Contract
Exhibit
10.1
by
and among
and
EACH
OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
each
as a debtor and debtor-in-possession
as
Borrowers,
THE
LENDERS THAT ARE SIGNATORIES HERETO
as
the Lenders,
and
BD
FUNDING I, LLC
as
Agent
Dated
as of June 15, 2009
THIS
DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this "Agreement"), is
entered into as of June 15, 2009 by and among the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), BD FUNDING
I, LLC, as administrative agent for the Lenders (in such capacity, together with
its successors and assigns in such capacity, "Agent"), TXCO
RESOURCES INC., a Delaware corporation, as a debtor and debtor-in-possession
("Administrative
Borrower") and each of Administrative Borrower's Subsidiaries identified
on the signature pages hereof, each as a debtor and debtor-in-possession (such
Subsidiaries, together with Administrative Borrower, are referred to hereinafter
each individually as a "Borrower", and
individually and collectively, jointly and severally, as the "Borrowers").
A. The
Borrowers have commenced cases (the "Chapter 11 Cases")
under Chapter 11 of Title 11 of the United States Code in the United States
Bankruptcy Court for the Western District of Texas, San Antonio Division (the
"Bankruptcy
Court"), and the Borrowers have retained possession of their assets and
are authorized under the Bankruptcy Code to continue the operation of their
businesses as debtors-in-possession.
B. Pursuant
to the Debtor-In-Possession Note dated as of May 22, 2009 executed by the
Borrowers and payable to the order of Double Black Diamond Offshore,
Ltd., as agent on behalf of the Lenders in an original principal amount not
to exceed $12,500,000 (the "Interim Period DIP
Note" ), the Lenders have made post petition advances to the Borrowers in
an aggregate principal amount of $2,000,000 (the "Interim Period
Advances").
C. The
Borrowers have requested the Lenders to make additional post-petition loans and
advances consisting of a multiple draw term loan facility in an aggregate
principal amount (when aggregated with the Interim Period Advances) not to
exceed $32,000,000, including a subfacility for the issuance of letters of
credit. The Lenders are severally, and not jointly, willing to extend
such credit to the Borrowers subject to the terms and conditions hereinafter set
forth.
The
parties agree as follows:
1. DEFINITIONS
AND CONSTRUCTION
1.1 Definitions.. Capitalized
terms used in this Agreement shall have the meanings specified therefor on
Appendix A attached hereto.
1.2 Accounting
Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the
term "financial
statements" shall include the notes and schedules
thereto. Whenever the term "Borrowers" is used in respect of a
financial covenant or a related definition, it shall be understood to mean the
Borrowers on a consolidated basis, unless the context clearly requires
otherwise.
1.3 Code. Any
terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein; provided,
however, that to the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall
govern.
1.4 Construction. Unless
the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms "includes"
and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The
words "hereof,"
"herein,"
"hereby,"
"hereunder,"
and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not to
any particular provision of this Agreement or such other Loan Document, as the
case may be. Section, subsection, clause, appendix, schedule, and
exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or
in any other Loan Document to the satisfaction or repayment in full of the
Obligations shall mean the repayment in full in cash (or, in the case of Letters
of Credit, the cash collateralization or support by a standby letter of credit
in accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 Schedules,
Appendices and Exhibits. All
of the appendices, schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
2. LOAN
AND TERMS OF PAYMENT.
2.1 Advances.
(a) Subject
to the terms and conditions of this Agreement and the Bankruptcy Court Orders,
on and after the Final Facility Effective Date and until the Final Maturity Date
(or such earlier termination of the Commitments in accordance with the terms
herein), each Lender agrees (severally, not jointly or jointly and severally) to
make advances (such advances, together with the Interim Period Advances are
herein the "Advances") to the
Borrowers in an amount not to exceed in the aggregate such Lender's Pro Rata
Share of an amount equal to the lesser of:
(i) the
Maximum Facility Amount less (A) the sum of all outstanding Advances made
hereunder plus the Letter of Credit Usage at such time, less (B) the aggregate
amount of reserves, if any, established by Agent under Section 2.1(b);
and
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(ii) as
of each week, the sum of (A) an amount equal to 110% of the difference between
(x) the cumulative uses of cash (excluding repayments of Advances and
amounts in respect of any Permitted Letters of Credit), minus (y) the cumulative
sources of cash (excluding Advances or Permitted Letters of Credit), in each
case as set forth in the Budget through such week, plus (B) such additional
amount as may be needed in order to enable the Borrowers to maintain an
aggregate cash balance of approximately $1,000,000.
(b) Anything
to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves against
amounts the Borrowers are entitled to borrow under Section 2.1(a)
in such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, including reserves with respect
to (i) sums that any Borrower is required to pay under any Section of this
Agreement or any other Loan Document (such as Taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and are overdue, (ii) amounts owing by any Borrower to any Person
to the extent secured by a Lien on, or trust over, any of the Collateral
(including proceeds thereof or collections from the sale of Oil and Gas which
may from time to time come into the possession of Lenders or the Agent), which
Lien or trust, in the Permitted Discretion of Agent likely would have a priority
superior to Agent's Liens in and to such item of the Collateral (other than
Permitted Priority Liens) and (iii) the Carve-Out Expenses.
2.2 Interim
Period DIP Note
(a) . Upon
the satisfaction of the conditions set forth in Section 4.1, (i) all
Interim Period Advances shall be deemed to be Advances hereunder, (ii) all
accrued and unpaid interest under the Interim Period DIP Note shall be deemed to
be accrued and unpaid interest hereunder, (iii) all other then-outstanding
payment obligations of the Borrowers under the Interim Period DIP Note shall
become Obligations hereunder and (iv) the Interim Period DIP Note shall have no
further force or effect, it being the intent of the parties hereto that this
Agreement shall be deemed as having been given in substitution and not in
novation or discharge of all such obligations or amounts then owing by the
Borrowers under the Interim Period DIP Note.
2.3 Borrowing
Procedures.
(a) Procedure for
Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. The
Borrowers may request a Borrowing no more than once per calendar
week. Such request must be received by Agent no later than 1:00 p.m.
(Dallas, Texas time) at least 3 Business Days before the Business Day that is
the requested Funding Date specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time. In such circumstances, the Borrowers agree that any
such telephonic notice will be confirmed in writing within 24 hours of the
giving of such telephonic notice, but the failure to provide such written
confirmation shall not affect the validity of the request. Each
request for Borrowing shall be irrevocable and binding on the
Borrowers.
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(b) Borrowing Amounts. Each Borrowing shall be
in an amount that is an integral multiple of $100,000 and not less than $500,000
or, if the Budget does not then permit a Borrowing of such amount, such lesser
amount as permitted in the Budget.
(c) Making of Advances. Agent
shall promptly notify the Lenders of the requested Borrowing (and not later than
1:00 p.m. (Dallas, Texas time) on the Business Day that is 2 Business Days
preceding the Funding Date applicable thereto), by telecopy, telephone or
electronic mail. Each Lender shall transfer immediately available
funds equal to the amount of such Lender's Pro Rata Share of the requested
Borrowing to the Administrative Borrower's Designated Account not later than
4:00 p.m. (Dallas, Texas time) on the Funding Date applicable thereto; provided, however, that no
Lender shall have the obligation to make, any Advance if such Lender has actual
knowledge that (1) one or more of the applicable conditions precedent set forth
in Section 4
will not be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived in accordance herewith, or (2) the
requested Borrowing would exceed the Availability on such Funding
Date.
(d) Notation. Agent
shall record on its books the principal amount of the Advances owing to each
Lender, and the interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and
accurate.
2.4 Payments
of Principal.
(a) Manner of Payment. Except
as otherwise expressly provided herein, all payments by the Borrowers shall be
made to each Lender's Account for the account of such Lender and shall be made
in immediately available funds, no later than 3:00 p.m. (Dallas, Texas time) on
the date specified herein. Any payment received by Lender later than 3:00 p.m.
(Dallas, Texas time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue until
such following Business Day.
(b) Apportionment and
Application.
(i) All
principal and interest payments shall be apportioned ratably among the
applicable Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees,
amounts and expenses (other than fees or expenses that are for Agent's
separate account) shall be apportioned ratably among the Lenders having a Pro
Rata Share of the type of Obligation to which a particular fee, amount or
expense relates. All payments to be made hereunder by the
Borrowers shall be remitted to the Lenders in accordance with this Section 2.4, and
all such payments, and all proceeds of Collateral received by Agent, shall be
applied as set forth in this Section
2.4.
(ii) Any
partial repayments of principal shall be applied pro rata in repayment of (a)
the first $7,500,000 of Advances (which bear interest at the rate described in
clause (i) of the definition of "Applicable Rate") and (b) any Advances in
excess of $7,500,000 (which bear interest at the rate described in clause (ii)
of the definition of "Applicable Rate"), in each case as are outstanding as of
the date of such repayment.
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(iii) All
prepayments of principal, payments remitted to the Lender Group during the
occurrence and continuance of an Event of Default and all proceeds of Collateral
received by Agent shall, in each case, be applied as follows:
(A) first, to pay any
fees or premiums then due to Agent or the Lenders under the Loan Documents until
paid in full,
(B) second, to pay any
Lender Group Expenses (including cost or expense reimbursements) or indemnities
then due to Agent or the Lenders under the Loan Documents, until paid in
full,
(C) third, ratably to pay
interest due in respect of the Advances, until paid in full,
(D) fourth, ratably (i)
to pay the principal of all Advances until paid in full and (ii) to the Issuing
Lender and the other Lenders, as cash collateral in an amount up to 105% of the
Letter of Credit Usage, and
(E) fifth, to pay any
other Obligations until paid in full.
(iv) In
the event of a direct conflict between the priority provisions of this Section 2.4 and any
other provision contained in any other Loan Document, it is the intention of the
parties hereto that such provisions be read together and construed, to the
fullest extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall
control and govern.
(c) Repayments.
(i) Excess
Usage. If at any time the sum of the aggregate principal
amount of all Advances made hereunder, the outstanding Letter of Credit Usage,
and the aggregate amount of reserves, if any, established by Agent under Section 2.1(b)
exceeds the lesser of (A) an amount equal to 110% of the difference between
(x) the cumulative uses of cash (excluding repayments of Advances and
amounts in respect of any Permitted Letters of Credit), minus (y) the
cumulative sources of cash (excluding Advances or Permitted Letters of Credit),
in each case as set forth in the Budget through such time, and (b) the
Maximum Facility Amount, the Borrowers shall immediately repay the Obligations
in an amount equal to such excess, which repayments shall be applied in the
manner set forth in Section
2.4(b).
(ii) Voluntary
Repayments. The Advances may be voluntarily repaid in full or
in part at any time without premium or penalty.
(iii) Mandatory
Repayments.
(A) Immediately
upon the receipt by any Borrower of the proceeds of any sale or disposition of
Property or assets (other than Permitted Dispositions), such Borrower shall,
subject to the order of the Bankruptcy Court, repay the outstanding principal
amount of the Obligations in accordance with Section 2.4(b) in an
amount equal to 100% of such
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Net Cash
Proceeds (including condemnation awards and payments in lieu thereof) received
by such Borrower in connection with such sales or
dispositions. Nothing contained in this paragraph shall permit any
Borrower to sell or otherwise dispose of any property or assets other than in
accordance with Section 7.4.
(B) Immediately
upon the receipt by any Borrower of any Extraordinary Receipts, the Borrowers
shall repay the outstanding principal amount of the Obligations in accordance
with Section
2.4(b) in an amount equal to 100% of such Extraordinary Receipts, net of
any reasonable expenses incurred in collecting such Extraordinary
Receipts.
(C) Immediately
upon the issuance or incurrence by any Borrower of any Indebtedness (other than
Indebtedness permitted under Section 7.1) or the
issuance by any Borrower of any shares of Stock (other than in the event
that any Borrower forms a Subsidiary in accordance with Section 6.13,
the issuance by such Subsidiary of Stock to such Borrower), the Borrowers shall
repay the outstanding principal amount of the Obligations in accordance with
Section 2.4(b)
in an amount equal to 100% of the Net Cash Proceeds received by such Person in
connection with such incurrence of Indebtedness or such issuance of
Stock. Notwithstanding the foregoing, the provisions of this
paragraph shall not be deemed to be an implied consent to any such issuance or
incurrence which is otherwise prohibited by the terms and conditions of this
Agreement.
(iv) Repayment
on Final Maturity Date. The outstanding
principal amount of the Advances, together with interest accrued and unpaid
thereon and all other Obligations outstanding hereunder, shall be due and
payable on the Final Maturity Date or, if earlier, on the date on which they are
declared due and payable pursuant to the terms of this Agreement.
(v) Re-borrowings
Not Permitted. Any amounts repaid by the Borrowers may not be
re-borrowed.
2.5 Interest
Rate.
(a) Interest
Rates. Except as provided in Section 2.6(b), all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Applicable Rate.
(b) Default Rate. Upon
the occurrence and during the continuation of an Event of Default:
(i) all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 200 basis points above the per
annum rate otherwise applicable hereunder, and
(ii) the
Letter of Credit fee provided for in Section 2.11(b) shall be increased
to 200 basis points above the per annum rate otherwise applicable
hereunder.
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(c) Intent to Limit Charges to Maximum
Lawful Rate. In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem
applicable. The Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto,
as of the date of this Agreement, the Borrowers are and shall be liable only for
the payment of such maximum as allowed by law, and payment received from the
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such
excess. Without limiting the foregoing, it is the intention of the
parties hereto that the Agent and each Lender shall conform strictly to usury
laws applicable to it. Accordingly, if the transactions contemplated hereby
would be usurious as to the Agent or any Lender under laws applicable to it
(including the laws of the United States of America and any other jurisdiction
whose laws may be mandatorily applicable to the Agent or such Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Advances, it is
agreed as follows: (a) the aggregate of all consideration that
constitutes interest under law applicable to the Agent or any Lender that is
contracted for, taken, reserved, charged or received by the Agent or such Lender
under any of the Loan Documents or agreements or otherwise in connection with
the Advances shall under no circumstances exceed the maximum amount allowed by
such applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by the Agent or such Lender on the principal
amount of the Borrowing (or, to the extent that the principal amount of such
Borrowing shall have been or would thereby be paid in full, refunded by the
Agent or such Lender to the Borrowers; and (b) in the event that the maturity of
the Advances is accelerated by reason of any Event of Default or otherwise, or
in the event of any required or permitted repayment, then such consideration
that constitutes interest under law applicable to the Agent or any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any provided for in this Agreement or otherwise shall be
canceled automatically by the Agent or such Lender as of the date of such
acceleration or repayment and, if theretofore paid, shall be credited by the
Agent or such Lender on the principal amount of the Borrowing (or, to the extent
that the principal amount of such Borrowing shall have been or would
thereby be paid in full, refunded by the Agent or such Lender to the
Borrowers). All sums paid or agreed to be paid to the Agent or any
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extent permitted by law applicable to the Agent or such Lender, be amortized,
prorated, allocated and spread throughout the stated term of the Advances until
payment in full so that the rate or amount of interest on account of any
Advances do not exceed the maximum amount allowed by such applicable
law. If at any time and from time to time (i) the amount of interest
payable to the Agent or any Lender on any date shall be computed at the maximum
rate allowable under law applicable to the Agent or such Lender pursuant to this
paragraph and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to the Agent or such Lender would be
less than the amount of interest payable to the Agent or such Lender computed at
the maximum rate allowable under law applicable to the Agent or such Lender,
then the amount of interest payable to the Agent or such Lender in
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respect
of such subsequent interest computation period shall continue to be computed at
the maximum lawful rate applicable to the Agent or such Lender until the total
amount of interest payable to the Agent or such Lender shall equal the total
amount of interest which would have been payable to the Agent or such Lender if
the total amount of interest had been computed without giving effect to this
paragraph.
2.6 Payment
of Interest,
Origination Amount
and Fees.
(a). Subject to the terms of the Bankruptcy Court Orders and except
as provided to the contrary herein, all Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the last
Business Day of each month, and all interest hereunder shall be due and payable
as set forth in Section
2.13(a). The Borrowers hereby authorize Agent, during the
occurrence and continuance of an Event of Default, to charge all interest and
fees (when due and payable), all Lender Group Expenses (after the same become
due and payable in accordance with Section 18.8), all
amounts, charges, commissions, fees, and costs provided for in Sections 2.10,
2.11 and 2.12(e) (in each case
as and when due and payable), and all other payments as and when due and payable
under any Loan Document, to the Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter accrue
interest at the rate then applicable to Advances. All interest,
amounts and fees chargeable under the Loan Documents shall be computed on the
basis of a 360 day year for the actual number of days elapsed.
2.7 Crediting
Payments. The
receipt of any payment item by any Lender (whether from transfers to such Lender
by the Cash Management Banks pursuant to the Control Agreements or otherwise)
shall not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to such Lender's Account or
unless and until such payment item is honored when presented for
payment. Should any payment item not be honored when presented for
payment, then the Borrowers shall be deemed not to have made such payment and
interest shall accrue in respect of such item as provided
herein. Anything to the contrary contained herein notwithstanding,
any payment item shall be deemed received by a Lender only if it is received
into such Lender's Account on a Business Day on or before 3:00 p.m. (Dallas,
Texas time). If any payment item is received into a Lender's Account
on a non-Business Day or after 3:00 p.m. (Dallas, Texas time) on a Business Day,
it shall be deemed to have been received by such Lender as of the opening of
business on the immediately following Business Day; provided, however, each Lender
reserves the right, in its sole discretion, to exclude from such payment item
the amount of any such payment item that such Lender determines may constitute
trust funds (e.g., production taxes, severance taxes, or payroll taxes) or
amounts attributable to interests of third Persons such as overriding royalty
interests.
2.8 Designated
Account. Each
Lender is authorized to make the Advances, and Issuing Lender is authorized to
issue the Letters of Credit, under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized
Person. Administrative Borrower agrees to establish and maintain an
account (the "Designated Account")
with a Cash Management Bank for the purpose of receiving the proceeds of the
Advances requested by the Borrowers and made by the Lenders
hereunder. Unless otherwise agreed by any Lender and Administrative
Borrower with respect to any Advance to be made by such
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Lender,
any Advance requested by the Borrowers and made by the Lenders hereunder shall
be made to the Designated Account.
2.9 Maintenance
of Loan Account. Agent
shall maintain an account on its books in the name of the Borrowers (the "Loan
Account") on which the Borrowers will be charged with all Advances made by the
Lenders to the Borrowers or for the Borrowers' account, the Letters of Credit
issued by Issuing Lender for the Borrowers' account, and with all other payment
Obligations hereunder or under the other Loan Documents, including, accrued
interest, fees and expenses, and Lender Group Expenses. In accordance
with Section 2.7, the
Loan Account will be credited with all payments received by any Lender from the
Borrowers or for the Borrowers' account, including all amounts received in any
Lender's Account from any Cash Management Bank. Any statements
regarding the Loan Account rendered by Agent to the Borrowers, including
itemizations of principal, interest, fees, charges and expenses, shall, absent
manifest error, be conclusively presumed to be correct and accurate unless,
within 30 days after receipt thereof by the Borrowers, the Administrative
Borrower shall deliver to Agent a written objection thereto describing the error
or errors contained in any such statements. Promptly after receipt of
such written objection and Agent's evaluation thereof, the Agent shall credit
the Loan Account for amounts (if any) contained in such statements that Agent
agrees were charged in error.
2.10 Origination
Amount. The Borrowers shall pay an amount (the "Origination Amount")
equal to 3.0% of the Maximum Facility Amount to the Lenders in accordance with
their Pro Rata Shares (and the Borrowers hereby authorize Agent to charge such
amounts due and owing to the Loan Account and to designate such amounts as
Advances under this Agreement as and when due and payable or structure such
amounts as original issue discount), which shall be payable as
follows:
(a) that
portion of the Origination Amount equal to 1.0% of the Maximum Facility Amount
shall be due and payable on the date of the first Advance under this
Agreement (without regard to Advances under the Interim Period DIP Note);
provided, however, that such
amount shall be permanently reduced by any Origination Amount paid by the
Borrowers pursuant to the Interim Period DIP Note; and
(b) that
portion of the Origination Amount equal to 2.0% of the Maximum Facility Amount
shall be due and payable on the Final Maturity Date (or upon any earlier
repayment of all Advances hereunder).
2.11 Fees. In
addition to any other fees set forth in the Loan Documents, the Borrowers shall
pay the following fees to the Lenders in accordance with their Pro Rata Shares
(and the Borrowers hereby authorize Agent to charge such amounts due and owing
to the Loan Account and to designate such amounts as Advances under this
Agreement as and when due and payable):
(a) An
unused line fee (the "Unused Line Fee")
equal to the product of (x) 0.50% per annum and (y) the Maximum
Facility Amount, less the sum of (a) the average Daily Balance of Advances that
were outstanding during the immediately preceding month, plus (b) the average
Daily Balance of outstanding and undrawn Letters of Credit during the
immediately preceding month. The Unused Line Fee shall accrue during
the period from and
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including
the Final Facility Effective Date through but excluding the date on which the
Commitments are terminated; provided that, if a Lender continues to have any L/C
Risk Participation Liability after its Commitment terminates, then the Unused
Line Fee shall continue to accrue on the average daily amount of such Lender's
L/C Risk Participation Liability from and including the date on which its
Commitment terminates to but excluding the date on which it ceases to have any
L/C Risk Participation Liability. Accrued Unused Line Fees shall be
payable in arrears on the last Business Day of each month and on the day on
which the Unused Line Fee ceases to accrue hereunder.
(b) In
addition to the charges, commissions, fees, and costs set forth in Section 2.12(e), the Borrowers
shall pay to any Issuing Lender and, subject to their compliance with Section 2.12(b),
the other Lenders a Letter of Credit fee which shall accrue at a rate equal to
the product of (x) Applicable Rate (or such lower rate as may be agreed
between Agent and the Borrowers) and (y) the Daily Balance of the undrawn
amount of all outstanding Letters of Credit.
2.12 Letters
of Credit.
(a) Subject
to the terms and conditions of this Agreement, any Issuing Lender may agree to
cause an Underlying Issuer to issue letters of credit for the account of the
Borrowers (each, a "Letter of Credit"),
whether by purchasing participations, executing indemnities or reimbursement
obligations, or otherwise (each such undertaking, an "L/C Undertaking")
with respect to such Letters of Credit; provided, however, that the
Issuing Lender or the Agent in its sole discretion may decline to cause or allow
the issuance of any Letter of Credit so requested. Each request for
the issuance of a Letter of Credit, or the amendment, renewal, or extension of
any outstanding Letter of Credit, shall be made in writing by an Authorized
Person and delivered to the Issuing Lender and Agent via hand delivery,
telecopy, or electronic mail reasonably in advance of the requested date of
issuance, amendment, renewal, or extension. Each such request
shall be in form and substance satisfactory to Agent and the Issuing Lender in
its Permitted Discretion and shall specify (i) the amount of such Letter of
Credit, (ii) the date of issuance, amendment, renewal, or extension of such
Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the
name and address of the beneficiary thereof, and (v) such other information
(including, in the case of an amendment, renewal, or extension, identification
of the outstanding Letter of Credit to be so amended, renewed, or extended) as
shall be necessary to prepare, amend, renew, or extend such Letter of
Credit. If requested by the Issuing Lender, the Borrowers also shall
be an applicant under the application with respect to any Letter of Credit that
is to be the subject of an L/C Undertaking. No Letter of Credit shall
be issued if the Letter of Credit Usage would exceed the Maximum Facility Amount
less the outstanding amount of Advances less the aggregate amount of reserves,
if any, established by Agent under Section
2.1(b).
Each
Letter of Credit shall be in form and substance acceptable to the Issuing Lender
and Agent (in the exercise of their Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a
Letter of Credit or an L/C Undertaking, the Borrowers immediately shall
reimburse such L/C Disbursement to Issuing Lender by paying to such Issuing
Lender an amount equal to such L/C Disbursement not later than 2:00 p.m.,
Dallas, Texas time, on the date that
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such L/C
Disbursement is made, if Administrative Borrower shall have received written or
telephonic notice of such L/C Disbursement prior to 1:00 p.m., Dallas, Texas
time, on such date, or, if such notice has not been received by Administrative
Borrower prior to such time on such date, then not later than 2:00 p.m., Dallas,
Texas time, on the Business Day immediately following the date that
Administrative Borrower receives such notice, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and shall bear interest at the rate then
applicable to Advances. To the extent an L/C Disbursement is deemed
to be an Advance hereunder, the Borrowers' obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting
Advance.
(b) Promptly
following receipt of a notice of L/C Disbursement, each Lender agrees to fund
its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection to Issuing Lender on the same terms and conditions as if the
Borrowers had requested such Advance. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders, the
Issuing Lender shall be deemed to have granted to each Lender, and each Lender
shall be deemed to have purchased, a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of the L/C Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to the Issuing Lender
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay the
Issuing Lender such Lender's Pro Rata Share of each L/C Disbursement made by the
Issuing Lender and not reimbursed by the Borrowers on the date due as provided
in Section 2.12(a), or of any
reimbursement payment required to be refunded to the Borrowers for any
reason. Each Lender acknowledges and agrees that its obligation to
deliver to the Issuing Lender an amount equal to its respective Pro Rata Share
of each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall be absolute
and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in Section
3. If any such Lender fails to make available to the Issuing
Lender the amount of such Lender's Pro Rata Share of each L/C Disbursement made
by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and the Issuing
Lender shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in
full.
(c) Each
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
harmless from any loss, cost, expense, or liability, and reasonable attorneys
fees incurred by the Lender Group arising out of or in connection with any
Letter of Credit; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability that a court of competent jurisdiction has finally determined to
have resulted from the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees
to be bound by the Underlying Issuer's regulations and interpretations of any
Letter of Credit, even though this interpretation may be different from such
Borrower's own, and each Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake, whether of omission
or commission, in following the Borrowers' instructions or those contained in
the Letter of Credit or any modifications, amendments, or supplements
thereto. Each Borrower understands that the L/C
Undertakings
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may
require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by the Borrowers against such Underlying
Issuer. Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless with respect to any loss, cost, expense
(including reasonable attorneys fees), or liability incurred by the Lender Group
under any L/C Undertaking as a result of the Lender Group's indemnification of
any Underlying Issuer; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that a court of
competent jurisdiction has finally determined to have resulted from gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group. Each Borrower hereby acknowledges and agrees that
neither the Lender Group nor the Issuing Lender shall be responsible for delays,
errors, or omissions resulting from the malfunction of equipment in connection
with any Letter of Credit.
(d) Each
Borrower hereby authorizes and directs any Underlying Issuer to deliver to the
Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Letter of Credit and to
accept and rely upon the Issuing Lender's instructions with respect to all
matters arising in connection with such Letter of Credit and the related
application.
(e) Any
and all issuance charges, commissions, fees, and costs charged by the Underlying
Issuer with respect to the Letters of Credit shall be Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
the Issuing Lender.
(f) If
by reason of (i) any change after the Filing Date in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any
reserve, deposit, or similar requirement is or shall be imposed or modified in
respect of any Letter of Credit issued hereunder, or
(ii) there
shall be imposed on the Underlying Issuer or the Lender Group any other
condition regarding any Letter of Credit issued pursuant hereto,
and the
result of the foregoing is to increase, directly or indirectly, the cost to the
Lender Group of issuing, making, guaranteeing, or maintaining any Letter of
Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent or the Issuing Lender may, at any time
within a reasonable period after the additional cost is incurred or the amount
received is reduced, notify Administrative Borrower, and the Borrowers shall pay
the Lenders on demand such amounts as Agent or the Issuing Lender may specify to
be necessary to compensate the Lender Group for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand
until payment in full thereof at the rate then applicable to Advances hereunder;
provided that the Borrowers shall not be required to compensate a Lender
pursuant to this Section for any such amounts incurred more than 270 days prior
to the date that such Lender first demands payment from any Borrower of such
amounts;
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provided
further that if any event or circumstance giving rise to such amounts is
retroactive, then the 270 day period referred to above shall be extended to
include the period of retroactive effect thereof. The determination
by Agent or the Issuing Lender of any amount due pursuant to this Section, as
set forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
2.13 LIBO Rate
Provisions.
(a) Interest and Interest Payment
Dates. Accrued interest on all Borrowings shall be payable on
the earliest of (i) each Interest Payment Date in respect thereof, (ii) the date
on which this Agreement is terminated pursuant to the terms hereof and (iii) the
date on which all or any portion of the Obligations are accelerated pursuant to
the terms hereof.
(b) Breakage Costs. The
Borrowers shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as a result
of (A) the payment of any principal of any Borrowing other than on an Interest
Payment Date applicable thereto (including as a result of an Event of Default),
or (B) the failure to borrow any Borrowing on the date specified in notice of
Borrowing delivered pursuant hereto (such losses, costs, or expenses, "Funding
Losses"). Funding Losses shall, with respect to Agent or any
Lender, be deemed to equal the amount determined by Agent or such Lender to be
the excess, if any, of (1) the amount of interest that would have accrued on the
principal amount of such Borrowing had such repayment not occurred, at the LIBO
Rate that would have been applicable thereto, for the period from the date of
such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, for the period that would have been the
Interest Period therefor), minus (2) the amount of interest that would accrue on
such principal amount for such period at the interest rate which Agent or such
Lender would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to the
Administrative Borrower setting forth any amount or amounts that Agent or such
Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive
absent manifest error.
(c) Increased
Costs. The LIBO Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes in Taxes constituting Taxes of the
type described in clauses (a) and (b) of the definition of "Excluded Taxes") and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor) (excluding the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System), which
additional or increased costs would increase the cost of funding or maintaining
loans bearing interest at the LIBO Rate. In any such event, the
affected Lender shall give the Administrative Borrower, Agent and the other
Lenders notice of such a determination and adjustment and, upon its receipt of
the notice from the affected Lender, the Administrative Borrower may, by notice
to such affected Lender (x) require such Lender to furnish to the Administrative
Borrower a statement setting forth the basis for adjusting such LIBO Rate and
the method for determining the amount of such adjustment, or (y) repay
the
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Borrowings
with respect to which such adjustment is made (together with any amounts due
under this paragraph. Failure or delay on the part of any Lender to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's right to demand such compensation; provided that the Borrowers
shall not be required to compensate a Lender pursuant to this Section for any
additional or increased costs incurred more than 180 days prior to the date that
such Lender notifies the Administrative Borrower of such law giving rise to such
additional or increased costs and of such Lender's intention to claim
compensation therefor; provided further that if such claim arises by reason of
the adoption of or change in any law that is retroactive, then the 180-day
period day period referred to above shall be extended to include the period of
retroactive effect thereof.
(d) No Requirement of Matched
Funding. Anything to the contrary contained herein
notwithstanding, no Lender is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Borrowing as to which interest accrues at
the LIBO Rate. The provisions of this Section shall apply as if each
Lender had match funded any Borrowing as to which interest is accruing at the
LIBO Rate by acquiring eurodollar deposits for each Interest Period in the
amount of such Borrowing.
2.14 Capital
Requirements. If,
after the date hereof, any Lender determines that (i) the adoption of or change
in any law, rule, regulation or guideline regarding capital requirements for
banks or bank holding companies, or any change in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request, or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender's or such holding company's capital
as a consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
such Lender to be material, then such Lender may notify the Administrative
Borrower and Agent thereof. Following receipt of such notice, the
Borrowers agree to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution
methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrowers shall
not be required to compensate a Lender pursuant to this Section for any
reduction in return incurred more than 270 days prior to the date that such
Lender notifies the Administrative Borrower of such law, rule, regulation or
guideline giving rise to such reductions and of such Lender's intention to claim
compensation therefor; provided further that if such claim arises by reason of
the adoption of or change in any law, rule, regulation or guideline that is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
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2.15 Administrative
Borrower as Agent for Borrowers. Each Borrower hereby
irrevocably appoints Administrative Borrower as the borrowing agent and
attorney-in-fact for all Borrowers, which appointment shall remain in full force
and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower (i) to
provide all notices with respect to Advances and Letters of Credit obtained for
the benefit of any Borrower and all other notices and instructions under this
Agreement on behalf of the Borrowers and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances and
Letters of Credit and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan Account and Collateral of the Borrowers in a
combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Borrowers in order to utilize the collective borrowing
powers of the Borrowers in the most efficient and economical manner and at their
request, and that Lender Group shall not incur liability to any Borrower as a
result hereof. Each Borrower expects to derive benefit, directly or
indirectly, from the handling of the Loan Account and the Collateral in a
combined fashion since the successful operation of each Borrower is dependent on
the continued successful performance of the integrated group.
2.16 Joint
and Several Liability of Borrowers. (a) Each
Borrower is accepting joint and several liability hereunder and under the other
Loan Documents in consideration of the financial accommodations to be provided
by the Lender Group under this Agreement, for the mutual benefit, directly and
indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the
Obligations.
(b) Each
Borrower, jointly and severally, hereby irrevocably and unconditionally accepts,
not merely as a surety but also as a co-debtor, joint and several liability with
the other Borrowers, with respect to the payment and performance of all of the
Obligations (including any Obligations arising under this Section 2.16), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.
(c) If
and to the extent that any Borrower shall fail to make any payment with respect
to any of the Obligations as and when due or to perform any of the Obligations
in accordance with the terms thereof, then in each such event the other
Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The
Obligations of each Borrower under the provisions of this Section 2.16 constitute the
absolute and unconditional, full recourse Obligations of each Borrower
enforceable against each Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever, subject to applicable
law.
(e) Except
as otherwise expressly provided in this Agreement, each Borrower hereby waives
notice of acceptance of its joint and several liability, notice of any Advances
or Letters of Credit issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any payment
under this Agreement, notice of
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any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Borrower hereby assents
to, and waives notice of, any extension or postponement of the time for the
payment of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Agent or Lenders at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any
Borrower. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of the Agent or any Lender with respect to the failure by any other
Borrower to comply with any of its respective Obligations, including any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.16 afford grounds for
terminating, discharging or relieving any Borrower, in whole or in part, from
any of its Obligations under this Section 2.16, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of each Borrower under this Section 2.16 shall not be
discharged except by performance and then only to the extent of such
performance. The Obligations of each Borrower under this Section 2.16 shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or Agent or any Lender.
(f) Each
Borrower represents and warrants to Agent and Lenders that such Borrower is
currently informed of the financial condition of the other Borrowers and of all
other circumstances which a diligent inquiry would reveal and which bear upon
the risk of nonpayment of the Obligations. Each Borrower further
represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each
Borrower hereby covenants that such Borrower will continue to keep informed of
the Borrowers' financial condition, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) Each
Borrower waives all rights and defenses arising out of an election of remedies
by Agent or any Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
may have destroyed Agent's or such Lender's rights of subrogation and
reimbursement against such Borrower by the operation of statute or
otherwise.
(h) Each
Borrower waives all rights and defenses that such Borrower may have because the
Obligations are secured by Real Property. This means, among other
things:
(i) Agent
and Lenders may collect from such Borrower without first foreclosing on any Real
Property or Collateral consisting of personal property pledged by the
Borrowers.
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(ii) If
Agent or any Lender forecloses on any Real Property Collateral:
(A) Subject
to applicable law, the amount of the Obligations may be reduced only by the
price for which that Collateral is sold at the foreclosure sale, even if such
Collateral is worth more than the sale price.
(B) Agent
and Lenders may collect from such Borrower even if Agent or Lenders,
by foreclosing on the Real Property Collateral, has destroyed any right such
Borrower may have to collect from the other Borrowers.
The
foregoing is an unconditional and irrevocable waiver of any rights and defenses
such Borrower may have because the Obligations are secured by Real
Property.
(i) The
provisions of this Section 2.16 are made for the
benefit of Agent, Lenders and their respective successors and permitted assigns,
and may be enforced by it or them from time to time against any or all Borrowers
as often as occasion therefor may arise and without requirement on the part of
Agent, Lender, successor or permitted assign first to marshal any of its or
their claims or to exercise any of its or their rights against any Borrower or
to exhaust any remedies available to it or them against any Borrower or to
resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of
this Section
2.16
shall remain in effect until all of the Obligations shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by Agent or any Lender, the provisions of this
Section
2.16
will forthwith be reinstated in effect, as though such payment had not been
made.
(j) Until
the Obligations have been paid in full and all of the Commitments terminated,
each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations
have been paid in full in cash. Any claim which any Borrower may have
against any other Borrower with respect to any payments to any Agent or Lender
hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and all such Obligations shall be
paid in full in cash before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.
(k) Each
Borrower hereby agrees that, after the occurrence and during the continuance of
any Default or Event of Default, the payment of any amounts due with respect to
the indebtedness owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence
and during the continuance of any Default or Event of Default, such Borrower
will not demand, xxx for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such
Borrower shall collect, enforce or receive any
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amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for Agent, and such Borrower shall deliver
any such amounts to the Lenders for application to the Obligations in accordance
with Section
2.4(b).
2.17 Lender's Failure
to Fund Advances
(a) All
Advances shall be made by the Lenders contemporaneously and in accordance with
their Pro Rata Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make its Pro Rata Share of any Advance (or other extension of credit) hereunder,
nor shall any Commitment of any Lender be increased or decreased as a result of
any failure by any other Lender to perform its obligations hereunder, and (ii)
no failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(b) If
any Lender has not transferred immediately available funds equal to the amount
of such Lender's Pro Rata Share of a requested Borrowing to the Administrative
Borrower's Designated Account before 2:00 p.m. (Dallas, Texas time) on the
Funding Date applicable thereto, and such Lender has not notified Agent prior to
2:00 p.m. (Dallas, Texas time) on such Funding Date that such Lender will not
make available such funds as and when required hereunder, then Agent may,
in its sole discretion (but shall not be so required), make available to the
Borrowers on such date a corresponding amount. If and to the extent
any Lender shall not have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available to the
Borrowers such amount, then such Lender shall on the Business Day following such
Funding Date make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount
is so made available, such payment to Agent by the Lender shall constitute such
Lender's Advance on the date of borrowing for all purposes of this
Agreement. If the Lender does not make such amount available to Agent
on the Business Day following the Funding Date, Agent will notify Administrative
Borrower of such failure to fund and, upon demand by Agent, the Borrowers shall
pay such amount to Agent for Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make any Advance on any
Funding Date shall not relieve any other Lender of any obligation hereunder to
make an Advance on such Funding Date, but neither Agent nor any Lender shall be
responsible for the failure of any other Lender to make the Advance to be made
by such other Lender(s) on any Funding Date.
(c) Notwithstanding
any provision of this Agreement to the contrary, if any Lender becomes a
Defaulting Lender, then the following provisions shall apply for so long as such
Lender is a Defaulting Lender:
(i) Solely
for the purposes of voting or consenting to matters with respect to the Loan
Documents, a Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero;
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(ii) the
Unused Line Fee in respect of such Defaulting Lender's Commitment shall cease to
accrue;
(iii) no
Issuing Lender shall be required to issue, amend or increase any Letter of
Credit unless it is satisfied that the related exposure thereunder will be 100%
covered by the Commitments of the non-Defaulting Lenders and/or cash collateral
will be provided by the Borrower in an amount equal to the amount of such
Defaulting Lender's Pro Rata Share of the Advance deemed to be made in
connection with such Letter of Credit; and
(iv) Agent
may, at its option, arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be acceptable to the Required
Lenders.
This
Section shall remain effective with respect to such Defaulting Lender until (w)
the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (x) the non-Defaulting Lenders, Agent, and
Administrative Borrower shall have waived such Defaulting Lender's default in
writing, (y) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent or the other Lenders, as the case may be,
all amounts owing by Defaulting Lender in respect thereof or (z) the
Defaulting Lender otherwise adequately remedies all matters that caused such
Lender to be a Defaulting Lender (as determined by the Agent, the Administrative
Borrower and the other Lenders). The operation of this Section shall
not be construed to increase or otherwise affect the Commitment of any Lender,
to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by the Borrowers of their duties and obligations hereunder to Agent
or to the Lenders other than such Defaulting Lender. Any such failure
to fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement. In connection with the
arrangement of a substitute Lender in accordance with clause (iv) above, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the L/C Risk Participation Liability) but without any premium
or penalty of any kind whatsoever; provided, however, that any
such assumption of the Commitment of such Defaulting Lender shall not be deemed
to constitute a waiver of any of the Lender Groups' or the Borrowers' rights or
remedies against any such Defaulting Lender arising out of or in relation to
such failure to fund.
3. SECURITY
AND ADMINISTRATIVE PRIORITY.
3.1 Collateral;
Grant of Lien and Security Interest. (a) As
security for the full and timely payment and performance of all of the
Obligations, to the extent authorized by the Bankruptcy Court Orders, each of
the Borrowers assigns, pledges and grants (or causes the assignment, pledge and
grant in respect of any indirectly owned assets) to Agent, for the benefit of
Agent and the Lenders, a security interest in and to and Lien on all of the
property, assets or interests in property or assets of such Person, of any kind
or nature whatsoever, real or personal, now existing or hereafter acquired or
created, including, without limitation, all property of the estates (within the
meaning of the Bankruptcy Code) of such Borrower, and all accounts,
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inventory,
goods, contract rights, instruments, documents, chattel paper, patents,
trademarks, copyrights and licenses therefor, general intangibles, payment
intangibles, letters of credit, letter-of-credit rights, supporting obligations,
machinery and equipment, real property, fixtures, leases, all of the Stock of
each Subsidiary of such Borrower, all of the Stock of all other Persons directly
owned by such Borrower, money, investment property, deposit accounts, all
commercial tort claims and all causes of action arising under the Bankruptcy
Code or otherwise, and all cash and non-cash proceeds, rents, products and
profits of any of collateral described above (all property or assets of the
Borrowers subject to the security interest referred to in this Section 3.1(a) being
hereafter collectively referred to as the "Collateral").
(b) The
Agent's Liens and security interests in favor of Agent and the Lenders referred
to in Section
3.1(a) hereof shall be valid and perfected Liens and security interests
in the Collateral, superior to all other Liens and security interests in the
Collateral, other than the Permitted Priority Liens. Such Agent's
Liens and security interests and their priority shall remain in effect until the
Commitments hereunder have been terminated and the payment to Agent and the
Lenders, as applicable, in full and in cash, of the Obligations (including
providing Letter of Credit Collateralization with respect to then existing
Letter of Credit Usage).
(c) Agent's
and Lenders' Liens on the Collateral owned by the Borrowers and Agent's and
Lenders' respective administrative claims shall be subject to the prior payment
of the Carve-Out Expenses.
3.2 Administrative
Priority. Each
of the Borrowers agrees for itself that, subject to the terms of the Bankruptcy
Court Orders, the Obligations of such Person and the adequate protection claims
granted pursuant to the Bankruptcy Court Orders shall constitute allowed
superpriority administrative expenses in the Chapter 11 Cases, having priority
over any and all administrative expense claims, adequate protection claims and
all other claims against the Borrowers, now existing or hereafter arising, of
any kind whatsoever, including without limitation, all claims arising under
sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546, 726, 1113
or 1114 and any other provision of the Bankruptcy Code or otherwise, whether or
not such expenses or claims may become secured by a judgment lien or other
non-consensual lien, levy or attachment, subject only to the prior payment of
the Carve-Out Expenses.
3.3 Grants,
Rights and Remedies. The
Agent's Liens and security interests granted pursuant to Section 3.1(a) hereof
and the administrative priority granted pursuant to Section 3.2 hereof
may be independently granted by the Loan Documents and by other Loan Documents
hereafter entered into. This Agreement, the Bankruptcy Court Orders
and such other Loan Documents supplement each other, and the grants, priorities,
rights and remedies of the Agent and the Lenders hereunder and thereunder are
cumulative.
3.4 No
Filings Required. The
Agent's Liens and security interests referred to herein shall be deemed valid
and perfected by entry of the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, as the case may be. Agent shall not be
required to file any financing statements, mortgages, certificates of title,
notices of Lien or similar instruments in any jurisdiction or filing office or
to take any other action in order to validate or perfect the Lien and security
interest granted by or pursuant to this Agreement or the Interim Bankruptcy
Court or the
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Final
Bankruptcy Court Order, as the case may be, or any other Loan Document;
provided, that Agent shall be permitted to file any financing statements,
mortgages, certificates of title, notices of Lien or similar instruments in any
jurisdiction or filing office or to take any other action with respect to the
Lien and security interest granted by or pursuant to this Agreement, and the
Borrowers shall take any other actions reasonably requested by Agent and the
Lenders from time to time to in connection therewith, including, without
limitation, (a) executing and delivering any requested security agreement,
pledge agreement or Mortgage, (b) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the Code or
other applicable law, to the extent, if any, that any Borrower's signature
thereon is required therefor, (c) causing Agent's name to be noted as secured
party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (d) complying with
any provision of any statute, regulation or treaty of the United States as to
any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, and (e) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the Code or by other law,
as applicable in any relevant jurisdiction.
3.5 Survival. The
Agent's Liens, lien priority, administrative priorities and other rights and
remedies granted to Agent and the Lenders pursuant to this Agreement, the
Bankruptcy Court Orders and the other Loan Documents (specifically including the
existence, perfection and priority of the Liens and security interests provided
herein and therein, and the administrative priority provided herein and therein)
shall not be modified, altered or impaired in any manner by any other financing
or extension of credit or incurrence of Indebtedness by any Borrower (pursuant
to Section 364 of the Bankruptcy Code or otherwise), or by any dismissal or
conversion of any of the Chapter 11 Cases, or by any other act or omission
whatsoever. Without limitation, notwithstanding any such order,
financing, extension, incurrence, dismissal, conversion, act or
omission:
(a) except
for the Carve-Out Expenses, no costs or expenses of administration which have
been or may be incurred in the Chapter 11 Cases or any conversion of the same or
in any other proceedings related thereto, and no priority claims, are or will be
prior to or on parity with any claim of Agent and the Lenders against any
Borrower in respect of any Obligation; and
(b) the
Liens in favor of Agent and the Lenders set forth in Section 3.1(a) hereof
shall constitute valid and perfected first priority Liens and security
interests, subject only to Permitted Priority Liens.
4. CONDITIONS;
TERM OF AGREEMENT.
4.1 Conditions
Precedent to Final Facility Effectiveness. This
Agreement shall become effective as of the Business Day (the "Final Facility Effective
Date") when each of the following conditions precedent shall have been
satisfied:
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(a) The
Borrowers shall have commenced the Chapter 11 Cases and no trustee, examiner or
receiver shall have been appointed or designated with respect to the Borrowers'
businesses, properties or assets and no motion shall be pending seeking any
relief or seeking any other relief in the Bankruptcy Court to exercise control
over Collateral other than the Bankruptcy Court Orders;
(b) Agent
shall have received copies of the first day motions to be filed by the Borrowers
with the Bankruptcy Court in the Chapter 11 Cases, each of which shall be in
form and substance satisfactory to the Lenders;
(c) The
Interim Bankruptcy Court Order shall not have been reversed, modified, amended,
stayed or vacated absent prior written consent of Agent and the
Lenders;
(d) The
Final Bankruptcy Court Order shall have been signed and entered by the
Bankruptcy Court on or prior to June 22, 2009, and shall not have been reversed,
modified, amended, stayed or vacated absent the prior written consent of Agent
and the Lenders;
(e) In
connection with the preservation of Net Operating Losses, the Bankruptcy Court
shall have entered an interim order in form and substance acceptable to the
Lenders restricting the trading in securities and claims of the
Borrowers;
(f) The
Agent shall have received a written statement from the Borrowers executed by an
Authorized Person certifying that the Borrowers' aggregate unpaid accounts and
trade payables as of the Filing Date did not exceed $80,000,000;
(g) The
representations and warranties contained in Section 5 and in
each other Loan Document are true and correct on and as of such date (except to
the extent such representations and warranties relate solely to an earlier date)
as though made on and as of such date, and no Default or Event of Default shall
have occurred and be continuing or would result from this Agreement or the other
Loan Documents becoming effective in accordance with its or their respective
terms;
(h) Agent
shall have received each of the following documents:
(i) This
Agreement, duly executed and delivered by each Borrower, the Agent and each
Lender;
(ii) the
Budget, in form and substance satisfactory to the Agent and the Lenders in their
sole and absolute discretion;
(iii) a
certificate from the Secretary of each Borrower (A) attesting to and attaching
copies of the resolutions of such Borrower's Board of Directors, Members or
Managers, as applicable, authorizing its execution, delivery, and performance of
this Agreement and the other Loan Documents to which it is a party, which
resolutions authorize specific officers of such Borrower to execute the same,
and (B) attesting to the incumbency and signatures of such specific officers of
such Borrower; and
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(iv) All
other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agent and the
Lenders.
4.2 Conditions
Precedent to all Extensions of Credit. The
obligation of each Lender to make any Advance (or to extend any other credit
hereunder) at any time shall be subject to the following conditions
precedent:
(a) Agent
shall have received a notice of borrowing pursuant to Section 2.3 hereof
with respect to each requested Advance, and each requested Advance or credit
extension is consistent with the most recently delivered and approved Budget
subject to the variances permitted herein;
(b) the
representations and warranties of any Borrower contained in this Agreement or in
the other Loan Documents or other certificate or other writing delivered to the
Agent or any Lender pursuant hereto or thereto shall be true and correct in all
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(c) no
Default or Event of Default shall have occurred and be continuing on the date of
such extension of credit, nor shall either result from the making
thereof;
(d) neither
any injunction, writ, restraining order, or other order of any nature
restricting, conditioning or prohibiting, directly or indirectly, the extending
of such credit shall have been issued and remain in force by any Governmental
Authority, nor shall any proceeding or other action have been instituted,
directly or indirectly, with respect to any Loan Document, the Advances made or
to be made hereunder, the Liens granted hereunder or the other intended benefits
under the Bankruptcy Court Orders, in any case against any Borrower, Agent, or
any Lender that remains in effect and unresolved;
(e) the
Borrowers shall have paid all Lender Group Expenses, the Origination Amount and
all fees, in each case, that are then due and payable pursuant to the terms of
this Agreement, unless otherwise waived by Agent and the Lenders;
(f) the
making of such Loan shall not contravene any law, rule or regulation applicable
to the Agent or any Lender; and
(g) any
final order of the Bankruptcy Court restricting the trading in securities and
claims of the Borrowers shall be in form and substance acceptable to Agent and
the Lenders.
Each
Borrowing by and issuance of a Letter of Credit on behalf of the Borrowers
hereunder shall constitute a representation and warranty by the Borrowers as of
the date of such extension of credit that the conditions set forth in clauses
(b), (c), (d) (with respect to the Borrowers only) and (e) of this Section 4.2 have
been satisfied.
4.3 Effect
of Termination. If
an Event of Default has occurred and is continuing, the Commitments may be
terminated at the election of the Required Lenders, in which case the
Commitments shall be terminated effective immediately upon notice thereof to
the
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Administrative
Borrower. On
the date of termination of the Commitments or any termination of this Agreement,
all Obligations (including contingent reimbursement obligations of the Borrowers
with respect to outstanding Letters of Credit) shall immediately become due and
payable without notice or demand (including the requirement that Borrowers
provide Letter of Credit Collateralization). No termination of this
Agreement, however, shall relieve or discharge the Borrowers of their respective
duties, obligations, or covenants hereunder or under any other Loan Document and
Agent's Liens in the Collateral shall remain in effect until all Obligations
have been paid in full (including providing Letter of Credit Collateralization
with respect to the then existing Letters of Credit Usage) and the Lenders'
obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lenders' obligations to provide
additional credit under the Loan Documents have been irrevocably terminated,
Agent will, at the Borrowers' sole expense, without recourse, representation or
warranty, execute and deliver any termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record,
Agent's Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.
4.4 Early
Termination by Borrowers. The
Borrowers have the option, at any time upon 10 days prior written notice to
Agent, to terminate this Agreement and terminate the Commitments hereunder by
paying to Agent, in cash, the Obligations in full (including providing Letter of
Credit Collateralization with respect to the then existing Letter of Credit
Usage). If the Borrowers have sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and the
Borrowers shall be obligated to repay the Obligations in full (including
providing Letter of Credit Collateralization with respect to the then existing
Letter of Credit Usage), on the date set forth as the date of termination of
this Agreement in such notice.
5. REPRESENTATIONS
AND WARRANTIES.
In order
to induce the Lender Group to enter into this Agreement, each Borrower makes the
following representations and warranties to the Lender Group, which shall be
true, correct, and complete, in all respects, as of the date hereof, and at and
as of the date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date, which shall have been true, correct
and complete as of such earlier date) and such representations and warranties
shall survive the execution and delivery of this Agreement:
5.1 Due
Organization and Qualification; Subsidiaries.
(a) The
Borrowers and the Restricted Subsidiary are each duly organized, validly
existing and in good standing under the laws of the jurisdiction of their
respective organization and qualified to do business in any state where the
failure to be so qualified reasonably could be expected to have a Material
Adverse Effect.
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(b) Set
forth on Schedule
5.1 is a complete and accurate list of the Administrative Borrower's
direct and indirect Subsidiaries showing: (i) the jurisdiction of their
organization, (ii) the number of shares of each class of common and preferred
Stock authorized for each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned by the applicable
Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and
non-assessable.
(c) Except
as set forth on Schedule 5.1,
neither any Borrower nor the Restricted Subsidiary is subject to any obligation
(contingent or otherwise) to repurchase or
otherwise
acquire or retire any shares of such Person's Subsidiaries' capital Stock or any
security convertible into or exchangeable for any such capital
Stock.
(d) Except
as disclosed on Schedule 5.1, the
Borrowers have no joint ventures or similar arrangements with any Person other
than a Borrower, and the Restricted Subsidiary has no joint ventures or similar
arrangements.
5.2 Due
Authorization; No Conflict.
(a) As
to each Borrower, the execution, delivery, and performance by such Borrower of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower and such
Borrower, subject to the entry and terms of the Bankruptcy Court Orders, has
full power and authority to own and hold under lease its property and to conduct
its business substantially as currently conducted by it.
(b) As
to each Borrower, the execution, delivery, and performance by such Borrower of
this Agreement and the other Loan Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to any Borrower, the Governing Documents of any Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on any Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any Material Contract of
any Borrower (other than conflicts, breaches or defaults arising solely by
virtue of the filing of the Chapter 11 Cases or which would not have a
Material Adverse Effect) or require any approval or consent of any Person under
any Material Contract of any Borrower, other than consents or approvals that
have been obtained and that are still in force and effect or which, if not
obtained, would not have a Material Adverse Effect, (iii) result in or require
the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of any Borrower's equity holders, other than approvals that have
been obtained and that are still in force and effect.
(c) Except
for the Final Bankruptcy Court Order, no authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority is required for
(i) the execution, delivery and performance by each Borrower of this Agreement
and the other Loan Documents to which it is a party, (ii) the pledge or grant by
the Borrowers of the Liens created in favor of Agent and the Lenders pursuant to
this Agreement or any of the Loan Documents or (iii) the exercise by Agent of
any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to this Agreement, any of the Loan Documents or
created or
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provided
for by applicable law), except as may be required, in connection with the
disposition of any pledged Collateral, by laws generally affecting the offering
and sale of securities.
(d) Subject
to the entry of the Final Bankruptcy Court Order, as to each Borrower, this
Agreement and the other Loan Documents to which such Borrower is a party, and
all other documents contemplated hereby and thereby, have been duly executed and
delivered by such Borrower and constitute legal, valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance
with their respective terms, except as enforcement may be
limited
by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights
generally.
5.3 Jurisdiction of
Organization; Location of Chief Executive Office; Organizational Identification
Number.
(a) The
name of (within the meaning of Section 9-503 of the Code) and jurisdiction of
organization of each Borrower is set forth on Schedule
5.3.
(b) The
chief executive office of each Borrower is located at the address indicated on
Schedule
5.3.
(c) Each
Borrower's tax identification numbers and organizational identification numbers,
if any, are identified on Schedule
5.3.
5.4 Title
to Property (Other than Oil and Gas Properties). The
Borrowers have good and defensible title to, or a valid leasehold interest in,
the personal property assets that they purport to own and good and indefeasible
title to, or a valid leasehold interest in, the Real Property (other than Oil
and Gas Properties) that they purport to own, in each case, free and clear of
Liens except for Permitted Liens and except for such defects in title as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No portion of any Real Property material for the
conduct of the Borrowers' business (other than Oil and Gas Properties) has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. All material permits required to
have been issued or appropriate to enable the Real Property (other than Oil and
Gas Properties) to be lawfully occupied and used for all of the purposes for
which they are currently occupied and used have been lawfully issued and are in
full force and effect in all material respects.
5.5 Litigation.
(a) There
are no actions, suits, investigations or proceedings pending or, to the
knowledge of each Borrower, threatened against any Borrower or the Restricted
Subsidiary other than (i) those matters disclosed on Schedule 5.5,
(ii) actions, suits, investigations or proceedings initiated by vendors or
other trade creditors in respect of claims due and payable by any Borrower and
(iii) matters that reasonably could not be expected to have a Material
Adverse Effect.
(b) As
of the date hereof, there are no actions, suits, investigations or proceedings
pending or, to the knowledge of each Borrower, threatened against any
Borrower
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with
respect to this Agreement or any other Loan Document that remains in effect and
unresolved after entry of the Bankruptcy Court Orders.
5.6 Financial
Information.
(a) The
Administrative Borrower's audited consolidated financial statements for the year
ended December 31, 2008 as incorporated in the Administrative Borrower's Form
10-K filed with the SEC on March 13, 2009 (i) were prepared in accordance with
GAAP consistently applied throughout the periods covered thereby, except as
otherwise expressly noted therein; and (ii) fairly present in all material
respects the consolidated financial condition of the Borrowers, as of the dates
thereof and results of operations for the periods covered thereby.
(b) The
Budget, when submitted to Agent and the Lenders as required pursuant to the Loan
Documents, represents the Borrowers' good faith estimate of the future
revenue and expenses of the Borrowers for the periods set forth therein based on
assumptions believed by the Borrowers to be reasonable at the time of delivery
thereof to Agent, it being understood that such projections and forecasts are
subject to uncertainties and contingencies, many of which are beyond the control
of the Borrowers and no assurances can be given that such projections or
forecasts will be realized, and further understood that projections concerning
(i) volumes attributable to the Oil and Gas Properties and production and
cost estimates contained in the Budget and (ii) case administration expenses
(including professional fees) are necessarily based upon third-party
professional opinions, estimates and projections and that the Borrowers do not
warrant that such opinions, estimates and projections will ultimately prove to
have been accurate, provided that the Budget shall be prepared in good faith
based upon assumptions believed by the Borrowers to be reasonable at the time of
the delivery thereof to Agent and consistent with industry
standards.
5.7 Employee
Benefits. Except
as specifically disclosed in Schedule
5.7:
(a) Each
Plan of the Borrowers and the Restricted Subsidiary is in compliance in all
material respects with the applicable provisions of ERISA, the IRC and other
federal or state law. Each Plan that is intended to be qualified
under IRC Section 401(a) is either (i) a prototype plan entitled to rely on the
opinion letter issued by the IRS as to the qualified status of such plan under
Section 401 of the IRC to the extent provided in Revenue Procedure 2005-16, as
modified, or (ii) the recipient of, or has made or will make timely application
for, a determination letter from the IRS to the effect that such Plan is
qualified, and the plans and trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the
IRC. To the knowledge of the Borrowers, nothing has occurred which
would cause the loss of such qualification. The Borrowers, the
Restricted Subsidiary and each ERISA Affiliate have made all required
contributions to any Plan subject to Section 412 of the IRC, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the IRC has been made with respect to any Plan. No
Plan provides retiree medical or retiree life insurance benefits to any Person
and none of the Borrowers are contractually or otherwise obligated (whether or
not in writing) to provide any Person with life insurance or medical benefits
upon retirement or termination of employment, other than as required by the
provisions of Sections 601 through 608 of ERISA and Section 4980B of the
IRC.
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(b) There
are no pending or, to the knowledge of the Borrowers or any ERISA Affiliate,
threatened claims, actions or lawsuits, or actions by any Governmental
Authority, with respect to any Plan of the Borrowers or the Restricted
Subsidiary which has resulted or would reasonably be expected to result in a
Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any such Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i)
No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension
Plan of the Borrowers or the Restricted Subsidiary has any Unfunded Pension
Liability; (iii) neither the Borrowers, the Restricted Subsidiary nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) neither the Borrowers, the
Restricted Subsidiary nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither the Borrowers, the Restricted Subsidiary nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
5.8 Environmental
Condition. Except as set forth on Schedule
5.8,
(a) The
Borrowers, the Restricted Subsidiary and their businesses, operations, Real
Property are and have at all times during Borrowers' and the Restricted
Subsidiary's ownership, lease, operation, management, occupation or use thereof
been in material compliance with any applicable Environmental Laws;
(b) The
Borrowers have obtained all permits, licenses, approvals and other governmental
authorizations required for the conduct of their business and operations, and
the ownership, operation and use of the Real Property, under all applicable
Environmental Laws (the "Environmental Permits"). The Borrowers are
in material compliance with the terms and conditions of such Environmental
Permits, and all such Environmental Permits are valid and in good
standing. No material expenditures or operational adjustments are
reasonably anticipated to be required to remain in compliance with the terms and
conditions of, or to renew or modify such Environmental Permits;
(c) There
has been no Release or threatened Release or any handling, management,
generation, treatment, storage or disposal of Hazardous Materials on, at, under
or from any Real Property that has resulted in, or is reasonably likely to
result in, a material Environmental Liability for any Borrower;
(d) There
is no material Environmental Action or Environmental Liability pending or, to
the knowledge of any Borrower, threatened against any Borrower or the Restricted
Subsidiary, or relating to the Real Property or relating to the operations of
any Borrower or the Restricted Subsidiary, and, to the knowledge of any
Borrower, there are no actions, activities, circumstances, conditions,
events or incidents that are reasonably likely to form the basis of such an
Environmental Action or Environmental Liability;
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(e) Neither
any Borrower nor the Restricted Subsidiary is conducting, financing or is
obligated to perform any material Response Action or otherwise incur any
material expense under Environmental Law pursuant to any Environmental Action or
agreement by which it is bound or has expressly assumed by contract or
agreement;
(f) No
Real Property or facility owned, operated or leased by any Borrower is (i)
listed or proposed for listing on the National Priorities List as defined in and
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. §9601 et seq. or (ii) included on any similar list
maintained by any Governmental Authority that indicates that any Borrower has or
may have an obligation to undertake any material Response Action;
(g) No
Environmental Lien has been recorded or, to the knowledge of any Borrower,
threatened with respect to any Real Property;
(h) The
execution, delivery and performance of this Agreement, the other Loan Documents
and the other transactions contemplated hereby and thereby will not require any
notification, registration, filing, reporting, disclosure, investigation,
remediation or cleanup obligations pursuant to any requirement of Governmental
Authority or any other Environmental Law;
(i) The
Borrowers have made available to the Lenders all material records and files in
the possession, custody or control of, or otherwise reasonably available to, any
Borrower concerning compliance with or liability or obligation under
Environmental Law, including those concerning the condition of the Real Property
or the existence of Hazardous Materials at the Real Property; and
(j) None
of the matters disclosed in Schedule 5.8,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
5.9 Intellectual
Property. The
Borrowers own or are licensed or otherwise have the right to use all of the
material patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without material
conflict with the rights of any other Person. To the knowledge of
each Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrowers infringes upon any rights held by any other Person,
except to the extent such infringement could not reasonably be expected to have
a Material Adverse Effect. Except as specifically disclosed in Schedule 5.5, no
claim or litigation regarding any of the foregoing is pending or, to the
knowledge of any Borrower, threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of any Borrower, proposed, which, in either
case, would reasonably be expected to have a Material Adverse
Effect.
5.10 Compliance with
Laws.
(a) Neither
any Borrower nor the Restricted Subsidiary is in violation of any law, statute,
regulation, ordinance, judgment, order, or decree applicable to it (other than
(i)
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Environmental
Law which is addressed in Section 5.8 above and
(ii) as set forth below in subclause (b)), which violation could reasonably be
expected to have a Material Adverse Effect.
(b) No
Borrower has failed to obtain any material license, permit, franchise or other
authorization from any Governmental Authority necessary for the ownership of any
of its Oil and Gas Properties or the conduct of its business. The Oil
and Gas Properties of the Borrowers (and assets and properties utilized
therewith) have been maintained, operated and developed in a good and
workmanlike manner and in substantial conformity with all applicable laws and
all rules, regulations and orders of all Governmental Authorities having
jurisdiction and in substantial conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of such Oil and Gas Properties
(except such non-conformity arising solely by virtue of the filing of the
Chapter 11 Cases). To the Borrowers' knowledge, (i) no Oil and
Gas Property of any Borrower is subject to having allowable production reduced
below the full and regular allowable production (including the maximum
permissible tolerance) because of any overproduction (whether or not the same
was permissible at the time) prior to the date hereof, and (ii) none of the
xxxxx comprising a part of such Oil and Gas Properties (or assets and properties
utilized therewith) is deviated from the vertical by more than the maximum
permitted by applicable laws, regulations, rules and orders of any Governmental
Authority, and such xxxxx are, in fact, bottomed under and are producing from,
and the well bores are wholly within, such Oil and Gas Properties (or in the
case of xxxxx located on Real Property utilized therewith, such utilized Real
Property) covered by the leases.
5.11 Labor
Matters. Except
to the extent such matters could not reasonably be expected to have a Material
Adverse Effect, (a) no actual or threatened strikes, labor disputes, slowdowns,
walkouts, work stoppages, or other concerted interruptions of operations that
involve any employees employed at any time in connection with the business
activities or operations at the Property of any Borrower exist, (b) hours
worked by and payment made to the employees of any Borrower or the Restricted
Subsidiary have not been in violation of the Fair Labor Standards Act or any
other applicable laws pertaining to labor matters, (c) all payments due from any
Borrower or the Restricted Subsidiary for employee health and welfare insurance,
including, without limitation, workers compensation insurance, have been paid or
accrued as a liability on its books, and (d) the business activities and
operations of the Borrowers are in compliance with the Occupational Safety and
Health Act and other applicable health and safety law.
5.12 Material
Contracts. Except
as may have resulted solely from the filing of the Chapter 11 Cases, each
Material Contract (a) is in full force and effect and is binding upon and
enforceable against any Borrower and, to the best of the Administrative
Borrowers' knowledge, each other Person that is a party thereto in accordance
with its terms, and (b) has not been otherwise amended or modified, except to
the extent permitted by Section 7.7.
5.13 Insurance. The
Properties of the Borrowers are insured with financially sound and reputable
insurance companies that are not Affiliates of any Borrower, in such amounts,
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar Properties in
localities where any Borrower operates, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
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5.14 Taxes. The
Borrowers and the Restricted Subsidiary have timely filed all federal tax
returns and reports required to be filed, and have paid all federal Taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their Properties, income or assets otherwise due and payable, except
(a) those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP and (b) overdue ad valorem taxes accrued by the Borrowers prior
to the Filing Date in an aggregate amount not to exceed $1,000,000 at any
time. The Borrowers and the Restricted Subsidiary have timely filed
all material state and other non-federal tax returns and reports required to be
filed, and have paid all state and other non-federal Taxes, assessments, fees
and other governmental charges levied or imposed upon them or their Properties,
income or assets prior to delinquency thereof, except those (a) which are not
overdue by more than 30 days or (b) which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. As of the date hereof, other than as set forth
on Schedule
5.14, to the Administrative Borrower's knowledge, there is no proposed
tax assessment against any Borrower or the Restricted Subsidiary.
5.15 Gas
Imbalances. As
of the date hereof, except as set forth on Schedule 5.15, there
are no gas imbalances, take or pay or other prepayments with respect to any of
the Oil and Gas Properties in excess of $2,000,000 in the aggregate that would
require any Borrower to deliver Oil and Gas produced from any of the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor.
5.16 Derivative
Contracts. Schedule
5.16 sets forth a true and complete list of all Derivative Contracts of the
Borrowers as of the date hereof (the "Existing Derivative
Contracts"), along with the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
xxxx to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counterparty to each such
agreement. The Borrowers have, on or prior to the date hereof,
provided, true, correct and complete copies of the Existing Derivative Contracts
to Agent.
5.17 Oil and
Gas Properties.
(a) The
Borrowers have good and defensible title to the Oil and Gas that they purport to
own from time to time in and under their Oil and Gas Properties, together with
the right to produce the same.
(b) The
Oil and Gas Properties are not subject to any Lien other than Permitted
Liens. All Oil and Gas has been and will hereafter be produced, sold
and delivered by the Borrowers in accordance in all material respects with all
applicable laws and regulations of every Governmental Authority except such laws
and regulations, the failure to comply with could not reasonably be expected to
have a Material Adverse Effect; each of the Borrowers has complied in all
material respects (from the time of acquisition by any Borrower) and will
hereafter comply in all material respects with all material terms of each oil,
gas and mineral lease comprising its Oil and Gas Properties; and all such oil,
gas and mineral leases under which any Borrower is a lessee or co-lessee have
been and will hereafter be maintained in full force and effect. To
the knowledge of the Borrowers, all of the Hydrocarbon Interests comprising its
Oil and Gas Properties are and will hereafter be enforceable in all material
respects in accordance
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with
their terms, except as such may be modified by applicable bankruptcy law or an
order of a court in equity and except to the extent the failure to be
enforceable could not reasonably be expected to have a Material Adverse
Effect.
(c) There
are no leases, subleases, contracts or other operating agreements that allocate
operating expenses to any Borrower in excess of its working interest of record
in the particular Oil and Gas Property subject to such lease, sublease, contract
or other operating agreement.
(d) The
quantum and nature of the interest of the Borrowers in and to the Oil and Gas
Properties as set forth in the most recent Reserve Report includes the entire
interest of the Borrowers in such Oil and Gas Properties as of the date of such
applicable Reserve Report, and are complete and accurate in all material
respects as of the date of such applicable Reserve Report; and there are no
"back-in" or "reversionary" interests held by third parties which could
materially reduce the interest of any Borrower in such Oil and Gas Properties
except as expressly set forth in the most recent Reserve Report. The
ownership of the Oil and Gas Properties by the Borrowers shall not in any
material respect obligate any Borrower to bear the costs and expenses relating
to the maintenance, development or operations of each such Oil and Gas Property
in an amount in excess of the working interest of record of the Borrowers in
each Oil and Gas Property set forth in the most recent Reserve
Report.
5.18 Midstream
Contracts. As
of the date hereof, the Borrowers' marketing, gathering, transportation,
processing and treating facilities and equipment, together with the Midstream
Contracts, and any other marketing, gathering, transportation, processing and
treating contracts in effect among, inter alia, the Borrowers and any other
Person, are, except as set forth on Schedule 5.18,
sufficient to market, gather, transport, process or treat, as applicable,
reasonably anticipated volumes of production of Oil and Gas from the Borrowers'
Oil and Gas Properties. Any such contracts with Affiliates are
disclosed on Schedule
5.18 hereto.
5.19 Seismic
Licenses. With
respect to the Seismic Licenses: (i) all Seismic Licenses material to the
conduct of Borrowers' business as described in the Budget and the Long Term
Outlook are in effect and have not expired or terminated; (ii) no Borrower is in
material breach or material default, and no event, fact, or circumstance has
occurred, that, with the lapse of time or the giving of notice, or both, would
constitute such a material breach or material default by any Borrower with
respect to the terms of any such Seismic License except any default by any
Borrower arising solely by virtue of the filing of the Chapter 11 Cases; and
(iii) neither any Borrower, nor, to the knowledge of the Borrowers, any other
party to any such Seismic License has given written notice of any action to
terminate, cancel, rescind, or procure a judicial reformation of any Seismic
License or any provision thereof.
5.20 Long
Term Fixed Rate Contracts Except for (i) contracts listed on
Schedule 5.20 in effect as of the date hereof and (ii) contracts thereafter
either disclosed in writing to Agent or included in the most recently delivered
Reserve Report, the Borrowers have no Long Term Fixed Rate
Contracts. As used herein, "Long Term Fixed Rate
Contracts" means any material agreement that is not cancelable on 60 days
notice or less without penalty or detriment for the sale of production from any
Borrower's Oil and Gas (including, without limitation, calls on or other rights
to purchase, production, whether or not the same are currently being
exercised)
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that (a)
pertains to the sale of production at a fixed price and (b) has a maturity or
expiry date of more than six (6) months from the date of such
agreement. Each Borrower (x) is presently receiving a price for all
production from (or attributable to) each Oil and Gas Property covered by a
production sales contract or marketing contract that is computed in accordance
with the terms of such contract and, no such proceeds are currently being held
in suspense by such purchaser or any other Person at one time outstanding in
excess of $1,000,000 and (y) is not having deliveries of production from such
Oil and Gas Property curtailed by any purchaser or transporter of production
substantially below such property's or the relevant pipeline's delivery
capacity. Except as set forth in Schedule 5.20, none
of the Oil and Gas Properties are subject to any contractual or other
arrangement whereby payment for production therefrom is to be deferred for a
substantial period of time after the month in which such production is delivered
(i.e., in the case of oil, not in excess of 60 days, and in the case of gas, not
in excess of 90 days).
5.21 Fraudulent
Transfer No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of any Borrower or
the Restricted Subsidiary.
5.22 Complete
Disclosure. Subject
to Section
5.6(b) as to the Budget, none of the factual information (taken as a
whole) furnished by or on behalf of any Borrower in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents, or any transaction contemplated herein or therein contains
any material misstatement of fact, or omits to state any material fact necessary
to make such information not misleading in any material respect, at such time in
light of the circumstances under which such information was
provided.
5.23 Margin
Stock. Neither
any Borrower nor the Restricted Subsidiary is engaged, nor will it engage, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin security" as such terms are defined in Regulation U of the Federal
Reserve Board as now and from time to time hereafter in effect (such securities
being referred to herein as "Margin
Stock"). Neither any Borrower nor the Restricted Subsidiary
owns any Margin Stock, and none of the proceeds of the Advances or other
extensions of credit under this Agreement will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry any Margin Stock or for any other purpose which might cause any of the
Advances or other extensions of credit under this Agreement to be considered a
"purpose credit" within the meaning of Regulation T, U or X of the Federal
Reserve Board.
5.24 No
Default or Event of Default. No event has occurred and is
continuing which constitutes a Default or an Event of Default.
5.25 Good
Faith. The Borrowers agree and acknowledge that the terms of
this Agreement and the other Loan Documents have been negotiated with the
Borrowers by the Lenders and Agent in good faith and that all extensions of
credit contemplated under the Loan Documents have been extended in good faith
within the meaning of Section 364(e) of the Bankruptcy Code.
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5.26 Restricted
Subsidiary. The Restricted Subsidiary does not (i) own,
lease or have any other interest in any property, assets or interests in
property or assets of any kind or nature whatsoever, real or personal, now
existing, (ii) own or otherwise have the right, or is not licensed, to use
any patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights, (iii) engage in or conduct any
activities, operations or business or (iv) have any obligations, duties or
liabilities except as set forth in Schedules 5.5
and 5.14.
5.27 Government
Regulation. Neither
any Borrower nor the Restricted Subsidiary is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. Neither any Borrower nor the Restricted Subsidiary
is subject to regulation under the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder. The Advances and the other transactions
contemplated hereunder, the application of the proceeds thereof and repayment
thereof comply in all material respects with any such statute or any rule,
regulation or order issued by the SEC.
5.28 Foreign Assets
Control Regulations, Etc.
(a) Neither
any Borrower nor the Restricted Subsidiary is in violation in any material
respect of the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
(b) Neither
any Borrower nor the Restricted Subsidiary (i) is, or will become, a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti
Terrorism Order or (ii) engages or will engage in any dealings or
transactions, or is or will be otherwise associated, with any such
Person. The Borrowers and the Restricted Subsidiary are each in
compliance, in all material respects, with the USA Patriot Act.
(c) No
part of the proceeds from the loans made hereunder will be used by Borrowers,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as
amended.
5.29 Administrative Priority;
Lien Priority.
(a) Subject
to the terms of the Bankruptcy Court Orders, the Obligations of the Borrowers
will constitute allowed administrative expenses in the Chapter 11 Cases, having
priority in payment over all other administrative expenses and unsecured claims
against the Borrowers now existing or hereafter arising, of any kind or nature
whatsoever, including all administrative expenses of the kind specified in, or
arising or ordered under, Sections 105, 326, 328, 330, 331, 503(b), 507(a),
507(b), 546(c), 726 and 1114 of the Bankruptcy Code, subject only to the prior
payment of Carve-Out Expenses.
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(b) Subject
to the terms of the Bankruptcy Court Orders, Agent's Liens and security
interests of Agent on the Collateral referred to in Section 3.1(a) hereof
shall be valid and perfected first priority Liens, subject only to Permitted
Priority Liens.
6. AFFIRMATIVE
COVENANTS.
Each
Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations, the Borrowers shall (and shall cause, as
applicable, the Restricted Subsidiary to) do all of the following:
6.1 Accounting
System. Maintain
a system of accounting that enables the Borrowers to produce financial
statements in accordance with GAAP and maintain records pertaining to the
Collateral that contain information as from time to time may reasonably be
requested by Agent.
6.2 Collateral
Reporting. Provide
Agent, with a copy to each Lender, with each of the reports set forth on Schedule A-3 at the
times specified therein.
6.3 Financial
Statements, Reports, Certificates. Deliver
to Agent, with copies to each Lender, each of the financial statements, reports,
or other items set forth on Schedule A-4 at the
times specified therein.
6.4 Advisor;
Access to Information; Inspection. The
Borrowers shall continue to retain FTI (or another advisor acceptable to Agent)
on terms and conditions reasonably acceptable to Agent. The Lenders
shall have reasonable access to FTI (or any successor advisor acceptable to the
Agent) and the Borrowers' chief restructuring officer for purposes of reviewing
and discussing the Budget and related diligence items. The Lenders
and their representatives may continue their due diligence program in order to
determine the amount of drilling capital expenditures to be allowed in the
Budget. In connection with such due diligence, the Lenders may work
with representatives of potential strategic partners or other entities (subject
to appropriate confidentiality agreements); provided, that the Agent shall
provide written notice to the Administrative Borrower of the potential strategic
partners or other entities in advance of engaging in such
discussions. In addition, upon reasonable (but, in any case, not less
than two Business Days) prior notice and on reasonable intervals (but not more
than once in any 10 Business Day period at the Borrower's expense unless a
Default or an Event of Default has occurred and is continuing), each Lender and
its duly authorized representatives or agents may visit any of the Borrowers'
properties and inspect any of its assets or books and records, examine and make
copies of such books and records, and discuss the Borrowers' affairs, finances,
and accounts with, and be advised as to the same by, the Borrowers' officers and
employees.
6.5 Maintenance
of Properties. Keep
and maintain all Property material to the conduct of their business in good
working order and condition, ordinary wear and tear excepted, and prudently
operate their Oil and Gas Properties for the production of Oil and Gas, and to
the extent no Borrower is the operator of a Property in which any Borrower has
an interest, the Borrowers shall use commercially reasonable efforts to cause
the operator to operate such Property, in each case in a careful and efficient
manner in accordance with the usual and customary practices of the industry, in
material and substantial compliance with all applicable contracts, agreements
and requirements of any Governmental Authority.
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6.6 Taxes. Cause
all assessments and Taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against the Borrowers, the Restricted
Subsidiary or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except (a) to
the extent that the validity of such assessment or Tax shall be the subject of a
Permitted Protest or (b) overdue ad valorem taxes accrued by the Borrowers
prior to the Filing Date in an aggregate amount not to exceed $1,000,000 at any
time. The Borrowers will (and will cause the Restricted Subsidiary
to) make timely payment or deposit of all Tax payments and withholding taxes
required of them by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower or the Restricted Subsidiary has made such payments
or deposits, except (a) to the extent that the validity of such assessment
or Tax shall be the subject of a Permitted Protest or (b) overdue ad
valorem taxes accrued by the Borrowers prior to the Filing Date in an aggregate
amount not to exceed $1,000,000 at any time.
6.7 Insurance. At
Borrowers' expense, maintain insurance respecting their assets wherever located,
covering loss or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of a cancellation of the policy for any reason
whatsoever. If Borrowers at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay all
premiums relating thereto, Agent may at any time or times thereafter obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which Agent deems advisable. Agent shall
have no obligation to obtain insurance for Borrowers or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from Borrowers' failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed,
including reasonable attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by Borrowers to Agent and shall be
additional Obligations hereunder secured by the Collateral.
6.8 Compliance
with Laws. Comply
with the requirements of all applicable laws, rules, regulations, and orders of
any Governmental Authority, other than Environmental Laws (which are addressed
in Section 6.11
below), except where the failure to so comply with such laws (other than
Environmental Laws), rules, regulations, and orders, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. Each Borrower shall obtain and maintain all material
licenses, permits, franchises, and governmental authorizations necessary to own
its respective property and to conduct its business as conducted on the Filing
Date.
6.9 Notices. Promptly
notify the Agent and each Lender in writing:
(a) of
any matter that has resulted or may reasonably be expected to result in a
Material Adverse Effect, including arising out of or resulting from (i) a
material breach or non performance of, or any default under, a Material Contract
of any Borrower or any allegation thereof; (ii) any material dispute,
litigation, investigation, proceeding or suspension between any
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Borrower
and any Governmental Authority; or (iii) the commencement of, or any material
development in, any material litigation or proceeding affecting any Borrower,
including pursuant to any applicable Environmental Laws; and
(b) of
the occurrence of any Default or Event of Default.
Each
notice delivered under this Section 6.9
shall be accompanied by a statement of an Authorized Person setting forth the
details of the matter requiring such notice and any action taken or proposed to
be taken with respect thereto.
6.10 Existence. At
all times preserve, renew and keep in full force and effect each Borrower's and
the Restricted Subsidiary's valid existence, good standing, franchises, permits,
licenses, accreditations, authorizations, or other approvals necessary to their
businesses, except as could not reasonably be expected to have a Material
Adverse Effect.
6.11 Environmental.
(a) Keep
any Real Property free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens;
(b) Comply,
in all material respects, with all Environmental Laws and Environmental Permits;
obtain and maintain in full force and effect all material Environmental Permits;
and conduct all actions, including Response Actions, required under any
Environmental Actions or applicable Environmental Laws, and in material
compliance with, the requirements of any Governmental Authority and applicable
Environmental Laws;
(c) Do
or cause to be done all things reasonably necessary to prevent any Release in,
on, under, to or from any Real Property except in material compliance with
applicable Environmental Laws or Environmental Permits, and ensure that there
shall be no Hazardous Materials in, on, under or from any Real Property except
those that are used, stored, handled and managed in material compliance with
applicable Environmental Laws;
(d) Undertake
all actions, including Response Actions, reasonably necessary, at the sole cost
and expense of Borrowers, to address (i) any Environmental Action and any
obligations thereunder; (ii) any Release at, from or onto any Real Property as
required pursuant to Environmental Law or the requirements of any Governmental
Authority; and (iii) Environmental Liability;
(e) Diligently
pursue and use commercially reasonable efforts to cause any Person with an
indemnity, contribution or other obligation to any of the Borrowers or their
Subsidiaries relating to any Environmental Action or compliance with or
liability under Environmental Law to satisfy such obligations in full and in a
timely manner; and
(f) Promptly,
but in any event within 10 Business Days after Administrative Borrower's
obtaining knowledge or receipt of notice thereof, provide Agent with written
notice of, and all data, information and reports generated or prepared in
connection with, any of the following: (i) the filing or threatened filing of an
Environmental Lien against the Real Property
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or any
personal property of any Borrower, (ii) commencement of any material
Environmental Action or notice that a material Environmental Action will be
filed against any Borrower, and (iii) any Release or threatened Release of a
reportable quantity, and that could reasonably be expected to result in a
material Environmental Liability, in, on, under, at, from or migrating to any
Real Property owned, leased or operated by any Borrower, except as otherwise
pursuant to and in compliance with the terms and conditions of an Environmental
Permit, (iv) any material non-compliance with, or violation of, any
Environmental Law applicable to any Borrower, any Borrower's business and any
Real Property, (v) any Response Action which could reasonably be expected to
result in a material Environmental Liability, and (vi) any notice or other
communication received by any Borrower from any Person or Governmental Authority
relating to any material Environmental Liability.
6.12 Disclosure
Updates. Promptly
and in no event later than 10 Business Days after Administrative Borrower's
obtaining knowledge thereof, notify Agent if any written information, exhibit,
or report furnished to the Lender Group contained, at the time it was furnished,
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not seriously misleading in
light of the circumstances in which made.
6.13 Formation
of Subsidiaries. A
Borrower may only form a direct or indirect Subsidiary or acquire a direct or
indirect Subsidiary after the Filing Date with the prior written consent of
Agent; provided, that the Borrowers may not cause the Restricted Subsidiary to
form a direct or indirect Subsidiary or acquire a direct or indirect
Subsidiary. If any Borrower desires to form any direct or indirect
Subsidiary or acquire any direct or indirect Subsidiary after the Filing Date,
then prior to such formation or acquisition, such Borrower shall provide not
less than 10 Business Days prior written notice of such Borrower's intention to
form or acquire, as the case may be, such direct or indirect Subsidiary to Agent
requesting Agent's consent to such formation. If Agent, in its sole
discretion, elects to grant its consent to such formation or acquisition, such
Borrower shall (a) cause such new Subsidiary to provide to Agent a joinder to
this Agreement, together with such other security documents (including Mortgages
with respect to any Real Property of such new Subsidiary), as well as
appropriate financing statements (and with respect to all property subject to a
Mortgage, fixture filings), all in form and substance satisfactory to Agent, (b)
provide to Agent a pledge agreement and appropriate certificates and powers or
financing statements, hypothecating all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory to Agent,
and (c) provide to Agent all other documentation which in its reasonable opinion
is necessary or appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document, agreement,
or instrument executed or issued pursuant to this Section 6.13 shall be a Loan
Document.
6.14 Further
Assurances. At
any time upon the request of Agent, Borrowers shall execute or deliver to Agent,
and shall cause their Subsidiaries to execute or deliver to Agent, any and all
financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, Mortgages, deeds of trust,
opinions of counsel, and all other documents (collectively, the "Additional
Documents") that Agent may reasonably request in form and substance
reasonably satisfactory to Agent with respect to any Liens in favor of
Agent. To the maximum extent permitted by applicable law, the
Borrowers authorize Agent, upon
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failure
by the Borrowers to do so promptly after written request, to execute any such
Additional Documents in their names, as applicable and to file such executed
Additional Documents in any appropriate filing office. The assurances
contemplated by this Section 6.14 shall be
given under applicable non-bankruptcy law (to the extent not inconsistent with
the Bankruptcy Code and the Bankruptcy Court Orders) as well as the Bankruptcy
Code, it being the intention of the parties that Agent may request assurances
under applicable non-bankruptcy law, and such request shall be complied with (if
otherwise made in good faith by Agent) whether or not the Bankruptcy Court
Orders are in force and whether or not dismissal of the Chapter 11 Cases or any
other action by the Bankruptcy Court is imminent, likely or
threatened.
6.15 Title
Information. Upon
request by Agent, the Borrowers shall deliver title information in form and
substance reasonably acceptable to Agent regarding the Oil and Gas Properties
evaluated by the most recent Reserve Report. Agent, at the direction
of the Required Lenders, may establish a reserve against the Maximum Facility
Amount pursuant to Section 2.1(b) with respect to any Oil and Gas Properties
evaluated by the most recent Reserve Report for which Agent does not receive
such requested title information. For the avoidance of doubt, Agent
may in its sole discretion deem unacceptable any title information that
evidences the existence of any title defects or exceptions regarding the Oil and
Gas Properties which are not otherwise permitted by Section 7.2;
provided, that the Borrowers will have a period of 15 days following notice from
Agent that any such title defects or exceptions exist to cure any such title
defects or exceptions (including defects or exceptions as to
priority).
6.16 Derivative
Contracts. Upon
the request of Agent, the Borrowers will use commercially reasonable efforts to
enter into and maintain Derivative Contracts for Hydrocarbon Interests, in form
and substance satisfactory to Agent with an Approved Counterparty in notional
volumes in amounts satisfactory to Agent to the extent consistent with the
Budget and the Long Term Outlook.
6.17 Cash Management
Arrangements.
(a) If
Agent so requests, the Administrative Borrower shall and shall cause each other
Borrower to (i) establish and maintain cash management services of a type and on
terms satisfactory to Agent at one or more of the banks mutually acceptable to
Agent and Administrative Borrower (each a "Cash Management
Bank"), and shall request in writing and otherwise take such
commercially reasonable steps to ensure that all of the Borrowers' Account
Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all of their Collections (including those sent directly by their
Account Debtors to any Borrower) into a bank account (a "Cash Management
Account") at one of the Cash Management Banks. Agent reserves
the right, in its sole discretion, to require that any amounts received in any
Cash Management Account which may represent amounts that constitute trust funds
(i.e., production taxes, severance taxes, or payroll taxes) or amounts
attributable to interests of third Persons such as overriding royalty interest
be segregated by such Cash Management Bank and held in a separate account or
otherwise as directed by Agent.
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(b) If
Agent so requests, each Cash Management Bank shall establish and maintain
Control Agreements with Agent and Borrowers. Each such Control
Agreement shall provide, among other things, that (i) the Cash Management Bank
will comply with any instructions originated by Agent directing the disposition
of the funds in such Cash Management Account without further consent by any
Borrower, as applicable, (ii) the Cash Management Bank has no rights of setoff
or recoupment or any other claim against the applicable Cash Management Account
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment, and (iii) upon the instruction of the Agent (an "Activation
Instruction"), it will forward by daily sweep all amounts in the
applicable Cash Management Account to the Agent's Account. Agent
agrees not to issue an Activation Instruction with respect to the Cash
Management Accounts or to give instructions to the Cash Management Bank
directing the disposition of funds in a Cash Management Account unless an Event
of Default has occurred and is continuing at such time.
6.18 Funding
of Capital Expenditures. Unless
Agent otherwise consents, all Capital Expenditures of the Borrowers shall be
funded using proceeds from Advances and in no event shall Capital Expenditures
be funded from oil and gas production revenues. Notwithstanding the
foregoing, the amount of each Advance shall be as determined in accordance with
Section 2.1,
and nothing in this paragraph shall be deemed to increase the permitted amount
of any Advance.
6.19 Long
Term Outlook. Borrowers
will cause their management and advisors (including FTI or any successor advisor
acceptable to Agent) to cooperate with the Lenders in the creation of the Budget
as well as longer term projections of cash flow from operations and required
Capital Expenditures (the "Long Term
Outlook"). The purpose of the Long Term Outlook is to assist
the Lenders in determining the long range cash needs of the business and to
assess the financing needs of a potential exit from bankruptcy. The
Long Term Outlook will take into account the Lenders' assessment of the
viability of the various joint venture projects in which the Borrowers are
involved.
6.20 Exit
Financing. The
Borrowers shall discuss with the Lenders the terms of potential exit financing
to be provided on or after the effectiveness of any plan of reorganization in
the Chapter 11 Cases, and the Borrowers shall not solicit any such exit
financing from anyone other than the Lenders until 30 days after the entry of
the Final Bankruptcy Court Order. The Borrowers shall provide the
Lenders with reasonable details on a regular basis regarding any discussions
with other potential exit financing providers. If at any time
following the expiration of such 30-day period referenced above, the Borrowers
desire to arrange exit financing with a Person other than the Lenders or an
Affiliate thereof, the Borrowers shall first notify Agent and the Lenders in
writing of such proposed exit financing, which notice shall set forth the
proposed economic and other material terms and conditions of the proposed exit
financing (the "Exit
Financing Notice"). The Lenders shall have the right within 10
Business Days of the receipt of such Exit Financing Notice to accept the terms
of the proposed exit financing. If the Lenders reject the offer or
fail to accept the offer within such 10 Business Day response period, the
Borrowers shall have the right, for a period of 15 Business Days after receipt
of such rejection or after the end of such period to enter into a binding
agreement in respect of such proposed exit financing on the economic and other
material terms and conditions set forth in the Exit Financing
Notice. If the proposed exit financing is not subject to a binding
agreement within such 15
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Business
Day period or the financing transaction is not closed within 30 days thereafter,
the Borrowers may not enter into such proposed exit financing without again
complying in full with the provisions of this Section 6.20. If
the Lenders elect to accept the offer for such proposed exit financing, the
Borrowers, Agent and the Lenders shall agree on a mutually acceptable closing
date in respect of such proposed exit financing.
6.21 Plan
of Reorganization. The
Borrowers shall use best efforts to consult with Agent and the Lenders in
connection with the preparation and formulation of a plan of reorganization (and
proposed disclosure statement in respect thereto) to be filed in respect of the
Chapter 11 Cases, and in any event shall provide Agent and the Lenders a copy of
such plan of reorganization (and proposed disclosure statement in respect
thereto) proposed to be filed with the Bankruptcy Court no later than 10 days
prior to the date of such filing.
6.22 Restricted
Subsidiary. The
Borrowers (i) will cause the management, business and affairs of each
Borrower to be conducted in such a manner (including, without limitation, by
keeping separate books of account, furnishing separate financial statements of
the Restricted Subsidiary to creditors and potential creditors thereof and by
not permitting the personal property assets, the Real Property and/or any Oil
and Gas Properties of any Borrower to be commingled) so that the Restricted
Subsidiary will be treated as a corporate entity separate and distinct from the
Borrowers, (ii) will not incur, assume, guarantee or be or become liable
for any Indebtedness of the Restricted Subsidiary and (iii) will not permit
the Restricted Subsidiary to hold any Stock in, or any Indebtedness of, any
Borrower.
6.23 ERISA. As
soon as possible and, in any event, within 10 Business Days after any Borrower
or any ERISA Affiliate knows or has reason to know of the occurrence of an ERISA
Event, deliver to each of the Lenders a certificate of an Authorized Person
setting forth the full details as to such occurrence and the action, if any,
that the applicable Borrower or ERISA Affiliate is required to take, together
with any notices required or proposed to be given or filed by such Borrower or
ERISA Affiliate to or with the PBGC or any other Governmental Authority, or a
Plan participant and any notices received by such Borrower or ERISA Affiliate
from the PBGC or any other Governmental Authority, or a Plan participant with
respect thereto.
7. NEGATIVE
COVENANTS.
Each
Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations (including providing Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage),
Borrowers will not (and will not permit the Restricted Subsidiary to) do any of
the following:
7.1 Indebtedness. Create,
incur, assume, suffer to exist, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except with
respect to the Borrowers only:
(a) Indebtedness
incurred pursuant to this Agreement;
(b) Indebtedness
under the Pre-Petition Credit Facilities;
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(c) Indebtedness
consisting of Contingent Obligations permitted pursuant to Section
7.14;
(d) Indebtedness
consisting of gas imbalances or obligations in respect of take or pay or other
prepayments not exceeding the amount specified in Section 5.15;
(e) Indebtedness
in respect of Derivative Contracts permitted under Section
7.18;
(f) guarantees
by the Borrowers in respect of Indebtedness of any Borrower otherwise permitted
hereunder; provided, however, that each
such guarantee shall be subordinated to the Obligations;
(g) Indebtedness
of any Borrower owing to any other Borrower permitted under Section 7.12;
(h) Capital
Leases existing as of the Filing Date and purchase money obligations (including
obligations in respect of mortgage, industrial revenue bond, industrial
development bond, and similar financings) existing as of the Filing Date to
finance the purchase, repair or improvement of fixed or capital
assets;
(i) Indebtedness
existing as of the Filing Date incurred by any Borrower under asset disposition
agreements providing for indemnification, the adjustment of the purchase price
or similar adjustments;
(j) Indebtedness
existing as of the Filing Date in respect of netting services, overdraft
protections and similar arrangements in each case in connection with cash
management and deposit accounts;
(k) Indebtedness
consisting of unpaid accounts and trade payables not to exceed
$80,000,000;
(l) Indebtedness
existing as of the Filing Date consisting of the financing of insurance
premiums; and
(m) Indebtedness
in respect of Permitted Letters of Credit.
7.2 Liens. Create,
incur, assume, or suffer to exist, directly or indirectly, any Lien on or with
respect to any of its assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for the following with
respect to the Borrowers only ("Permitted
Liens"):
(a) any
Lien on Property of any Borrower as set forth in Schedule 7.2 and any
modifications, replacements, renewals or extensions thereof; provided, however, that the
Lien does not extend to any additional Property other than (A) after-acquired
Property that is affixed or incorporated into the Property covered by such Lien
and (B) proceeds and products thereof;
(b) any
Lien created under any Loan Document;
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(c) Liens
for Taxes, fees, assessments or other governmental charges which are not
delinquent or remain payable without penalty, or to the extent that non payment
thereof is permitted by Section
6.6;
(d) carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's or other
similar Liens arising in the ordinary course of business (whether by law or by
contract) which either (i) are for sums not yet delinquent, or (ii) as to
which payment and enforcement is stayed under the Bankruptcy Code or pursuant to
orders of the Bankruptcy Court;
(e) Liens
consisting of (i) pledges or deposits required in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other social security legislation; (ii) pledges and deposits in the ordinary
course of business not exceeding $500,000 in the aggregate securing insurance
premiums or reimbursement obligations under insurance policies, in each case
payable to insurance carriers that provide insurance to any Borrower; or (iii)
obligations in respect of letters of credit or bank guarantees that have been
posted by any Borrower to support the payments of the items set forth in the
foregoing clauses (i) and (ii);
(f) easements,
rights of way, restrictions, defects or other exceptions to title and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not material in amount, are not incurred to secure Indebtedness,
and which do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the businesses of any
Borrower;
(g) Liens
on the Property of any Borrower securing (i) the non-delinquent performance of
bids, trade contracts (other than for borrowed money), leases or statutory
obligations, (ii) Contingent Obligations on surety, performance and appeal
bonds, and (iii) other non-delinquent obligations of a like nature; in each
case, incurred in the ordinary course of business;
(h) Liens
arising solely by virtue of any statutory or common law provision relating to
banker's liens, rights of set-off or similar rights and remedies as to Deposit
Accounts or other funds maintained with a creditor depository institution or
under any deposit account agreement entered into in the ordinary course of
business; provided, however, that (i)
such Deposit Account is not a dedicated cash collateral account and is not
subject to restrictions against access by the applicable Borrower, (ii) the
applicable Borrower maintains (subject to such right of set off) dominion and
control over such account(s), and (iii) such deposit account is not intended by
the applicable Borrower to provide cash collateral to the depository
institution;
(i) Oil
and Gas Liens to secure obligations which are not delinquent and which do not in
any case materially detract from the value of the Oil and Gas Property subject
thereto;
(j) Liens
securing the Pre-Petition Credit Facilities;
(k) Liens
securing judgments for the payment of money not constituting an Event of
Default;
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(l) Liens
existing as of the Filing Date securing purchase money Indebtedness and Capital
Leases; provided, however, that such
Liens do not at any time encumber any Property other than the Property
(including after-acquired Property) financed by such Indebtedness and the
proceeds and the products thereof and accessions thereto; and provided further,
however, that individual financings of assets provided by one lender may be
cross collateralized to other financings of equipment provided by such
lender;
(m) (i)
leases, licenses, subleases or sublicenses granted to other Persons in the
ordinary course of business which do not (A) interfere in any material respect
with the business of any Borrower or (B) secure any Indebtedness for borrowed
money or (ii) the rights reserved or vested in any Person by the terms of any
lease, license, franchise, grant or permit held by any Borrower or by a
statutory provision, to terminate any such lease, license, franchise, grant or
permit, or to require annual or periodic payments as a condition to the
continuance thereof;
(n) Liens
arising from precautionary UCC financing statement filings regarding leases
entered into by any Borrower in the ordinary course of business;
(o) Liens
arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods entered into by any Borrower in the ordinary
course of business not prohibited by this Agreement;
(p) Any
adequate protection liens granted by the Bankruptcy Court Orders;
or
(q) Liens
consisting of obligations in respect of Permitted Letters of
Credit.
7.3 Restrictions
on Fundamental Changes.
(a) Enter
into any merger, consolidation, reorganization, or recapitalization, or
reclassify its Stock;
(b) Liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution);
or
(c) Suspend
or go out of a substantial portion of its or their business.
7.4 Disposition of Assets;
Farmouts.
(a) Other
than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or
otherwise dispose of (or enter into an agreement to convey, sell, lease,
license, assign, transfer, or otherwise dispose of) any assets, including any
Stock; provided, that the Borrowers will not permit the Restricted Subsidiary to
undertake or be a party to any Permitted Disposition.
(b) Enter
into any farmout arrangements except as fully disclosed and approved by the
Required Lenders.
7.5 Change
of Jurisdiction, Corporate Name or Location. (a) Change any
Borrower's or the Restricted Subsidiary's jurisdiction of organization and/or
organization and/or
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organizational
identification number (if any), (b) change any Borrower's or the Restricted
Subsidiary's corporate name or (c) change any Borrower's or the Restricted
Subsidiary's chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in any case without at least
thirty (30) days prior written notice to Agent, and provided that any such new
location shall be in the United States.
7.6 Nature
of Business. Engage
in any business or activity other than, with respect to the Borrowers only, the
Oil and Gas Business.
7.7 Material
Contracts. (a) Except
for Material Contracts provided to Agent prior to the execution by the relevant
Borrower(s) thereof and for which expenditures are included in the Budget, enter
into any Material Contract that provides for payment obligations in excess of
$1,000,000 without the prior written consent of Agent, or (b) directly or
indirectly amend, supplement or otherwise modify any material term or condition
(pursuant to a waiver granted by or to such Person or otherwise) or fail to
enforce strictly the terms and conditions of the indemnities and rights
furnished to any Borrower pursuant to any Material Contract, in each case, such
that after giving effect thereto such terms, conditions, indemnities and rights
shall be materially less favorable to the interests of any Borrower or the
Lenders with respect thereto.
7.8 Sale
and Leasebacks. Directly
or indirectly, become liable, directly or by way of any Guaranty Obligation,
with respect to any lease of any Property (whether real, personal or mixed)
whether now owned or hereafter acquired, (a) which any Borrower has sold or
transferred or is to sell or transfer to any other Person or (b) which any
Borrower intends to use for substantially the same purposes as any other
Property which has been or is to be sold or transferred by any Borrower to any
other Person in connection with such lease.
7.9 Restricted
Payments. Directly
or indirectly, (a) purchase, redeem or otherwise acquire for value any Stock,
now or hereafter outstanding from its members, partners or stockholders; or (b)
declare or pay any distribution, dividend or return capital to its members,
partners or stockholders (other than to its members, partners or stockholders
that are Borrowers), or make any distribution of cash or Property to its
members, partners or stockholders (other than members, partners or stockholders
that are Borrowers); provided, that any Borrower may take such actions as are
necessary to pay federal withholding taxes incurred by an employee of such
Borrower upon the vesting of restricted Stock granted to such employee in
connection with a Stock incentive plan, and such actions shall not be deemed to
be restricted payments for purposes of this Section 7.9.
7.10 Accounting
Methods. Make
any significant change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of any Borrower or the Restricted
Subsidiary.
7.11 Investments.
Except for Permitted Investments, directly or indirectly, make or acquire any
Investment or incur any liabilities (including Contingent Obligations) for or in
connection with any Investment; provided, that the Borrowers will not permit the
Restricted Subsidiary to make or be a party to any Permitted
Investment.
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7.12 Transactions
with Affiliates. Directly
or indirectly enter into or permit to exist any transaction with any Affiliate
of any Borrower or the Restricted Subsidiary except for, with respect to the
Borrowers only:
(a) transactions
between the Borrowers, on the one hand, and any Affiliate of the Borrowers, on
the other hand, so long as such transactions (i) are upon fair and reasonable
terms, (ii) have been fully disclosed to the Lenders and are in the Budget, and
(iv) are no less favorable to the Borrowers, as applicable, than would be
obtained in an arm's length transaction with a non-Affiliate;
(b) the
payment of reasonable director, officer and employee compensation (including
bonuses and severance to the extent set forth in the Budget and approved by
order of the Bankruptcy Court) and other reasonable benefits (including
retirement, health, stock option and other benefit plans) which have been fully
disclosed to the Lenders and are in the Budget, and indemnification arrangements
made in the ordinary course of business and consistent with industry practice
and the reimbursement of reasonable out-of-pocket costs and expenses of
directors, officers and employees; and
(c) the
transactions between any Borrower and any Affiliates thereof entered into on or
before the Filing Date and as described on Schedule 7.12.
7.13 Use
of Proceeds; Budget Compliance. Use
the proceeds of the Advances or any of the Collateral consisting of cash or Cash
Equivalents for any purpose other than (i) to pay fees, costs, and expenses
incurred in connection with this Agreement and the other Loan Documents and (ii)
for expenditures consistent with the Budget (subject to the variances permitted
herein) and the terms and conditions hereof, provided, however, that such
Collateral and proceeds of Advances, in any case not to exceed $35,000 in the
aggregate, may be used by Borrowers to pay professional fees and expenses
incurred investigating the extent, validity and priority of the claims and liens
under the Pre-Petition Credit Facilities, but not to challenge any liens or
claims under the Pre-Petition Credit Facilities. Except for
cumulative calculations in any measurement period expressly provided for in the
definition of Material Budget Deviation set forth in Appendix A, no unused
portion of any line item in the Budget may be carried forward or carried
backward to any prior or subsequent period in the Budget more than 2
weeks. The Borrowers will not distribute to, or otherwise permit the
Restricted Subsidiary to use, the proceeds of the Advances or any of the
Collateral consisting of cash or Cash Equivalents for any purpose.
7.14 Contingent
Obligations. Create,
incur, assume suffer to exist, guarantee or otherwise become or remain, directly
or indirectly, liable with respect to any Contingent Obligations, except with
respect to the Borrowers only:
(a) endorsements
for collection or deposit in the ordinary course of business;
(b) Derivative
Contracts permitted under Section 7.18
hereof;
(c) obligations
under plugging bonds, performance bonds and fidelity bonds issued for the
account of any Borrower, obligations to indemnify or make whole any surety and
similar agreements incurred in the ordinary course of business;
(d) this
Agreement;
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(e) Guaranty
Obligations permitted under Section 7.1 or
obligations in respect of letters of credit or bank guarantees permitted under
Section
7.2(e);
(f) Contingent
Obligations consisting of gas imbalances or obligations in respect of take or
pay or other prepayments not to exceed the amount specified in Section 5.15;
and
(g) guarantees
of leases (other than Capital Leases) or of other obligations that do not
constitute Indebtedness, in each case entered into in the ordinary course of
business.
7.15 Forward
Sales. Directly
or indirectly (a) enter into any forward sales transaction or agreement with
respect to physical deliveries of Oil and Gas outside the ordinary course of
business; or (b) sell or convey any production payment, term overriding
interest, net profits interest or any similar interest.
7.16 Oil
and Gas Imbalances. Directly
or indirectly enter into any contracts or agreements which guarantee production
of Oil and Gas (other than Derivative Contracts otherwise permitted under Section 7.18) and
shall not hereafter allow gas imbalances, take-or-pay or other similar
arrangement or any prepayment with respect to their Oil and Gas Properties that
would require any Borrower either to make cash settlements for such production
or to deliver Oil and Gas produced from the Oil and Gas Properties at some
future time in any case without then or thereafter receiving full payment
therefor to exceed, during any monthly period, 2% of the current aggregate
monthly gas production for such monthly period from the Oil and Gas Properties
of the Borrowers.
7.17 Marketing
Activities. Engage
in marketing activities for any Oil and Gas or enter into any contracts related
thereto other than, with respect to the Borrowers only, (i) contracts for the
sale of Oil and Gas scheduled or reasonably estimated to be produced from their
proved Oil and Gas Properties during the period of such contracts,
(ii) contracts for the sale of Oil and Gas scheduled or reasonably
estimated to be produced from proved Oil and Gas Properties of third parties
during the period of such contracts associated with the Oil and Gas Properties
of Borrowers that Borrowers have the right to market pursuant to Hydrocarbon
Interests, joint operating agreements, unitization agreements or other similar
contracts that are usual and customary in the Oil and Gas Business and (iii)
other contracts for the purchase and/or sale of Oil and Gas of third parties (A)
that have generally offsetting provisions (i.e., corresponding pricing
mechanics, delivery dates and points and volumes) such that no "position" is
taken and (B) for which appropriate credit support has been taken to alleviate
the material credit risks of the counterparty thereto.
7.18 Derivative
Contracts. Directly
or indirectly, enter into or in any manner be liable on any Derivative Contract
except, with respect to the Borrowers only, (a) the Existing Derivative
Contracts or (b) Derivative Contracts entered into pursuant to Section 6.16, and no
Borrower shall, amend, supplement, restate or otherwise modify or extend any
such Derivative Contracts without the prior written consent of
Agent.
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7.19 ERISA
Plans. The
Borrowers shall not, and shall not permit the Restricted Subsidiary or any ERISA
Affiliate to, incur any obligation to contribute to any Multiemployer Plan, any
Pension Plan or any Plan that provides retiree medical or retiree life insurance
benefits to any Person, other than as required by the provisions of
Sections 601 through 608 of ERISA and Section 4980B of the
Code.
7.20 No
Amendment of Governing Documents.
Amend, modify, supplement, restate or otherwise change their Governing Documents
without the prior written consent of the Agent.
7.21 No
Impairment of Intercompany Transfers. From
and after the Final Facility Effective Date, directly or indirectly enter into
or become bound by any agreement, instrument, indenture or other obligation
(other than (x) this Agreement and the other Loan Documents,
(y) customary restrictions and conditions contained in agreements relating
to the sale of Property pending such sale and (z) customary provisions in
Leases, Subleases or joint venture agreements) which could directly or
indirectly restrict the ability of any Borrower to: (a) pay dividends or make
other distributions to any Borrower, (b) redeem its Stock held by any Borrower,
(c) repay Indebtedness owing by it to any Borrower, or (d) transfer any of its
Property to any Borrower.
7.22 Assumption,
Rejection or Modification of Contracts. Without
the prior consent of the Required Lenders assume or reject any Material Contract
pursuant to Section 365 of the Bankruptcy Code.
7.23 Bankruptcy Court Orders;
Administrative Priority.
(a) At
any time, seek, consent to or suffer to exist any reversal, modification,
amendment, stay or vacation of any of the Bankruptcy Court Orders, except for
modifications and amendments agreed to by Agent and the Required
Lenders;
(b) at
any time, suffer to exist a priority for any allowed administrative expense or
unsecured claim against any Borrower (now existing or hereafter arising of any
kind or nature whatsoever), including, without limitation, any allowed
administrative expenses of the kind specified in, or arising or ordered under,
Sections 105, 326, 328, 330, 331, 503(b), 507(a),
507(b),
546(c) 726 and 1114 of the Bankruptcy Code, equal or superior to the priority of
Agent and the Lenders in respect of the Obligations, except for the Carve-Out
Expenses; and
(c) at
any time, suffer to exist any Lien on the Collateral having a priority equal or
superior to the Lien in favor of Agent and the Lenders in respect of the
Collateral, except for Permitted Priority Liens.
7.24 Limitation
on Repayments of Pre-Petition Obligations.
.. Except as otherwise permitted pursuant to the Bankruptcy
Court Orders or as set forth in the Budget, (a) make any payment or prepayment
on or redemption or acquisition for value (including, without limitation, by way
of depositing with any trustee with respect thereto money or securities before
due for the purpose of paying when due) of any Pre-Petition Obligations of any
Borrower, (b) pay any interest on any Pre-Petition Obligations of any Borrower
(whether in cash, in kind securities or otherwise), or (c) make any payment or
create or permit any Lien pursuant to Section 361 of the Bankruptcy Code (or
pursuant to any other provision of the Bankruptcy Code authorizing
-48-
adequate
protection), or apply to the Bankruptcy Court for the authority to do any of the
foregoing; provided, that
Borrowers may make payments for administrative expenses that are allowed and
payable under Sections 330 and 331 of the Bankruptcy Code subject to the
limitations set forth in Section 3.1(c), and
may make payments permitted by the "first day" orders and orders approving the
assumption of executory contracts and unexpired leases, in each case as approved
by Agent.
7.25 Prosecution
of Claims Against Agent or Lenders. Use
proceeds of the Collateral or proceeds of the Advances hereunder to pay for
prosecution of claims against Agent or Lenders.
8. EVENTS
OF DEFAULT.
8.1 Events
or Circumstances Constituting an Event of Default. Any one or
more of the following events shall constitute an event of default (each, an
"Event of Default") under this Agreement:
(a) The
Borrowers fail to pay any portion of the principal of the Obligations when and
as required to be paid herein (including when declared to be due and payable in
accordance with the terms hereof);
(b) The
Borrowers fail to pay, when and as required to be paid herein, any interest, any
other payments for fees, expenses, or other amounts payable hereunder or under
any other Loan Document (but excluding payments described in paragraph (a)
above) within 3 Business Days after the same becomes due and
payable;
(c) If
any Borrower:
(i) fails
to perform or observe any covenant or other agreement contained in any of Sections 6.2, 6.3, 6.9, 6.10, 6.12, 6.13, 6.16, 6.17, 6.18, 6.21 and Section 7 of this
Agreement;
(ii) fails
to perform or observe any covenant in Section 6 of this
Agreement (other than those described in clause (i) above) and such failure
continues for a period of 15 days after the earlier of (i) the date on which
such failure shall first become known to any officer of any Borrower or (ii)
written notice thereof is given to Administrative Borrower by Agent;
or
(iii) fails
to perform or observe any covenant or other agreement contained in this
Agreement, or in any of the other Loan Documents, in each case, other than any
such covenant or agreement that is the subject of another provision of this
Section 8 (in
which event such other provision of this Section 8 shall
govern), and such failure continues for a period of 30 days after the earlier of
(i) the date on which such failure shall first become known to any officer of
any Borrower or (ii) written notice thereof is given to Administrative Borrower
by Agent;
(d) If
any Borrower's assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, and the same is not stayed by the Bankruptcy Court
(whether pursuant to Section 362 of the Bankruptcy Code or
otherwise);
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(e) A
Material Budget Deviation shall have occurred;
(f) One
or more non-interlocutory judgments, non-interlocutory orders, decrees or
arbitration awards is entered against any Borrower involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer has not denied coverage) as to any single or related series of
transactions, incidents or conditions, of $500,000 or more, and the same shall
not be stayed by the Bankruptcy Court (whether pursuant to Section 362 of the
Bankruptcy Code or otherwise);
(g) If
any warranty, representation, statement, or Record made herein or in any other
Loan Document or delivered to Agent or any Lender in connection with this
Agreement or any other Loan Document proves to be untrue in any material respect
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;
(h) If
any provision of any Loan Document shall at any time for any reason be declared
to be null and void, or the validity or enforceability thereof shall be
contested by any Borrower, or a proceeding shall be commenced by any Borrower,
or by any Governmental Authority having jurisdiction over any Borrower, seeking
to establish the invalidity or unenforceability thereof, or any Borrower shall
deny that it has any liability or obligation purported to be created under any
Loan Document;
(i) Either
(i) any "accumulated funding deficiency" (as defined in Section 412(a) of the
IRC) in excess of $500,000 exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or its delegate, (ii) the
Borrowers or any ERISA
Affiliate
institutes steps to terminate any ERISA Plan and the then current value of such
ERISA Plan's benefit liabilities exceeds the then current value of such ERISA
Plan's assets available for the payment of such benefit liabilities by more than
$500,000 or (iii) an ERISA Event has occurred that, in the opinion of the
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrowers in an
aggregate amount exceeding $500,000 for all periods;
(j) Any
event or events shall have occurred since the Filing Date which have resulted in
a Material Adverse Effect;
(k) The
Interim Bankruptcy Court Order or the Final Bankruptcy Order shall have been
stayed, amended, modified, reversed or vacated without the consent of the
Required Lenders;
(l) The
Borrowers shall propose any plan of reorganization in the Chapter 11 Cases,
other than a plan which either (i) provides for the payment in full in cash on
the effective date of all Obligations or (ii) is acceptable to the Lenders in
their sole and absolute discretion, or an order shall be entered by the
Bankruptcy Court confirming a plan of reorganization in any of the Chapter 11
Cases which does not (x) contain a provision for termination of the Commitment
and payment in full in cash of all Obligations on or before the effective date
of such plan or plans
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upon
entry thereof and (y) provide for the continuation of the Liens and security
interests and priorities granted to Agent (for the benefit of the Lenders) until
such plan effective date;
(m) Without
the Lenders' consent, the Board of Directors of any Borrower authorizes (or the
Borrowers shall file a motion seeking approval of, or bidding procedures in
respect of) the sale of all or substantially all of the assets of such Borrower,
either pursuant to Section 363 of the Bankruptcy Code or otherwise;
(n) Without
the Required Lenders' prior written consent, the payment by any Borrower, or
application by any Borrower for authority to pay, any Pre-Petition Obligation
not expressly authorized by the Budget;
(o) The
allowance of any claim or claims under Section 506(c) of the Bankruptcy Code or
otherwise against the Agent, any Lender or against any agent or lender in
connection with the Pre-Petition Credit Facilities;
(p) An
order with respect to any of the Chapter 11 Cases shall be entered by the
Bankruptcy Court appointing, or any Borrower shall file an application for an
order with respect to any Chapter 11 Case seeking the appointment of, (i) a
trustee under Section 1104 of the Bankruptcy Code, or (ii) an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code;
(q) An
order with respect to any of the Chapter 11 Cases shall be entered by the
Bankruptcy Court converting such Chapter 11 Case to a case under Chapter 7 of
the Bankruptcy Code;
(r) Any
Borrower shall file a motion or other pleading seeking the dismissal of its
Chapter 11 Case under Section 1112 of the Bankruptcy Code or otherwise
or an order shall be entered by the Bankruptcy Court dismissing any of the
Chapter 11 Cases, in each case, which does not contain a provision for
termination of the Commitment and the payment in full in cash of all Obligations
upon entry thereof;
(s) An
order with respect to any of the Chapter 11 Cases shall be entered by the
Bankruptcy Court without the express prior written consent of Agent and the
Lenders, (i) to revoke, reverse, stay, modify, supplement or amend any of the
Bankruptcy Court Orders, (ii) to permit any administrative expense or any claim
(now existing or hereafter arising, of any kind or nature whatsoever) to have
administrative priority as to the Borrowers equal or superior to the priority of
Agent and the Lenders in respect of the Obligations, except for the Carve-Out
Expenses, or (iii) to grant or permit the grant of a Lien on the Collateral
other than a Permitted Lien;
(t) Subject
to any exceptions permitted by the Bankruptcy Court Orders, the entry of an
order by the Bankruptcy Court granting relief from or modifying the automatic
stay of Section 362 of the Bankruptcy Code to allow any creditor to execute upon
or enforce a Lien on any Collateral unless the Agent consents to the entry of
such order;
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(u) An
application for any of the orders described in Sections 8.1 (p)
through 8.1(t)
above shall be made by a Person and such application is not contested by
Borrowers in good faith and the relief requested is granted in an order that is
not stayed pending appeal
(v) (i)
any Borrower shall attempt to invalidate, reduce or otherwise impair the Liens
or security interests of Agent or the Lenders, claims or rights against such
Person or to subject any Collateral to assessment pursuant to Section 506(c) of
the Bankruptcy Code, (ii) any of Agent's Liens or security interests created by
this Agreement, any other Loan Document or the Bankruptcy Court Orders shall,
for any reason, cease to be valid or (iii) any action is commenced by any
Borrower which contests the validity, perfection or enforceability of any of the
Agent's Liens and security interests of Agent or the Lenders created by the
Bankruptcy Court Orders, this Agreement, or any other Loan
Document;
(w) The
Bankruptcy Court Orders shall for any reason fail or cease to create a valid and
perfected and, except to the extent permitted by the terms thereof or hereof,
first priority Lien in favor of Agent and the Lenders on any Collateral
purported to be covered thereby; or
(x) If
at any time any Borrower (i) is subject to a material Environmental Action
or (ii) incurs any material Environmental Liability, in any case in
connection with Former Real Property.
9. THE
LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights
and Remedies. Upon
the occurrence and during the continuation of an Event of Default, at the
request of the Required Lenders, the Agent shall, notwithstanding the provisions
of Section 362 of the
Bankruptcy
Code, without any application, motion, notice to, hearing before, or order from
the Bankruptcy Court (except as may be expressly required by the Bankruptcy
Court Orders) and without notice or demand upon Borrowers (except as expressly
set forth below):
(a) Upon
notice to Administrative Borrower, declare all or any portion of the
Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable;
(b) Cease
advancing money or extending credit to or for the benefit of Borrowers under
this Agreement, under any of the Loan Documents, or under any other agreement
between Borrowers and the Lender Group;
(c) Foreclose
any or all of the Liens on all of the Collateral and sell the Real Property
Collateral or Oil and Gas Properties or cause the Real Property Collateral or
Oil and Gas Properties to be sold in accordance with applicable law and the
Bankruptcy Court Orders, and exercise any and all other rights or remedies
available to Agent, on behalf of the Lender Group, under any of the Loan
Documents, at law or in equity with respect to the Collateral;
(d) Terminate
this Agreement and any of the other Loan Documents as to any future
liability or obligation of the Lender Group, but without affecting any of
Agent's Liens in the Collateral and without affecting the Obligations;
and
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(e) The
Lender Group shall have all other rights and remedies available at law or in
equity or pursuant to any other Loan Document or pursuant to the Bankruptcy
Court Orders.
9.2 Remedies
Cumulative. The
rights and remedies of the Lender Group under this Agreement, the other Loan
Documents, and all other agreements shall be cumulative. The Lender
Group shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by the
Lender Group of one right or remedy shall be deemed an election, and no waiver
by the Lender Group of any Event of Default shall be deemed a continuing
waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES
AND EXPENSES.
If any
Borrower fails (or fails to cause the Restricted Subsidiary) to pay any monies
(whether Taxes, assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to any Borrower, may do
any or all of the following: (a) make payment of the same or any part thereof,
(b) set up such reserves against the Maximum Facility Amount as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with Section 6.7 hereof,
obtain and maintain insurance policies of the type described in Section 6.7 and take
any action with respect to such policies as Agent deems prudent. Any
such amounts paid by Agent shall constitute Lender Group Expenses and any such
payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent need not inquire as to, or
contest the validity of, any such expense, Tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS;
INDEMNIFICATION.
11.1 Demand;
Protest; etc. Each
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which any such
Borrower may in any way be liable.
11.2 The
Lender Group's Liability for Collateral. Each
Borrower hereby agrees that: (a) so long as Agent complies with its
obligations, if any, under the Code, the Lender Group shall not in any way or
manner be liable or responsible for: (i) the safekeeping of the
Collateral, (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause, (iii) any diminution in the value thereof, or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by the Borrowers.
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11.3 Indemnification;
Expenses. Each Borrower shall pay, reimburse, indemnify,
defend, and hold Agent-Related Persons, and the Lender-Related Persons, (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or
as a result of or related to the negotiation, execution, delivery, enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of the Borrowers'
compliance with the terms of the Loan Documents, (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto, and (c) in
connection with or arising out of any presence or Release of Hazardous
Materials, any Environmental Actions, any Environmental Liabilities or any
Response Actions related in any way to any assets or properties of any Borrower
(each and all of the foregoing, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall
survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. EXCEPT
AS PROVIDED ABOVE IN THIS SECTION 11.3, THE FOREGOING INDEMNITY SHALL APPLY
TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF
SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless
otherwise provided in this Agreement, all notices or demands by Borrowers or
Agent to the other relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Administrative Borrower or Agent, as applicable, may designate to
each other in accordance herewith), or by facsimile transmission to the
Administrative Borrower or Agent, as the case may be, at its address set forth
below:
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|
If
to Administrative Borrower:
|
|
|
000
Xxxxxxxx Xxxx., Xxxxx 000
|
|
|
Xxx
Xxxxxxx, Xxxxx 00000
|
|
|
Attention:
Chief Executive Officer
|
|
|
Fax
No. (000) 000-0000
|
|
|
with
a copy to:
|
Fulbright
& Xxxxxxxx L.L.P.
|
|
0000
Xxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxx,
Xxxxx 00000
|
|
|
Attention:
Xxxxxxxx X. Xxxxxx
|
|
|
Fax
No. (000) 000-0000
|
|
|
If
to Agent:
|
BD
Funding I, LLC
|
|
0000
XxXxxxxx Xxxxxx, 00xx Xxxxx
|
|
|
Xxxxxx,
Xxxxx 00000
|
|
|
Attention:
Xxxxxxx Bank Debt Team
|
|
|
Fax
No. (000) 000-0000
|
|
|
with
a copy to:
|
Xxxxxx
& Xxxxxx L.L.P.
|
|
000
Xxxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Xxxxxx Xxxxxxxxxx
|
|
|
Fax
No. (000) 000-0000
|
|
|
and:
|
Xxxxxx
& Xxxxxx L.L.P.
|
|
0000
Xxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxx,
Xxxxx 00000
|
|
|
Attention:
Xxxxxxxxxxx X. Xxxx
|
|
|
Fax
No. (000) 000-0000
|
|
|
If
to Lenders:
|
To
the addresses set forth on the signature pages under each Lender's
name,
|
provided,
that the relevant Person delivering any notices or demands relating to or
arising out of a Default or Event of Default under this Agreement or any other
Loan Document shall in each case provide a copy thereof to counsel for the
official committee of unsecured creditors in the Chapter 11 Cases (Gardere Xxxxx
Xxxxxx LLP, 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
Attention: Xxxxxxx X. XxXxxxxx, Fax No. (000) 000-0000).
Agent,
any Lender and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this
Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the
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Lender
Group in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by facsimile
transmission or any other method set forth above.
13. CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER
LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT AS
GOVERNED BY THE BANKRUPTCY CODE AND EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY
IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT.
(b) IF THE BANKRUPTCY COURT ABSTAINS FROM
HEARING OR REFUSES TO EXERCISE JURISDICTION OVER ANY OF THE FOLLOWING, THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN
THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. BORROWERS AND EACH MEMBER OF THE LENDER
GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
(c) BORROWERS AND EACH MEMBER OF THE
LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS. BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT
OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
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14. ASSIGNMENTS
AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and
Participations.
(a) Any
Lender may at any time assign and delegate to one or more Assignees all or any
portion of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents. Each
such assignment shall be subject to the following
conditions: (1) except in the case of an assignment to an
existing Lender from an assigning Lender or an assignment of the entire
remaining amount of the assigning Lender's Obligations or Commitment, the amount
of Obligations or Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Agent) shall not be less than $500,000
unless the Agent otherwise consents; (2) each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender's rights
and obligations under this Agreement; and (3) the parties to each assignment
shall execute and deliver to the Agent an Assignment and Acceptance, together
with a processing fee of $3,500.
(b) From
and after the date that Agent notifies the assigning Lender that it has received
an executed Assignment and Acceptance and, if applicable, payment of the
required processing fee, (i) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assigning Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
and be released from any future obligations under this Agreement (and in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall effect a novation among Borrowers, the assigning
Lender, and the Assignee; provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement.
(c) By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by the Borrowers of any of their obligations under
this Agreement or any other Loan Document furnished pursuant hereto,
(iii) such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue
to
-57-
make its
own credit decisions in taking or not taking action under this Agreement, (v)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (vi) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately
upon Agent's receipt of the required processing fee, if applicable, and delivery
of notice to the assigning Lender pursuant to Section 14.1(b), this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any
Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a "Participant")
participating interests in all or any portion of its Obligations, its
Commitment, and the other rights and interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender shall remain a "Lender" for all
purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or
under the other Loan Documents and the Originating Lender's obligations under
this Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall
be derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections of any Borrower, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders
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among
themselves. The provisions of this Section 14.1(e) are
solely for the benefit of the Lender Group, and the Borrowers shall not have any
rights as third party beneficiaries of any such provisions.
(f) In
connection with any such assignment or participation or proposed assignment or
participation, a Lender may disclose all documents and information which it now
or hereafter may have relating to the Borrowers and their respective
businesses.
(g) Any
other provision in this Agreement notwithstanding, any Lender may at any time
create a security interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24 to secure obligations of such Lender, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law; provided, that the creation of such a security
interest or pledge shall not release a Lender from any of its obligations
hereunder.
14.2 Successors. This
Agreement shall bind and inure to the benefit of the respective successors and
assigns of each of the parties; provided, however, that no
Borrower may assign this Agreement or any rights or duties hereunder without the
Required Lenders' prior written consent and any prohibited assignment shall be
absolutely void ab initio. A Lender may assign this Agreement and the
other Loan Documents and its rights and duties hereunder and under the other
Loan Documents pursuant to Section 14.1
hereof.
15. AMENDMENTS;
WAIVERS.
15.1 Amendments
and Waivers. No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by Borrowers therefrom,
shall be effective unless the same shall be in writing and signed by Agent, the
Required Lenders and the Borrowers and then any such waiver or consent shall be
effective, but only in the specific instance and for the specific purpose for
which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders directly affected thereby, do any of the following:
(a) increase
or extend any Commitment of any Lender;
(b) postpone
or delay any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees, or other amounts due hereunder or under
any other Loan Document (it being understood that the waiver of an Event of
Default or a mandatory prepayment shall not constitute a postponement or delay
of any payment on a fixed date);
(c) reduce
the principal of, or the rate of interest on, any loan or other extension of
credit hereunder, or reduce any fees or other amounts payable hereunder or under
any other Loan Document (except in connection with the waiver of applicability
of Section 2.5(b) (which waiver shall be effective with the written consent
of the Required Lenders));
(d) change
the Pro Rata Share that is required to take any action hereunder;
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(e) amend
or modify this Section or any provision of this Agreement expressly providing
for consent or other action by all Lenders;
(f) other
than as permitted by Section 16.11,
release Agent's Lien in and to any of the Collateral;
(g) change
the definition of "Required Lenders" or
"Pro Rata
Share";
(h) contractually
subordinate any of Agent's Liens or modify, waive or subordinate the super
priority claim status of the Obligations (except as permitted in this Agreement
and the Loan Documents); and
(i) other
than in connection with a merger, liquidation, dissolution or sale of such
Person expressly permitted by the terms hereof or the other Loan Documents,
release Borrowers from any obligation for the payment of money.
and,
provided
further, however, that no
amendment, waiver or consent shall, unless in writing and signed by Agent or
Issuing Lender, as applicable, affect the rights or duties of Agent or Issuing
Lender as applicable, under this Agreement or any other Loan
Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent, termination, or release of, or with respect to, any
provision of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the
rights or obligations of Borrowers, shall not require consent by or the
agreement of Borrowers.
15.2 No
Waivers; Cumulative Remedies. No
failure by Agent or any Lender to exercise any right, remedy, or option under
this Agreement or any other Loan Document, or delay by Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by
Agent or any Lender will be effective unless it is in writing, and then only to
the extent specifically stated. No waiver by Agent or any Lender on
any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrowers of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and
the other Loan Documents will be cumulative and not exclusive of any other right
or remedy that Agent or any Lender may have.
16. AGENT;
THE LENDER GROUP.
16.1 Appointment
and Authorization of Agent. Each
Lender hereby designates and appoints Agent as its representative under this
Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes Agent to execute and deliver each of the other Loan Documents on its
behalf and to take such other action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express
conditions contained in this Section
16. The provisions of this Section 16 are solely
for the benefit of Agent and the Lenders, and the Borrowers shall have no rights
as a third party beneficiary of any of such provisions contained herein except
under Sections 16.9
and 16.11. Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those
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expressly
set forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Person, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Agent is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly
otherwise provided in this Agreement, Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent shall have the right to exercise
the following powers as long as this Agreement remains in effect: (a)
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections of the Borrowers, and related matters, (b) execute or file any and
all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) receive, apply, and
distribute the Collections of the Borrowers as provided in the Loan Documents,
(d) open and maintain such bank accounts and cash management arrangements as
Agent deems necessary and appropriate in accordance with the Loan Documents for
the foregoing purposes with respect to the Collateral and the Collections of the
Borrowers, (e) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to the Borrowers, the Obligations, the
Collateral, the Collections of the Borrowers, or otherwise related to any of
same as provided in the Loan Documents, and (f) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation
of Duties. Agent
may execute any of its duties under this Agreement or any other Loan Document by
or through agents, employees or attorneys in fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or
misconduct of any agent or attorney in fact that it selects as long as such
selection was made without gross negligence or willful misconduct.
16.3 Liability
of Agent. None
of Agent-Related Persons shall (a) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction), or (b) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by any
Borrower or any of its Subsidiaries or Affiliates, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Borrower or its Subsidiaries or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
books and records or properties of the Borrowers.
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16.4 Reliance
by Agent. Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy
or other electronic method of transmission or other document, statement 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 Borrowers or counsel to any Lender),
independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Required Lenders or the Lenders, as the case may
be, as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable. If Agent so
requests, it shall first be indemnified to its reasonable satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the requisite Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the
Lenders. For purposes of determining compliance with the conditions
specified in Section 4, each Lender that has funded its Pro Rata Share of
the initial Advance or any subsequent Advance, as the case may be, shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender as a condition
precedent to such initial Advance or any subsequent Advance, as
applicable.
16.5 Notice
of Default or Event of Default. Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default, unless Agent shall have received written notice from a
Lender or a Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of
default". Agent promptly will notify the Lenders of its
receipt of any such notice. If any Lender obtains actual knowledge of
any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if
any. Subject to Section 16.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless
and until Agent has received any such request, 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.
16.6 Credit
Decision. Each
Lender acknowledges that none of Agent-Related Persons has made any
representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of the Borrowers or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and any other Person party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to
Borrowers. Each Lender also represents that it will, independently
and without reliance upon
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any
Agent-Related Person 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 investigations as it deems necessary
to inform itself as to the business, prospects, operations, Property, financial
and other condition and creditworthiness of the Borrowers and any other Person
party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrowers or any
other Person party to a Loan Document that may come into the possession of any
of Agent-Related Persons.
16.7 Costs
and Expenses; Indemnification. Agent
may incur and pay Lender Group Expenses to the extent Agent reasonably deems
necessary or appropriate for the performance and fulfillment of its functions,
powers, and obligations pursuant to the Loan Documents, including court costs,
attorneys fees and expenses, fees and expenses of financial accountants,
advisors, consultants, and appraisers, costs of collection by outside collection
agencies, auctioneer fees and expenses, and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not any Borrower
is obligated to reimburse Agent or Lenders for such expenses pursuant to this
Agreement or otherwise. Agent is authorized and directed to deduct
and retain sufficient amounts from the Collections of the Borrowers received by
Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses by any Borrower, each Lender hereby
agrees that it is and shall be obligated to pay to Agent such Lender's Pro Rata
Share thereof. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting the obligation of the Borrowers to do so), according to their Pro Rata
Shares, from and against any and all Indemnified Liabilities INCLUDING SUCH
INDEMNIFIED LIABILITIES AS MAY ARISE OR BE CAUSED BY THE NEGLIGENCE, SOLE,
JOINT, CONCURRENT, COMPARATIVE OR OTHERWISE OF SUCH AGENT-RELATED PERSONS; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct (as determined by a final judgment of a
court of competent jurisdiction) nor shall any non-Defaulting Lender be liable
for the obligations of any Defaulting Lender in failing to make an Advance or
other extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender's Pro
Rata Share of any costs or out of pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8 Agent
in Individual Capacity. Agent
and its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in, and
generally
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engage in
any kind of banking, trust, financial advisory, underwriting, or other business
with the Borrowers and their Affiliates and any other Person party to any Loan
Documents as though Agent were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The
other members of the Lender Group acknowledge that, pursuant to such activities,
Agent or its Affiliates may receive information regarding the Borrowers or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of the Borrowers or such other Person and
that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include
Agent in its individual capacity.
16.9 Successor
Agent. Agent
may resign as Agent upon 30 days prior notice to the Lenders (unless such notice
is waived by the Required Lenders). If Agent resigns under this
Agreement, the Required Lenders shall appoint a successor Agent for the Lenders;
provided, that if such successor Agent is not a Lender or an Affiliate of any of
the Lenders, the appointment of such successor Agent shall, so long as no
Default or Event of Default has occurred and is continuing, be subject to the
consent of the Administrative Borrower (which consent shall not be unreasonably
withheld, conditioned or delayed). If no successor Agent is appointed
prior to the effective date of the resignation or removal of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. At any
time, Agent may be removed upon prior notice from the Required Lenders to Agent
and the other Lenders. If Agent has been removed by the Required Lenders,
Required Lenders may agree in writing to replace Agent with a successor Agent
from among the Lenders or such other Person as the Required Lenders may
designate. In any such event, upon the acceptance of its appointment
as successor Agent hereunder, such successor Agent shall succeed to all the
rights, powers, and duties of the retiring Agent and the term "Agent" shall mean
such successor Agent and the retiring Agent's appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 16 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Required Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor Agent as provided for above.
16.10 Lender
in Individual Capacity. Any
Lender and its respective Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with the Borrowers and Affiliates and any other
Person party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Borrowers or their Affiliates or any other Person
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such
confidentiality
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obligations,
which waiver such Lender will use its reasonable best efforts to obtain), such
Lender shall not be under any obligation to provide such information to
them.
16.11 Collateral
Matters.
(a) The
Lenders hereby irrevocably authorize Agent, at its option and in its sole
discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrowers of all
Obligations, (ii) constituting Property being sold or disposed in
accordance with this Agreement or (iii) constituting Property leased to the
Borrowers under a lease that has expired or terminated in a transaction
permitted hereunder.
(b) Agent
shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by any Borrower or is cared for, protected, or
insured or has been encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority.
16.12 Sharing
of Payments. If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any
Advances resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Pro Rata Share of the Advances and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Advances of other Lenders to the extent necessary so that
the benefit of all such payments shall be shared by the Lenders ratably in
accordance with their Pro Rata Shares; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in the Advances to any assignee or
participant (other than to the Borrowers or any Affiliate thereof (as to which
the provisions of this paragraph shall apply)). The Borrowers consent
to the foregoing and agree, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrowers rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrowers in the amount of such
participation.
16.13 Agency
for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver possession or control of such Collateral to Agent
or in accordance with Agent's instructions.
16.14 Payments
by Agent to the Lenders. All
payments to be made by Agent to the Lenders shall be made by bank wire transfer
of immediately available funds pursuant to such
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wire
transfer instructions as each party may designate for itself by written notice
to Agent. Concurrently with each such payment, Agent shall identify
whether such payment (or any portion thereof) represents principal, premium,
fees, or interest of the Obligations.
16.15 Concerning
the Collateral and Related Loan Documents. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents. Each member of the Lender
Group agrees that any action taken by Agent in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders.
16.16 Several
Obligations; No Liability. Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender
any interest in, or subject any Lender to any liability for, or in respect of,
the business, assets, profits, losses, or liabilities of any other
Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as expressly
provided in Section
16.7, no member of the Lender Group shall have any liability for the acts
of any other member of the Lender Group. No Lender shall be
responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
(a) All
payments made by any Borrower hereunder or under any note or other Loan Document
will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Indemnified Taxes and Other
Taxes, and in the event any deduction or withholding of Indemnified Taxes and
Other Taxes is required by applicable law, each Borrower agrees to pay the full
amount of such Indemnified Taxes and Other Taxes and such
additional amounts as may be necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section 17(a))
the Agent and/or each Lender, as the case may be, receives an amount equal to
the sum it would have received had no deductions or withholdings been
made. As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by a Borrower to a Governmental Authority, such Borrower shall
deliver to Agent the original (or a certified copy) of a receipt issued by such
Governmental Authority evidencing such payment.
(b) The
Borrowers shall indemnify the Agent and each Lender within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including
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Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Agent or such Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or
liability delivered to the Borrowers by a Lender (with a copy to the Agent), or
by the Agent on its own behalf or on behalf of a Lender, shall be conclusive
absent manifest error.
(c) If
a Lender is entitled to claim an exemption or reduction from United States
withholding tax or backup withholding tax, such Lender agrees with and in favor
of Agent and any Borrower, to deliver to Agent for delivery to the
Borrowers:
(i) if
such Lender claims an exemption from United States withholding tax pursuant to
its portfolio interest exception, (A) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a "bank" as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within
the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or any Borrower;
(ii) if
such Lender claims an exemption from, or a reduction of, withholding tax under a
United States tax treaty, properly completed and executed IRS Form W-8BEN before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or any Borrower;
(iii) if
such Lender claims that interest paid under this Agreement is exempt from United
States withholding tax because it is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before receiving its first payment under this Agreement and at
any other time reasonably requested by Agent or any Borrower; or
(iv) such
other form or forms, including IRS Form W-9, as may be required under the IRC or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding or backup withholding tax before receiving its
first payment under this Agreement and at any other time reasonably requested by
Agent or any Borrower.
Each
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction. In addition, each such Lender agrees that it will deliver,
upon Administrative Borrower's written request, updated versions of the
foregoing documents whenever they have become obsolete or inaccurate in any
material respect, together with such other forms or documents as may be required
in order to confirm or establish the entitlement of such Lender to continued
exemption from or reduction of withholding tax, but only if, and to the extent
that, such Lender is eligible for such exemption or reduction.
-67-
(d) If
any Lender is entitled to claim an exemption from, or reduction of, withholding
tax and such Lender sells, assigns, or otherwise transfers all or part of the
Obligations of Borrowers to such Lender, such Lender agrees to notify Agent and
Administrative Borrower of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrowers to such Lender. To the
extent of such percentage amount, Agent and Borrowers will treat such Lender's
documentation provided pursuant to Section 17(c) as no longer
valid. With respect to such percentage amount, Lender shall provide
new documentation, pursuant to Section 17(c), if
applicable.
(e) If
any Lender is entitled to a reduction in the applicable withholding tax, Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (c) of
this Section 17
are not delivered to Agent, then Agent may withhold from any interest payment to
such Lender not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(f) If
the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender due to a failure on the part of
the Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent, as Tax or
otherwise, including penalties and interest, and including any Taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section 17, together
with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(g) If
Agent or a Lender determines, in its sole discretion, that it has received a
refund of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower paid additional
amounts pursuant to this Section 17, it
shall pay over such refund to such Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by such Borrower under this Section 17 with
respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net
of all reasonable out-of-pocket expenses of Agent or such Lender and without
interest (other than any interest paid by the relevant governmental authority
with respect to such refund); provided, that upon
request of Agent or such Lender, the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) shall be repaid to Agent or such Lender by such Borrower in the
event that Agent or such Lender is required to repay such refund to such
Governmental Authority. This section shall not be construed to
require Agent or any Lender to make available its tax returns (or any other
information relating to its Taxes which it deems confidential) to any Borrower
or any other Person.
-68-
18.1 Section
Headings. Headings
and numbers have been set forth herein for convenience only. Unless
the contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement.
18.2 Interpretation. Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed
against the Lender Group or Borrowers, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all
parties and shall be construed and interpreted according to the ordinary meaning
of the words used so as to accomplish fairly the purposes and intentions of all
parties hereto.
18.3 Severability
of Provisions. Each
provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of any
specific provision.
18.4 Set-Off. If
an Event of Default shall have occurred and be continuing, each Lender and each
of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrowers against the then-matured (whether by
reason of acceleration or otherwise) portion of any and all of the Obligations
of the Borrowers now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement. The rights of each Lender under this paragraph
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
18.5 Lender-Creditor
Relationship. The
relationship between the Lenders and Agent, on the one hand, and Borrowers, on
the other hand, is solely that of creditor and debtor. No member of
the Lender Group has (or shall be deemed to have) any fiduciary relationship or
duty to the Borrowers arising out of or in connection with, and there is no
agency or joint venture relationship between the members of the Lender Group, on
the one hand, and the Borrowers, on the other hand, by virtue of any Loan
Document or any transaction contemplated therein.
18.6 Counterparts;
Electronic Execution. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
facsimile transmission or electronic mail shall be equally as effective as
delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by facsimile
transmission or electronic mail also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document
mutatis
mutandis.
18.7 Revival
and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by any Borrower or the transfer to the Lender Group of any
property should for any
-69-
reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (each, a "Voidable Transfer"),
and if the Lender Group is required to repay or restore, in whole or in part,
any such Voidable Transfer, or elects to do so upon the reasonable advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that the
Lender Group is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys fees of the Lender Group related thereto, the
liability of Borrowers automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been
made.
18.8 Lender
Group Expenses. Subject
to the terms of the Bankruptcy Court Orders, without prior application to, or
approval by, the Bankruptcy Court, the Lender Group Expenses shall be due and
payable within 10 days after receipt of an invoice from Agent setting forth in
reasonable detail the Lender Group Expenses for which payment is being
demanded. Each Borrower agrees, subject to the terms of the
Bankruptcy Court Orders, to pay any and all Lender Group Expenses as set forth
above and agrees that its respective obligations contained in this Section 18.8
shall survive payment or satisfaction in full of all other
Obligations.
18.9 USA
PATRIOT Act. Each
Lender that is subject to the requirements of the USA Patriot Act (Title 111 of
Pub. L. 107-56 (signed into law October 26, 2001)) hereby notifies the Borrowers
that pursuant to the requirements of the Act, it is required to obtain, verify
and record information that identifies the Borrowers, which information includes
the name and address of the Borrowers and other information that will allow such
Lender to identify the Borrowers in accordance with said Act.
18.10 Integration. This
Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
18.11 Parties
Including Trustees; Bankruptcy Court Proceedings . This
Agreement, the other Loan Documents, and all Liens created hereby or pursuant
hereto or to any other Loan Document shall be binding upon each Borrower, the
estate of each Borrower, and any trustee or successor in interest of any
Borrower in any Chapter 11 Case or any subsequent case commenced under Chapter 7
of the Bankruptcy Code or any other bankruptcy or insolvency laws, and shall not
be subject to Section 365 of the Bankruptcy Code. This Agreement and
the other Loan Documents shall be binding upon, and inure to the benefit of, the
successors of Agent and the Lenders and their respective assigns, transferees
and endorsees. The Agent's Liens created by this Agreement and the
other Loan Documents shall be and remain valid and perfected in the event of the
substantive consolidation or conversion of any Chapter 11 Case or any other
bankruptcy case of any Borrower to a case under Chapter 7 of the Bankruptcy
Code, or in the event of dismissal of any Chapter 11 Case or the release of any
Collateral from the jurisdiction of the Bankruptcy Court for any reason, without
the necessity that Agent or any of the Lenders file financing statements or
otherwise perfect its security interests or Liens under applicable
law.
-70-
18.12 Priority
of Terms. To
the extent of any conflict between or among (i) the express terms or provisions
of any of the Loan Documents (excluding the Bankruptcy Court Orders), on the one
hand, and (ii) the terms and provisions of the Bankruptcy Court Orders, on the
other hand, the terms and provisions of the Bankruptcy Court Orders shall
govern, and notwithstanding anything else to the apparent contrary herein or in
any other Loan Document (excluding the Bankruptcy Court Orders), no Default or
Event of Default shall arise hereunder if a Borrower is unable to perform or
observe any term or provision hereof because such action would otherwise violate
a term or provision of the Bankruptcy Court Orders.
[Signature
pages follow.]
-71-
|
TXCO
RESOURCES INC., a Delaware corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
TXCO
ENERGY CORP., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
TEXAS
TAR SANDS INC., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
OUTPUT
ACQUISITION CORP., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
OPEX
ENERGY, LLC, a Texas limited liability company, as a
Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
CHARRO
ENERGY, INC., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
TXCO
DRILLING CORP., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
EAGLE
PASS WELL SERVICE, L.L.C., a Texas limited liability company, as a
Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
PPL
OPERATING INC., a Texas corporation, as a Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
MAVERICK
GAS MARKETING, LTD., a Texas limited partnership, as a
Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
MAVERICK-DIMMIT
PIPELINE, LTD., a Texas limited partnership, as a
Borrower
|
|
|
By: /s/ Xxxxx X.
Xxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
[Signature
page of Agent and Lenders follows.]
|
Address:
0000
XxXxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxxxx Bank Debt Team
Fax
No. (000) 000-0000
|
BD
FUNDING I, LLC, as Agent and as a Lender
By: Xxxxxxx
Capital, L.P., its Manager
By: Asgard
Investment Corp., its GeneralPartner
By: /s/
Xxxxx Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
|
|
Address:
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn: Xxxx
X'Xxxxx
Fax
No. (000) 000-0000
|
REGIMENT
CAPITAL SPECIAL SITUATIONS FUND III, L.P., as a Lender
By:/s/ X. X.
Xxxxxx
Name: Xxxxxxx X.
Xxxxxx
Title:Authorized Signatory
|
|
Addresses:
000
Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx,
Xxxxxxxxxxx 00000
Attn:
Xxxxxxx Xxxxx
Fax
No. (000) 000-0000
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxxxxx X. Xxxxx
Fax
No. (000) 000-0000
|
CIT
BANK, as a Lender
By: The
CIT Group/EquipmentFinancing, Inc., as attorney-in-fact
By: /s/ X.X.
Xxxxx
Name:X.X. Xxxxx
Title:Managing Director
|
|
Address:
0000
XxXxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxxxx Bank Debt Team
Fax
No. (000) 000-0000
|
LTD/DLT
LONGHORN CORP., as a Lender
By: /s/
Xxxxx Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
|
TABLE
OF CONTENTS
|
1.
|
DEFINITIONS
AND CONSTRUCTION
|
1
|
|
1.1
|
Definitions
|
1
|
|
1.2
|
Accounting
Terms
|
1
|
|
1.3
|
Code
|
2
|
|
1.4
|
Construction
|
2
|
|
1.5
|
Schedules,
Appendices and Exhibits
|
2
|
|
2.
|
LOAN
AND TERMS OF PAYMENT.
|
2
|
|
2.1
|
Advances.
|
2
|
|
2.2
|
Interim
Period DIP Note
|
3
|
|
2.3
|
Borrowing
Procedures.
|
3
|
|
2.4
|
Payments
of Principal.
|
4
|
|
2.5
|
Interest
Rate.
|
6
|
|
2.6
|
Payment
of Interest, Origination Amount and Fees
|
8
|
|
2.7
|
Crediting
Payments
|
8
|
|
2.8
|
Designated
Account
|
8
|
|
2.9
|
Maintenance
of Loan Account
|
9
|
|
2.10
|
Origination
Amount
|
9
|
|
2.11
|
Fees
|
9
|
|
2.12
|
Letters
of Credit.
|
10
|
|
2.13
|
LIBO
Rate Provisions
|
13
|
|
2.14
|
Capital
Requirements
|
14
|
|
2.15
|
Administrative
Borrower as Agent for Borrowers
|
15
|
|
2.16
|
Joint
and Several Liability of Borrowers.
|
15
|
|
2.17
|
Lender's
Failure to Fund Advances
|
18
|
|
3.
|
SECURITY
AND ADMINISTRATIVE PRIORITY.
|
19
|
|
3.1
|
Collateral;
Grant of Lien and Security Interest
|
19
|
|
3.2
|
Administrative
Priority
|
20
|
|
3.3
|
Grants,
Rights and Remedies
|
20
|
|
3.4
|
No
Filings Required
|
20
|
|
3.5
|
Survival
|
21
|
|
4.
|
CONDITIONS;
TERM OF AGREEMENT.
|
21
|
|
4.1
|
Conditions
Precedent to Final Facility Effectiveness
|
21
|
|
4.2
|
Conditions
Precedent to all Extensions of Credit
|
23
|
|
4.3
|
Effect
of Termination
|
23
|
|
4.4
|
Early
Termination by Borrowers
|
24
|
|
5.
|
REPRESENTATIONS
AND WARRANTIES.
|
24
|
|
5.1
|
Due
Organization and Qualification; Subsidiaries
|
24
|
|
5.2
|
Due
Authorization; No Conflict.
|
25
|
|
5.3
|
Jurisdiction
of Organization; Location of Chief Executive Office; Organizational
Identification Number
|
26
|
-i-
|
5.4
|
Title
to Property (Other than Oil and Gas Properties)
|
26
|
|
5.5
|
Litigation
|
26
|
|
5.6
|
Financial
Information
|
27
|
|
5.7
|
Employee
Benefits
|
27
|
|
5.8
|
Environmental
Condition
|
28
|
|
5.9
|
Intellectual
Property
|
29
|
|
5.10
|
Compliance
with Laws.
|
29
|
|
5.11
|
Labor
Matters
|
30
|
|
5.12
|
Material
Contracts
|
30
|
|
5.13
|
Insurance
|
30
|
|
5.14
|
Taxes
|
31
|
|
5.15
|
Gas
Imbalances
|
31
|
|
5.16
|
Derivative
Contracts
|
31
|
|
5.17
|
Oil
and Gas Properties.
|
31
|
|
5.18
|
Midstream
Contracts
|
32
|
|
5.19
|
Seismic
Licenses
|
32
|
|
5.20
|
Long
Term Fixed Rate Contracts
|
32
|
|
5.21
|
Fraudulent
Transfer
|
33
|
|
5.22
|
Complete
Disclosure
|
33
|
|
5.23
|
Margin
Stock
|
33
|
|
5.24
|
No
Default or Event of Default
|
33
|
|
5.25
|
Good
Faith
|
33
|
|
5.26
|
Restricted
Subsidiary
|
34
|
|
5.27
|
Government
Regulation
|
34
|
|
5.28
|
Foreign
Assets Control Regulations, Etc.
|
34
|
|
5.29
|
Administrative
Priority; Lien Priority
|
34
|
|
6.
|
AFFIRMATIVE
COVENANTS.
|
35
|
|
6.1
|
Accounting
System
|
35
|
|
6.2
|
Collateral
Reporting
|
35
|
|
6.3
|
Financial
Statements, Reports, Certificates
|
35
|
|
6.4
|
Advisor;
Access to Information; Inspection
|
35
|
|
6.5
|
Maintenance
of Properties
|
35
|
|
6.6
|
Taxes
|
36
|
|
6.7
|
Insurance
|
36
|
|
6.8
|
Compliance
with Laws
|
36
|
|
6.9
|
Notices
|
36
|
|
6.10
|
Existence
|
37
|
|
6.11
|
Environmental.
|
37
|
|
6.12
|
Disclosure
Updates
|
38
|
|
6.13
|
Formation
of Subsidiaries
|
38
|
|
6.14
|
Further
Assurances
|
38
|
|
6.15
|
Title
Information
|
39
|
|
6.16
|
Derivative
Contracts
|
39
|
|
6.17
|
Cash
Management Arrangements
|
39
|
-ii-
|
6.18
|
Funding
of Capital Expenditures
|
40
|
|
6.19
|
Long
Term Outlook
|
40
|
|
6.20
|
Exit
Financing
|
40
|
|
6.21
|
Plan
of Reorganization
|
41
|
|
6.22
|
Restricted
Subsidiary
|
41
|
|
6.23
|
ERISA
|
41
|
|
7.
|
NEGATIVE
COVENANTS.
|
41
|
|
7.1
|
Indebtedness
|
41
|
|
7.2
|
Liens
|
42
|
|
7.3
|
Restrictions
on Fundamental Changes.
|
44
|
|
7.4
|
Disposition
of Assets; Farmouts
|
44
|
|
7.5
|
Change
of Jurisdiction, Corporate Name or Location
|
44
|
|
7.6
|
Nature
of Business
|
45
|
|
7.7
|
Material
Contracts
|
45
|
|
7.8
|
Sale
and Leasebacks
|
45
|
|
7.9
|
Restricted
Payments
|
45
|
|
7.10
|
Accounting
Methods
|
45
|
|
7.11
|
Investments
|
45
|
|
7.12
|
Transactions
with Affiliates
|
46
|
|
7.13
|
Use
of Proceeds; Budget Compliance
|
46
|
|
7.14
|
Contingent
Obligations
|
46
|
|
7.15
|
Forward
Sales
|
47
|
|
7.16
|
Oil
and Gas Imbalances
|
47
|
|
7.17
|
Marketing
Activities
|
47
|
|
7.18
|
Derivative
Contracts
|
47
|
|
7.19
|
ERISA
Plans
|
48
|
|
7.20
|
No
Amendment of Governing Documents
|
48
|
|
7.21
|
No
Impairment of Intercompany Transfers
|
48
|
|
7.22
|
Assumption,
Rejection or Modification of Contracts
|
48
|
|
7.23
|
Bankruptcy
Court Orders; Administrative Priority
|
48
|
|
7.24
|
Limitation
on Repayments of Pre-Petition Obligations.
|
48
|
|
7.25
|
Prosecution
of Claims Against Agent or Lenders
|
49
|
|
8.
|
EVENTS
OF DEFAULT.
|
49
|
|
8.1
|
Events
or Circumstances Constituting an Event of Default
|
49
|
|
9.
|
THE
LENDER GROUP'S RIGHTS AND REMEDIES.
|
52
|
|
9.1
|
Rights
and Remedies
|
52
|
|
9.2
|
Remedies
Cumulative
|
52
|
|
10.
|
TAXES
AND EXPENSES.
|
53
|
-iii-
|
11.
|
WAIVERS;
INDEMNIFICATION.
|
53
|
|
11.1
|
Demand;
Protest; etc
|
53
|
|
11.2
|
The
Lender Group's Liability for Collateral
|
53
|
|
11.3
|
Indemnification;
Expenses
|
54
|
|
12.
|
NOTICES.
|
54
|
|
13.
|
CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.
|
56
|
|
14.
|
ASSIGNMENTS
AND PARTICIPATIONS; SUCCESSORS.
|
56
|
|
14.1
|
Assignments
and Participations.
|
56
|
|
14.2
|
Successors
|
59
|
|
15.
|
AMENDMENTS;
WAIVERS.
|
59
|
|
15.1
|
Amendments
and Waivers
|
59
|
|
15.2
|
No
Waivers; Cumulative Remedies
|
60
|
|
16.
|
AGENT;
THE LENDER GROUP.
|
60
|
|
16.1
|
Appointment
and Authorization of Agent
|
60
|
|
16.2
|
Delegation
of Duties
|
61
|
|
16.3
|
Liability
of Agent
|
61
|
|
16.4
|
Reliance
by Agent
|
62
|
|
16.5
|
Notice
of Default or Event of Default
|
62
|
|
16.6
|
Credit
Decision
|
62
|
|
16.7
|
Costs
and Expenses; Indemnification
|
63
|
|
16.8
|
Agent
in Individual Capacity
|
63
|
|
16.9
|
Successor
Agent
|
64
|
|
16.10
|
Lender
in Individual Capacity
|
64
|
|
16.11
|
Collateral
Matters.
|
65
|
|
16.12
|
Sharing
of Payments
|
65
|
|
16.13
|
Agency
for Perfection
|
65
|
|
16.14
|
Payments
by Agent to the Lenders
|
65
|
|
16.15
|
Concerning
the Collateral and Related Loan Documents
|
66
|
|
16.16
|
Several
Obligations; No Liability
|
66
|
|
17.
|
WITHHOLDING
TAXES.
|
66
|
|
18.
|
GENERAL
PROVISIONS.
|
69
|
|
18.1
|
Section
Headings
|
69
|
|
18.2
|
Interpretation
|
69
|
|
18.3
|
Severability
of Provisions
|
69
|
|
18.4
|
Set-Off
|
69
|
|
18.5
|
Lender-Creditor
Relationship
|
69
|
|
18.6
|
Counterparts;
Electronic Execution
|
69
|
|
18.7
|
Revival
and Reinstatement of Obligations
|
69
|
-iv-
|
18.8
|
Lender
Group Expenses
|
70
|
|
18.9
|
USA
PATRIOT Act
|
70
|
|
18.10
|
Integration
|
70
|
|
18.11
|
Parties
Including Trustees; Bankruptcy Court Proceedings
|
70
|
|
18.12
|
Priority
of Terms
|
71
|
-v-
|
Appendix
A
|
Definitions
|
|
Exhibit
A-1
|
Form
of Assignment and Acceptance
|
|
Schedule
A-1
|
Commitments
|
|
Schedule
A-2
|
Lender's
Accounts
|
|
Schedule
A-3
|
Collateral
Reporting
|
|
Schedule
A-4
|
Financial
Reporting
|
|
Schedule
5.1
|
Subsidiaries
|
|
Schedule
5.3
|
Jurisdiction
of Organization, Offices and Identification Numbers
|
|
Schedule
5.5
|
Litigation
|
|
Schedule
5.7
|
ERISA
Matters
|
|
Schedule
5.8
|
Environmental
Matters
|
|
Schedule
5.14
|
Tax
Assessments
|
|
Schedule
5.15
|
Gas
Imbalances
|
|
Schedule
5.16
|
Derivative
Contracts
|
|
Schedule
5.18
|
Matters
Regarding Midstream Contracts
|
|
Schedule
5.20
|
Matters
Regarding Long Term Fixed Rate Contracts
|
|
Schedule
7.2
|
Other
Liens
|
|
Schedule
7.12
|
Affiliate
Transactions
|
_______________________________________
|
|
NOTE: The
Exhibits and Schedules have not been included for purposes of this filing
on Form 8-K. They are available to the public at the offices of
the Clerk of the Bankruptcy Court or the Bankruptcy Court's web site
(xxxx://xxx.xxxx.xxxxxxxx.xxx/) or may be obtained through private
document retrieval services, or on the web site established by the
Debtors' claims and noticing agent
(xxxx://xxxxx.xxxxxxxxxxxxx.xxx/xxxx). They will be provided
upon request by the SEC.
|
-vi-
Appendix
A
As used
in this Agreement, the following terms shall have the following
definitions:
"Account" means an
account (as that term is defined in the Code).
"Account Debtor" means
any Person who is obligated on an Account, chattel paper, or a general
intangible.
"Activation
Instruction" has the meaning specified therefor in Section
6.17(b).
"Additional Documents"
has the meaning specified therefor in Section
6.14.
"Administrative
Borrower" has the meaning specified therefor in the preamble to this
Agreement.
"Advances" has the
meaning specified therefor in Section
2.1(a).
"Affiliate" shall
mean, with respect to any Person, (a) each Person that, directly or indirectly,
owns or controls, whether beneficially, or as a trustee, guardian or other
fiduciary, (i) 10% or more of the Stock having ordinary voting power in the
election of directors of such Persons and/or (ii) 50% or more of the Stock
of such Person, (b) each Person that controls, is controlled by or is under
common control with such Person, (c) each of such Person's officers and
directors, and (d) in the case of any Borrower, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of such
Borrower. For the purposes of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether through the ownership
of voting securities, by contract or otherwise; provided, however, that the
term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" has the
meaning specified therefor in the preamble to this Agreement.
"Agent-Related
Persons" means Agent, together with its Affiliates, officers, directors,
employees, shareholders, partners, members, attorneys, and agents.
"Agent's Liens" mean the
Liens granted by any Borrower to Agent under the Loan Documents and the
Bankruptcy Court Orders.
"Agreement" means the
Debtor-In-Possession Credit Agreement to which this Appendix A is
attached.
"Applicable Rate"
shall mean (i) the LIBO Rate plus 4.0% per annum with respect to Advances funded
hereunder up to $7,500,000 and (ii) the LIBO Rate plus 10.0% with respect to
Advances funded hereunder in excess of $7,500,000.
"Approved
Counterparty" means (a) any Lender or any Affiliate of a Lender, or (b)
any other Person approved by the Agent in writing.
"Assignee" means
(i) an Affiliate of any Lender and/or (ii) with the prior written
consent of Agent, the Required Lenders and, unless a Default or Event of Default
has occurred and is continuing, the Administrative Borrower (provided that the
Administrative Borrower's consent may not be unreasonably withheld, conditioned
or delayed).
"Assignment and
Acceptance" means an Assignment and Acceptance Agreement substantially in
the form of Exhibit
A-1.
"Authorized Person"
means any one of the individuals identified on a schedule previously submitted
to Agent.
"Availability" means,
as of any date of determination, the amount that Borrowers are entitled to
borrow as Advances under Section 2.1 of this
Agreement (after giving effect to all then outstanding Obligations and all
sublimits and reserves then applicable hereunder).
"Avoidance Actions"
means all proceeds or other amounts received in respect of the Borrowers' claims
and causes of action arising under state or federal law under sections 541, 542,
544, 545, 547, 548, 549, 550, 551, 552 and 553 of the Bankruptcy
Code.
"Bankruptcy Code"
means title 11 of the United States Code, as in effect from time to
time.
"Bankruptcy Court" has
the meaning specified therefor in the recitals hereto.
"Bankruptcy Court
Orders" means the Interim Bankruptcy Court Order and the Final Bankruptcy
Court Order.
"Board of Directors"
means the board of directors (or comparable managers) of Administrative Borrower
or any committee thereof duly authorized to act on behalf of the board of
directors (or comparable managers).
"Borrowers" has the
meaning specified therefor in the preamble to this Agreement; provided, that any
Subsidiary of any Borrower formed in accordance with Section 6.13 shall be
included in any reference to the term "Borrowers" from and after the date of
such Subsidiary's execution of a joinder to this Agreement.
"Borrowing" means a
borrowing hereunder consisting of Advances made or to be made on the same day by
the Lenders and having the same Interest Period.
"Budget" means the
Budget attached as Annex I hereto, as
may be updated or supplemented from time to time pursuant to Schedule A-4 or
otherwise, in form and substance acceptable to Agent and the Lenders in their
sole and absolute discretion, setting forth among other things, the following
categories of expenditures (which shall be based on authorization for
expenditures provided to and approved by the Lenders in respect of each well to
be drilled), which shall include lease name, estimated cost and targeted
geologic zone: (i) Capital Expenditures; (ii) each lease maintenance expenditure
identified with lease name, size and duration until next obligation; and (iii)
seismic costs.
"Business Day" means
any day that (a) is not a Saturday, Sunday or other day on which commercial
banks in the state of Texas or New York are authorized or required by law to
close and (b) as applicable, is also a day on which dealings in dollar deposits
are carried out in the London interbank market.
"Capital Expenditures"
means, with respect to any Person for any period, the aggregate of all
expenditures by such Person and its Subsidiaries (other than the Restricted
Subsidiary) during such period that are capital expenditures as determined in
accordance with GAAP, whether such expenditures are paid in cash or
financed.
2
"Capital Lease" means
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.
"Carve-Out
Expenses" shall mean (i) allowed, accrued, but unpaid professional
fees of the Borrowers and one official committee of creditors consistent with
the amounts included in the Budget which have accrued and been incurred prior to
the occurrence of an Event of Default, (ii) allowed, accrued but unpaid
professional fees and expenses incurred by Borrowers and such official committee
consistent with the Budget which are incurred in the Chapter 11 Cases after an
Event of Default (that is not cured or waived) in an aggregate amount not to
exceed $300,000, and (iii) fees payable to the Office of the United States
Trustee pursuant to 28 U.S.C. § 1930 and to the clerk of the Bankruptcy Court;
provided, however, that the
Carve-Out Expenses shall not include (a) any other claims that are or may be
senior to or pari passu with any of the Carve-Out Expenses, (b) any fees or
expenses of a Chapter 7 trustee, (c) any fees or disbursements arising after the
conversion of any of the Chapter 11 Cases to a Chapter 7 case, (d) any fees or
disbursements related to the investigation of, preparation for, or commencement
or prosecution of investigation of prepetition secured claims under
the Pre-Petition Credit Facilities except as specifically permitted by the
Bankruptcy Court Orders or (e) any fees or disbursements related to any
challenge or objection to the debt or security of the Agent or the Lenders or
hindering or delaying the Agent's or any Lender's enforcement or realization
upon the Collateral if an Event of Default has occurred and is
continuing.
"Cash Equivalents"
means (a) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within 1 year from
the date of acquisition thereof, (b) marketable direct obligations issued by any
state of the United States or any political subdivision of any such state or any
public instrumentality thereof maturing within 1 year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Rating Group
("S&P") or
Xxxxx'x Investors Service, Inc. ("Moody's"), (c) commercial
paper maturing no more than 270 days from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody's, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof issued by any bank
organized under the laws of the United States or any state thereof having at the
date of acquisition thereof combined capital and surplus of not less than
$250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies
the criteria described in clause (d) above, or
(ii) any other bank organized under the laws of the United States or any state
thereof so long as the amount maintained with any such other bank is less than
or equal to $100,000 and is insured by the Federal Deposit Insurance
Corporation, and (f) Investments in money market funds substantially all of
whose assets are invested in the types of assets described in clauses (a)
through (e) above.
"Cash Management
Account" has the meaning specified therefor in Section
6.17(a).
"Cash Management Bank"
has the meaning specified therefor in Section
6.17(a).
"Chapter 11 Cases" has
the meaning specified therefor in the recitals hereto.
"Code" means the
Uniform Commercial Code, as in effect from time to time, in the applicable
jurisdiction.
"Collateral" has the
meaning specified therefor in Section
3.1(a).
"Collections" means
all cash, checks,
notes, instruments, and other items of payment (including insurance proceeds,
proceeds of cash sales, rental proceeds, and tax refunds).
3
"Commitment" means,
with respect to each Lender, the Dollar amount of its commitment as set forth
beside such Lender's name under the applicable heading on Schedule A-1 to this
Agreement or in the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder, as such amounts may be reduced or increased from time
to time pursuant to assignments made in accordance with the provisions of Section
14.1.
"Contingent
Obligation" means, as to any Person, without duplication, any direct or
indirect liability of that Person with or without recourse, (a) with respect to
any Indebtedness, dividend, letter of credit or other similar obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, (iii) to purchase Property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to pay such
primary obligation, or (iv) otherwise to assure or hold harmless the holder of
any such primary obligation against loss in respect thereof (each, a "Guaranty
Obligation"); (b) with respect to any Surety Instrument issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials, supplies
or other Property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires that payment
for such materials, supplies or other Property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or other
Property is ever made or tendered, or such services are ever performed or
tendered, or (d) in respect of any Derivative Contract. The amount of
any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the lesser of (i) the stated maximum amount, if any, of such Contingent
Obligation and (ii) the maximum stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations, shall be equal
to the lesser of (i) the stated maximum amount, if any, of such Contingent
Obligation and (ii) the maximum reasonably anticipated liability in respect
thereof.
"Control Agreement"
means a control agreement, in form and substance satisfactory to Agent, executed
and delivered by the applicable Borrower or Borrowers, Agent, and the applicable
securities intermediary (with respect to a Securities Account) or bank (with
respect to a Deposit Account).
"Daily Balance" means,
as of any date of determination and with respect to any Obligation, the amount
of such Obligation owed at the end of such day.
"Default" means an
event, condition, or default that, with the giving of notice, the passage of
time, or both, would be an Event of Default.
"Defaulting Lender"
means any Lender, as determined by Agent, that (a) fails to fund any
portion of any Advance, participation in Letters of Credit or any other
extension of credit that it is required to make hereunder on the date that it is
required to do so hereunder, or (b) otherwise fails to pay over to Agent or
any other Lender any other amount required to be paid by it hereunder within 3
Business Days of the date when due, unless the subject of a good faith
dispute.
"Defaulting Lender
Rate" means the Applicable Rate.
"Deposit Account"
means any deposit account (as that term is defined in the Code).
4
"Derivative Contract"
means all futures contracts, forward contracts, swap, put, cap or collar
contracts, option contracts, hedging contracts or other derivative contracts or
similar agreements covering oil and gas commodities or prices or financial,
monetary or interest rate instruments.
"Designated Account"
has the meaning specified therefor in Section 2.8.
"Dollars" means United
States dollars.
"Environmental
Actions" means any complaint, summons, citation, notice, directive,
demand, suit, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or Releases (a) at, onto or from any assets, properties, or businesses of
Borrowers or any of their respective predecessors in interest, including the
Real Property, (b) from or onto adjoining properties or businesses, or (c) from
or onto any facilities which received Hazardous Materials generated by Borrowers
or any of their respective predecessors in interest.
"Environmental Law"
means any applicable federal, state, provincial, foreign or local statute, law,
rule, regulation, ordinance, code, binding and enforceable guideline, binding
and enforceable written policy, or rule of common law now or hereafter in effect
and in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, in each case, to the extent binding on any Borrower, relating to the
environment, health and safety, natural resources or natural resource damages,
or Hazardous Materials, in each case as amended from time to time.
"Environmental
Liabilities" means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts, or consultants, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest that arise under Environmental Laws or
are incurred as a result of any (i) Environmental Action, (ii)
Release or (iii) Response Action.
"Environmental Lien"
means any Lien in favor of any Governmental Authority or Person for
Environmental Liabilities.
"Environmental
Permits" has the meaning specified therefor in Section 5.8(b).
"ERISA" means the
Employee Retirement Income Security Act of 1974, as amended, and regulations
promulgated thereunder.
"ERISA Affiliate"
means any trade or business (whether or not incorporated) under common control
with any Borrower within the meaning of Section 414(b) or (c) of the IRC (and
Sections 414(m) and (o) of the IRC for purposes of provisions relating to
Section 412 of the IRC).
"ERISA Event" means
(a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is insolvent or in reorganization; (d)
the filing of a notice of intent to terminate (other than pursuant to Section
4041(b) of ERISA), the treatment of a Plan amendment as a termination under
Section 4041(c) or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might
5
reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower or any ERISA Affiliate; (g) the filing pursuant to
Section 412(d) of the IRC or Section 303(d) of ERISA of an application for
waiver of the minimum funding standard with respect to any Pension Plan; (h) the
making of any amendment to any Pension Plan that could directly result in the
imposition of a lien or the posting of a bond or other security; or (i) the
occurrence of a nonexempt prohibited transaction (within the meaning of Section
4975 of the IRC or Section 406 of ERISA).
"Event of Default" has
the meaning specified therefor in Section
8.
"Exchange Act" means
the Securities Exchange Act of 1934, as in effect from time to
time.
"Excluded Taxes" means, with
respect to Agent, any Lender, the Issuing Lender or any other recipient of any
payment to be made by or on account of any of the Obligations, the following
Taxes, including interest, penalties or other additions thereto: (a) income or
franchise taxes imposed on (or measured by) its gross or net income by the
United States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in which
it is otherwise deemed to be engaged in a trade or business for Tax purposes or,
in the case of any Lender, in which its applicable lending office is located;
(b) any branch profits taxes imposed by the United States of America; and
(c) in the case of a Foreign Lender, any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) or is attributable
to such Foreign Lender's failure to comply with Section 17(c) or
(d), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new lending office or assignment, to receive
additional amounts from a Borrower in respect to such withholding tax pursuant
to Section 17(a).
"Existing Derivative
Contracts" has the meaning assigned to such term in Section
5.16.
"Extraordinary
Receipts" means any cash received by any Borrower not in the ordinary
course of business, including (a) proceeds of insurance (including key man life
insurance and business interruption insurance), but excluding any casualty
insurance proceeds used to restore or replace the affected properties, (b)
judgments, proceeds of settlements or other cash consideration of any kind in
connection with any cause of action (other than Avoidance Actions), (c) any
federal, foreign, state or local Tax refunds in excess of $50,000, (d) pension
plan reversions, (e) indemnity payments (other than to the extent such indemnity
payments are (i) immediately payable to a Person that is not an Affiliate
of the Borrowers or (ii) received by the Borrowers as reimbursement for a
payment previously made to such Person), and (f) any purchase price adjustment
(other than a working capital adjustment) received in connection with any
purchase agreement.
"Filing Date" means
May 17, 2009.
"Final Bankruptcy Court
Order" means the final order of the Bankruptcy Court with respect to the
transactions described herein, in form and substance acceptable to the Agent and
the Lenders in their sole and absolute discretion, as the same may be amended,
modified or supplemented from time to time with the express written joinder or
consent of Agent, the Lenders and Borrowers.
"Final Facility Effective
Date" has the meaning specified therefor in Section
4.1.
6
"Final Maturity Date"
means the date which is the earliest of (a) December 15, 2009, (b) the date of
the substantial consummation (as defined in Section 1101(2) of the Bankruptcy
Code) of a plan of reorganization in the Chapter 11 Cases that has been
confirmed by an order of the Bankruptcy Court, and (c) such earlier date on
which all Loans and other Obligations for the payment of money shall become due
and payable in accordance with the terms of this Agreement and the other Loan
Documents.
"Foreign Lender" means
any Lender that is not a "U.S. person" as defined in Section 7701(a)(30) of
the IRC.
"Former Real
Property" means real property owned, leased, operated, managed or
occupied by any Borrower, the Restricted Subsidiary or any of such Person's
predecessors-in-interest.
"Funding Date" means
the date on which a Borrowing occurs.
"Funding Losses" has
the meaning specified therefor in Section 2.13(b).
"GAAP" means generally
accepted accounting principles as in effect from time to time in the United
States, consistently applied.
"Governing Documents"
means, with respect to any Person, the certificate or articles of incorporation,
by-laws, or other organizational documents of such Person.
"Governmental
Authority" means any federal, state, local, or other governmental or
administrative body, instrumentality, board, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
"Guaranty Obligation"
has the meaning specified in the definition of "Contingent
Obligation."
"Hazardous Materials"
means (a) chemicals, materials or substances that are regulated under any
Environmental Law, or defined or listed in, or otherwise classified pursuant to,
any Environmental Law as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity," (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives, (d) any radioactive
materials, (e) asbestos in any form, (f) oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million, (g) lead
based paint, (h) urea formaldehyde, (i) radon, and (j) pesticides.
"Hydrocarbon
Interests" means leasehold and other real property interests in or under
oil, gas and other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests, production
payment interests relating to oil, gas or other liquid or gaseous hydrocarbons
wherever located including any reserved or residual interest of whatever nature,
covering lands in or offshore the continental United States.
7
"Indebtedness" of any
Person means, without duplication, (a) all indebtedness for borrowed money; (b)
all obligations issued, undertaken or assumed as the deferred purchase price of
Property or services (other than trade payables entered into in the ordinary
course of business on ordinary terms and not past due for more than 90 days
after the due date thereof, other than those trade payables disputed in good
faith); (c) all non-contingent reimbursement or payment obligations with respect
to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of Property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
Property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such Property) including, without limitation, production
payments, net profit interests and other Hydrocarbon Interests subject to
repayment out of future Oil and Gas production; (f) all obligations with respect
to Capital Leases; (g) all non-contingent net obligations with respect to
Derivative Contracts; (h) gas imbalances or obligations under take-or-pay or
prepayment contracts with respect to any of the Oil and Gas Properties which
would require any Borrower to deliver Oil and Gas from any of the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor; (i) all indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in Property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (j) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above.
"Indemnified
Liabilities" has the meaning specified therefor in Section 11.3.
"Indemnified Person"
has the meaning specified therefor in Section
11.3.
"Indemnified Taxes"
means Taxes other than Excluded Taxes.
"Insolvency
Proceeding" means any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar
relief.
"Interest Payment
Date" means the last Business Day of each calendar month during the term
of this Agreement.
"Interest Period"
means the period from and including the preceding Interest Payment Date to but
excluding the next succeeding Interest Payment Date; provided, that the first
Interest Period shall be from and including the Final Facility Effective Date to
but excluding the first Interest Payment Date, and the last Interest Period
shall be from and including the Interest Payment Date immediately preceding the
Final Maturity Date to but excluding the Final Maturity Date.
"Interim Bankruptcy Court
Order" means the order entered by the Bankruptcy Court on May 22, 2009
entitled "Interim Order Under 11 U.S.C. §§ 105(A), 361, 363, and 364 and Fed. R.
Bankr. P. 2002, 4001 and 9014 (I) Authorizing Debtors to Incur Post-Petition
Secured Indebtedness, (II) Granting Security Interests and Superpriority Claims,
(III) Approving Use of Cash Collateral, and (IV) Scheduling Final Hearing", as
the same may be amended, modified or supplemented from time to time with the
express written joinder or consent of Agent, the Lenders and
Borrowers.
8
"Interim Period
Advances" has the meaning specified therefor in the recitals
hereto.
"Interim Period DIP
Note" has the meaning specified therefor in the recitals
hereto.
"Investment" means,
with respect to any Person, any investment by such Person in any other Person
(including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding bona
fide Accounts arising in the ordinary course of business consistent with
past practice), purchases or other acquisitions of Indebtedness, Stock, or all
or substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with
GAAP.
"IRC" means the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
"IRS" shall mean the
Internal Revenue Service, or any successor thereto.
"Issuing Lender" means
any Lender that, at the request of Administrative Borrower and with the consent
of Agent, agrees, in such Lender's sole discretion, to become an Issuing Lender
for the purpose of issuing Letters of Credit or L/C Undertakings pursuant to
Section
2.12.
"L/C Disbursement"
means a payment made by the Issuing Lender pursuant to a Letter of Credit or an
L/C Undertaking.
"L/C Risk Participation
Liability" means, as to each Letter of Credit, all reimbursement
obligations of Borrowers to the Issuing Lender with respect to an L/C
Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn with respect to such Letter of Credit, (b) all
amounts that have been paid by the Issuing Lender to the Underlying Issuer to
the extent not reimbursed by Borrowers, whether by the making of an Advance or
otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable
with respect thereto.
"L/C Undertaking" has
the meaning specified therefor in Section 2.12(a).
"Lender" and "Lenders" have the
respective meanings set forth in the preamble to this Agreement, and shall
include any other Person made a party to this Agreement in accordance with the
provisions of Section
14.1.
"Lender Group" means,
individually and collectively, each of the Lenders (including the Issuing
Lender) and Agent.
9
"Lender Group
Expenses" means all (a) costs or expenses (including Taxes, and insurance
premiums) required to be paid by Borrowers or their Subsidiaries under any of
the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b)
out-of-pocket fees or charges paid or incurred by Agent or the Lenders in
connection with the Lender Group's transactions with Borrowers or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, or the copyright office, filing, recording, publication,
appraisal, real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent or the Lenders in
the disbursement of funds to Borrowers or other members of the Lender Group (by
wire transfer or otherwise), (d) charges paid or incurred by Agent or the
Lenders resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agent or the
Lenders related to any inspections or audits to the extent of the fees and
charges contained in the Loan Documents, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with
Borrowers or any of their Subsidiaries, (h) Agent's and each Lender's reasonable
costs and expenses (including attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, syndicating, or amending the Loan Documents,
including the reasonable costs and expenses of any independent engineers and
consultants retained by Agent and each Lender in connection herewith, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with the Chapter 11 Cases, or
a "workout," a "restructuring," or an Insolvency Proceeding concerning Borrowers
or their Subsidiaries or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any action concerning the Collateral.
"Lender's Account" means the
Deposit Account of each Lender identified on Schedule
A-2.
"Lender-Related
Person" means, with respect to any Lender, such Lender, together with
such Lender's Affiliates, and its and their respective officers, directors,
employees, shareholders, partners, members, attorneys, and agents.
"Letter of Credit" has
the meaning specified therefor in Section 2.12(a).
"Letter of Credit
Collateralization" means either (a) providing cash collateral (pursuant
to documentation reasonably satisfactory to Agent, including provisions that
specify that the Letter of Credit fee set forth in this Agreement will continue
to accrue while the Letters of Credit are outstanding) to be held by Agent for
the benefit of the Lenders in an amount equal to 105% of the then existing
Letter of Credit Usage, (b) causing the Underlying Letters of Credit to be
returned to the Issuing Lender, or (c) providing Agent with a standby letter of
credit, in form and substance reasonably satisfactory to Agent, from a
commercial bank acceptable to Agent (in its sole discretion) in an amount equal
to 105% of the then existing Letter of Credit Usage (it being understood that
the Letter of Credit fee set forth in this Agreement will continue to accrue
while the Letters of Credit are outstanding and that any such fee that accrues
must be an amount that can be drawn under any such standby letter of
credit).
"Letter of Credit
Usage" means, as of any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit.
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"LIBO Rate" means with
respect to any Interest Period, the greater of (a) 3.0% per annum and (b) the
rate appearing on Reuters BBA Libor Rates Page 3750 (or on any successor or
substitute page of such page providing rate quotations comparable to those
currently provided on such page, as determined from time to time for purposes of
providing quotations on interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for Dollar
deposits with a maturity comparable to such Interest Period; provided, that in
the event that such rate is not available at such time for any reason, then
"LIBO Rate" for such Interest Period shall be the interest rate at which Dollar
deposits in the approximate amount of the relevant Borrowing would be offered to
major banks in the London interbank market at approximately 11:00 a.m., London
time, two Business Days prior to the applicable date for payment of interest in
accordance with this Agreement.
"Lien" means any
security interest, mortgage, deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien (statutory or other) or
preferential arrangement of any kind or nature whatsoever in respect of any
Property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement and the interest of a lessor
under a Capital Lease), any financing lease having substantially the same
economic effect as any of the foregoing, and any contingent or other agreement
to provide any of the foregoing, but not including (a) the interest of a lessor
under a lease on Oil and Gas Properties or (b) the interest of a lessor under an
Operating Lease.
"Loan Account" has the
meaning specified therefor in Section
2.9.
"Loan Documents" means
this Agreement, the Bankruptcy Court Orders, the Interim DIP Note, any Control
Agreements, the Letters of Credit, any mortgage, pledge agreement or other
security document executed by a Borrower in connection with this Agreement, any
note or notes executed by Borrowers in connection with this Agreement and
payable to a member of the Lender Group, and any other agreement entered into,
now or in the future, by any Borrower in connection with this
Agreement.
"Long Term Fixed Rate
Contracts" has the meaning specified therefor in Section 5.20.
"Long Term Outlook"
has the meaning specified therefor in Section
6.19.
"Margin Stock" shall
have the meaning specified therefor in Section
5.23.
"Material Adverse
Effect" means (a) a material adverse change in the business, operations,
results of operations, net operating income, value of Collateral, assets,
liabilities or condition (financial or otherwise) of Borrowers, taken as a whole
(except for the commencement of the Chapter 11 Cases), (b) a material impairment
of the ability of Borrowers, taken as a whole, to perform their obligations
under the Loan Documents to which they are parties or of the Lender Group's
ability to enforce the Obligations or realize upon the Collateral with the
priority and other benefits contemplated by this Agreement and the Bankruptcy
Court Orders, or (c) a material impairment of the enforceability or priority of
Agent's Liens with respect to the Collateral as a result of an action or failure
to act on the part of any Borrower.
"Material Budget
Deviation" means, any of the following, as of any date of
determination:
(i) the
Borrowers' aggregate cumulative (over any consecutive 4-week period) (A)
production volumes and (B) operating receipts for such period, as compared to
such amounts as set forth in the Budget for such period, shall have a negative
variance exceeding 10%;
11
(ii) the
Borrowers' aggregate cumulative (over any consecutive 4-week period) (A) lease
operating expenses, (B) general and administrative expenditures and (C)
operating disbursements (excluding interest, professional fees and amounts in
respect of letters of credit) for such period, as compared to such amounts as
set forth in the Budget for such period, shall have a positive variance
exceeding 10%;
(iii) the
Borrowers' aggregate cumulative (over any consecutive 4-week period) capital
expenditures for any well for such period, as compared to such amounts as set
forth in the Budget for such period, shall have a positive variance exceeding
10%, and the Borrowers aggregate cumulative (over any consecutive 4-week period)
combined capital expenditures for all xxxxx for such period, as compared to such
amounts as set forth in the Budget for such period, shall have a positive
variance exceeding 5%; or
(iv) the
aggregate of (A) interest paid or charged to the Loan Account under this
Agreement, (B) interest paid on the Pre-Petition Revolver Loan Facility and
(iii) the professional fees of Borrowers, for any period, as compared to such
amounts as set forth in the Budget for such period, shall have a positive
variance exceeding 25%.
"Material Contract"
means, with respect to any Person, (a) each Midstream Contract,
(b) each Derivative Contract, (c) any employment contract between any
Borrower and any employee of such Borrower, (d) each contract or agreement
to which such Person or any of its Subsidiaries is a party that provides for
payment obligations in excess of $250,000, (e) each Long Term Fixed Rate
Contract and (f) all other contracts or agreements to which such Person or
any of its Subsidiaries is a party for which breach, non-performance,
cancellation or failure to renew could reasonably be expected to have a Material
Adverse Effect.
"Maximum Facility
Amount" means $32,000,000.
"Midstream Contracts"
means (a) the Firm Transportation Service Agreement by and between
Maverick-Dimmit Pipeline, Ltd. and TXCO Energy Corp. dated April 1,
2007 and (b) the Marketing Services Agreement by and between Maverick Gas
Marketing, Ltd. and TXCO Energy Corp. dated April 1, 2007.
"Xxxxx'x" has the meaning
specified therefor in the definition of Cash Equivalents.
"Mortgages" means,
individually and collectively, one or more mortgages, deeds of trust, or deeds
to secure debt, executed and delivered by any Borrower or Borrowers in favor of
Agent, in form and substance satisfactory to Agent, that encumber the Oil and
Gas Properties.
"Multiemployer Plan"
means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA,
to which the Borrower or any ERISA Affiliate makes, is making, or is obligated
to make contributions or, during the preceding three calendar years, has made,
or been obligated to make, contributions.
12
"Net Cash Proceeds"
means:
(a) with
respect to any sale or disposition by any Borrower of property or assets, the
amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of any Borrower, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Priority Lien on any asset (other than (A) Indebtedness owing to Agent
or any Lender under this Agreement or the other Loan Documents and (B)
Indebtedness assumed by the purchaser of such asset) which is required to be,
and is, repaid in connection with such sale or disposition, (ii) reasonable
fees, commissions, and expenses related thereto and required to be paid by such
Borrower in connection with such sale or disposition and (iii) Taxes paid or
estimated in good faith based on reasonable supporting documentation to be
payable to any taxing authorities by such Borrower in connection with such sale
or disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid or
estimated in good faith based on reasonable supporting documentation to be
payable to a Person that is not an Affiliate of any Borrower, and are properly
attributable to such transaction; and
(b) with
respect to the issuance or incurrence of any Indebtedness by any Borrower, or
the issuance by any Borrower of any shares of its Stock, the aggregate amount of
cash received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of such Borrower in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and
expenses related thereto and required to be paid by such Borrower in connection
with such issuance or incurrence, (ii) Taxes paid or estimated in good faith
based on reasonable supporting documentation to be payable to any taxing
authorities by such Borrower in connection with such issuance or incurrence, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or estimated in good
faith based on reasonable supporting documentation to be payable to a Person
that is not an Affiliate of any Borrower, and are properly attributable to such
transaction.
"Obligations" means
all loans, Advances, debts, principal, interest, contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant to this
Agreement), obligations (including indemnification obligations), fees, charges,
costs, Lender Group Expenses, lease payments, guaranties, covenants, and duties
of any kind and description owing by Borrowers to the Lender Group pursuant to
or evidenced by the Loan Documents and irrespective of whether for the payment
of money, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and including all interest not paid when
due and all other expenses or other amounts that Borrowers are required to pay
or reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.
"Oil and Gas" means
petroleum, natural gas and other related hydrocarbons or minerals or any of them
and all other substances produced or extracted in association
therewith.
13
"Oil and Gas Business"
means (a) the acquisition, exploration, exploitation, development, operation and
disposition of interests in Oil and Gas Properties and Oil and Gas, (b) the
gathering, marketing, treating, processing, storage, selling and transporting of
any production from such interests or properties, including, without limitation,
the marketing of Oil and Gas obtained from unrelated Persons, (c) any business
relating to or arising from exploration for or development, production,
treatment, processing, storage, transportation or marketing of oil, gas and
other minerals and products produced in association therewith, (d) any
business relating to oilfield sales and service, and (e) any activity that is
ancillary or necessary or desirable to facilitate the activities described in
clauses (a) through (d) of this definition.
"Oil and Gas Liens"
means (a) Liens arising under oil and gas leases, overriding royalty agreements,
net profits agreements, royalty trust agreements, farm-out agreements, division
orders, contracts for the sale, purchase, exchange, transportation, gathering or
processing of Oil and Gas, unitizations and pooling designations, declarations,
orders and agreements, development agreements, operating agreements, production
sales contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements that are customary in the oil and gas business
and are entered into by the any Borrower in the ordinary course of business;
provided, however, in all instances that such Liens are limited to the assets
that are the subject of the relevant agreement; and (b) Liens on pipelines or
pipeline facilities that arise by operation of law.
"Oil and Gas
Properties" means Hydrocarbon Interests now or hereafter owned by the
Borrowers and contracts executed in connection therewith and all tenements,
hereditaments, appurtenances, and properties belonging, affixed or incidental to
such Hydrocarbon Interests, including any and all Property, now owned by the
Borrowers and situated upon or to be situated upon, and used, built for use, or
useful in connection with the operating, working or developing of such
Hydrocarbon Interests, including, without limitation, any and all Oil and Gas
xxxxx, buildings, structures, field separators, liquid extractors, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
apparatus, equipment, appliances, tools, implements, cables, wires, towers,
taping, tubing and rods, surface leases, rights of way, easements and
servitudes, and all additions, substitutions, replacements for, fixtures and
attachments to any and all of the foregoing owned directly or indirectly by the
Borrowers.
"Operating Lease"
means an operating lease determined in accordance with GAAP.
"Originating Lender"
has the meaning specified therefor in Section 14.1(e).
"Origination
Amount" has the meaning specified therefor in Section 2.10.
"Other Taxes" means
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
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.
"Participant" has the
meaning specified therefor in Section
14.1(e).
"PBGC" means the
Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding
to any of its principal functions under ERISA.
14
"Pension Plan" means a
pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA,
other than a Multiemployer Plan, which any Borrower or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five plan years.
"Permitted Discretion"
means a determination made in the exercise of reasonable (from the perspective
of a secured lender) credit judgment.
"Permitted
Dispositions" means (a) sales of Oil and Gas and other inventory to
buyers in the ordinary course of business; (b) sales or other dispositions of
equipment that is substantially worn, damaged, or obsolete; (c) the use or
transfer of money or Cash Equivalents in a manner that is not prohibited by, or
inconsistent with, the terms of this Agreement, the Budget or the other Loan
Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, (e) the sales or other dispositions in accordance with
Section 35 of the Final Bankruptcy Court Order; (f) Permitted Liens,
restricted payments and Investments constituting dispositions and expressly
permitted pursuant to Sections 7.2,
7.9 and 7.11, respectively;
and (g) the abandonment of any well or forfeiture, surrender or release by
any Borrower of any lease in the ordinary course of business which is not
materially disadvantageous in any way to the Lenders and which, in such
Borrower's commercially reasonable opinion, is in the best interest of such
Borrower.
"Permitted
Investments" means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in settlement of amounts due to any Borrower
effected in the ordinary course of business or owing to any Borrower as a result
of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of any Borrower, (e) Investments as set forth
in the Budget in direct ownership interests in additional Oil and Gas Properties
and gas gathering systems related thereto or related to farm-out, farm-in, joint
operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar arrangements which are usual and customary
in the oil and gas exploration and production business located within the
geographic boundaries of the United States of America provided that for purposes
of this clause (e), an investment in capital Stock, partnership interests, joint
venture interests, limited liability company interests or other similar equity
interests in a Person shall not constitute a Permitted Investment, (f)
commission, travel and similar advances and loans to employees, officers or
directors in the ordinary course of business of any Borrower, in each case only
as permitted by applicable law, including Section 402 of the Sarbanes Oxley Act
of 2002, as amended, but in any event not to exceed $25,000 in the aggregate at
any time, (g) Investments consisting of Liens or Contingent Obligations
expressly permitted under Sections 7.2 and
7.14,
respectively, (h) any Derivative Contract permitted under Section 7.18 and (i)
Investments made by a Borrowers in another Borrower. In determining
the amount of any Investment permitted under this definition, the amount of any
Investment or outstanding at any time shall be the aggregate cash investment
less all cash
returns, cash dividends and cash distributions (or the fair market value of any
non-cash returns, dividends and distributions) received by such Person in
respect of the capital thereof, and shall be calculated without regard to any
write down or write-off.
"Permitted Letter of
Credit" any Letter of Credit and any other letter of credit issued to the
account of any Borrower that is in form and substance satisfactory to Agent and
set forth in the Budget.
"Permitted Liens" has
the meaning specified therefor in Section
7.2.
15
"Permitted Priority
Liens" means (a) all valid, enforceable and perfected statutory
mechanics' and materialmen's liens (whether filed or perfected prepetition or
postpetition) which the Bankruptcy Court or other court of competent
jurisdiction has made a valid, final and binding determination that such Liens
(i) have priority over the Liens securing the obligations under the
Pre-Petition Credit Facilities or (ii) attach to property upon which the
lenders under the Pre-Petition Credit Facilities do not have a Lien as of the
Filing Date, and (b) statutory Liens for Taxes, fees, assessments and other
governmental charges that have priority over the Liens securing the obligations
under the Pre-Petition Credit Facilities; provided, however,
such Liens shall not include any Liens that are contractually subordinated to
the Obligations.
"Permitted Protest"
means the right of any Borrower to protest any Lien (other than any Lien that
secures the Obligations), Taxes (other than payroll taxes or Taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on such Borrower's
books and records in such amount as is required under GAAP, (b) any such protest
is instituted promptly and prosecuted diligently by such Borrower in good faith,
and (c) Agent is satisfied that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of Agent's
Liens.
"Person" means natural
persons, corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, joint ventures, trusts,
land trusts, business trusts, or other organizations, irrespective of whether
they are legal entities, and any Governmental Authority.
"Plan" means an
employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
ERISA, other than a Multiemployer Plan.
"Pre-Petition Credit
Facilities" means collectively the Pre-Petition Revolver Loan Facility
and the Pre-Petition Term Loan Facility.
"Pre-Petition
Obligations" means all indebtedness, obligations (including obligations
in respect of any letters of credit, bank products and hedging agreements) and
liabilities of the Borrowers incurred prior to the Filing Date plus fees,
expenses, and indemnities due thereunder and interest thereon accruing both
before and after the Filing Date to the extent allowable under the Bankruptcy
Code, whether such indebtedness, obligations or liabilities are direct or
indirect, joint or several, absolute or contingent, due or to become due,
whether for payment or performance, now existing or hereafter
arising.
"Pre-Petition Revolver Loan
Facility" means the loan facility established pursuant to the Amended and
Restated Credit Agreement dated as of April 2, 2007 (as amended, restated,
supplemented, or otherwise modified) among the Administrative Borrower, as
borrower, certain of its subsidiaries signatory thereto as guarantors, Bank of
Montreal, as administrative agent, and the lenders from time to time party
thereto.
"Pre-Petition Term Loan
Facility" means the loan facility established pursuant to Amended and
Restated Term Loan Agreement dated as of July 25, 2007 (as amended, restated,
supplemented, or otherwise modified), among the Administrative Borrower, as
borrower, certain of its subsidiaries signatory thereto as guarantors, Bank of
Montreal, as administrative agent, and the lenders from time to time party
thereto.
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"Pro Rata Share"
means, as of any date of determination:
(a) with
respect to a Lender's obligation to make Advances and right to receive payments
of principal, interest, fees, costs, and expenses with respect thereto, (i)
prior to the Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender's Commitment, by (z) the aggregate
Commitments of all Lenders, and (ii) from and after the time that the
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all
Advances,
(b) with
respect to a Lender's obligation to participate in Letters of Credit, to
reimburse the Issuing Lender, and right to receive payments of fees with respect
thereto, (i) prior to the Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender's Commitment, by (z) the
aggregate Commitments of all Lenders, and (ii) from and after the time that the
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all Advances,
and
(c) with
respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Commitment by (ii) the
aggregate amount of Commitments of all Lenders; provided, however, that in the
event the Commitments have been terminated or reduced to zero, Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the L/C Risk Participation Liability with respect to
outstanding Letters of Credit, by (B) the outstanding principal amount of all
Advances plus the aggregate amount of the L/C Risk Participation Liability with
respect to outstanding Letters of Credit.
"Property" means any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, cash, securities,
accounts and contract rights.
"Real Property" means
any estates or interests in real property now owned, leased or operated or
hereafter acquired, leased or operated by Borrowers and the improvements
thereto.
"Record" means
information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form.
"Release" means any
spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing, depositing, dispersing,
emanating or migrating of any Hazardous Materials in, into, onto, from or
through the environment or any Real Property.
"Reportable Event"
means any of the events set forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day notice requirement
under ERISA has been waived in regulations issued by the PBGC.
"Required Lenders"
means Lenders whose aggregate Pro Rata Share (determined pursuant to clause (c)
of such definition) equals at least 75%.
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"Reserve Report" means
the most recent reserve report delivered to the Lenders under the Pre-Petition
Term Loan Facility and each subsequent report delivered pursuant to Section 6.2 in form
and substance reasonably satisfactory to Agent, setting forth (a) the volumetric
quantity and the total reserve value (including itemization of the proved
developed producing reserves, the proved developed nonproducing reserves and
proved undeveloped reserves) of the oil and gas reserves attributable to the Oil
and Gas Properties of the Borrowers, together with a projection of the rate of
production and future net income, Taxes, operating expenses and capital
expenditures with respect thereto as of such date, and (b) such other
information as Agent may reasonably request.
"Response Action"
means all actions taken to (a) clean up, remove, remediate, contain, treat,
monitor, assess, investigate, evaluate, correct or in any way address any
violation of or non-compliance with Environmental Law, any Environmental
Liability, any Release or any Hazardous Materials in the indoor or outdoor
environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, (d) perform any pre-remedial
studies, investigations, or post-remedial operation and maintenance activities,
or (e) conduct any other actions with respect to Hazardous Materials authorized
by Environmental Laws.
"Restricted
Subsidiary" means Colorado Exploration Company, a Colorado
corporation.
"SEC" means the United
States Securities and Exchange Commission and any successor
thereto.
"Securities Account"
means a securities account (as that term is defined in the Code).
"Seismic
Licenses" means all of the license agreements relating to the
performance of seismic exploration on the Oil and Gas Properties to which any
Borrower is a party.
"S&P" has the
meaning specified therefor in the definition of Cash Equivalents.
"Stock" means all
shares, options, warrants, interests, participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, partnership interest, membership
interest or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsidiary" of a
Person means a corporation, partnership, limited liability company, limited
partnership or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, limited partnership or
other entity.
"Surety Instruments"
means all letters of credit (including standby), banker's acceptances, bank
guaranties, shipside bonds, surety bonds, performance bonds (including plugging
and abandonment bonds) and similar instruments.
"Taxes" means shall
mean, any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any Governmental Authority and all
interest, penalties or similar liabilities with respect thereto.
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"Underlying Issuer"
means a third Person which is the beneficiary of an L/C Undertaking and which
has issued a letter of credit at the request of the Issuing Lender for the
account of Borrowers.
"Unfunded Pension
Liability" means the excess of a Plan's benefit liabilities under Section
4001(a)(16) of ERISA, over the current value of that Plan's assets, determined
in accordance with the assumptions used for funding the Pension Plan pursuant to
Section 412 of the IRC for the applicable plan year.
"Unused Line Fee" has
the meaning specified therefor in Section 2.11(a).
"Voidable Transfer"
has the meaning specified therefor in Section
18.7.
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