of Law (including Regulation D), or any interpretation, directive,
or request (whether or not having the force of law) of any Governmental
Authority or monetary authority charged with the enforcement, interpretation, or
administration thereof, occurring after the Closing Date and applying to a class
of lenders including such Lender or its lending office.
"Release of Hazardous Substances" shall mean any emission, spill, release,
disposal, or discharge, except in accordance with a valid permit, license,
certificate, or approval of the relevant Governmental Authority, of any
Hazardous Substance into or upon (a) the air, (b) soils or any improvements
located thereon, (c) surface water or groundwater, or (d) the sewer or septic
system, or the waste treatment, storage, or disposal system servicing any
Property of the Borrower.
"Replacement Lenders" shall have the meaning assigned to such term in Section
2.20.
"Required Lenders" shall mean, at any time when no Loans or Letters of Credit
are outstanding, Lenders holding in the aggregate Percentage Shares greater than
sixty-six and two-thirds percent (66-2/3%) of the Commitment Amount, and at any
time when any Loans or Letters of Credit are outstanding, Lenders which in the
aggregate hold more than sixty-six and two-thirds percent (66-2/3%) of the sum
of the Loan Balance (without regard to any sale of a participation in any Loan)
and the L/C Exposure; provided that, the portion of the Commitment Amount or
Loan Balance held or deemed held by any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.
"Required Payment" shall have the meaning assigned to such term in Section 2.7.
"Requirement of Law" shall mean, as to any Person, the certificate or articles
of incorporation and by-laws, the certificate or articles of organization and
regulations, operating agreement or limited liability company agreement, the
agreement of limited partnership, the partnership agreement, or other
organizational or governing documents of such Person, and any applicable law,
treaty, ordinance, order, judgment, rule, decree, regulation, or determination
of an arbitrator, court, or other Governmental Authority, including rules,
regulations, orders, and requirements for permits, licenses, registrations,
approvals, or authorizations, in each case as such now exist or may be hereafter
amended and are applicable to or binding upon such Person or any of its Property
or to which such Person or any of its Property is subject.
"Reserve Report" shall mean each report delivered to the Agent pursuant to the
provisions of Section 5.4.
"Reserve Requirement" shall mean, for any Interest Period for any LIBO Rate
Loan, the average maximum rate at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in Dallas, Texas, with deposits exceeding one billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D) and any other
reserves required by reason of any Regulatory Change to be maintained by such
member banks against (a) any category of liabilities which includes deposits by
reference to which the LIBO Rate is to be determined as provided herein in the
definition of the term "LIBO Rate" or (b) any category of extensions of credit
or other assets which include a LIBO Rate Loan.
"Responsible Officer" shall mean, as to any Business Entity, its President, any
Vice President or any other Person duly authorized in accordance with the
applicable organizational documents, bylaws, regulations or resolutions to act
on behalf of such Business Entity.
"Secured Creditors" shall mean the Lenders, any other Approved Hedge
Counterparties and any Secured Third Party Hedge Counterparties.
"Secured Third Party Hedge Counterparty" shall mean any counterparty of the
Borrower to a Commodity Hedge Agreement or Interest Rate Hedge Agreement that is
party to an intercreditor agreement with the Agent, in form and substance
satisfactory to the Agent and such counterparty.
"Security Documents" shall mean the security documents executed and delivered in
satisfaction of the condition set forth in Section 3.1(f) and all other
documents and instruments at
any time executed as security for all or any portion of the Obligations, as such
instruments may be amended, supplemented, restated, or otherwise modified from
time to time.
"Subsidiary" shall mean, as to any Person, any Business Entity of which shares
of stock or other equity interests having ordinary voting power (other than
stock or other equity interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other governing body or other managers of such Business Entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Subsidiary Guarantors" shall mean, collectively, the Domestic Subsidiaries of
the Borrower or any of the Guarantors.
"Superfund Site" shall mean those sites listed on the Environmental Protection
Agency National Priority List and eligible for remedial action or any comparable
state registry or list in any state of the United States.
"Taxes" shall mean any and all present or future taxes, levies, imposts, duties,
fees, deductions, charges or withholdings imposed by any Governmental Authority.
"Terminated Lender" shall have the meaning assigned to such term in Section
2.20.
"Termination Date" shall have the meaning assigned to such term in Section 2.20.
"Transferee" shall mean any Person to which any Lender has sold, assigned,
transferred, or granted a participation in any of the Obligations, as authorized
pursuant to the provisions of Section 9.1, and any Person acquiring, by
purchase, assignment, transfer, or participation, from any such purchaser,
assignee, transferee, or participant, any part of such Obligations.
"UCC" shall mean the Uniform Commercial Code as from time to time in effect in
the State of Texas.
"USA Patriot Act" shall mean the Uniting and Strengthening America by Providing
Appropriate Tools required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001), as the same has been, or shall hereafter
be, renewed, extended, amended or replaced.
1.3 Undefined Financial Accounting Terms. Financial accounting terms used
in this Agreement without definition are used herein with the respective
meanings assigned thereto in accordance with GAAP at the time in effect.
1.4 References. References in this Agreement to Schedule, Exhibit, Article
or Section numbers shall be to Schedules, Exhibits, Articles or Sections of this
Agreement, unless expressly stated to the contrary. References in this
Agreement to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," "hereunder" and words of similar import shall be to this Agreement in
its entirety and not only to the particular Schedule, Exhibit, Article, or
Section in which such reference appears. Specific enumeration herein shall not
exclude the general and, in such regard, the terms "includes" and "including"
used herein shall mean
"includes, without limitation," or "including, without limitation," as the case
may be, where appropriate. Except as otherwise indicated, references in this
Agreement to statutes, sections, or regulations are to be construed as including
all statutory or regulatory provisions consolidating, amending, replacing,
succeeding, or supplementing the statute, section, or regulation referred to.
References in this Agreement to "writing" include printing, typing, lithography,
facsimile reproduction, and other means of reproducing words in a tangible
visible form. References in this Agreement to agreements and other contractual
instruments shall be deemed to include all exhibits and appendices attached
thereto and all subsequent amendments and other modifications to such
instruments, but only to the extent such amendments and other modifications are
not prohibited by the terms of this Agreement. References in this Agreement to
Persons include their respective successors and permitted assigns.
1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 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. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated. 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.
1.7 Incorporation of Schedules and Exhibits. The Schedules and Exhibits
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for all purposes.
1.8 Negotiated Transaction. Each party to this Agreement affirms to the
others that it has had the opportunity to consult, and discuss the provisions of
this Agreement with, independent counsel and fully understands the legal effect
of each provision.
ARTICLE II
TERMS OF FACILITY
2.1 Revolving Line of Credit and Letter of Credit Facility. Upon the
terms and conditions (including the right of the Lenders to decline to make any
Loan, other than a Letter of Credit Payment, so long as any condition to the
making of such Loan set forth in Section 3.2 has not been satisfied) and relying
on the representations and warranties contained in this Agreement, each Lender
severally agrees to make Loans during the Commitment Period to or for the
benefit of the Borrower in an aggregate outstanding principal amount not to
exceed at any time the Percentage Share of such Lender of the Commitment Amount
then in effect (but such product not to exceed, at any time, the Facility Amount
of the relevant Lender then in effect),
minus the Percentage Share of such Lender of the then existing L/C Exposure.
Loans shall be made from time to time on any Business Day designated in a
Borrowing Request.
(b) Subject to the provisions of this Agreement, during the Commitment
Period, the Borrower may borrow, repay, and reborrow and convert Loans of one
type or with one Interest Period into Loans of another type or with a different
Interest Period. Each borrowing or conversion of principal of (i) Base Rate
Loans shall be in an amount at least equal to $100,000 and a whole multiple of
$10,000 and (ii) LIBO Rate Loans shall be in an amount at least equal to
$100,000 and a whole multiple of $10,000 and, if any LIBO Rate Loan would
otherwise be in a lesser principal amount for any period, such Loan shall be a
Base Rate Loan during such period. Except for prepayments made pursuant to the
provisions of Section 2.11, each prepayment of principal shall be in an amount
at least equal to $100,000 and a whole multiple of $10,000. Each borrowing,
prepayment, or conversion of or into a Loan of a different type or, in the case
of a LIBO Rate Loan, having a different Interest Period, shall be deemed a
separate borrowing, conversion, and prepayment for purposes of the foregoing,
one for each type of Loan or Interest Period.
(c) The Agent shall notify each Lender of its receipt of a Borrowing Request
as soon as practicable following its receipt thereof, including in such notice
the amount of the requested Loan and the requested date for the making of the
requested Loan. Not later than 11:00 a.m., Central Standard or Central Daylight
Savings Time, as the case may be, on the date specified for each borrowing, each
Lender shall make available to the Agent, at an account designated by the Agent,
an amount equal to the Percentage Share of such Lender of the borrowing to be
made on such date. The amount so received by the Agent shall, subject to the
terms and conditions hereof, be made available to the Borrower in immediately
available funds at the Principal Office. All Loans by each Lender shall be
maintained at the Applicable Lending Office of such Lender and shall be
evidenced by the Note of such Lender. The failure of any Lender to make any
Loan required to be made by it hereunder shall not relieve any other Lender of
its obligation to make any Loan required to be made by it, and no Lender shall
be responsible for the failure of any other Lender to make any Loan.
(d) Upon the terms and conditions (including the right of the Agent to
decline to issue, renew or extend any such Letter of Credit so long as any
condition to the issuance, renewal or extension of such Letter of Credit set
forth in Section 3.3 has not been satisfied) and relying on the representations
and warranties contained in this Agreement, the Agent, as issuing bank for the
Lenders, agrees, from the date of this Agreement until the date which is 30 days
prior to the Commitment Termination Date, to issue, on behalf of the Lenders in
their respective Percentage Shares, Letters of Credit for the account of the
Borrower and to renew and extend such Letters of Credit. Such Letters of Credit
shall be issued, renewed or extended from time to time on any Business Day
designated by the Borrower following the receipt in accordance with the terms
hereof by the Agent of the written (or oral, confirmed promptly in writing)
request by a Responsible Officer of the Borrower therefor and a Letter of Credit
Application. Letters of Credit shall be issued in such amounts as the Borrower
may request; provided, however, that (i) no Letter of Credit shall have an
expiration date which is less than 30 days prior to the Commitment Termination
Date, (ii) the Loan Balance plus the L/C Exposure, including that under any then
requested Letter of Credit, shall not exceed at any time the Commitment Amount,
(iii) the L/C Exposure, including that under any then requested Letter of
Credit, shall not exceed
at any time the L/C Sublimit and (iv) no Letter of Credit shall be issued in an
amount less than $20,000.
(e) In connection with the issuance, renewal or extension by the Agent of
any Letter of Credit pursuant to Section 2.1(d), the Borrower shall pay to the
Agent, for the account of the Lenders, a letter of credit fee in an amount equal
to the greater of (i) the face amount of such Letter of Credit multiplied by the
then effective Applicable Margin for a LIBO Rate Loan made on such date of
issuance, renewal or extension, calculated on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) on the amount of the L/C Exposure under such Letter of
Credit and for the period for which such Letter of Credit is issued, renewed or
extended and remains outstanding, or (ii) $500. Such fee with respect to each
Letter of Credit shall be payable on the date of issuance, renewal or extension
of the relevant Letter of Credit. Neither the Agent nor any Lender shall have
any obligation to refund any portion of any such fee upon early cancellation of
the relevant Letter of Credit. The Borrower also agrees to pay on demand to the
Agent, solely for its account as issuer of the relevant Letter of Credit, its
customary letter of credit transaction fees and expenses, including amendment
fees, payable with respect to each Letter of Credit.
(f) The Borrower agrees that neither the Agent nor any Lender shall be
responsible for, nor shall the Obligations be affected by, among other things,
(i) the validity or genuineness of documents or any endorsements thereon
presented in connection with any Letter of Credit, even if such documents shall
in fact prove to be in any and all respects invalid, fraudulent or forged, so
long as the Agent, as the issuer of such Letter of Credit, has no actual
knowledge of any such invalidity, lack of genuineness, fraud or forgery prior to
the presentment for payment of a corresponding Letter of Credit or any draft
thereunder or (ii) any dispute between or among the Borrower and any beneficiary
of any Letter of Credit or any other Person to which any Letter of Credit may be
transferred, or any claims whatsoever of the Borrower against any beneficiary of
any Letter of Credit or any such transferee. The Borrower further acknowledges
and agrees that the Agent, as the issuer of Letters of Credit, shall be liable
to the Borrower to the extent, but only to the extent, of any direct, as opposed
to consequential or punitive, damages suffered by the Borrower as a result of
the willful misconduct or gross negligence of the Agent as the issuer of Letters
of Credit in determining whether documents presented under a Letter of Credit
complied with the terms of such Letter of Credit that resulted in either a
wrongful payment under such Letter of Credit or a wrongful dishonor of a claim
or draft properly presented under such Letter of Credit. In the absence of
gross negligence or willful misconduct by the Agent as the issuer of Letters of
Credit, the Agent shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Agent, the Lenders,
and the Borrower agree that any action taken or omitted by the Agent, as issuer
of any Letter of Credit, under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct, shall be binding as among the Agent, as issuer of such
Letter of Credit or otherwise, the Lenders, and the Borrower shall not put the
Agent, as issuer of such Letter of Credit or otherwise, or any Lender under any
liability to the Borrower.
(g) Unless the Borrower provides to the Agent funds sufficient to allow the
Agent to pay any drawing by a beneficiary under a Letter of Credit prior to the
Agent being
obligated to pay the relevant drawing under a Letter of Credit, the Agent shall
make a Letter of Credit Payment in payment of such drawing. Prior to any Letter
of Credit Payment in respect of any Letter of Credit, each Lender shall be
deemed to be a participant, through the Agent with respect to the relevant
Letter of Credit, in the obligation of the Agent, as the issuer of such Letter
of Credit, in an amount equal to the Percentage Share of such Lender of the
maximum amount which is or at any time may become available to be drawn
thereunder. Upon delivery by such Lender of funds requested pursuant to Section
2.1(h), such Lender shall be treated as having purchased a participating
interest in an amount equal to such funds delivered by such Lender to the Agent
in the obligation of the Borrower to reimburse the Agent, as the issuer of such
Letter of Credit, for any amounts payable, paid or incurred by the Agent, as the
issuer of such Letter of Credit, with respect to such Letter of Credit.
(h) Each Lender shall be unconditionally and irrevocably liable, without
regard to the occurrence of any Default or Event of Default, to the extent of
the Percentage Share of such Lender at the time of issuance of each Letter of
Credit, to reimburse, on demand, the Agent, as the issuer of such Letter of
Credit, for the amount of each Letter of Credit Payment under such Letter of
Credit. Each Letter of Credit Payment shall be deemed to be a Loan by each
Lender to the extent of funds delivered by such Lender to the Agent with respect
to such Letter of Credit Payment and shall to such extent be deemed a Loan under
and shall be evidenced by the Note of such Lender and shall be payable by the
Borrower upon demand by the Agent.
(i) Each Lender agrees to indemnify the Agent, as the issuer of each Letter
of Credit, and the officers, directors, employees, agents, attorneys in fact and
Affiliates of the Agent (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
the Percentage Share of such Lender at the time of issuance of such Letter of
Credit, from and against any and all liabilities, claims, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind whatsoever which may at any time (including any time following the
payment and performance of all Obligations and the termination of this
Agreement) be imposed on, incurred by or asserted against the Agent as the
issuer of such Letter of Credit or any of its officers, directors, employees,
agents, attorneys in fact or Affiliates in any way relating to or arising out of
this Agreement or such Letter of Credit or any action taken or omitted by the
Agent as the issuer of such Letter of Credit or any of its officers, directors,
employees, agents, attorneys in fact or Affiliates under or in connection with
any of the foregoing, including any liabilities, claims, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
imposed, incurred or asserted as a result of the negligence, whether sole or
concurrent, of the Agent as the issuer of such Letter of Credit or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates;
provided that no Lender (other than the Agent as the issuer of a Letter of
Credit) shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent as the issuer of a Letter of Credit. The agreements in
this Section 2.1(I) shall survive the payment and performance of all Obligations
and the termination of this Agreement.
2.2 Limitations on Interest Periods. Each Interest Period selected by the
Borrower (a) which commences on the last Business Day of a calendar month (or
any day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month, (b) which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day), (c) which would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date and (d) shall have
a duration of not less than one month and, if any Interest Period would
otherwise be a shorter period, the relevant Loan shall be a Base Rate Loan
during such period.
2.3 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, no more than six separate LIBO Rate Loans shall be outstanding
at any one time, with, for purposes of this Section, all LIBO Rate Loans for the
same Interest Period constituting one LIBO Rate Loan. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any interest
rate for any LIBO Rate Loan for any Interest Period therefor:
(a) the Agent determines (which determination shall be conclusive, absent
manifest error) that quotations of interest rates for the deposits referred to
in the definition of "LIBO Rate" in Section 1.2 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loan as provided in this Agreement; or
(b) the Agent determines (which determination shall be conclusive, absent
manifest error) that the rates of interest referred to in the definition of
"LIBO Rate" in Section 1.2 upon the basis of which the rate of interest for such
Loan for such Interest Period is to be determined do not adequately cover the
cost to the Lenders of making or maintaining such Loan for such Interest Period,
then the Agent shall give the Borrower and the Lenders prompt notice thereof;
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make LIBO Rate Loans or to convert Base Rate Loans into LIBO Rate
Loans, and the Borrower shall, on the last day of the then current Interest
Period for each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or
convert such Loan into a LIBO Rate Loan with amounts and maturities for which
quotations are provided, or convert such Loan into a Base Rate Loan in
accordance with the provisions of Section 2.12.
2.4 Use of Loan Proceeds and Letters of Credit. Proceeds of all Loans
shall be used solely by the Borrower (i) to acquire and develop Oil and Gas
Properties, including those which are the subject of the Acquisition, (ii) for
the Borrower's working capital and general business purposes and capital
expenditures not otherwise prohibited under applicable provisions of this
Agreement, (iii) to fund loans or advances to and Investments in Subsidiary
Guarantors and (iv) to pay fees and expenses incurred in connection with this
Agreement and the Acquisition; provided, however, proceeds of Loans may not be
used to purchase or carry, directly or indirectly, any margin stock or for any
other purpose which would constitute the Facility a
"purpose credit" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System.
(b) Letters of Credit shall be issued solely for the account of the Borrower
for general business purposes of the Borrower and the Subsidiary Guarantors not
otherwise prohibited under applicable provisions of this Agreement; provided,
however, no Letter of Credit may be used in lieu or in support of stay or appeal
bonds or obligations in respect of Commodity Hedge Agreements or Interest Rate
Hedge Agreements.
2.5 Interest. Subject to applicable provisions of this Agreement (including
those of Section 2.17), (a) interest on Base Rate Loans shall accrue and be
payable at a daily interest rate based on the per annum rate equal to the sum of
the Adjusted Base Rate for each relevant day plus the Applicable Margin for Base
Rate Loans on such day, converted to a daily rate on the basis of a year of 365
or 366 days, as the case may be; provided, however, in no event shall such
applicable rate exceed the Highest Lawful Rate, with such rate being applied on
the basis of actual days elapsed (including the first day, but excluding the
last day) during the period for which interest is payable at the relevant rate,
and (b) interest on LIBO Rate Loans shall accrue during each relevant Interest
Period and be payable at a daily interest rate based on the per annum rate equal
to the Adjusted LIBO Rate on the first day of the relevant Interest Period plus
the relevant Applicable Margin for LIBO Rate Loans on such day, converted to a
daily rate on the basis of a year of 360 days; provided, however, in no event
shall such applicable rate exceed the Highest Lawful Rate, with such rate being
applied on the basis of actual days elapsed (including the first day, but
excluding the last day) during the period for which interest is payable at the
relevant rate. Notwithstanding the foregoing, interest on past due principal
and, to the extent permitted by applicable law, past due interest and fees,
shall accrue at the Default Rate and shall be payable upon demand by the Agent
at any time as to all or any portion of such interest. Interest provided for
herein shall be calculated on unpaid sums actually advanced and outstanding
pursuant to the terms of this Agreement and only for the period from the date or
dates of such advances to, but not including, the date or dates of repayment.
In the event that the Borrower fails to select the duration of any Interest
Period for any LIBO Rate Loan within the time period and otherwise as provided
herein, such Loan (if outstanding as a LIBO Rate Loan) shall be automatically
converted into a Base Rate Loan on the last day of the then current Interest
Period for such Loan or (if outstanding as a Base Rate Loan) shall remain as, or
(if not then outstanding) shall be made as, a Base Rate Loan.
2.6 Repayment of Loans and Interest. Accrued and unpaid interest on each
outstanding Base Rate Loan shall be due and payable monthly commencing on the
first day of November, 2010 and continuing on the first day of each calendar
month thereafter while any Base Rate Loan remains outstanding, the payment in
each instance to be the amount of interest which has accrued and remains unpaid
in respect of the relevant Loan. Accrued and unpaid interest on each
outstanding LIBO Rate Loan shall be due and payable on the earlier of (a) the
last day of the Interest Period for such LIBO Rate Loan or (b) if any Interest
Period is of a duration longer than three months, on the day of the third month
of the relevant Interest Period corresponding to the day preceding the initial
day of such Interest Period and on the last day of the relevant Interest Period,
the payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. The Loan Balance, together with
all accrued and unpaid interest thereon, shall be due and payable on the
Commitment Termination
Date. At the time of making each payment hereunder or under the Notes, the
Borrower shall specify to the Agent the Loans or other amounts payable by the
Borrower hereunder to which such payment is to be applied. In the event the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Agent may apply such payment as it may elect in its discretion
and in accordance with the terms hereof.
2.7 Outstanding Amounts. The outstanding principal balance of the Note of
each Lender reflected by the notations of such Lender on its records shall be
deemed rebuttably presumptive evidence of the principal amount owing on such
Note. The liability for payment of principal and interest evidenced by each
Note shall be limited to principal amounts actually advanced and outstanding
pursuant to this Agreement and interest on such amounts calculated in accordance
with this Agreement. Unless the Agent shall have been notified by a Lender or
the Borrower prior to the date on which any of them is scheduled to make payment
to the Agent of (in the case of a Lender) the proceeds of a Loan to be made by
such Lender hereunder or (in the case of the Borrower) a payment to the Agent
for the account of the Agent or one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and, in
reliance upon such assumption, may (but shall not be required to) make the
amount thereof available to the intended recipient on such date. If such Lender
or the Borrower, as the case may be, has not in fact made the Required Payment
to the Agent, the recipient of such payment shall, on demand, repay to the Agent
solely for its account the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to, in the case of a Lender as recipient, the
Federal Funds Rate or, in the case of the Borrower as recipient, the Adjusted
Base Rate plus the Applicable Margin.
2.8 Taxes and Time, Place, and Method of Payments. All payments required
pursuant to this Agreement or the Notes shall be made without set-off or
counterclaim in Dollars and in immediately available funds free and clear of,
and without deduction for, any Indemnified Taxes or Other Taxes; provided,
however that if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
by the amount (the "Additional Amount") necessary so that after making all
required deductions (including deductions applicable to additional sums
described in this paragraph) the Agent or any Lender, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law. In addition, to the extent not
paid in accordance with the preceding sentence, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.
(b) THE BORROWER shall indemnify the AGENT AND EACH Lender for Indemnified
Taxes and Other Taxes paid by SUCH PERSON, INCLUDING ANY INDEMNIFIED TAXES OR
OTHER TAXES ARISING FROM THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE
AGENT OR ANY LENDER; provided, however, that the BORROWER shall not be obligated
to make payment to the AGENT OR ANY Lender in respect of penalties, interest and
other similar liabilities attributable to such Indemnified Taxes or
Other Taxes if such penalties, interest or other similar liabilities are
attributable to the gross negligence or willful misconduct of the PERSON SEEKING
INDEMNIFICATION.
(c) If a Lender or the Agent shall become aware that it is entitled to claim
a refund from a Governmental Authority in respect of Indemnified Taxes or Other
Taxes paid by the Borrower pursuant to this Section 2.8, including Indemnified
Taxes or Other Taxes as to which it has been indemnified by the Borrower, or
with respect to which the Borrower has paid Additional Amounts pursuant to the
Loan Documents, it shall promptly notify the Borrower of the availability of
such refund claim and, if the Lender or the Agent, as the case may be,
determines in good faith that making a claim for refund will not have an adverse
effect to its taxes or business operations, shall, within 10 days after receipt
of a request by the Borrower, make a claim to such Governmental Authority for
such refund at the expense of the Borrower. If a Lender or the Agent receives a
refund in respect of any Indemnified Taxes or Other Taxes paid by the Borrower
pursuant to the Loan Documents, it shall within 30 days from the date of such
receipt pay over such refund to the Borrower (but only to the extent of
Indemnified Taxes or Other Taxes paid pursuant to the Loan Documents, including
indemnity payments made or Additional Amounts paid, by the Borrower under this
Section 2.8 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out of pocket expenses of such Lender or the Agent, as
the case may be, and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund).
(d) If any Lender or the Agent is or becomes eligible under any applicable
law, regulation, treaty or other rule to a reduced rate of taxation, or a
complete exemption from withholding, with respect to Indemnified Taxes or Other
Taxes on payments made to it or for its benefit by the Borrower, such Lender or
the Agent, as the case may be, shall, upon the request, and at the cost and
expense, of the Borrower, complete and deliver from time to time any
certificate, form or other document requested by the Borrower, the completion
and delivery of which are a precondition to obtaining the benefit of such
reduced rate or exemption, provided that the taking of such action by such
Lender or the Agent, as the case may be, would not, in the judgment of such
Lender or the Agent, as the case may be, be disadvantageous or prejudicial to
such Lender or the Agent, as the case may be, or inconsistent with its internal
policies or legal or regulatory restrictions. For any period with respect to
which a Lender or the Agent, as the case may be, has failed to provide any such
certificate, form or other document requested by the Borrower, such Lender or
the Agent, as the case may be, shall not be entitled to any payment under this
Section 2.8 in respect of any Indemnified Taxes or Other Taxes that would not
have been imposed but for such failure.
(e) Each Lender organized under the laws of the United States, any State
thereof or the District of Columbia (other than Lenders that are corporations or
otherwise exempt from United States backup withholding Tax) shall (i) deliver to
the Borrower and the Agent, when such Lender first becomes a Lender, upon the
written request of the Borrower or the Agent, two original copies of United
States Internal Revenue Form W-9 or any successor form, properly completed and
duly executed by such Lender, certifying that such Lender is exempt from United
States backup withholding Tax on payments of interest made under the Loan
Documents and (ii) thereafter at each time it is so reasonably requested in
writing by the
Borrower or the Agent, deliver within a reasonable time two original copies of
an updated United States Internal Revenue Service Form W-9 or any successor form
thereto.
(f) Each Lender that is organized under the laws of a jurisdiction other
than the United States, any State thereof or the District of Columbia (each such
Lender, a "Foreign Lender") that is entitled to an exemption from or reduction
of withholding Tax under the laws of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under the Loan Documents shall deliver to the Borrower and the Agent,
such properly completed and duly executed documentation prescribed by applicable
law or reasonably requested by the Borrower or the Agent as will permit such
payments to be made without withholding or at a reduced rate, unless in the good
faith opinion of the Foreign Lender such documentation would expose the Foreign
Lender to any material adverse consequence or risk. Such documentation shall be
delivered by each Foreign Lender on or before the date it becomes a Lender and,
if required by law, on or before the date, if any, such Foreign Lender changes
its Applicable Lending Office by designating a different lending office with
respect to its Loans. In addition, each Foreign Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Foreign Lender. Each Lender (and, in the case of a Foreign Lender its
lending office), represents that on the Closing Date, payments made hereunder by
the Borrower or the Agent to it would not be subject to United States Federal
withholding tax.
(g) Notwithstanding the provisions of subsections (a) and (b) above, the
Borrower shall not be required to indemnify any Foreign Lender or to pay any
Additional Amounts to any Foreign Lender, in respect of United States federal
withholding Tax pursuant to subsections (a) or (b) above, (i) to the extent that
the obligation to withhold amounts with respect to United States federal
withholding tax existed on the date such Foreign Lender became a Lender; (ii)
with respect to payments to a new lending office with respect to a Loan, but
only to the extent that such withholding tax exceeds any withholding tax that
would have been imposed on such Lender had it not designated such new lending
office; (iii) with respect to a change by such Foreign Lender of the
jurisdiction in which it is organized, incorporated, controlled or managed, or
in which it is doing business, from the date such Foreign Lender changed such
jurisdiction, but only to the extent that such withholding tax exceeds any
withholding tax that would have been imposed on such Lender had it not changed
the jurisdiction in which it is organized, incorporated, controlled or managed,
or in which it is doing business; or (iv) to the extent that the obligation to
indemnify any Foreign Lender or to pay such Additional Amounts would not have
arisen but for a failure by such Foreign Lender to comply with the provisions of
Section 2.8(f).
(h) All payments by the Borrower shall be deemed received on (i) receipt or
(ii) the next Business Day following receipt if such receipt is after 3:00 p.m.,
Central Standard or Central Daylight Savings Time, as the case may be, on any
Business Day, and shall be made to the Agent at the Principal Office. Except as
provided to the contrary herein, if the due date of any payment hereunder or
under any Note would otherwise fall on a day which is not a Business Day, such
date shall be extended to the next succeeding Business Day, and interest shall
be payable for any principal so extended for the period of such extension
2.9 Pro Rata Treatment; Adjustments. Except to the extent otherwise
expressly provided herein, (i) each borrowing pursuant to this Agreement shall
be made from the Lenders pro rata in accordance with their respective Percentage
Shares, (ii) each reduction of the sum of the Facility Amounts of the Lenders at
the request of the Borrower, as well as any subsequent increase in the sum of
the Facility Amounts of the Lenders at the request of the Borrower and with
written agreement of the Agent and all the Lenders, shall serve to adjust the
Facility Amounts of the Lenders pro rata in accordance with the Facility Amounts
of the Lenders in effect immediately prior to any such adjustment, (iii) each
payment of Commitment Fees shall be made to the Agent for the account of the
Lenders pro rata in accordance with their respective Percentage Shares, (iv)
except as otherwise provided herein, each payment by the Borrower of other fees
pursuant to this Agreement shall be made to Amegy solely for its account, except
as agreed otherwise by Amegy and any other Lender, (v) each payment of principal
of Loans shall be made to the Agent for the account of the Lenders pro rata in
accordance with their respective shares of the Loan Balance, (vi) each payment
of interest on Loans shall be made to the Agent for the account of the Lenders
pro rata in accordance with their respective shares of the aggregate amount of
interest due and payable to the Lenders, and (vii) each payment by the Borrower
under Commodity Hedge Agreements and Interest Rate Hedge Agreements with
Approved Hedge Counterparties shall be made only to the Person or Persons
entitled thereto.
(b) The Agent shall distribute all payments with respect to the Obligations
under the Loan Documents promptly upon receipt in like funds as received to the
Lenders and any Approved Hedge Counterparties entitled to participate in any
relevant payment. In the event that any payments made hereunder by the Borrower
on the Obligations under the Loan Documents at any particular time are
insufficient to satisfy in full the Obligations under the Loan Documents due and
payable at such time, such payments shall be applied (i) first, to fees and
expenses due pursuant to the terms of this Agreement or any other Loan Document,
(ii) second, to accrued interest, (iii) third, to the Loan Balance and any other
Obligations under the Loan Documents pro rata on the basis of the ratio of the
amount of all such Obligations under the Loan Documents owing to the Agent or
the relevant Lender, as the case may be, to the total amount of the Obligations
under the Loan Documents then owing and (iv) fourth to cash collateralize the
L/C Exposure in the manner provided in Section 2.11.
(c) If any Lender (for purposes of this Section 2.9(c), a "Benefited
Lender") shall at any time receive any payment of all or part of its portion of
the Obligations under the Loan Documents, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 7.1(f) or Section 7.1(g), or
otherwise) in an amount greater than such Lender was entitled to receive
pursuant to the terms hereof, such Benefited Lender shall purchase for cash from
the other Lenders such portion of the Obligations under the Loan Documents of
such other Lenders, or shall provide such other Lenders with the benefits of any
such Collateral or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such Collateral or
proceeds with each of the Lenders according to the terms hereof. If all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefited Lender, such purchase shall be rescinded and the purchase price and
benefits returned by such Lender, to the extent of such recovery, but without
interest. The Borrower agrees that each such Lender so purchasing a portion of
the Obligations under the Loan Documents of another Lender may exercise all
rights of payment (including rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion. If any Lender
ever receives, by voluntary payment, exercise of rights of set-off or banker's
lien, counterclaim, cross-action or otherwise, any funds of the Borrower to be
applied to the Obligations under the Loan Documents, or receives any proceeds by
realization on or with respect to any Collateral, all such funds and proceeds
shall be forwarded immediately to the Agent for distribution in accordance with
the terms of this Agreement.
2.10 Borrowing Base and Monthly Reduction Amount.
(a) The Borrowing Base as of the Closing Date is acknowledged by the
Borrower, the Agent and the Lenders to be $6,000,000. Commencing on October 1,
2010 and continuing thereafter on the first day of each calendar month through
the Commitment Termination Date, the amount of the Borrowing Base then in effect
shall be reduced by the Monthly Reduction Amount, which Monthly Reduction Amount
as of the Closing Date is acknowledged to be $0.
(b) The Borrowing Base and the Monthly Reduction Amount shall be
redetermined, by the Agent, with the approval of the Lenders as required
pursuant to the provisions of Section 9.9, semi-annually (as soon as practicable
following each receipt, prior to the Commitment Termination Date, of a Reserve
Report provided to the Agent pursuant to the provisions of Section 5.4 prior to
commencing with the Reserve Report to be provided to the Agent no later than
April 1, 2011) on the basis of information supplied by the Borrower in
compliance with the provisions of this Agreement, including Reserve Reports, and
all other information available to the Agent and the Lenders. In addition, the
Agent, with the approval of the Lenders as required pursuant to the provisions
of Section 9.9, shall, in the normal course of business following a request of
the Borrower, redetermine the Borrowing Base and the Monthly Reduction Amount;
provided, however, the Agent and the Lenders shall not be obligated to respond
to more than one such request during the period between the scheduled
semi-annual redeterminations provided for above. Notwithstanding the foregoing,
the Borrowing Base in effect at any time shall be subject to reduction in
accordance with applicable provisions of Section 6.4 and the Agent, with the
approval of the Lenders as required pursuant to the provisions of Section 9.9,
may at its discretion and shall, upon request by the Required Lenders and with
the approval of the Lenders as required pursuant to the provisions of Section
9.9, redetermine the Borrowing Base and the Monthly Reduction Amount at any
time; provided, however, the Agent and the Lenders shall not be entitled to more
than one such unscheduled redetermination between the scheduled redeterminations
provided for above.
(c) Upon each determination of the Borrowing Base and the Monthly Reduction
Amount, the Agent shall notify the Borrower orally (confirming such notice
promptly in writing) of such determination, and, subject to the operation of the
Monthly Reduction Amount, the Borrowing Base and the Monthly Reduction Amount so
communicated to the Borrower shall become effective upon such oral notification
and shall remain in effect until the next subsequent determination of the
Borrowing Base and the Monthly Reduction Amount.
(d) The Borrowing Base shall represent the determination by the Agent and
the Lenders, in accordance with the applicable definitions and provisions herein
contained and the customary lending practices of the Agent and the Lenders for
loans of this nature (but taking
into account floor and cap prices or other price protection under Commodity
Hedge Agreements), of the value, for loan purposes, of the Mortgaged Properties
and any other Oil and Gas Properties of the Borrower acceptable to the Agent and
the Lenders, subject, in the case of any increase in the Borrowing Base, to the
credit approval processes of the Agent and each of the Lenders. Furthermore,
the Borrower acknowledges that the determination of the Borrowing Base contains
an equity cushion (market value in excess of loan value), which is acknowledged
by the Borrower to be essential for the adequate protection of the Agent and the
Lenders.
2.11 Mandatory Prepayments. If at any time, as a result of the second
sentence of subsection (a) of Section 2.10, the sum of the Loan Balance and the
L/C Exposure exceeds the Commitment Amount then in effect, the Borrower shall,
within three Business Days of receipt of notice from the Agent of such
occurrence, prepay such portion of the Loan Balance and/or, as provided below in
this subsection (a), provide cash as Collateral so that the sum of the Loan
Balance and the L/C Exposure does not exceed the Commitment Amount then in
effect. If at any time, other than as a result of the second sentence of
subsection (a) of Section 2.10, the sum of the Loan Balance and the L/C Exposure
exceeds the Commitment Amount then in effect (such excess, a "Deficiency"), the
Borrower shall, within 30 days of notice from the Agent of such occurrence, (i)
prepay the amount of the Deficiency in four substantially equal installment
payments, each for application on the Loan Balance and then to provide cash as
Collateral for the L/C Exposure in the manner provided below in this Section
2.11, the first of which being due on the thirtieth day following receipt by the
Borrower of the relevant notice from the Agent and the second, third and fourth
of which being due on the sixtieth, ninetieth and one hundred twentieth day,
respectively, following receipt by the Borrower of the relevant notice from the
Agent, (ii) provide additional Collateral, of character and value satisfactory
to the Required Lenders in their reasonable credit judgment, and/or cash as
Collateral to secure the Obligations, by way of the execution and delivery to
the Agent of Security Documents in form and substance satisfactory to the Agent
or (iii) affect any combination of the alternatives described in clauses (i) and
(ii) of this sentence and acceptable to the Required Lenders in their reasonable
credit judgment. Any prepayment pursuant to the provisions of this Section 2.11
shall be without premium or penalty, except as provided in Section 2.18, and the
amount of any such prepayment may be reborrowed if otherwise available to the
Borrower pursuant to the terms of this Agreement. In the event that a mandatory
prepayment is to be made under this Section 2.11 or any other applicable
provision of this Agreement and the Loan Balance is less than the amount
required to be prepaid, the Borrower shall repay the entire Loan Balance and, in
accordance with the provisions of the relevant Letter of Credit Applications
executed by the Borrower or otherwise to the satisfaction of the Agent, deposit
with the Agent, as additional Collateral securing the Obligations, an amount of
cash, in immediately available funds, equal to the L/C Exposure minus the
Commitment Amount. The cash deposited with the Agent in satisfaction of the
requirement provided in this Section 2.11 shall be invested, at the express
direction of the Borrower as to investment vehicle and maturity (which shall be
no later than the latest expiry date of any then outstanding Letter of Credit),
for the account of the Borrower in cash or cash equivalent investments offered
by or through Amegy.
2.12 Voluntary Prepayments and Conversions of Loans. Subject to applicable
provisions of this Agreement, the Borrower shall have the right at any time or
from time to time to prepay Loans without prepayment penalty and to convert
Loans of one type or with one
Interest Period into Loans of another type or with a different Interest Period;
provided, however, that (a) the Borrower shall give the Agent notice of each
such prepayment or conversion of (i) all or any portion of a LIBO Rate Loan no
less than three Business Days prior to prepayment or conversion and (ii) all or
any portion of a Base Rate Loan no less than one Business Day prior to
prepayment or conversion, (b) any prepayment of any LIBO Rate Loan shall be in
an amount of at least equal to $100,000 and a whole multiple of $10,000, (c) the
Borrower shall pay all accrued and unpaid interest on the amounts prepaid or
converted, (d) no such prepayment or conversion shall serve to postpone the
repayment when due of any Obligation or any installments thereof and (e) the
Borrower shall reimburse each Lender for any losses, expenses or costs incurred
by such Lender pursuant to prepayment or conversion of a Loan, or the failure of
the Borrower to make such prepayment or conversion as provided in Section 2.18.
Except as provided in the immediately preceding sentence, any prepayment
pursuant to the provisions of this Section 2.12 shall be without premium or
penalty and the amount of any such prepayment may be reborrowed if otherwise
available to the Borrower pursuant to the terms of this Agreement.
2.13 Commitment Fees. In addition to interest on the Notes as provided
herein and other fees payable hereunder, and to compensate the Lenders for
maintaining funds available under the Facility, the Borrower shall pay to the
Agent, for the account of the Lenders, in immediately available funds, for the
calendar quarter ending on the last day of September, 2010 and for each calendar
quarter thereafter during the Commitment Period and on the Commitment
Termination Date, a fee equal to one-half of one percent (0.50%) per annum,
calculated on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day, but excluding the last day),
multiplied by the average daily amount of the Available Commitment during the
relevant quarterly or shorter period, as the case may be. Commitment Fees shall
be payable by the Borrower upon receipt of an invoice therefor or statement
thereof delivered by the Agent and shall be past due if not paid within ten days
of receipt of each such invoice or statement.
2.14 Engineering Fees and Expenses. The Borrower shall pay directly, or
reimburse the Agent for its payment of, the fees and expenses of the independent
petroleum engineer or firm of independent petroleum engineers engaged by the
Agent in connection with the initial determination and each subsequent
redetermination of the Borrowing Base. Such amounts shall be payable by the
Borrower to the independent petroleum engineer or firm of independent petroleum
engineers or to the Agent, as the case may be, within 30 days of receipt by the
Borrower of a statement therefor.
2.15 Additional Fees. In addition to interest on the Notes as provided
herein and other fees payable hereunder, and to compensate the Lenders for the
costs of the extension of credit hereunder, the Borrower shall pay to the Agent,
for the account of the Lenders, on the Closing Date, in immediately available
funds, a fee in the amount of $75,000. Additionally, the Borrower shall pay a
fee to the Agent on the Closing Date and each anniversary of the Closing Date,
for its account, equal to $5,000 multiplied by the total number of Lenders
existing at such time; provided, however, that in the event that Amegy is the
sole Lender existing at such time, such fee shall not apply. Further, (a) the
Borrower shall pay a fee to the Agent, for the account of the Lenders, at any
time the Borrowing Base is increased to an amount in excess of the highest
Borrowing Base ever previously in effect equal to one and one-quarter percent
(1.25%) of the
amount of such new Borrowing Base in excess of the highest Borrowing Base ever
previously in effect.
2.16 Loans to Satisfy Obligations. Upon a Default, the Lenders may, but
shall not be obligated to, make Loans for the benefit of the Borrower and apply
proceeds thereof to the satisfaction of any condition, warranty, representation
or covenant of the Borrower or any Guarantor contained in this Agreement or any
other Loan Document. Such Loans shall be evidenced by the Notes and shall bear
interest at the Adjusted Base Rate plus the Applicable Margin in the manner
provided in Section 2.5, subject, however, to the provisions of Section 2.5
regarding the accrual of interest at the Default Rate in certain circumstances.
2.17 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. In this connection, there shall never be
collected, charged, or received on the sums advanced hereunder interest in
excess of that which would accrue at the Highest Lawful Rate. The Borrower
agrees that, to the extent the Highest Lawful Rate is determined with reference
to the laws of the State to Texas, the Highest Lawful Rate shall be the "weekly"
rate as defined in Chapter 303 of the Texas Finance Code, provided, however,
that the Agent or any Lender may, at its election, substitute for the "weekly"
rate the "annualized" or "quarterly" rate, as such terms are defined in the
aforesaid statute, upon the giving of notices provided for in such statute and
effective upon the giving of such notices. The Agent and each Lender 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
laws of the State of Texas or the United States of America applicable to the
Agent or the relevant Lender, if greater.
(b) 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 held by any affected Lenders shall be the Highest Lawful Rate, and the
obligation, if any, of the Borrower for the payment of fees or other charges
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 on amounts evidenced by the Notes held by
any affected Lenders shall remain at the Highest Lawful Rate until such time as
there has been paid to each applicable Lender (i) the amount of interest in
excess of that accruing at the Highest Lawful Rate that such Lender would have
received during the Limitation Period had the interest rate remained at the
otherwise applicable rate, and (ii) all interest and fees otherwise payable to
such Lender but for the effect of such Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on the Notes or
under this Agreement or any other Loan Document include amounts which by law are
deemed interest and which would exceed the amount permitted if the Highest
Lawful 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 the Borrower, the
Agent, and the Lenders; and the party receiving such excess shall promptly
refund the amount of such excess (to the extent only of such interest payments
in excess of that which would have accrued and been payable on the basis of the
Highest Lawful Rate) upon discovery of such error by such party or
notice thereof from the Borrower. In the event that the maturity of any
Obligation is accelerated, by reason of an election by the Lenders or otherwise,
or in the event of any required or permitted prepayment, then the consideration
constituting interest under applicable laws may never exceed that payable on the
basis of the Highest Lawful Rate, and excess amounts paid which by law are
deemed interest, if any, shall be credited by the Agent and the Lenders on the
principal amount of the Obligations, or if the principal amount of the
Obligations shall have been paid in full, refunded to the Borrower.
(d) All sums paid, or agreed to be paid, to the Agent and the Lenders for
the use, forbearance and detention of the proceeds of any advance hereunder
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full term hereof until paid in full so that
the actual rate of interest is uniform but does not exceed the Highest Lawful
Rate throughout the full term hereof.
2.18 Yield Protection. Without limiting the effect of the other provisions
of this Section 2.18 (but without duplication), the Borrower shall pay to the
Agent and each Lender from time to time such amounts as are necessary to
compensate it for any actual and reasonable Additional Costs incurred by the
Agent or such Lender.
(b) Without limiting the effect of the other provisions of this Section 2.18
(but without duplication), the Borrower shall pay to each Lender from time to
time on request such amounts as are necessary to compensate such Lender or such
Lender's holding company for any costs attributable to the maintenance by such
Lender (or any Applicable Lending Office), pursuant to any Regulatory Change, of
capital in respect of its Commitment, such compensation to include an amount
equal to any reduction of the rate of return on assets or equity of such Lender
or such Lender's holding company (or any Applicable Lending Office) to a level
below that which such Lender or such Lender's holding company (or any Applicable
Lending Office) could have achieved but for such Regulatory Change.
(c) Without limiting the effect of the other provisions of this Section 2.18
(but without duplication), in the event that any Requirement of Law or
Regulatory Change or the compliance by the Agent or any Lender therewith shall
(i) impose, modify, or hold applicable any reserve, special deposit, or similar
requirement against any Letter of Credit or obligation to issue Letters of
Credit, or (ii) impose upon the Agent or such Lender any other condition
regarding any Letter of Credit or obligation to issue Letters of Credit, and the
result of any such event shall be to increase the cost to the Agent or such
Lender of issuing or maintaining any Letter of Credit or obligation to issue
Letters of Credit or any liability with respect to Letter of Credit Payments, or
to reduce any amount receivable in connection therewith, then upon demand by the
Agent or such Lender, as the case may be, the Borrower shall pay to the Agent or
such Lender, from time to time as specified by the Agent or such Lender,
additional amounts which shall be sufficient to compensate the Agent or such
Lender for such increased cost or reduced amount receivable.
(d) Without limiting the effect of the other provisions of this Section 2.18
(but without duplication), the Borrower shall pay to the Agent and each Lender
such amounts as shall be sufficient in the reasonable opinion of the Agent and
such Lender to compensate them for any actual and reasonable loss, cost, or
expense incurred by and as a result of:
(i) any payment, prepayment, or conversion by the Borrower of a LIBO Rate
Loan on a date other than the last day of an Interest Period for such Loan; or
(ii) any failure by the Borrower to borrow a LIBO Rate Loan or to convert a
Base Rate Loan into a LIBO Rate Loan on the date for such borrowing or
conversion specified in the relevant Borrowing Request,
such compensation to include with respect to any LIBO Rate Loan, an amount equal
to the excess, if any, of (A) the amount of interest which would have accrued on
the principal amount so paid, prepaid, converted, or not borrowed or converted
for the period from the date of such payment, prepayment, conversion, or failure
to borrow or convert to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow or convert, the Interest
Period for such Loan which would have commenced on the date of such failure to
borrow or convert) at the applicable rate of interest for such Loan provided for
herein over (B) the interest component of the amount the Agent or such Lender
would bid were it to bid at the commencement of such period in the London
interbank market for Dollar deposits of amounts comparable to such principal
amount and maturities comparable to such period, as reasonably determined by the
Agent or such Lender.
(e) Determinations by the Agent or any Lender for purposes of this Section
2.18 of the effect of any Regulatory Change on capital maintained, its costs or
rate of return, its obligation to make and maintain Loans, issuing or
participating in Letters of Credit, or on amounts receivable by it in respect of
Loans, Letters of Credit or such other obligations, and the additional amounts
required to compensate the Agent and such Lender under this Section 2.18 shall
be conclusive, absent manifest error, provided that such determinations are made
on a reasonable basis. The Agent or the relevant Lender shall furnish the
Borrower with a certificate setting forth in reasonable detail the basis and
amount of Additional Costs or any other loss, cost or expense incurred as a
result of any such event, and the statements set forth therein shall be
conclusive, absent manifest error, provided that such determinations are made on
a reasonable basis. The Agent or the relevant Lender shall (i) notify the
Borrower, as promptly as practicable after the Agent or such Lender obtains
knowledge of any Additional Costs or other sums payable pursuant to this Section
and determines to request compensation therefor, of any event occurring after
the Closing Date which will entitle the Agent or such Lender to compensation
pursuant to this Section 2.18; and (ii) designate a different Applicable Lending
Office for the Loans affected by such event if such designation will avoid the
need for or reduce the amount of such compensation and will not, in the sole
opinion of the Agent or such Lender, be disadvantageous to the Agent or such
Lender. If any Lender requests compensation from the Borrower under this
Section 2.18, the Borrower may, after payment of all compensation then accrued
and by notice to the Agent and such Lender, require that the Loans by such
Lender of the type with respect to which such compensation is requested be
converted into Base Rate Loans in accordance with Section 2.12. Any
compensation requested by the Agent or any Lender pursuant to this Section 2.18
shall be due and payable within 30 days of receipt by the Borrower of any such
notice.
(f) The Agent and the Lenders agree not to request, and the Borrower shall
not be obligated to pay, any Additional Costs or other sums payable pursuant to
this Section unless similar Additional Costs and other sums payable are also
generally assessed by the Agent
or such Lender against other customers similarly situated where such customers
are subject to documents providing for such assessment.
2.19 Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to (a) honor its obligation to make LIBO Rate Loans, or (b) maintain LIBO
Rate Loans, then such Lender shall promptly notify the Agent and the Borrower
thereof. The obligation of such Lender to make LIBO Rate Loans and convert Base
Rate Loans into LIBO Rate Loans shall then be suspended until such time as such
Lender may again make and maintain LIBO Rate Loans, and the outstanding LIBO
Rate Loans of such Lender shall be converted into Base Rate Loans.
2.20 Replacement Lenders. If any Lender has notified the Borrower of its
incurring any loss, cost or expense under Section 2.18 or has invoked the
indemnification as to certain Taxes set forth in Section 2.8, the Borrower may,
unless such Lender has notified the Borrower that the circumstances giving rise
to such notice no longer apply, terminate, in whole but not in part, the
Commitment of such Lender (other than the Agent) (the "Terminated Lender") at
any time upon five Business Days' prior written notice to the Terminated Lender
and the Agent (a "Notice of Termination").
(b) In order to effect the termination of the Commitment of the Terminated
Lender, the Borrower shall (i) obtain an agreement with one or more Lenders to
increase their Commitments and/or (ii) request any one or more other Persons to
become a "Lender" in place and instead of such Terminated Lender and agree to
accept a Commitment; provided, however, that such one or more other Persons are
acceptable to the Agent and become parties hereto by executing an Assignment
Agreement (the Lenders or other Persons that agree to accept in whole or in part
the Commitment of the Terminated Lender being referred to herein as the
"Replacement Lenders"), such that the aggregate increased and/or accepted
Facility Amounts of the Replacement Lenders under clauses (i) and (ii) above
equal the Facility Amount of the Terminated Lender.
(c) The Notice of Termination shall include the name of the Terminated
Lender, the date the termination will occur (the "Termination Date"), the
Replacement Lender or Replacement Lenders to which the Terminated Lender will
assign its Commitment, and, if there will be more than one Replacement Lender,
the portion of the Terminated Lender's Commitment to be assigned to each
Replacement Lender.
(d) On the Termination Date, (i) the Terminated Lender shall by execution
and delivery of an Assignment Agreement assign its Commitment to the Replacement
Lender or Replacement Lenders (pro rata, if there is more than one Replacement
Lender, in proportion to the portion of the Terminated Lender's Commitment to be
assigned to each Replacement Lender) indicated in the Notice of Termination and
shall assign to the Replacement Lender or Replacement Lenders its Loans (if any)
then outstanding pro rata as aforesaid, (ii) the Terminated Lender shall endorse
its Note, payable without recourse, representation or warranty to the order of
the Replacement Lender or Replacement Lenders (pro rata as aforesaid), (iii) the
Replacement Lender or Replacement Lenders shall purchase the Note held by the
Terminated Lender (pro rata as aforesaid) at a price equal to the unpaid
principal amount thereof plus interest and fees accrued and unpaid to the
Termination Date, (iv) the Replacement Lender or
Replacement Lenders will thereupon (pro rata as aforesaid) succeed to and be
substituted in all respects for the Terminated Lender with like effect as if
becoming a Lender pursuant to the terms of Section 9.1(b) and the Terminated
Lender will have the rights and benefits of an assignor under Section 9.1(b) and
(v) the Terminated Lender shall have received payment of an amount equal to its
Percentage Share of the Loan Balance and accrued interest thereon, accrued fees
owed to it and all other amounts due and owing to it hereunder and under the
other Loan Documents (including any loss, cost or expense under Section 2.18
incurred up to, but not including, the Termination Date). To the extent not in
conflict, the terms of Section 9.1(b) shall supplement the provisions of this
Section 2.20.
(e) Any Terminated Lender (including the Agent in its capacity as a Lender
and as Agent) shall reimburse the Borrower for all reasonable and necessary fees
and expenses of counsel to the Borrower and, if required by the Replacement
Lender or Replacement Lenders, of counsel to the Replacement Lender or
Replacement Lenders in connection with replacing such Terminated Lender with a
Replacement Lender or Replacement Lenders.
2.21 Regulatory Change. In the event that by reason of any Regulatory
Change or any other circumstance arising after the Closing Date affecting any
Lender, such Lender (a) incurs Additional Costs based on or measured by the
excess above a level, as prescribed from time to time by any Governmental
Authority with jurisdiction over such Lender, of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the interest rate on any LIBO Rate Loan is determined as
provided in this Agreement or a category of extensions of credit or other assets
of such Lender which includes any LIBO Rate Loan, or (b) becomes subject to
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, at the election of such Lender with notice to the Agent and the
Borrower, the obligation of such Lender to make LIBO Rate Loans and to convert
Base Rate Loans into LIBO Rate Loans shall be suspended until such time as such
Regulatory Change or other circumstance ceases to be in effect, and all such
outstanding LIBO Rate Loans shall be converted into Base Rate Loans.
2.22 Letters in Lieu of Transfer Orders or Division Orders. The Agent
agrees that none of the letters in lieu of transfer or division orders provided
pursuant to the provisions of Section 3.1(f) or Section 5.7 will be sent to the
addressees thereof unless an Event of Default has occurred, at which time the
Agent may, at its option and in addition to the exercise of any of its other
rights and remedies, send any or all of such letters.
2.23 Power of Attorney. The Borrower hereby designates the Agent as its
agent and attorney-in-fact, to act in its name, place, and stead solely for the
purpose of completing and, upon the occurrence of an Event of Default,
delivering any and all of the letters in lieu of transfer or division orders
delivered by the Borrower pursuant to the provisions of Section 3.1(f) or
Section 5.7, including completing any blanks contained in such letters and
attaching exhibits thereto describing the relevant Collateral. The Borrower
hereby ratifies and confirms all that the Agent shall lawfully do or cause to be
done by virtue of this power of attorney and the rights granted with respect to
such power of attorney. This power of attorney is coupled with the interests of
the Agent in the Collateral, shall commence and be in full force and effect as
of the Closing Date and shall remain in full force and effect and shall be
irrevocable so long as any Obligation remains outstanding or unpaid or any
Commitment exists. The powers conferred on
the Agent by this appointment are solely to protect the interests of the Agent,
the Lenders and any other Secured Creditors under the Loan Documents with
respect to the assignment of production proceeds under certain of the Security
Documents and shall not impose any duty upon the Agent to exercise any such
powers. The power of attorney under this Section 2.23 is expressly limited to
the rights and powers set forth herein and no additional rights or powers are
herein created or implied. The Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and shall not be
responsible to the Borrower or any other Person for any act or failure to act
with respect to such powers, except for gross negligence or willful misconduct.
2.24 Security Interest in Accounts; Right of Offset. As security for the
payment and performance of the Obligations, the Borrower hereby transfers,
assigns, and pledges to the Agent, each Lender and each other Approved Hedge
Counterparty (for the pro rata benefit of such Persons) and grants to the Agent,
each Lender and each other Approved Hedge Counterparty (for the pro rata benefit
of such Persons) a security interest in all of its funds now or hereafter or
from time to time on deposit with the Agent, such Lender or such other Approved
Hedge Counterparty, with such interest of the Agent, the Lenders and the other
Approved Hedge Counterparties to be retransferred, reassigned, and/or released
at the expense of the Borrower upon payment in full and complete performance of
all Obligations. All remedies as secured party or assignee of such funds shall
be exercisable upon the occurrence of any Event of Default, regardless of
whether the exercise of any such remedy would result in any penalty or loss of
interest or profit with respect to any withdrawal of funds deposited in a time
deposit account prior to the maturity thereof. Furthermore, the Borrower hereby
grants to the Agent, each Lender and each other Approved Hedge Counterparty (for
the pro rata benefit of such Persons) the right, exercisable at such time as any
Obligation shall mature, whether by acceleration of maturity or otherwise, of
offset or banker's lien against all of its funds now or hereafter or from time
to time on deposit with the Agent, such Lender or such other Approved Hedge
Counterparty, regardless of whether the exercise of any such remedy would result
in any penalty or loss of interest or profit with respect to any withdrawal of
funds deposited in a time deposit account prior to the maturity thereof. The
provisions of this Section 2.24 shall in all respects be subject to the
provisions of any intercreditor agreement among any Secured Third Party Hedge
Counterparty, the Borrower and the Agent.
2.25 Defaulting Lenders.
(a) Notwithstanding anything to the contrary contained herein, in the event
any Lender (i) becomes a Defaulting Lender, or (ii) notifies either the Agent or
the Borrower that it does not intend to make available its portion of any Loan
(if the actual refusal would constitute a breach by such Lender of its
obligations under this Agreement) (each, a "Lender Default"), all rights and
obligations hereunder of such Defaulting Lender and of the parties hereto shall
be modified to the extent of the express provisions of this Section 2.25 while
such Lender Default remains in effect.
(b) Loans shall be made pro rata from Lenders (the "Non-Defaulting Lenders")
which are not Defaulting Lenders based on their respective Percentage Shares,
and no Percentage Share of any Lender or any pro rata share of any Loans
required to be advanced by any Lender shall be increased as a result of such
Lender Default. Amounts received in respect of
principal of any type of Loans shall be applied to reduce the applicable Loans
of each Lender (other than any Defaulting Lender) pro rata based on the
aggregate of the outstanding Loans of that type of all Lenders at the time of
such application; provided that, the Agent shall not be obligated to transfer to
a Defaulting Lender any payments received by the Agent for the Defaulting
Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder (including any principal, interest or fees). Amounts
payable to a Defaulting Lender shall instead be paid to or retained by the
Agent. The Agent may hold and, in its discretion, re-lend to the Borrower the
amount of such payments received or retained by it for the account of such
Defaulting Lender.
(c) A Defaulting Lender shall not be entitled to give instructions to the
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the other Loan Documents. All amendments, waivers and other
modifications of this Agreement and the other Loan Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
either Loans outstanding or a Percentage Share.
(d) Other than as expressly set out in this Section 2.25, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify the
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.25 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the other Loan Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which the Borrower, the Agent or any
Lender may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the satisfaction
of the Agent the breach or condition which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
ARTICLE III
CONDITIONS
The obligations of the Agent and the Lenders to enter into this Agreement and to
make Loans or issue or participate in, as the case may be, Letters of Credit are
subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items. Neither the Lenders nor the
Agent shall have any obligation under this Agreement unless and until all
matters incident to the consummation of the transactions contemplated herein
shall be satisfactory to the Agent and the Lenders, and the Agent and, upon
request, any Lender shall have received, reviewed and approved the following
documents and other items, appropriately executed when necessary and, where
applicable, acknowledged by one or more Responsible Officers of the Borrower or
other Persons, as the case may be, all in form and substance satisfactory to the
Agent and dated, where applicable, of even date herewith or a date prior thereto
or thereafter and acceptable to the Agent:
(a) multiple counterparts of this Agreement as requested by the Agent;
(b) the Notes to be in place on the Closing Date;
(c) copies of the organizational documents of the Borrower and all
amendments to any of such documents, accompanied by a certificate dated the
Closing Date issued by the secretary or an assistant secretary or another
authorized representative of the Borrower to the effect that each such copy is
correct and complete;
(d) a certificate of incumbency dated the Closing Date, including specimen
signatures of all officers or other representatives of the Borrower who are
authorized to execute Loan Documents on behalf of the Borrower, each such
certificate being executed by the secretary or an assistant secretary or another
authorized representative of the Borrower;
(e) copies of resolutions adopted by the directors of the Parent approving
the Loan Documents to which the Borrower is a party and authorizing the
transactions contemplated herein and therein, accompanied by a certificate dated
the Closing Date issued by the secretary or an assistant secretary of the Parent
to the effect that such copies are true and correct copies of resolutions duly
adopted and that such resolutions constitute all the resolutions adopted with
respect to such transactions, have not been amended, modified or rescinded in
any respect and are in full force and effect as of the date of such certificate;
(f) the following documents establishing Liens in favor or for the benefit
of the Agent, for the benefit of the Secured Creditors, in and to the
Collateral, including Mortgaged Properties constituting no less than ninety
percent (90%) of the discounted present value, as determined by the Agent in its
reasonable discretion, of the proved reserves attributable to the Oil and Gas
Properties of the Borrower:
(i) security documents covering, in the aggregate and among other Property
of the Borrower, Oil and Gas Properties of the Borrower sufficient for the
Borrower to be in compliance with the provisions of Section 5.5; and
(ii) undated letters, in form and substance satisfactory to the Agent, from
the Borrower to each purchaser of production and disburser of the proceeds of
production from or attributable to the Mortgaged Properties, with the addressees
left blank, authorizing and directing the addressees to make future payments
attributable to production from the Mortgaged Properties directly to the Agent;
(g) evidence satisfactory to the Agent that, with the exception of delivery
by the Borrower of funds in payment of the purchase price for the Acquisition,
the Acquisition has closed;
(h) audited financial statements of the Parent and its consolidated
Subsidiaries as of December 31, 2009, together with opinion of the auditors of
the Parent with respect thereto, and a balance sheet of the Borrower prepared as
of the Closing Date and giving effect to the Acquisition;
(i) certificates dated as of a recent date from the Secretary of State or
other appropriate Governmental Authority evidencing the existence or
qualification and, if applicable, good standing of the Borrower in its
jurisdiction of organization and in any other jurisdictions where it owns
property or does business;
(j) results of a search of the uniform commercial code records of the
Secretary of State of the State of Delaware, in the name of the Borrower, such
search reports to be from a source or sources acceptable to the Agent and
reflecting no Liens, other than Permitted Liens, against any of the Collateral
as to which perfection of a Lien is accomplished by the filing of a financing
statement;
(k) confirmation, acceptable to the Agent, of the title of the Borrower,
free and clear of Liens other than Permitted Liens, to Mortgaged Properties
constituting no less than eighty percent (80%) of the discounted present value,
as determined by the Agent in its reasonable discretion, of the proved reserves
attributable to such Mortgaged Properties;
(l) confirmation acceptable to the Agent that the Oil and Gas Properties of
the Borrower are in compliance, in all material respects, with applicable
Environmental Laws;
(m) copies of executed counterparts of all operating, lease, sublease,
royalty, sales, exchange, processing, farmout, bidding, pooling, unitization,
communitization and other agreements relating to the Mortgaged Properties, as
requested by the Agent or any Lender;
(n) engineering information regarding the Mortgaged Properties, as requested
by the Agent;
(o) the opinions of Xxxxxx & Xxxxxx, L.L.P. and Xxxxxxx Xxxxx PLLP, as
counsel to the Borrower in connection with this Agreement and the other Loan
Documents to which the Borrower is a party, which, when taken together, address,
in substance, the opinions set forth in the form of opinion attached hereto as
Exhibit V;
(p) certificates evidencing the insurance coverage required by the
provisions of Section 5.20;
(q) payment to Amegy of any fees due as of the Closing Date pursuant to this
Agreement;
(r) payment from the Borrower for estimated fees charged by filing officers
and other public officials incurred or to be incurred in connection with the
filing and recordation of any Security Documents and fees and expenses of
Xxxxxxx Xxxxxx L.L.P., counsel to the Agent, in connection with the transaction
which is the subject of this Agreement and, in each case, for which invoices
have been presented as of the Closing Date;
(s) copies of all Commodity Hedge Agreements, in form and substance and with
counterparties acceptable to the Agent, for purposes of determining the
Borrowing Base as of the Closing Date, if any;
(t) certificates of Responsible Officers of the Parent to the effect that
all representations and warranties made by the Borrower in this Agreement or any
other Loan Document in place on the Closing Date are true and correct as of the
Closing Date and that no Default or Event of Default exists as of the Closing
Date;
(u) confirmation acceptable to the Agent that no event or circumstance,
including any action, suit, investigation or proceeding pending, or, to the
knowledge of the Borrower, threatened in any court or before any arbitrator or
Governmental Authority, shall have occurred which could reasonably be expected
to have a Material Adverse Effect; and
(v) such other agreements, documents, instruments, opinions, certificates,
waivers, consents and evidence as the Agent or any Lender may request.
3.2 Each Loan. In addition to the conditions precedent stated elsewhere
herein, the Lenders shall not be obligated to make any Loan, other than in
connection with a Letter of Credit Payment, unless:
(a) at least the requisite time prior to the requested date for the relevant
Loan, the Borrower shall have delivered to the Agent a Borrowing Request and a
funding direction advising the Agent whether the requested Loan should be funded
to an account of the Borrower at Amegy or should be funded by wire transfer to
an account of another Person (in which case wire transfer instructions shall be
included) and each statement or certification made in such Borrowing Request
shall be true and correct on the requested date for such Loan;
(b) no Event of Default, Default or Deficiency shall exist or will occur as
a result of the making of the requested Loan;
(c) if requested by the Agent or any Lender, the Borrower shall have
delivered evidence satisfactory to the Agent or such Lender substantiating any
of the matters contained in this Agreement which are necessary to enable the
Borrower to qualify for such Loan;
(d) the Agent shall have received, reviewed and approved such additional
documents and items as described in Section 3.1 as may be requested by the Agent
with respect to such Loan;
(e) no event shall have occurred which, in the opinion of the Agent or any
of the Lenders, could reasonably be expected to have a Material Adverse Effect;
(f) each of the representations and warranties of the Borrower or any of the
Guarantors contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects and shall be deemed to be repeated by
the relevant entity as if made on the requested date for such Loan, except for
any such representations and warranties that speak to a specific date;
(g) all of the Security Documents shall be in full force and effect and
provide to the Agent the security intended thereby;
(h) neither the consummation of the transactions contemplated hereby nor the
making of such Loan shall contravene, violate or conflict with any Requirement
of Law;
(i) if the Borrower or any of the Guarantors has formed, after the Closing
Date, any Subsidiary, such Subsidiary, if a Domestic Subsidiary, shall have
executed and delivered a Joinder Agreement and a Guaranty and, if requested by
the Agent, Security Documents covering the assets of such Domestic Subsidiary;
and
(j) all matters incident to the consummation of the transactions hereby
contemplated shall be satisfactory to the Agent.
3.3 Issuance of Letters of Credit. The obligation of the Agent, as the
issuer of the Letters of Credit, to issue, renew, or extend any Letter of Credit
is subject to the satisfaction of the following additional conditions precedent:
(a) the Borrower shall have delivered to the Agent a written (or oral,
confirmed promptly in writing) request for the issuance, renewal or extension of
a Letter of Credit at least three Business Days prior to the requested issuance,
renewal or extension date and a Letter of Credit Application at least one
Business Day prior to the requested issuance date; and each statement or
certification made in such Letter of Credit Application shall be true and
correct in all material respects on the requested date for the issuance of such
Letter of Credit;
(b) no Event of Default, Default or Deficiency shall exist or will occur as
a result of the issuance, renewal, or extension of such Letter of Credit;
(c) if requested by the Agent or any Lender, the Borrower shall have
delivered evidence satisfactory to the Agent or such Lender substantiating any
of the matters contained in this Agreement which are necessary to enable the
Borrower to qualify for the issuance, renewal or extension of such Letter of
Credit;
(d) the Agent shall have received, reviewed, and approved such additional
documents and items as described in Section 3.1 as may be requested by the Agent
with respect to the issuance, renewal or extension of such Letter of Credit;
(e) no event shall have occurred which, in the opinion of the Agent or any
of the Lenders, could reasonably be expected to have a Material Adverse Effect;
(f) each of the representations and warranties of the Borrower or any of the
Guarantors contained in this Agreement and the other Loan Documents shall be
true and correct and shall be deemed to be repeated by the Borrower as if made
on the requested date for the issuance, renewal or extension of such Letter of
Credit except for any such representation and warranties that speak to a
specific date;
(g) all of the Security Documents shall be in full force and effect and
provide to the Lender the security intended thereby;
(h) neither the consummation of the transactions contemplated hereby nor the
issuance, renewal or extension of such Letter of Credit shall contravene,
violate or conflict with any Requirement of Law;
(i) if the Borrower or any of the Guarantors has formed, after the Closing
Date, any Subsidiary, such Subsidiary, if a Domestic Subsidiary, shall have
executed and delivered a Joinder Agreement and a Guaranty and, if requested by
the Agent, Security Documents covering the assets of such Domestic Subsidiary;
(j) the terms, provisions and beneficiary of the Letter of Credit or such
renewal or extension shall be satisfactory to the Agent, as the issuer of the
Letters of Credit, in its sole discretion; and
(k) all matters incident to the consummation of the transactions hereby
contemplated shall be satisfactory to the Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement, to induce the
Agent to issue and renew Letters of Credit, and to induce the Lenders to make
the Loans and to participate in Letters of Credit, the Borrower and each of the
Guarantors represents and warrants to the Agent and each Lender (which
representations and warranties shall survive the delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by it of this Agreement
and the borrowings by the Borrower hereunder, the execution and delivery by the
Borrower of the Notes, the repayment by the Borrower of the Notes and interest
and fees provided for in the Notes and this Agreement, the execution and
delivery of the Security Documents to which it is a party and the performance by
it of its obligations under the Loan Documents to which it is a party are within
the power of the Borrower or such Guarantor, have been duly authorized by all
necessary action by the Borrower or such Guarantor, and do not and will not (a)
require the consent of any Governmental Authority, (b) contravene or conflict
with any Requirement of Law, (c) contravene or conflict with any indenture,
instrument or other agreement to which it is a party or by which any of its
Property may be presently bound or encumbered or (d) result in or require the
creation or imposition of any Lien in, upon or on any of its Property under any
such indenture, instrument or other agreement, other than under any of the Loan
Documents.
4.2 Existence. It is a limited liability company or other Business Entity
duly organized, legally existing and, if applicable, in good standing under the
laws of the state of its organization and is duly qualified as a foreign
Business Entity and, if applicable, in good standing in all jurisdictions
wherein the ownership of its Property or the operation of its business
necessitates same.
4.3 Valid and Binding Obligations. Each Loan Document to which it is a
party, when duly executed and delivered by it, constitutes its legal, valid and
binding obligation enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
4.4 Security Documents. The provisions of each Security Document, executed
by it are effective to create, in favor or for the benefit of the Agent, a
legal, valid and enforceable Lien in all of its right, title and interest in the
Collateral described therein, which Lien, assuming the accomplishment of
recording and filing in accordance with applicable laws prior to the
intervention of rights of other Persons, constitutes a fully perfected
first-priority Lien (except as to Permitted Liens) on all of its right, title
and interest in the Collateral described therein.
4.5 Title to Oil and Gas Properties. It has good and marketable title to
all of its Oil and Gas Properties, free and clear of all Liens except Permitted
Liens. No Person other than it has any ownership interest, whether legal or
beneficial, in its interest in any of its Oil and Gas Properties.
4.6 Scope and Accuracy of Financial Statements. The Financial Statements
provided to the Agent prior to Closing present fairly in all material respects
the financial position and results of operations and cash flows of the Parent in
accordance with GAAP as at the relevant point in time or for the period
indicated, as applicable.
4.7 No Material Adverse Effect or Default. No event or circumstance has
occurred since the date of the Financial Statements delivered pursuant to
Section 3.1(h) which could reasonably be expected to have a Material Adverse
Effect, and no Default has occurred and is continuing.
4.8 No Material Misstatements. No information, exhibit, statement or report
furnished to the Agent or any Lender by it or at its direction in connection
with this Agreement or any other Loan Document contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the date made or
deemed made.
4.9 Liabilities, Litigation and Restrictions. Other than as reflected in
the Financial Statements provided to the Agent prior to Closing or listed on
Schedule 4.9 under the heading "Liabilities," it has no liabilities, direct or
contingent, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth under the heading "Litigation" on Schedule 4.9, no
litigation or other action of any nature affecting it is pending before any
Governmental Authority or threatened against or affecting it or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. No unusual or unduly burdensome restriction, restraint or hazard exists
by contract, Requirement of Law or otherwise relative to its business or
operations or its ownership and operation of any Collateral other than such as
relate generally to Persons engaged in business activities similar to those
conducted by it.
4.10 Authorizations; Consents. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize, or is otherwise required in connection with, the valid
execution and delivery by it of the Loan Documents to which it is a
party or any instrument contemplated hereby, the repayment of the Notes and
interest and fees provided in the Notes and this Agreement or the performance of
the Obligations, in each case except for any such authorizations, consents,
approvals, exemptions, permits, or licenses that are normally obtained in the
ordinary course of business.
4.11 Compliance with Laws. It and its Properties, including any Mortgaged
Properties and Oil and Gas Properties owned by it, are in compliance in all
material respects with all applicable Requirements of Law.
4.12 ERISA. It does not maintain, nor has it maintained, any Plan. It does
not currently contribute to or have any obligation to contribute to or otherwise
have any liability with respect to any Plan.
4.13 Environmental Laws. Except as described on Schedule 4.13:
(a) no Property owned by it, or, to its knowledge, Property of others
adjacent to Property owned by it, is currently on or has ever been on any
federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by it at a site which was, at the time of such generation,
transportation, and/or disposal, or has since become, a Superfund Site;
(c) except in accordance with applicable Requirements of Law or the terms of
a valid permit, license, certificate, or approval of the relevant Governmental
Authority, no Release of Hazardous Substances by it or from, affecting or
related to any Property owned by it has occurred; and
(d) no Environmental Complaint has been received by it and remains
unresolved.
4.14 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of, and it has not taken any
action that would result in any transaction contemplated by the Loan Documents
being in violation of any regulations promulgated by the Board of Governors of
the Federal Reserve System, including Regulations T, U or X.
4.15 Investment Company Act. It is not, nor is it directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" or an "affiliated person" subject to regulation as an "investment
company" within the meaning of the Investment Company Act of 1940.
4.16 Proper Filing of Tax Returns; Payment of Taxes Due. It has duly and
properly filed its United States income tax returns and all other tax returns
which are required to be filed and has paid all taxes shown as due from it
thereon, except such as are being contested in good faith and as to which
adequate provisions and disclosures have been made. The respective charges and
reserves on its books with respect to taxes and other governmental charges are
adequate.
4.17 Refunds. Except as described on Schedule 4.17, no orders of,
proceedings pending before, or other requirements of any Governmental Authority
exist which could result in it being required to refund any portion of the
proceeds received or to be received by it from the sale of hydrocarbons
constituting part of the Mortgaged Property or other Oil and Gas Properties
owned by it.
4.18 Gas Contracts. Except as described on Schedule 4.18, (a) it is not
obligated in any material respect by virtue of any prepayment made under any
contract containing a "take-or-pay" or "prepayment" provision or under any
similar agreement to deliver hydrocarbons produced from or allocated to any of
the Mortgaged Property or other Oil and Gas Properties owned by it at some
future date without receiving full payment therefor within 90 days of delivery,
and (b) it has not produced gas, in any material amount, subject to, and neither
it nor any of the Mortgaged Properties or other Oil and Gas Properties owned by
it is subject to, balancing rights of third parties or subject to balancing
duties under Requirements of Law, except as to such matters for which it has
established monetary reserves adequate in amount to satisfy such obligations and
has segregated such reserves from other accounts.
4.19 Intellectual Property. It owns or is licensed to use all Intellectual
Property necessary to conduct its business as currently conducted. No claim has
been asserted or is pending by any Person with respect to the use of any such
Intellectual Property or challenging or questioning the validity or
effectiveness of any such Intellectual Property; and it knows of no valid basis
for any such claim. The use of such Intellectual Property by it does not
infringe on the rights of any Person, except for such claims and infringements
as do not, in the aggregate, give rise to any material liability on its part.
4.20 Casualties or Taking of Property. Except as disclosed on Schedule
4.20, since the later of (a) the Closing Date, or (b) the date of the most
recent Financial Statements furnished to the Agent pursuant to either Section
5.2 or Section 5.3, neither its business nor any of its Property has been
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits or concessions by any
Governmental Authority, riot, activities of armed forces or acts of God.
4.21 Principal Location. Its principal place of business and chief
executive office is located at its address set forth in Section 9.3 or at such
other location as it may have, by proper written notice hereunder, advised the
Agent.
4.22 Subsidiaries. It has no Subsidiaries other than as set forth on
Schedule 4.22 or as otherwise disclosed to the Agent in writing.
4.23 Compliance with Anti-Terrorism Laws. Neither it nor any of its
Affiliates is in violation of any Anti-Terrorism Law or knowingly engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.
(b) Neither it nor any of its Affiliates is any of the following (each a
"Blocked Person"):
(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the provisions
of, Executive Order No. 13224;
(iii) a Person with which any bank or other financial institution is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
(iv) a Person that commits, threatens or conspires to commit or supports
"terrorism" as defined in Executive Order No. 13224;
(v) a Person that is named as a "specially designated national" on the most
current list published by OFAC at its official website or any replacement
website or other replacement official publication of such list; or
(vi) an Affiliate of a Person or entity listed above.
(c) Neither it nor any of its Affiliates (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages
in any transaction relating to, any property or interests in property blocked
pursuant to Executive Order No. 13224.
(d) Neither it nor any of its Affiliates is in violation of any rules or
regulations promulgated by OFAC or of any economic or trade sanctions
administered and enforced by OFAC or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any rules or
regulations promulgated by OFAC.
4.24 Identification Numbers. Its federal taxpayer identification number and
its organizational number with the Secretary of State of the state of its
formation are as set out on Schedule 4.24 or as otherwise disclosed to the Agent
in writing.
4.25 Solvency. Immediately after the Closing and immediately following the
making of each Loan made on the Closing Date and following the making of any
Loan made after the Closing Date, after giving effect to the application of the
proceeds of each such Loan, (a) the fair value of its assets, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or
otherwise, at a fair valuation; (b) the present fair saleable value of its
assets, at a fair valuation, will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured considering all financing alternatives and potential
asset sales reasonably available to it; (c) it will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) it will not have unreasonably
small capital with which to conduct the business in which it is
engaged as such business is now conducted and are proposed to be conducted
following the Closing Date.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitment
exists, the Borrower and each of the Guarantors (provided that Section 5.14
shall apply only to the Borrower) shall:
5.1 Maintenance of and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the request of the Agent or any Lender, make such records
available for inspection by the Agent or any Lender and, at the expense of the
Borrower, allow the Agent or any Lender to make and take away copies thereof.
5.2 Quarterly Financial Statements and Compliance Certificates. Deliver to
the Agent and, upon request, any Lender, on or before the 60th day after the
close of each quarterly period of each fiscal year of the Borrower, commencing
with that ending December 31, 2010, (a) a copy of the unaudited Financial
Statements of the Borrower as at the close of such quarterly period and from
the beginning of such fiscal year to the end of such period, such Financial
Statements to be certified by a Responsible Officer of the Parent as having been
prepared in accordance with GAAP consistently applied and as a fair presentation
of the financial condition of the Borrower, subject to changes resulting from
normal year end audit adjustments, and (b) a Compliance Certificate prepared as
of the close of such quarterly period.
5.3 Annual Financial Statements and Compliance Certificate. Deliver to the
Agent and, upon request, any Lender, on or before the 120th day after the close
of each fiscal year of the Borrower, commencing with that ending on December 31,
2010, (a) a copy of the annual audited Financial Statements of the Borrower,
such Financial Statements to be accompanied by an unqualified opinion from a
nationally-recognized or regionally-recognized firm of independent certified
public accountants or other independent certified public accountants acceptable
to the Agent and be certified by a Responsible Officer of the Parent as having
been prepared in accordance with GAAP consistently applied and as a fair
presentation of the financial condition of the Borrower, and (b) a Compliance
Certificate prepared as of the close of the relevant fiscal year.
5.4 Oil and Gas Reserve Reports and Production Reports. Deliver to the
Agent and, upon request, any Lender, no later than each April 1 during the term
of this Agreement, an engineering report in form and substance satisfactory to
the Agent, prepared as of the preceding January 1 and certified by a
nationally-recognized or regionally-recognized firm of independent consulting
petroleum engineers or other firm of independent consulting petroleum engineers
acceptable to the Agent as fairly and accurately setting forth (i) the proved
and producing, non-producing, shut-in, behind-pipe and undeveloped oil and gas
reserves (separately classified as such) attributable to the Mortgaged
Properties and other Oil and Gas Properties of the Borrower
and its Subsidiaries as of the most recent practicable date, (ii) the aggregate
present value of the future net income with respect to proved and producing
reserves attributable to the Mortgaged Properties and other Oil and Gas
Properties of the Borrower, discounted at a stated per annum discount rate,
(iii) projections of the annual rate of production, gross income and net income
with respect to such proved and producing reserves, (iv) information with
respect to the "take-or-pay," "prepayment" and gas-balancing liabilities of the
Borrower with respect to such reserves and (v) general economic assumptions.
(b) Deliver to the Agent and, upon request, any Lender, no later than each
October 1 during the term of this Agreement (commencing October 1, 2011), an
engineering report, in substantially the format of and providing the information
provided in the engineering reports provided pursuant to Section 5.4(a),
prepared as of the preceding July 1 and certified, at the election of the
Borrower, by either the chief operating officer or senior reserve engineer of
the Borrower or a nationally-recognized or regionally-recognized firm of
independent consulting petroleum engineers acceptable to the Agent as fairly and
accurately setting forth the information provided therein.
(c) Deliver to the Agent and, upon request, any Lender, in connection with
each unscheduled redetermination of the Borrowing Base requested by the
Borrower, an engineering report, in substantially the format of and providing
the information provided in the engineering report provided pursuant to Section
5.4(a), prepared as of a date no more than 60 days prior to such redetermination
date (and in the case of an unscheduled redetermination requested by the Agent
and the Lenders, within 60 days of such request) and certified, at the election
of the Borrower, by either the chief operating officer or senior reserve
engineer of the Borrower or a nationally-recognized or regionally-recognized
firm of independent consulting petroleum engineers acceptable to the Agent as
fairly and accurately setting forth the information provided therein.
(d) Deliver to the Agent, no later than the 60th day following the end of
each calendar quarter, a report, in form satisfactory to the Agent, setting
forth information as to quantities of production from the Mortgaged Properties,
volumes of production sold, volumes of production committed to Commodity Hedge
Agreements, pricing, purchasers of production, gross revenues, lease operating
expenses, and such other information as the Agent may request with respect to
the relevant quarterly period.
5.5 Title Opinions; Title Defects; Mortgaged Properties. Promptly upon the
request of the Agent, (a) furnish to the Agent title opinions, in form and
substance and by counsel satisfactory to the Agent, or other confirmation of
title acceptable to the Agent, covering Oil and Gas Properties of the Borrower
the discounted present value of the proved reserves attributable to which, in
the aggregate, equals no less than eighty one percent (81%) of the aggregate
discounted present value of the proved reserves attributable to the Oil and Gas
Properties of the Borrower; promptly, but in any event within 30 days after
notice by the Agent of any defect having a Material Adverse Effect on the value
of any Oil and Gas Property, clear such title defects; and promptly upon request
of the Agent, execute and deliver to the Agent additional Security Documents as
necessary to maintain, as Mortgaged Properties, Oil and Gas Properties of the
Borrower constituting no less than ninety percent (90%) of the aggregate
discounted present value of the proved reserves attributable to the Oil and Gas
Properties of the Borrower.
5.6 Notices of Certain Events. Deliver to the Agent, promptly, but in no
event later than the fifth Business Day after having knowledge of the occurrence
of any of the following events or circumstances, a written statement with
respect thereto, signed by a Responsible Officer of the Borrower and setting
forth the relevant event or circumstance and the steps being taken by the
Borrower with respect to such event or circumstance:
(a) any Default or Event of Default;
(b) any default by it under any contractual obligation or any litigation,
investigation, or proceeding between it and any Governmental Authority which, in
either case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving it as a defendant or in which any
of its Property is subject to a claim and in which the amount involved is
$100,000 or more and which is not covered by insurance or in which injunctive or
similar relief is sought;
(d) the receipt by it of any Environmental Complaint, which if adversely
determined could reasonably be expected to have a Material Adverse Effect;
(e) any actual, proposed, or threatened testing or other investigation by
any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any of its Property following any allegation of a
violation of any Requirement of Law;
(f) any Release of Hazardous Substances by it or from, affecting, or related
to any of its Property or Property of others adjacent to any of its Property
which could reasonably be expected to have a Material Adverse Effect, except in
accordance with applicable Requirements of Law or the terms of a valid permit,
license, certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or forfeiture
of or failure to renew, any permit, license, registration, approval, or
authorization, which could reasonably be expected to have a Material Adverse
Effect;
(g) any change in its ownership or in the senior management of the Parent;
(h) any material change in its accounting or financial reporting practices;
and
(i) any other event or condition which could reasonably be expected to have
a Material Adverse Effect.
5.7 Letters in Lieu of Transfer Orders or Division Orders. Promptly upon
request by the Agent at any time and from time to time, and without limitation
on the rights of the Agent pursuant to the provisions of Section 2.22 and
Section 2.23, execute such letters in lieu of transfer or division orders, in
addition to the letters delivered to the Agent in satisfaction of the condition
set forth in Section 3.1(f), as are necessary or appropriate to transfer and
deliver to the Agent proceeds from or attributable to any Mortgaged Property.
5.8 Commodity Hedging. Comply in all material respects with any Commodity
Hedge Agreements entered into by the Borrower in effect on the Closing Date or
subsequent to
the Closing Date and not in violation of the provisions of Section 6.1;
provided, however, that all of the foregoing is subject to the limitations on
Commodity Hedge Agreements set forth in Section 6.1.
5.9 Joinder Agreements, Guaranties and Additional Security Documents. Cause
each Domestic Subsidiary of the Borrower or any of the Guarantors formed after
the Closing Date to execute and deliver a Joinder Agreement, a Guaranty in favor
of the Agent, for the benefit of the Lenders and the other Secured Creditors,
and Security Documents, as requested by the Agent, in favor or for the benefit
of the Agent, for the benefit of the Lenders and the other Secured Creditors,
covering assets of such Domestic Subsidiary and take all such other action
requested by the Agent or any Lender to perfect the Lien of such Security
Documents, and execute and deliver to the Agent multiple counterparts, as
requested by the Agent, Security Documents (as requested by the Agent and in
form and substance satisfactory to the Agent) establishing in favor of the
Agent, for the benefit of the Lenders and any other Secured Creditors, a Lien
against all of the issued and outstanding capital stock of any such newly formed
Subsidiary of the Borrower or any of the Guarantors.
5.10 Additional Information. Furnish to the Agent and any Lender, promptly
upon the request of the Agent or any Lender, such additional financial or other
information concerning its assets, liabilities, operations and transactions as
the Agent or any Lender may from time to time request; and notify the Agent not
less than ten Business Days prior to the occurrence of any condition or event
that may change the proper location for the filing of any financing statement or
other public notice or recording for the purpose of perfecting a Lien in any
Collateral, including any change in its name or jurisdiction of organization;
and upon the request of the Agent, execute such additional Security Documents as
may be necessary or appropriate in connection therewith.
5.11 Compliance with Laws. Comply with all applicable Requirements of Law,
including (a) ERISA, (b) Environmental Laws and (c) all permits, licenses,
registrations, approvals, and authorizations (i) related to any natural or
environmental resource or media located on, above, within, related to or
affected by any of its Property, (ii) required for the performance of its
operations, or (iii) applicable to the use, generation, handling, storage,
treatment, transport or disposal of any Hazardous Substances; and use its best
efforts to cause all of its employees, crew members, agents, contractors,
subcontractors and future lessees (pursuant to appropriate lease provisions),
while such Persons are acting within the scope of their relationship with it, to
comply with all such Requirements of Law as may be necessary or appropriate to
enable it to so comply.
5.12 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent and other Indebtedness which, if unpaid, might become
a Lien against any of its Property, except any of the foregoing that are being
contested in good faith and as to which an adequate reserve in accordance with
GAAP has been established or unless failure to pay would not have a Material
Adverse Effect.
5.13 Maintenance of Existence or Qualification and Good Standing. Maintain
its separate existence and identity and, if applicable, good standing and
qualification in its
jurisdiction of formation and in all jurisdictions wherein the Property now
owned or hereafter acquired or business now or hereafter conducted by it
necessitates same.
5.14 Payment of Notes; Performance of Obligations. Pay the Notes according
to the reading, tenor and effect thereof, as modified hereby, and do and perform
every act required under the Loan Documents and discharge all of the other
Obligations.
5.15 Further Assurances. Promptly cure any defects in the execution and
delivery of any of the Loan Documents to which it is a party and all agreements
contemplated thereby, and execute, acknowledge and deliver to the Agent or any
Lender such other assurances and instruments as shall, in the opinion of the
Agent or any Lender, be necessary to fulfill the terms of the Loan Documents to
which it is a party.
5.16 Initial Expenses of Agent. Upon request by the Agent, promptly
reimburse the Agent for, or pay directly to such special counsel, all fees and
expenses of Xxxxxxx Xxxxxx L.L.P., special counsel to the Agent, in connection
with the preparation of this Agreement and all documentation contemplated
hereby, the satisfaction of the conditions precedent set forth herein, the
filing and recordation of Security Documents and the consummation of the
transactions contemplated in this Agreement.
5.17 Subsequent Expenses of Agent and Lenders. Upon request by the Agent,
promptly reimburse the Agent (to the fullest extent permitted by law) for all
amounts expended, advanced or incurred by or on behalf of the Agent to evaluate
the Mortgaged Properties or to satisfy any of the relevant Person's obligations
under any of the Loan Documents; to collect the Obligations; to ratify, amend,
restate or prepare additional Loan Documents, as the case may be; for the filing
and recordation of Security Documents; to enforce the rights of the Agent or any
of the Lenders under any of the Loan Documents; and to protect the relevant
Person's Properties or business, including the Collateral, which amounts shall
be deemed compensatory in nature and liquidated as to amount upon notice to the
relevant Person by the Agent and which amounts shall include (a) all court
costs, (b) reasonable attorneys' fees, (c) fees and expenses of auditors,
accountants, and independent petroleum engineers or incurred to protect the
interests of the Agent, the Lenders and any other Approved Hedge Counterparties,
(d) fees and expenses incurred in connection with the participation by the Agent
and the Lenders as members of the creditors' committee in any Insolvency
Proceeding, (e) fees and expenses incurred in connection with lifting the
automatic stay prescribed in Xxx.000 Xxxxx 00 xx xxx Xxxxxx Xxxxxx Code, and (f)
fees and expenses incurred in connection with any action pursuant to Sec.1129
Title 11 of the United States Code all incurred by the Agent and the Lenders in
connection with the collection of any sums due under the Loan Documents,
together with interest at the per annum interest rate equal to the Adjusted Base
Rate plus the Applicable Margin on each such amount from the date of
notification that the same was expended, advanced, or incurred by the Agent or
any Lender until the date it is repaid to the Agent or such Lender, with the
obligations under this Section 5.16 surviving the non-assumption of this
Agreement in any Insolvency Proceeding and being binding upon it and/or a
trustee, receiver, custodian, or liquidator of it appointed in any such case.
5.18 Operation of Oil and Gas Properties. Develop, maintain and operate or,
to the extent that the right or obligation to do so rests with another Person,
use commercially
reasonable efforts to cause such other Person to develop, maintain and operate
its Oil and Gas Properties in a prudent and workmanlike manner and in accordance
with customary industry standards.
5.19 Maintenance and Inspection of Properties. Maintain or, to the extent
that the right or obligation to do so rests with another Person, use
commercially reasonable efforts to cause such other Person to maintain all of
its tangible Properties in good repair and condition, ordinary wear and tear
excepted; make or, to the extent that the right or obligation to do so rests
with another Person, use commercially reasonable efforts to cause such other
Person to make all necessary replacements thereof and operate such Properties in
a good and workmanlike manner; and permit any authorized representative of the
Agent or any Lender, upon prior notice to visit and inspect, at reasonable
times, any of its tangible Property.
5.20 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Agent, name the Agent as an additional insured (in the case of
liability insurance) and co-loss payee (in the case of physical damage
insurance), and, upon any renewal of any such insurance and at other times upon
request by the Agent, furnish to the Agent evidence, satisfactory to the Agent,
of the maintenance of such insurance. The Agent shall have the right to
collect, and the Borrower and each of the Guarantors hereby assigns to the
Agent, any and all monies that may become payable under any policies of
insurance relating to business interruption or by reason of damage, loss or
destruction of any of the Collateral. In the event of any damage, loss or
destruction for which insurance proceeds relating to business interruption
exceed $250,000 or Collateral exceed $250,000, the Agent may, at its option,
apply all such sums or any part thereof received by it toward the payment of the
Obligations, whether matured or unmatured, application to be made first to fees,
then to interest and then to principal, and shall deliver to the Borrower or the
relevant Guarantor, as the case may be, the balance, if any, after such
application has been made. In the event of any other damage, loss or
destruction for which insurance proceeds received are $250,000 or less, and
provided that no Default or Event of Default has occurred, the Agent shall
deliver any such proceeds received by it to the Borrower or the relevant
Guarantor, as the case may be, for use to repair or replace the damaged,
destroyed or lost property. In the event the Agent receives insurance proceeds
not attributable to Collateral or business interruption, the Agent shall deliver
any such proceeds to the Borrower.
5.21 Environmental Indemnification. INDEMNIFY AND HOLD THE AGENT AND EACH
OF THE LENDERS AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT AND AFFILIATES AND EACH TRUSTEE FOR THE
BENEFIT OF THE AGENT OR THE LENDERS UNDER ANY SECURITY DOCUMENT (EACH OF THE
FOREGOING AN "INDEMNITEE") 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 REASONABLE 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 OF ITS PROPERTY, WHETHER PRIOR
TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON ANY
OF ITS
PROPERTY, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY IT OR ANY
OF ITS PREDECESSORS IN TITLE, EMPLOYEES, AGENTS, CONTRACTORS OR SUBCONTRACTORS
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 OF ITS PROPERTY, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL
RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE,
TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY IT OR ANY OF ITS
EMPLOYEES, AGENTS, CONTRACTORS, OR SUBCONTRACTORS WHILE SUCH PERSONS ARE ACTING
WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH IT, 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
OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING ANY SUCH CLAIM, LOSS,
DAMAGE, LIABILITY, FINE, PENALTY, CHARGE, ADMINISTRATIVE OR JUDICIAL PROCEEDING,
ORDER, JUDGMENT, REMEDIAL ACTION, REQUIREMENT, ENFORCEMENT ACTION, COST OR
EXPENSE, ARISING FROM THE NEGLIGENCE (BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT), WHETHER SOLE OR CONCURRENT, OF ANY INDEMNITEE; WITH THE FOREGOING
INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT, UNLESS ALL SUCH OBLIGATIONS HAVE BEEN SATISFIED WHOLLY IN CASH AND
NOT BY WAY OF REALIZATION AGAINST ANY COLLATERAL OR THE CONVEYANCE OF ANY
PROPERTY IN LIEU THEREOF, PROVIDED, HOWEVER, THAT SUCH INDEMNITY SHALL NOT
EXTEND TO ANY ACT OR OMISSION BY THE AGENT OR ANY LENDER WITH RESPECT TO ANY
PROPERTY SUBSEQUENT TO THE AGENT OR ANY LENDER 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 AGENT OR ANY LENDER. ALL
AMOUNTS DUE UNDER THIS SECTION 5.21 SHALL BE PAYABLE ON WRITTEN DEMAND THEREFOR.
5.22 General Indemnification. INDEMNIFY AND HOLD EACH INDEMNITEE HARMLESS
FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES (INCLUDING THE
ALLOCATED COST OF INTERNAL COUNSEL), INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE ARISING OUT OF, IN ANY WAY CONNECTED WITH, OR AS A RESULT OF (A) THE
EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE
PERFORMANCE BY THE PARTIES HERETO AND THERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER AND THEREUNDER AND CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, (B) THE USE OF PROCEEDS OF THE LOANS OR LETTERS OF CREDIT,
OR (C) ANY CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE
FOREGOING, WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO, INCLUDING ANY SUCH
LOSS, CLAIM, DAMAGE, LIABILITY OR EXPENSE ARISING FROM THE NEGLIGENCE (BUT NOT
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), WHETHER SOLE OR CONCURRENT, OF ANY
INDEMNITEE; WITH THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT. ALL AMOUNTS DUE UNDER THIS
SECTION 5.22 SHALL BE PAYABLE ON WRITTEN DEMAND THEREFOR.
5.23 Evidence of Compliance with Anti-Terrorism Laws. Deliver to the Agent
and any Lender any certification or other evidence requested from time to time
by the Agent or such Lender confirming its compliance with the provisions of
Section 6.17.
5.24 Operating Accounts. Establish and maintain with Amegy its principal
operating accounts.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitment
exists, neither the Borrower nor any Guarantor shall:
6.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable, taxes and other assessments, in each case incurred in the
ordinary course of business and which are not unpaid in excess of 90 days beyond
invoice date or are being contested in good faith and as to which such reserve
as is required by GAAP has been made, (c) Indebtedness under Commodity Hedge
Agreements, including reimbursement obligations under letters of credit securing
or supporting such Indebtedness, with any Approved Hedge Counterparty, Secured
Third Party Hedge Counterparty or, so long as each such Person is acceptable to
the Agent, other counterparties, provided that (i) such agreements shall not be
for a term in excess of five years and shall not, except as to floors, be
entered into with respect to more than eighty percent (80%) of the projected
production of proved developed producing volumes of each commodity category, as
reflected in each Reserve Report provided pursuant to the provisions of Section
5.4 during the term of the relevant agreement, and (ii) the floor prices in such
agreements are not less than the prices used by the Agent in its most recent
Borrowing Base determination as of the time the relevant agreement is entered
into, (d) Indebtedness under Interest Rate Hedge Agreements with any Approved
Hedge Counterparty, Secured Third Party Hedge Counterparty or, so long as each
such Person is acceptable to the Agent, other counterparties, provided that such
agreements shall not be entered into with respect to notional principal amounts
in excess of eighty percent (80%) of the Loan Balance, (e) Indebtedness incurred
with respect to all or a portion of the purchase price of Property acquired in
the ordinary course of business not exceeding $100,000 in the aggregate, (f)
Indebtedness owing by the Borrower or any Guarantor to the Borrower or any other
Guarantor and (g) other unsecured Indebtedness or Indebtedness secured by a
Permitted Lien not exceeding, in the aggregate at any time, $100,000 for the
Borrower on a consolidated basis with its consolidated Subsidiaries.
6.2 Contingent Obligations. Create, incur, assume or suffer to exist any
Contingent Obligation; provided, however, the foregoing restriction shall not
apply to (a) performance guarantees, performance surety or other bonds or
endorsements of items deposited for collection, in each case provided in the
ordinary course of business, (b) trade credit incurred or operating leases
entered into in the ordinary course of business, or (c) Indebtedness permitted
by Section 6.1 or (d) any Guaranties.
6.3 Liens. Create, incur, assume or suffer to exist any Lien on any of its
Oil and Gas Properties or any other Property, whether now owned or hereafter
acquired; provided, however, the foregoing restriction shall not apply to
Permitted Liens.
6.4 Sales of Assets. Sell, transfer or otherwise dispose of, in one or any
series of transactions, any of its Property, whether now owned or hereafter
acquired, or enter into any agreement to do so; provided, however, the foregoing
restriction shall not apply to (a) the sale of hydrocarbons or inventory in the
ordinary course of business, provided, however, that no contract for the sale of
hydrocarbons shall obligate the relevant Person to deliver hydrocarbons produced
from any of its Oil and Gas Properties at some future date without receiving
full payment therefor within 60 days of delivery, (b) the sale or other
disposition of Property destroyed, lost, worn out, damaged or having only
salvage value or no longer used or useful in the business in which it is used,
(c) the sale or other disposition of any Property, other than Oil and Gas
Properties by the Borrower or any Guarantor to the Borrower or any other
Guarantor, (d) so long as no Default or Event of Default exists, sales or other
dispositions of Oil and Gas Properties of the Borrower between redeterminations
of the Borrowing Base as provided in Section 2.10 the aggregate loan value of
which, as assigned thereto by the Agent in the most recent setting of the
Borrowing Base in accordance with the provisions of Section 2.10, equals ten
percent (10%) or less of the amount of the then existing Borrowing Base;
provided, however, in connection with any such transaction, the then existing
Borrowing Base shall be automatically reduced by an amount equal to such loan
value of the relevant Mortgaged Properties and further provided, however, that,
upon consummation of any such transaction, if a Deficiency exists, the Borrower
shall proceed to cure such Deficiency in accordance with the provisions of
Section 2.11, or (e) so long as no Default or Event of Default exists, sales or
other dispositions of Oil and Gas Properties of the Borrower between
redeterminations of the Borrowing Base as provided in Section 2.10 the aggregate
loan value of which, as assigned thereto by the Agent in the most recent setting
of the Borrowing Base in accordance with the provisions of Section 2.10, exceeds
ten percent (10%) of the amount of the then existing Borrowing Base with the
consent of the Agent and the Required Lenders; provided, however, that the
Borrowing Base to be in effect immediately upon consummation of any such
transaction shall be established by the Agent, with the approval of the Lenders
as required pursuant to the provisions of Section 9.9, prior to consummation of
the transaction, and further provided, however, that upon consummation of any
such transaction, if a Deficiency exists, the Borrower shall proceed to cure any
such Deficiency in accordance with the provisions of Section 2.11.
6.5 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred.
6.6 Sale or Discount of Receivables. Except to minimize losses on bona fide
debts previously contracted, discount or sell with recourse, or sell for less
than the greater of the face or market value thereof, any of its notes
receivable or accounts receivable.
6.7 Loans or Advances. Make or agree to make or allow to remain outstanding
any loans or advances to any Person; provided, however, the foregoing
restriction shall not apply to (a) advances or extensions of credit in the form
of accounts receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b)
advances to employees for the payment of expenses in the ordinary course of
business not exceeding $50,000 in the aggregate for the Borrower on a
consolidated basis with its consolidated Subsidiaries outstanding at any time,
(c) loans or advances by the Borrower or any Guarantor to the Borrower or any
other Guarantor or (d) other loans or advances so long as not exceeding, in the
aggregate outstanding at any time, $100,000 in the aggregate for the Borrower on
a consolidated basis with its consolidated Subsidiaries.
6.8 Investments. Make or acquire Investments in, or purchase or otherwise
acquire all or substantially all of the assets of, any Person; provided,
however, the foregoing restriction shall not apply to the purchase or
acquisition of (a) Oil and Gas Properties, (b) Investments in the form of (i)
debt securities issued or directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof, with maturities of
no more than one year, (ii) commercial paper of a domestic issuer rated at the
date of acquisition at least P-2 by Xxxxx'x Investors Service, Inc. or A-2 by
Standard & Poor's Corporation and with maturities of no more than one year from
the date of acquisition or (iii) repurchase agreements covering debt securities
or commercial paper of the type permitted in this Section 6.8, certificates of
deposit, demand deposits, eurodollar time deposits, overnight bank deposits and
bankers' acceptances, with maturities of no more than one year from the date of
acquisition, issued by or acquired from or through any Lender or any bank or
trust company organized under the laws of the United States of America or any
state thereof and having capital surplus and undivided profits aggregating at
least $100,000,000, (c) other short-term Investments similar in nature and
degree of risk to those described in clause (b) of this Section 6.8, (d)
Investments in money-market funds sponsored or administered by Persons
acceptable to the Agent and which funds invest in short-term Investments similar
in nature and degree of risk to those described in clause (b) of this Section
6.8, (e) Investments by the Borrower or any Guarantor in the Borrower or any
other Guarantor or (f) evidences of loans or advances not prohibited by the
provisions of Section 6.7.
6.9 Dividends and Distributions. Declare, pay or make, whether in cash or
Property of the Borrower, any dividend or distribution on, or purchase, redeem
or otherwise acquire for value, any of its equity interests; provided, however,
the foregoing restriction shall not apply to (a) so long as there exists no
Default or Event of Default and the Lender has received reasonable support for
the amount of each such dividend or distribution, dividends or distributions
paid to the members of the Borrower in the amount of up to the amount of
federal, state and local income taxes that the members of the Borrower shall be
obligated to pay in respect of the taxable income of the Borrower, (b) dividends
or distributions permitted by written consent of the Agent with the approval of
the Required Lenders (not to be unreasonably withheld) at each semi-annual
Borrowing Base redetermination or (c) dividends paid in common equity interests.
6.10 Issuance of Equity; Changes in Structure. Issue or agree to issue any
additional equity interests, other than (a) common equity interests and (b)
preferred equity interests with terms approved in writing by the Agent and the
Required Lenders in advance of the issuance thereof; enter into any transaction
of consolidation, merger or amalgamation in which the Borrower is not the
survivor; or liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
6.11 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease or exchange of Property or the rendering
of service) with any of its
Affiliates, other than upon fair and reasonable terms no less favorable than
could be obtained in an arm's length transaction with a Person which was not an
Affiliate, other than (a) transactions disclosed in writing to the Agent and
consented to by the Agent (such consent not to be unreasonably withheld), and
(b) payments from the Borrower to the Parent to reimburse the Parent for
expenses of the Borrower paid on its behalf by the Parent.
6.12 Lines of Business. Change its principal line of business from that in
which it is engaged as of the date hereof.
6.13 Plan Obligation. Assume or otherwise become subject to an obligation
to contribute to or maintain any Plan or acquire any Person which has at any
time had an obligation to contribute to or maintain any Plan.
6.14 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities, determined as of the close of any calendar quarter, commencing with
the quarterly period ending December 31, 2010, to be less than 1.00 to 1.00.
6.15 Leverage Ratio. Permit the ratio, determined as of the close of any
calendar quarter, commencing with the quarterly period ending December 31, 2010,
of (a) Indebtedness of the Borrower on a consolidated basis with its
consolidated Subsidiaries in respect of borrowed money, including the Loan
Balance (exclusive, for the avoidance of doubt, of trade accounts payable and
accrued liabilities, net unrealized losses or charges in respect of Commodity
Hedge Agreements or Interest Rate Hedge Agreements and the undrawn, unexpired
amount of all outstanding Letters of Credit, if such would otherwise be
included), which is not subordinated to payment in full of all Obligations on
terms approved by the Agent to (b) EBITDA of the Borrower on a consolidated
basis with its consolidated Subsidiaries for the period of four calendar
quarters then ended (provided that (i) EBITDA for the quarterly period ending
December 31, 2010 shall be EBITDA for such quarterly period multiplied by four,
(ii) EBITDA for the quarterly period ending March 31, 2011 shall be EBITDA for
the two quarterly periods ending on such date multiplied by two and (iii) EBITDA
for the quarterly period ending June 30, 2011 shall be EBITDA for the three
quarterly periods ending on such date multiplied by one and one third), to be
greater than 3.50 to 1.00.
6.16 Interest Coverage Ratio. Permit (a) for each of the quarterly periods
ending December 31, 2010 through June 30, 2011, the ratio of (i) EBITDA for the
Borrower on a consolidated basis with its consolidated basis with its
consolidated Subsidiaries for the relevant quarterly period to (ii) Interest
Expense for the Borrower on a consolidated basis with its consolidated
Subsidiaries for the relevant quarterly period to be less than 2.50 to 1.00 or
(b) for each quarterly period ending thereafter, the ratio of (i) EBITDA for the
Borrower on a consolidated basis with its consolidated Subsidiaries for the
twelve-month period then ending to (ii) Interest Expense for the Borrower on a
consolidated basis with its consolidated Subsidiaries for the twelve-month
period then ended to be less than 2.50 to 1.00.
6.17 Anti-Terrorism Laws. Conduct any business or engage in any transaction
or dealing with any Blocked Person, including the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Blocked
Person; deal in, or otherwise engage in any transaction relating to, any
Property or interests in Property blocked pursuant to Executive Order
No. 13224; or engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, (i)
any of the prohibitions set forth in Executive Order No. 13224 or the USA
Patriot Act, or (ii) any prohibitions set forth in the rules or regulations
issued by OFAC or any sanctions against targeted foreign countries, terrorism
sponsoring organizations, and international narcotics traffickers based on
United States foreign policy.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
(a) default shall be made in the payment when due of (i) any installment of
principal or interest under this Agreement or the Notes, (ii) in the payment
when due of any fee or other sum payable under any Loan Document, or (iii) any
Indebtedness of the Borrower under any Commodity Hedge Agreement or Interest
Rate Hedge Agreement permitted or required under applicable provisions of this
Agreement;
(b) default shall be made by the Borrower or any of the Guarantors in the
due observance or performance of any of its obligations, covenants or agreements
under the Loan Documents, and, as to compliance with the obligations, covenants
or agreements under Article V (other than Section 5.14), such default shall
continue for 30 days after the earlier of notice thereof by the Agent or
knowledge thereof by the Borrower;
(c) any representation or warranty made by or on behalf of the Borrower or
any of the Guarantors in any of the Loan Documents proves to have been untrue in
any material respect or any representation, statement (including Financial
Statements), certificate or data furnished or made to the Agent or any Lender in
connection herewith proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(d) default shall be made by the Borrower or any of the Guarantors (as
principal or guarantor or other surety) in the payment or performance of any
bond, debenture, note or other Indebtedness in excess of $100,000 in the
aggregate or under any credit agreement, loan agreement, indenture, promissory
note or similar agreement or instrument executed in connection with any of the
foregoing, and such default shall remain unremedied for in excess of the period
of grace, if any, with respect thereto or there shall occur any event or
condition in respect of any such Indebtedness which would allow the holders
thereof to require such Indebtedness to be repaid, repurchased or redeemed;
(e) the Borrower shall be unable to satisfy any condition or cure any
circumstance specified in Article III, the satisfaction or curing of which is
precedent to the right of the Borrower to obtain a Loan or the issuance, renewal
or extension of a Letter of Credit, and such inability shall continue for a
period in excess of 60 days;
(f) the Borrower or any of the Guarantors shall (i) apply for or consent to
the appointment of a receiver, trustee, or liquidator of it or all or a
substantial part of its assets, (ii)
file a voluntary petition commencing an Insolvency Proceeding, (iii) make a
general assignment for the benefit of creditors of all or substantially all of
its assets, (iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(g) an order, judgment or decree shall be entered against the Borrower or
any of the Guarantors by any court of competent jurisdiction or by any other
duly authorized authority, on the petition of a creditor or otherwise, granting
relief in any Insolvency Proceeding or 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 such order, judgment, or decree shall not be dismissed or stayed
within 60 days;
(h) the levy against any significant portion of the Property of the Borrower
or any of the Guarantors of any execution, garnishment, attachment,
sequestration or other writ or similar proceeding in an amount in excess of
$100,000 which is not permanently dismissed or discharged within 60 days after
the levy;
(i) a final and non-appealable order, judgment or decree shall be entered
against the Borrower or any of the Guarantors for money damages and/or
Indebtedness due in an amount in excess of $100,000, and such order, judgment or
decree shall not be dismissed or stayed within 60 days or is not fully covered
by insurance (excluding any deductible);
(j) any charges are filed or any other action or proceeding is instituted by
any Governmental Authority against the Borrower or any of the Guarantors under
the Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. Sec.1961
et seq.), the result of which could be the forfeiture or transfer of any
material Property of the Borrower subject to a Lien in favor of the Agent
without (i) satisfaction or provision for satisfaction of such Lien or (ii) such
forfeiture or transfer of such Property being expressly made subject to such
Lien;
(k) the Borrower or any of the Guarantors shall have (i) concealed, removed
or diverted, or permitted to be concealed, removed or diverted, any part of its
Property, with intent to hinder, delay or defraud its creditors or any of them,
(ii) made or suffered a transfer of any of its Property which is fraudulent
under any bankruptcy, fraudulent conveyance, or similar law with intent to
hinder, delay or defraud its creditors, (iii) 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 with intent to hinder, delay or defraud its
creditors, or (iv) shall have 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 60 days from the date thereof;
(l) any Security Document shall for any reason not, or cease to, create
valid and perfected first priority Liens (subject only to Permitted Liens)
against the Collateral purportedly covered thereby, except to the extent
permitted by this Agreement;
(m) any Loan Document, at any time after its execution and delivery and for
any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all
Obligations and termination of the Commitments and this Agreement, ceases to be
in full force and effect;
(n) the Borrower or any of the Guarantors purports to revoke, terminate or
rescind any Loan Document or any provision of any Loan Document;
(o) neither the Parent nor High Plains Gas, LLC, a Wyoming limited liability
company, shall be serving as the sole manager of the Borrower; the Parent and
High Plains Gas, LLC shall cease to own, in the aggregate, at least fifty one
percent (51%) of the common equity interests in the Borrower; or, if High Plains
Gas, LLC owns at least fifty one percent (51%) of the common equity interests in
the Borrower, Xxxx Xxxxxxxxx shall cease to own at least fifty one percent (51%)
of the equity interests in High Plains Gas, LLC with the right to elect its
managers or to manage such Business Entity; or
(p) the occurrence of a Material Adverse Effect.
7.2 Remedies. Upon the occurrence of an Event of Default specified in
Section 7.1(f) or Section 7.1(g), immediately and without notice, (i) all
Obligations under the Loan Documents shall automatically become immediately due
and payable, without presentment, demand, protest, notice of protest, default,
or dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity, or other notice of any kind, except as may be provided to the contrary
elsewhere herein, all of which are hereby expressly waived by the Borrower and
the Guarantors and (ii) the Commitments shall immediately cease and terminate
unless and until reinstated by the Agent and the Lenders in writing.
(b) Upon the occurrence of any Event of Default other than those specified
in Section 7.1(f) or Section 7.1(g), (i) the Agent may and, upon the request of
the Required Lenders, shall, by notice in writing to the Borrower, declare all
Obligations under the Loan Documents immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower and the Guarantors and
(ii) the Agent may and, upon the request of the Required Lenders, shall declare
the Commitments terminated, whereupon the Commitments shall immediately cease
and terminate unless and until reinstated by the Agent and the Lenders in
writing.
(c) Upon the occurrence of any Event of Default, the Agent may, in addition
to the foregoing in this Section 7.2, exercise any or all of the rights and
remedies provided by law or pursuant to the Loan Documents.
(d) Should the Obligations under the Loan Documents become immediately due
and payable in accordance with any of the preceding subsections of this Section
7.2, the obligation of the Borrower with respect to the L/C Exposure shall be to
provide cash as Collateral therefor, to be held and administered by the Agent as
provided in Section 2.11 with respect to mandatory prepayments and, failing
receipt by the Agent of immediate payment in full of the Loan Balance, any
additional Obligations then due and payable, and all accrued and unpaid interest
and fees and such cash to serve as Collateral for the L/C Exposure, the Agent
shall be entitled to proceed against the Collateral, and proceeds from any
realization against any such Collateral, other than cash, in excess of the sum
of the costs of such realization, the Loan Balance, any additional Obligations
then due and payable, and accrued and unpaid interest and fees shall constitute
cash Collateral for the remaining L/C Exposure, if any, to be held and
administered by the Agent as provided in Section 2.11.
(e) Proceeds from realization against the Collateral and any other funds
received by the Agent from the Borrower or any of the Guarantors when an Event
of Default has occurred and is continuing shall be applied (i) first, to fees
and expenses due pursuant to the terms of this Agreement, any other Loan
Document or any Commodity Hedge Agreement or Interest Rate Hedge Agreement with
an Approved Hedge Counterparty, (ii) second, to accrued interest on the
Obligations under the Loan Documents or any Commodity Hedge Agreement or
Interest Rate Hedge Agreement with an Approved Hedge Counterparty, (iii) third,
to the Loan Balance, in any manner elected by the Agent (with the consent of the
Required Lenders), and any other Obligations then due and payable, pro rata in
accordance with the ratio of the Loan Balance or such other Obligations, as the
case may be, to the sum of the Loan Balance and such other Obligations and (iv)
as provided in subsection (d) immediately above, if applicable.
ARTICLE VIII
THE AGENT
8.1 Appointment. Each Lender hereby designates and appoints the Agent as
the agent of such Lender under this Agreement and the other Loan Documents. The
Agent shall also act hereunder as agent for all Approved Hedge Counterparties.
Each Lender authorizes the Agent, as the agent for such Lender, to take such
action on behalf of such Lender under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities except those expressly set forth herein or in any other Loan
Document or any fiduciary relationship with any Lender; and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities on
the part of the Agent shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible to any
Lender for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
required to initiate or conduct any litigation or collection proceedings
hereunder, except with the contribution by each Lender of its Percentage Share
of costs reasonably expected by the Agent to be incurred in connection
therewith, (b) liable for any action lawfully taken or omitted to be taken by it
or such Person
under or in connection with this Agreement or any other Loan Document (except
for gross negligence or willful misconduct of the Agent or such Person) or (c)
responsible in any manner to any Lender or any other Approved Hedge Counterparty
for any recitals, statements, representations or warranties made by the Borrower
or any of the Guarantors or any officer or representative thereof contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
the Borrower or any of the Guarantors to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender or any
other Approved Hedge Counterparty to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of the Guarantors.
8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the Borrower or any of the Guarantors), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless and until a written notice of
assignment, negotiation, or transfer thereof shall have been received by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and contribution by each Lender of its Percentage Share of costs
reasonably expected by the Agent to be incurred in connection therewith. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders. Such request and any action taken or failure
to act pursuant thereto shall be binding upon the Lenders and all future holders
of the Notes. In no event shall the Agent be required to take any action that
exposes the Agent to personal liability or that is contrary to any Loan Document
or applicable Requirement of Law.
8.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agent has
received notice from a Lender, the Borrower or any of the Guarantors referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall promptly give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
until the Agent shall have received such directions, subject to the provisions
of Section 7.2, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders. In the
event that the officer of the Agent primarily responsible for the lending
relationship with the Borrower or the officer of any Lender primarily
responsible for the lending relationship with the Borrower becomes aware that a
Default or Event of Default has occurred and is continuing, the Agent or
such Lender, as the case may be, shall use its good faith efforts to inform the
other Lenders and/or the Agent, as the case may be, promptly of such occurrence.
Notwithstanding the preceding sentence, failure to comply with the preceding
sentence shall not result in any liability to the Agent or any Lender.
8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any other Lender nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to such Lender and that no
act by the Agent or any other Lender hereafter taken, including any review of
the affairs of the Borrower or any of the Guarantors, shall be deemed to
constitute any representation or warranty by the Agent or any Lender to any
other Lender. Each Lender represents to the Agent that it has, independently
and without reliance upon the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, condition
(financial and otherwise) and creditworthiness of the Borrower and the
Guarantors and the value of the Collateral and other Properties of the Borrower,
any of the Guarantors or any other Person and has made its own decision to enter
into this Agreement. Each Lender also represents that it will, independently
and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, condition (financial and otherwise) and creditworthiness
of the Borrower and the value of the Collateral and other Properties of the
Borrower, any of the Guarantors or any other Person. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial and otherwise), or creditworthiness
of the Borrower, and the Guarantors or the value of the Collateral or other
Properties of the Borrower, any of the Guarantors or any other Person which may
come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
8.7 Indemnification. Each Lender agrees to indemnify the Agent and its
officers, directors, employees, agents, attorneys-in-fact and Affiliates (to the
extent not reimbursed by the Borrower or any of the Guarantors and without
limiting the obligation of the Borrower to do so), ratably according to the
Percentage Share of such Lender, from and against any and all liabilities,
claims, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including any time following the payment and performance of all Obligations and
the termination of this Agreement) be imposed on, incurred by or asserted
against the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates in any way relating to or arising out of this
Agreement or any other Loan Document, or any other document contemplated or
referred to herein or the transactions contemplated hereby or any action taken
or omitted by the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates under or in connection with any of the
foregoing, including any liabilities, claims, obligations, losses, damages,
penalties, actions,
judgments, suits, costs, expenses and disbursements imposed, incurred or
asserted as a result of the negligence, whether sole or concurrent, of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates. The agreements
in this Section 8.7 shall survive the payment and performance of all Obligations
and the termination of this Agreement.
8.8 Restitution. Should the right of the Agent or any Lender to realize
funds with respect to the Obligations be challenged and any application of such
funds to the Obligations be reversed, whether by Governmental Authority or
otherwise, or should the Borrower or any of the Guarantors otherwise be entitled
to a refund or return of funds distributed to the Lenders in connection with the
Obligations, the Agent or such Lender, as the case may be, shall promptly notify
the Lenders of such fact. Not later than noon, Central Standard or Central
Daylight Savings Time, as the case may be, of the Business Day following such
notice, each Lender shall pay to the Agent an amount equal to the ratable share
of such Lender of the funds required to be returned to the Borrower or any of
the Guarantors. The ratable share of each Lender shall be determined on the
basis of the percentage of the payment all or a portion of which is required to
be refunded originally distributed to such Lender, if such percentage can be
determined, or, if such percentage cannot be determined, on the basis of the
Percentage Share of such Lender. The Agent shall forward such funds to the
Borrower, the relevant Guarantor or to the Lender required to return such funds.
If any such amount due to the Agent is made available by any Lender after Noon,
Central Standard or Central Daylight Savings Time, as the case may be, of the
Business Day following such notice, such Lender shall pay to the Agent (or the
Lender required to return funds to the Borrower or any of the Guarantors, as the
case may be) for its own account interest on such amount at a rate equal to the
Federal Funds Rate for the period from and including the date on which
restitution to the Borrower or any of the Guarantors is made by the Agent (or
the Lender required to return funds to the Borrower or any of the Guarantors, as
the case may be,) to, but not including, the date on which such Lender failing
to timely forward its share of funds required to be returned to the Borrower or
the relevant Guarantor shall have made its ratable share of such funds
available.
8.9 Agent in Its Individual Capacity. The Agent and its Affiliates may make
loans to, accept deposits from, and generally engage in any kind of business
with the Borrower and the Guarantors as though the Agent were not the agent
hereunder. With respect to any Note issued to the Lender serving as the Agent,
the Agent shall have the same rights and powers under this Agreement as a Lender
and may exercise such rights and powers as though it were not the Agent. The
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
8.10 Successor Agent. The Agent may resign as Agent upon ten days' notice
to the Lenders, all Approved Hedge Counterparties under then existing Commodity
Hedge Agreements or Interest Rate Hedge Agreements and the Borrower. If the
Agent shall resign as Agent under this Agreement and the other Loan Documents,
Lenders (other than the Agent in its capacity as a Lender) for which the
Percentage Shares aggregate at least fifty-one percent (51%) of the
Percentage Shares of all Lenders (other than the Agent in its capacity as a
Lender) shall appoint from among the Lenders a successor agent for the Lenders
and the Approved Hedge Counterparties, whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent; provided, however, should
the Agent resign at a point when all Loans, accrued interest and fees hereunder
have been paid in full and the Commitments have terminated, resulting in the
only then existing Obligations being the liability of the Borrower under
Commodity Hedge Agreements and/or Interest Rate Hedge Agreements with Approved
Hedge Counterparties, the successor agent shall be selected from among such
Approved Hedge Counterparties by majority vote of such Approved Hedge
Counterparties. The term "Agent" shall mean such successor agent effective upon
its appointment. The rights, powers, and duties of the former Agent as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent or any of the parties to this Agreement or any holders of the
Notes. After the removal or resignation of any Agent hereunder as Agent, the
provisions of this Article VIII and those of any Section hereof relating to the
Agent, including Section 5.16, Section 5.17, Section 5.20 and Section 5.21 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement and the other Loan Documents.
8.11 Applicable Parties. The provisions of this Article are solely for the
benefit of the Agent and the Lenders, and neither the Borrower nor any Guarantor
shall have any rights as a third party beneficiary or otherwise under any of the
provisions of this Article. In performing functions and duties hereunder and
under the other Loan Documents, the Agent shall act solely as the agent of the
Lenders and any other Approved Hedge Counterparties and does not assume, nor
shall it be deemed to have assumed, any obligation or relationship of trust or
agency with or for the Borrower or any legal representative, successor or assign
of any such Person.
8.12 Releases. Each Lender hereby authorizes the Agent to release any
Collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents. Each Lender hereby authorizes the Agent to execute and deliver
to the Borrower, at the Borrower's sole cost and expense, any and all releases
of Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property of the Borrower or any of the Guarantors to the extent such sale or
other disposition is permitted by the terms of the Loan Documents.
ARTICLE IX
MISCELLANEOUS
9.1 Assignments; Participations. Neither the Borrower nor any of the
Guarantors may not assign any of its rights or delegate any of its obligations
under any Loan Document without the prior consent of the Agent and the Lenders.
(b) With the consent of the Agent and, except when a Default or an Event of
Default shall have occurred, the Borrower (which shall not be unreasonably
withheld or delayed in either case), any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
pursuant to an Assignment Agreement; provided, however, (i) such consents shall
not be required with respect to an assignment from one Lender to one or more
other Lenders or Affiliates of Lenders, (ii) the consent of the Borrower shall
not be
required with respect to an assignment from a Lender to one or more Approved
Funds or Affiliates of Approved Funds and (iii) any such assignment shall be as
to a Facility Amount of at least $5,000,000 (or any whole multiple of $100,000
in excess thereof), unless the relevant assignment is to an Affiliate of the
assigning Lender or is an assignment of the entire Commitment of the assigning
Lender. The assignee shall pay to the Agent a transfer fee in the amount of
$5,000 for each such assignment. Any such assignment shall become effective
upon the execution and delivery to the Agent of an Assignment Agreement and, if
required, the consent of the Agent and the Borrower. Promptly following receipt
of an executed Assignment Agreement, the Agent shall send to the Borrower a copy
of such executed Assignment Agreement. Promptly following receipt of such
executed Assignment Agreement, the Borrower shall execute and deliver, at its
own expense, a new Note to the assignee, if such assignee is not then a Lender.
Upon the effectiveness of any assignment pursuant to this Section 9.1(b), the
assignee will become a "Lender," if not already a "Lender," for all purposes of
the Loan Documents, and the assignor shall be relieved of its obligations
hereunder to the extent of such assignment. If the assignor no longer holds any
rights or obligations under this Agreement, such assignor shall cease to be a
"Lender" hereunder, except that its rights under Section 5.16, Section 5.17,
Section 5.20 and Section 5.21, shall not be affected. On the last Business Day
of each month during which an assignment has become effective pursuant to this
Section 9.1(b) or sooner following an assignment, the Agent shall prepare a new
Exhibit IV giving effect to all such assignments effected during such month or
any relevant assignment, as the case may be, and will promptly provide a copy
thereof to the Borrower and each Lender.
(c) Each Lender may transfer, grant, or assign participations in all or any
portion of its interests hereunder to any Person pursuant to this Section
9.1(c), provided that such Lender shall remain a "Lender" for all purposes of
this Agreement and the transferee of such participation shall not constitute a
"Lender" hereunder. In the case of any such participation, the participant
shall not have any rights under any Loan Document, the rights of the participant
in respect of such participation to be against the granting Lender as set forth
in the agreement with such Lender creating such participation, and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation. Each agreement creating a participation must include
an agreement by the participant to be bound by the provisions of Section 8.3,
Section 8.6 and Section 8.7.
(d) The Lenders may furnish any information concerning the Borrower or any
of the Guarantors in the possession of the Lenders from time to time to
assignees and participants and prospective assignees and participants.
(e) Notwithstanding anything in this Section 9.1 to the contrary, any Lender
may assign and pledge all or any of its Notes or any interest therein to any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and any operating circular issued by such Federal Reserve System and/or such
Federal Reserve Bank. No such assignment or pledge shall release the assigning
or pledging Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 9.1, no transfer or
assignment of the interests or obligations of any Lender or grant of
participations therein shall be permitted if such transfer, assignment, or grant
would require the Borrower to file a registration
statement with the Securities and Exchange Commission or any successor
Governmental Authority or qualify the Loans under the "Blue Sky" laws of any
state.
9.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and the Guarantors and all
covenants and agreements of the Borrower and the Guarantors herein made shall
survive the execution and delivery of the Notes and the Security Documents and
shall remain in force and effect so long as any Obligation is outstanding or any
Commitment exists.
9.3 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be confirmed in writing, all
notices, requests, and communications hereunder shall be in writing (including
by facsimile, electronic mail or other electronic form). Unless otherwise
expressly provided herein, any such notice, request, demand, or other
communication shall be deemed to have been duly given or made when delivered by
hand or by a nationally-recognized overnight courier service, or, in the case of
delivery by mail, five days after being deposited in the mail, certified mail,
return receipt requested, postage prepaid, or, in the case of facsimile notice,
when receipt thereof is acknowledged orally or by written confirmation report,
addressed as follows:
(a) if to the Agent, to:
Amegy Bank National Association
0000 Xxxx Xxx Xxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Lending Dept.
Facsimile: (000) 000-0000
or for notice by mail:
Amegy Bank National Association
X.X. Xxx 00000
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Lending Dept.
(b) if to any Lender, to the address, including facsimile number, of
such Lender reflected on Exhibit IV or any replacement thereof.
(c) if to the Borrower or any of the Guarantors, to:
00000 Xxxxxxxx Xxxx., Xxxxx 000 with a copy to:
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx Xxxxxx Xxxxxx, P.C.
Attention: Xxxxx X. Xxxx 000 Xxxxxx Xxxxxx
Facsimile: (000) 000-0000 Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.
9.4 Parties in Interest. Subject to the restrictions on changes in
structure set forth in Section 6.10 and other applicable restrictions contained
herein, all covenants and agreements herein contained by or on behalf of the
Borrower, any of the Guarantors, the Agent or the Lenders shall be binding upon
and inure to the benefit of the Borrower, the relevant Guarantor, the Agent or
the Lenders, as the case may be, and their respective legal representatives,
successors and permitted assigns.
9.5 Renewals; Extensions. All provisions of this Agreement relating to the
Notes shall apply with equal force and effect to each promissory note hereafter
executed which in whole or in part represents a renewal or extension of any part
of the Indebtedness of the Borrower under this Agreement, the Notes or any other
Loan Document.
9.6 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Agent, the Lenders, any other Approved Hedge
Counterparties, the Borrower and the Guarantors. No other Person shall have any
right, benefit, priority, or interest hereunder or as a result hereof or have
standing to require satisfaction of provisions hereof in accordance with their
terms.
9.7 No Waiver; Rights Cumulative. No course of dealing on the part of the
Agent or the Lenders or their officers or employees, nor any failure or delay by
the Agent or the Lenders with respect to exercising any of their rights under
any Loan Document shall operate as a waiver thereof. The rights of the Agent
and the Lenders under the Loan Documents shall be cumulative and the exercise or
partial exercise of any such right shall not preclude the exercise of any other
right. Neither the making of any Loan nor the issuance of any Letter of Credit
shall constitute a waiver of any of the covenants, warranties, or conditions of
the Borrower or any of the Guarantors contained herein. In the event the
Borrower is unable to satisfy any such covenant, warranty, or condition, neither
the making of any Loan nor the issuance of any Letter of Credit shall have the
effect of precluding the Agent or the Lenders from thereafter declaring such
inability to be an Event of Default as hereinabove provided.
9.8 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations 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
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
9.9 Amendments; Waivers. Neither this Agreement nor any provision hereof
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge or termination is sought. Subject to the preceding
sentence, any provision of this Agreement or any other Loan Document may be
amended, modified or waived by the Borrower, the Guarantors and the Required
Lenders; provided that, notwithstanding any provision of this Agreement to the
contrary, (a) no amendment, modification or waiver which extends the final
maturity of the Loans, increases the Commitment Amount, increases, affirms or
reduces the Borrowing Base or the Monthly Reduction Amount, forgives the
principal amount of any Indebtedness of the Borrower outstanding under this
Agreement or interest thereon or fees owing under this Agreement, releases any
guarantor of such Indebtedness, releases all or substantially all of the
Collateral, reduces the interest rate applicable to the Loans or the fees
payable to the Lenders generally, affects Section 2.1, Section 2.2, Section
7.2(c) or this Section 9.9, modifies the definition of "Required Lenders" or
postpones the date of payment of any amount due as a result of the Monthly
Reduction Amount or any fee payable hereunder shall be effective without the
consent of each Lender effected thereby; (b) no amendment, modification or
waiver which increases the Facility Amount or the Percentage Share of any Lender
shall be effective without the consent of such Lender; and (c) no amendment,
modification or waiver which modifies the rights, duties or obligations of the
Agent shall be effective without the consent of the Agent. Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.
9.10 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
9.11 Disposition of Collateral. Notwithstanding any term or provision,
express or implied, in any of the Security Documents, but subject to applicable
provisions of this Agreement, the realization, liquidation, foreclosure or any
other disposition on or of any or all of the Collateral shall be in the order
and manner and determined in the sole discretion of the Agent; provided,
however, that in no event shall the Agent violate applicable law or exercise
rights and remedies other than those provided in such Security Documents or
otherwise existing at law or in equity.
9.12 Governing Law. THIS AGREEMENT AND THE Notes 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, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW.
9.13 Waiver of Right to Jury Trial. THE BORROWER, EACH OF THE GUARANTORS,
THE AGENT AND EACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS
OF THE AGENT OR ANY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO.
THE PROVISIONS OF THIS SECTION 9.13 ARE A MATERIAL INDUCEMENT FOR THE LENDER TO
ENTER INTO THIS AGREEMENT.
9.14 Waiver of Class Action. THE BORROWER, EACH OF THE GUARANTORS, THE
AGENT AND EACH OF THE LENDERS WAIVES THE RIGHT TO LITIGATE ANY CLAIM, DISPUTE OR
------
CONTROVERSY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AS A CLASS
ACTION, EITHER AS A MEMBER OF A CLASS OR AS A REPRESENTATIVE, OR TO ACT AS A
PRIVATE ATTORNEY GENERAL.
9.15 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE AGENT, IN COURTS HAVING SITUS IN HOUSTON, XXXXXX
COUNTY, TEXAS. IN SUCH REGARD, THE BORROWER AND EACH OF THE GUARANTORS HEREBY
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN
HOUSTON, XXXXXX COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE AGENT OR ANY LENDER IN ACCORDANCE WITH THIS SECTION 9.15.
9.16 Integration. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE
THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND THERETO WITH RESPECT TO THE
SUBJECT HEREOF AND THEREOF AND SHALL SUPERSEDE ANY PRIOR AGREEMENT AMONG THE
PARTIES HERETO AND THERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
HEREOF AND THEREOF, INCLUDING ANY TERM SHEET PROVIDED TO THE BORROWER BY THE
AGENT OR ANY LENDER. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
9.17 Waiver of Punitive and Consequential Damages. THE BORROWER, EACH OF
THE GUARANTORS, THE AGENT AND EACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT IT MAY LAWFULLY
AND EFFECTIVELY DO SO, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY DISPUTE
BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY, ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 9.17.
9.18 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which for all purposes shall be deemed to be an original,
and all such counterparts shall together constitute but one and the same
Agreement and shall be enforceable as of the date hereof upon the execution of
one or more counterparts hereof by each of the parties hereto. In this regard,
each of the parties hereto acknowledges that a counterpart of this Agreement
containing a set of counterpart execution pages reflecting the execution of each
party hereto shall be sufficient to reflect the execution of this Agreement by
each party hereto and shall constitute one instrument.
9.19 USA Patriot Act Notice. Each Lender and the Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrower and the Guarantors that,
pursuant to the requirements of the USA Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender or the Agent, as applicable, to identify the Borrower in
accordance with the USA Patriot Act.
9.20 Contribution and Indemnification. In the event that any Credit Party
pays (whether through direct payments or as a result of providing Collateral for
the Obligations) any amounts on the Obligations in excess of such Credit Party's
Obtained Benefit (the "Excess Payments"), such Credit Party shall be entitled to
make demand on the other Credit Parties for such Excess Payments, and to receive
from each other Credit Party that received an Obtained Benefit, such Credit
Party Contribution Percentage of the Excess Payment. If any party obligated to
make such a payment is unable to pay the Contribution Percentage of the Excess
Payment, each other Credit Party agrees to make a contribution to the party
entitled to such payment to the extent necessary so that each Credit Party
shares equally the liability for such Excess Payment in relation to the relative
Obtained Benefit received by such Credit Party. IN SUCH REGARD, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, EACH CREDIT PARTY SHALL INDEMNIFY, DEFEND AND HOLD
HARMLESS THE OTHER CREDIT PARTIES FROM AND AGAINST ANY AND ALL LIABILITY,
CLAIMS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES)
ARISING WITH RESPECT TO THE OBLIGATIONS AND EXCEEDING SUCH OTHER CREDIT PARTY'S
OBTAINED BENEFIT OR CONTRIBUTION PERCENTAGE THEREOF AS PROVIDED HEREIN. Any
amount due under this Section 9.20 shall be due and payable within ten days of
demand therefor by the party entitled to payment and shall be made to the party
entitled thereto at the address for notices to the Credit Parties under this
Agreement, in immediately available funds, not later than 2:00 p.m., Central
Standard or Daylight Time, on the date on which such payment shall come due.
The remedies available to any Credit Party pursuant to the provisions of this
Section 9.20 are not exclusive. All rights and claims of contribution,
indemnification and reimbursement under this Section 9.20 shall be subordinate
in right of payment to the prior payment in full of the Obligations. The
provisions of this Section 9.20 shall, to the extent expressly inconsistent with
any provision in any Loan Document, supersede such inconsistent provision.
9.21 Tax Shelter Regulations. The Borrower does not intend to treat the
Loans and related transactions hereunder and under the other Loan Documents as a
"reportable transaction" (within the meanings under current Treasury Regulation
Section 1.6011-4 and Proposed Treasury Regulation Section 1.6011-4, promulgated
on November 1, 2006). In the event the Borrower determines to take any action
inconsistent with the foregoing statement, it will promptly notify the Agent
thereof. If the Borrower so notifies the Agent, the Borrower acknowledges that
one or more of the Lenders may treat its Loans and related transactions
hereunder and under the other Loan Documents as part of a transaction that is
subject to current Treasury Regulation Section 301.6112-1 or Proposed Treasury
Regulation Section 301.6112-1, promulgated on November 1, 2006, and, in such
case, such Lender or Lenders, as applicable, will maintain the lists and other
records required, if any, by such Treasury Regulations.
(SIGNATURES APPEAR ON FOLLOWING PAGES)
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER:
CEP-M PURCHASE, LLC
By: Current Energy Partners Corporation,
its Manager
By: \s\ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Chief Executive Officer
(Signatures continue on following page)
AGENT:
AMEGY BANK NATIONAL ASSOCIATION, as Agent
By: \s\ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
LENDER:
AMEGY BANK NATIONAL ASSOCIATION
By: \s\ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
Contact Information and
Applicable Lending Office
for Base Rate Loans
and LIBO Rate Loans:
0000 Xxxx Xxx Xxxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Lending Dept.
Facsimile: (000) 000-0000