EXHIBIT 10.1
CREDIT AGREEMENT
among
DELTA PETROLEUM CORPORATION,
as Borrower,
The Financial Institutions Listed on Schedule 1.1 Hereto,
as Banks,
BANK ONE, NA,
as Administrative Agent,
BANK OF OKLAHOMA, N.A.,
as Syndication Agent,
and
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agent
$200,000,000
Dated as of
November 5, 2004
X.X. XXXXXX SECURITIES INC.,
as Sole Lead Arranger and Bookrunner
TABLE OF CONTENTS
Page No.
Article I TERMS DEFINED 1
Section 1.1 Definitions 1
Section 1.2 Accounting Terms and Determinations 21
Section 1.3 Petroleum Terms 21
Section 1.4 Money 21
Article II THE CREDIT 22
Section 2.1 Commitments. 22
Section 2.2 Method of Borrowing. 25
Section 2.3 Method of Requesting Letters of Credit. 26
Section 2.4 Notes 26
Section 2.5 Interest Rates; Payments. 27
Section 2.6 Mandatory Prepayments 28
Section 2.7 Voluntary Prepayments 28
Section 2.8 Voluntary Reduction of Commitments 29
Section 2.9 Termination of Commitments; Final Maturity of
Revolving Loan 29
Section 2.10 Application of Payments 29
Section 2.11 Commitment Fee 29
Section 2.12 Agency and other Fees 29
Article III GENERAL PROVISIONS 29
Section 3.1 Delivery and Endorsement of Notes 29
Section 3.2 General Provisions as to Payments 30
Article IV BORROWING BASE 31
Section 4.1 Reserve Report; Proposed Borrowing Base 31
Section 4.2 Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards 31
Section 4.3 Special Redetermination. 32
Section 4.4 Asset Disposition Adjustment 32
Section 4.5 Borrowing Base Deficiency 32
Section 4.6 Initial Borrowing Base 33
Article V COLLATERAL AND GUARANTEES 33
Section 5.1 Security 33
Section 5.2 Guarantees 35
Article VI CONDITIONS PRECEDENT 35
Section 6.1 Conditions to Initial Borrowing and Participation
in Letter of Credit Exposure 35
Section 6.2 Conditions to Each Borrowing and each Letter of
Credit 38
Section 6.3 Post-Closing Deliveries 38
Section 6.4 Materiality of Conditions 38
Article VII REPRESENTATIONS AND WARRANTIES 38
Section 7.1 Corporate Existence and Power 39
Section 7.2 Credit Party and Governmental Authorization;
Contravention 39
Section 7.3 Binding Effect 39
Section 7.4 Financial Information 39
Section 7.5 Litigation 40
Section 7.6 ERISA 40
Section 7.7 Taxes and Filing of Tax Returns 41
Section 7.8 Ownership of Properties Generally 41
Section 7.9 Mineral Interests 41
Section 7.10 Licenses, Permits, Etc 41
Section 7.11 Compliance with Law 42
Section 7.12 Full Disclosure 42
Section 7.13 Organizational Structure; Nature of Business 42
Section 7.14 Environmental Matters 42
Section 7.15 Burdensome Obligations 43
Section 7.16 Fiscal Year 43
Section 7.17 No Default 43
Section 7.18 Government Regulation 43
Section 7.19 Insider 43
Section 7.20 Gas Balancing Agreements and Advance Payment Contracts 44
Article VIII AFFIRMATIVE COVENANTS 44
Section 8.1 Information 44
Section 8.2 Business of Credit Parties 46
Section 8.3 Maintenance of Existence 46
Section 8.4 Title Data 46
Section 8.5 Right of Inspection 46
Section 8.6 Maintenance of Insurance 46
Section 8.7 Payment of Taxes and Claims 47
Section 8.8 Compliance with Laws and Documents 47
Section 8.9 Operation of Properties and Equipment 47
Section 8.10 Environmental Law Compliance 48
Section 8.11 ERISA Reporting Requirements 48
Section 8.12 Additional Documents 49
Section 8.13 Environmental Review 49
Article IX NEGATIVE COVENANTS 49
Section 9.1 Incurrence of Debt 49
Section 9.2 Restricted Payments 50
Section 9.3 Negative Pledge 50
Section 9.4 Consolidations and Mergers 50
Section 9.5 Asset Dispositions 50
Section 9.6 Amendments to Organizational Documents; Other
Material Agreements 51
Section 9.7 Use of Proceeds 51
Section 9.8 Investments 51
Section 9.9 Transactions with Affiliates 51
Section 9.10 ERISA 51
Section 9.11 Hedge Transactions 51
Section 9.12 Fiscal Year 52
Section 9.13 Change in Business 52
Section 9.14 Obligations of Unrestricted Subsidiaries 52
Article X FINANCIAL COVENANTS 52
Section 10.1 Current Ratio 52
Section 10.2 Consolidated Total Debt to Consolidated EBITDAX 52
Article XI DEFAULTS 52
Section 11.1 Events of Default 52
Article XII AGENTS 54
Section 12.1 Appointment; Nature of Relationship 54
Section 12.2 Powers 55
Section 12.3 General Immunity 55
Section 12.4 No Responsibility for Loans, Recitals, etc 55
Section 12.5 Action on Instructions of Banks 56
Section 12.6 Employment of Agents and Counsel 56
Section 12.7 Reliance on Documents; Counsel 56
Section 12.8 Administrative Agent's Reimbursement and
Indemnification 56
Section 12.9 Notice of Default 57
Section 12.10 Rights as a Bank 57
Section 12.11 Bank Credit Decision 57
Section 12.12 Successor Administrative Agent 57
Section 12.13 Delegation to Affiliates 58
Section 12.14 Execution of Collateral Documents 58
Section 12.15 Collateral Releases 58
Section 12.16 Agents 58
Article XIII CHANGE IN CIRCUMSTANCES 59
Section 13.1 Increased Cost and Reduced Return. 59
Section 13.2 Limitation on Type of Loans 60
Section 13.3 Illegality 60
Section 13.4 Treatment of Affected Loans 61
Section 13.5 Compensation 61
Section 13.6 Taxes 62
Section 13.7 Discretion of Banks as to Manner of Funding 63
Article XIV MISCELLANEOUS 63
Section 14.1 Notices 63
Section 14.2 No Waivers 64
Section 14.3 Expenses; Indemnification. 64
Section 14.4 Right of Set-off; Adjustments 65
Section 14.5 Amendments and Waivers 66
Section 14.6 Survival 66
Section 14.7 Limitation on Interest 66
Section 14.8 Invalid Provisions 67
Section 14.9 Waiver of Consumer Credit Laws 67
Section 14.10 Assignments and Participations 67
Section 14.11 TEXAS LAW 70
Section 14.12 Consent to Jurisdiction; Waiver of Immunities 71
Section 14.13 Counterparts; Effectiveness 71
Section 14.14 No Third Party Beneficiaries 71
Section 14.15 COMPLETE AGREEMENT 71
Section 14.16 WAIVER OF JURY TRIAL 71
Section 14.17 Confidentiality 72
Section 14.18 USA Patriot Act 72
EXHIBITS
EXHIBIT A FORM OF FACILITY GUARANTY
EXHIBIT B FORM OF PROMISSORY NOTE
EXHIBIT C FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT D FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT E FORM OF REQUEST FOR BORROWING
EXHIBIT F FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT G FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT H FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT I FORM OF CERTIFICATE OF PRINCIPAL EXECUTIVE AND FINANCIAL
OFFICER
EXHIBIT J FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT K FORM OF ASSIGNMENT AND AMENDEMENT TO MORTGAGES
SCHEDULES
SCHEDULE 1.1 FINANCIAL INSTITUTIONS
SCHEDULE 1.2 EXISTING LETTERS OF CREDIT
SCHEDULE 1.3 EXISTING MORTGAGES
SCHEDULE 6.3 POST-CLOSING DELIVERIES
SCHEDULE 7.5 LITIGATION
SCHEDULE 7.6 ERISA MATTERS
SCHEDULE 7.10 LICENSES, PERMITS, ETC.
SCHEDULE 7.13 ORGANIZATIONAL STRUCTURE
SCHEDULE 7.14 ENVIRONMENTAL DISCLOSURE
SCHEDULE 9.8 PERMITTED INVESTMENTS
SCHEDULE 9.14 OBLIGATIONS TO UNRESTRICTED SUBSIDIARIES
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of the 5th
day of November, 2004, among DELTA PETROLEUM CORPORATION, a Colorado
corporation ("Borrower"), BANK ONE, NA, with its main office in Chicago,
Illinois, as Administrative Agent ("Administrative Agent"), BANK OF OKLAHOMA,
N.A., as Syndication Agent ("Syndication Agent"), U.S. BANK NATIONAL
ASSOCIATION, as Documentation Agent ("Documentation Agent"), and the financial
institutions listed on Schedule 1.1 hereto as Banks (individually a "Bank" and
collectively "Banks").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Banks provide Borrower with a
revolving credit facility, and Banks are willing to provide such facility on
the terms and subject to the conditions hereafter set forth; and
WHEREAS, pursuant to Article XII of this Agreement, Bank One, NA has been
appointed Administrative Agent for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among Bank One, NA, X.X.
Xxxxxx Securities Inc. ("JPMSI") and Borrower, JPMSI has been appointed Sole
Lead Arranger and Bookrunner for the credit facility provided herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent, Syndication Agent, Documentation
Agent and Banks agree as follows:
ARTICLE I
TERMS DEFINED
Section 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined by Administrative Agent to be equal to
the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Administrative Agent" means Bank One, NA, in its capacity as
Administrative Agent for Banks hereunder or any successor thereto.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment of
the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is, or is to be,
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right
of refusal to the purchaser to take delivery of such production in lieu of
payment, and, in either of the foregoing instances, the Advance Payment is, or
is to be, applied as payment in full for such production when sold and
delivered or is, or is to be, applied as payment for a portion only of the
purchase price thereof or of a percentage or share of such production;
provided that inclusion of the standard "take or pay" provision in any gas
sales or purchase contract or any other similar contract shall not, in and of
itself, constitute such contract as an Advance Payment Contract for the
purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person and, with respect to any Credit
Party, means, any director, executive officer, general partner or manager of
such Credit Party and any Person who holds ten percent (10%) or more of the
voting stock, partnership interests, membership interests or other ownership
interests of such Credit Party. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, membership interests or partnership interests,
or by contract or otherwise.
"Agent" means Administrative Agent, Syndication Agent, Documentation
Agent, Sole Lead Arranger, Bookrunner, or any other agent appointed hereunder
from time to time, and "Agents" means Administrative Agent, Syndication Agent,
Documentation Agent, Sole Lead Arranger, Bookrunner, and any other agent
appointed hereunder from time to time, collectively.
"Agreement" means this Credit Agreement as the same may hereafter be
modified, amended or supplemented from time to time.
"Amber" means Amber Resources Company of Colorado, a Delaware
corporation.
"Applicable Environmental Law" means any federal, state or local law,
common law, ordinance, regulation or policy, as well as order, decree, permit,
judgment or injunction issued, promulgated, approved, or entered thereunder,
relating to the environment, health and safety, or Hazardous Substances
(including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) or to industrial hygiene or the
environmental conditions on, under, or about any real property owned, leased
or operated at any time by any Credit Party or any real property owned, leased
or operated by any other party including, without limitation, soil,
groundwater, and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of
Revolving Loan, the "Lending Office" of such Bank (or of an affiliate of such
Bank) designated for such Type of Revolving Loan on the signature pages hereof
or such other office of such Bank (or an affiliate of such Bank) as such Bank
may from time to time specify to Administrative Agent and Borrower by written
notice in accordance with the terms hereof as the office by which Revolving
Loans of such Type are to be made and maintained.
"Applicable Margin" means, on any date, with respect to each Type of
Revolving Loan, an amount determined by reference to the ratio of Outstanding
Credit to the Borrowing Base on such date in accordance with the table below:
Ratio of Outstanding Credit Applicable Margin for Applicable Margin for
to Borrowing Base Eurodollar Loans Base Rate Loans
>- 90 to 1 2.250% 1.000%
>_ .75 to 1 and < .90 to 1 2.000% 0.750%
>_ .50 to 1 and < .75 to 1 1.750% 0.500%
< .50 to 1 1.500% 0.250%
"Approved Fund" means any Fund that is administered or managed by (a) a
Bank, (b) an Affiliate of a Bank, or (c) an entity or an Affiliate of an
entity that administers or manages a Bank.
"Approved Petroleum Engineer" means any reputable firm of independent
petroleum engineers as shall be selected by Borrower and approved by
Administrative Agent, such approval not to be unreasonably withheld.
"Asset Disposition" means the sale, assignment, lease, license, transfer,
exchange or other disposition by any Credit Party of all or substantially all
of its right, title and interest in any Borrowing Base Property.
"Assignment and Acceptance Agreement" has the meaning given such term in
Section 14.10(c)(i).
"Assignment and Amendment to Mortgages" means, collectively, those
certain Assignments and Amendments to Mortgages to be entered into among
Borrower, Existing Agent and Administrative Agent, substantially in the form
of Exhibit K attached hereto, pursuant to which, among other things, the
Existing Mortgages shall be (i) assigned to Administrative Agent for the
ratable benefit of each Bank to secure the Obligations, and (ii) amended to
reflect the terms and provisions of this Agreement.
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, its Chief Accounting
Officer, any of its Vice Presidents, its Treasurer or its corporate Secretary.
"Availability" means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.
"Bank" means any financial institution reflected on Schedule 1.1 hereto
as having a Commitment and its successors and permitted Assignees, and "Banks"
shall mean all Banks.
"Bank One" means Bank One, NA, a national banking association, with its
main office in Chicago, Illinois, in its capacity as a Bank.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective automatically
and without notice to Borrower or any Bank on the effective date of such
change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means the portion of the principal of the Revolving Loan
bearing interest with reference to the Base Rate.
"Big Dog" means Big Dog Drilling Co., LLC, a Nevada limited liability
company.
"BOK" means Bank of Oklahoma, N.A.
"Bookrunner" means JPMSI, in its capacity as bookrunner for the credit
facility hereunder or any successor thereto.
"Borrower" means Delta Petroleum Corporation, a Colorado corporation.
"Borrower Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit C attached hereto (with applicable conforming changes) to be
executed by Borrower pursuant to which Borrower shall pledge to Administrative
Agent, for the ratable benefit of Banks, all of the issued and outstanding
Equity owned by Borrower of each Restricted Subsidiary described therein to
secure the Obligations.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
"Base Rate Borrowing," and any Borrowing which will constitute a Eurodollar
Loan, is referred to herein as a "Eurodollar Borrowing."
"Borrowing Base" has the meaning set forth in Section 4.1 hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any, by
which the Outstanding Credit on such date exceeds the Borrowing Base in effect
on such date; provided, that, for purposes of determining the existence and
amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not be
deemed to be outstanding to the extent it is secured by cash in the manner
contemplated by Section 2.1(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by
Banks for purposes of establishing the Borrowing Base.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing are
made available to Borrower or to satisfy any obligation of any Credit Party.
"Castle" means Castle Texas Exploration Limited Partnership, a Texas
limited partnership.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit H attached hereto to be executed and
delivered by an Authorized Officer of Borrower pursuant to Section 6.1(a)(xiv)
hereof.
"Change of Control" means that, for any reason, (i) any Person or group
(as defined in Sections 13(d)(3) or 14(d)(2) of the Exchange Act) shall become
the direct or indirect beneficial owner (as defined in Section 13(d)(3) of the
Exchange Act) of greater than thirty percent (30%) of the total voting power
of all classes of capital stock then outstanding of Borrower entitled (without
regard to the occurrence of any contingency) to vote in elections of directors
of Borrower, or (ii) any Credit Party (other than Borrower) shall cease to be
a wholly owned direct or indirect Subsidiary of Borrower.
"Closing Date" means the date upon which all of the conditions precedent
set forth in Section 6.1 have been satisfied; provided, that, in no event
shall such date be later than November 5, 2004.
"Closing Transactions" means the transactions to occur on the Closing
Date, including, without limitation, (a) the refinancing in full, with the
proceeds of a Borrowing under this Agreement, of all Debt and other
obligations accrued and outstanding under the Existing Credit Agreement as of
the Closing Date, including, without limitation, (i) the entire outstanding
principal balance of the loans made thereunder, (ii) all accrued but unpaid
interest, and (iii) all accrued but unpaid commitment and other fees, (b) the
cancellation of all letters of credit outstanding under the Existing Credit
Agreement other than the Existing Letters of Credit, (c) the assignment of the
Existing Mortgages to Administrative Agent to secure the Obligations, (d) the
release of all Liens securing the Debt and other obligations of Borrower and
its Subsidiaries under the Existing Credit Agreement (including, without
limitation, the delivery of UCC-3 releases with respect to all uniform
commercial code filings made under or pursuant to the Existing Credit
Agreement) to the extent not being assigned pursuant to the terms of this
Agreement and the Assignment and Amendment to Mortgages, and delivery to
Administrative Agent of all original certificates and stock powers pledged and
delivered by Borrower or any of its Subsidiaries pursuant to the terms of the
Existing Credit Agreement as security for Borrower's and its Subsidiaries'
obligations thereunder, (e) the release of all Guarantees of the Debt and
obligations of Borrower and its Subsidiaries under the Existing Credit
Agreement, (f) the termination of the Existing Credit Agreement and all
commitments thereunder, and (g) the payment of all fees and expenses of
Administrative Agent and its Affiliates in connection with the credit facility
provided herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to any Bank, the commitment of such Bank
to lend its Commitment Percentage of the Total Commitment to Borrower pursuant
to Section 2.1 hereof, as such Commitment may be terminated or reduced from
time to time in accordance with the provisions hereof. On the Closing Date,
the amount of each Bank's Commitment is the amount set forth opposite such
Bank's name on Schedule 1.1 hereto; provided, that after giving effect to any
Assignment and Acceptance Agreement, the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative Agent pursuant
to Section 14.10(c)(iv) hereof.
"Commitment Fee Percentage" means, on any date, the percentage determined
by reference to the ratio of Outstanding Credit to the Borrowing Base on such
date in accordance with the table below:
Ratio of Outstanding Credit to Commitment Fee
Borrowing Base Percentage
>_ .90 to 1 0.500%
>_ .75 to 1 and < .90 to 1 0.375%
>_ .50 to 1 and < .75 to 1 0.375%
< .50 to 1 0.300%
"Commitment Percentage" means, with respect to each Bank, the Commitment
Percentage for such Bank set forth on Schedule 1.1 hereto; provided, that
after giving effect to any Assignment and Acceptance Agreement, the Commitment
Percentage of each Bank shall be the amount set forth in the Register
maintained by Administrative Agent pursuant to Section 14.10(c)(iv) hereof.
"Consolidated Current Assets" means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time. For purposes of
this definition, any non-cash gains on any Hedge Agreement resulting from the
requirements of SFAS 133 for any period of determination shall be excluded
from the determination of current assets of such Person and its Consolidated
Subsidiaries.
"Consolidated Current Liabilities" means, for any Person at any time, the
current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of Borrower, excluding the current portion (if any) of
the outstanding principal balance of the Revolving Loan. For purposes of this
definition, any non-cash losses or charges on any Hedge Agreement resulting
from the requirements of SFAS 133 for any period of determination shall be
excluded from the determination of current liabilities of such Person and its
Consolidated Subsidiaries.
"Consolidated EBITDAX" means, for any Person for any period: (a)
Consolidated Net Income of such Person for such period; plus, to the extent
deducted in the calculation of Consolidated Net Income, (b) the sum of (i)
income or franchise Taxes paid or accrued; (ii) Consolidated Net Interest
Expense; (iii) amortization, depletion and depreciation expense; (iv) any
non-cash losses or charges on any Hedge Agreement resulting from the
requirements of SFAS 133 for that period; (v) other non-cash charges
(excluding accruals for cash expenses made in the ordinary course of
business); and (vi) costs and expenses associated with, and attributable to,
oil and gas capital expenditures that are expensed rather than capitalized;
less, to the extent included in the calculation of Consolidated Net Income,
(c) the sum of (i) the income of any Person (other than wholly-owned
Subsidiaries of such Person) unless such income is received by such Person in
a cash distribution; (ii) gains or losses from sales or other dispositions of
assets (other than Hydrocarbons produced in the normal course of business);
(iii) any non-cash gains on any Hedge Agreement resulting from the
requirements of SFAS 133 for that period; (iv) extraordinary or non-recurring
gains, but not net of extraordinary or non-recurring "cash" losses; and (v)
costs and expenses associated with, and attributable to, oil and gas capital
expenditures that are expensed rather than capitalized. Notwithstanding
anything to the contrary contained herein, all calculations of Consolidated
EBITDAX shall be (A) in all respects, acceptable to, and approved by,
Administrative Agent, and (B) for any applicable period of determination
during which Borrower has consummated an acquisition or disposition (to the
extent permitted hereunder) of properties or assets, calculated and determined
on a pro forma basis as if such acquisition or disposition was consummated on
the first day of such applicable period.
"Consolidated Net Income" means, for any Person for any period, the net
income (or loss) of such Person and its Consolidated Subsidiaries for such
period.
"Consolidated Net Interest Expense" means, for any Person for any period,
the remainder of the following for such Person and its Consolidated
Subsidiaries for such period: (a) interest expense, minus (b) interest income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements.
"Consolidated Total Debt" means, for any Person for any period, all Debt
of such Person and its Consolidated Subsidiaries determined on a consolidated
basis for such period.
"Continue," "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.5 hereof and/or Article XIII hereof of a
Eurodollar Loan from one Interest Period to the next Interest Period.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.5 and/or Article XIII hereof of all or a portion of one
Type of Revolving Loan into another Type of Revolving Loan.
"Credit Parties" means, collectively, Borrower and each Restricted
Subsidiary, and "Credit Party" means any one of the foregoing.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest
charges are customarily paid or accrued, (d) all Guarantees by such Person,
(e) the unfunded or unreimbursed portion of all letters of credit issued for
the account of such Person, (f) any amount owed by such Person representing
the deferred purchase price of property or services other than accounts
payable incurred in the ordinary course of business and in accordance with
customary trade terms and which are not more than (90) days past the invoice
date, and (g) all liability of such Person as a general partner of a
partnership for obligations of such partnership of the nature described in (a)
through (f) preceding.
"DEC" means Delta Exploration Company, Inc., a Colorado corporation,
which is a wholly-owned Subsidiary of Borrower.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, in respect of any principal of the Revolving Loan
or any other amount payable by Borrower under any Loan Paper which is not paid
when due (whether at stated maturity, by acceleration, or otherwise), a rate
per annum during the period commencing on the due date until such amount is
paid in full equal to the sum of (i) two percent (2%), plus (ii) the
Applicable Margin for Base Rate Loans, plus (iii) the Base Rate as in effect
from time to time (provided, that if such amount in default is principal of a
Eurodollar Borrowing and the due date is a day other than the last day of an
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day
of the Interest period therefor, the sum of (a) two percent (2%), plus (b) the
Applicable Margin for Eurodollar Loans, plus (c) the Eurodollar Rate for such
Borrowing for such Interest Period as provided in Section 2.5 hereof, and
thereafter, the rate provided for above in this definition).
"Distribution" by any Person, means (a) with respect to any stock issued
by such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership,
joint venture, limited liability company, membership or other interest, (b)
the declaration or payment of any dividend or other distribution on or with
respect to any stock, partnership, joint venture, limited liability company,
membership or other interest of such Person, and (c) any other payment by such
Person with respect to such stock, partnership, joint venture, limited
liability company, membership or other interest of such Person.
"Documentation Agent" means U.S. Bank National Association, in its
capacity as Documentation Agent for Banks hereunder or any successor thereto.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Chicago, Illinois or Dallas, Texas, are
authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, (a) its office located
at its address identified on Schedule 1.1 hereto as its Domestic Lending
Office, (b) its office located at its address identified on the Register as
its Domestic Lending Office, or (c) such other office as such Bank may
hereafter designate as its Domestic Lending Office by notice to Borrower and
Administrative Agent.
"Environmental Complaint" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment,
letter or other communication from any federal, state or municipal authority
or any other party against any Credit Party involving (a) a Hazardous
Discharge from, onto or about any real property owned, leased or operated at
any time by any Credit Party, (b) a Hazardous Discharge caused, in whole or in
part, by any Credit Party or by any Person acting on behalf of or at the
instruction of any Credit Party, or (c) any violation of any Applicable
Environmental Law by any Credit Party.
"Equity" means shares of capital stock or a partnership, profits,
capital, member or other equity interest, or options, warrants or any other
rights to substitute for or otherwise acquire the capital stock or a
partnership, profits, capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under common
control with any Credit Party as determined under section 4001(a)(14) of
ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable Eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, (a) its office,
branch or affiliate located at its address identified on Schedule 1.1 hereto
as its Eurodollar Lending Office, (b) its office, branch or affiliate located
at its address identified on the Register as its Eurodollar Lending Office, or
(c) such other office, branch or affiliate of such Bank as it may hereafter
designate as its Eurodollar Lending Office by notice to Borrower and
Administrative Agent.
"Eurodollar Loans" means Revolving Loans that bear interest at rates
based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the applicable British Bankers' Association LIBOR rate for deposits
in Dollars as reported by any generally recognized financial information
service as of 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period, and having a maturity equal to such
Interest Period; provided, that, if no such British Bankers' Association LIBOR
rate is available to Administrative Agent, the applicable Eurodollar Rate for
the relevant Interest Period shall instead be the rate determined by
Administrative Agent to be the rate at which Bank One or one of its Affiliate
banks offers to place deposits in Dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two (2) Eurodollar
Business Days prior to the first day of such Interest Period, in the
appropriate amount of Bank One's relevant Eurodollar Loan and having a
maturity equal to such Interest Period.
"Events of Default" has the meaning set forth in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Existing Agent" means BOK, in its capacity as agent for the Existing
Banks under the Existing Credit Agreement.
"Existing Banks" means BOK and each of the other financial institutions
named and defined in the Existing Credit Agreement as a "Bank."
"Existing Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated as of December 30, 2003, by and among Borrower, DEC,
Piper, Existing Agent and Existing Banks, as heretofore amended.
"Existing Letter of Credit Exposure" means, at any time, without
duplication, the sum of (a) the aggregate undrawn amount of all outstanding
Existing Letters of Credit at such time plus (b) the aggregate amount of all
payments made by any issuer of an Existing Letter of Credit pursuant to such
Existing Letters of Credit that have not yet been reimbursed by or on behalf
of Borrower or its Subsidiaries at such time.
"Existing Letters of Credit" means, collectively, the letters of credit
issued for the account of Borrower or its Subsidiaries under the Existing
Credit Agreement and outstanding on the date hereof and described on Schedule
1.2 attached hereto, specifically excluding any extensions or renewals of such
letters of credit.
"Existing Mortgages" means the mortgages, deeds of trust, security
agreements, assignments, pledges and other documents, instruments and
agreements described on Schedule 1.3 attached hereto, which establish Liens on
certain of Borrower's and its Subsidiaries' oil and gas properties and related
assets to secure Borrower's and its Subsidiaries' obligations under the
Existing Credit Agreement.
"Existing Reserve Report" means an engineering and economic analysis of
the Borrowing Base Properties prepared effective as of July 1, 2004, and dated
August 25, 2004, by Xxxxx X. Xxxxx Associates, Inc.
"Facility Guaranty" means a Guaranty substantially in the form of Exhibit
A attached hereto to be executed by each Restricted Subsidiary of Borrower in
favor of Banks, pursuant to which such Restricted Subsidiary of Borrower
guarantees payment and performance in full of the Obligations.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (a) if the day for which such rate is
to be determined is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (b) if such rate is not so published on such next succeeding Domestic
Business Day, the Federal Funds Rate for any day shall be the average rate
charged to Administrative Agent on such day on such transactions as determined
by Administrative Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer" shall
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"Fiscal Quarter" means the fiscal quarter of Borrower, ending on the last
day of each March, June, September and December of each year.
"Fiscal Year" means the fiscal year of Borrower, ending on June 30 or
December 31, as applicable.
"Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
its business.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the SEC, the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after
the Closing Date so as to properly reflect the financial condition, and the
results of operations and changes in financial position, of Borrower and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by the SEC, Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee thereof)
in order to continue as a generally accepted accounting principle or practice
may be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish,
or municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions, by "comfort letter" or other
similar undertaking of support or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law
or which is otherwise regulated by any Applicable Environmental Law or is
required to be investigated and/or remediated by or pursuant to any Applicable
Environmental Law.
"Hedge Agreements" means, collectively, any agreement, instrument,
arrangement or schedule or supplement thereto evidencing any Hedge
Transaction.
"Hedge Transaction" means any financial derivative transaction under SFAS
133 pursuant to which a Person xxxxxx risks related to commodity prices,
interest rates, currency exchange rates, securities prices or financial
market conditions. Hedge Transactions expressly includes Oil and Gas Hedge
Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith, and all
products, by-products and all other substances derived therefrom or the
processing thereof, and all other minerals and substances, including, but not
limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam,
water, carbon dioxide, helium, and any and all other minerals, ores, or
substances of value, and the products and proceeds therefrom, including,
without limitation, all gas resulting from the in-situ combustion of coal or
lignite.
"Immaterial Title Deficiencies" means, with respect to Borrowing Base
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties with a Recognized Value greater
than three percent (3%) of the Recognized Value of all of such Borrowing Base
Properties.
"Indirect Subsidiary" has the meaning given such term in the definition
of "Subsidiary Pledge Agreement."
"Initial Borrowing Base" means a Borrowing Base in the amount of
$75,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and
each Continuation of Eurodollar Loans and each Conversion of all or part of
the Base Rate Loan to Eurodollar Loans, the period commencing on the date of
such Borrowing, Continuation or Conversion and ending one (1), two (2), three
(3) or, subject to availability, six (6) or twelve (12) months thereafter, as
Borrower may elect in the applicable Request for Borrowing or Notice of
Continuation or Conversion; provided, that:
(a) any Interest Period which would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Eurodollar Business Day of
a calendar month;
(c) if any Interest Period includes a date on which any payment of
principal of the Eurodollar Loans which are the subject of such Borrowing,
Continuation or Conversion is required to be made hereunder, but does not end
on such date, then (i) the principal amount of such Eurodollar Loans required
to be repaid on such date shall have an Interest Period ending on such date,
and (ii) the remainder of each such Eurodollar Loans shall have an Interest
Period determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided,
that, "Investment" shall not include current customer and trade accounts which
are payable in accordance with customary trade terms.
"JPMSI" means X.X. Xxxxxx Securities Inc.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion
of Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit issued
hereunder, a fee in an amount equal to the greater of (a) $500, or (b) a
percentage of the stated amount of such Letter of Credit (calculated on a per
annum basis based on the stated term of such Letter of Credit) determined by
reference to the ratio of the Outstanding Credit to the Borrowing Base in
effect on the date such Letter of Credit is issued in accordance with the
table below:
Ratio of Outstanding Credit to Per Annum Letter of Credit Fee
Borrowing Base Percentage
>_ .90 to 1 2.250%
>_ .75 to 1 and < .90 to 1 2.000%
>_ .50 to 1 and < .75 to 1 1.750%
< .50 to 1 1.500%
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit issued hereunder, a fee equal to one eighth of one percent (.125%) per
annum of the stated amount of such Letter of Credit.
"Letter of Credit Issuer" has the meaning set forth in Section 2.1(b).
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b) and, except as expressly provided to the
contrary herein, shall include the Existing Letters of Credit until such time
as such Existing Letters of Credit have been cancelled, replaced or have
otherwise expired.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, financing statement or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the Credit Parties
shall be deemed to own subject to a Lien any asset which is acquired or held
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan Papers" means this Agreement, the Notes, each Facility Guaranty
which may now or hereafter be executed, each Borrower Pledge Agreement which
may now or hereafter be executed, each Subsidiary Pledge Agreement which may
now or hereafter be executed, the Existing Mortgages (as amended by the
Assignment and Amendment to Mortgages), the Assignments and Amendments to
Mortgages, all Mortgages now or at any time hereafter delivered pursuant to
Section 5.1, all Letters of Credit, and all other certificates, documents or
instruments delivered in connection with this Agreement, as the foregoing may
be amended from time to time.
"Margin Regulations" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event that has or
would reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition, results of operations or prospects
of Borrower, individually, or the Credit Parties, taken as a whole, (b) the
right or ability of any Credit Party to fully, completely and timely perform
its obligations under the Loan Papers, (c) the validity or enforceability of
any Loan Paper against any Credit Party which is a party thereto, or (d) the
validity, perfection or priority of any material Lien intended to be created
under or pursuant to any Loan Paper to secure the Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral
Interest owned by any Credit Party is bound, a net gas imbalance to all such
Credit Parties in excess of $500,000 in the aggregate.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Revolving Loan owed to such Bank at such time to exceed the
maximum amount which such Bank would be allowed to contract for, charge, take,
reserve, or receive under applicable Laws after taking into account, to the
extent required by applicable Laws, any and all relevant payments or charges
under the Loan Papers. To the extent the Laws of the State of Texas are
applicable for purposes of determining the "Maximum Lawful Rate," such term
shall mean the "indicated rate ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code, as amended, substituted for or
restated, or, if permitted by applicable Law and effective upon the giving of
the notices required by such Chapter 303 (or effective upon any other date
otherwise specified by applicable Law), the "quarterly ceiling" or "annualized
ceiling" from time to time in effect under such Chapter 303, whichever
Administrative Agent (with the approval of Required Banks) shall elect to
substitute for the "indicated rate ceiling," and vice versa, each such
substitution to have the effect provided in such Chapter 303, and
Administrative Agent (with the approval of Required Banks) shall be entitled
to make such election from time to time and one or more times and, without
notice to Borrower, to leave any such substitute rate in effect for subsequent
periods in accordance with such Chapter 303.
"Mineral Interests" means rights, estates, titles, and interests in and
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interest, production payment, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Laws, which now or hereafter include all or any
part of the foregoing.
"Monthly Date" means the last day of each calendar month.
"Mortgages" means all mortgages, deeds of trust, amendments to mortgages,
security agreements, assignments of production, pledge agreements, collateral
mortgages, collateral chattel mortgages, collateral assignments, financing
statements and other documents, instruments and agreements evidencing,
creating, perfecting or otherwise establishing the Liens required by Section
5.1 hereof. All Mortgages shall be in form and substance satisfactory to
Administrative Agent in its sole discretion. The term "Mortgages" shall
include, without limitation, the Existing Mortgages, as amended pursuant to
the Assignment and Amendment to Mortgages.
"Note" means a promissory note of Borrower payable to the order of a
Bank, in substantially the form of Exhibit B hereto, in the amount of such
Bank's Commitment, evidencing the obligation of Borrower to repay to such Bank
its Commitment Percentage of the Revolving Loan, together with all
modifications, extensions, renewals, and rearrangements thereof, and "Notes"
means all of such Notes collectively.
"Notice of Continuation or Conversion" has the meaning set forth in
Section 2.5(c).
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of
any Bank arising pursuant to the Loan Papers or pursuant to any Hedge
Agreement or Hedge Transaction entered into with any Bank or any Affiliate of
any Bank, and all interest accrued thereon and costs, expenses, and attorneys'
fees incurred in the enforcement or collection thereof, regardless of whether
such indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.
"Oil & Gas Hedge Transaction" means a Hedge Transaction pursuant to which
any Person xxxxxx the price to be received by it for future production of
Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.
"Participant" has the meaning given such term in Section 14.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens securing the Obligations;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the operation of
the subject property, and for the purposes of this Agreement, a minor defect
in title shall include, but not be limited to, easements, rights-of-way,
servitudes, permits, surface leases and other similar rights in respect of
surface operations, and easements for pipelines, streets, alleys, highways,
telephone lines, power lines, railways and other easements and rights-of-way,
on, over or in respect of any of the properties of any Credit Party that are
customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests which
are not more than sixty (60) days delinquent (except to the extent permitted
by Section 8.7);
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's Liens and other similar Liens arising by operation of Law in the
ordinary course of business which are not more than sixty (60) days delinquent
(except to the extent permitted by Section 8.7);
(e) Liens for Taxes or assessments not yet due or not yet delinquent,
or, if delinquent, that are being contested in good faith in the normal course
of business by appropriate action, as permitted by Section 8.7;
(f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including,
without limitation, any royalty, overriding royalty, net profits interest,
production payment, carried interest or reversionary working interest; and
(g) Liens, charges and encumbrances upon Borrower's assets, other
than Borrowing Base Properties, which in the aggregate, do not have a value in
excess of $250,000.
"Permitted Investments" means (a) readily marketable direct obligations
of the United States of America (or investments in mutual funds or similar
funds which invest solely in such obligations), (b) fully insured demand or
time deposits and certificates of deposit with maturities of one year or less
of any commercial bank operating in the United States having capital and
surplus in excess of $500,000,000, (c) commercial paper of a domestic issuer
if at the time of purchase such paper is rated in one of the two highest
ratings categories of Standard and Poor's Corporation or Xxxxx'x Investors
Service, (d) Investments by any Credit Party in a Subsidiary of Borrower that
has provided a Facility Guaranty and the Equity of which has been pledged to
Administrative Agent pursuant to a Borrower Pledge Agreement or a Subsidiary
Pledge Agreement, (e) Investments existing on the date hereof and described on
Schedule 9.8 attached hereto, and (f) other Investments; provided, that, the
aggregate amount of all other Investments made pursuant to this clause (f)
outstanding at any time shall not exceed $500,000 (measured on a cost basis).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Government Authority.
"Piper" mean Piper Petroleum Company, a Colorado corporation, which is a
wholly-owned Subsidiary of Borrower.
"Plan" means (i) with respect to a Credit Party, an employee benefit plan
within the meaning of section 3(3) of ERISA, and any other similar plan,
policy or arrangement, including an employment contract, whether formal or
informal and whether legally binding or not, under which any Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party, or such present or former employee's
dependents or beneficiaries, has any current or future right to benefits
resulting from the present or former employee's employment relationship with
any Credit Party, and (ii) with respect to an ERISA Affiliate, a plan
described in clause (i) preceding if, and only if, such plan is subject to
Title IV of ERISA.
"Prime Rate" means the per annum rate of interest established from time
to time by Bank One or its parent as its prime rate, which rate may not be the
lowest rate of interest charged by Administrative Agent to its customers.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"Purchasers" has the meaning given such term in Section 14.10(c).
"Quarterly Date" means the last day of each March, June, September and
December.
"Recognized Value" means, with respect to all Proved Mineral Interests,
the portion of the Borrowing Base which Bank One attributes to such Proved
Mineral Interests for purposes of the most recent redetermination of the
Borrowing Base pursuant to Article IV hereof (or for purposes of determining
the initial Borrowing Base in the event no such redetermination has occurred),
based upon the discounted present value of the estimated net cash flow to be
realized from the production of Hydrocarbons from all such Proved Mineral
Interests.
"Redetermination" means any Scheduled Redetermination, Special
Redetermination or other redetermination of the Borrowing Base pursuant to
Section 4.4.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each April 1 and October 1, commencing Xxxxx 0, 0000, (x)
with respect to any Special Redetermination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date
of a request for a Special Redetermination, and (c) with respect to any
redetermination of the Borrowing Base pursuant to Section 4.4, the date of the
consummation of any applicable Asset Disposition. The Closing Date shall also
constitute a Redetermination Date for purposes of this Agreement.
"Register" has the meaning given such term in Section 14.10(c)(iv).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Request for Borrowing" has the meaning set forth in Section 2.2(a).
"Request for Letter of Credit" has the meaning set forth in Section
2.3(a).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Required Reserve Value" means Proved Mineral Interests that have a
Recognized Value of not less than eighty percent (80%) of the Recognized Value
of all Proved Mineral Interests held by Borrower and its Subsidiaries and
included in the Borrowing Base.
"Reserve Report" means an unsuperseded engineering analysis of the
Mineral Interests owned by Borrower, in form and substance reasonably
acceptable to Administrative Agent, prepared in accordance with customary and
prudent practices in the petroleum engineering industry and Financial
Accounting Standards Board Statement 69. Each Reserve Report required to be
delivered by August 31 of each year pursuant to Section 4.1 shall be prepared
by the Approved Petroleum Engineer. Each other Reserve Report shall be
prepared by either (i) the Approved Petroleum Engineer, or (ii) Borrower's
in-house staff, and shall include a detailed reconciliation from the most
recently delivered Reserve Report prepared by the Approved Petroleum Engineer.
Notwithstanding the foregoing, in connection with any Special Redetermination
requested by Borrower, the Reserve Report shall be in form and scope mutually
acceptable to Borrower and Administrative Agent. Until superseded, the
Existing Reserve Report shall be considered the Reserve Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against in the
case of Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person, (b) any capital contribution, loan or advance by
any Credit Party to any Unrestricted Subsidiary, (c) the issuance of a
Guarantee by any Credit Party with respect to any Debt or other obligation of
any Unrestricted Subsidiary, or (d) the retirement, redemption, defeasance,
repurchase or prepayment prior to scheduled maturity by such Person or any
Affiliate of such Person of any Debt of such Person.
"Restricted Subsidiary" means, as of the date hereof, DEC and Piper, and
shall also mean any other Subsidiary of Borrower which Borrower hereafter
designates as a "Restricted Subsidiary;" provided, that, no Subsidiary of
Borrower will be a Restricted Subsidiary unless (a) one hundred percent (100%)
of its issued and outstanding Equity has been pledged to Administrative Agent
to secure the Obligations pursuant to a Borrower Pledge Agreement or a
Subsidiary Pledge Agreement, and (b) it has executed a Facility Guaranty.
"Revolving Loan" means the revolving credit loan in an amount outstanding
at any time not to exceed the lesser of (i) the Borrowing Base then in effect,
and (ii) the amount of (a) the Total Commitment then in effect less (b) the
amount of the Letter Credit Exposure then outstanding to be made by Banks to
Borrower in accordance with Section 2.1 hereof. The Revolving Loan may be
comprised of the Base Rate Loan and one or more Eurodollar Loans as Borrower
may select in a Request for Borrowing or a Notice of Continuation or
Conversion.
"Schedule" means a "schedule" attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 4.2.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Shark" means Shark Trucking Co., LLC, a Nevada limited liability
company.
"Sole Lead Arranger" means JPMSI, in its capacity as sole lead arranger
for the credit facility hereunder or any successor thereto.
"Special Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 4.3.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term "Subsidiary" shall include Subsidiaries of Subsidiaries (and
so on).
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit D attached hereto (with applicable conforming changes) to
be executed by each existing and/or future Restricted Subsidiary of Borrower
to the extent such Restricted Subsidiary owns any outstanding Equity of any
other Restricted Subsidiary of Borrower (for purposes of this definition and
Section 5.1(d) hereof, such Restricted Subsidiary is referred to herein and
therein as an "Indirect Restricted Subsidiary"), pursuant to which such
Indirect Restricted Subsidiary shall pledge to Administrative Agent, for the
ratable benefit of Banks, all of the issued and outstanding Equity owned by
such Indirect Restricted Subsidiary of each Restricted Subsidiary of such
Indirect Restricted Subsidiary described therein to secure the Obligations.
"Syndication Agent" means Bank of Oklahoma, N.A., in its capacity as
Syndication Agent for Banks hereunder or any successor thereto.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any
Governmental Authority. "Tax" means any one of the foregoing.
"Termination Date" means November 5, 2008.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $200,000,000, as such amount shall be reduced from time to
time pursuant to Section 2.8 and Section 2.9.
"Transferee" has the meaning given such term in Section 14.10(d).
"Type" means, with reference to a Revolving Loan, the characterization of
such Revolving Loan as the Base Rate Loan or a Eurodollar Loan based on the
method by which the accrual of interest on such Revolving Loan is calculated.
"Unrestricted Subsidiary" means any Subsidiary of Borrower which is not a
Restricted Subsidiary and shall include, as of the date hereof, Amber, Big
Dog, Castle and Shark.
Section 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be expressed in U.S.
dollars and shall be prepared in accordance with GAAP, applied on a basis
consistent with the most recent audited consolidated financial statements of
Borrower and its Consolidated Subsidiaries delivered to Banks except for
changes concurred in by Borrower's independent certified public accountants
and which are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to Banks pursuant to Section
8.1(a) or Section 8.1(b); provided, that, unless Required Banks shall
otherwise agree in writing, no such change shall modify or affect the manner
in which compliance with the covenants contained in Article X are computed
such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.
Section 1.3 Petroleum Terms. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves"
have the meaning given such terms from time to time and at the time in
question by the Society of Petroleum Engineers of the American Institute of
Mining Engineers.
Section 1.4 Money. Unless expressly stipulated otherwise, all
references herein to "dollars," "money," "funds," "payments," "prepayments" or
similar financial or monetary terms, are references to currency of the United
States of America.
ARTICLE II
THE CREDIT
Section 2.1 Commitments.
(a) Each Bank severally agrees, subject to Section 2.1(c), Section
6.1 and Section 6.2 and the other terms and conditions set forth in this
Agreement, to lend to Borrower from time to time prior to the Termination Date
amounts requested by Borrower not to exceed in the aggregate at any one time
outstanding, the amount of such Bank's Commitment reduced by an amount equal
to such Bank's Letter of Credit Exposure. Each Borrowing shall be in an
aggregate principal amount of $1,000,000 or any larger integral multiple of
$100,000 (except that any Base Rate Borrowing may be in an amount equal to the
Availability at such time), and (ii) shall be made from the Banks ratably in
accordance with their respective Commitment Percentages. Subject to the
foregoing limitations and the other provisions of this Agreement, prior to the
Termination Date Borrower may borrow under this Section 2.1(a), repay amounts
borrowed and request new Borrowings to be made under this Section 2.1(a).
(b) Administrative Agent, or such Bank designated by Administrative
Agent which (without obligation to do so) consents to the same (and, with
respect to the Existing Letters of Credit only (and only until such time as
such Existing Letters of Credit have been cancelled, replaced or have
otherwise expired), shall include BOK, in its capacity as the issuer of such
Existing Letters of Credit) ("Letter of Credit Issuer") will, from time to
time prior to the date which is five (5) Domestic Business Days prior to the
Termination Date, upon request by Borrower, issue Letters of Credit for the
account of Borrower or any Restricted Subsidiary designated by Borrower, so
long as (i) the sum of (A) the total Letter of Credit Exposure then existing,
and (B) the amount of the requested Letter of Credit does not exceed
$5,000,000, and (ii) Borrower would be entitled to a Borrowing under Section
2.1(a) and Section 2.1(c) in the amount of the requested Letter of Credit.
Not less than three (3) Domestic Business Days prior to the requested date of
issuance of any such Letter of Credit, Borrower (and any Restricted Subsidiary
for whose account such Letter of Credit is being issued) shall execute and
deliver to Letter of Credit Issuer, Letter of Credit Issuer's customary letter
of credit application. Each Letter of Credit shall be in the minimum amount
of $10,000 and shall be in form and substance acceptable to Letter of Credit
Issuer. No Letter of Credit shall have an expiration date later than the
earlier of (i) the Termination Date, or (ii) one (1) year from the date of
issuance (or, in the case of any renewal or extension thereof, one (1) year
after such renewal or extension). Upon the date of issuance of a Letter of
Credit, and, with respect to the Existing Letters of Credit, on the Closing
Date, Letter of Credit Issuer shall be deemed to have sold to each other Bank,
and each other Bank shall be deemed to have unconditionally and irrevocably
purchased from Letter of Credit Issuer, a non recourse participation in the
related Letter of Credit and Letter of Credit Exposure equal to such Bank's
Commitment Percentage of such Letter of Credit and Letter of Credit Exposure.
Upon request of any Bank, but not less often than quarterly, Administrative
Agent shall provide notice to each Bank by telephone, teletransmission or
telex setting forth each Letter of Credit issued and outstanding pursuant to
the terms hereof and specifying the beneficiary and expiration date of each
such Letter of Credit, each Bank's percentage of each such Letter of Credit
and the actual dollar amount of each Bank's participation held by Letter of
Credit Issuer thereof for such Bank's account and risk. At the time of
issuance of each Letter of Credit, Borrower shall pay to Administrative Agent
in respect of such Letter of Credit (a) the applicable Letter of Credit Fee,
and (b) the applicable Letter of Credit Fronting Fee. Administrative Agent
shall distribute the Letter of Credit Fee payable upon the issuance of each
Letter of Credit to Banks in accordance with their respective Commitment
Percentages, and Administrative Agent shall distribute the Letter of Credit
Fronting Fee to Letter of Credit Issuer for its own account. Any (y) material
amendment or modification, or (z) renewal or extension of any Letter of Credit
shall be deemed to be the issuance of a new Letter of Credit for purposes of
this Section 2.1(b). Notwithstanding anything to the contrary contained
herein, Borrower shall pay to Letter of Credit Issuer in connection with the
issuance of each Letter of Credit and/or any amendment or modification of any
nature to any existing Letter of Credit, Letter of Credit Issuer's usual and
customary fees for the issuance of, amendments or modifications to, and
processing of, Letters of Credit.
Immediately upon the occurrence of an Event of Default and the
acceleration of the Obligations hereunder, and also on the date which is five
(5) Domestic Business Days prior to the Termination Date, Borrower shall
deposit with Administrative Agent cash in such amounts as Administrative Agent
may request, up to a maximum amount equal to the aggregate existing Letter of
Credit Exposure of all Banks; provided, that, in the case of any of the Events
of Default specified in Section 11.1(g) or Section 11.1(h), an amount equal to
the aggregate existing Letter of Credit Exposure of all Banks shall be due and
payable without any notice to Borrower or any other act by Administrative
Agent or any Bank. Any amounts so deposited shall be held by Administrative
Agent for the ratable benefit of all Banks as security for the outstanding
Letter of Credit Exposure and the other Obligations, and Borrower will, in
connection therewith, execute and deliver such security agreements in form and
substance satisfactory to Administrative Agent which Administrative Agent may,
in its discretion, require. As drafts or demands for payment are presented
under any Letter of Credit, Administrative Agent shall apply such cash to
satisfy such drafts or demands. When all Letters of Credit have expired and
the Obligations have been repaid in full (and no Bank has any obligation to
lend or issue Letters of Credit hereunder) or such Event of Default has been
cured to the satisfaction of Required Banks, Administrative Agent shall
release to Borrower any remaining cash deposited under this Section 2.1(b).
Whenever Borrower is required to make deposits under this Section 2.1(b) and
fails to do so on the day such deposit is due, Administrative Agent or any
Bank may, without notice to Borrower, make such deposit (whether by
application of proceeds of any collateral for the Obligations, by transfers
from other accounts maintained with any Bank or otherwise) using any funds
then available to any Bank of any Credit Party, any guarantor or any other
party liable for repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower
hereby agrees to reimburse each Letter of Credit Issuer immediately upon
demand by such Letter of Credit Issuer, and in immediately available funds,
for any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued by it. Payment shall be made by Borrower with
interest on the amount so paid or disbursed by Letter of Credit Issuer from
and including the date payment is made under any Letter of Credit to and
including the date of payment, at the lesser of (i) the Maximum Lawful Rate,
or (ii) the Default Rate. The obligations of Borrower under this paragraph
will continue until all Letters of Credit have expired and all reimbursement
obligations with respect thereto have been paid in full by Borrower and until
all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Letter of Credit Issuer upon
demand for all amounts paid under Letters of Credit as set forth in the
immediately preceding paragraph hereof; provided, however, if Borrower for any
reason fails to reimburse Letter of Credit Issuer in full upon demand, Banks
shall reimburse Letter of Credit Issuer in accordance with each Banks'
Commitment Percentage for amounts due and unpaid from Borrower as set forth
hereinbelow; provided, however, that no such reimbursement made by Banks shall
discharge Borrower's obligations to reimburse Letter of Credit Issuer. All
reimbursement amounts payable by any Bank under this Section 2.1(b) shall
include interest thereon at the Federal Funds Rate, from the date of the
payment of such amounts by Letter of Credit Issuer to the date of
reimbursement by such Bank. No Bank shall be liable for the performance or
nonperformance of the obligations of any other Bank under this paragraph. The
reimbursement obligations of Banks under this paragraph shall continue after
the Termination Date and shall survive termination of this Agreement and the
other Loan Papers.
Borrower shall indemnify and hold Administrative Agent, Letter of Credit
Issuer and each Bank, and their respective officers, directors,
representatives and employees harmless from loss for any claim, demand or
liability which may be asserted against any or such indemnified party in
connection with actions taken under Letters of Credit or in connection
therewith (including losses resulting from the negligence of any or such
indemnified party), and shall pay each indemnified party for reasonable fees
of attorneys and legal costs paid or incurred by each indemnified party in
connection with any matter related to Letters of Credit, except for losses and
liabilities incurred as a direct result of the gross negligence or willful
misconduct of such indemnified party, IT BEING THE EXPRESS INTENTION OF THE
PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR THE CONSEQUENCES
OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for any reason fails to indemnify
or pay Administrative Agent or Letter of Credit Issuer as set forth herein in
full, Banks shall indemnify and pay such indemnified party upon demand, in
accordance with each Bank's Commitment Percentage of such amounts due and
unpaid from Borrower; provided, however, that, no such payment made by Banks
shall discharge Borrower's obligation to indemnify or pay such indemnified
party in accordance with the terms hereof. The provisions of this paragraph
shall survive the termination of this Agreement.
Neither Administrative Agent nor any other Letter of Credit Issuer makes
any representation or warranty, nor assumes any responsibility with respect to
the validity, legality, sufficiency or enforceability of any letter of credit
application executed and delivered in connection with any Letter of Credit
issued hereunder or any document relative thereto or to the collectibility
thereunder. Neither Administrative Agent nor any other Letter of Credit
Issuer assumes any responsibility for the financial condition of Borrower or
for the performance of any obligation of Borrower. Administrative Agent and
each other Letter of Credit Issuer may use its discretion with respect to
exercising or refraining from exercising any rights, or taking or refraining
from taking any action which may be vested in it or which it may be entitled
to take or assert with respect to any Letter of Credit or any letter of credit
application. FURTHERMORE, EXCEPT AS SET FORTH HEREIN, NEITHER ADMINISTRATIVE
AGENT NOR ANY OTHER LETTER OF CREDIT ISSUER SHALL BE UNDER ANY LIABILITY TO
ANY BANK, WITH RESPECT TO ANYTHING ADMINISTRATIVE AGENT OR ANY SUCH LETTER OF
CREDIT ISSUER MAY DO OR REFRAIN FROM DOING IN THE EXERCISE OF ITS JUDGMENT,
THE SOLE LIABILITY AND RESPONSIBILITY OF ADMINISTRATIVE AGENT AND SUCH LETTER
OF CREDIT ISSUER BEING TO HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS AS
ADMINISTRATIVE AGENT OR SUCH LETTER OF CREDIT ISSUER HANDLES ITS OWN SHARE.
NEITHER ADMINISTRATIVE AGENT NOR ANY OTHER LETTER OF CREDIT ISSUER SHALL HAVE
ANY DUTIES OR RESPONSIBILITIES EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND
THOSE DUTIES AND LIABILITIES SHALL BE SUBJECT TO THE LIMITATIONS AND
QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE, NEITHER ADMINISTRATIVE AGENT,
ANY LETTER OF CREDIT ISSUER, NOR ANY OF THEIR DIRECTORS, OFFICERS, OR
EMPLOYEES SHALL BE LIABLE FOR ANY ACTION TAKEN OR OMITTED (WHETHER OR NOT SUCH
ACTION TAKEN OR OMITTED IS EXPRESSLY SET FORTH HEREIN) UNDER OR IN CONNECTION
HEREWITH OR UNDER ANY OTHER INSTRUMENT OR DOCUMENT IN CONNECTION HEREWITH,
EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Neither Administrative
Agent nor any other Letter of Credit Issuer shall incur any liability to any
Bank, Borrower, or any Affiliate of any Bank or Borrower, in acting upon any
notice, document, order, consent, certificate, warrant or other instrument
reasonably believed by Administrative Agent or such Letter of Credit Issuer to
be genuine or authentic and to be signed by the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur
Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder, in an amount which would
cause the Outstanding Credit to exceed the Borrowing Base then in effect. No
Bank shall be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency. Nothing in this Section 2.1(c) shall be deemed to limit any
Bank's obligation to reimburse any Letter of Credit Issuer with respect to its
participation in Letters of Credit as a result of the drawing under any Letter
of Credit pursuant to Section 2.1(b).
Section 2.2 Method of Borrowing.
(a) In order to request any Borrowing under Section 2.1, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly completed
Request for Borrowing (herein so called) prior to 11:00 a.m. (Chicago,
Illinois time), (i) on the Borrowing Date specified for a proposed Base Rate
Borrowing, and (ii) at least three (3) Eurodollar Business Days before the
Borrowing Date of a proposed Eurodollar Borrowing. Each such Request for
Borrowing shall be substantially in the form of Exhibit E attached hereto, and
shall specify:
(i) the Borrowing Date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Eurodollar Business Day
in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative Agent
shall promptly notify each Bank of the contents thereof and the amount of the
Borrowing to be loaned by such Bank pursuant thereto, and such Request for
Borrowing shall not thereafter be revocable by Borrower.
(c) Not later than 12:00 noon (Chicago, Illinois time) on the date of
each Borrowing, each Bank shall make available its Commitment Percentage of
such Borrowing, in Federal or other funds immediately available in Chicago,
Illinois to Administrative Agent at its address set forth on Schedule 2.1
hereto. Unless Administrative Agent determines that any applicable condition
specified in Section 6.2 has not been satisfied, Administrative Agent will
make the funds so received from Banks available to Borrower at Administrative
Agent's aforesaid address.
Section 2.3 Method of Requesting Letters of Credit.
(a) In order to request any Letter of Credit hereunder, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly completed
Request for Letter of Credit (herein so called) prior to 12:00 noon (Chicago,
Illinois time) at least three (3) Domestic Business Days before the date
specified for issuance of such Letter of Credit. Each Request for Letter of
Credit shall be substantially in the form of Exhibit F attached hereto, shall
be accompanied by the applicable Letter of Credit Issuer's duly completed and
executed letter of credit application and agreement and shall specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including the
name and address of the beneficiary, the stated amount, the expiration date
and the conditions under which drafts under such Letter of Credit are to be
available; and
(iii) the purpose of such Letter of Credit.
(b) Upon receipt of a Request for Letter of Credit, Administrative
Agent shall promptly notify each Bank and the proposed Letter of Credit Issuer
of the contents thereof, including the amount of the requested Letter of
Credit, and such Request for Letter of Credit shall not thereafter be
revocable by Borrower.
(c) No later than 12:00 noon (Chicago, Illinois time) on the date
each Letter of Credit is requested to be issued, unless Administrative Agent
or the applicable Letter of Credit Issuer determines that any applicable
condition precedent set forth in Section 6.2 hereof has not been satisfied,
Administrative Agent or such other applicable Letter of Credit Issuer will
issue and deliver such Letter of Credit pursuant to the instructions of
Borrower.
Section 2.4 Notes. Each Bank's Commitment Percentage of the Revolving
Loan shall be evidenced by a single Note payable to the order of such Bank in
an amount equal to such Bank's Commitment.
Section 2.5 Interest Rates; Payments.
(a) The principal amount of the Base Rate Loan outstanding from day
to day shall bear interest at a rate per annum equal to the sum of (i) the
Applicable Margin plus (ii) the applicable Base Rate in effect from day to
day; provided that in no event shall the rate charged hereunder or under the
Notes exceed the Maximum Lawful Rate. Interest on the Base Rate Loan shall be
payable as it accrues on each Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding from day
to day shall bear interest for the Interest Period applicable thereto at a
rate per annum equal to the sum of (i) the Applicable Margin plus (ii) the
applicable Adjusted Eurodollar Rate; provided that in no event shall the rate
charged hereunder or under the Notes exceed the Maximum Lawful Rate. Interest
on any portion of the principal of each Eurodollar Loan subject to an Interest
Period of one (1), two (2) or three (3) months shall be payable on the last
day of the Interest Period applicable thereto. Interest on any portion of the
principal of each Eurodollar Loan subject to an Interest Period of six (6) or
twelve (12) months shall be payable on the last day of the Interest Period
applicable thereto and on each Quarterly Date.
(c) So long as no Default or Event of Default shall be continuing,
subject to the provisions of this Section 2.5, Borrower shall have the option
of having all or any portion of the principal outstanding under the Revolving
Loan be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall bear
interest at rates determined by reference to the Base Rate and the Adjusted
Eurodollar Rate, respectively; provided, that each Eurodollar Loan shall be in
a minimum amount of $2,000,000 and shall be in an amount which is an integral
multiple of $500,000. Prior to the termination of each Interest Period with
respect to each Eurodollar Loan, Borrower shall give written notice (a "Notice
of Continuation or Conversion") in the form of Exhibit G attached hereto to
Administrative Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest Period.
Such Notice of Continuation or Conversion shall be given to Administrative
Agent at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then expiring.
If Borrower shall specify a Eurodollar Loan, such Notice of Continuation or
Conversion shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definition of such term) selected by
Borrower. Each Notice of Continuation or Conversion shall be irrevocable and
effective upon notification thereof to Administrative Agent. If the required
Notice of Continuation or Conversion shall not have been timely received by
Administrative Agent, Borrower shall be deemed to have elected that the
principal of the Eurodollar Loan subject to the Interest Period then expiring
be Converted to the Base Rate Loan upon the expiration of such Interest
Period and Borrower will be deemed to have given Administrative Agent notice
of such election. Subject to the limitations set forth in this Section 2.5(c)
on the amount and number of Eurodollar Loans, Borrower shall have the right to
Convert all or any part of the Base Rate Loan to a Eurodollar Loan by giving
Administrative Agent a Notice of Continuation or Conversion of such election
at least three (3) Eurodollar Business Days prior to the date on which
Borrower elects to make such Conversion (a "Conversion Date"). The Conversion
Date selected by Borrower shall be a Eurodollar Business Day. Notwithstanding
anything in this Section 2.5 to the contrary, no portion of the principal of
the Base Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar
Loan may be Continued as such when any Default or Event of Default has
occurred and is continuing, but each such Eurodollar Loan shall be
automatically Converted to the Base Rate Loan on the last day of each
applicable Interest Period. Borrower shall not be permitted to have more than
five (5) Eurodollar Loans in effect at any time.
(d) Notwithstanding anything to the contrary set forth in Section
2.5(a) or Section 2.5(b) above, after the occurrence of an Event of Default,
interest shall accrue on the outstanding principal balance of the Revolving
Loan, and to the extent permitted by Law, on the past due but unpaid interest
on the Revolving Loan and all other past due Obligations from the period from
and including the occurrence of such Event of Default to but excluding the
date the same is remedied at a rate per annum equal to the lesser of (a) the
Default Rate, and (b) the Maximum Lawful Rate.
(e) Administrative Agent shall determine each interest rate
applicable to the Revolving Loan in accordance with the terms hereof.
Administrative Agent shall promptly notify Borrower and Banks by telex,
telecopy or cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Base Rate or the Eurodollar Rate
hereunder (the "contract rate") is limited to the Maximum Lawful Rate, any
subsequent reductions in the contract rate shall not reduce the rate of
interest on the Revolving Loan below the Maximum Lawful Rate until the total
amount of interest accrued equals the amount of interest which would have
accrued if the contract rate had at all times been in effect. In the event
that at maturity (stated or by acceleration), or at final payment of any Note,
the total amount of interest paid or accrued on such Note is less than the
amount of interest which would have accrued if the contract rate had at all
times been in effect with respect thereto, then at such time, to the extent
permitted by law, Borrower shall pay to the holder of such Note an amount
equal to the difference between (i) the lesser of the amount of interest which
would have accrued if the contract rate had at all times been in effect and
the amount of interest which would have accrued if the Maximum Lawful Rate had
at all times been in effect, and (ii) the amount of interest actually paid on
such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be
computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest payable hereunder on the Base
Rate Loan shall be computed based on the actual number of days elapsed
assuming that each calendar year consisted of 365 days (or 366 days in a leap
year).
Section 2.6 Mandatory Prepayments. Upon the occurrence of any Borrowing
Base Deficiency, Borrower shall make the mandatory prepayments of the
Revolving Loan required by Section 4.5 hereof.
Section 2.7 Voluntary Prepayments. Borrower may, subject to Section
13.5 and the other provisions of this Agreement, prepay the principal of the
Revolving Loan in whole or in part. Any partial prepayment shall be in a
minimum amount of $1,000,000 and shall be in an integral multiple of $100,000.
Section 2.8 Voluntary Reduction of Commitments. Borrower may, by notice
to Administrative Agent three (3) Domestic Business Days prior to the
effective date of any such reduction, reduce the Total Commitment (and thereby
reduce the Commitment of each Bank ratably) in amounts not less than
$10,000,000 and in an amount which is an integral multiple of $10,000,000. On
the effective date of any such reduction, Borrower shall, to the extent
required as a result of such reduction, make a principal payment on the
Revolving Loan in an amount sufficient to cause the principal balance of the
Revolving Loan then outstanding to be equal to or less than the Total
Commitment as thereby reduced. Notwithstanding the foregoing, Borrower shall
not be permitted to voluntarily reduce the Total Commitment to an amount less
than the aggregate Letter of Credit Exposure of all Banks.
Section 2.9 Termination of Commitments; Final Maturity of Revolving
Loan. The Total Commitment (and the Commitment of each Bank) shall terminate,
and the entire outstanding principal balance of the Revolving Loan, all
interest accrued thereon, all accrued but unpaid fees hereunder and all other
outstanding Obligations shall be due and payable in full on the Termination
Date.
Section 2.10 Application of Payments. Each repayment pursuant to
Section 2.6, Section 2.7, Section 2.8, Section 2.9, and Section 4.5 shall be
made together with accrued interest on the amount repaid to the date of
payment, and shall be applied in accordance with Section 3.2 and the other
provisions of this Agreement.
Section 2.11 Commitment Fee. On the Termination Date, on each Quarterly
Date prior to the Termination Date, and, in the event the Commitments are
terminated in their entirety prior to the Termination Date, on the date of
such termination, Borrower shall pay to Administrative Agent, for the ratable
benefit of each Bank based on each Bank's Commitment Percentage, a commitment
fee equal to the Commitment Fee Percentage in effect from day to day (applied
on a per annum basis and computed on the basis of actual days elapsed and as
if each calendar year consisted of 365 days (or 366 days in a leap year)) of
the average daily Availability for the Fiscal Quarter (or portion thereof)
ending on the date such payment is due.
Section 2.12 Agency and other Fees. Borrower shall pay to
Administrative Agent and its Affiliates such other fees and amounts as
Borrower shall be required to pay to Administrative Agent and its Affiliates
from time to time pursuant to any separate agreement between Borrower and
Administrative Agent or such Affiliates. Such fees and other amounts shall be
retained by Administrative Agent and its Affiliates, and no Bank (other than
Bank One) shall have any interest therein. Administrative Agent may disburse
any fees paid to Administrative Agent and its Affiliates pursuant to this
Section 2.12 in any manner Administrative Agent desires in its sole
discretion.
ARTICLE III
GENERAL PROVISIONS
Section 3.1 Delivery and Endorsement of Notes. On the Closing Date,
Administrative Agent shall deliver to each Bank the Note payable to such Bank.
Each Bank may endorse (and prior to any transfer of its Note shall endorse) on
the schedules attached and forming a part thereof appropriate notations to
evidence the date and amount of its Commitment Percentage of each Borrowing,
the Interest Period applicable thereto, and the date and amount of each
payment of principal made by Borrower with respect thereto; provided that the
failure by any Bank to so endorse its Note shall not affect the liability of
Borrower for the repayment of all amounts outstanding under such Note together
with interest thereon. Each Bank is hereby irrevocably authorized by Borrower
to endorse its Note and to attach to and make a part of any such Note a
continuation of any such schedule as required.
Section 3.2 General Provisions as to Payments.
(a) Borrower shall make each payment of principal of, and interest
on, the Revolving Loan, and all fees payable hereunder shall be paid, not
later than 12:00 noon (Chicago, Illinois time) on the date when due, in
Federal or other funds immediately available in Chicago, Illinois, to
Administrative Agent at its address set forth on Schedule 1.1 hereto, without
defense, set-off, deduction or counterclaim. Administrative Agent will
promptly (and if such payment is received by Administrative Agent by 10:00
a.m. (Chicago, Illinois time), and otherwise if reasonably possible, on the
same Domestic Business Day) distribute to each Bank its Commitment Percentage
of each such payment received by Administrative Agent for the account of
Banks. Whenever any payment of principal of, or interest on, the Base Rate
Loan or of fees shall be due on a day which is not a Domestic Business Day,
the date for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on, any
portion of any Eurodollar Loan shall be due on a day which is not a Eurodollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Eurodollar Business Day (subject to the provisions of the
definition of Interest Period). If the date for any payment of principal is
extended by operation of Law or otherwise, interest thereon shall be payable
for such extended time. Borrower hereby authorizes Administrative Agent to
charge from time to time against Borrower's accounts with Administrative Agent
any amount then due.
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Revolving Loan shall be applied
first to Eurodollar Loans outstanding with Interest Periods ending on the date
of such payment, then to the Base Rate Loan, and then to Eurodollar Loans next
maturing until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank shall be applied
first to the payment of all proper costs incurred by Administrative Agent in
connection with the collection thereof (including reasonable expenses and
disbursements of Administrative Agent), second to the payment of all proper
costs incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of Banks), third to the reimbursement of
any advances made by Banks to effect performance of any unperformed covenants
of any Credit Party under any of the Loan Papers, fourth to the payment of any
unpaid fees required pursuant to Section 2.12, fifth to the payment of any
unpaid fees required pursuant to Section 2.1(b) and Section 2.11, sixth, to
the payment of all accrued but unpaid interest, seventh, to the payment to
each Bank of its Commitment Percentage of the outstanding principal of the
Revolving Loan and to satisfy all obligations and liabilities then due under
Hedge Agreements, such payments to be made pro rata to each Bank owed such
Obligations in proportion to all such payments owed to all Banks in respect of
such Obligations, and eighth to establish the deposits required in Section
2.1(b). All payments received by a Bank after the occurrence of an Event of
Default for application to the principal of the Revolving Loan shall be
applied by such Bank in the manner provided in Section 3.2(b).
ARTICLE IV
BORROWING BASE
Section 4.1 Reserve Report; Proposed Borrowing Base. The aggregate
amount of credit available to Borrower under this Agreement shall be limited
by a Borrowing Base (herein so called) which shall be determined by Banks at
the times and in accordance with the standards and procedures set forth in
this Article IV. As soon as available and in any event by February 15 and
August 31 of each year, commencing February 15, 2005, Borrower shall deliver
to Administrative Agent and each Bank a Reserve Report prepared as of the
immediately preceding December 31 and June 30, respectively. Simultaneously
with the delivery to Administrative Agent and each Bank of each Reserve
Report, Borrower shall notify Administrative Agent and each Bank of the amount
of the Borrowing Base which Borrower requests become effective on the next
Redetermination Date (or such date promptly following such Redetermination
Date as Required Banks shall elect).
Section 4.2 Scheduled Redeterminations of the Borrowing Base; Procedures
and Standards. Based in part on the Reserve Reports made available to Banks
pursuant to Section 4.1, Banks shall redetermine the Borrowing Base on or
prior to the next Redetermination Date (or such date promptly thereafter as
reasonably possible based on the engineering and other information available
to Banks). Any Borrowing Base which becomes effective as a result of any
Redetermination of the Borrowing Base shall be subject to the following
restrictions: (a) such Borrowing Base shall not exceed the Borrowing Base
requested by Borrower pursuant to Section 4.1 or Section 4.3 (as applicable),
(b) such Borrowing Base shall not exceed the Total Commitment then in effect,
(c) to the extent such Borrowing Base represents an increase from the
Borrowing Base in effect prior to such Redetermination, such Borrowing Base
shall be approved by all Banks, and (d) to the extent such Borrowing Base
represents a decrease in the Borrowing Base in effect prior to such
Redetermination, or a reaffirmation of such prior Borrowing Base, such
Borrowing Base shall be approved by Required Banks. Each Redetermination
shall be made by Banks in their sole discretion. Without limiting such
discretion, Borrower acknowledges and agrees that Banks (i) may make such
assumptions regarding appropriate existing and projected pricing for
Hydrocarbons as they deem appropriate in their sole discretion, (ii) may make
such assumptions regarding projected rates and quantities of future production
of Hydrocarbons from the Mineral Interests owned by Borrower as they deem
appropriate in their sole discretion, (iii) may consider the projected cash
requirements of the Credit Parties, (iv) are not required to consider any
asset other than Proved Mineral Interests owned by Borrower which are subject
to first and prior Liens in favor of Administrative Agent for the ratable
benefit of Banks to the extent required by Section 5.1 hereof, and (v) may
make such other assumptions, considerations and exclusions as Banks deem
appropriate in the exercise of their sole discretion. It is further
acknowledged and agreed that each Bank may consider such other credit factors
as it deems appropriate in the exercise of its sole discretion and shall have
no obligation in connection with any Redetermination to approve any increase
from the Borrowing Base in effect prior to such Redetermination. Promptly
following any Redetermination of the Borrowing Base, Administrative Agent
shall notify Borrower of the amount of the Borrowing Base as redetermined,
which Borrowing Base shall be effective as of the date specified in such
notice, and shall remain in effect for all purposes of this Agreement until
the next Redetermination.
Section 4.3 Special Redetermination.
(a) In addition to Scheduled Redeterminations, (i) Borrower shall be
permitted to request a Special Redetermination of the Borrowing Base once in
each period between Scheduled Redeterminations, and (ii) Required Banks shall
be permitted to request a Special Redetermination of the Borrowing Base once
in each Fiscal Year. Any request by Required Banks pursuant to this Section
4.3(a) shall be submitted to Administrative Agent and Borrower. Any request
by Borrower pursuant to this Section 4.3(a) shall be submitted to
Administrative Agent and each Bank and at the time of such request Borrower
shall (A) deliver to Administrative Agent and each Bank a Reserve Report, and
(B) also notify Administrative Agent and each Bank of the Borrowing Base
requested by Borrower in connection with such Special Redetermination.
(b) Any Special Redetermination shall be made by Banks in accordance
with the procedures and standards set forth in Section 4.2; provided, that, no
Reserve Report will be required to be delivered to Administrative Agent and
Banks in connection with any Special Redetermination requested by Required
Banks pursuant to Section 4.3(a) above.
Section 4.4 Asset Disposition Adjustment. In addition to the
Redeterminations pursuant to Section 4.2 and Section 4.3, Required Banks shall
be permitted to redetermine the Borrowing Base in connection with, and
simultaneously with, the consummation of an Asset Disposition described in the
proviso of Section 9.5(b), and reduce the Borrowing Base by an amount equal to
the Borrowing Base value of the Borrowing Base Properties which are the
subject of such Asset Disposition (which shall be the Borrowing Base value
assigned thereto by Administrative Agent and approved by Required Banks). In
the event Required Banks elect to redetermine the Borrowing Base in accordance
with this Section 4.4, Administrative Agent shall notify Borrower promptly,
but in any event no less than one (1) Domestic Business Day prior to the
consummation of the Asset Disposition, of the amount of the Borrowing Base as
redetermined, which Borrowing Base shall be effective as of the date specified
in such notice, and shall remain in effect for all purposes of this Agreement
until the next Redetermination. Notwithstanding anything to the contrary
contained herein, Borrower agrees that any such Redetermination pursuant to
this Section 4.4 shall not be construed or deemed to be a Special
Redetermination hereunder.
Section 4.5 Borrowing Base Deficiency. To the extent a Borrowing Base
Deficiency exists after giving effect to any Redetermination (other than in
connection with a Redetermination pursuant to Section 4.4 hereof), Borrower
shall, within ten (10) days following notice thereof from Administrative
Agent, provide written notice (the "Election Notice") to Administrative Agent
stating the action which Borrower proposes to take to remedy such Borrowing
Base Deficiency, and Borrower shall thereafter, at its option, either (a)
within thirty (30) days following the delivery of the Election Notice, make a
prepayment or prepayments of principal on the Revolving Loan in an amount
sufficient to eliminate such Borrowing Base Deficiency, and if such Borrowing
Base Deficiency cannot be eliminated pursuant to this Section 4.5 by
prepayment of the Revolving Loan in full (as a result of outstanding Letter of
Credit Exposure), Borrower shall also at such time deposit with Administrative
Agent sufficient cash to be held by Administrative Agent to secure outstanding
Letter of Credit Exposure in the manner contemplated by Section 2.1(b) as
necessary to eliminate such Borrowing Base Deficiency, (b) eliminate such
Borrowing Base Deficiency by making three (3) consecutive mandatory
prepayments of principal on the Revolving Loan, each of which shall be in the
amount of one-third (1/3rd) of the amount of such Borrowing Base Deficiency,
commencing on the first Monthly Date following the delivery of the Election
Notice, and continuing on each Monthly Date thereafter, (c) within ninety (90)
days following the delivery of the Election Notice, submit (and pledge as
collateral pursuant to Article V hereof) additional oil and gas properties
owned by Borrower and its Subsidiaries for consideration in connection with
the determination of the Borrowing Base which Administrative Agent and Banks
deem sufficient in their sole discretion to eliminate such Borrowing Base
Deficiency, or (d) eliminate such Borrowing Base Deficiency through a
combination of prepayments on the Revolving Loan and submission of additional
oil and gas properties for inclusion in the Borrowing Base as set forth in
subclauses (a) and (c) above. Notwithstanding the foregoing, upon any
Redetermination of the Borrowing Base pursuant to Section 4.4 hereof which
results in a Borrowing Base Deficiency (or increase in an existing Borrowing
Base Deficiency), Borrower shall immediately make a mandatory prepayment of
principal on the Revolving Loan in an amount sufficient to eliminate such
Borrowing Base Deficiency.
Section 4.6 Initial Borrowing Base. Notwithstanding anything to the
contrary contained herein, the Borrowing Base in effect during the period
commencing on the Closing Date and ending on the effective date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.
ARTICLE V
COLLATERAL AND GUARANTEES
Section 5.1 Security.
(a) The Obligations shall be secured by first and prior Liens
(subject only to Permitted Encumbrances) covering and encumbering (i) the
Required Reserve Value of all Borrowing Base Properties, together with all
related assets and interests, including, without limitation, all operating
equipment, accounts, inventory, contract rights and all products, proceeds and
other interests relating to the ownership, operation and/or production of such
Borrowing Base Properties, and (ii) all of the issued and outstanding Equity
owned by Borrower and each Restricted Subsidiary of each Restricted
Subsidiary. On the Closing Date, Borrower shall (A) deliver to Administrative
Agent for the ratable benefit of each Bank, the Mortgages and Assignments and
Amendments to Mortgages in form and substance acceptable to Administrative
Agent and duly executed by Borrower and/or its Subsidiaries, together with
such other assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 and UCC-3 financing statements
(each duly authorized and executed, as applicable) as Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect first and
prior Liens in all Borrowing Base Properties and other interests of Borrower
required by this Section 5.1(a), (B) execute and deliver to Administrative
Agent (1) a Borrower Pledge Agreement, and (2) such UCC-1 and UCC-3 financing
statements as Administrative Agent shall request to fully evidence and perfect
the Liens created by such Borrower Pledge Agreement, and (C) deliver to
Administrative Agent the certificate(s) evidencing the issued and outstanding
Equity of each existing Subsidiary of Borrower, duly endorsed or accompanied
by appropriate blank stock powers. Borrower hereby authorizes Administrative
Agent, and its agents, successors and assigns, to file any and all necessary
financing statements under the Uniform Commercial Code, assignments or
continuation statements as necessary from time to time (in Administrative
Agent's discretion) to perfect (or continue perfection of) the Liens granted
pursuant to the Loan Papers.
(b) On or before each Redetermination Date after the Closing Date and
at such other times as Administrative Agent or Required Banks shall request or
as otherwise required hereunder, including, without limitation, pursuant to
Section 4.5 hereof, Borrower and its Restricted Subsidiaries shall execute and
deliver to Administrative Agent, for the ratable benefit of each Bank,
Mortgages in form and substance acceptable to Administrative Agent and duly
executed by Borrower and any such Restricted Subsidiary (as applicable)
together with such other assignments, conveyances, amendments, agreements and
other writings, including, without limitation, UCC-1 financing statements
(each duly authorized and executed) as Administrative Agent shall deem
necessary or appropriate to grant, evidence and perfect the Liens required by
Section 5.1(a) preceding with respect to Borrowing Base Properties acquired by
Borrower and its Restricted Subsidiaries subsequent to the last date on which
Borrower or any such Restricted Subsidiary was required to execute and deliver
Mortgages pursuant to this Section 5.1(b), or which, for any other reason are
not the subject of valid, enforceable, perfected first priority Liens (subject
only to Permitted Encumbrances) in favor of Administrative Agent for the
ratable benefit of Banks.
(c) At any time Borrower or any of its Subsidiaries is required to
execute and deliver Mortgages and/or Assignments and Amendments to Mortgages
to Administrative Agent pursuant to this Section 5.1, Borrower shall also
deliver to Administrative Agent such opinions of counsel (including, if so
requested, title opinions addressed to Administrative Agent) and other
evidence of title as Administrative Agent shall deem necessary or appropriate
to verify (i) Borrower's or such Subsidiary's title to the Required Reserve
Value of the Proved Mineral Interests which are subject to such Mortgages, and
(ii) the validity and perfection of the Liens created by such Mortgages (as
amended by the Assignments and Amendments to Mortgages, as applicable) and
such other matters regarding such Mortgages and/or Assignments and Amendments
to Mortgages as Administrative Agent shall reasonably request.
(d) To the extent required or contemplated by the terms of Section
5.1(a)(ii), Borrower or any Indirect Restricted Subsidiary (as applicable)
shall execute and deliver to Administrative Agent a Borrower Pledge Agreement
or a Subsidiary Pledge Agreement (as applicable) together with (i) all
certificates (or other evidence acceptable to Administrative Agent) evidencing
the issued and outstanding Equity of any such Restricted Subsidiary of every
class owned by Borrower or such Indirect Restricted Subsidiary (as applicable)
which shall be duly endorsed or accompanied by stock powers executed in blank
(as applicable), and (ii) such UCC-1 financing statements as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect the
Liens required by Section 5.1(a)(ii) in the issued and outstanding Equity of
each such Restricted Subsidiary.
Section 5.2 Guarantees. Payment and performance of the Obligations shall
be fully guaranteed by each Restricted Subsidiary pursuant to a Facility
Guaranty, and Borrower shall cause any such applicable Restricted Subsidiary
to execute and deliver to Administrative Agent such Facility Guaranty.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Initial Borrowing and Participation in Letter
Credit Exposure. The obligation of each Bank to loan its Commitment
Percentage of the initial Borrowing hereunder and the obligation of
Administrative Agent to issue (or cause another Bank to issue) any Letter of
Credit issued hereunder is subject to the satisfaction of each of the
following conditions:
(a) Closing Deliveries. Administrative Agent shall have received
each of the following documents, instruments and agreements, each of which
shall be in form and substance and executed in such counterparts as shall be
acceptable to Administrative Agent and each Bank and each of which shall,
unless otherwise indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the amount of
such Bank's Commitment, duly executed by Borrower;
(ii) the Mortgages and Assignments and Amendments to Mortgages to
be executed on the Closing Date pursuant to Section 5.1(a), duly executed and
delivered by Borrower and each Subsidiary of Borrower (as applicable),
together with such other assignments, conveyances, amendments, agreements and
other writings, including, without limitation, UCC-1 financing statements, tax
affidavits and applicable department of revenue documentation, in form and
substance satisfactory to Administrative Agent, creating first and prior Liens
in all Borrowing Base Properties;
(iii) Facility Guarantees duly executed by each existing Restricted
Subsidiary of Borrower;
(iv) a Borrower Pledge Agreement duly executed by Borrower together
with (A) certificates evidencing one hundred percent (100%) of the issued and
outstanding Equity of each existing Restricted Subsidiary of Borrower of every
class (all certificates delivered pursuant to this Section 6.1(a)(iv) shall be
duly endorsed or accompanied by duly executed blank stock powers), and (B)
such financing statements (duly authorized) as Administrative Agent shall
request to perfect the Liens granted pursuant to such Borrower Pledge
Agreement;
(v) such financing statements (including, without limitation, the
financing statements referenced in subclauses (ii) and (iv) above) in form and
substance acceptable to Administrative Agent (duly authorized) as
Administrative Agent shall specify to fully evidence and perfect all Liens
contemplated by the Loan Papers, all of which shall be filed of record in such
jurisdictions as Administrative Agent shall require in its sole discretion;
(vi) a copy of the articles or certificate of incorporation,
certificate of organization, or comparable charter documents, and all
amendments thereto, of each Credit Party accompanied by a certificate that
such copy is true, correct and complete, and dated within ten (10) days of the
Closing Date (or within such other period as acceptable to Administrative
Agent), issued by the appropriate Governmental Authority of the jurisdiction
of incorporation of each such Credit Party, and accompanied by a certificate
of the Secretary or comparable Authorized Officer of each such Credit Party
that such copy is true, correct and complete on the Closing Date;
(vii) a copy of the bylaws, regulations or comparable charter
documents, and all amendments thereto, of each Credit Party accompanied by a
certificate of the Secretary or comparable Authorized Officer of each such
Credit Party that such copy is true, correct and complete as of Closing Date;
(viii) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as Administrative
Agent has requested relating to the existence of each Credit Party and to the
effect that each such Credit Party is in good standing with respect to the
payment of franchise and similar Taxes and is duly qualified to transact
business in such jurisdictions;
(ix) a certificate of incumbency of all officers of each Credit
Party who will be authorized to execute or attest to any Loan Paper, dated the
Closing Date, executed by the Secretary or comparable Authorized Officer of
each such Credit Party;
(x) copies of resolutions or comparable authorizations approving
the Loan Papers and authorizing the transactions contemplated by this
Agreement and the other Loan Papers, duly adopted by the Board of Directors
(or comparable authority) of each Credit Party accompanied by certificates of
the Secretary or comparable officer of each such Credit Party that such copies
are true and correct copies of resolutions duly adopted at a meeting of or (if
permitted by applicable Law and, if required by such Law, by the bylaws or
comparable charter documents of each such Credit Party, as applicable) by the
unanimous written consent of the Board of Directors (or comparable authority)
of each such Credit Party, as applicable, and that such resolutions constitute
all the resolutions adopted with respect to such transactions, have not been
amended, modified, or revoked in any respect, and are in full force and effect
as of the Closing Date;
(xi) an opinion of Xxxx Xxxxx P.C., dated the Closing Date,
favorably opining as to the enforceability of each of the Loan Papers and
otherwise in form and substance satisfactory to Administrative Agent and
Banks;
(xii) an opinion of special counsel for Administrative Agent in
each of Alabama, Louisiana, New Mexico and Wyoming, each dated the Closing
Date, favorably opining as to the enforceability of the applicable Mortgages
and Assignments and Amendments to Mortgages in each applicable State and
otherwise in form and substance satisfactory to Administrative Agent and
Banks;
(xiii) a certificate signed by an Authorized Officer of Borrower
stating that (a) the representations and warranties contained in this
Agreement and the other Loan Papers are true and correct in all respects, and
(b) no Default or Event of Default has occurred and is continuing;
(xiv) a Certificate of Ownership Interests signed by an Authorized
Officer of Borrower in the form of Exhibit H attached hereto;
(xv) copies of all reports in Borrower's files (or otherwise
reasonably available to Borrower) pertaining to Borrower's Mineral Interests
and operations, which report(s) shall not reflect the existence of facts or
circumstances which would constitute a material violation of any Applicable
Environmental Law or which are likely to result in a material liability to any
Credit Party; and
(xvi) certificates from Borrower's insurance broker setting forth
the insurance maintained by Borrower and stating that such insurance is in
full force and effect, and which certificates shall evidence that such
insurance complies with the requirements of Section 8.6.
(b) Title Review. Administrative Agent or its counsel shall have
completed a review of title to the Required Reserve Value of all Borrowing
Base Properties and such review shall not have revealed any condition or
circumstance which would reflect that the representations and warranties
contained in Section 7.8 and Section 7.9 hereof are inaccurate in any respect.
(c) Closing Transactions. Subject only to the disbursement and
application of the initial Borrowing, the Closing Transactions shall have
occurred (or Administrative Agent shall be satisfied that such transactions
will occur simultaneously therewith).
(d) No Material Adverse Change. No Material Adverse Change shall
have occurred.
(e) No Legal Prohibition. The transactions contemplated by this
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent or any Bank to any material adverse change in its assets,
liabilities, financial condition, operations or prospects or subject any
Credit Party to a Material Adverse Change.
(f) No Litigation. No litigation, arbitration or similar proceeding
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
(g) Closing Fees. Borrower shall have paid to Administrative Agent
for the ratable benefit of each Bank, and shall have paid to Administrative
Agent and its Affiliates (for its own account), the fees to be paid on the
Closing Date pursuant to Section 2.12.
(h) Other Matters. All matters related to this Agreement, the other
Loan Papers, the Closing Transactions, and the Credit Parties shall be
acceptable to each Bank in its sole discretion, and each Credit Party shall
have delivered to Administrative Agent and each Bank such evidence as they
shall request to substantiate any matters related to this Agreement and the
other Loan Papers as Administrative Agent or any Bank shall request.
Section 6.2 Conditions to Each Borrowing and each Letter of Credit. The
obligation of each Bank to loan its Commitment Percentage of each Borrowing
and the obligation of any Letter of Credit Issuer to issue, extend, amend or
renew any Letter of Credit on the date such Letter of Credit is to be issued,
extended, amended or renewed is subject to the further satisfaction of the
following conditions:
(a) timely receipt by Administrative Agent of a Request for Borrowing
or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall have
occurred and be continuing and the funding of such Borrowing or the issuance
of the requested Letter of Credit (as applicable) shall not cause a Default or
Event of Default;
(c) the representations and warranties of each Credit Party contained
in this Agreement and the other Loan Papers shall be true and correct on and
as of the date of such Borrowing or issuance of such Letter of Credit (as
applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on
the date of such Borrowing and the date of issuance of each Letter of Credit
as to the facts specified in Section 6.2(b) through Section 6.2(f).
Section 6.3 Post-Closing Deliveries. Borrower shall deliver, or cause
to be delivered, to Administrative Agent and its counsel each document,
instrument or agreement, and take each action, or cause to be taken each
action, specified in Schedule 6.3 hereto, in each case on or before the date
specified in such Schedule 6.3.
Section 6.4 Materiality of Conditions. Each condition precedent herein
is material to the transactions contemplated herein, and time is of the
essence in respect of each thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank
that each of the following statements is true and correct on the date hereof,
will be true and correct on the Closing Date after giving effect to the
Closing Transactions, and will be true and correct on the occasion of each
Borrowing and the issuance of each Letter of Credit:
Section 7.1 Corporate Existence and Power. Each Credit Party (a) is a
corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the
Laws of its jurisdiction of incorporation or organization, (b) has all
corporate, partnership or limited liability company power (as applicable) and
all material governmental licenses, authorizations, consents and approvals
required to carry on its businesses as now conducted and as proposed to be
conducted, and (c) is duly qualified to transact business as a foreign
corporation, partnership or limited liability company (as applicable) in each
jurisdiction where a failure to be so qualified could reasonably be expected
to have a Material Adverse Effect.
Section 7.2 Credit Party and Governmental Authorization; Contravention.
The execution, delivery and performance of this Agreement and the other Loan
Papers by each Credit Party (to the extent each Credit Party is a party to
this Agreement and such Loan Papers) are within such Credit Party's corporate,
partnership or limited liability company powers (as applicable), when executed
will be duly authorized by all necessary corporate, partnership or limited
liability company action (as applicable), require no action by or in respect
of, or filing with, any Governmental Authority (except for filings and
recordings to perfect Liens granted pursuant to such Loan Papers) and do not
contravene, or constitute a default under, any provision of applicable Law
(including, without limitation, the Margin Regulations) or of the articles or
certificate of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents of any Credit Party or of any agreement,
judgment, injunction, order, decree or other instrument binding upon any
Credit Party or result in the creation or imposition of any Lien on any asset
of any Credit Party other than the Liens securing the Obligations.
Section 7.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of Borrower; the other Loan Papers when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of each Credit Party executing the same; and each Loan Paper is,
or when executed and delivered, will be, enforceable against each Credit Party
which executes the same in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
Laws affecting creditors rights generally, and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
Section 7.4 Financial Information.
(a) The most recent annual audited consolidated balance sheet of
Borrower and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, fairly present, in conformity with GAAP, the consolidated financial
position of Borrower as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated balance sheet of
Borrower delivered to Banks, and the related unaudited consolidated statements
of operations and cash flows for the portion of Borrower's Fiscal Year then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in Section 7.4(a), the consolidated
financial position of Borrower as of such date and its consolidated results of
operations and cash flows for such portion of Borrower's Fiscal Year.
(c) Since the date of Borrower's most recent annual and quarterly
consolidated balance sheet and consolidated statements of operations and cash
flow delivered to Banks, there has been no material adverse change in the
assets, liabilities, financial position, results of operations or prospects of
Borrower, individually, or the Credit Parties, taken as a whole.
Section 7.5 Litigation. Except for matters disclosed on Schedule 7.5
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could reasonably be expected to have
a Material Adverse Effect or which could in any manner draw into question the
validity of the Loan Papers.
Section 7.6 ERISA. No Credit Party maintains or has ever maintained or
been obligated to contribute to any Plan covered by Title IV of ERISA or
subject to the funding requirements of section 412 of the Code or section 302
of ERISA. Each Plan maintained by any Credit Party or any ERISA Affiliate of
any Credit Party is in compliance in all material respects with all applicable
Laws. Except in such instances where an omission or failure would not have a
Material Adverse Effect, (a) all returns, reports and notices required to be
filed with any regulatory agency with respect to any Plan have been filed
timely, and (b) no Credit Party nor any ERISA Affiliate of any Credit Party
has failed to make any contribution or pay any amount due or owing as required
by the terms of any Plan. There are no pending or, to the best of Borrower's
knowledge, threatened claims, lawsuits, investigations or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against, and no Credit Party nor any ERISA Affiliate of any Credit Party has
knowledge of any threatened litigation or claims against, the assets of any
Plan or its related trust or against any fiduciary of a Plan with respect to
the operation of such Plan that are likely to result in liability of any
Credit Party having a Material Adverse Effect. Except in such instances where
an omission or failure would not have a Material Adverse Effect, each Plan
that is intended to be "qualified" within the meaning of section 401(a) of the
Code is, and has been during the period from its adoption to date, so
qualified, both as to form and operation and all necessary governmental
approvals, including a favorable determination as to the qualification under
the Code of such Plan and each amendment thereto, have been or will be timely
obtained. No Credit Party nor any ERISA Affiliate of any Credit Party has
engaged in any prohibited transactions, within the meaning of section 406 of
ERISA or section 4975 of the Code, in connection with any Plan which would
result in liability of any Credit Party having a Material Adverse Effect.
Except as set forth on Schedule 7.6 attached hereto, no Credit Party maintains
or contributes to any Plan that provides a post-employment health benefit,
other than a benefit required under section 601 of ERISA, or maintains or
contributes to a Plan that provides health benefits that is not fully funded
except where the failure to fully fund such Plan could not reasonably be
expected to have a Material Adverse Effect. No Credit Party maintains, has
established or has ever participated in a multiple employer welfare benefit
arrangement within the meaning of section 3(40)(A) of ERISA.
Section 7.7 Taxes and Filing of Tax Returns. Each Credit Party has
filed all tax returns required to have been filed and has paid all Taxes shown
to be due and payable on such returns, including interest and penalties, and
all other Taxes which are payable by such party, to the extent the same have
become due and payable, other than Taxes with respect to which a failure to
pay would not have a Material Adverse Effect. No Credit Party knows of any
proposed material Tax assessment against it and all Tax liabilities of each
Credit Party are adequately provided for. No income tax liability of any
Credit Party has been asserted by the Internal Revenue Service or other
Governmental Authority for Taxes in excess of those already paid.
Section 7.8 Ownership of Properties Generally. Except for Immaterial
Title Deficiencies, each Credit Party has good and defensible title to all
material properties and assets purported to be owned by it, including, without
limitation, all assets reflected in the balance sheets referred to in Section
7.4(a) and Section 7.4(b) and all assets which are used by the Credit Parties
in the operation of their respective businesses, and none of such properties
or assets is subject to any Lien other than Permitted Encumbrances.
Section 7.9 Mineral Interests. Borrower has good and defensible title
to all Mineral Interests described in the Reserve Report, including, without
limitation, all Borrowing Base Properties, free and clear of all Liens except
Permitted Encumbrances and Immaterial Title Deficiencies. With the exception
of Immaterial Title Deficiencies, all such Mineral Interests are valid,
subsisting, and in full force and effect, and all rentals, royalties, and
other amounts due and payable in respect thereof have been duly paid. Without
regard to any consent or non-consent provisions of any joint operating
agreement covering any of Borrower's Proved Mineral Interests, and with the
exception of Immaterial Title Deficiencies, Borrower's share of (a) the costs
for each Proved Mineral Interest described in the Reserve Report is not
greater than the decimal fraction set forth in the Reserve Report, before and
after payout, as the case may be, and described therein by the respective
designations "working interests," "WI," "gross working interest," "GWI," or
similar terms, and (b) production from, allocated to, or attributed to each
such Proved Mineral Interest is not less than the decimal fraction set forth
in the Reserve Report, before and after payout, as the case may be, and
described therein by the designations "net revenue interest," "NRI," or
similar terms. Each well drilled in respect of each Proved Producing Mineral
Interest described in the Reserve Report (y) is capable of, and is presently,
producing Hydrocarbons in commercially profitable quantities, and Borrower is
currently receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders,
and (z) has been drilled, bottomed, completed, and operated in compliance with
all applicable Laws and no such well which is currently producing Hydrocarbons
is subject to any penalty in production by reason of such well having produced
in excess of its allowable production.
Section 7.10 Licenses, Permits, Etc. Except as disclosed on Schedule
7.10 attached hereto, each Credit Party possesses such valid franchises,
certificates of convenience and necessity, operating rights, licenses,
permits, consents, authorizations, exemptions and orders of Governmental
Authorities, as are necessary to carry on its business as now conducted and as
proposed to be conducted, except to the extent a failure to obtain any such
item would not have a Material Adverse Effect.
Section 7.11 Compliance with Law. The business and operations of each
Credit Party have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which do not (either
individually or collectively) have a Material Adverse Effect.
Section 7.12 Full Disclosure. All information heretofore furnished by
each Credit Party to Administrative Agent or any Bank for purposes of or in
connection with this Agreement, any Loan Paper or any transaction contemplated
hereby or thereby is, and all such information hereafter furnished by or on
behalf of any Credit Party to Administrative Agent or any Bank will be, true,
complete and accurate in every material respect. The Credit Parties have
disclosed or have caused to be disclosed to Banks in writing any and all facts
which might reasonably be expected to result in a Material Adverse Change.
Section 7.13 Organizational Structure; Nature of Business. As of the
Closing Date, Borrower has no direct, wholly-owned Subsidiaries, other than
DEC and Piper. Borrower, DEC and Piper are primarily engaged in the business
of acquiring, exploring, developing and operating Mineral Interests and the
production, processing and marketing of Hydrocarbons therefrom and related
activities. Borrower owns approximately ninety-two percent (92%) of the
issued and outstanding Equity of Amber. Amber has no assets other than a
right to receive a portion of the proceeds from certain litigation against the
Federal Government relative to offshore California. Borrower owns a fifty
percent (50%) membership interest in Big Dog. Big Dog is engaged in the
drilling business and, as of the date hereof, owns three (3) operating
drilling rigs. Borrower is the general partner of Castle, which general
partnership interest was acquired by Borrower at the time it acquired all of
the domestic oil and gas properties of Castle Energy Corporation. Borrower
owns a fifty percent (50%) membership interest in Shark. Shark owns trucks
necessary to move drilling rigs and other equipment for Big Dog. Schedule
7.13 attached hereto accurately reflects (i) the jurisdiction of incorporation
or organization of each Credit Party, (ii) each jurisdiction in which each
Credit Party is qualified to transact business as a foreign corporation,
foreign partnership or foreign limited liability company, (iii) the
authorized, issued and outstanding Equity of each Credit Party, and (iv) all
outstanding warrants, options, subscription rights, convertible securities or
other rights to purchase Equity of each Credit Party.
Section 7.14 Environmental Matters. Except for matters disclosed on
Schedule 7.14 attached hereto, no operation conducted by any Credit Party and
no real or personal property now or previously owned or leased by any Credit
Party (including, without limitation, any Credit Party's Mineral Interests)
and no operations conducted thereon, and to any Credit Parties' knowledge, no
operations of any prior owner, lessee or operator of any such properties, is
or has been in violation of any Applicable Environmental Law other than
violations which neither individually nor in the aggregate will have a
Material Adverse Effect. Except for matters disclosed on Schedule 7.14
attached hereto, no Credit Party, nor any such property nor operation is the
subject of any existing, pending or, to any Credit Parties' knowledge,
threatened Environmental Complaint which could, individually or in the
aggregate, have a Material Adverse Effect. All notices, permits, licenses,
and similar authorizations, required to be obtained or filed in connection
with the ownership of each tract of real property or operations of any Credit
Party thereon and each item of personal property owned, leased or operated by
any Credit Party, including, without limitation, notices, licenses, permits
and authorizations required in connection with any past or present treatment,
storage, disposal, or release of Hazardous Substances into the environment,
have been duly obtained or filed except to the extent the failure to obtain or
file such notices, licenses, permits and authorizations would not have a
Material Adverse Effect. All Hazardous Substances, generated at each tract of
real property and by each item of personal property owned, leased or operated
by any Credit Party have been transported, treated, and disposed of only by
carriers or facilities maintaining valid permits under RCRA (as hereinafter
defined) and all other Applicable Environmental Laws for the conduct of such
activities except in such cases where the failure to obtain such permits would
not, individually or in the aggregate, have a Material Adverse Effect. Except
for matters disclosed on Schedule 7.14 attached hereto, there have been no
Hazardous Discharges which were not in compliance with Applicable
Environmental Laws other than Hazardous Discharges which would not,
individually or in the aggregate, have a Material Adverse Effect. Except for
matters disclosed on Schedule 7.14 attached hereto, no Credit Party has any
contingent liability in connection with any Hazardous Discharge which could
reasonably be expected to have a Material Adverse Effect. As used in this
Section 7.14, the term "RCRA" shall mean the Resource Conservation and
Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Recovery Act of 1976, as amended by the Solid Waste Disposal Act
of 1980, and the Hazardous and Solid Waste Amendments of 1984, as the same may
be further amended and in effect from time to time.
Section 7.15 Burdensome Obligations. No Credit Party, nor any of the
properties of any Credit Party, is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of their properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to have a Material Adverse Effect. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement (other than
the Loan Papers) or subject to any order of any Governmental Authority which
prohibits or restricts in any way the right of such Credit Party or any
Restricted Subsidiary to make Distributions.
Section 7.16 Fiscal Year. As of the Closing Date, Borrower's Fiscal
Year is July 1 through June 30.
Section 7.17 No Default. Neither a Default nor an Event of Default has
occurred or will exist after giving effect to the transactions contemplated by
this Agreement or the other Loan Papers.
Section 7.18 Government Regulation. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Credit Party of Debt, including, but not limited to Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
Section 7.19 Insider. No Credit Party is, and no Person having
"control" (as that term is defined in 12 U.S.C. section 375(b) or regulations
promulgated thereunder) of any Credit Party is an "executive officer,"
"director" or "shareholder" of any Bank or any bank holding company of which
any Bank is a Subsidiary or of any Subsidiary of such bank holding company.
Section 7.20 Gas Balancing Agreements and Advance Payment Contracts. On
the date of this Agreement, (a) there is no Material Gas Imbalance, and (b)
the aggregate amount of all Advance Payments received by any Credit Party
under Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $500,000.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or
any amount payable under any Note remains unpaid or any Letter of Credit
remains outstanding:
Section 8.1 Information. Borrower will deliver, or cause to be
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90) days (or
such shorter time as required to be filed with the SEC) after the end of each
Fiscal Year, consolidated balance sheets of Borrower as of the end of such
Fiscal Year and the related consolidated statements of income and statements
of cash flow for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all reported by Borrower in
accordance with GAAP and audited by a firm of independent public accountants
of nationally recognized standing and acceptable to Administrative Agent;
(b) as soon as available and in any event within forty-five (45) days
(or such shorter time as required to be filed with the SEC) after the end of
each of the first three (3) Fiscal Quarters of each Fiscal Year, consolidated
balance sheets of Borrower as of the end of such Fiscal Quarter and the
related consolidated statements of income and statements of cash flow for such
quarter and for the portion of Borrower's Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in comparative form the figures for
the corresponding quarter and the corresponding portion of Borrower's previous
Fiscal Year; all financial statements delivered pursuant to this Section
8.1(b) shall be certified as to fairness of presentation, GAAP (except for the
absence of footnotes and normal year end adjustments) and consistency by a
Financial Officer of Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Section 8.1(a) and Section 8.1(b) a certificate of
the principal executive and Financial Officer of Borrower in the form of
Exhibit I attached hereto, (i) setting forth in reasonable detail the
calculations required to establish whether Borrower was in compliance with the
requirements of Article X on the date of such financial statements, (ii)
stating whether there exists on the date of such certificate any Default and,
if any Default then exists, setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto, (iii)
stating whether or not such financial statements fairly reflect in all
material respects the results of operations and financial condition of
Borrower as of the date of the delivery of such financial statements and for
the period covered thereby, (iv) setting forth (A) whether as of such date
there is a Material Gas Imbalance and, if so, setting forth the amount of net
gas imbalances under Gas Balancing Agreements to which Borrower is a party or
by which any Mineral Interests owned by Borrower is bound, and (B) the
aggregate amount of all Advance Payments received under Advance Payment
Contracts to which Borrower is a party or by which any Mineral Interests owned
by Borrower is bound which have not been satisfied by delivery of production,
if any, (v) setting forth a summary of the Hedge Transactions to which
Borrower is a party on such date, and (vi) setting forth the other information
described in Exhibit I attached hereto;
(d) promptly upon the filing thereof, copies of all final
registration statements, post effective amendments thereto and annual,
quarterly or special reports which any Credit Party shall have filed with the
SEC;
(e) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating (i) any potential, actual or alleged
non-compliance with or violation of the requirements of any Applicable
Environmental Law which could result in liability to any Credit Party for
fines, clean up or any other remediation obligations or any other liability in
excess of $500,000 in the aggregate; (ii) any threatened Hazardous Discharge
which Hazardous Discharge would impose on any Credit Party a duty to report to
a Governmental Authority or to pay cleanup costs or to take remedial action
under any Applicable Environmental Law which could result in liability to any
Credit Party for fines, clean up and other remediation obligations or any
other liability in excess of $500,000 in the aggregate; or (iii) the existence
of any Lien arising under any Applicable Environmental Law securing any
obligation to pay fines, clean up or other remediation costs or any other
liability in excess of $500,000 in the aggregate. Without limiting the
foregoing, each Credit Party shall provide to Banks promptly upon receipt of
same by any Credit Party copies of all environmental consultants or engineers
reports received by any Credit Party which would render the representation and
warranty contained in Section 7.14 untrue or inaccurate in any respect;
(f) in the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 8.1(e) hereof or Administrative Agent
or any Bank otherwise learns of any event or condition under which any such
notice would be required, then, upon request of Required Banks, Borrower shall
within thirty (30) days of such request, cause to be furnished to
Administrative Agent and each Bank a report by an environmental consulting
firm acceptable to Administrative Agent and Required Banks, stating that a
review of such event, condition or circumstance has been undertaken (the scope
of which shall be acceptable to Administrative Agent and Required Banks) and
detailing the findings, conclusions and recommendations of such consultant.
Borrower shall bear all expenses and costs associated with such review and
updates thereof;
(g) immediately upon any Authorized Officer of any Credit Party
becoming aware of the occurrence of any Default, a certificate of an
Authorized Officer of Borrower setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto;
(h) no later than February 15 and August 31 of each year, commencing
February 15, 2005, reports of production volumes, revenue, expenses and
product prices for all oil and gas properties owned by Borrower with a
Recognized Value of $250,000 or more for the periods of six (6) months ending
the preceding December 31 and June 30, respectively. Such reports shall be
prepared on an accrual basis and shall be reported on a field by field basis;
(i) promptly notify Banks of any Material Adverse Change;
(j) promptly notify Banks of any material litigation involving any
Credit Party;
(k) promptly notify Banks of any change in Borrower's Fiscal Year
from that reflected in Section 7.16 hereof; and
(l) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent, at
the request of any Bank, may reasonably request.
Section 8.2 Business of Credit Parties. The primary business of the
Credit Parties will be (and will continue to be) the acquisition, exploration,
development and operation of Mineral Interests and the production, processing
and marketing of Hydrocarbons therefrom and related activities.
Section 8.3 Maintenance of Existence. Borrower shall, and shall cause
each other Credit Party to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of
incorporation or organization, and (b) maintain its good standing and
qualification to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could have a
Material Adverse Effect.
Section 8.4 Title Data. In addition to the title information required
by Section 5.1(c) and Section 6.1(b) hereof, Borrower shall, upon the request
of Required Banks, cause to be delivered to Administrative Agent such title
opinions and other information regarding title to Mineral Interests owned by
Borrower as are appropriate to determine the status thereof.
Section 8.5 Right of Inspection. Borrower will permit, and will cause
each other Credit Party to permit, any officer, employee or agent of
Administrative Agent to visit and inspect any of the assets of any Credit
Party, examine each Credit Party's books of record and accounts, take copies
and extracts therefrom, and discuss the affairs, finances and accounts of each
Credit Party with such Credit Party's officers, accountants and auditors, all
at such reasonable times and as often as Administrative Agent may desire, all
at the expense of Borrower.
Section 8.6 Maintenance of Insurance. Borrower will, and will cause each
other Credit Party to, at all times maintain or cause to be maintained
insurance covering such risks as are customarily carried by businesses
similarly situated, including, without limitation, the following: (a)
workmen's compensation insurance; (b) employer's liability insurance; (c)
comprehensive general public liability and property damage insurance; (d)
insurance against (other than losses or damage to property owned by Borrower
which is self insured) losses customarily insured against as a result of
damage by fire, lightning, hail, tornado, explosion and other similar risk;
and (e) comprehensive automobile liability insurance. All loss payable
clauses or provisions in all policies of insurance maintained by any Credit
Party pursuant to this Section 8.6 shall be endorsed in favor of and made
payable to Administrative Agent for the ratable benefit of Banks, as their
interests may appear. Administrative Agent shall, during the continuance of
an Event of Default, have the right, for the ratable benefit of Banks, to
collect, and Borrower hereby assigns to Administrative Agent for the ratable
benefit of Banks (and hereby agrees to cause each other Credit Party to
assign), any and all monies that may become payable under any such policies of
insurance by reason of damage, loss or destruction of any of property which
stands as security for the Obligations or any part thereof, and Administrative
Agent may, during the continuance of an Event of Default, at its election,
either apply for the ratable benefit of Banks all or any part of the sums so
collected toward payment of the Obligations, whether or not such Obligations
are then due and payable, in such manner as Administrative Agent may elect or
release same to the applicable Credit Party.
Section 8.7 Payment of Taxes and Claims. Borrower will, and will cause
each other Credit Party to, pay (a) all Taxes imposed upon it or any of its
assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon, and (b) all material
claims (including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by Law have
or might become a Lien (other than a Permitted Encumbrance) on any of its
assets; provided, however, no payment of Taxes or claims shall be required if
(i) the amount, applicability or validity thereof is currently being contested
in good faith by appropriate action promptly initiated and diligently
conducted in accordance with good business practices and no material part of
the property or assets of Borrower, and no part of the assets of any
Subsidiary of Borrower which would be material to Borrower, is subject to any
pending levy or execution, (ii) Borrower, and any Subsidiary of Borrower, as
and to the extent required in accordance with GAAP, shall have set aside on
their books reserves (segregated to the extent required by GAAP) deemed by
them to be adequate with respect thereto, and (iii) Borrower has notified
Administrative Agent of such circumstances, in detail satisfactory to
Administrative Agent.
Section 8.8 Compliance with Laws and Documents. Borrower will, and will
cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles) of incorporation, bylaws, regulations and similar
organizational documents and all Material Agreements to which any Credit Party
is a party, if a violation, alone or when combined with all other such
violations, could reasonably be expected to have a Material Adverse Effect.
Section 8.9 Operation of Properties and Equipment.
(a) Borrower will, and will cause each other Credit Party to,
maintain, develop and operate its Mineral Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express
or implied, of all oil and gas leases relating to such Mineral Interests so
long as such Mineral Interests are capable of producing Hydrocarbons and
accompanying elements in paying quantities, except where such failure to
maintain, develop, operate, observe or comply could not reasonably be expected
to have a Material Adverse Effect.
(b) Borrower will, and will cause each other Credit Party to, comply
in all respects with all contracts and agreements applicable to or relating to
its Mineral Interest or the production and sale of Hydrocarbons and
accompanying elements therefrom, except to the extent a failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
(c) Borrower will, and will cause each other Credit Party to, at all
times maintain, preserve and keep all operating equipment used with respect to
its Mineral Interests in proper repair, working order and condition, and make
all necessary or appropriate repairs, renewals, replacements, additions and
improvements thereto so that the efficiency of such operating equipment shall
at all times be properly preserved and maintained, except where such failure
to comply could not reasonably be expected to have a Material Adverse Effect;
provided, further that, no item of operating equipment need be so repaired,
renewed, replaced, added to or improved, if Borrower shall in good faith
determine that such action is not necessary or desirable for the continued
efficient and profitable operation of the business of such Credit Party.
Section 8.10 Environmental Law Compliance. Except to the extent a
failure to comply could not reasonably be expected to have a Material Adverse
Effect, Borrower will, and will cause each other Credit Party to, comply with
all Applicable Environmental Laws, including, without limitation, (a) all
licensing, permitting, notification and similar requirements of Applicable
Environmental Laws, and (b) all provisions of all Applicable Environmental
Laws regarding storage, discharge, release, transportation, treatment and
disposal of Hazardous Substances. Borrower will, and will cause each other
Credit Party to, promptly pay and discharge when due all legal debts, claims,
liabilities and obligations with respect to any clean-up or remediation
measures necessary to comply with Applicable Environmental Laws.
Section 8.11 ERISA Reporting Requirements. Borrower shall furnish, or
cause to be furnished, to Administrative Agent:
(a) promptly and in any event (i) within thirty (30) days after
Borrower or any ERISA Affiliate receives notice from any regulatory agency of
the commencement of an audit, investigation or similar proceeding with respect
to a Plan, and (ii) within ten (10) days after Borrower or any ERISA Affiliate
contacts the Internal Revenue Service for the purpose of participation in a
closing agreement or any voluntary resolution program with respect to a Plan
which could reasonably be expected to have a Material Adverse Effect or knows
or has reason to know that any event with respect to any Plan of Borrower or
any ERISA Affiliate has occurred that is reasonably believed by Borrower to
potentially have a Material Adverse Effect, a written notice describing such
event and describing what action is being taken or is proposed to be taken
with respect thereto, together with a copy of any notice of such event that is
given to the PBGC;
(b) promptly and in any event within thirty (30) days after the
receipt by Borrower of a request therefor by a Bank, copies of any annual and
other report (including Schedule B thereto) with respect to a Plan filed by
Borrower or any ERISA Affiliate with the United States Department of Labor,
the Internal Revenue Service or the PBGC;
(c) notification within thirty (30) days of the effective date
thereof of any material increases in the benefits, or material change in the
funding method, of any existing Plan which is not a multiemployer plan (as
defined in section 4001(a)(3) of ERISA), or the establishment of any material
new Plans, or the commencement of contributions to any Plan to which Borrower
or any ERISA Affiliate was not previously contributing; and
(d) promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Plan, and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not reasonably be expected to have a Material Adverse Effect.
Section 8.12 Additional Documents. Borrower will, and will cause each
other Credit Party to, cure promptly any defects in the creation and issuance
of each Note, and the execution and delivery of this Agreement and the other
Loan Papers and, at Borrower's expense, Borrower shall promptly and duly
execute and deliver to each Bank, and cause each other Credit Party to
promptly and duly execute and deliver to each Bank, upon reasonable request,
all such other and further documents, agreements and instruments in compliance
with or accomplishment of the covenants and agreements of the Credit Parties
in this Agreement and the other Loan Papers as may be reasonably necessary or
appropriate in connection therewith.
Section 8.13 Environmental Review. Borrower shall deliver to
Administrative Agent prior to the completion by any Credit Party of any
material acquisition of Mineral Interests or related assets, other than an
acquisition of additional interests in Mineral Interests in which a Credit
Party previously held an interest, any report or reports (including, without
limitation, any Phase I environmental reports) obtained by Borrower in the
course of such acquisition setting forth the results of any environmental
review of such Mineral Interests and related assets. Additionally, if
requested by Administrative Agent or Required Banks in writing in connection
with any such material acquisition, and not otherwise obtained by Borrower and
delivered to Administrative Agent in accordance with the foregoing provisions
of this Section 8.13, Borrower shall deliver to Administrative Agent, within
forty-five (45) days of Administrative Agent's or Required Banks' written
request, a report or reports related to any such material acquisition which
shall be in form, scope and detail acceptable to Administrative Agent from
environmental engineering firms acceptable to Administrative Agent, and which
shall set forth the results of a Phase I environmental review of the Mineral
Interests and related assets the subject of such material acquisition. All of
the reports delivered to Administrative Agent pursuant to this Section 8.13
shall not reflect the existence of facts or circumstances which would
constitute a material violation of any Applicable Environmental Law or which
are likely to result in a material liability to any Credit Party.
ARTICLE IX
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable
under any Note remains unpaid or any Letter of Credit remains outstanding:
Section 9.1 Incurrence of Debt. Borrower will not, nor will Borrower
permit any other Credit Party to, incur, become or remain liable for any Debt
other than (a) the Obligations, (b) Existing LC Exposure, (c) payables
incurred in the ordinary course of business (other than in connection with a
loan or lending transaction) that are not more than 30 days past due, from the
date of invoice or demand, except such payables being contested in good faith
in accordance with Section 8.7 hereof, and (d) other unsecured Debt in an
aggregate amount outstanding at any time not to exceed $1,000,000.
Section 9.2 Restricted Payments. Borrower will not, nor will Borrower
permit any other Credit Party to, directly or indirectly, declare or pay, or
incur any liability to declare or pay, any Restricted Payment; provided, that
(a) any Subsidiary of Borrower may make Distributions to Borrower, and (b) any
Credit Party may make Distributions to any other Credit Party that has
provided a Facility Guaranty, and all of the Equity of which owned by Borrower
or any Indirect Restricted Subsidiary has been pledged to Administrative Agent
pursuant to a Borrower Pledge Agreement or a Subsidiary Pledge Agreement (as
applicable).
Section 9.3 Negative Pledge. Borrower will not, nor will Borrower
permit any other Credit Party to, create, assume or suffer to exist any Lien
on any of their respective assets, other than Permitted Encumbrances.
Section 9.4 Consolidations and Mergers. Borrower will not, nor will
Borrower permit any other Credit Party to, consolidate or merge with or into
any other Person; provided, that, so long as no Default or Event of Default
exists or will result, Borrower or any Restricted Subsidiary may merge or
consolidate with any other Person so long as Borrower or such Restricted
Subsidiary is the surviving Person and, in the case of a Restricted
Subsidiary, a wholly owned Subsidiary of Borrower.
Section 9.5 Asset Dispositions. Borrower will not, nor will Borrower
permit any other Credit Party to, sell, lease, transfer, abandon or otherwise
dispose of any asset other than (a) the sale in the ordinary course of
business of Hydrocarbons produced from Borrower's Mineral Interests, and (b)
provided no Event of Default or Borrowing Base Deficiency exists, the sale,
lease, transfer, abandonment, exchange or other disposition of other assets;
provided, that, no sale, lease, transfer, abandonment, exchange or other
disposition by Borrower or any of its Subsidiaries of Borrowing Base
Properties with an aggregate value (which, in the case of assets consisting of
Mineral Interests, shall be the Recognized Value of such Mineral Interests
and, in the case of any exchange, shall be the net value or net Recognized
Value realized or resulting from such exchange) in any period between
Scheduled Redeterminations (for purposes of this clause (b) the Closing Date
will be deemed to be a Scheduled Redetermination) in excess of five percent
(5%) of the Borrowing Base then in effect shall be permitted pursuant to this
clause (b) unless each of the following conditions is satisfied: (i) Borrower
shall have provided Administrative Agent with not less than ten (10) Domestic
Business Days written notice of such sale, lease, transfer, abandonment,
exchange or other disposition, which notice shall include a specific
description of the assets to be sold, leased, transferred, abandoned,
exchanged or otherwise disposed, (ii) any Redetermination of the Borrowing
Base pursuant to Section 4.4 hereof shall have occurred, (iii) all mandatory
prepayments required by Section 2.6 in connection with such sale, lease,
transfer, abandonment, exchange or other disposition are made concurrently
with the closing thereof, (iv) no Borrowing Base Deficiency will exist after
consummation of such sale, lease, transfer, abandonment, exchange or other
disposition (and application of the proceeds thereof to the mandatory
prepayments required by Section 2.6), and (v) no Default has occurred which is
continuing. In no event will Borrower sell, transfer or dispose of any Equity
in any Subsidiary nor will any Credit Party issue or sell any Equity or any
option, warrant or other right to acquire such Equity or security convertible
into such Equity to any Person other than the Credit Party which is the direct
parent of such issuer on the Closing Date.
Section 9.6 Amendments to Organizational Documents; Other Material
Agreements. Borrower will not, nor will Borrower permit any other Credit
Party to, enter into or permit any modification or amendment of, or waive any
material right or obligation of any Person under, its certificate or articles
of incorporation, bylaws, partnership agreement, regulations or other
organizational documents other than amendments, modifications and waivers
which will not, individually or in the aggregate, have a Material Adverse
Effect.
Section 9.7 Use of Proceeds. The proceeds of Borrowings will not be
used for any purpose other than (a) working capital, (b) to finance the
acquisition, exploration and development of Mineral Interests and related
assets and activities, (c) for general corporate purposes, and (d) to
refinance existing Debt and obligations outstanding under the Existing Credit
Agreement. None of such proceeds (including, without limitation, proceeds of
Letters of Credit issued hereunder) will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, and none of such proceeds will be used in violation
of applicable Law (including, without limitation, the Margin Regulations).
Letters of Credit will be issued hereunder only for the purpose of securing
bids, tenders, bonds, contracts and other obligations entered into in the
ordinary course of Borrower's business, and otherwise to guaranty payment and
performance in accordance with the ordinary practice of Borrower's business.
Without limiting the foregoing, no Letters of Credit will be issued hereunder
for the purpose of or providing credit enhancement with respect to any Debt or
equity security of any Credit Party or to secure any Credit Party's
obligations with respect to Hedge Transactions entered into with a Person
which is not a Bank or an Affiliate of such Bank.
Section 9.8 Investments. Borrower will not, nor will Borrower permit
any other Credit Party to, directly or indirectly, make or have outstanding
any Investment other than Permitted Investments.
Section 9.9 Transactions with Affiliates. Borrower will not, nor will
Borrower permit any of its Subsidiaries to, engage in any transaction with an
Affiliate unless such transaction is as favorable to such party as could be
obtained in an arm's length transaction with an unaffiliated Person in
accordance with prevailing industry customs and practices.
Section 9.10 ERISA. Except in such instances where an omission or
failure would not have a Material Adverse Effect, Borrower will not, nor will
Borrower permit any other Credit Party to (a) take any action or fail to take
any action which would result in a violation of ERISA, the Code or other Laws
applicable to the Plans maintained or contributed to by it or any ERISA
Affiliate, or (b) modify the term of, or the funding obligations or
contribution requirements under any existing Plan, establish a new Plan, or
become obligated or incur any liability under a Plan that is not maintained or
contributed to by Borrower or any ERISA Affiliate as of the Closing Date.
Section 9.11 Hedge Transactions. Borrower will not, nor will Borrower
permit any other Credit Party to, enter into any Oil and Gas Hedge
Transactions which would cause the amount of (a) oil which is the subject of
Oil and Gas Hedge Transactions in existence at such time to exceed
seventy-five percent (75%) of Borrower's anticipated production of oil from
Proved Producing Mineral Interests (as reflected in the Reserve Report in
effect on the Closing Date and then, when available, the most recent Reserve
Report delivered to Administrative Agent pursuant to Section 4.1 hereof)
during the term of such existing Oil and Gas Hedge Transactions, and (b) gas
which is the subject of Oil and Gas Hedge Transactions in existence at such
time to exceed seventy-five percent (75%) of Borrower's anticipated production
of gas from Proved Producing Mineral Interests (as reflected in the Reserve
Report in effect on the Closing Date and then, when available, the most recent
Reserve Report delivered to Administrative Agent pursuant to Section 4.1
hereof) during the term of such existing Oil and Gas Hedge Transactions, which
Oil and Gas Hedge Transactions shall not, in any case, have a tenor of greater
than three (3) years.
Section 9.12 Fiscal Year. Borrower will not, nor will Borrower permit
any other Credit Party to, change its Fiscal Year; provided, that, upon prior
written notice to Administrative Agent and Banks, Borrower may change its
Fiscal Year from (a) July 1 through June 30, to (b) January 1 through December
31.
Sectio 9.13 Change in Business. Borrower will not, nor will Borrower
permit any other Credit Party to, engage in any business other than the
businesses engaged in by such parties on the date hereof as described in
Section 7.13 hereof.
Section 9.14 Obligations of Unrestricted Subsidiaries. Except as
described on Schedule 9.14 attached hereto, Borrower will not, nor will
Borrower permit any other Credit Party to, incur any liability, Debt or
obligation to any Unrestricted Subsidiary of any nature, or have any liability
(whether by operation of law or otherwise) for any liability, Debt or
obligation of any Unrestricted Subsidiary.
ARTICLE X
FINANCIAL COVENANTS
Borrower agrees that so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
Section 10.1 Current Ratio. Borrower will not permit its ratio of
Consolidated Current Assets to Consolidated Current Liabilities (a) as of the
end of the Fiscal Quarters ending December 31, 2004 and March 31, 2005, to be
less than 0.8 to 1.0, and (b) as of the end of the Fiscal Quarter ending June
30, 2005, and as of the end of each Fiscal Quarter thereafter, to be less than
1.0 to 1.0.
Section 10.2 Consolidated Total Debt to Consolidated EBITDAX. As of the
end of any Fiscal Quarter, commencing with the Fiscal Quarter ending December
31, 2004, Borrower will not permit its ratio of Consolidated Total Debt to
Consolidated EBITDAX to be greater than 3.0 to 1.0.
ARTICLE XI
DEFAULTS
Section 11.1 Events of Default. If one or more of the following events
(collectively "Events of Default" and individually an "Event of Default")
shall have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any Note
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Section 4.5, Section 6.3, Section 8.1, Section 8.2,
Section 8.3, Section 8.6, Article IX or Article X of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or the other Loan Papers (other than
those referenced in Section 11.1(a), Section 11.1(b) and Section 11.1(c)) and
such failure continues for a period of thirty (30) days after the earlier of
(i) the date any Authorized Officer of any Credit Party acquires knowledge of
such failure, or (ii) written notice of such failure has been given to any
Credit Party by Administrative Agent or any Bank;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove
to have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on any
Debt of such Person in a principal amount equal to or greater than $500,000,
and such default shall continue for thirty (30) days, or any other event or
condition shall occur which (i) results in the acceleration of the maturity of
any such Debt, or (ii) entitles the holder of such Debt to accelerate the
maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar Law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate, partnership or limited liability company
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of sixty (60)
days; or an order for relief shall be entered against any Credit Party under
the federal bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of
money aggregating in excess of $500,000 shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied and unstayed for
thirty (30) days;
(j) (i) any event occurs with respect to any Plan or Plans pursuant to
which any Credit Party incurs a liability due and owing at the time of such
event, without existing funding therefor, for benefit payments under such Plan
or Plans in excess of $1,000,000; or (ii) any Credit Party, any ERISA
Affiliate, or any other "party-in-interest" or "disqualified person," as such
terms are defined in section 3(14) of ERISA and section 4975(e)(2) of the
Code, shall engage in transactions which in the aggregate result in a direct
or indirect liability to any Credit Party or any ERISA Affiliate in excess of
$1,000,000 under section 409 or 502 of ERISA or section 4975 of the Code which
either (A) results in a Lien on any Credit Party's assets which is not a
Permitted Encumbrance, or (B) continues unsatisfied for a period of thirty
(30) days after any Authorized Officer of any Credit Party first acquires
knowledge of such liability;
(k) a Change of Control shall occur;
(l) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party,
or any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Papers, or any Lien created by the Loan Papers shall for
any reason (other than the release thereof in accordance with the Loan Papers)
cease to be a valid, first priority, perfected Lien (subject to Permitted
Encumbrances) upon any of the Proved Mineral Interests purported to be covered
thereby, except as a result of any action or inaction of Administrative Agent
or Banks; or
(m) a default or event of default shall occur under any Hedge
Agreement under which the liability to Borrower could reasonably be expected
to exceed $500,000;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind
(including, without limitation, notice of intention to accelerate and
acceleration), all of which are hereby waived, (a) if requested by Required
Banks, terminate the Commitments and they shall thereupon terminate, and (b)
if requested by Required Banks, take such other actions as may be permitted by
the Loan Papers including, declaring the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due and
payable; provided that, in the case of any of the Events of Default specified
in Section 11.1(g) or Section 11.1(h), without any notice to any Credit Party
or any other act by Administrative Agent or Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable.
ARTICLE XII
AGENTS
Section 12.1 Appointment; Nature of Relationship. Bank One, NA is
hereby appointed by each of the Banks as its contractual representative and
Administrative Agent hereunder and under each other Loan Paper, and each Bank
irrevocably authorizes Administrative Agent to act as the contractual
representative of such Bank with the rights and duties expressly set forth
herein and in the other Loan Papers. Administrative Agent agrees to act as
such contractual representative and Administrative Agent upon the express
conditions contained in this Article XII. Notwithstanding the use of the
defined term "Administrative Agent," it is expressly understood and agreed
that Administrative Agent shall not have any fiduciary responsibilities to any
Bank by reason of this Agreement or any other Loan Paper and that
Administrative Agent is merely acting as the contractual representative of the
Banks with only those duties as are expressly set forth in this Agreement and
the other Loan Papers. In its capacity as the Banks' contractual
representative, Administrative Agent (i) does not hereby assume any fiduciary
duties to any of the Banks, (ii) is a "representative" of the Banks within the
meaning of the term "secured party" as defined in the Illinois Uniform
Commercial Code, and (iii) is acting as an independent contractor, the rights
and duties of which are limited to those expressly set forth in this Agreement
and the other Loan Papers. Each of the Banks hereby agree not to assert any
claim against Administrative Agent on any theory of liability for breach of
fiduciary duty, any and all of which claims each Bank hereby waives.
Section 12.2 Powers. Administrative Agent shall have and may exercise
such powers under the Loan Papers as are specifically delegated to
Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. Administrative Agent shall have no
implied duties to the Banks, or any obligation to the Banks to take any action
thereunder except any action specifically provided by the Loan Papers to be
taken by Administrative Agent.
Section 12.3 General Immunity. Neither Administrative Agent nor any of
its directors, officers, agents or employees shall be liable to Borrower or
any Bank for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Paper or in connection herewith or therewith except to
the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
Section 12.4 No Responsibility for Loans, Recitals, etc. Neither
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in connection with
any Loan Paper or any Borrowing hereunder; (b) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Paper,
including, without limitation, any agreement by an obligor to furnish
information directly to each Bank; (c) the satisfaction of any condition
specified in Article VI, except receipt of items required to be delivered
solely to Administrative Agent; (d) the existence or possible existence of any
Default or Event of Default; (e) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Paper or any other instrument or
writing furnished in connection therewith; (f) the value, sufficiency,
creation, perfection or priority of any Lien in any collateral security; or
(g) the financial condition of Borrower or any guarantor of any of the
Obligations or of any of Borrower's or any such guarantor's respective
Subsidiaries. Administrative Agent shall have no duty to disclose to the
Banks information that is not required to be furnished by Borrower to
Administrative Agent at such time, but is voluntarily furnished by Borrower to
Bank One (either in its capacity as Administrative Agent or in its individual
capacity). Except as expressly set forth herein, Administrative Agent shall
not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Credit Party that is communicated to
or obtained by it or any of its Affiliates.
Section 12.5 Action on Instructions of Banks. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Paper in accordance with written
instructions signed by the Required Banks, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks. The Banks hereby acknowledge that Administrative Agent shall be under
no duty to take any discretionary action permitted to be taken by it pursuant
to the provisions of this Agreement or any other Loan Paper unless it shall be
requested in writing to do so by Required Banks. Administrative Agent shall
be fully justified in failing or refusing to take any action hereunder and
under any other Loan Paper unless it shall first be indemnified to its
satisfaction by the Banks pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
Section 12.6 Employment of Agents and Counsel. Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any
other Loan Paper by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between Administrative Agent and the Banks and all
matters pertaining to Administrative Agent's duties hereunder and under any
other Loan Paper.
Section 12.7 Reliance on Documents; Counsel. Administrative Agent shall
be entitled to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine
and correct and to have been signed or sent by the proper Person or Persons,
and, in respect to legal matters, upon the opinion of counsel selected by
Administrative Agent, which counsel may be employees of Administrative Agent.
Section 12.8 Administrative Agent's Reimbursement and Indemnification.
Banks agree to reimburse and indemnify Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (i) for any amounts not reimbursed by Borrower for which
Administrative Agent is entitled to reimbursement by Borrower under the Loan
Papers, (ii) for any other expenses incurred by Administrative Agent on behalf
of the Banks, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Papers (including, without
limitation, for any expenses incurred by Administrative Agent in connection
with any dispute between Administrative Agent and any Bank or between two or
more of the Banks) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Administrative Agent in any way relating to or
arising out of the Loan Papers or any other document delivered in connection
therewith or the transactions contemplated thereby (including, without
limitation, for any such amounts incurred by or asserted against
Administrative Agent in connection with any dispute between Administrative
Agent and any Bank or between two or more of the Banks), or the enforcement of
any of the terms of the Loan Papers or of any such other documents; provided
that no Bank shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of Administrative Agent. The obligations of the Banks under this Section 12.8
shall survive payment of the Obligations and termination of this Agreement.
Section 12.9 Notice of Default. Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless Administrative Agent has received written notice
from a Bank or Borrower referring to this Agreement describing such Default or
Event of Default and stating that such notice is a "notice of default". In
the event that Administrative Agent receives such a notice, Administrative
Agent shall give prompt notice thereof to the Banks.
Section 12.10 Rights as a Bank. In the event Administrative Agent is a
Bank, Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Paper with respect to its Commitment and its Revolving
Loans as any Bank and may exercise the same as though it were not
Administrative Agent, and the term "Bank" or "Banks" shall, at any time when
Administrative Agent is a Bank, unless the context otherwise indicates,
include in its individual capacity. Administrative Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Paper, with Borrower or any of its
Subsidiaries in which Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.
Section 12.11 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon Administrative Agent, Sole Lead
Arranger, Bookrunner or any other Agent or Bank and based on the financial
statements prepared by Borrower and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Papers. Each Bank also acknowledges
that it will, independently and without reliance upon Administrative Agent,
Sole Lead Arranger, Bookrunner or any other Agent or Bank and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Papers.
Section 12.12 Successor Administrative Agent. Administrative Agent may
resign at any time by giving written notice thereof to Banks and Borrower,
such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five (45) days after the retiring Administrative Agent gives
notice of its intention to resign. Upon any such resignation, Required Banks
shall have the right to appoint, on behalf of Borrower and the Banks, a
successor Administrative Agent, which shall be approved by Borrower, such
approval not to be unreasonably withheld; provided, that, Borrower shall not
have the right to approve any successor Administrative Agent appointed during
the continuance of any Default. If no successor Administrative Agent shall
have been so appointed by Required Banks within thirty (30) days after the
resigning Administrative Agent's giving notice of its intention to resign,
then the resigning Administrative Agent may appoint, on behalf of Borrower and
Banks, a successor Administrative Agent which shall be approved by Borrower,
such approval not to be unreasonably withheld; provided, that, Borrower shall
not have the right to approve any successor Administrative Agent appointed
during the continuance of any Default. If Administrative Agent has resigned
and no successor Administrative Agent has been appointed, Banks may perform
all the duties of Administrative Agent hereunder and Borrower shall make all
payments in respect of the Obligations to the applicable Bank and for all
other purposes shall deal directly with the Banks. No successor
Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment. Any such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Administrative Agent. Upon the effectiveness of the resignation of
Administrative Agent, the resigning Administrative Agent shall be discharged
from its duties and obligations hereunder and under the Loan Papers. After
the effectiveness of the resignation of an Administrative Agent, the
provisions of this Article XII shall continue in effect for the benefit of
such Administrative Agent in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent hereunder and under
the other Loan Papers. In the event that there is a successor to
Administrative Agent by merger, or Administrative Agent assigns its duties and
obligations to an Affiliate pursuant to this Section 12.12, then the term
"Prime Rate" as used in this Agreement shall mean the prime rate, base rate or
other analogous rate of the new Administrative Agent.
Section 12.13 Delegation to Affiliates. Borrower and Banks agree that
Administrative Agent may delegate any of its duties under this Agreement to
any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification,
waiver and other protective provisions to which Administrative Agent is
entitled under Article XII and Article XIII.
Section 12.14 Execution of Collateral Documents. Without limiting the
powers and authority of Administrative Agent described herein, the Banks
hereby empower and authorize Administrative Agent to execute and deliver to
Borrower on their behalf the Mortgages, the Assignments and Amendments to
Mortgages, the Borrower Pledge Agreements, the Subsidiary Pledge Agreements
and all related financing statements and any other financing statements,
agreements, documents or instruments as shall be necessary or appropriate to
effect the purposes of the foregoing instruments.
Section 12.15 Collateral Releases. Banks hereby empower and authorize
Administrative Agent to execute and deliver to Borrower on their behalf any
agreements, documents or instruments as shall be necessary or appropriate to
effect any releases of collateral which shall be permitted by the terms hereof
or of any other Loan Paper or which shall otherwise have been approved by
Required Banks (or, if required by the terms of Section 14.5, all of the
Banks) in writing.
Section 12.16 Agents. None of the Banks (if any) identified in, or
appointed at any time under, this Agreement as a "Documentation Agent,"
"Co-Documentation Agent," "Syndication Agent" and/or a "Co-Syndication Agent"
shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Banks as such.
Without limiting the foregoing, none of any such Agents shall have or be
deemed to have a fiduciary relationship with any Bank. Each Bank hereby makes
the same acknowledgments with respect to any such Agents as it makes with
respect to Administrative Agent in Section 12.11.
ARTICLE XIII
CHANGE IN CIRCUMSTANCES
Section 13.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Loans, its Note,
or its obligation to make Eurodollar Loans, or change the basis of taxation of
any amounts payable to such Bank (or its Applicable Lending Office) under this
Agreement or its Note in respect of any Eurodollar Loans (other than taxes
imposed on the overall net income of such Bank or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, compulsory loan, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Adjusted Eurodollar
Rate) relating to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Bank (or its Applicable
Lending Office), including the Commitment of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable Lending Office)
or on the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable
by such Bank (or its Applicable Lending Office) under this Agreement or its
Note with respect to any Eurodollar Loans, then the Borrower shall pay to such
Bank on demand such amount or amounts as will compensate such Bank for such
increased costs or reductions incurred or experienced within one hundred
twenty (120) days of such demand. If any Bank requests compensation by
Borrower under this Section 13.1(a), the Borrower may, by notice to such Bank
(with a copy to Administrative Agent), suspend the obligation of such Bank to
make or Continue Eurodollar Loans or to Convert all or part of the Base Rate
Loan owing to such Bank into Eurodollar Loans, until the event or condition
giving rise to such request ceases to be in effect (in which case the
provisions of Section 13.4 shall be applicable); provided, that such
suspension shall not affect the right of such Bank to receive the compensation
so requested.
(b) If, after the date hereof, any Bank shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Bank or any corporation controlling such Bank as a consequence of such Bank's
obligations hereunder to a level below that which such Bank or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then, from time to time upon demand, Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
reductions experienced within one hundred twenty (120) days of such demand.
(c) Each Bank shall promptly notify Borrower and Administrative Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section 13.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to it. Any Bank claiming
compensation under this Section 13.1 shall furnish to Borrower and
Administrative Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
Section 13.2 Limitation on Type of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to Banks of funding Eurodollar
Loans for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Revolving Loans and the relevant amounts or periods, and
so long as such condition remains in effect, Banks shall be under no
obligation to make additional Revolving Loans of such Type, Continue Revolving
Loans of such Type, or to Convert Revolving Loans of any other Type into
Revolving Loans of such Type, and Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Revolving Loans of the
affected Type, either prepay such Revolving Loans or Convert such Revolving
Loans into another Type of Revolving Loan in accordance with the terms of this
Agreement.
Section 13.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans
hereunder, then such Bank shall promptly notify Borrower thereof and such
Bank's obligation to make or Continue Eurodollar Loans and to Convert other
Types of Revolving Loans into Eurodollar Loans shall be suspended until such
time as such Bank may again make, maintain, and fund Eurodollar Loans (in
which case the provisions of Section 13.4 shall be applicable).
Section 13.4 Treatment of Affected Loans. If the obligation of any Bank
to make particular Eurodollar Loans or to Continue Revolving Loans, or to
Convert Revolving Loans of another Type into Revolving Loans of a particular
Type shall be suspended pursuant to Section 13.1 or Section 13.3 hereof
(Revolving Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Bank's Affected Loans
shall be automatically Converted into the Base Rate Loan on the last day(s) of
the then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 13.3 hereof, on such earlier date as such Bank
may specify to Borrower with a copy to Administrative Agent) and, unless and
until such Bank gives notice as provided below that the circumstances
specified in Section 13.1 or Section 13.3 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to the Base
Rate Loan; and
(b) all Revolving Loans that would otherwise be made or Continued by
such Bank as Revolving Loans of the Affected Type shall be made or Continued
instead as part of the Base Rate Loan, and all Revolving Loans of such Bank
that would otherwise be Converted into Revolving Loans of the Affected Type
shall be Converted instead into (or shall remain) as part of the Base Rate
Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent)
that the circumstances specified in Section 13.1 or Section 13.3 hereof that
gave rise to the Conversion of such Bank's Affected Loans pursuant to this
Section 13.4 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Revolving Loans of the Affected
Type made by other Banks are outstanding, such Bank's portion of the Base Rate
Loan shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Revolving Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto,
all Revolving Loans held by Banks holding Revolving Loans of the Affected Type
and by such Bank are held pro rata (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.
Section 13.5 Compensation. Upon the request of any Bank, Borrower shall
pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Revolving
Loan) on a date other than the last day of the Interest Period for such Loan;
or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VI to
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the
date for such Borrowing, Conversion, Continuation, or prepayment specified in
the relevant Request for Borrowing, Notice of Continuation or Conversion, or
other notice of Borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Section 13.6 Taxes.
(a) Any and all payments by Borrower to or for the account of any
Bank or Administrative Agent hereunder or under any other Loan Paper shall be
made free and clear of and without deduction for any and all present or future
Taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and
Administrative Agent, Taxes imposed on its income, and franchise Taxes imposed
on it (all such non-excluded Taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to in this
Section 13.6 as "Non-Excluded Taxes"). If Borrower shall be required by Law
to deduct any Non-Excluded Taxes from or in respect of any sum payable under
this Agreement or any other Loan Paper to any Bank or Administrative Agent,
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 13.6) such Bank or Administrative Agent receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable Law, and (iv) Borrower shall furnish to
Administrative Agent, at its address set forth on Schedule 1.1 hereto, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary Taxes and any other excise or property Taxes or charges
or similar levies which arise from any payment made under this Agreement or
any other Loan Paper or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Paper (hereinafter referred to as
"Other Taxes").
(c) Borrower agrees to indemnify each Bank and Administrative Agent
for the full amount of Non-Excluded Taxes and Other Taxes (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 13.6) paid by such Bank or
Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Bank organized under the Laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on Schedule 1.1 hereto and on or
prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by Borrower or
Administrative Agent (but only so long as such Bank remains lawfully able to
do so), shall provide Borrower and Administrative Agent, at the time or times
prescribed by applicable Law, with such properly completed and executed
documentation prescribed by applicable Law (or reasonably requested by
Borrower) certifying that such Bank is entitled to benefits under an income
tax treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, and certifying that such
Bank is entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Loan Papers.
(e) For any period with respect to which a Bank has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to
Section 13.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 13.6(a), Section 13.6(b) or Section 13.6(c) with respect to
Non-Excluded Taxes imposed by the United States; provided, however, that
should a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding Tax, become subject to Non-Excluded Taxes because of its failure
to deliver a form required hereunder, Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Non-Excluded
Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 13.6, then such Bank will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of
Non-Excluded Taxes, Borrower shall furnish to Administrative Agent the
original or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 13.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
Section 13.7 Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for
the purposes of this Agreement all determinations hereunder shall be made as
if such Bank had actually funded and maintained each Eurodollar Loan during
the Interest Period for such Eurodollar Loan through the purchase of deposits
having a maturity corresponding to the last day of such Interest Period and
bearing an interest rate equal to the Adjusted Eurodollar Rate for such
Interest Period.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank,
at its address or telecopier number set forth on Schedule 1.1 hereto, and if
given to Borrower, at its address or telecopy number set forth on the
signature pages hereof (or in either case, at such other address or telecopy
number as such party may hereafter specify for the purpose by notice to the
other parties hereto). Each such notice, request or other communication shall
be effective (a) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified in this Section 14.1 and the appropriate
answerback is received or receipt is otherwise confirmed, (b) if given by
mail, three (3) Domestic Business Days after deposit in the mails with first
class postage prepaid, addressed as aforesaid, or (c) if given by any other
means, when delivered at the address specified in this Section 14.1; provided
that notices to Administrative Agent under Article II or Article III shall not
be effective until received.
Section 14.2 No Waivers. No failure or delay by Administrative Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note or other Loan Paper shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law or in any of the other Loan Papers.
Section 14.3 Expenses; Indemnification.
(a) Borrower agrees to pay on demand all reasonable costs and
expenses of Administrative Agent, Sole Lead Arranger and Bookrunner in
connection with the syndication, preparation, execution, delivery,
modification, and amendment of this Agreement, the other Loan Papers, and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for Administrative Agent with respect
thereto and with respect to advising Administrative Agent as to its rights and
responsibilities under the Loan Papers. Borrower further agrees to pay on
demand all costs and expenses of Administrative Agent and Banks, if any
(including, without limitation, reasonable attorneys' fees and expenses), in
connection with (i) the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Loan Papers and the other documents to be
delivered hereunder, and (ii) any forbearance or workout, or any modifications
to the Loan Papers, following an Event of Default. Each demand for payment of
costs and expenses shall include a reasonably detailed list of such costs and
expenses, and such costs and expenses payable hereunder shall not include the
allocated costs of internal counsel of any Agent or Bank.
(b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS EACH AGENT AND
EACH BANK AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM
AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY
BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH
CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT
LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR
PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS
OF THE REVOLVING LOAN (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE,
LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED
PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF AN
INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS
SECTION 14.3 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH
INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY CREDIT PARTIES, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER
PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR
NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AGREES NOT
TO ASSERT ANY CLAIM AGAINST ANY AGENT, ANY BANK, ANY OF THEIR AFFILIATES, OR
ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND
ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR
PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN PAPERS, ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE REVOLVING LOAN.
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 14.3 shall survive the payment in full of the Revolving Loan and
all other amounts payable under this Agreement.
Section 14.4 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Bank (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 indebtedness at any time
owing by such Bank (or any of its Affiliates) to or for the credit or the
account of any Credit Party against any and all of the Obligations,
irrespective of whether such Bank shall have made any demand under this
Agreement or Note held by such and although such obligations may be unmatured.
Each Bank agrees promptly to notify the affected Credit Party after any such
set-off and application made by such Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section 14.4 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Bank may have.
(b) If any Bank (a "benefitted Bank") shall at any time receive any
payment of all or part of the amounts owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in respect
of such other Bank's amounts owing to it, or interest thereon, such benefitted
Bank shall purchase for cash from the other Banks a participating interest in
such portion of each such other Bank's amounts owing to it, or shall provide
such other Banks with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Bank to share the
excess payment or benefits of such collateral or proceeds ratably with each
other Bank; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. Borrower agrees that any
Bank so purchasing a participation from a Bank pursuant to this Section 14.4
may, to the fullest extent permitted by Law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of Borrower in the amount of
such participation.
Section 14.5 Amendments and Waivers. Any provision of this Agreement,
the Notes or any other Loan Paper may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by Borrower and Required
Banks (and, if the rights or duties of any Agent are affected thereby, by such
Agent); provided that no such amendment or waiver shall, unless signed by all
Banks, (a) increase the Commitment of any Bank, (b) reduce the principal of or
rate of interest on any Revolving Loan or any fees or other amounts payable
hereunder or for termination of any Commitment, (c) change the percentage of
the Total Commitment, or the number of Banks which shall be required for Banks
or any of them to take any action under this Section 14.5 or any other
provision of this Agreement, (d) extend the due date for, or forgive any
principal, interest, fees or reimbursement obligations due hereunder, (e)
release any material guarantor or other material party liable for all or any
part of the Obligations or release any material part of the collateral for the
Obligations or any part thereof other than releases required pursuant to sales
of collateral which are expressly permitted by Section 9.5 hereof, (f) amend
or modify any of the provisions of Article IV hereof or the definitions of any
terms defined therein, or (g) increase any Borrowing Base above the Borrowing
Base then in effect.
Section 14.6 Survival. All representations, warranties and covenants
made by any Credit Party herein or in any certificate or other instrument
delivered by it or in its behalf under the Loan Papers shall be considered to
have been relied upon by Banks and shall survive the delivery to Banks of such
Loan Papers or the extension of the Revolving Loan (or any part thereof),
regardless of any investigation made by or on behalf of Banks. The indemnity
provided in Section 14.3(b) herein shall survive the repayment of all credit
advances hereunder and/or the discharge or release of any Lien granted
hereunder or in any other Loan Paper, contract or agreement between Borrower
or any other Credit Party and any Agent or any Bank.
Section 14.7 Limitation on Interest. Regardless of any provision
contained in the Loan Papers, Banks shall never be entitled to receive,
collect, or apply, as interest on the Revolving Loan, any amount in excess of
the Maximum Lawful Rate, and in the event any Bank ever receives, collects or
applies as interest any such excess, such amount which would be deemed
excessive interest shall be deemed a partial prepayment of principal and
treated hereunder as such; and if the Revolving Loan is paid in full, any
remaining excess shall promptly be paid to Borrower. In determining whether
or not the interest paid or payable under any specific contingency exceeds the
Maximum Lawful Rate, Borrower and Banks shall, to the extent permitted under
applicable Law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof and (c) amortize, prorate, allocate and spread, in equal
parts, the total amount of the interest throughout the entire contemplated
term of the Notes, so that the interest rate is the Maximum Lawful Rate
throughout the entire term of the Notes; provided, however, that if the unpaid
principal balance thereof is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Lawful Rate, Banks
shall refund to Borrower the amount of such excess and, in such event, Banks
shall not be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of the
Maximum Lawful Rate.
Section 14.8 Invalid Provisions. If any provision of the Loan Papers is
held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable,
the Loan Papers shall be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part thereof, and the
remaining provisions thereof shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of the
Loan Papers a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and
enforceable.
Section 14.9 Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of
the Texas Finance Code, as amended, Borrower agrees that such Chapter 346
shall not govern or in any manner apply to the Revolving Loan.
Section 14.10 Assignments and Participations.
(a) Successors and Assigns. The terms and provisions of the Loan
Papers shall be binding upon and inure to the benefit of Borrower and Banks
and their respective successors and assigns permitted hereby, except that (i)
Borrower shall not have the right to assign its rights or obligations under
the Loan Papers without the prior written consent of each Bank, (ii) any
assignment by any Bank must be made in compliance with Section 14.10(c), and
(iii) any transfer by participation must be made in compliance with Section
14.10(b). Any attempted assignment or transfer by any party not made in
compliance with this Section 14.10(a) shall be null and void, unless such
attempted assignment or transfer is treated as a participation in accordance
with Section 14.10(b). The parties to this Agreement acknowledge that clause
(ii) of this Section 14.10(a) relates only to absolute assignments and this
Section 14.10(a) does not prohibit assignments creating security interests,
including, without limitation, (x) any pledge or assignment by any Bank of all
or any portion of its rights under this Agreement and any Note to a Federal
Reserve Bank or (y) in the case of a Bank which is a Fund, any pledge or
assignment of all or any portion of its rights under this Agreement and any
Note to its trustee in support of its obligations to its trustee; provided,
however, that no such pledge or assignment creating a security interest shall
release the transferor Bank from its obligations hereunder unless and until
the parties thereto have complied with the provisions of Section 14.10(c).
Administrative Agent may treat the Person which made any Revolving Loan or
which holds any Note as the owner thereof for all purposes hereof unless and
until such Person complies with Section 14.10(c); provided, however, that
Administrative Agent may in its discretion (but shall not be required to)
follow instructions from the Person which made any Revolving Loan or which
holds any Note to direct payments relating to such Revolving Loan or Note to
another Person. Any assignee of the rights to any Revolving Loan or any Note
agrees by acceptance of such assignment to be bound by all the terms and
provisions of the Loan Papers. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Revolving Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Revolving Loan.
(b) Participations.
(i) Any Bank may at any time sell to one or more banks or other
entities ("Participants") participating interests in any Revolving Loan owing
to such Bank, any Note held by such Bank, any Commitment of such Bank or any
other interest of such Bank under the Loan Papers. In the event of any such
sale by a Bank of participating interests to a Participant, such Bank's
obligations under the Loan Papers shall remain unchanged, such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Bank shall remain the owner of its Revolving Loans and
the holder of any Note issued to it in evidence thereof for all purposes under
the Loan Papers, all amounts payable by Borrower under this Agreement shall be
determined as if such Bank had not sold such participating interests, and
Borrower and Administrative Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under the
Loan Papers.
(ii) Each Bank shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Papers other than any amendment, modification or waiver
with respect to any Revolving Loan or Commitment in which such Participant has
an interest which would require consent of all of the Banks pursuant to the
terms of Section 14.5 or of any other Loan Paper.
(iii) Borrower agrees that each Participant shall be deemed to have
the right of setoff provided in Section 14.4 in respect of its participating
interest in amounts owing under the Loan Papers to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
the Loan Papers; provided, that each Bank shall retain the right of setoff
provided in Section 14.4 with respect to the amount of participating interests
sold to each Participant. Banks agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 14.4,
agrees to share with each Bank, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with Section
14.4 as if each Participant were a Bank. Borrower further agrees that each
Participant shall be entitled to the yield protection provisions contained in
Article XIII to the same extent as if it were a Bank and had acquired its
interest by assignment pursuant to Section 14.10(c); provided, that (A) a
Participant shall not be entitled to receive any greater payment under Article
XIII than the Bank who sold the participating interest to such Participant
would have received had it retained such interest for its own account, unless
the sale of such interest to such Participant is made with the prior written
consent of Borrower, and (B) any Participant not incorporated under the laws
of the United States of America or any State thereof agrees to comply with the
provisions of Section 13.6 to the same extent as if it were a Bank.
(c) Assignments.
(i) Any Bank may at any time assign to one or more banks or other
entities ("Purchasers") all or any part of its rights and obligations under
the Loan Papers. The parties to such assignment shall execute and deliver an
Assignment and Acceptance Agreement (herein so called) which shall be
substantially in the form of Exhibit J or in such other form as may be agreed
to by the parties thereto. Each such assignment with respect to a Purchaser
which is not a Bank or an Affiliate of a Bank or an Approved Fund shall either
be in an amount equal to the entire applicable Commitment and Revolving Loans
of the assigning Bank or (unless each of Borrower and Administrative Agent
otherwise consents) be in an aggregate amount not less than $5,000,000. The
amount of the assignment shall be based on the Commitment or outstanding
Revolving Loans (if the Commitment has been terminated) subject to the
assignment, determined as of the date of such assignment or as of the
"Effective Date," if the "Effective Date" is specified in the Assignment and
Acceptance Agreement.
(ii) The consent of Borrower shall be required prior to an
assignment becoming effective unless Purchaser is a Bank, an Affiliate of a
Bank or an Approved Fund, provided that the consent of Borrower shall not be
required if a Default has occurred and is continuing. The consent of
Administrative Agent shall be required prior to an assignment becoming
effective unless the Purchaser is a Bank, an Affiliate of a Bank or an
Approved Fund. The consent of Letter of Credit Issuer shall be required prior
to an assignment of a Commitment becoming effective unless Purchaser is a
Bank, an Affiliate of a Bank or an Approved Fund. Any consent required under
this Section 14.10(c)(ii) shall not be unreasonably withheld or delayed.
(iii) Upon (A) delivery to Administrative Agent of an Assignment
and Acceptance Agreement, together with any consents required by Section
14.10(c)(i) and (ii), and (B) payment of a $3,500 fee to Administrative Agent
for processing such assignment (unless such fee is waived by Administrative
Agent), such assignment shall become effective on the effective date specified
in such Assignment and Acceptance Agreement. On and after the effective date
of such assignment, such Purchaser shall for all purposes be a Bank party to
this Agreement and any other Loan Paper executed by or on behalf of Banks and
shall have all the rights and obligations of a Bank under the Loan Papers, to
the same extent as if it were an original party thereto, and the transferor
Bank shall be released with respect to the Commitment and Revolving Loans
assigned to such Purchaser without any further consent or action by Borrower,
Banks or Administrative Agent. In the case of an assignment covering all of
the assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a Bank hereunder but shall continue to be entitled to the
benefits of, and subject to, those provisions of this Agreement and the other
Loan Papers which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Bank of rights or
obligations under this Agreement that does not comply with this Section
14.10(c) shall be treated for purposes of this Agreement as a sale by such
Bank of a participation in such rights and obligations in accordance with
Section 14.10(b). Upon the consummation of any assignment to a Purchaser
pursuant to this Section 14.10(c), the transferor Bank, Administrative Agent
and Borrower shall make appropriate arrangements so that new Notes or, as
appropriate, replacement Notes are issued to such transferor Bank and new
Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.
(iv) Administrative Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at one of its offices in Chicago, Illinois
or Dallas, Texas a copy of each Assignment and Acceptance Agreement delivered
to it and a register for the recordation of the names and addresses of the
Banks, and the Commitments of, and principal amounts of the Revolving Loans
owing to, each Bank pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and Borrower,
Administrative Agent and Banks may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Bank hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by Borrower and any Bank, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Dissemination of Information. Borrower authorizes each Bank to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Papers by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Bank's possession
concerning the creditworthiness of Borrower and its Subsidiaries, including,
without limitation, any information contained in any financial reports;
provided, that, each Transferee and prospective Transferee agrees to be bound
by Section 14.17 of this Agreement.
(e) Tax Treatment. If any interest in any Loan Paper is transferred
to any Transferee which is not incorporated under the laws of the United
States or any State thereof, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 13.6(d).
Section 14.11 TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE
OBLIGATIONS IS LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF
THE LIENS IN FAVOR OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH
PROPERTY, AND (B) THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH
RESPECT TO SUCH PROPERTY.
Section 14.12 Consent to Jurisdiction; Waiver of Immunities.
(a) Borrower hereby irrevocably submits to the jurisdiction of any
Texas State or Federal court sitting in the Northern District of Texas over
any action or proceeding arising out of or relating to this Agreement or any
other Loan Papers, and Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such Texas
State or Federal court. Borrower irrevocably consents to the service of any
and all process in any such action or proceeding by the delivery by Federal
Express or other nationally recognized overnight delivery service of copies of
such process to such Person at its address specified in Section 14.1.
Borrower agrees that a final judgment on any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
(b) Nothing in this Section 14.12 shall affect any right of Banks to
serve legal process in any other manner permitted by Law or affect the right
of any Bank to bring any action or proceeding against any Credit Party or
their properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
such Person hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other Loan Papers.
Section 14.13 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the terms and conditions herein set forth, this
Agreement shall become effective when Administrative Agent shall have received
counterparts hereof signed by all of the parties hereto or, in the case of any
Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
Section 14.14 No Third Party Beneficiaries. Except for the provisions
hereof inuring to the benefit of Agents not a party to this Agreement, it is
expressly intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained other
than third party beneficiaries permitted pursuant to Section 14.10.
Section 14.15 COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS
AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, AND THE
CREDIT PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG BANKS, AGENTS,
AND THE CREDIT PARTIES.
Section 14.16 WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT AND
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
Section 14.17 Confidentiality. Administrative Agent and each Bank (each,
a "Lending Party") agrees to keep confidential any information furnished or
made available to it by Borrower pursuant to this Agreement that is marked
confidential; provided, that nothing herein shall prevent any Lending Party
from disclosing such information (a) to any other Lending Party or any
Affiliate of any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or any Affiliate of any Lending Party, (b) to any
other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any Law, rule or regulation, (d)
upon the order of any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or becomes available
to the public or that is or becomes available to any Lending Party other than
as a result of a disclosure by any Lending Party prohibited by this Agreement,
(g) in connection with any litigation to which such Lending Party or any of
its affiliates may be a party relating to the Obligations or any Loan Paper,
(h) to the extent necessary in connection with the exercise of any remedy
under this Agreement or any other Loan Paper, and (i) subject to provisions
substantially similar to those contained in this Section 14.17, to any actual
or proposed participant or assignee.
Section 14.18 USA Patriot Act. Each Bank hereby notifies Borrower that,
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the "Act"), it is required to
obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information
that will allow such Bank to identify Borrower in accordance with the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year
first above written.
[signature pages to follow]
SIGNATURE PAGE TO
CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AS BANKS
BORROWER:
DELTA PETROLEUM CORPORATION,
a Colorado corporation
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx,
Chief Financial Officer and Treasurer
Address for Notice:
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax No. (000) 000-0000
SIGNATURE PAGE TO
CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AS BANKS
ADMINISTRATIVE AGENT:
BANK ONE, NA,
as Administrative Agent
By: /s/ J. Xxxxx Xxxxxx
J. Xxxxx Xxxxxx,
Director, Capital Markets
BANK:
BANK ONE, NA
By: /s/ J. Xxxxx Xxxxxx
J. Xxxxx Xxxxxx,
Director, Capital Markets
SIGNATURE PAGE TO
CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AS BANKS
SYNDICATION AGENT:
BANK OF OKLAHOMA, N.A.,
as Syndication Agent
By: /s/ Xxxxx Rheem
Xxxxx Rheem,
Vice President
BANK:
BANK OF OKLAHOMA, N.A.
By: /s/ Xxxxx Xxxxx
Xxxxx Rheem,
Vice President
SIGNATURE PAGE TO
CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AS BANKS
DOCUMENTATION AGENT:
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agent
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Authorized Officer
BANK:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Authorized Officer
SIGNATURE PAGE TO
CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AS BANKS
BANK:
HIBERNIA NATIONAL BANK
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Authorized Officer
