EXHIBIT 10(vi)
$100,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 28, 2001
AMONG
KCS ENERGY, INC., AS THE BORROWER,
THE LENDERS SIGNATORY HERETO
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, AS AGENT,
CIBC INC., AS COLLATERAL AGENT,
CIBC WORLD MARKETS CORP., AS ARRANGER AND SOLE BOOK RUNNER,
GUARANTY BANK, AS CO-ARRANGER
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS AND INTERPRETATION........................................................ 1
1.1 Terms Defined Above................................................................ 1
1.2 Additional Defined Terms........................................................... 1
1.3 Undefined Financial Accounting Terms............................................... 20
1.4 References......................................................................... 20
1.5 Articles and Sections.............................................................. 20
1.6 Number and Gender.................................................................. 20
1.7 Incorporation of Exhibits.......................................................... 21
1.8 Knowledge.......................................................................... 21
ARTICLE II. TERMS OF FACILITIES.................................................................. 21
2.1 Loans.............................................................................. 21
2.2 Letters of Credit.................................................................. 22
2.3 [Intentionally Blank].............................................................. 25
2.4 Limitations on Interest Periods.................................................... 25
2.5 Limitation on Types of Loans....................................................... 25
2.6 Use of Loan Proceeds and Letters of Credit......................................... 25
2.7 Interest........................................................................... 26
2.8 Repayment of Loans and Interest.................................................... 26
2.9 General Terms...................................................................... 26
2.10 Time, Place, and Method of Payments................................................ 27
2.11 Pro Rata Treatment: Adjustments.................................................... 27
2.12 Borrowing Base Determinations...................................................... 29
2.13 Mandatory Prepayments.............................................................. 31
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2.14 Voluntary Prepayments and Conversions of Loans..................................... 31
2.15 Commitment Fees and Usage Fee...................................................... 31
2.16 Letter of Credit Fee............................................................... 32
2.17 Intentionally Blank................................................................ 32
2.18 Intentionally Blank................................................................ 32
2.19 Right of Offset.................................................................... 32
2.20 Maximum Interest................................................................... 32
2.21 Obligations Absolute............................................................... 33
2.22 Yield Protection................................................................... 34
2.23 Illegality......................................................................... 36
2.24 Taxes.............................................................................. 36
2.25 Replacement or Additional Lenders.................................................. 37
ARTICLE III. CONDITIONS.......................................................................... 39
3.1 Conditions Precedent to Initial Loan or Letter of Credit........................... 39
3.2 Conditions Precedent to Each Loan.................................................. 42
3.3 Conditions Precedent to Issuance of Letters of Credit.............................. 43
ARTICLE IV. REPRESENTATIONS AND WARRANTIES....................................................... 44
4.1 Due Authorization.................................................................. 44
4.2 Corporate Existence................................................................ 44
4.3 Valid and Binding Obligations...................................................... 44
4.4 Existing Indebtedness.............................................................. 45
4.5 Security Instruments............................................................... 45
4.6 Title to Assets.................................................................... 45
4.7 Scope and Accuracy of Financial Statements and Reserve Reports..................... 45
4.8 No Material Misstatements.......................................................... 45
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4.9 Liabilities and Litigation......................................................... 46
4.10 Authorizations; Consents........................................................... 46
4.11 Compliance with Laws............................................................... 46
4.12 Default............................................................................ 46
4.13 ERISA.............................................................................. 47
4.14 Environmental Laws................................................................. 47
4.15 Compliance with Federal Reserve Regulations........................................ 48
4.16 Investment Company Act Compliance.................................................. 48
4.17 Public Utility Holding Company Act Compliance...................................... 48
4.18 Proper Filing of Tax Returns; Payment of Taxes Due................................. 48
4.19 Refunds............................................................................ 48
4.20 Gas Contracts...................................................................... 49
4.21 Intellectual Property.............................................................. 49
4.22 Labor Matters...................................................................... 49
4.23 Casualties or Taking of Property................................................... 49
4.24 Locations of Borrower.............................................................. 49
4.25 Subsidiaries....................................................................... 50
4.26 Good Standing...................................................................... 50
ARTICLE V. AFFIRMATIVE COVENANTS................................................................. 50
5.1 Maintenance and Access to Records.................................................. 50
5.2 Quarterly Financial Statements; Compliance Certificates............................ 50
5.3 Annual Financial Statements........................................................ 50
5.4 Oil and Gas Reserve Reports........................................................ 50
5.5 Title Opinions; Title Defects...................................................... 51
5.6 Notices of Certain Events.......................................................... 52
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5.7 Additional Information............................................................. 52
5.8 Compliance with Laws............................................................... 53
5.9 Payment of Assessments and Charges................................................. 53
5.10 Maintenance of Corporate Existence and Good Standing............................... 53
5.11 Payment of Notes; Performance of Obligations....................................... 53
5.12 Further Assurances................................................................. 53
5.13 Fees and Expenses.................................................................. 54
5.14 Operation of Oil and Gas Properties................................................ 55
5.15 Maintenance and Inspection of Properties........................................... 55
5.16 Maintenance of Insurance........................................................... 55
5.17 Indemnification.................................................................... 55
5.18 Liens on Material Properties; Additional Guaranties and Mortgages.................. 56
5.19 Maintenance of Agreements, etc..................................................... 59
5.20 Hedging............................................................................ 59
ARTICLE VI. NEGATIVE COVENANTS................................................................... 59
6.1 Indebtedness....................................................................... 59
6.2 Contingent Obligations............................................................. 60
6.3 Liens.............................................................................. 60
6.4 Negative Pledge Agreements......................................................... 60
6.5 Sales of Assets.................................................................... 61
6.6 Leasebacks......................................................................... 61
6.7 Loans; Advances; Investments....................................................... 61
6.8 Dividends and Distributions........................................................ 62
6.9 Environmental Matters.............................................................. 62
6.10 Merger, etc.; Changes in Corporate Structure....................................... 63
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6.11 Transactions with Affiliates....................................................... 63
6.12 Lines of Business.................................................................. 63
6.13 ERISA Compliance................................................................... 63
6.14 Subordinated Indebtedness; Production Payments..................................... 63
6.15 Use of Proceeds.................................................................... 64
6.16 Intentionally Blank................................................................ 64
6.17 Change of Ownership................................................................ 64
6.18 Capital Expenditures............................................................... 64
6.19 Working Capital.................................................................... 64
6.20 Interest Coverage Ratio............................................................ 64
6.21 Debt to Adjusted EBITDA Ratio...................................................... 64
ARTICLE VII. EVENTS OF DEFAULT................................................................... 64
7.1 Enumeration of Events of Default................................................... 64
7.2 Remedies........................................................................... 67
ARTICLE VIII. THE AGENTS AND THE ARRANGER........................................................ 68
8.1 Appointment........................................................................ 68
8.2 Delegation of Duties............................................................... 68
8.3 Exculpatory Provisions............................................................. 68
8.4 Reliance by Agent.................................................................. 69
8.5 Notice of Default.................................................................. 69
8.6 Non-Reliance on Agent and Other Lenders............................................ 70
8.7 Indemnification.................................................................... 70
8.8 Restitution........................................................................ 71
8.9 Agents in Individual Capacity...................................................... 71
8.10 Successor Agent.................................................................... 72
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8.11 Applicable Parties................................................................. 72
ARTICLE IX. MISCELLANEOUS........................................................................ 72
9.1 Assignments; Participations........................................................ 72
9.2 Survival of Representations, Warranties, and Covenants............................. 74
9.3 Notices and Other Communications................................................... 75
9.4 Parties in Interest................................................................ 75
9.5 Rights of Third Parties............................................................ 75
9.6 No Waiver; Rights Cumulative....................................................... 75
9.7 Severability....................................................................... 75
9.8 Amendments; Waivers................................................................ 75
9.9 Confidentiality.................................................................... 76
9.10 Governing Law...................................................................... 77
9.11 Jurisdiction and Venue............................................................. 77
9.12 Appointment of Agent for Service of Process........................................ 77
9.13 Waiver of Rights to Jury Trial..................................................... 78
9.14 Integration........................................................................ 78
9.15 Counterparts....................................................................... 78
9.16 L/C Documents...................................................................... 78
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LIST OF EXHIBITS
Exhibit I - Form of Note
Exhibit II - Form of Subordination
Exhibit III - Form of Assignment Agreement
Exhibit IV - Form of Borrowing Request
Exhibit V - Schedule of Jurisdictions Where Qualified to Do Business
Exhibit VI - Facility Amounts
Exhibit VII - Form of Compliance Certificate
Exhibit VIII - Form of Opinion of Borrower' Counsel
Exhibit IX - Form of Opinion of Local Counsel
Exhibit X - Disclosures
Exhibit XI - Specified Assets
Exhibit XII - Form of Pledge Agreement
Exhibit XIII - [Intentionally Blank]
Exhibit XIV - Form of Subsidiary Guaranty
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into effective as of November
28, 2001, by and among KCS ENERGY, INC., a Delaware corporation (the
"Borrower"); each lender that is a signatory hereto or becomes a party hereto as
provided in Sections 9.1 or 2.25 (individually, together with its successors and
such assigns, a "Lender" and, collectively, together with their respective
successors and such assigns, the "Lenders"); CANADIAN IMPERIAL BANK OF COMMERCE,
a Canadian chartered bank, acting through its New York Agency (in its individual
capacity, "CIBC"), as agent for the Lenders (in such capacity, together with its
successors in such capacity pursuant to the terms hereof, the "Agent"); CIBC
INC., a Delaware corporation (in its individual capacity, "CIBC Inc."), as
collateral agent for the Lender Parties (as herein defined; CIBC Inc. in such
capacity, together with its successors in such capacity pursuant to the terms
hereof, the "Collateral Agent"); CIBC World Markets Corp., as Arranger and Sole
Book Runner (the "Arranger"); and Guaranty Bank as Co-Arranger and Documentation
Agent (the "Co-Arranger").
W I T N E S S E T H:
WHEREAS, the Borrower would like to obtain credit from the Lenders and the
Lenders are willing to provide such credit on the terms, and subject to the
conditions herein set forth;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Agreement, the terms "Agent,"
"Arranger," "Borrower," "CIBC," "CIBC Inc.," "Collateral Agent," "Lender," and
"Lenders" shall have the meanings assigned to them hereinabove.
1.2 Additional Defined Terms. As used in this Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Acquired Property" shall have the meaning specified in Section
5.18(c).
"Acquisition Indebtedness" shall have the meaning specified in
Section 5.18(c).
"Additional Costs" shall mean actual costs which the Agent or any
Lender reasonably determines have been incurred and are attributable to
its obligation to make or its making or maintaining any LIBO Rate Loan or
issuing or participating in Letters of Credit, or any reduction in any
amount receivable by the Agent or such Lender in respect of any such
obligation or any LIBO Rate Loan or Letter of Credit, in each case
resulting from any Regulatory Change which (a) changes the basis of
taxation of any amounts payable to the Agent or such Lender under this
Agreement or any Note in respect of any
LIBO Rate Loan or Letter of Credit (other than taxes imposed on or
calculated on the basis of the overall net income, capital or profit of
the Agent or such Lender or its Applicable Lending Office for any such
LIBO Rate Loan or for issuing or participating in any Letter of Credit),
(b) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio, or similar requirements (other than the Reserve Requirement
utilized in the determination of the Adjusted LIBO Rate for such Loan)
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities of, such Lender (including LIBO Rate Loans and
Dollar deposits in the London interbank market in connection with LIBO
Rate Loans), or the Commitment of such Lender, or (c) imposes any other
condition affecting this Agreement or any Note or any of such extensions
of credit, liabilities, or Commitments.
"Adjusted Base Rate" shall mean, for any day and any Base Rate Loan,
an interest rate per annum equal to the sum of (a) the greater of (i) the
Federal Funds Rate for such day plus one percent (1%), or (ii) the Base
Rate for such day plus (b) the Applicable Margin for such Base Rate Loan,
such rate to be computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable, but in no
event shall such rate exceed the Highest Lawful Rate.
"Adjusted EBITDA" shall mean EBITDA less the amortization of
deferred revenue attributable to the Production Payment 2001 Facility.
"Adjusted LIBO Rate" shall mean, for any Interest Period for any
LIBO Rate Loan, an interest rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) determined by the Agent to be equal to the
sum of (a) the quotient of (i) the LIBO Rate for such Interest Period for
such LIBO Rate Loan divided by (ii) a percentage (expressed as a decimal)
equal to 100% minus the Reserve Requirement for such Loan for such
Interest Period plus (b) the Applicable Margin for such LIBO Rate Loan,
such rate to be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) during
the period for which payable, but in no event shall such rate exceed the
Highest Lawful Rate.
"Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlled by, controlling, or under common control
with, such Person and any "affiliate" of such Person within the meaning of
Reg. Section 240.12b-2 of the Securities Exchange Act of 1934, as amended,
with "control," as used in this definition, meaning possession, directly
or indirectly, of the power (a) to vote fifteen percent (15%) or more of
the securities (on a fully diluted basis) having ordinary voting power for
the election of directors or managing members or managing general partners
or (b) to direct or cause the direction of management, policies or action
through ownership of voting securities, a voting trust, or membership in
management or in the group appointing or electing management or by
contract or otherwise through formal or informal arrangements or business
relationships.
"Agreement" shall mean this Credit Agreement, as the same may from
time to time be amended, supplemented, restated or otherwise modified.
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"Applicable Lending Office" shall mean, for each Lender and type of
Loan, the lending office of such Lender (or an Affiliate of such Lender)
designated for such type of Loan on the signature pages hereof or such
other office of such Lender (or an Affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower as the
office by which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean as to each Base Rate Loan and each
LIBO Rate Loan, an amount equal to the percentage set forth in the grid
below for such type of Loan, as such percentage may be modified pursuant
to the terms set forth below:
% that Obligations then Outstanding Applicable Margin
with respect to Loans and L/C -----------------------------
Exposure Bear to Borrowing Base Base Rate LIBO Rate
----------------------------------- --------- ---------
Less than or equal to 33.333% 0.00% 2.0%
Greater than 33.333% but less than 0.50% 2.5%
or equal to 66.667%
Greater than 66.667% 1.0% 3.0%
"Assignment Agreement" shall mean an Assignment Agreement,
substantially in the form of Exhibit III, with appropriate insertions.
"Available Commitment" shall mean, at any time, an amount equal to
the remainder, if any, of (a) the lesser of the Commitment Amount or the
Borrowing Base in effect at such time minus (b) Obligations in respect of
the outstanding principal amount of the Loans and L/C Exposure at such
time.
"Base Rate" shall mean the interest rate most recently announced by
CIBC at its New York, New York office as its prime rate for Dollar loans.
The Base Rate shall change simultaneously with each change in such
announced interest rate and such Base Rate may not be the lowest interest
rate charged by CIBC in connection with extensions of credit.
"Base Rate Loan" shall mean any Loan which the Borrower has
requested in writing to bear interest at the Adjusted Base Rate or which,
pursuant to the terms hereof, is otherwise required to bear interest at
the Adjusted Base Rate.
"Benefited Lender" shall have the meanings assigned to such term in
Section 2.11(c).
"Borrowing Base" shall mean, at any time, the amount determined in
accordance with Section 2.12(a), (b), (c) and (d).
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"Borrowing Request" shall mean each written request, in
substantially the form attached hereto as Exhibit IV, by the Borrower to
the Agent for a borrowing or conversion pursuant to Sections 2.1 or 2.14,
each of which shall:
(a) be signed by a Responsible Officer of the Borrower;
(b) specify the amount and type of Loan requested or to be
made or converted and the date of the borrowing or conversion (which
shall be a Business Day);
(c) when requesting the making of or a conversion into a Base
Rate Loan, be delivered to the Agent no later than 11:00 a.m., New
York, New York time, on the Business Day of the requested borrowing
or conversion; and
(d) when requesting the making or continuation of or a
conversion into a LIBO Rate Loan, be delivered to the Agent no later
than 12 noon, New York, New York time, the third Business Day prior
to the requested borrowing or conversion and designate the Interest
Period requested with respect to such Loan.
"Business Day" shall mean a day other than a day when commercial
banks are authorized or required to close in the State of New York and,
with respect to all requests, notices, and determinations in connection
with, and payments of principal and interest on, LIBO Rate Loans, which is
also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Capitalized Lease Liabilities" shall mean all monetary obligations
of the Borrower or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other
Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Change of Control" means
(a) the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 20% or more of the outstanding
shares of voting stock of the Borrower; provided, however, that for
purposes hereof, the acquisition by a Qualified Purchaser or by any
Person or Persons who are as of the date of this Agreement executive
officers or directors, or both, of the Borrower of such beneficial
ownership shall not be a Change of Control; or
(b) a change shall occur in the Board of Directors of the
Borrower so that a majority of the members of the Board of Directors
of the Borrower ceases to include individuals who were members of
the Board of Directors of the
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Borrower on the Closing Date (or individuals whose election or
nomination for election was approved by a vote of at least a
majority of the directors then in office who either were directors
on the Closing Date or whose election or nomination for election was
previously so approved).
"Closing Date" shall mean November 28, 2001.
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"Collateral" shall mean the Mortgaged Properties, the Properties
described in the Security Instruments referenced in Section 3.1 hereof,
and any other Property now or at any time subject to a Lien to secure the
payment or performance of all or any portion of the Obligations.
"Commitment" shall mean, relative to any Lender, such Lender's
obligations to make Loans and participate in Letters of Credit pursuant to
Sections 2.1 and 2.2 and "Commitments" shall mean the several obligations
of the Lenders to make Loans and participate in Letters of Credit.
"Commitment Amount" shall mean an amount equal to $100,000,000, as
such amount may be changed from time to time pursuant to the terms of this
Agreement.
"Commitment Period" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"Commitment Termination Date" shall mean the date of Final Maturity.
"Commodity Hedging Agreement" shall mean any swap agreement, cap,
floor, collar, exchange transaction, forward agreement, or other exchange
or protection agreement relating to hydrocarbons, whether in effect on the
date hereof or hereafter entered into by the Borrower or any option with
respect to any such transaction.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower, within the meaning of Section 4001 of
ERISA.
"Compliance Certificate" shall mean each certificate, substantially
in the form attached hereto as Exhibit VII, executed by a Responsible
Officer of the Borrower, and furnished to the Agent from time to time in
accordance with the terms hereof.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation") in any manner, whether
directly or indirectly, including any obligation of such Person,
regardless of whether such obligation is contingent, (a) to purchase any
primary obligation or any Property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any primary obligation, or (ii) to maintain working or equity
capital of any other Person in respect of any primary
5
obligation, or otherwise to maintain the net worth or solvency of any
other Person, (c) to purchase Property, securities or services primarily
for the purpose of assuring the owner of any primary obligation of the
ability of the Person primarily liable for such primary obligation to make
payment thereof, or (d) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof, with the
amount of any Contingent Obligation being deemed to be equal to the stated
or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"Debt" shall mean Indebtedness of the Borrower and its Subsidiaries,
on a consolidated basis, other than Indebtedness of the type described in
clause (a) of the definition of Indebtedness to the extent such
Indebtedness so described in clause (a) thereof is not included within
clauses (b) through (f) thereof, and other than the Production Payment
2001 Obligations.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to the
Adjusted Base Rate from time to time in effect plus two percent (2%), such
rate to be computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed (including the first day but excluding the
last day) during the period for which payable, but in no event shall such
rate exceed the Highest Lawful Rate.
"Deferred Revenue Amortization" shall mean the amortization of
deferred revenue in accordance with GAAP attributable to the Production
Payment 2001 Facility.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"EBITDA" shall mean, for any period, Net Income for such period plus
Interest Expense, federal and state income taxes, depreciation,
amortization, Reorganization Expenses and other non-cash expenses for such
period deducted in the determination of Net Income for such period.
"Eligible Assignee" means at any time any Lender, bank, finance
company, insurance company, savings and loan association, savings bank,
other financial institution, Person or fund that is regularly engaged in
making or purchasing loans.
"Energy Marketing" means KCS Energy Marketing, Inc., a New Jersey
corporation.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation by any Governmental Authority or any other Person with
respect to (a) air emissions from any Property at any time owned, leased
or operated by the Borrower or any Subsidiary of the Borrower, (b) spills,
releases, or discharges of Hazardous Substances to soils, any
6
improvements located thereon, surface water, groundwater, or the sewer,
septic, waste treatment, storage, or disposal systems servicing any
Property at any time owned, leased or operated by the Borrower or any of
its Subsidiaries, (c) solid or liquid waste disposal of Hazardous
Substances at any Property at any time owned, leased or operated by the
Borrower or any of its Subsidiaries or affecting any Property of the
Borrower or any of its Subsidiaries or the facilities located and or the
operations conducted on any real Property of the Borrower or any of its
Subsidiaries, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance by the Borrower or any of its
Subsidiaries or affecting any Property of the Borrower or any of its
Subsidiaries or the facilities located and the operations conducted on any
real Property of the Borrower or any of its Subsidiaries, or (e) other
environmental, health, or safety matters affecting any Property at any
time owned, leased or operated by the Borrower or any of its Subsidiaries,
the business conducted thereon or (f) any violation or alleged violation
of Environmental Laws.
"Environmental Laws" shall mean (a) the following federal laws as
they may be cited, referenced, and amended from time to time: the Clean
Air Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Endangered Species Act, the Hazardous
Materials Transportation Act of 1986, the Occupational Safety and Health
Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery
Act of 1976, the Safe Drinking Water Act, the Superfund Amendments and
Reauthorization Act, and the Toxic Substances Control Act; (b) any and all
equivalent environmental statutes of any state in which Property at any
time owned, leased or operated by the Borrower or any of its Subsidiaries
is situated, as they may be cited, referenced and amended from time to
time; (c) any rules or regulations promulgated under or adopted pursuant
to the above federal and state laws; and (d) any other equivalent federal,
state, or local statute or any requirement, rule, regulation, code,
ordinance, or order adopted pursuant thereto, including those relating to
the generation, transportation, treatment, storage, recycling, disposal,
handling, or release of Hazardous Substances or relating to public health
and safety and protection of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
published interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Facility Amount" shall mean, for each Lender, the amount set forth
opposite the name of such Lender on Exhibit VI under the caption "Facility
Amount," as modified to reflect assignments permitted by Sections 9.1 and
2.25 or otherwise pursuant to the terms hereof.
"Federal Funds Rate" shall mean, for any day, a rate of interest 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 Business Day next succeeding such day,
7
provided that (a) if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if such rate is not so published
for any day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent on such day on such transactions as determined in
good faith by the Agent.
"Fee Letter" shall mean that letter agreement dated as of June 29,
2001, between the Agent and the Borrower.
"Final Maturity" shall mean November 28, 2004 unless the Liquidity
Condition shall not have been satisfied by November 15, 2002, in which
event it shall mean November 15, 2002.
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting in all cases of at least a balance sheet and related statements
of operations and cash flows, and in each year-end financial statement a
statement of common stock and other stockholders' or partners' equity,
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a nationally
recognized firm of independent certified public accountants or other
independent certified public accountants reasonably acceptable to the
Agent and footnotes to any of the foregoing, all of which, unless
otherwise indicated, shall be prepared in accordance with GAAP
consistently applied (subject to normal year-end audit adjustments with
respect to Financial Statements prepared as at a point in time other than
year-end) and in comparative form with respect to the corresponding period
of the preceding fiscal period.
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants and, unless the context requires
use of a specified date, in effect in the United States from time to time.
"Gas Services" means Medallion Gas Services, Inc., an Oklahoma
corporation.
"Governmental Authority" shall mean any nation, country,
commonwealth, territory, government, state, county, parish, municipality,
or other political subdivision and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
"Hazardous Substances" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos or any material
containing asbestos, polychlorinated biphenyls (PCBs), petroleum,
petroleum products, associated oil or natural gas exploration, production,
and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and
Reauthorization Act, as amended, the Hazardous Materials Transportation
Act, as amended, the Resource
8
Conservation and Recovery Act, as amended, the Toxic Substances Control
Act, as amended, or any other Requirement of Law.
"Hedging Agreement" shall mean any Interest Hedging Agreement or any
Commodity Hedging Agreement whether in effect as of the date hereof or
hereafter entered into by the Borrower, including any Secured Hedging
Agreement.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum non-usurious interest rate, if any (or, if the context so
requires, an amount calculated at such rate), that at any time or from
time to time may be contracted for, taken, reserved, charged, or received
under laws applicable to such Lender, as such laws are presently in effect
or, to the extent allowed by applicable law, as such laws may hereafter be
in effect and which allow a higher maximum non-usurious interest rate than
such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication,
(a) all liabilities (excluding reserves for deferred income taxes,
deferred compensation liabilities, and other deferred liabilities and
credits) which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet, (b)
all obligations of such Person evidenced by bonds, debentures, promissory
notes, or similar evidences of indebtedness, (c) all other indebtedness of
such Person for borrowed money, (d) Capitalized Lease Liabilities, (e) the
Production Payment 2001 Obligations, (f) all obligations of others, to the
extent any such obligation is secured by a Lien on the assets of such
Person (whether or not such Person has assumed or become liable for the
obligation secured by such Lien), (g) all guaranties of such Person of
obligations and liabilities of the type described in the foregoing clauses
(a) through (d).
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the
United States or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, trade names, copyrights, technology, trade secrets know-how,
and processes.
"Interest Expense" shall mean, for any period, the total interest
expense (including interest expense attributable to capitalized leases) of
the Borrower and its Subsidiaries, for such period, determined on a
consolidated basis and in accordance with GAAP and shall include preferred
stock dividends paid in cash, but shall exclude non- cash amortization of
debt expense.
9
"Interest Hedging Agreement" shall mean any interest rate swap, rate
cap, rate floor, rate collar, forward agreement, or other exchange or rate
protection agreement, entered into by the Borrower or any option with
respect to any such transaction.
"Interest Period" shall mean, subject to the limitations set forth
in Section 2.4, with respect to any LIBO Rate Loan, a period commencing on
the date such Loan is made or converted from a Loan of another type
pursuant to this Agreement or the last day of the next preceding Interest
Period with respect to such Loan and ending on the numerically
corresponding day in the calendar month that is one, two, three or six
months thereafter, as the Borrower may request in the Borrowing Request
for such Loan.
"Investment" shall mean, as to any Person, any stock, bond, note or
other evidence of Debt or any other security (other than current trade and
customer accounts) of, investment or partnership interest in or loan to,
such Person.
"L/C Exposure" shall mean, at any time, the aggregate maximum amount
available to be drawn under outstanding Letters of Credit at such time.
"Lender Party" shall mean any of the Collateral Agent, the Agent,
each Lender and each Lender or Affiliate of a Lender which is a
counterparty to a Secured Hedging Agreement with the Borrower.
"Letter of Credit" shall mean any standby letter of credit issued
for the account of the Borrower pursuant to Section 2.2.
"Letter of Credit Application" shall mean the standard letter of
credit application employed by the Agent, as the issuer of the Letters of
Credit, from time to time in connection with letters of credit.
"Letter of Credit Payment" shall mean any payment made by the Agent
on behalf of the Lenders under a Letter of Credit, to the extent that such
payment has not been repaid by the Borrower.
"LIBO Rate" shall mean, with respect to any Interest Period for any
LIBO Rate Loan, the interest rate equal to (a) the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined on the basis
of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period and appearing
on Telerate Page 3750 at or about 11:00 a.m., London time, on the day two
Business Days prior to the commencement of such Interest Period or (b) if
such a rate does not appear on Telerate Page 3750, the average of the
rates per annum (rounded upward, if necessary, to the nearest 1/100 of 1%)
at which Dollar deposits in immediately available funds are offered to
CIBC in the interbank LIBOR market at or about 11:00 a.m. (New York City
time) two Business Days prior to the beginning of such Interest Period,
and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" shall mean any Loan which the Borrower has
requested in writing to bear interest at the Adjusted LIBO Rate and which
is permitted by the terms hereof to bear interest at the Adjusted LIBO
Rate.
10
"Lien" shall mean any interest in Property securing an obligation
owed to, or constituting a claim by, a Person other than the owner of such
Property, whether such interest is based on common law, statute, or
contract, and including the lien or security interest arising from a
mortgage, ship mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt, margin agreement, or a lease,
consignment, or bailment for security purposes (other than true leases or
true consignments), liens of mechanics, materialmen, and artisans,
maritime liens and reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases, and other
Title exceptions and encumbrances affecting Property which secure an
obligation owed to, or constitute a claim by, a Person other than the
owner of such Property (for the purpose of this Agreement, a Person shall
be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which Title to the Property has been retained by
or vested in some other Person for security purposes), and the filing or
recording of any financing statement or other security instrument in any
public office.
"Loan" shall mean a Base Rate Loan or a LIBO Rate Loan made by any
Lender to or for the benefit of the Borrower pursuant to this Agreement,
each of which is a "type" of Loan hereunder and, without duplication, any
payment made by the Agent as the issuing bank under a Letter of Credit
and, without duplication, any payment made by a Lender to the Agent by
reason of a Letter of Credit Payment.
"Liquidity Condition" shall mean that (i) less than $20,000,000 in
principal amount of the Borrower's Senior Notes are outstanding on August
31, 2002 and (ii) the Borrower shall have cash plus Available Commitment
of not less than the then outstanding principal amount of the Senior Notes
on August 31, 2002; provided, however, that if the Borrower fails to
satisfy one or both of clause (i) and (ii) on August 31, 2002, the
Borrower shall have a seventy- five (75) day period in which to remedy
such failure.
"Loan Balance" shall mean, at any time, the aggregate outstanding
principal balance of the Loans at such time.
"Loan Documents" shall mean this Agreement, the Notes, the Fee
Letter, any Subsidiary Guaranty, any Secured Hedging Agreement, the Letter
of Credit Applications, the Letters of Credit, the Security Instruments,
and all other documents and instruments now or hereafter delivered by the
Borrower, any Mortgagor, any Subsidiary Guarantor or any of their
respective Affiliates in favor or for the benefit of the Agent, the
Collateral Agent, or any Lender Party pursuant to the terms of or in
connection with this Agreement, the Notes, a Subsidiary Guaranty, any
Secured Hedging Agreement, the Letter of Credit Applications, the Letters
of Credit, or the Security Instruments, and all renewals, extensions,
amendments, supplements, and restatements thereof.
"Material Adverse Effect" shall mean in the reasonable determination
of the Required Lenders, the occurrence or existence of any material
adverse effect on the business, operations, Properties, condition
(financial or otherwise), or prospects of the Borrower and the Subsidiary
Guarantors or upon the ability of the
11
Borrower and the Subsidiary Guarantors to perform their obligations under
the Loan Documents.
"Material Properties" shall mean, at any time, collectively (a) Oil
and Gas Properties of the Borrower or any Subsidiary of the Borrower which
constitute sixty- five percent (65%) of the net present value (determined
in accordance with the most recent Reserve Reports provided to the Agent
in accordance with Section 5.4) of all Oil and Gas Properties owned by
such Persons (other than those described in the following clause (b))
after giving effect, if applicable, to any secured Acquisition
Indebtedness in respect of any such Property constituting Acquired
Property (which Oil and Gas Properties, as of the Closing Date, are listed
in the Reserve Report dated September 30, 2001 prepared by the Borrower,
copies of which have been delivered to the Agent) but in any event, Oil
and Gas Properties (other than those described in the following clause
(b)) which at all times and from time to time have a Risk Adjusted Present
Value equal to at least one hundred fifty percent (150%) of the sum of the
principal amount of outstanding Loans plus L/C Exposure and (b) those
Properties of the Borrower or any of its Subsidiaries from time to time
subject to the Production Payment 2001 Facility. Notwithstanding the
above, the value of the Material Properties not subject to the Production
Payment 2001 Facility shall be equal to at least 90% of the Risk Adjusted
Present Value of the properties not subject to the Production Payment 2001
Facility.
"Material Subsidiary" shall mean any direct or indirect Subsidiary
of the Borrower other than a Subsidiary which engages in no commercial
activities or a Subsidiary that has assets with a value of $1,000,000 or
less.
"Maximum Borrowing Base Amount" shall, so long as any Senior Notes
are outstanding, mean, on the date of any Loan or issuance of a Letter of
Credit, the greater of (i) $165,000,000 plus an amount to secure hedging
obligations or (ii) fifteen percent (15%) of Adjusted Consolidated Net
Tangible Assets (as defined in the indenture referred to in clause (i) of
the definition of Public Debt), but not to exceed $190,000,000 prior to
December 31, 2001, or $155,000,000 after December 31, 2001, less, in both
cases, the remaining Production Payment 2001 Obligations; provided,
however that, at any time when the aggregate principal amount of Loans of
all Lenders outstanding hereunder plus the L/C Exposure exceeds
$15,000,000, in no event shall the amount determined under clause (i) or
(ii) above, on the date of any Loan or issuance of a Letter of Credit,
exceed the amount of indebtedness constituting "Permitted Indebtedness"
(as defined therein) under the further proviso of clause (i) of the
definition of Permitted Indebtedness in the indenture referred to in
clause (i) of the definition of Public Debt.
"Medallion" means KCS Medallion Resources, Inc., a Delaware
corporation.
"Michigan Resources" means KCS Michigan Resources, Inc., a Delaware
corporation.
"Mortgage" shall mean any (a) Act of Mortgage and Security Agreement
Securing Future Obligations or (b) any Open-End Line of Credit Mortgage,
Deed of Trust, Indenture, Security Agreement, Financing Statement and
Assignment of
12
Production or any other mortgage or deed of trust or similar instrument
executed by the Borrower or any Subsidiary of the Borrower in favor of the
Collateral Agent for the benefit of the Lender Parties and creating a Lien
on real property and other related assets of the Borrower or such
Subsidiary of the Borrower, in each case as such may from time to time be
amended, supplemented, restated or otherwise modified.
"Mortgagor" shall mean the Borrower or any Subsidiary of the
Borrower which is party to a Mortgage in favor of the Collateral Agent for
the benefit of the Lender Parties.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the
Borrower or any Subsidiary of the Borrower purported to be subject to a
Lien in favor of the Collateral Agent to secure the Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"National Enerdrill" means National Enerdrill Corporation, a New
Jersey corporation.
"Net Cash Proceeds" means, for any issuance of equity securities,
the cash proceeds (including any cash payments actually received as a
deferred payment of principal pursuant to a note, installment receivable,
purchase price adjustment receivable or otherwise) of such issuance of
equity securities net of (i) legal fees, accountant fees, investment
banking fees, brokerage fees, finders fees, survey costs, Title insurance
premiums, and other customary fees, costs and expenses actually incurred,
paid or payable in connection therewith, (ii) taxes or other governmental
fees or charges paid or payable as a result thereof and (iii) reasonable
reserves for purchase price adjustments.
"Net Income" shall mean, for any period, the net income (or loss) of
the Borrower and its Subsidiaries for such period, determined on a
consolidated basis and in accordance with GAAP.
"Notes" shall mean certain promissory notes of the Borrower referred
to in Section 2.1(c) payable to a Lender in the amount of the Facility
Amount of such Lender in the form attached hereto as Exhibit I with
appropriate insertions together with all renewals, extensions for any
period, increases and rearrangements thereof.
"Notice of Termination" shall have the meaning assigned to such term
in Section 2.25.
"NYMEX" shall mean the New York Mercantile Exchange.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrower to pay or
reimburse the Agent, as the issuer of Letters of Credit, or the Lenders,
as the case may be, for, amounts payable, paid (or deemed paid), or
incurred with respect to Letters of Credit and amounts required to be paid
pursuant to Section 2.2(e) or 2.13, (c) the undrawn, unexpired amount of
all outstanding Letters of Credit, (d) the obligation of the Borrower for
the payment of fees
13
and expenses pursuant to the Loan Documents, (e) the obligations of each
Subsidiary Guarantor under its Subsidiary Guaranty, (f) all amounts owing
or to be owing by the Borrower under any Hedging Agreement with any Lender
Party (including any Secured Hedging Agreement) now or hereafter arising,
and (g) all other obligations and liabilities of the Borrower or its
Subsidiaries to any of the Lender Parties, now existing or hereafter
incurred, under, arising out of or in connection with any Loan Document,
and to the extent that any of the foregoing includes or refers to the
payment of amounts deemed or constituting interest, only so much thereof
as shall have accrued, been earned and which remains unpaid at each
relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other
interests in or under mineral estates or oil, gas, and other liquid or
gaseous hydrocarbon leases with respect to Properties situated in the
United States or offshore from any State of the United States, including
overriding royalty and royalty interests, leasehold estate interests, net
profits interests, production payment interests, and mineral fee
interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to SubTitle A of Title IV of ERISA or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Share" shall mean, as to each Lender, the percentage
such Lender's Facility Amount constitutes of the aggregate Facility Amount
of all Lenders.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 302(f) or
Section 4068 of ERISA), old-age pension, or public liability obligations
which are not yet due or which are being contested in good faith by
appropriate proceedings, if such reserve as may be required by GAAP shall
have been made therefor, (c) Liens in favor of Governmental Authorities,
vendors, carriers, warehousemen, repairmen, mechanics, workmen, and
materialmen, and construction or similar Liens arising by operation of law
(including Liens securing statutory or regulatory obligations) in the
ordinary course of business in respect of obligations that are not
past-due or which are being contested in good faith by appropriate
proceedings, if such reserve as may be required by GAAP shall have been
made therefor, (d) Liens in favor of operators and non-operators under
joint operating agreements or similar contractual arrangements arising in
the ordinary course of the business of the Borrower or any of its
Subsidiaries to secure amounts owing, which amounts are not yet due or are
being contested in good faith by appropriate proceedings, if such reserve
as may be required by GAAP shall have been made therefor, (e) Liens under
production sales agreements, division orders, operating agreements,
unitization and pooling orders, and other agreements customary in the oil
and gas business for processing, producing, transporting, marketing, and
exchanging produced hydrocarbons
14
securing obligations not constituting Indebtedness and provided that such
Liens do not secure obligations to deliver hydrocarbons at some future
date without receiving full payment therefor within 90 days of delivery,
(f) the terms of the instruments evidencing the Oil and Gas Properties of
the Borrower or any of its Subsidiaries, the Star Production Payments, the
Production Payment 2001 Lien and documents listed and matters described
under the heading "Permitted Encumbrances" or "Permitted Liens" in an
exhibit to the Security Instruments, (g) easements, rights of way,
restrictions, encumbrances and minor defects in the chain of Title which
are customarily accepted in the oil and gas industry none of which
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries or materially detract from the value
or use of the Property to which they apply, (h) Liens in favor of the
Collateral Agent for the benefit of any Lender Party and other Liens
expressly permitted under the Security Instruments, and judgment Liens
arising by operation of law or as the result of the abstracting of a
judgment or similar action under the laws of any jurisdiction and not
giving rise to an Event of Default, in respect of judgments that are not
final and non-appealable judgments, so long as any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which
such proceeding may be initiated shall not have expired.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, limited liability company, government, any
agency or political subdivision of any government, or any other form of
entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower, any of the
Subsidiaries of the Borrower or any Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means any of the Pledge Agreements executed by
the Borrower or a Subsidiary of the Borrower in favor of the Collateral
Agent for the benefit of the Lender Parties substantially in the form of
Exhibit XII hereto or any similar agreement creating a Lien on equity
interests in a Subsidiary of the Borrower in favor of the Collateral Agent
for the benefit of the Lender Parties and in notes (excluding intercompany
notes) payable to the Borrower or a Subsidiary of the Borrower, in each
case as such may be amended, supplemented, restated or otherwise modified
from time to time.
"Preferred Stock" shall mean the Borrower's 5% Convertible Preferred
Stock, par value $.01 per share.
"Principal Office" shall mean the principal office of the Agent in
New York, New York, presently located at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
"Production Payment 2001 Facility" means the transactions
contemplated by the Purchase and Sale Agreement dated February 14, 2001,
among KCS Resources, Inc.,
15
KCS Energy Services, Inc., KCS Michigan Resources, Inc. and KCS Medallion
Resources, Inc. and Star VPP, LP as in effect on August 1, 2001 providing
for the sale by certain of the Borrower's Subsidiaries of the Star
Production Payments.
"Production Payment 0000 Xxxx" means collectively the Liens granted
by Borrower's Subsidiaries pursuant to Section 16 of the two Production
and Delivery Agreements dated effective as of February 1, 2001 in favor of
Star VPP, LP, as Grantee.
"Production Payment 2001 Obligations" means, as of any date on which
the amount thereof is to be determined, the obligations of the Borrower or
any of its Subsidiaries under the Production Payment 2001 Facility either
recorded as liabilities in accordance with GAAP or as deferred revenues in
accordance with GAAP.
"Prohibited Transaction" shall have the meaning assigned to such
term in Section 406 of ERISA or Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Public Debt" shall mean the obligations of the Borrower and its
Subsidiaries under or in connection with (i) the Indenture dated as of
January 15, 1996, by and among the Borrower, the Subsidiary Guarantors (as
such term is defined therein) named therein, and Fleet National Bank of
Connecticut, as Trustee, relating to the sale by the Borrower of its 11%
Senior Notes due 2003, as amended by a First Supplemental Indenture dated
as of December 2, 1996, Second Supplemental Indenture dated January 3,
1997 and Third Supplemental Indenture dated as of February 20, 2001, and
as hereinafter amended from time to time as permitted hereby and (ii) the
Indenture dated as of January 15, 1998, by and among the Borrower, the
Subsidiary Guarantors (as such term is defined therein) named therein, and
State Street Bank and Trust Company, as Trustee, relating to the sale by
the Borrower of its eight and seven-eighths percent (8 7/8%) Senior
Subordinated Notes due 2006, as amended by a First Supplemental Indenture
dated as of February 20, 2001 and as hereinafter amended from time to time
as permitted hereby.
"Qualified Purchaser" shall mean any domestic pension or publically
traded mutual fund.
"Qualified Swap Counterparty" shall mean (a) any of the Agent, the
Collateral Agent, a Lender or any Affiliate of any of the foregoing, or
(b) any other Person with a rating on its unsecured, long-term debt of BBB
or better from Standard & Poor's and Baa2 or better from Xxxxx'x.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System (or any successor), as amended or supplemented
from time to time.
"Regulatory Change" shall mean, with respect to any Lender, the
passage, adoption, institution, or modification of any federal, state,
local, or foreign Requirement of Law (including Regulation D), or any
interpretation, directive, or request (whether or
16
not having the force of law) of any Governmental Authority or monetary
authority charged with the enforcement, interpretation, or administration
thereof, occurring after the Closing Date and applying to a class of
lenders including such Lender or its Applicable Lending Office.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal
system servicing any Property at any time owned, leased or operated by the
Borrower or any Subsidiary of the Borrower.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Reorganization Expenses" shall mean non-recurring expenses not to
exceed $8,500,000 in the aggregate for purposes hereof incurred in
connection with the Borrower's confirmed plan of reorganization pursuant
to its Fourth Amended Joint Plan of Reorganization which was approved in
the order dated January 30, 2001 of the United States Bankruptcy Court for
the District of Delaware.
"Replacement Lenders" shall have the meaning assigned to such term
in Section 2.25.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice requirement under ERISA is waived in regulations issued by the
PBGC.
"Required Lenders" shall mean, at any time when no Loans are
outstanding and L/C Exposure is zero, Lenders whose Percentage Shares of
all Commitments total at least sixty-six and two-thirds percent (66 2/3%)
of all such Commitments, and at any other time when any Loans are
outstanding or L/C Exposure is greater than zero, or both, Lenders holding
at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
principal amount of all Loans outstanding (without regard to any sale of a
participation in any Loan) and L/C Exposure.
"Required Payment" shall have the meaning assigned to such term in
Section 2.9.
"Requirement of Law" shall mean, as to any Person, any applicable
law, treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Governmental Authority,
including rules, regulations, orders, and requirements for permits,
licenses, registrations, approvals, or authorizations, in each case as
such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
17
"Reserve Report" shall mean each report provided by the Borrower
pursuant to Section 5.4.
"Reserve Requirement" shall mean, for any date on which the LIBO
Rate is determined, the maximum aggregate rate (expressed as a percentage)
of all reserves (including all basic, marginal, supplemental, emergency
and other reserves and taking into account any transitional adjustments or
other scheduled changes in reserve requirements) which are applicable to
any Lender on such date of determination under regulations issued by the
Federal Reserve System Board in respect of "Eurocurrency Liabilities" (as
such term is used in Regulation D of the Federal Reserve System Board) or
any successor category of such liabilities under Regulation D or any
successor regulation. Each determination by the Agent of the applicable
Reserve Requirement shall, in the absence of manifest error, be conclusive
and binding.
"Responsible Officer" shall mean, as to the Borrower or any
Subsidiary of the Borrower, any of the following officers: Chief Executive
Officer, Chairman, Chief Operating Officer, Chief Financial Officer,
Treasurer or Secretary; and in any event, shall mean no other Person or
Persons except as modified pursuant to a certificate accepted by the
Agent.
"Risk Adjusted Present Value" shall mean a net present value of the
applicable Oil and Gas Properties after giving effect, if applicable, to
any secured Acquisition Indebtedness in respect of any such Property
constituting Acquired Property based on standard parameters determined in
good faith by the Agent and Co-Arranger in their discretion in accordance
with its customary standards for borrowing base credits.
"Sales Period" shall mean each successive six- month period during
the term hereof, commencing with the six- month period beginning October
1, 2001.
"Secured Hedging Agreement" shall have the meaning given it in
Section 5.20.
"Security Instruments" shall mean the security instruments executed
and delivered in satisfaction of the condition set forth in Section
3.1(f), and all other documents and instruments at any time executed as
security for all or any portion of the Obligations, including without
limitation security instruments executed pursuant to Section 2.13 or 5.18,
as such instruments may be amended, restated, supplemented or otherwise
modified from time to time.
"Senior Notes" shall mean the Debt issued under the indenture
referred to in clause (i) of the definition of Public Debt.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Specified Assets" shall mean certain assets of the Borrower and its
Subsidiaries, which assets include certain Oil and Gas Properties located
in the States of Colorado, Montana and Wyoming, all as described on
Exhibit XI.
18
"Star Production Payments" means collectively the term overriding
royalty interest and the production payment conveyed to Star VPP, LP,
pursuant to the Production Payment 2001 Facility.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower
having terms of payment which are subordinated to payment of the
Obligations pursuant to terms and conditions and tenor that are no less
favorable to the Lenders than those described on Exhibit II or that are
approved in writing by the Required Lenders, and otherwise permitted
pursuant to the provisions of this Agreement and includes the Indebtedness
referred to in clause (ii) of the definition of the Public Debt.
"Subsidiary" shall mean, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
trust, association or other entity the accounts of which would be
consolidated with those of the parent in the parent's consolidated
financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation,
limited liability company, partnership, trust, association or other entity
(a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held by the parent or
one or more subsidiaries of the parent, or (b) that is, as of such date,
otherwise controlled, by the parent or one or more subsidiaries of the
parent, or (c) of which securities or other ownership interests are, as of
such date owned, controlled or held by the parent or one or more
subsidiaries of the parent and either (i) which together with its
Subsidiaries during any quarter has more than 10% of the Net Income or
Adjusted EBITDA of the parent or (ii) holds, directly or indirectly, 10%
of the consolidated assets of the parent and its subsidiaries.
"Subsidiary Guarantor" shall mean any Subsidiary of the Borrower
which executes a Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean any guaranty in favor of each of
the Lender Parties substantially in the form of Exhibit XIV, delivered
pursuant to Section 3.1(a) or Section 5.18, in each case as the same may
be amended, supplemented, restated or otherwise modified.
"Sufficient Copies" shall mean that number of copies as shall
reasonably be requested from time to time by the Agent.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"Taxes" shall have the meaning assigned to such term in Section
2.24.
"Terminated Lender" shall have the meaning assigned to such term in
Section 2.25.
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"Termination Date" shall have the meaning assigned to such term in
Section 2.25.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"VPP Subsidiaries" shall mean one or more Subsidiaries of the
Borrower formed for the purpose of acquiring one or more production
payment or term overriding royalty interest investments from any oil and
gas producer.
"VPP Subsidiaries Investment" shall mean the investment by Borrower
or its Subsidiaries of up to $20,000,000, in the aggregate, of capital in
one or more VPP Subsidiaries.
"Working Capital" shall mean for any day the difference between the
Borrower's current assets and current liabilities on a consolidated basis,
each as stated on the Borrower's consolidated balance sheet on each day;
provided, that for purposes hereof, current assets shall be deemed to
include the then Available Commitment and current liabilities shall be
deemed not to include the current portion, if any, of the Notes, the L/C
Exposure or the Senior Notes.
1.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.
1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears. References in this Agreement to "includes" or
"including" shall mean "includes, without limitation," or "including, without
limitation," as the case may be. References in this Agreement to statutes,
sections, or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending, replacing, succeeding or
supplementing such statutes, sections, or regulations. Items within a
disjunctive clause containing the disjunction "or" are not exclusive of other
items in such disjunctive clause.
1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate.
20
1.7 Incorporation of Exhibits. The Exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for all
purposes.
1.8 Knowledge. As used herein "knowledge" or "knowledge and belief" of the
Borrower or any Subsidiary of the Borrower shall mean the knowledge of any
executive officer of the Borrower or such Subsidiary; provided, however, that in
the case of any matter covered by Sections 4.14 and 5.6 relating to an Oil and
Gas Property of the Borrower or a Subsidiary of the Borrower, such "knowledge"
or "knowledge and belief" shall mean (a) in the case of an Oil and Gas Property
operated by the Borrower or a Subsidiary of the Borrower, the knowledge of the
highest ranking field personnel of the Borrower or such Subsidiary assigned to
such Property and (b) in the case of an Oil and Gas Property of the Borrower or
a Subsidiary of the Borrower that is not operated by the Borrower or such
Subsidiary, the knowledge of an operations manager having responsibility for
such Property.
ARTICLE II.
TERMS OF FACILITIES
2.1 Loans.
(a) Upon the terms and conditions and relying on the
representations and warranties contained in this Agreement and the
other Loan Documents, each Lender severally agrees to make Loans
during the Commitment Period on a revolving basis to or for the
benefit of the Borrower, in an aggregate principal amount not to
exceed at any time outstanding the lesser of the Facility Amount of
such Lender or the Percentage Share of such Lender of the Borrowing
Base then in effect; provided, however, that notwithstanding the
foregoing (i) the outstanding principal balance of all Loans of all
Lenders plus the L/C Exposure shall not exceed the lesser of the
Commitment Amount or the Borrowing Base at any time or, if any
Senior Notes are outstanding, the Maximum Borrowing Base Amount in
effect on the date of any such loan, and (ii) the sum of the
outstanding principal balance of all Loans by any Lender plus the
Percentage Share of such Lender of the L/C Exposure shall not exceed
an amount equal to the Percentage Share of such Lender multiplied by
the lesser of the Commitment Amount or the Borrowing Base at any
time or, if any Senior Notes are outstanding, the Maximum Borrowing
Base Amount in effect on the date of any such loan. Loans shall be
made from time to time on any Business Day designated by the
Borrower in a Borrowing Request.
(b) Subject to the terms of this Agreement, during the
Commitment Period, the Borrower may borrow, repay, and reborrow and
convert Loans of one type or with one Interest Period into Loans of
another type or with a different Interest Period. Except for
prepayments made pursuant to Section 2.13, each borrowing,
conversion, and prepayment of principal, in the case of Base Rate
Loans, shall be in an amount at least equal to $100,000 and in
multiples of $100,000 thereafter and, in the case of LIBO Rate
Loans, shall be in an amount at least equal to $1,000,000 and in
multiples of $100,000 thereafter. Each
21
borrowing, prepayment, or conversion of or into a Loan of a
different type or, in the case of a LIBO Rate Loan, having a
different Interest Period, shall be deemed a separate borrowing,
conversion, and prepayment for purposes of the foregoing, one for
each type of Loan or Interest Period. Anything in this Agreement to
the contrary notwithstanding, the aggregate principal amount of LIBO
Rate Loans by all of the Lenders having the same Interest Period
shall be at least equal to $1,000,000; and if any borrowing of LIBO
Rate Loans having the same interest period would otherwise be in a
lesser principal amount, such Loans shall be Base Rate Loans during
such period.
(c) Not later than 1:00 p.m. New York, New York time, on the
date specified for each borrowing of a Loan, each Lender shall make
available to the Agent an amount equal to the Percentage Share of
such Lender of the borrowing to be made on such date, at an account
designated by the Age nt, for the account of the Borrower. The
amount so received by the Agent shall, subject to the terms and
conditions hereof, be made available to the Borrower in immediately
available funds, in an account designated from time to time by the
Borrower. All Loans by each Lender shall be maintained at the
Applicable Lending Office of such Lender and shall be evidenced by
the Note of such Lender.
(d) The failure of any Lender to make any Loan required to be
made by it hereunder shall not relieve any other Lender of its
obligation to make any Loan required to be made by it, and no Lender
shall be responsible for the failure of any other Lender to make any
Loan.
2.2 Letters of Credit.
(a) Upon the terms and conditions and relying on the
representations and warranties contained in this Agreement, the
Agent, as issuing bank for the Lenders, agrees, from the date of
this Agreement until the date which is 30 days prior to the
Commitment Termination Date, to issue, on behalf of the Lenders in
their respective Percentage Shares, Letters of Credit for the
account of the Borrower and to renew and extend such Letters of
Credit. Letters of Credit shall be issued, renewed, or extended from
time to time on any Business Day designated by the Borrower
following the receipt in accordance with the terms hereof by the
Agent of the written request by a Responsible Officer of the
Borrower and a Letter of Credit Application. Letters of Credit shall
be issued in such amounts as the Borrower may request; provided,
however, that (i) no Letter of Credit shall have an expiration date
which is (1) more than 365 days after the issuance thereof or (2)
subsequent to one Business Day prior to the Commitment Termination
Date or, in the case of standby Letters of Credit posted to secure
xxxxxxx'x compensation or replugging obligations or environmental
remediation, subsequent to the Commitment Termination Date, (ii) the
outstanding principal balance of all Loans of all Lenders plus the
L/C Exposure shall not exceed the lesser of the Commitment Amount or
the Borrowing Base at any time or, if any Senior Notes are
outstanding, the Maximum Borrowing Base Amount in effect on the date
of issuance of such Letter of Credit, (iii) the L/C
22
Exposure shall not exceed on the date of issuance of any Letter of
Credit the product of 0.20 times the then Borrowing Base, and (iv)
no Letter of Credit shall be issued in an amount less than $50,000.
(b) Upon the issuance of any Letter of Credit, each Lender
shall be deemed to purchase a participation from the Agent in the
relevant Letter of Credit in an amount equal to the Percentage Share
of such Lender of the maximum amount which is or at any time may
become available to be drawn thereunder.
(c) Each Lender shall be unconditionally and irrevocably
liable, without regard to the occurrence of any Default or Event of
Default, to the extent of the Percentage Share of such Lender, to
reimburse, on demand, the Agent, as the issuer of such Letter of
Credit, for the amount of each Letter of Credit Payment under such
Letter of Credit. Each Letter of Credit Payment shall be deemed to
be a Base Rate Loan by each Lender with respect to such Lender's
Percentage Share of such Letter of Credit Payment and shall to such
extent be deemed a Base Rate Loan under and shall be evidenced by
the Note of such Lender. In the event that a Default has occurred
and is continuing under Sections 7.1(f) or (g), an amount equal to
any Letter of Credit Payment made after the occurrence and during
the continuance of such Default shall be payable by the Borrower
upon demand by the Agent. Notwithstanding anything contained herein
or any other Loan Document (including any Letter of Credit
Application), but subject to the provisions of Section 2.13, neither
the Agent as the issuing bank nor any such Lender shall have any
right to require the Borrower to prepay any amounts for which the
Agent as the issuing bank or any Lender might become liable under
any Letter of Credit.
(d) EACH LENDER AGREES TO INDEMNIFY THE AGENT, AS THE ISSUER
OF EACH LETTER OF CREDIT, AND THE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS-IN-FACT AND AFFILIATES OF THE AGENT (TO THE EXTENT
NOT REIMBURSED BY THE BORROWER AND WITHOUT LIMITING THE OBLIGATION
OF THE BORROWER TO DO SO), RATABLY ACCORDING TO THE PERCENTAGE SHARE
OF SUCH LENDER, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND DISBURSEMENTS OF ANYKIND WHATSOEVER WHICH MAY AT
ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE
OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE AGENT AS THE ISSUER OF SUCH
LETTER OF CREDIT OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR SUCH LETTER OF CREDIT OR ANY ACTION
TAKEN OR OMITTED BY THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH ANY OF
THE FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS IMPOSED, INCURRED OR ASSERTED AS A RESULT
OF THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT
23
AS THE ISSUER OF SUCH LETTER OF CREDIT OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES;
PROVIDED THAT NO LENDER (OTHER THAN THE AGENT AS THE ISSUER OF A
LETTER OF CREDIT) SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF
SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT AS THE
ISSUER OF A LETTER OF CREDIT. THE AGREEMENTS IN THIS SECTION 2.2(D)
SHALL SURVIVE THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT.
(e) Upon the occurrence and during the continuance of an Event
of Default, an amount equal to the amount of the then contingent
liability of the Agent as Letter of Credit issuer and the other
Lenders under each outstanding Letter of Credit shall, at the option
of the Agent and without demand upon or notice to the Borrower, be
deemed (as between the Borrower and the Agent) to have been paid or
disbursed by the Agent under such Letter of Credit (notwithstanding
that such amount may not in fact have been so paid or disbursed),
and the Borrower shall be obligated (i) forthwith to reimburse the
Agent for the amount deemed to have been so paid or disbursed by the
Agent, and (ii) if the Agent, in its discretion, so demands, to pay
to the Agent, forthwith on demand, such additional amounts as may be
required so that the aggregate of all amounts previously paid by the
Borrower to the Agent under this Section 2.2(e) and Sections 2.13
and 6.5, and not theretofore applied to the payment of amounts due
and payable by the Borrower to the Agent with respect to such Letter
of Credit shall equal the amount of the then contingent liability of
the Agent (and the other Lender Parties) under such Letter of
Credit. Any amounts so received by the Agent pursuant to the
provisions of the preceding sentence shall be held as collateral
security for: first, the repayment, as and when payable hereunder,
of the Borrower's Obligations in connection with such Letter of
Credit; and second, all other Obligations. The cash collateral so
held may, if the Agent agrees in its sole discretion, at the written
request of the Borrower, be invested as set forth in Section 2.13;
provided that the Agent, on behalf of the Lenders, shall have a
perfected security interest in such investment at all times. Any
losses of such investments shall be charged against the principal
amount invested. Neither the Agent nor any Lender shall be liable
for any loss resulting from any investment of such cash collateral
at the Borrower's request. The Agent is not obligated hereby, or by
any other Loan Document, to make or maintain any investment except
upon timely written request of an officer of the Borrower. If and to
the extent that (a) all Obligations then due and payable of the
Borrower have been fully paid and satisfied, and the commitments and
obligations of the Agent (and the other Lender Parties) under such
Letter of Credit and related documents and all Loan Documents have
terminated or (b) no Event of Default shall any longer be
continuing, in the case of payments made under this Section 2.2(e),
the Agent shall pay to the Borrower, upon the Borrower's request
therefor, all amounts previously paid to the Agent by the Borrower
pursuant to this Section 2.2(e), 2.13 or 6.5 and not theretofore
applied by the Agent to reduce Obligations then due and payable.
24
2.3 [Intentionally Blank].
2.4 Limitations on Interest Periods. Each Interest Period for LIBO Rate
Loans selected by the Borrower (a) which commences on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month
shall end on the last Business Day of the appropriate subsequent calendar month,
(b) which would otherwise end on a day which is not a Business Day shall end on
the next succeeding Business Day (or, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day), (c)
which would otherwise end after the Final Maturity then in effect, shall end on
the Final Maturity then in effect, and (d) shall have a duration of not less
than one month and, if any Interest Period would otherwise be a shorter period,
the relevant Loan shall be a Base Rate Loan during such period.
2.5 Limitation on Types of Loans. Borrowings of Loans may be outstanding
as either Base Rate Loans or LIBO Rate Loans as selected by the Borrower.
Anything herein to the contrary notwithstanding, no more than ten (10) separate
Loans shall be outstanding at any one time, with, for purposes of this Section,
all Base Rate Loans constituting one Loan, and all LIBO Rate Loans for the same
Interest Period constituting one Loan. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any borrowing of LIBO Rate Loans for any Interest Period therefor:
(a) the Agent determines (which determination shall be
conclusive, absent manifest error) that quotations of interest rates
for the deposits referred to in the definition of "LIBO Rate" in
Section 1.2 are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining the rate of
interest for such Loan as provided in this Agreement; or
(b) the Agent or the Required Lenders determine (which
determination shall be conclusive, absent manifest error) that the
rates of interest referred to in the definition of "LIBO Rate" in
Section 1.2 upon the basis of which the rate of interest for such
Loan for such Interest Period is to be determined do not adequately
cover the cost to the Lenders of making or maintaining such Loans
for such Interest Period, then the Agent shall give the Borrower and
the Lenders prompt notice thereof; and so long as such condition
remains in effect, the Lenders shall be under no obligation to make
LIBO Rate Loans or to convert Base Rate Loans into LIBO Rate Loans,
and the Borrower shall, on the last day of the then current Interest
Period for each outstanding LIBO Rate Loan, either prepay such LIBO
Rate Loan or convert such Loan into a Base Rate Loan in accordance
with Section 2.14.
2.6 Use of Loan Proceeds and Letters of Credit.
Proceeds of all Loans and Letters of Credit shall be used solely by the
Borrower for general corporate purposes of the Borrower or its Subsidiaries as
they relate to the acquisition, development and production of Oil and Gas
Properties and the repurchase and retirement of Senior Notes and Working
Capital.
25
2.7 Interest. Subject to the terms of this Agreement (including Section
2.20), interest on the Loans shall accrue and be payable at a rate per annum
equal to the lesser of (a) the Highest Lawful Rate or (b) the Adjusted Base Rate
for each Base Rate Loan or the Adjusted LIBO Rate for each LIBO Rate Loan.
Notwithstanding the foregoing, interest on outstanding principal amounts of the
Loans and, to the extent permitted by applicable law, interest on past- due
interest, fees and other Obligations, shall accrue at the Default Rate upon
maturity and during the continuance of an Event of Default and shall be payable
upon demand by the Agent at any time as to all or any portion of such interest.
In the event that the Borrower fails to select the duration of any Interest
Period for any Loan comprised of a LIBO Rate Loan within the time period and
otherwise as provided herein, such Loan (if outstanding as a LIBO Rate Loan)
will be automatically converted into a Base Rate Loan on the last day of the
then current Interest Period for such Loan or (if outstanding as a Base Rate
Loan) will remain as, or (if not then outstanding will be made as, a Base Rate
Loan. Interest provided for herein shall be calculated on unpaid sums actually
advanced and outstanding pursuant to the terms of this Agreement and only for
the period from the date or dates of such advances until repayment.
2.8 Repayment of Loans and Interest.
(a) Accrued and unpaid interest on each outstanding Base Rate
Loan shall be due and payable quarterly commencing on the 31st day
of December, 2001, and on the last Business Day of each third
calendar month thereafter while any Base Rate Loan remains
outstanding, the payment in each instance to be the amount of
interest which has accrued and remains unpaid in respect of the
relevant Loan. Accrued and unpaid interest on each outstanding LIBO
Rate Loan shall be due and payable on the last day of the Interest
Period for such LIBO Rate Loan and, in the case of any Interest
Period in excess of three months, on the day of the third calendar
month following the commencement of such Interest Period
corresponding to the day of the calendar month on which such
Interest Period commenced or if there is no such corresponding day,
on the last Business Day of the month, the payment in each instance
to be the amount of interest which has accrued and remains unpaid in
respect of the relevant Loan.
(b) The outstanding principal balance of all Loans, together
with all accrued and unpaid interest thereon, shall be due and
payable at Final Maturity.
2.9 General Terms.
(a) The outstanding principal balance of the Notes of each
Lender reflected in the records of such Lender shall be deemed
rebuttably presumptive evidence of the principal amount owing on
such Notes. The liability for payment of principal and interest
evidenced by each such Note shall be limited to principal amounts
actually advanced and outstanding pursuant to this Agreement and
interest on such amounts calculated in accordance with this
Agreement.
(b) Unless the Agent shall have been notified by a Lender or
the Borrower prior to the date on which any of them is scheduled to
make payment to the Agent of (in the case of a Lender) the proceeds
of a Loan to be made by such
26
Lender hereunder or (in the case of the Borrower) a payment to the
Agent for the account of one or more of the Lenders hereunder (such
payment, in either case, being herein called the "Required
Payment"), which notice shall be effective upon receipt, that it
does not intend to make the Required Payment to the Agent, the Agent
may assume that the Required Payment has been made and, in reliance
upon such assumption, may (but shall not be required to) make the
amount thereof available to the intended recipient on such date. If
such Lender or the Borrower, as the case may be, have not in fact
made the Required Payment to the Agent, the recipient of such
payment shall, on demand, repay to the Agent for its account the
amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to, in the case of a Lender as
recipient, the Federal Funds Rate or, in the case of the Borrower as
recipient, the Adjusted Base Rate.
2.10 Time, Place, and Method of Payments. All payments required pursuant
to this Agreement or the Notes shall be made without set-off or counterclaim in
U.S. Dollars and in immediately available funds. All payments by the Borrower
shall be deemed received on the next Business Day following receipt if such
receipt is after 2:00 p.m., Eastern Standard or Daylight Saving Time, as the
case may be, on any Business Day, and shall be made to the Agent at the
Principal Office. Except as provided to the contrary herein, if the due date of
any payment hereunder or under any Note would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding Business
Day, and interest shall be payable for any principal so extended for the period
of such extension.
2.11 Pro Rata Treatment: Adjustments.
(a) Except to the extent otherwise expressly provided herein,
(i) each borrowing of Loans pursuant to this Agreement shall be made
from the Lenders pro rata in accordance with their respective
Percentage Shares, (ii) each payment by the Borrower of fees payable
by the Borrower in respect of Loans shall be made for the account of
the Lenders pro rata in accordance with their respective Percentage
Shares, (iii) each payment of principal of Loans shall be made for
the account of the Lenders pro rata in accordance with their
respective shares of the Loan Balance, (iv) each payment of interest
on Loans shall be made for the account of the Lenders pro rata in
accordance with their respective Percentage Shares of the aggregate
amount of such interest due and payable to the Lenders, (v) each
payment by the Borrower of fees payable by the Borrower in respect
of Letters of Credit (other than the fronting fee payable to the
Agent or any transactional fees and expenses, including amendment
fees or issuance fees payable to the Agent) shall be made for the
account of the Lenders pro rata in accordance with their respective
Percentage Shares.
(b) Subject to clause (e) below, the Agent shall distribute
all payments for the account of the Lenders with respect to the
Loans and the Letters of Credit to the Lenders promptly upon receipt
in like funds as received. In the event that any payments made
hereunder by the Borrower at any particular time are
27
insufficient to satisfy in full the Obligations due and payable at
such time, such payments shall be applied (i) first, to fees and
expenses due pursuant to the terms of this Agreement or any other
Loan Document, allocated pro rata to each of the Lender Parties in
accordance with the fees and expenses due and payable to it as a
percentage of the aggregate fees and expenses due and payable by the
Borrower, (ii) second, to accrued interest pro rata based on the
accrued interest due and payable to each Lender as a percentage of
the aggregate interest due and payable by the Borrower on such date,
(iii) third, pro rata (x) to the Loan Balance, which shall be
applied to the principal of the Loans then due and payable in the
order which the Borrower specifies or, if the Borrower shall not so
specify or if an Event of Default has occurred and is continuing, as
the Required Lenders shall determine in their sole discretion and
(y) to the payment of Obligations pursuant to the Secured Hedging
Agreements to the extent such are due and payable as of such date,
and (iv) last, to any other Obligations then due and payable.
(c) If any Lender (or any Affiliate of any Lender in the case
of any Obligation in respect of a Secured Hedging Agreement) (for
purposes of this Section, a "Benefitted Lender") shall at any time
receive any payment of all or part of its portion of the
Obligations, or receive any Collateral in respect of its
Obligations, or any proceeds by realization on or with respect to
any Collateral securing any of such Obligations (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Sections 7.1(f) or 7.1(g), or otherwise)
in an amount greater than such Lender (or Affiliate, if applicable)
was entitled to receive with respect to its Obligations pursuant to
the terms hereof and of the other Loan Documents, such Benefitted
Lender shall purchase for cash from the other Lenders (or Affiliates
thereof, if applicable) such portion of the Obligations of such
other Lenders (or Affiliates thereof, if applicable), or shall
provide such other Lenders (or Affiliates thereof, if applicable)
with the benefits of any such Collateral or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such Collateral or proceeds with each
of the Lenders (or Affiliates, if applicable) according to the terms
hereof. If all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded and the purchase price and benefits returned by
such Lenders (or Affiliates thereof, if applicable), to the extent
of such recovery, but without interest. The Borrower agrees that
each such Lender (or Affiliate thereof, if applicable) so purchasing
a portion of the Obligations of another Lender (or Affiliate of such
Lender, if applicable) may exercise all rights of payment (including
rights of set-off) with respect to such portion as fully as if such
Lender (or Affiliate thereof, if applicable) were the direct holder
of such portion. If any Lender (or Affiliate thereof, if applicable)
ever receives, by voluntary payment, exercise of rights of set-off
or banker's lien, counterclaim, cross-action or otherwise, any funds
of the Borrower to be applied to the Obligations, or receives any
proceeds by realization on or with respect to any Collateral, all
such funds and proceeds shall be forwarded immediately to the Agent
for distribution in accordance with the terms of this Agreement.
28
(d) [Intentionally Blank]
(e) Notwithstanding any of the provisions of this Section
2.11, (i) after the occurrence and during the continuance of an
Event of Default, the Lenders may apply payments in respect of the
Obligations then due and payable in such manner as the Required
Lenders shall determine in their sole discretion.
2.12 Borrowing Base Determinations.
(a) The Borrowing Base as of the Closing Date is agreed by the
Borrower and the Lenders to be $32,500,000; provided that
notwithstanding the foregoing, in the event that prior to the
initial redetermination of the Borrowing Base pursuant to the
provisions of this Section 2.12 (other than pursuant to this clause
(a)) one or more additional Lenders shall become party to this
Agreement and as a result the aggregate Facility Amounts of all of
the Lenders shall be in excess of $32,500,000, then, for purposes of
this Agreement, the Borrowing Base shall automatically increase by
an amount equal to the lesser of $2,500,000 or the amount by which
the aggregate Facility Amounts of all of the Lenders including such
additional Lenders is in excess of $32,500,000.
(b) The Borrowing Base shall be redetermined by the Agent,
with the consent of the Lenders, semi-annually effective as of each
April 1 and October 1, commencing April 1, 2002, on the basis of
information supplied by the Borrower in compliance with the
provisions of this Agreement, including Reserve Reports, and all
other information available to the Agent and the Lenders. In
addition, the Agent, with the consent of the Lenders, shall, in the
normal course of business following a request of the Borrower,
redetermine the Borrowing Base; provided, however, (i) the Agent and
the Lenders shall not be obligated to respond to more than one (1)
such request during any calendar year in addition to each scheduled
semi-annual redetermination provided for above and (ii) no such
discretionary redetermination of the Borrowing Base shall be
permitted prior to January 1, 2002. Notwithstanding the foregoing,
the Agent, with the consent of the Lenders, may at its discretion
redetermine the Borrowing Base at any other time and from time to
time; provided that, the Agent and the Lenders may not redetermine
the Borrowing Base more that one (1) time during any calendar year
and no discretionary redetermination of the Borrowing Base by the
Agent and the Lenders shall be permitted prior to January 1, 2002.
(c) In accordance with the preceding subparagraph (b), a
preliminary determination of the Borrowing Base shall be made by the
Agent within thirty (30) days of the Agent's receiving all of the
information required under this Agreement in connection therewith
and, upon making such initial determination (which preliminary
determination may not exceed the Maximum Borrowing Base then in
effect), the Agent shall notify the Lenders of such preliminary
Borrowing Base determination. The Lenders, as required below, shall
approve such determination by written notice to the Agent within ten
(10) Business Days of the giving of notice of such determination by
the Agent to such Lenders; provided,
29
however that failure by any Lender to confirm in writing the Agent's
determination of the Borrowing Base shall be, and shall be deemed, a
rejection of such determination. Any change in the Borrowing Base
(other than the automatic increase provided in clause (a) of this
Section 2.12) shall be subject to the credit approval processes of
the Lenders then in effect for loans of this type. If the Lenders or
Required Lenders, as the case may be, fail to approve such
preliminary determination of the Borrowing Base made by the Agent
pursuant to this Section 2.12 during such ten (10) Business Day
period, then the Lenders shall as soon as practicable, but in no
event later than sixty (60) days after the expiration of such ten
(10) Business Day period, make a determination of the Borrowing Base
based on their sole discretion in accordance with their respective
customary practices and standards for oil and gas loans and in
accordance with the succeeding subparagraph (d). Upon agreement by
the Agent and the Lenders as so required of the amount of credit to
be made available to the Borrower hereunder, the Agent shall, by
written notice to the Borrower and the Lenders, designate the new
Borrowing Base available to the Borrower. During such 60-day period,
the Borrowing Base theretofore in effect shall remain in effect. Any
increase in the Borrowing Base shall require the consent of all of
the Lenders. Any decrease in the Borrowing Base and any continuation
of the Borrowing Base at the same level shall require the consent of
the Required Lenders.
(d) In connection with any determination or redetermination of
the Borrowing Base, the Agent and each Lender shall evaluate the Oil
and Gas Properties in accordance with their then existing customary
lending procedures for evaluating oil and gas reserves and related
assets for loans of this type and in making such determination, the
Agent and the Lenders shall consider reserve/engineering
information, location of Oil and Gas Properties, total indebtedness
of the Borrower and its Subsidiaries (and the terms of such
Indebtedness), financial reports, commodity price forecasts, reserve
adjustment factors, the discount rate used in calculating the
Borrowing Base and any other information and factors deemed
pertinent by the Agent and the Lenders for loans of this type made
to similar borrowers, in their sole discretion from time to time in
each case in accordance with their then existing respective
customary lending practices for evaluating oil and gas reserves and
related assets. Notwithstanding the foregoing provisions of this
Section if at any time the preliminary Borrowing Base
redetermination by the Agent results in an increase in the Borrowing
Base and such Borrowing Base is not approved unanimously by all the
Lenders, then, in such event, during the next 60 day period the
Borrower may, at its election, terminate the Commitments of such
dissenting Lenders pursuant to the procedures set forth in Section
2.25. At the end of such 60 day period, the Borrowing Base shall be
an amount agreed to by the Agent and all of the Lenders.
Furthermore, the Borrower acknowledges that the Agent and the
Lenders have no obligation to increase the Borrowing Base and may
reduce the Borrowing Base, in either case, at any time as provided
herein or as a result of any circumstance, and further acknowledges
that the determination of the Borrowing Base contains an equity
cushion (market value in excess of loan value), which is
acknowledged by the Borrower to be essential for the adequate
protection of the Lenders.
30
2.13 Mandatory Prepayments. If at any time the sum of the Loan Balance
plus the L/C Exposure exceeds the lesser of the Commitment Amount or the
Borrowing Base then in effect, the Borrower shall, within 120 days of notice
from the Agent of such occurrence, (i) prepay, or make arrangements acceptable
to the Required Lenders for the prepayment of, the amount of such excess for
application on the Loan Balance, (ii) provide additional collateral, of
character and value satisfactory to the Required Lenders in their sole
discretion (which value may be in excess of the value of the Material
Properties), to secure the Obligations by the execution and delivery to the
Agent of Security Instruments in form and substance satisfactory to the Agent
acting reasonably, or (iii) effect any combination of the alternatives described
in clauses (i) and (ii) of this Section 2.13 and acceptable to the Required
Lenders. In the event that a mandatory prepayment is required under this Section
2.13 and the amount required to be prepaid exceeds the Loan Balance, the
Borrower shall repay the entire Loan Balance together with accrued interest,
and, in accordance with the provisions of the relevant Letter of Credit
Applications executed by the Borrower or otherwise to the satisfaction of the
Agent, deliver to the Agent, as additional collateral securing the Obligations,
an amount of cash, in immediately available funds, equal to such excess. So long
as no Event of Default shall have occurred and be continuing, the excess cash
held by the Agent in satisfaction of the requirement provided in this Section
2.13, if requested by the Borrower, may be invested in cash equivalent short
term investments available through the Agent. Any losses on such investment
shall be for the account of the Borrower.
2.14 Voluntary Prepayments and Conversions of Loans.
(a) Subject to applicable provisions of this Agreement, the
Borrower shall have the right at any time or from time to time to
prepay Loans.
(b) The Borrower may convert Loans of one type or with one
Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (i) the Borrower shall give
the Agent notice of each such conversion into all or any portion of
a LIBO Rate Loan no less than three Business Days prior to
conversion, (ii) any LIBO Rate Loan may be prepaid or converted only
on the last day of an Interest Period for such Loan, unless the
Borrower pays, within the time period set forth therefor in Section
2.22(e), the amount, if any, required to be paid under Section
2.22(e), (iii) each prepayment, in the case of Base Rate Loans,
shall be in an amount not less than $100,000 or incremental amounts
of $100,000 in excess thereof or the Loan Balance of such Loans and,
in the case of LIBO Rate Loans, shall be in an amount not less than
$1,000,000 or incremental amounts of $100,000 in excess thereof or
the Loan Balance of such Loans, (iv) the Borrower shall pay all
accrued and unpaid interest on the amounts prepaid or converted, and
(v) no such prepayment or conversion shall serve to postpone the
repayment when due of any Obligation except as set forth in clause
(a) above.
2.15 Commitment Fees and Usage Fee. To compensate the Lenders for
maintaining funds available under the Commitment, the Borrower shall pay to the
Agent for the account of such Lenders a fee equal to (i) at all times the
Commitments are outstanding and existing, one-half of one percent (0.50%) per
annum times the average daily amount of the Available Commitment during the
immediately preceding fiscal quarter just ended (or shorter period
31
thereof in the case of the fee for the period from the date of this Agreement
and ending December 31, 2001 or the period ending on the Commitment Termination
Date), calculated on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding the last day);
such accrued commitment fees shall be payable in arrears on the 31st day of
December, 2001, the last Business Day of each third calendar month thereafter
during the Commitment Period, and on the Commitment Termination Date.
2.16 Letter of Credit Fee. The Borrower shall pay to the Agent for the
account of the Lenders a letter of credit fee in the amount equal to the
Applicable Margin for LIBO Rate Loans in effect at such time per annum,
calculated on the basis of a year of 360 days and actual days the Letter of
Credit is outstanding (including the first day but excluding the last day),
times the average daily amount of the L/C Exposure during the immediately
preceding fiscal quarter then ended (or shorter period, as applicable). Accrued
letter of credit fees shall be payable quarterly in arrears on the 31st day of
December, 2001, the last Business Day of each third calendar month thereafter
during the Commitment Period, and at Final Maturity. The Borrower shall pay to
the Agent for its own account as the issuer of each Letter of Credit, on the
date of issuance or renewal of each Letter of Credit, an issuing fee equal to
one-eighth of one percent (.125%) per annum, calculated on the basis of a year
of 365 or 366 days, as the case may be, and actual days the Letter of Credit is
outstanding (including the first day but excluding the last day), on the face
amount of such Letter of Credit during the period for which such Letter of
Credit is issued or renewed. The Borrower also agrees to pay on demand to the
Agent for its own account as the issuer of the Letters of Credit its customary
letter of credit transactional fees and expenses, including amendment fees,
payable with respect to each Letter of Credit.
2.17 Intentionally Blank.
2.18 Intentionally Blank.
2.19 Right of Offset. The Borrower hereby grants to the Agent and each
Lender (for the benefit of all Lenders) the right, exercisable at such time as
any Event of Default shall occur and be continuing, of offset or banker's lien
against all funds of the Borrower now or hereafter or from time to time on
deposit with the Agent or such Lender, regardless of whether the exercise of any
such remedy would result in any penalty or loss of interest or profit with
respect to any withdrawal of funds deposited in a time deposit account prior to
the maturity thereof
2.20 Maximum Interest. It is the intention of the parties hereto to
conform strictly to applicable usury laws and, anything herein to the contrary
notwithstanding, the obligations of the Borrower or any Subsidiary Guarantor to
each Lender Party under this Agreement shall be subject to the limitation that
payments of interest shall not be required to the extent that contracting
therefor or the payment, collection, charging or receipt thereof would be
contrary to provisions of law applicable to such Lender Party limiting rates of
interest which may be extracted for, payed to or received, charged or collected
by such Lender Party. Accordingly, if the transactions contemplated hereby would
be usurious under applicable law (including the Federal and state laws of the
United States of America, or of any other jurisdiction whose laws may be
mandatorily applicable to any Lender) with respect to a Lender Party then, in
that event, notwithstanding anything to the contrary in this Agreement, it is
agreed as follows: (a) the provisions of this Section 2.20 shall govern and
control; (b) the aggregate of all consideration
32
which constitutes interest under applicable law that is contracted for, charged
or received under this Agreement or any other Loan Document, or under any of the
other aforesaid agreements or otherwise in connection with this Agreement or any
extension of credit hereunder or thereunder by such Lender Party shall under no
circumstances exceed the maximum amount of interest allowed by applicable law
(such maximum lawful interest rate, if any, with respect to such Lender Party
herein called the "Highest Lawful Rate"), and any excess shall be credited to
the Borrower or such Subsidiary Guarantor by such Lender Party (or, if such
consideration shall have been paid in full, such excess promptly refunded to the
Borrower or such Subsidiary Guarantor); (c) all sums paid, or agreed to be paid,
to such Lender Party for the use, forbearance and detention of the indebtedness
of the Borrower or such other Subsidiary Guarantor to such Lender Party
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the actual rate of interest is uniform throughout
the full term thereof; and (d) if at any time the interest otherwise provided
pursuant to Section 2.7 together with any other fees payable pursuant to this
Agreement and the other Loan Documents and deemed interest under applicable law,
exceeds that amount which would have accrued at the Highest Lawful Rate, the
amount of interest and any such fees to accrue to such Lender Party pursuant to
this Agreement shall be limited, notwithstanding anything to the contrary in
this Agreement or any other Loan Document to that amount which would have
accrued at the Highest Lawful Rate, but any subsequent reductions, as
applicable, shall, to the extent permitted by law, not reduce the interest to
accrue to such Lender Party pursuant to this Agreement below the Highest Lawful
Rate until the total amount of interest accrued pursuant to this Agreement and
such fees deemed to be interest equals the amount of interest which would have
accrued to such Lender if a varying rate per annum equal to the interest
otherwise provided pursuant to Section 2.7 had at all times been in effect, plus
the amount of fees which would have been received but for the effect of this
Section 2.20. For purposes of Chapter 303 of the Texas Finance Code, as amended
(formerly Chapter 1D of Article 5069 of the Texas Credit Title, Title 79,
Vernon's Texas Civil Statutes, as amended), to the extent, if any, applicable to
a Lender Party, each Borrower agrees that the Highest Lawful Rate shall be the
"weekly ceiling" as defined in said Chapter, provided that such Lender Party may
also rely, to the extent permitted by applicable laws, on alternative maximum
rates of interest under other laws applicable to such Lender Party, if greater.
Chapter 346 of the Texas Finance Code (formerly Tex. Rev. Civ. Stat. Xxx. Art.
0000, Xx. 15 and which regulates certain revolving credit loan accounts and
revolving tri-party accounts) shall not apply to this Agreement or the Notes.
2.21 Obligations Absolute. Subject to the further provisions of this
Section, the Obligations of the Borrower under this Article shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim, or defense to payment or performance which the Borrower
may have or have had against the Agent, any Lender, or any other Lender Party,
or any beneficiary of any Letter of Credit. The Borrower agrees that none of the
Agent or the Lenders or any other Lender Party shall be responsible for, nor
shall the Obligations be affected by, among other things, (a) the validity or
genuineness of documents or any endorsements thereon presented in connection
with any Letter of Credit, even if such documents shall in fact prove to be in
any and all respects invalid, fraudulent or forged, AND EVEN IF DUE TO THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER
LENDER PARTY, or (b) any dispute between or among the Borrower or any other
Person and any beneficiary or beneficiaries of any Letter of
33
Credit or any other party to which any Letter of Credit may be transferred, or
any claims whatsoever of the Borrower or any other Person against any
beneficiary of any Letter of Credit or any such transferee, EVEN IF DUE TO THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER
LENDER PARTY; provided, in all respects, that the Agent, as the issuer of
Letters of Credit, shall be liable to the Borrower to the extent, but only to
the extent, of any damages (other than punitive damages) suffered by the
Borrower as a result of the willful misconduct or gross negligence of the Agent
as the issuer of Letters of Credit in determining whether documents presented
under a Letter of Credit complied with the terms of such Letter of Credit that
resulted in either a wrongful payment under such Letter of Credit or a wrongful
dishonor of a claim or draft properly presented under such Letter of Credit. In
the absence of gross negligence or willful misconduct by the Agent as the issuer
of Letters of Credit, the Agent shall not be liable for any error, omission,
interruption or delay, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT OR ANY OTHER LENDER PARTY, in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit. The Agent, the Lenders, the other Lender Parties, and the
Borrower agree that any action taken or omitted by the Agent, as issuer of any
Letter of Credit, under or in connection with any Letter of Credit or the
related drafts or documents, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER LENDER PARTY, if done in the
absence of gross negligence or willful misconduct, shall be binding as among the
Agent, as issuer of such Letter of Credit or otherwise, the Lenders, the Lender
Parties, and the Borrower and shall not put the Agent, as issuer of such Letter
of Credit or otherwise, or any Lender or other Lender Party under any liability
to the Borrower; provided, however, that no such action taken or omitted to be
taken by the Agent shall be binding upon the Borrower as against any Person
other than the Agent and the Lenders and the other Lender Parties.
2.22 Yield Protection.
(a) Without limiting the effect of the other provisions of
this Section (but without duplication), the Borrower shall pay to
the Agent and each Lender from time to time, within five (5)
Business Days of receipt of the certificate provided for in Section
2.22(c), such amounts as the Agent or such Lender may reasonably
determine are necessary to compensate it for any Additional Costs
incurred by the Agent or such Lender.
(b) Without limiting the effect of the other provisions of
this Section (but without duplication), the Borrower shall pay to
each Lender from time to time, within five Business Days of receipt
of the certificate provided for in Section 2.22(e), such amounts as
such Lender may determine are necessary to compensate such Lender
for any actual costs incurred by such Lender attributable to the
maintenance by such Lender (or any Applicable Lending Office),
pursuant to any Regulatory Change, of capital (other than the
Reserve Requirement utilized in the determination of any Adjusted
LIBO Rate) in respect of its Commitments, such compensation to
include an amount equal to any reduction of the rate of return on
assets or equity of such Lender (or any Applicable Lending Office)
to a
34
level below that which such Lender (or any Applicable Lending
Office) could have achieved but for such Regulatory Change.
(c) Without limiting the effect of the other provisions of
this Sectio n (but without duplication), in the event that any
Regulatory Change or the compliance by the Agent or any Lender
therewith shall (i) impose, modify, or hold applicable any reserve,
special deposit, or similar requirement against any Letter of Credit
or obligation to issue Letters of Credit, or (ii) impose upon the
Agent or such Lender any other condition regarding any Letter of
Credit or obligation to issue Letters of Credit, and the result of
any such event shall be to increase the cost to the Agent or such
Lender of issuing or maintaining any Letter of Credit or obligation
to issue Letters of Credit or any liability with respect to Letter
of Credit Payments, or to reduce any amount receivable in connection
therewith, then, within five Business Days of receipt of the
certificate provided for in Section 2.22(e), the Borrower shall pay
to the Agent or such Lender, as the case may be, from time to time
as specified by the Agent or such Lender, the additional amounts
indicated in such certificate as sufficient to compensate the Agent
or such Lender for such increased cost or reduced amount receivable.
(d) Without limiting the effect of the other provisions of
this Section (but without duplication), the Borrower shall pay to
the Agent and each Lender, within five Business Days of receipt of
the certificate provided for in Section 2.22(e), such amounts as
shall be indicated in such certificate as sufficient to compensate
them for any loss, cost, or expense incurred by and as a result of
(i) any payment, prepayment, or conversion by the Borrower of a LIBO
Rate Loan on a date other than the last day of an Interest Period
for such Loan; or (ii) any failure by the Borrower to borrow a LIBO
Rate Loan or to convert a Base Rate Loan into a LIBO Rate Loan on
the date for such borrowing or conversion specified in the relevant
Borrowing Request or (iii) with respect to a LIBO Rate Loan, the
replacement of a Lender pursuant to Section 2.25 other than on the
last day of the Interest Period for such Loan.
(e) Determinations by the Agent or any Lender for purposes of
this Section of the effect of any Regulatory Change on capital
maintained, its costs or rate of return, maintaining Loans, issuing
Letters of Credit, its obligation to make Loans and issue Letters of
Credit, or on amounts receivable by it in respect of Loans, Letters
of Credit or such obligations, and the additional amounts required
to compensate the Agent and such Lender under this Section shall be
conclusive, absent manifest error, provided that such determinations
are made on a reasonable basis. The Agent or the relevant Lender
shall furnish the Borrower with a certificate setting forth in
reasonable detail the basis and amount of increased costs incurred
or reduced amounts receivable as a result of any such event, and the
statements set forth therein shall be conclusive, absent manifest
error. The Agent or the relevant Lender shall (i) notify the
Borrower, as promptly as practicable after the Agent or such Lender
obtains knowledge of any Additional Costs or other sums payable
pursuant to this Section and determines to request compensation
therefor, in respect of any event occurring after the Closing Date
35
which will entitle the Agent or such Lender to compensation pursuant
to this Section; provided that the Borrower shall not be obligated
for the payment of any Additional Costs or other sums payable
pursuant to this Section to the extent such Additional Costs or
other sums accrued more than 90 days prior to the date upon which
the Borrower was given such notice; and (ii) designate a different
Applicable Lending Office for the Loans affected by such event if
such designation will avoid the need for or reduce the amount of
such compensation and will not, in the sole opinion of the Agent or
such Lender, be disadvantageous to the Agent or such Lender. Any
compensation requested by the Agent or any Lender pursuant to this
Section shall be due and payable within five Business Days of
delivery of any such notice to the Borrower.
2.23 Illegality. Notwithstanding any other provision of this Agreement, in
the event that (a) it becomes unlawful for any Lender or its Applicable Lending
Office to (i) honor its obligation to make LIBO Rate Loans, or (ii) maintain
LIBO Rate Loans, or (b) the Agent or any Lender becomes subject to restrictions
on the amount of a category of liabilities or assets which it may hold, then
such Agent or Lender shall promptly notify the Agent and the Borrower thereof.
The obligation of such Lender to make LIBO Rate Loans and convert Base Rate
Loans into LIBO Rate Loans shall then be suspended until such time as such
Lender may again make and maintain LIBO Rate Loans or is not subject to such
restrictions, as the case may be, and the outstanding LIBO Rate Loans of such
Lender shall, to the extent permitted by law, be converted into Base Rate Loans
in accordance with Section 2.14; provided, however, each Lender shall use
reasonable efforts to designate a different Applicable Lending Office with
respect to any LIBO Rate Loan affected by the matters or circumstances described
in this Section to avoid the results provided in this Section if possible, so
long as such designation is not disadvantageous to such Lender as determined by
it in its sole discretion.
2.24 Taxes.
(a) All payments made by or on behalf of the Borrower under
this Agreement and under the other Loan Documents shall be made free
and clear of, and without reduction or withholding for or on account
of, present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority on the basis of any applicable treaty, law, rule,
guideline or regulations or in the interpretation or administration
thereof, excluding, in the case of the Agent and each Lender, income
and franchise taxes (whether based upon net income, capital or
profits) imposed on the Agent or such Lender (all such non-excluded
taxes, levies, imposts, deductions, charges or withholdings being
hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender Party
hereunder or under any other Loan Document, the amounts so payable
to the Agent or such Lender Party shall be increased to the extent
necessary to yield to the Agent or such Lender Party (after payment
of all Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Agreement and the
other Loan Documents. Whenever any Taxes are payable by the
Borrower, promptly thereafter the Borrower shall send to the Agent
for its own account or for the
36
account of such Lender Party, as the case may be, a certified copy
of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the
Borrower shall indemnify the Agent and the Lenders and the other
Lender Parties for any incremental taxes, interest or penalties that
may become payable by the Agent or any Lender Party as a result of
any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of all Obligations.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof agrees that, on the date
hereof or, if it becomes a Lender in accordance with Section 9.1, on
the date of the applicable Assignment Agreement, it will, to the
extent it may lawfully do so, deliver to the Borrower and the Agent
two duly completed copies of United States Internal Revenue Service
Form W-8 BEN, or Form W- 8ECI or any other applicable form, as the
case may be, certifying in each case that such Lender is entitled to
receive payments under any Loan Document, without deduction or
withholding of any United States federal income taxes. Each Lender
which delivers to the Borrower and the Agent a form pursuant to the
preceding sentence further undertakes to deliver to the Borrower and
the Agent two further copies of such form, or successor applicable
forms, or other manner of certification, as the case may be, on or
before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested
by the Borrower, certifying in the case of each such form that such
Lender is entitled to receive payments under any Loan Document
without deduction or withholding of any United States federal income
taxes, unless in any such case, an event (including any change in
treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such
Lender advises the Borrower that it is not capable of receiving
payments without any deduction or withholding of United States
federal income tax.
2.25 Replacement or Additional Lenders.
(a) If any Lender (i) has notified the Borrower of its
incurring additional costs under Section 2.22 or the illegality of
LIBO Rate Loans under Section 2.23, (ii) has required the Borrower
to make payments for Taxes under Section 2.24, or (iii) has informed
any Borrower of a Regulatory Change in accordance with Section 2.26,
or if a Lender is not in agreement with the amount of any Borrowing
Base redetermination which a group of Lenders constituting at least
the Required Lenders has approved, then in any such event the
Borrower may, unless such Lender has notified the Borrower that the
circumstances giving rise to such notice no longer apply, terminate,
in whole but not in part, the
37
Commitments of such Lender (other than the Agent) (the "Terminated
Lender") at any time upon five Business Days' prior written notice
to the Terminated Lender and the Agent (such notice referred to
herein as a "Notice of Termination").
(b) In order to effect the termination of the Commitments of
the Terminated Lender, the Borrower shall (i) obtain an agreement
with one or more Lenders to increase their Commitments or (ii)
request any one or more Eligible Assignees to become a "Lender" in
place and instead of such Terminated Lender and agree to accept its
Commitment; provided, however, that such one or more other Eligible
Assignees are reasonably acceptable to the Agent and become parties
by executing an Assignment Agreement (the Lenders or other
institutions that agree to accept in whole or in part the Commitment
of the Terminated Lender being referred to herein as the
"Replacement Lenders"), such that the aggregate increased and/or
accepted Facility Amounts of the Replacement Lenders under clauses
(i) and (ii) above equal the Facility Amount of the Terminated
Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the
"Termination Date"), the Replacement Lender or Replacement Lenders
to which the Terminated Lender will assign its Commitment, and, if
there will be more than one Replacement Lender, the portion of the
Terminated Lender's Commitment to be assigned to each Replacement
Lender.
(d) On the Termination Date, (i) the Terminated Lender shall
by execution and delivery of an Assignment Agreement assign its
Commitment to the Replacement Lender or Replacement Lenders (pro
rata, if there is more than one Replacement Lender, in proportion to
the portion of the Terminated Lender's Commitment to be assigned to
each Replacement Lender) indicated in the Notice of Termination and
shall assign to the Replacement Lender or Replacement Lenders its
Loans (if any) so assigned then outstanding pro rata as aforesaid),
(ii) the Terminated Lender shall endorse its applicable Note(s),
payable without recourse, representation or warranty to the order of
the Replacement Lender or Replacement Lenders (pro rata as
aforesaid), (iii) the Replacement Lender or Replacement Lenders
shall purchase the Note(s) held by the Terminated Lender (pro rata
as aforesaid) at a price equal to the unpaid principal amount
thereof plus interest and fees accrued and unpaid to the Termination
Date, (iv) the Borrower shall, upon request, execute and deliver, at
its own expense, new Notes to the Replacement Lenders in accordance
with their respective interests, (v) the Borrower shall, upon
request, pay any compensation due to the Terminated Lender pursuant
to Section 2.22, of which the Borrower shall have received notice
pursuant to Section 2.22(e) from the Terminated Lender within three
(3) Business Days of receipt by such Terminated Lender of a Notice
of Termination, and (vi) the Replacement Lender or Replacement
Lenders will thereupon (pro rata as aforesaid) succeed to and be
substituted in all respects for the Terminated Lender to the extent
of such assignment from and after such date with like effect as if
becoming a Lender pursuant to the terms of Section 9.1(b), and the
Terminated Lender will have the rights and benefits of an assignor
under Section 9.1(b). To
38
the extent not in conflict, the terms of Section 9.1(b) shall
supplement the provisions of this Section.
(e) Any additional Lender becoming a party to this Agreement
as contemplated by Section 2.12(a) shall execute and deliver to the
Agent and the Borrower a statement of accession setting forth its
Facility Amount and otherwise in form and substance reasonably
satisfactory to the Agent, evidencing its agreement to be bound as a
Lender by all of the provisions of this Agreement and the other Loan
Documents, and upon such execution and delivery thereof, such Person
shall be a "Lender" for all purposes of this Agreement and the other
Loan Documents.
ARTICLE III.
CONDITIONS
3.1 Conditions Precedent to Initial Loan or Letter of Credit. The Lenders
shall have no obligation to make the initial Loans or issue or participate in
the initial Letter of Credit on or after the Closing Date unless and until all
matters incident to the consummation of the transactions contemplated herein,
including the review by the Agent or its counsel of the title, as set forth in
clause (i), of the Borrower and the Subsidiary Guarantors or any other Person
party to a Security Instrument, to the Mortgaged Properties, shall be
satisfactory to the Agent, and (to the extent not previously received to the
satisfaction of the Agent in its sole determination) the Agent shall have
received, reviewed, and approved the following documents and other items,
appropriately executed when necessary and, where applicable, acknowledged by one
or more authorized officers of the Borrower or the respective Subsidiary
Guarantor, as the case may be, all in form and substance satisfactory to the
Agent and dated, where applicable, of even date herewith or a date prior thereto
and acceptable to the Agent :
(a) multiple counterparts of this Agreement and each
Subsidiary Guaranty, as requested by the Agent;
(b) the Notes;
(c) copies of the Articles of Incorporation or Certificate of
Incorporation and all amendments thereto and the bylaws and all
amendments thereto of the Borrower and each Subsidiary Guarantor
(other than Energy Marketing, Gas Services, Michigan Resources and
Medallion), accompanied by a certificate issued by the secretary or
an assistant secretary of the Borrower and each Subsidiary Guarantor
(other than Energy Marketing, Gas Services, Michigan Resources and
Medallion), as the case may be, to the effect that each such copy is
correct and complete;
(d) certificates of incumbency and signatures of all officers
of the Borrower and each Subsidiary Guarantor (other than Energy
Marketing, Gas Services, Michigan Resources and Medallion) who are
authorized to execute Loan Documents on behalf of such entities,
each such certificate being executed
39
by the secretary or an assistant secretary of the Borrower or such
Subsidiary Guarantor, as the case may be;
(e) copies of corporate resolutions approving the Loan
Documents and authorizing the transactions contemplated herein and
therein, duly adopted by the boards of directors of the Borrower and
each Subsidiary Guarantor (other than Energy Marketing, Gas
Services, Michigan Resources and Medallion) accompanied by
certificates of the secretary or an assistant secretary of the
Borrower or such Subsidiary Guarantor, as the case may be, to the
effect that such copies are true and correct copies of resolutions
duly adopted at a meeting or by unanimous consent of the board of
directors of the Borrower or such Subsidiary Guarantor, as the case
may be, 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 date of such certificate;
(f) multiple counterparts, as requested by the Agent, of the
following documents (together with any and all supplements or
amendments thereto required by the Collateral Agent pursuant to this
Agreement and the Loan Documents), creating, evidencing, perfecting,
and otherwise establishing Liens in favor of the Collateral Agent in
and to the Collateral:
(i) the Mortgage from the Borrower and each Mortgagor
(or other similar security instrument, agreement or assignment
required to perfect a Lien in and to the Mortgaged Properties
in the State where such Property is located) covering the
Material Properties and all improvements, personal property,
and fixtures related thereto, together with ratifications and
amendments in form satisfactory to the Collateral Agent
relating to each of the Security Instruments executed and
delivered by the Borrower or Subsidiary Guarantor prior to the
Closing Date;
(ii) a Pledge Agreement (together with stock powers and
endorsed notes as required thereby) from the Borrower or a
Subsidiary of the Borrower, as the case may be, creating a
Lien on the equity interests in each Subsidiary of the
Borrower (other than Energy Marketing and National Enerdrill),
whether held directly or indirectly, and on notes payable to
the Borrower or a Subsidiary of the Borrower (excluding
intercompany notes), in favor of the Collateral Agent for the
benefit of the Lender Parties; and
(iii) Financing Statements from the Borrower and each
Subsidiary Guarantor as debtor, constituent to the instrument
relating to the Mortgage Properties described in clause (i)
above and the equity interests and notes described in clause
(ii) above;
(g) certificates dated as of a recent date from the Secretary
of State or other appropriate Governmental Authority evidencing the
existence or
40
qualification and good standing of the Borrower and each Subsidiary
Guarantor (other than Energy Marketing, Gas Services, Michigan
Resources and Medallion) in their respective jurisdictions of
organization and in any other jurisdictions where any of them is
qualified to do business or, in the case of the Obligors set forth
in Exhibit X under the heading "Good Standing", a certificate of an
officer of the Borrower attaching copies of the tax returns and
other forms filed or to be filed within thirty (30) days of the date
hereof by such Obligors with the appropriate Governmental Authority
in the respective jurisdictions of organization and other
jurisdictions where such Obligor has filed to qualify to do business
in such jurisdictions;
(h) results of searches of the UCC Records of all States where
any Collateral is located from a source acceptable to the Agent and
reflecting no Liens against any of the Collateral other than Liens
in favor of the Agent or the Collateral Agent, other Permitted Liens
and Liens permitted under Section 6.3;
(i) Title opinions and other information reasonably acceptable
to the Agent covering the Oil and Gas Properties contemplated by
Section 5.5, of the Title of the Borrower and any Mortgagor to the
Mortgaged Properties warranted to be owned by it, free and clear of
Liens other than Permitted Liens and Liens permitted under Section
6.3;
(j) results satisfactory to the Agent in its discretion of a
review of the environmental reports furnished to the Agent by the
Borrower in connection with the Mortgaged Property;
(k) Intentionally Blank;
(l) engineering reports as of December 31, 2000, covering the
Oil and Gas Properties of the Borrower and its Subsidiaries prepared
by Netherland, Xxxxxx and Associates or other independent engineer
and engineering reports dated as of June 30, 2001 prepared by or
under the supervision of the chief petroleum engineer of the
Borrower evaluating the Oil and Gas Properties of the Borrower and
its Subsidiaries as of such date, in each case acceptable to the
Agent in its sole discretion;
(m) the opinion of counsel to the Borrower and the Subsidiary
Guarantors, in the form attached hereto as Exhibit VIII, with such
changes thereto as may be approved by the Agent;
(n) the opinion of special counsel in each State where any
Collateral is located in the form attached hereto as Exhibit IX,
relating to the Mortgaged Properties, with such changes thereto as
may be approved by the Agent;
(o) certificates evidencing the insurance coverage required
pursuant to Section 5.16;
(p) [Intentionally Blank];
41
(q) [Intentionally Blank];
(r) no change has occurred with respect to the Borrower or any
of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect;
(s) copies of (i) the indentures for the Public Debt, which
indentures shall permit the guaranties from the Subsidiary
Guarantors and the Liens under the Security Instruments and the
Subsidiary Guaranties and (ii) the agreements and other documents
related to the Production Payment 2001 Facility, in each case
satisfactory to the Agent and Certified by the Borrower as being
true, correct and complete;
(t) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent or any
Lender may reasonably request; and
(u) results reasonably satisfactory to the Agent of a review
of the commodity price-risk hedging policies and programs of the
Borrower and the Subsidiary Guarantors.
3.2 Conditions Precedent to Each Loan. The obligations of the Lenders to
make each Loan are subject to the satisfaction of the following additional
conditions precedent except that items (b), (c) and (d) below shall not be
applicable to continuations or conversions into Base Rate Loans where no new
funds are advanced:
(a) the Borrower shall have delivered to the Agent a Borrowing
Request at least the requisite time prior to the requested date or
time for the relevant Loan; and each statement or certification made
in such Borrowing Request shall be true and correct in all material
respects on the requested date for such Loan;
(b) no Default or Event of Default shall exist or will occur
as a result of the making of the requested Loan;
(c) no Material Adverse Effect shall have occurred;
(d) each of the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and
correct and shall be deemed to be repeated by the Borrower or the
relevant Subsidiary Guarantor, as the case may be, as if made on the
requested date for such Loan, except for any such representations
and warranties as are expressly stated to be made as of a particular
date which shall remain true and correct as of the date made;
(e) the Subsidiary Guaranties and all of the Security
Instruments shall be in full force and effect and provide to the
Lenders the security intended thereby;
42
(f) neither the consummation of the transactions contemplated
hereby nor the making or incurrence of such Loan shall contravene,
violate, or conflict with any Requirement of Law or the indenture,
as amended or modified from time to time, of any of the Public Debt;
and
(g) the Agent and each Lender shall have received the payment
of all fees due and payable by the Borrower hereunder and under the
other Loan Documents and the Agent shall have received reimbursement
from the Borrower, or special legal counsel for the Agent shall have
received payment from the Borrower, for (i) all reasonable fees and
expenses of counsel to the Agent for which the Borrower is
responsible pursuant to applicable provisions of this Agreement and
for which invoices have been presented as of or prior to the date of
the relevant Loan, and (ii) estimated fees charged by filing
officers and other public officials incurred or to be incurred in
connection with the filing and recordation of any Security
Instruments, for which invoices have been presented as of or prior
to the date of the requested Loan.
3.3 Conditions Precedent to Issuance of Letters of Credit. The obligation
of the Agent, as the issuer of the Letters of Credit, to issue, renew, or extend
any Letter of Credit is subject to the satisfaction of the following additional
conditions precedent:
(a) the Borrower shall have delivered to the Agent a Letter of
Credit Application at least three Business Days prior to the
requested issuance date; and each statement or certification made in
such Letter of Credit Application shall be true and correct in all
material respects on the requested date for the issuance of such
Letter of Credit;
(b) no Default or Event of Default shall exist or will occur
as a result of the issuance, renewal, or extension of such Letter of
Credit;
(c) the terms and provisions of the Letter of Credit or such
renewal or extension shall be reasonably satisfactory to the Agent,
as the issuer of the Letters of Credit;
(d) the conditions precedent set forth in clauses (c) through
(g) of Section 3.2 shall be satisfied; provided that for purposes of
this Section 3.3, (i) the references in clause (d) of Section 3.2 to
"the requested date for such Loan" shall be deemed to be a reference
to "the requested date for such "Letter of Credit"; (ii) the
reference in clause (f) of Section 3.2 to "the making of such Loan"
shall be deemed to be a reference to "the issuance of such Letter of
Credit"; (iii) the reference in clause (g)(ii) of Section 3.2 to
"the date of the requested Loan" shall be deemed to be a reference
to "the date of the requested Letter of Credit" and (iv) the
reference in clause (g) of Section 3.2 to the "fees due and payable
by the Borrower hereunder" shall include, without limitation, the
issuing fee payable pursuant to Section 2.16 on the date of issuance
or renewal; and
43
(e) the Borrowers shall have delivered to the Agent an opinion
of counsel for the Borrowers or other evidence satisfactory to the
Agent and the Lenders that the granting of the Liens pursuant to the
Security Instruments does not violate the indentures for the Public
Debt.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
extend credit to the Borrower, the Borrower represents and warrants to the Agent
and each Lender Party (which representations and warranties shall survive the
delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement, the borrowings hereunder, the execution and delivery by the Borrower
and each of the Subsidiary Guarantors of the Notes and the other Loan Documents,
the repayment of the Notes and interest and fees provided for in the Notes and
this Agreement, and the granting of the Liens and the performance of all
obligations of the Borrower and each of the Subsidiary Guarantors under the Loan
Documents are within the power of the Borrower or the Subsidiary Guarantor, as
the case may be, have been duly authorized by all necessary corporate action by
the Borrower or the Subsidiary Guarantor, as the case may be, and do not and
will not (a) require the consent of any Governmental Authority to be obtained by
the Borrower or such Subsidiary Guarantor, as applicable, (b) contravene or
conflict with any Requirement of Law applicable to the Borrower or the
Subsidiary Guarantor, as the case may be, or the articles or certificate of
incorporation, bylaws, or other organizational or governing documents of the
Borrower or such Subsidiary Guarantor, as the case may be, (c) contravene or
conflict with any material indenture, instrument, or other agreement, including,
without limitation, the indentures for the Public Debt or any other indenture,
instrument, or other agreement that, when aggregated with other such agreements,
is material, to which the Borrower or the Subsidiary Guarantor, as the case may
be, is a party or by which any Property of the Borrower or the Subsidiary
Guarantor, as the case may be, may be bound or encumbered, except as could not
reasonably be expected to have a Material Adverse Effect, (d) contravene or
conflict with any indenture, instrument, or other agreement by which any item of
Collateral is bound or to which any such item of Collateral is subject, except
as could not reasonably be expected to have a Material Adverse Effect, or (e)
result in or require the creation or imposition of any Lien in, upon or of any
Property of the Borrower or the Subsidiary Guarantor, as the case may be, under
any such indenture, instrument, or other agreement, other than the Loan
Documents.
4.2 Corporate Existence. The Borrower and each Subsidiary of the Borrower
is a Person duly organized, legally existing, and in good standing under the
laws of its state of organization and is duly qualified as a foreign entity and
is in good standing in all jurisdictions wherein the ownership of Property or
the operation of its business necessitates same, other than those jurisdictions
wherein the failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents to which the
Borrower or the Subsidiary Guarantor, as the case may be, is a party, when duly
executed and delivered by the Borrower or the Subsidiary Guarantor which is a
party thereto, will be the legal, valid, and
44
binding obligations of the Borrower or the Subsidiary Guarantor which is a party
thereto, enforceable against the Borrower or the Subsidiary Guarantor, as the
case may be, in accordance with its respective terms except as limited by
bankruptcy, insolvency or similar laws affecting generally the rights of
creditors and general principles of equity, whether applied by a court of law or
equity.
4.4 Existing Indebtedness. As of the date hereof, the Borrower and its
Subsidiaries have Indebtedness in the aggregate principal amounts set forth in
Exhibit X under the heading "Existing Indebtedness."
4.5 Security Instruments. The provisions of each Security Instrument
executed by the Borrower, or any Subsidiary Guarantor are effective to create in
favor of the Agent or the Collateral Agent, a legal, valid, and enforceable Lien
in all right, title, and interest of such Person in the Collateral described
therein, which Liens, assuming the accomplishment of recording and filing in
accordance with applicable laws prior to the intervention of rights of other
Persons, shall constitute fully perfected first-priority Liens on all right,
title, and interest of such Person in the Collateral described therein except
for Permitted Liens and other Liens permitted by Section 6.3 and except that in
the case of the Collateral subject to the Production Payment 2001 Lien and in
the case of Collateral subject to a Lien securing Acquisition Indebtedness for
such Collateral as described in Section 5.18(c), such Liens shall constitute
fully perfected second-priority Liens (except for Permitted Liens and other
Liens permitted by Section 6.3) rather than first-priority Liens.
4.6 Title to Assets. Except as heretofore disclosed to the Agent in
writing, insofar as such Property constitutes real property or interests in real
property, the Borrower and each Subsidiary Guarantor has good and indefeasible
Title to all of its Mortgaged Properties and all of its other Properties which
are material, free and clear of Liens, except Permitted Liens. With respect to
Property which does not constitute real property or an interest in real
property, the Borrower and each Subsidiary Guarantor owns all such other
Properties which are material, free and clear of all Liens, except Permitted
Liens and Liens otherwise permitted under Section 6.3.
4.7 Scope and Accuracy of Financial Statements and Reserve Reports. The
Financial Statements of the Borrower and its Subsidiaries as of December 31,
2000 and June 30, 2001 (subject, in the case of the Financial Statements as of
June 30, 2001, to normal year-end audit adjustments), present fairly the
financial position and results of operations and cash flows of the Borrower and
its Subsidiaries in accordance with GAAP as at the relevant point in time or for
the period indicated, as applicable. No event or circumstance has occurred since
June 30, 2001, except for fluctuations of oil and gas prices, which could
reasonably be expected to have a Material Adverse Effect. The Reserve Reports
dated December 31, 2000 and June 30, 2001 and delivered by Borrower pursuant to
Section 5.4 present fairly the reserve position of the Borrower and its
Subsidiaries as at the relevant point in time.
4.8 No Material Misstatements. All written estimates, projections and
forecasts furnished by or on behalf of the Borrower or any Subsidiary of the
Borrower to the Agent or any of the Lenders for purposes of or in connection
with this Agreement, or in connection with any extension of credit hereunder,
were and will be prepared on the basis of the good faith estimate of the
Borrower's senior management concerning probable financial condition and
performance
45
based on assumptions, data, tests or conditions believed to be reasonable or to
represent industry conditions existing at the time such estimates, projections
or forecasts were made. No other information, exhibit, statement, or report
furnished to the Agent or any Lender by or at the direction of the Borrower or
any Subsidiary of the Borrower in connection with this Agreement contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading as of the date made or
deemed made.
4.9 Liabilities and Litigation. Except as set forth under the heading
"Litigation" in Exhibit X, none of the Borrower or any Subsidiary Guarantor has
any liabilities, direct, or contingent, which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or any Subsidiary of the
Borrower has (a) any unfunded pension liability; Contingent Obligation (other
than Contingent Obligations pursuant to this Agreement or the Public Debt) or,
(c) except as set forth under the heading "Litigation" on Exhibit X, any
litigation or other action of any nature pending before any Governmental
Authority or, to the best knowledge of the Borrower, (i) threatened, against or
affecting any Collateral, or, in the case of Environmental Laws, any Property of
the Borrower or any Subsidiary of the Borrower, or the facilities located and
the operations conducted thereon, or (ii) threatened against or affecting the
Borrower or any Subsidiary of the Borrower which, in the case of any such
pending litigation or other action and in each case as described in subclauses
(i) or (ii), could reasonably be expected to result in any judgment or
liability, individually or when aggregated with all other such judgments or
liabilities, as described in clauses (a), (b), or (c), could reasonably be
expected to result in aggregate payments or liabilities in excess of the greater
of $1,000,000 or 5% of the then Borrowing Base, after giving effect to
reasonably expected insurance proceeds and cash reserves established therefor.
None of the Borrower or any of its Subsidiaries has any litigation or other
action of any nature pending before any Governmental Authority or, to the best
knowledge of the Borrower, threatened against or affecting the ability of the
Borrower and its Subsidiaries to enter into, execute, deliver or, taken as a
whole, perform in any material respect their obligations under the Loan
Documents.
4.10 Authorizations; Consents. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to be obtained by the Borrower or any Subsidiary of the Borrower to
authorize, or is otherwise required in connection with, the valid execution and
delivery by the Borrower or any such Subsidiary of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrower of the Notes and
interest and fees provided in the Notes and this Agreement, or the performance
by the Borrower and its Subsidiaries of the Obligations.
4.11 Compliance with Laws. The Property of the Borrower and each of its
Subsidiaries is in compliance with all applicable Requirements of Law, including
Environmental Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA,
other than any Requirements of Laws the failure with which to comply,
individually or in the aggregate, could not reasonably be expected to cause a
Material Adverse Effect.
4.12 Default. Neither the Borrower nor any Subsidiary of the Borrower is
in default of, and no event has occurred which, with the lapse of time or giving
of notice, or both, could
46
result in such a default of, (i) any charter document or bylaws of the Borrower
or any Subsidiary of the Borrower, or (ii) any agreement or obligation other
than an agreement or obligation evidencing or relating to Indebtedness to which
the Borrower or any Subsidiary of the Borrower is a party or by which any
Property of the Borrower or any Subsidiary of the Borrower may be bound,
pursuant to which the obligations of the Borrower and the Subsidiaries of the
Borrower in the aggregate under any such agreement or obligation, or the
obligations secured thereby, exceed $1,500,000, except such as are being
contested in good faith and as to which such reserve as may be required by GAAP
shall have been made therefore.
4.13 ERISA. (a) The Borrower does not, and will not for the term of any
Loan, hold "plan assets" of any employee benefit plan subject to Title I of
ERISA or any plan subject to Section 4975 of the Code under circumstances that
would contravene the requirements of regulatory authority issued under such
provisions of the Code or ERISA by the appropriate regulatory authorities. (b)
No Reportable Event has occurred with respect to any Single Employer Plan, and
each Single Employer Plan has complied with and been administered in all
material respects in accordance with applicable provisions of ERISA and the
Code. To the best knowledge of the Borrower, (a) no Reportable Event has
occurred with respect to any Multiemployer Plan, and (b) each Multiemployer Plan
has complied with and been administered in all material respects with applicable
provisions of ERISA and the Code. Each Plan satisfied the minimum funding
requirements under ERISA and the Code as of the last annual valuation date
applicable thereto. Neither the Borrower nor any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan for which there
is any withdrawal liability. As of the most recent valuation date applicable to
any Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization which could
reasonably be expected to create a liability (after expected insurance payments)
in excess of $1,000,000 is likely to occur. Based upon GAAP existing as of the
date of this Agreement and current factual circumstances, the Borrower has no
reason to believe that the annual cost during the term of this Agreement to the
Borrower and all Commonly Controlled Entities for post-retirement benefits to be
provided to the current and former employees of the Borrower and all Commonly
Controlled Entities under Plans which are welfare benefit plans (as defined in
Section 3(l) of ERISA) will, in the aggregate, have a Material Adverse Effect.
4.14 Environmental Laws. To the best knowledge and belief of the Borrower,
except for matters listed below in this Section 4.14 which could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect, and except as described on Exhibit X under the heading "Environmental
Matters:"
(a) no Property of the Borrower or of a Subsidiary of the
Borrower is currently on or has ever been on, any federal or state
list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported,
and/or disposed of by the Borrower or any Subsidiary of the Borrower
at a site which
47
was, at the time of such generation, transportation, and/or
disposal, or has since become, a Superfund Site;
(c) except in accordance with applicable Requirements of Law
or the terms of a valid permit, license, certificate, or approval of
the relevant Governmental Authority, no Release of Hazardous
Substances has occurred because of or been caused by the Borrower or
any Subsidiary of the Borrower from, affecting, or related to any
Property of the Borrower or any Subsidiary of the Borrower or the
facilities located and the operations conducted thereon;
(d) no Environmental Complaint has been received by the
Borrower or any Subsidiary of the Borrower;
(e) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its
Subsidiaries have been, and continue to be, owned or leased by the
Borrower and its Subsidiaries in material compliance with all
Environmental Laws; and
(f) the Borrower and its Subsidiaries have been issued and are
in material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental matters
and necessary for their businesses.
4.15 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any "margin stock"
regulations promulgated by the Board of Governors of the Federal Reserve System,
including Regulations T, U, or X.
4.16 Investment Company Act Compliance. Neither the Borrower nor any
Subsidiary Guarantor is, or is directly or indirectly controlled by or acting on
behalf of any Person which is, an "investment company" or an "affiliated person"
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.17 Public Utility Holding Company Act Compliance. Neither the Borrower
nor any Subsidiary Guarantor is a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
4.18 Proper Filing of Tax Returns; Payment of Taxes Due. The Borrower and
each Subsidiary of the Borrower has duly and properly filed its United States
income tax returns and all other tax returns which are required to be filed and
has paid all taxes shown to be due thereon, except such as are being contested
in good faith and as to which adequate provisions and disclosures have been made
and except such returns of which the failure to file has not had or would not
have a Material Adverse Effect. The respective charges and reserves on the books
of the Borrower with respect to taxes and other governmental charges are
adequate.
4.19 Refunds. Except as described on Exhibit X under the heading
"Refunds," to the best knowledge and belief of the Borrower, no orders of,
proceedings pending before, or other requirements of, the Federal Energy
Regulatory Commission or any other Governmental
48
Authority exist which could reasonably be expected to result in the Borrower or
any Subsidiary of the Borrower being required to refund any material portion of
the proceeds received or to be received from the sale of hydrocarbons
constituting part of the Mortgaged Property.
4.20 Gas Contracts. Except as described on Exhibit X under the heading
"Gas Contracts," as of the Closing Date, (a) the Borrower is not obligated, and
no Subsidiary of the Borrower is obligated, in any material respect, by virtue
of any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Mortgaged Property at some future date
without receiving full payment therefor within 90 days of delivery, and (b) none
of the Borrower or any Subsidiary of the Borrower has produced gas, in any
material amount, subject to, and none of the Borrower, any Subsidiary of the
Borrower or any of the Mortgaged Properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements,
except as to such matters for which the Borrower or such Subsidiary of the
Borrower has established monetary reserves adequate in amount to satisfy such
obligations.
4.21 Intellectual Property. The Borrower and each Subsidiary of the
Borrower owns or is licensed to use all Intellectual Property necessary to
conduct all business material to its condition (financial or otherwise),
business, or operations as such business is currently conducted. No claim has
been asserted or is pending by any Person with respect to the use of any such
Intellectual Property or challenging or questioning the validity or
effectiveness of any such Intellectual Property; and the Borrower knows of no
valid basis for any such claim, and the use of such Intellectual Property by the
Borrower and each Subsidiary of the Borrower does not infringe on the rights of
any Person, except, in each case, for such claims and infringements as are not,
in the aggregate, likely to have a Material Adverse Effect.
4.22 Labor Matters. Except as disclosed on Exhibit X under the heading
"Labor Matters," as of the Closing Date there are no collective bargaining
agreements covering the employees of the Borrower or any Affiliates of the
Borrower. None of such Persons has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years, other
than those which could not reasonably be expected to have a Material Adverse
Effect.
4.23 Casualties or Taking of Property. Except as disclosed on Exhibit X
under the heading "Casualties," since June 30, 2001, no Material Adverse Effect
has occurred with respect to the business nor any Property of the Borrower or
any Subsidiary of the Borrower as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property, or cancellation of contracts, permits, or
concessions by any Governmental Authority, riot, activities of armed forces, or
acts of God.
4.24 Locations of Borrower. The principal place of business and chief
executive office of the Borrower is located at the address of the Borrower set
forth on the signature pages hereof or at such other location as the Borrower
may have, by proper written notice hereunder, advised the Agent, provided that
such other location is within a state in which appropriate financing statements
from the Borrower in favor of the Agent have been filed.
49
4.25 Subsidiaries. As of the date hereof, the Borrower has no Subsidiaries
other than those described on Exhibit X under the heading "Subsidiaries." As of
the date hereof, none of the Borrower or any Subsidiary of the Borrower is a
general partner or joint venturer or has partnership or joint venture interests
in any Person other than those described in Exhibit X.
4.26 Good Standing. Borrower and all other Obligors set forth in Exhibit X
under the heading "Good Standing" have filed, or will have filed within thirty
(30) days of the date hereof, to qualify to do business in the respective
jurisdictions of organization and other jurisdictions as set forth in Exhibit X,
including filing all tax returns and other forms necessary to file with the
appropriate Governmental Authority in such jurisdictions.
ARTICLE V.
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrower shall and shall cause its Material Subsidiaries to:
5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all Borrower's and of its Subsidiaries' transactions so
that at any time, and from time to time, their true and complete financial
condition may be readily determined, and promptly following the reasonable
request of the Agent or any Lender, make such records available at the
Borrower's or its Subsidiaries' place of business upon reasonable prior notice,
during normal business hours, for inspection by the Agent or any Lender and, at
the expense of the Borrower, allow the Agent or, at the expense of the Borrower
during the occurrence of any Event of Default, any Lender to make and take away
copies thereof.
5.2 Quarterly Financial Statements; Compliance Certificates. Deliver to
each of the Lenders, on or before the 50th day after the close of each of the
first three quarterly periods of each fiscal year of the Borrower, Sufficient
Copies of the unaudited consolidated and consolidating Financial Statements of
the Borrower and its Subsidiaries as at the close of such quarterly period and
from the beginning of such fiscal year to the end of such period, such Financial
Statements to be certified by a Responsible Officer of the Borrower as having
been prepared in accordance with GAAP consistently applied and as a fair
presentation of the condition of the Borrower and its Subsidiaries, subject to
changes resulting from normal year-end audit adjustments, and a Compliance
Certificate.
5.3 Annual Financial Statements. Deliver to each of the Lenders, on or
before the 100th day after the close of each fiscal year of the Borrower, the
annual audited consolidated Financial Statements and unaudited consolidating
Financial Statements of the Borrower and its Subsidiaries, and a Compliance
Certificate.
5.4 Oil and Gas Reserve Reports.
(a) Deliver to the Agent and each of the Lenders no later than
seventy five (75) days after the end of each fiscal year during the
term of this Agreement, Sufficient Copies of engineering reports in
form and substance reasonably satisfactory to the Agent, certified
by any of the Persons listed under the heading
50
"Approved Petroleum Engineers" on Exhibit X or any other nationally
or regionally- recognized independent consulting petroleum engineers
reasonably acceptable to the Agent as fairly and accurately setting
forth, in accordance with the principles set forth in the Standards
Pertaining to the Estimating and Auditing of Oil and Gas Reserves as
at the time are promulgated by the Society of Petroleum Engineers,
(i) the proven and producing, shut- in, behind-pipe, and undeveloped
oil and gas reserves (separately classified as such) attributable to
the Oil and Gas Properties of the Borrower and its Subsidiaries as
of December 31 of the year for which such reserve reports are
furnished, (ii) the aggregate present value of the future net income
with respect to such Oil and Gas Properties, discounted at a stated
per annum discount rate of proven and producing reserves, (iii)
projections of the annual rate of production, gross income, and net
income with respect to such proven and producing reserves, and (iv)
information with respect to the "take-or-pay," "prepayment," and
material gas-balancing liabilities of the Borrower or any other
Mortgagor.
(b) Deliver to the Agent and each of the Lenders no later than
fifty (50) days after the end of each second quarterly period of
each fiscal year during the term of this Agreement, Sufficient
Copies of engineering reports in form and substance reasonably
satisfactory to the Agent prepared by or under the supervision of
the chief petroleum engineer of the Borrower evaluating the Oil and
Gas Properties of the Borrower and its Subsidiaries as of June 30 of
the year for which such reserve reports are furnished and updating
the information provided in the reports pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section
shall be submitted to the Agent and the Lenders together with such
additional data concerning pricing, quantities of production from
the Borrower's or any Mortgagor's or any other of the Borrower's
Subsidiary's Oil and Gas Properties, volumes of production sold,
hedging positions, purchasers of production, gross revenues,
expenses, and such other information and engineering and geological
data with respect thereto as the Agent may reasonably request.
5.5 Title Opinions; Title Defects. Promptly upon the written request of
the Agent made no more than once in any calendar year commencing with 2002,
furnish to the Agent confirmation of Title reasonably acceptable to the Agent,
covering Oil and Gas Properties constituting not less than 81% of the then Risk
Adjusted Present Value of the Material Properties described in clause (a) of the
definition thereof and 80% of the then net present value of the Material
Properties described in clause (b) of the definition thereof, determined in
accordance with the most recent Reserve Reports provided to the Agent in
accordance with Section 5.4; and promptly, but in any event within 60 days after
notice by the Agent of any defect which is material (in the reasonable opinion
of the Agent) in value, in the Title of the Borrower or any Subsidiary Guarantor
to any of such Oil and Gas Properties, clear such Title defects. In the event
any such Title defects are not cured in a timely manner, the value of the
affected Oil and Gas Properties shall be excluded from the Borrowing Base, or at
the Borrower's election, the Borrower shall pay all related costs and fees
incurred by the Agent to cure such Title defects.
51
5.6 Notices of Certain Events. Deliver to the Agent promptly upon having
knowledge of the occurrence of any of the following events or circumstances, a
written statement with respect thereto, signed by a Responsible Officer of the
Borrower and setting forth the relevant event or circumstance and the steps
being taken by the Borrower or the Borrower's Subsidiary with respect to such
event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual
obligation of the Borrower or any Subsidiary of the Borrower or any
litigation, investigation, or proceeding between the Borrower or any
Subsidiary of the Borrower and any Governmental Authority which, in
either case, (and if not cured in the case of any such default or
event of default, as the case may be) could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or any
Subsidiary of the Borrower as a defendant or in which any Property
of the Borrower or any Subsidiary of the Borrower is subject to a
claim and in which the amount of the claim against the Borrower or
any Subsidiary of the Borrower is $1,000,000 or more and which is
not covered by insurance or in which injunctive or similar relief is
sought;
(d) [Intentionally blank];
(e) [Intentionally blank];
(f) [Intentionally blank];
(g) any Reportable Event or imminently expected Reportable
Event with respect to any Plan; any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer
Plan; the institution of proceedings or the taking of any other
action by the PBGC, the Borrower or any Commonly Controlled Entity
or Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Plan; or any Prohibited Transaction in
connection with any Plan or any trust created thereunder and the
action being taken by the Internal Revenue Service with respect
thereto; and
(h) any other event or condition which could reasonably be
expected to have a Material Adverse Effect.
5.7 Additional Information. Furnish to the Agent, (a) within five Business
Days after any material report (other than financial statements) or other
communication is sent by the Borrower to its stockholders or filed by the
Borrower with the Securities and Exchange Commission or any successor or
analogous Governmental Authority, Sufficient Copies of such report or
communication and, promptly upon the request of the Agent, (b) such additional
financial or other information concerning the assets, liabilities, operations,
and transactions of the Borrower and its Subsidiaries as the Agent may from time
to time reasonably request
52
including without limitation, all such information that the Borrower or any
Subsidiary of the Borrower may have or receive with respect to the Collateral
and (c) notice not less than ten (10) Business Days prior to the occurrence of
any condition or event that may change the proper location for the filing of any
financing statement or other public notice or recording for the purpose of
perfecting a Lien in any Collateral, including any change in its name or the
location of its principal place of business or chief executive office; and upon
the request of the Agent, execute such additional Security Instruments as may be
necessary or appropriate in connection therewith.
5.8 Compliance with Laws. Except to the extent the failure to comply or
cause compliance would not have a Material Adverse Effect, (a) comply with all
Requirements of Law applicable to the Borrower or any Subsidiary, including (i)
the Natural Gas Policy Act of 1978, as amended, (ii) ERISA, (iii) Environmental
Laws, and (iv) all permits, licenses, registrations, approvals, and
authorizations (A) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Borrower or any Subsidiary, (B) required for the performance of
the operations of the Borrower or any Subsidiary, or (C) applicable to the use,
generation, handling, storage, treatment, transport, or disposal of any
Hazardous Substances; and (b) require that all employees, crew members, agents,
contractors, subcontractors, and future lessees (pursuant to appropriate lease
and other contractual provisions) of the Borrower or any Subsidiary, while such
Persons are acting within the scope of their relationship with the Borrower or
any Subsidiary, comply with all such Requirements of Law as may be necessary or
appropriate to enable the Borrower or any Subsidiary to so comply. For purposes
of this Section 5.8, "Subsidiary" means a Subsidiary of the Borrower.
5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Borrower or any Subsidiary of the
Borrower, except any of the foregoing being contested in good faith and as to
which adequate reserve in accordance with GAAP has been established or unless
failure to pay would not have a Material Adverse Effect.
5.10 Maintenance of Corporate Existence and Good Standing. (a) Maintain
its existence and good standing in its jurisdiction of organization and (b)
maintain its corporate qualification and good standing in all jurisdictions
wherein the Property now owned or hereafter acquired or business now or
hereafter conducted by the Borrower or any Subsidiary of the Borrower
necessitates same, unless the failure to do so would not have a Material Adverse
Effect.
5.11 Payment of Notes; Performance of Obligations. Pay the Notes according
to the reading, tenor, and effect thereof, as modified hereby, and do and
perform every act and discharge all of its other Obligations.
5.12 Further Assurances. Promptly after discovery thereof cure any
defects, errors, or omissions in the execution and delivery of any of the Loan
Documents required to be executed by the Borrower or any of the Subsidiary
Guarantors and execute, acknowledge, and deliver to the Agent such other
assurances and instruments as shall, in the reasonable opinion of the Agent, be
necessary to fulfill the terms of the Loan Documents.
53
5.13 Fees and Expenses.
(a) Upon request by the Agent, promptly pay to or reimburse
the Agent or the Collateral Agent, as applicable, for all reasonable
third-party fees, out-of-pocket costs and expenses of the Agent and
the Collateral Agent in connection with the preparation,
negotiation, execution, delivery and enforcement of this Agreement
and the other Loan Documents, and any and all amendments,
restatements and supplements thereof and thereto, the filing and
recordation of the Security Instruments, and the consummation of the
transactions contemplated by the Loan Documents, including
reasonable fees and expenses of legal counsel and, to the extent
retained after an Event of Default in connection with "workout" or
enforcement of this Agreement and the other Loan Documents, auditors
and accountants acting for both the Agent and the Collateral Agent.
(b) Upon request by the Agent (which shall be made promptly
after any request by the Collateral Agent or any Lender), promptly
pay (to the fullest extent permitted by law) for all amounts
reasonably expended, advanced, or incurred during the continuance of
an Event of Default by or on behalf of the Agent, the Collateral
Agent or any other Lender Party: (i) to satisfy any obligation of
the Borrower or any Subsidiary of the Borrower under any of the Loan
Documents; (ii) to collect the Obligations; (iii) to enforce the
rights of the Agent, the Collateral Agent, and the Lender Parties
under any of the Loan Documents, whether or not in an Insolvency
Proceeding; (iv) to protect the Properties or business of the
Borrower and any Subsidiary of the Borrower including the
Collateral, which amounts shall be deemed compensatory in nature and
liquidated as to amount upon notice to the Borrower by the Agent and
which amounts shall include all court costs and reasonable fees and
expenses of legal counsel, auditors and accountants, petroleum
engineers, and environmental and insurance consultants; (v) in
connection with the participation by the Agent and the Lenders as
members of the creditors' committee in a case commenced under any
Insolvency Proceeding; (vi) in connection with lifting the automatic
stay prescribed in Section 362 Title II of the United States Code;
and (vii) in connection with any action pursuant to Section 1129
Title II of the United States Code, all as shall be reasonably
incurred by the Agent, the Collateral Agent, and the Lender Parties
during the continuance of an Event of Default in connection with the
collection of any sums due under the Loan Documents, together with
interest at the per annum interest rate equal to the Default Rate on
each such amount from the date of notification that the same was
expended, advanced, or incurred by the Agent, the Collateral Agent,
or any Lender Party until the date it is repaid to the Agent, the
Collateral Agent, or such Lender Party, with the obligations under
this Section, to the extent permitted by law, surviving the
non-assumption of this Agreement in a case commenced under any
Insolvency Proceeding and being binding upon the Borrower and each
Subsidiary Guarantor and/or a trustee, receiver, custodian, or
liquidator of such Borrower and each Subsidiary Guarantor appointed
in any such case.
54
5.14 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards or make reasonable and customary efforts to cause such
Properties to be so operated.
5.15 Maintenance and Inspection of Properties. Use reasonable and
customary efforts to maintain or cause to be maintained all of its material
tangible Property in good repair and condition, ordinary wear and tear excepted;
make all reasonably necessary replacements thereof and permit any authorized
representative of the Agent, the Collateral Agent or any Lender to visit and
inspect at any reasonable time and upon reasonable notice any tangible Property
of the Borrower or any Subsidiary of the Borrower; provided, however, that any
expenses incurred in connection with any such visit or inspection shall be
reimbursed by the Borrower if required under Section 5.13.
5.16 Maintenance of Insurance. Maintain insurance with respect to its
Property and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
reasonably acceptable to the Required Lenders and, within 30 days of the Closing
Date furnish the Collateral Agent evidence of maintenance of property damage
insurance covering Collateral which names the Collateral Agent as a loss payee
and as additional insured as its interest may appear, and, upon any renewal of
any such insurance and at other times upon reasonable request by the Collateral
Agent, furnish to the Collateral Agent evidence, reasonably satisfactory to the
Collateral Agent, of the maintenance of such insurance. The Collateral Agent
shall have the right to collect, and the Borrower hereby assigns and the
Subsidiary Guarantors pursuant to the other Loan Documents have assigned to the
Collateral Agent, any and all monies that may become payable under any policies
of insurance by reason of damage, loss, or destruction of any of the Collateral.
In the event of any damage, loss, or destruction of Collateral at such time as a
Default or an Event of Default has occurred and is continuing, the Collateral
Agent may, at its option, apply all or a portion of any insurance proceeds
received by it toward the payment of the Obligations, whether matured or
unmatured, application to be made first to interest and then to principal, and
shall deliver to the Borrower the balance, if any, after such application has
been made. The prepayment of any LIBO Rate Loan by the application of such
insurance proceeds shall not require the Borrower to pay any penalty or premium,
including any yield protection amounts which otherwise would be payable upon
such prepayment under Section 2.22. In the event of any such damage, loss, or
destruction of Collateral at a time when no Default or Event of Default has
occurred and is continuing, the Collateral Agent shall deliver any such proceeds
received by it to the Borrower. In the event the Collateral Agent receives
insurance proceeds not attributable to Collateral, the Collateral Agent shall
deliver any such proceeds to the Borrower.
5.17 Indemnification. INDEMNIFY AND HOLD THE AGENT, THE COLLATERAL AGENT, THE
ARRANGER AND EACH OF THE LENDERS AND EACH OF THE OTHER LENDER PARTIES AND THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT,
THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER, THE ARRANGER AND
THE OTHER LENDERS AND LENDER PARTIES UNDER ANY SECURITY INSTRUMENT HARMLESS FROM
AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES,
CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL
ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY
55
KIND, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING
REASONABLE ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, FROM (a) THE PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER,
OR FROM ANY PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF BORROWER, WHETHER
PRIOR TO OR DURING THE TERM HEREOF OR THE FAILURE OR ALLEGED FAILURE OF THE
BORROWER OR ANY SUBSIDIARY OF THE BORROWER TO COMPLY WITH ENVIRONMENTAL LAWS,
(b) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER
OR ANY SUBSIDIARY OF BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND
WHETHER BY THE BORROWER OR ANY SUBSIDIARY OF BORROWER OR ANY PREDECESSOR IN
TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR ANY
SUBSIDIARY OF BORROWER OR ANY OTHER PERSON AT ANY TIME OCCUPYING OR PRESENT ON
SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL, STORAGE,
DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (c) ANY
RESIDUAL CONTAMINATION OF ANY HAZARDOUS SUBSTANCE ON OR UNDER ANY PROPERTY OF
THE BORROWER OR ANY SUBSIDIARY OF BORROWER, (d) ANY CONTAMINATION OF ANY
PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE,
HANDLING, STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE
BORROWER OR ANY SUBSIDIARY OF THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR,
OR SUBCONTRACTOR OF THE BORROWER OR ANY SUBSIDIARY OF BORROWER WHILE SUCH
PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER OR
ANY SUBSIDIARY OF BORROWER, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (e)
THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN DOCUMENT, ANY ALLEGATION BY ANY
BENEFICIARY OF A LETTER OF CREDIT OF A WRONGFUL DISHONOR BY THE AGENT OF A CLAIM
OR DRAFT PRESENTED THEREUNDER WHERE SUCH CLAIM OR DRAFT CONFORMED ON ITS FACE TO
SUCH LETTER OF CREDIT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR
RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, ON THE PART OF THE AGENT, THE COLLATERAL AGENT, THE ARRANGER OR ANY
LENDER OR LENDER PARTY OR ANY OF THEIR RESPECTIVE SHAREHOLDERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE
FOR THE BENEFIT OF THE AGENT, THE COLLATERAL AGENT, THE ARRANGER OR THE LENDERS
OR ANY OTHER LENDER PARTY UNDER ANY SECURITY INSTRUMENT; PROVIDED, HOWEVER, THE
FOREGOING CLAUSES (a) THROUGH (e) SHALL NOT APPLY TO ANY CLAIM, LOSS, DAMAGE,
LIABILITY, FINE, PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION OR
REQUIREMENT ATTRIBUTABLE TO (i) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
ANY PERSON TO BE INDEMNIFIED OR (ii) ANY ACTION OR INACTION OF ANY PERSON TO BE
INDEMNIFIED SUBSEQUENT TO THE EXERCISE OF OWNERSHIP RIGHTS AFTER ANY FORECLOSURE
ACTION WITH RESPECT TO ANY OF THE COLLATERAL TO THE EXTENT, WITH RESPECT TO SUCH
COLLATERAL, SUCH CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE,
PROCEEDING, ORDER, JUDGMENT, ACTION OR REQUIREMENT ARISES SUBSEQUENT TO THE
EXERCISE OF OWNERSHIP RIGHTS AFTER ANY FORECLOSURE ACTION WITH RESPECT TO SUCH
COLLATERAL, AND TO THE EXTENT SUCH PERSON IS A "PERSON IN CONTROL" UNDER ANY
ENVIRONMENTAL LAW. THE FOREGOING INDEMNITY SHALL SURVIVE SATISFACTION OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT, UNLESS ALL SUCH OBLIGATIONS
HAVE BEEN SATISFIED WHOLLY AND INDEFEASIBLY IN CASH FROM THE BORROWER OR A
SUBSIDIARY GUARANTOR AND NOT BY WAY OF REALIZATION AGAINST ANY COLLATERAL OR THE
CONVEYANCE OF ANY PROPERTY IN LIEU THEREOF.
5.18 Liens on Material Properties; Additional Guaranties and Mortgages.
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(a) Cooperate in good faith with the Agent to execute from
time to time such documents and instruments as the Agent may
reasonably request and (ii) execute and deliver and cause to be
executed and delivered instruments and documents, in each case, to
assure that Properties constituting Material Properties are at all
times subject to a first priority Lien (or, in the case of the
Properties subject to the Production Payment 2001 Lien or Acquired
Property, a second priority Lien subordinate to the Production
Payment 2001 Lien or the Lien securing such Acquisition
Indebtedness, as the case may be) in favor of the Collateral Agent
(subject to Permitted Liens and Liens permitted under Section 6.3)
to secure the Obligations (other than Hedging Obligations, if any,
which are not Secured Hedging Obligations).
(b) If after the date hereof, the Borrower, or any Subsidiary
of the Borrower, shall form or acquire any Subsidiary, including a
VPP Subsidiary, or any such Subsidiary of the Borrower or a
Subsidiary of the Borrower shall begin commercial operations, the
Borrower shall execute, or cause its relevant Subsidiary to execute,
a Pledge Agreement substantially in the form of those delivered
pursuant to Section 3.1(f)(ii) pledging the equity interest of the
Borrower or such Subsidiary of the Borrower in such Subsidiary and
any notes (excluding intercompany notes) payable to such Subsidiary
to the Collateral Agent for the benefit of the Lender Parties to
secure the Obligations (other than Hedging Obligations, if any,
which are not Secured Hedging Obligations) of the Borrower and its
Subsidiaries pursuant to this Agreement and the Loan Documents;
shall execute or cause its Subsidiary to execute and deliver to the
Collateral Agent all other documents and instruments (including
UCC-1 Financing Statements) and take all other actions with respect
to the creation and maintenance of such Lien as the Agent or
Collateral Agent may reasonably request; and shall deliver to the
Agent and the other Lender Parties such opinions of counsel
satisfactory to the Agent with respect to such Pledge Agreement,
which opinions shall be in form and substance reasonably
satisfactory to the Agent, as the Collateral Agent or Agent may
reasonably request; provided, however, that notwithstanding the
foregoing, the Borrower and its Subsidiaries shall not be obligated
to pledge the equity interests of the Borrower and its Subsidiaries
in any VPP Subsidiary to the Collateral Agent if (i) such pledge is
prohibited under the terms of such VPP Subsidiary's organizational
documents, (ii) such equity interests are held by a Subsidiary of
the Borrower which only business or activity is owning, either
directly or through another Subsidiary, equity interests in VPP
Subsidiaries, and which only Properties consist of such equity
interests (such Person a "VPP SPV") or are held by a Subsidiary of
the Borrower all of the outstanding capital stock of which is held
by a VPP SPV and (iii) the equity in such VPP SPV is pledged as
provided in this clause (b).
(c) The Borrower shall also cause any Subsidiary (whether
owned, formed or acquired) of the Borrower (other than a VPP
Subsidiary) which has or which acquires Property such that its
Property has a value in excess of $1,000,000 or which begins
commercial operations to become a Subsidiary Guarantor with respect
to, and jointly and severally liable with all other Subsidiary
Guarantors
57
for, all the Obligations (other than Hedging Obligations, if any,
which are not Secured Hedging Obligations) of the Borrower under
this Agreement and all other Loan Documents by executing and
delivering to the Agent for the benefit of the Lender Parties a
Subsidiary Guaranty substantially in the form of Exhibit XIV; to
execute and deliver to the Collateral Agent a Mortgage substantially
in the form of those delivered pursuant to Section 3.1(f)(i) (with
such changes as the Collateral Agent may reasonably request)
creating a first priority Lien in favor of the Collateral Agent for
the benefit of the Lender Parties (subject to Permitted Liens and
Liens permitted under Section 6.3) securing all the Obligations
(other than Hedging Obligations, if any, which are not Secured
Hedging Obligations) of the Borrower and such Subsidiary under this
Agreement, the Subsidiary Guaranty and any other Loan Document as
may be requested to assure that Properties constituting Material
Properties are subject to a Lien in favor of the Collateral Agent
securing the Obligations; to execute and deliver to the Collateral
Agent all other documents and instruments (including UCC-1 Financing
Statements) and take all other actions with respect to the creation
and maintenance of such Lien as the Agent or Collateral Agent may
reasonably request; and to deliver to the Agent and the other Lender
Parties such opinions of counsel satisfactory to the Agent with
respect to such Security Instruments, which opinions shall be in
form and substance satisfactory to the Agent, as the Collateral
Agent or Agent may reasonably request; provided, that
notwithstanding the foregoing, to the extent that such Subsidiary
shall acquire such Property with the proceeds of Indebtedness of the
type described in Section 6.1(g) or (h) (such Property herein
"Acquired Property" and such Indebtedness herein "Acquisition
Indebtedness"), the Liens required pursuant to this Section 5.18(c)
with respect to such Property may be a second priority Lien behind a
Lien securing such Acquisition Indebtedness rather than a first
priority lien and, provided further, that to the extent such
Acquisition Indebtedness prohibits the granting of a second priority
Lien, the Borrower shall, in lieu of taking the action set forth
above in this clause (c), cause the Acquired Property to be acquired
by a special purpose acquisition Subsidiary of the Borrower which
only business or activity is owning, operating, producing, drilling
and/or developing such Acquired Property and shall cause such
Subsidiary to execute a Pledge Agreement and take the other actions
contemplated by clause (b) above.
(d) If, after the date hereof, the Borrower or any Subsidiary
of the Borrower (i) sells, transfers or otherwise disposes of, in a
transaction permitted under Section 6.5 hereof, any assets subject
to a Lien in favor of the Collateral Agent, all of the capital stock
owned by it of a Subsidiary Guarantor or any equity that is pledged
pursuant to a Pledge Agreement or (ii) enters into any transaction
permitted under the proviso of the first sentence of Section 6.10
hereof, (1) the Liens with respect to any such assets so sold,
transferred or disposed of shall automatically be deemed to have
been released, (2) any Pledge Agreements executed by the holder of
any equity that is the subject of a transaction permitted under
Section 6.5(f) to the extent such Pledge Agreement relates to such
equity shall automatically be deemed to have been terminated, (3)
any Subsidiary Guaranty executed by the issuer of any equity that is
the subject of a transaction
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permitted under Section 6.5(f) shall automatically be deemed to have
been terminated and (4) any Pledge Agreements applicable to the
equity of a Subsidiary that is a party to a transaction permitted
under the proviso of the first sentence of Section 6.10 to the
extent such Pledge Agreement relates to such equity shall
automatically be deemed to have been terminated, and the Collateral
Agent shall at the expense of the Borrower execute all such
documents and instruments (including UCC-3 Financing Statements) and
take all such other actions as may be reasonably necessary to effect
the foregoing. Each Lender Party hereby authorizes the Collateral
Agent to take the actions contemplated by this clause (d).
(e) If on or after January 1, 2002 (i) any or all of
Medallion, Gas Services or Michigan Resources shall not have been
merged into KCS Resources, Inc. or (ii) Energy Marketing shall not
have been merged into KCS Energy Services, Inc., then the Borrower
shall no later than January 15, 2002 cause to be delivered to the
Agent with respect to any of Medallion, Gas Services, Michigan
Resources and Energy Marketing which is not merged as aforesaid,
certificates of secretaries or assistant secretaries thereof, board
resolutions, good standing certificates, and opinions of counsel,
satisfactory to the Agent, with respect to such Subsidiary's
Subsidiary Guaranty and such Subsidiary as the Agent may reasonably
request, including certificates and opinions to the effect of the
certificates and opinions delivered pursuant to clauses (c), (d),
(e), (g), (m) and (t) of Section 3.1
5.19 Maintenance of Agreements, etc. Take all commercially reasonable
efforts to maintain all rights and privileges useful or necessary in the conduct
of its business.
5.20 Hedging. Each Hedging Agreement shall have as parties the Borrower or
a Subsidiary Guarantor and a Qualified Swap Counterparty at the time such
Hedging Agreement is entered into. The obligations of the Borrower pursuant to
any Hedging Agreement of the Borrower entered into, in the Borrower's
discretion, with any Lender or an Affiliate of a Lender may, if so elected by
such Lender or Affiliate of a Lender, be secured by the Collateral pursuant to
the Security Instruments (each such Hedging Agreement, a "Secured Hedging
Agreement"); all other Hedging Agreements shall be unsecured.
ARTICLE VI.
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrower will not and will not permit any Material Subsidiary (or in
the case of Section 6.1, any Subsidiary) of the Borrower to:
6.1 Indebtedness. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to the Obligations, (b) unsecured accounts
payable incurred in the ordinary course of business, which are not unpaid in
excess of 60 days beyond invoice date or are being contested in good faith and
59
as to which such reserve as is required by GAAP has been made, (c) up to
$80,000,000 in the aggregate of Senior Notes, (d) up to $125,000,000 in the
aggregate of the notes issued pursuant to the indenture described in clause (ii)
of the definition of Public Debt, (e) up to $80,000,000 in the aggregate of
Subordinated Indebtedness other than that described in clause above; provided
that at no time shall the face principal amount of such other Subordinated
Indebtedness plus the principal amount of the then outstanding Senior Notes
exceed $80,000,000 in the aggregate, (f) the Production Payment 2001
Obligations, (g) Indebtedness, the proceeds of which is used by the Borrower and
the Subsidiary Guarantors to acquire Oil and Gas Properties, provided that (i)
such Indebtedness is either borrowed from the Lenders or is otherwise acceptable
to the Agent and the Lenders acting reasonably and (ii) after giving effect to
the incurrence thereof, no Default or Event or Default shall have occurred and
be continuing, Indebtedness of Subsidiaries of the Borrower other than
Subsidiary Guarantors which is not recourse directly or indirectly to the
Borrower and its other Subsidiary Guarantors; provided such Indebtedness is
acceptable to the Agent acting reasonably and (ii) after giving effect to the
incurrence thereof, no Default or Event of Default shall have occurred and be
continuing and Indebtedness not otherwise permitted under this Section 6.1 which
does not exceed at any one time the aggregate principal amount of $1,000,000.
6.2 Contingent Obligations. Create, incur, assume, or suffer to exist any
Contingent Obligation; provided, however, the foregoing restriction shall not
apply to (a) performance guaranties and performance surety or other bonds
provided in the ordinary course of business, including guaranties and letters of
credit supporting such performance obligations, (b) trade credit incurred or
operating leases entered into in the ordinary course of business, (c) guaranties
and contribution obligations under the Public Debt (d) endorsements of
instruments for deposit or collection in the ordinary course of business (e)
guaranties of any other Indebtedness permitted under Section 6.1(c) through (e)
or Section 6.1(g) or Section 6.1(i), and (f) Contingent Obligations in favor of
any Lender Party in its capacity as such; provided, however, that nothing herein
shall restrict the existence and performance by the Borrower or any Material
Subsidiary of the Production Payment 2001 Facility or the Production Payment
2001 Obligations.
6.3 Liens. Create, incur, assume, or suffer to exist any Lien on any of
its Oil and Gas Properties or any other Property, whether now owned or hereafter
acquired; provided, however, the foregoing restrictions shall not apply to (a)
Permitted Liens, (b) landlord's Liens in any Property which is not Collateral,
(c) Liens existing on cash deposits in connection with the defeasance of
Indebtedness permitted in Section 6.1(d), (d) Liens incurred in the ordinary
course of business covering deposit accounts in favor of the depository
institution holding such accounts and arising in connection with obligations of
the Borrower or any Subsidiary Guarantor arising from any such accounts, (e)
Liens securing the payment or performance of tenders, statutory or regulatory
obligations, surety and appeal bonds, bids, government contracts and leases,
performance and return of money bonds and similar obligations (other than for
payment of Debt) and covering Property which is not Collateral, (f) Liens on
Acquired Property securing Acquisition Indebtedness related thereto to the
extent permitted pursuant to the proviso of Section 5.18(c), and (g) Liens
described on Exhibit X under the heading "Liens".
6.4 Negative Pledge Agreements. Create, enter into, execute, incur, assume
or permit to exist, any contract, agreement or understanding (other than the
Loan Documents) which in any manner grants, conveys, creates or imposes, or
which in any way prohibits or restricts the
60
granting, conveying, creation or imposition of, any Lien on any Property of the
Borrower, or which requires the consent of, or notice to, other Persons in
connection therewith; provided, however, the foregoing restrictions shall not
apply to (a) any of the foregoing as may be required under any Indebtedness
permitted under Section 6.1, and (b) any of the foregoing with respect to any
Liens permitted pursuant to Section 6.3.
6.5 Sales of Assets. Sell, transfer, or otherwise dispose of, in one or
any series of transactions, assets, whether now owned or hereafter acquired or
enter into any agreement to do so; provided, however, the foregoing restriction
shall not apply to (a) the sale of hydrocarbons or inventory in the ordinary
course of business other than the sale of a production payment and provided that
no contract for the sale of hydrocarbons shall obligate the Borrower or its
Subsidiary, as the case may be, to deliver hydrocarbons produced from any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, the sale or other disposition of Property destroyed,
lost, worn out, damaged, or having only salvage value or no longer used or
useful in the business of such Borrower, (c) the sale of Specified Assets on or
before Xxxxx 0, 0000, (x) the sale of emission credits relating to any Oil and
Gas Property; provided such emission credits are not necessary for the efficient
operation of such Oil and Gas Property and will not increase the cost of
operating such Oil and Gas Property as contemplated by the most recent Reserve
Report delivered pursuant hereto, will not change the value of such Oil and Gas
Property and will not increase the Borrower's or the Borrower's Subsidiary's, as
the case may be, operational risk, (e) in addition to sales permitted by clauses
(a), (b), (c) and (d) above arms- length sales of assets in any Sales Period
having in the aggregate a value not in excess of $1,000,000, or (f) the capital
stock of any Subsidiary of the Borrower where the only assets of such Subsidiary
consist of assets the sale of which would be permitted under one or more of the
preceding clauses (a) through (e) of this Section 6.5. For purposes of this
Section 6.5, the value of any Property shall be the discounted present value of
such Property as shown on the most recent Reserve Report delivered to the Agent
pursuant to this Agreement. Cash proceeds received by the Borrower or any of its
Subsidiaries from the sales of assets permitted hereby (other than the Specified
Assets) shall either be (i) reinvested in substantially similar assets within
120 days after such sale or (ii) used for general corporate purposes, subject to
a concurrent adjustment of the Borrowing Base to eliminate the amount
attributable by the Required Lenders to the sold assets in the most recent
Borrowing Base determination under Section 2.12 and repayment within thirty days
of any amounts required pursuant to Section 2.13 as a result of such
redetermination. Sale of any asset not expressly permitted in this Section 6.5
shall require prior approval by the consent of the Agent and the Required
Lenders. Net proceeds received from the sales of Specified Assets not reinvested
or used as provided in the second next preceding sentence shall be applied
promptly to payment of outstanding Loans and to secure L/C Exposure of the
Borrower.
6.6 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred; provided that
the foregoing restrictions of this Section 6.6 shall not apply to Property
(which Property is not Oil and Gas Property) with a fair market value not in
excess of $500,000.
6.7 Loans; Advances; Investments. Except as permitted by Section 6.1, make
or agree to make or allow to remain outstanding any loans or advances to or
acquire Investments in,
61
guaranty the Indebtedness of, or purchase or otherwise acquire all or
substantially all of the assets of any Person; provided, however, the foregoing
restrictions shall not apply to (a) advances or extensions of credit in the form
of accounts receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b) advances to
employees of the Borrower for the payment of expenses in the ordinary course of
business, (c) the purchase or acquisition of Oil and Gas Properties located in
or offshore North America, (d) Investments in the form of (i) debt securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof, with maturities of no more
than one year from the date of acquisition, (ii) commercial paper of a domestic
issuer rated at the date of acquisition at least P-1 by Xxxxx'x Investor
Service, Inc. or A-1 by Standard & Poor's Corporation and with maturities of no
more than one year from the date of acquisition, and (iii) repurchase agreements
covering debt securities or commercial paper of the type permitted in this
Section, certificates of deposit, demand deposits, eurodollar time deposits,
overnight bank deposits and bankers' acceptances, with maturities of no more
than one year from the date of acquisition, issued by or acquired from or
through the Agent, any Lender, or any bank or trust company organized under the
laws of the United States or any state thereof and having capital surplus and
undivided profits aggregating at least $500,000,000, (e) other short-term
Investments similar in nature and degree of risk to those described in clause
(d) of this Section, (f) the VPP Subsidiaries Investment and (g) Investments by
the Borrower or any Subsidiary of the Borrower in the Borrower or any of its
Subsidiaries; provided, that notwithstanding the foregoing clause (g),
Investments by the Borrower or any Subsidiary of the Borrower in any
Subsidiaries that are not Subsidiary Guarantors shall not exceed $750,000 in the
aggregate for all such Investments in all such Subsidiaries which are not
Subsidiary Guarantors. Notwithstanding the foregoing clause (f), Borrower shall
be permitted to make the VPP Subsidiaries Investment only if (i) the applicable
VPP Subsidiary agrees with the Lenders in writing to incur only non-recourse
Indebtedness and (ii) the Borrower pledges or causes to be pledged its direct or
indirect equity interest in the VPP Subsidiary to the Collateral Agent for the
benefit of the Lender Parties as additional security for the Borrower's
obligations under this Agreement in accordance with, and if required under,
Section 5.18(b) hereof.
6.8 Dividends and Distributions. Declare, pay, or make, whether in cash or
Property of the Borrower, any dividend or distribution on or purchase, redeem,
or otherwise acquire for value, any share of any class of its capital stock;
provided, however, the foregoing restriction shall not apply to (i) dividends
paid in or other payments made in capital stock of the Borrower or options,
interests or other rights to purchase any such capital stock or (ii) the direct
conversion of the Preferred Stock to Common Stock of the Borrower pursuant to
the Borrower's articles of incorporation, (iii) the prepayment, purchase or
redemption of Preferred Stock using the Net Cash Proceeds from the issuance of
equity securities for such prepayment, purchase or redemption, or (iv) the
payment of cash dividends on the Preferred Stock in accordance with the
Borrower's articles of incorporation as in effect on the date hereof.
6.9 Environmental Matters. Cause or permit any of its Property to be in
violation of any Environmental Law or do anything or permit anything to be done
that would subject any of its Property to be subject to any remedial obligations
under any Environmental Law, assuming disclosure to applicable Governmental
Authorities of all relevant facts, conditions, and circumstances, except where
the foregoing would not have a Material Adverse Effect.
62
6.10 Merger, etc.; Changes in Corporate Structure. Enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution) other than the merger of
Subsidiaries; provided, however, the foregoing restriction shall not apply to
any such consolidation, merger, amalgamation, liquidation, winding up, or
dissolution involving a Subsidiary having only assets the sale of which would be
permitted under Section 6.5 hereof. The Borrower will not, nor will it permit
any Subsidiary of the Borrower to amend or otherwise modify its organizational
documents or its structure, activities or nature, as applicable, in any manner
that could reasonably be expected to have a Material Adverse Effect.
6.11 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) not otherwise permitted by this Agreement with any of its
Affiliates, other than upon fair and reasonable terms no less favorable than
could be obtained in an arm's length transaction with a Person which was not an
Affiliate.
6.12 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which the Borrower is engaged as of the
date hereof and those reasonably and directly related thereto.
6.13 ERISA Compliance. Permit the Borrower to hold "plan assets" of any
employee benefit plan subject to Title I of ERISA or any plan subject to Section
4975 of the Code under circumstances that would contravene the requirements of
regulatory authority issued under such provisions of the Code or ERISA by the
appropriate regulatory authorities, or permit any Plan maintained by it or any
Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner which could result in the imposition
of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or all or substantially all of the assets of any Person which has now or
has had at any time an obligation to contribute to any Multiemployer Plan.
6.14 Subordinated Indebtedness; Production Payments. Materially amend or
modify any of the terms or provisions of any documents, notes, or agreements
governing or evidencing the Subordinated Indebtedness or the Senior Notes,
including any term or provision which accelerates or increases the Subordinated
Indebtedness or the Senior Notes, or, at any time following the occurrence and
during the continuance of any Event of Default, make any payments, whether in
cash or other Property, on or with respect to the Subordinated Indebtedness
except payments (but not prepayments or defeasance) of interest and principal in
accordance with the terms of such Subordinated Indebtedness; provided, however,
the foregoing restriction shall not prevent the renewal or extension of the
Subordinated Indebtedness or the Senior Notes so long as no other terms are
materially amended or modified. The Borrower shall not prepay, redeem, purchase
or defease any Subordinated Indebtedness or renew, rearrange or materially amend
or modify the Production Payment 2001 Facility other than prepayments thereof
and other than immaterial modifications to the terms and delivery schedules
thereof; provided such modifications shall not alter the then remaining weighted
average life of such scheduled amounts of production.
63
6.15 Use of Proceeds. Permit the proceeds of any Loan or any Letter of
Credit to be used for any purpose other than as expressly permitted in Section
2.6.
6.16 Intentionally Blank.
6.17 Change of Ownership. Allow a Change of Control to occur.
6.18 Capital Expenditures. Make any capital expenses except for (i)
expenditures associated with proved, non-producing and development reserves, the
replacement of production, acquisitions, investments in volumetric production
payments, exploration and (ii) other expenditures of $500,000 or less in any
Sales Period.
6.19 Working Capital. Permit Working Capital to be at any time less than
the sum of $1 plus the greater of $7,000,000 and an amount equal to 10% of the
Borrowing Base at such time.
6.20 Interest Coverage Ratio. Permit, as of the close of any fiscal
quarter, the ratio of Adjusted EBITDA for the preceding four fiscal quarters
(including the quarter most recently ended) to (b) Interest Expense for the
preceding four fiscal quarters to be less than 2.75 to 1.0.
6.21 Debt to Adjusted EBITDA Ratio. Permit, as of the close of any fiscal
quarter the ratio of (a) Debt to (b) Adjusted EBITDA for the preceding four
fiscal quarters to be more than 3.5 to 1.0.
ARTICLE VII.
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
(a) (i) default shall be made in any payment of principal when
due under this Agreement or the Notes at Final Maturity or pursuant
to Section 2.13(a)(i), or (ii) default shall be made in the payment
when due of any other sums, including, without limitation, interest,
payable under any Loan Document other than as set forth under clause
(i) hereof and such failure shall continue unremedied for a period
of five (5) days;
(b) default shall be made in the due observance or performance
of any obligation under Section 6.10, 6.17, 6.20, or 6.21 of this
Agreement.
(c) default shall be made by the Borrower or a Subsidiary
Guarantor in the due observance or performance of any of their
respective obligations under the Loan Documents other than as
described in Section 7.1(a) or 7.1(b) and such default shall not
have been remedied within 30 days after the earlier of (i) receipt
of written notice thereof by the Borrower from the Agent, or (ii)
any Borrower or Subsidiary Guarantor having or obtaining knowledge
thereof;
64
(d) any representation or warranty made by any Borrower or any
Subsidiary Guarantor in any of the Loan Documents proves to have
been untrue in any material respect as of the date the facts therein
set forth were stated or certified or deemed stated or certified;
(e) default(s) shall be made by the Borrower or any Subsidiary
Guarantor (as principal or guarantor or other surety) in the payment
or performance of any Indebtedness in an aggregate amount equal to
or exceeding $1,500,000, and such default(s) shall remain unremedied
for in excess of the period of grace, if any, with respect thereto
if the effect of such default is that such Indebtedness becomes, or
if such default permits the holder of such Indebtedness to declare
it to be, immediately due and payable;
(f) the Borrower or any Subsidiary Guarantor shall (i) apply
for or consent to the appointment of a receiver, trustee, or
liquidator of it or all or a substantial part of its assets, (ii)
file a voluntary petition commencing an Insolvency Proceeding, (iii)
make a general assignment for the benefit of creditors, (iv) admit
in writing its inability to pay, or generally not be paying, its
debts as they become due, or (v) file an answer admitting the
material allegations of a petition filed against it in any
Insolvency Proceeding;
(g) an order, judgment, or decree shall be entered against the
Borrower or any Subsidiary Guarantor by any court of competent
jurisdiction or by any other duly authorized authority, on the
petition of a creditor or otherwise, granting relief in any
Insolvency Proceeding, or approving a petition seeking
reorganization or an arrangement of its debts or appointing a
receiver, trustee, conservator, custodian, or liquidator of it or
all or any substantial part of its assets, and such order, judgment,
or decree shall not be dismissed or stayed within 60 days;
(h) the levy against any significant portion of the Property
of the Borrower or any Subsidiary Guarantor execution, garnishment,
attachment, sequestration, or other writ or similar proceeding
involving an amount which, if paid, would have a Material Adverse
Effect and which is not permanently dismissed, discharged or bonded
within 30 days after the levy;
(i) a final and non-appealable order, judgment, or decree
shall be entered against the Borrower or any Subsidiary Guarantor
for money damages and/or Indebtedness due in an aggregate amount in
excess of $1,500,000 and which is not covered by independent
third-party insurance as to which the insurer does not dispute
coverage, and such order, judgment, or decree shall not be paid,
dismissed or stayed fifteen (15) days before the date on which
execution on any Property of the Borrower or Subsidiary Guarantor
may be issued;
(j) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against the Borrower or any
Subsidiary Guarantor under the Racketeering Influence and Corrupt
Organizations Statute
65
(18 U.S.C. Section 1961 et seq.), the result of which could
reasonably be expected to be the forfeiture or transfer of any
material Property of the Borrower or a Subsidiary Guarantor subject
to a Lien in favor of the Agent without (i) satisfaction or
provision for satisfaction of such Lien, or (ii) such forfeiture or
transfer of such Property being expressly made subject to such Lien;
(k) the Borrower or any Subsidiary Guarantor shall have
concealed, removed, or diverted, or permitted to be concealed,
removed, or diverted, any material part of its Property, with intent
to hinder, delay, or defraud its creditors or any of them;
(l) the Borrower shall hold "plan assets" of any employee
benefit plan subject to Title I of ERISA or any plan subject to
Section 4975 of the Code under circumstances that would contravene
the requirements of regulatory authority issued under such
provisions of the Code or ERISA by the appropriate regulatory
authorities, or any Person shall engage in any Prohibited
Transaction involving any Plan; any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan for which an excise tax is due or
would be due in the absence of a waiver; a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or
to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Agent, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; any Single Employer
Plan shall terminate for purposes of Title IV of ERISA; the
Borrower, any Subsidiary Guarantor, or any Commonly Controlled
Entity shall incur, or in the reasonable opinion of the Agent, be
likely to incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a Multiemployer Plan; or any
other event or condition shall occur or exist with respect to a Plan
and the result of such events or conditions referred to in this
Section 7.1(l) could reasonably be expected to subject the Borrower,
any Subsidiary Guarantor or any Commonly Controlled Entity to any
tax (other than an excise tax under Section 4980 of the Code),
penalty or other liabilities which taken in the aggregate would have
a Material Adverse Effect and any such circumstance shall exist for
in excess of 30 days;
(m) any Security Instrument shall for any reason not, or shall
cease to, create valid and perfected first-priority Liens (or, in
the case of the Properties subject to the Production Payment 2001
Facility, a second priority Lien behind the Production Payment 2001
Lien or in the case of Acquired Property subject to a Lien to secure
Acquisition Indebtedness as provided in Section 5.18(c), a second
priority lien behind such Lien) against the Collateral purportedly
covered thereby, subject to Permitted Lie ns and Liens permitted
under Section 6.3, and which Collateral has a value greater than
$1,000,000 in the aggregate for all such Collateral, unless the
Borrower has provided the Collateral Agent, within 30 days, with
additional Collateral having at least an equivalent value to the
Collateral
66
affected by such failure and otherwise reasonably satisfactory to
the Required Lenders; and
(n) the Borrower or any of its Subsidiaries shall fail to
deliver all of the Scheduled Amounts (as defined in the Production
Payment 2001 Facility) for any two consecutive months or shall owe
Monthly Adjustment Amounts (as defined in the Production Payment
2001 Facility) for any period of more than four months.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in
Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all
Obligations shall automatically become immediately due and payable,
including all Obligations to pay cash collateral as set forth in
Section 2.2(e) and Section 2.13, without presentment, demand,
protest, notice of protest, default, or dishonor, notice of intent
to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary
elsewhere herein, all of which are hereby expressly waived by the
Borrower; (ii) the Commitments shall immediately cease and terminate
unless and until reinstated by the Agent and the Lenders in writing;
and (iii) with the oral consent of the Required Lenders (confirmed
promptly in writing), the Agent and each Lender is hereby authorized
at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to setoff
and apply any and all deposits (general or special, time or demand,
provisional or final) held by the Agent or such Lender and any and
all other indebtedness at any time owing by the Agent or such Lender
to or for the credit or account of the Borrower against any and all
of the Obligations due and payable in such manner as the Lenders
determine in their sole discretion.
(b) Upon the occurrence of any Event of Default other than
those specified in Sections 7.1(f) or 7.1(g), (i) the Agent may and,
upon the request of the Required Lenders shall, by notice to the
Borrower, declare all Obligations hereunder and under the Notes
immediately due and payable, including all Obligations to pay cash
collateral as set forth in Section 2.2(e) and Section 2.13, without
presentment, demand, protest, notice of protest, default, or
dishonor, notice of intent to accelerate maturity, notice of
acceleration of maturity, or other notice of any kind, except as may
be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by the Borrower; (ii) the Agent may and,
upon the request of the Required Lenders, shall, declare the
Commitments terminated, whereupon the Commitments shall immediately
cease and terminate unless and until reinstated by the Agent and the
Lenders in writing; and (iii) with the oral consent of the Required
Lenders (confirmed promptly in writing), the Agent and each Lender
is hereby authorized at any time and from time to time, without
notice to the Borrower (any such notice being expressly waived by
each Borrower), to set-off and apply any and all deposits (general
or special, time or demand, provisional or final) held by the Agent
or such Lender and any and all
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other indebtedness at any time owing by the Agent or such Lender to
or for the credit or account of the Borrower against any and all of
the Obligations due and payable in such manner as the Lenders
determine in their sole discretion.
(c) Upon the occurrence of any Event of Default, the Lenders,
with the oral consent of the Required Lenders (confirmed promptly in
writing), and the Agent, in accordance with the terms hereof, may,
in addition to the foregoing in this Section 7.2, exercise any or
all of their rights and remedies provided by law or pursuant to the
Loan Documents in such manner as the Lenders determine in their sole
discretion.
ARTICLE VIII.
THE AGENTS AND THE ARRANGER
8.1 Appointment. Each Lender hereby designates and appoints CIBC as the
Agent, CIBC Inc. as the Collateral Agent and the Agent as Letter of Credit
issuing bank under this Agreement and the other Loan Documents. Each Lender
authorizes the Agent and the Collateral Agent to take such action on behalf of
such Lender under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent and the Collateral Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, none of the Agent or the
Collateral Agent shall have any duties or responsibilities except those
expressly set forth herein or in any other Loan Document or any fiduciary
relationship with any Lender and none of the Documentation Agent, the
Co-Arranger or the Arranger shall have any duties or responsibilities whatsoever
in such capacities or any fiduciary relationship with any Lender; and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities on
the part of the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger or the Arranger shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent, the Collateral Agent, the
Documentation Agent, the Co-Arranger or the Arranger.
8.2 Delegation of Duties. Each of the Agent and the Collateral Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. None of the Agent or
the Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. None of the Agent or the Collateral Agent or
any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be required to initiate or conduct any
litigation or collection proceedings hereunder, except with the concurrence of
the Required Lenders and contribution by each Lender of its Percentage Share of
costs reasonably expected by the Agent or the Collateral Agent to be incurred in
connection therewith, (b) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for gross negligence or willful misconduct of the
Agent or the Collateral Agent or such Person), or
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responsible in any manner to any Lender for any recitals, statements,
representations or warranties made by the Borrower or any Subsidiary of Borrower
or any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent or the Collateral Agent under or in connection
with, this Agreement or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of the Borrower or any Subsidiary of
Guarantor to perform its obligations hereunder or thereunder. None of the Agent
or the Collateral Agent shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower.
8.4 Reliance by Agent. Each of the Agent and the Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Agent or the Collateral Agent.
Each of the Agent and the Collateral Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless and until a written notice of
assignment, negotiation, or transfer thereof shall have been received by the
Agent. Each of the Agent and the Collateral Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or of all of the Lenders if required by
any provision of this Agreement and contribution by each Lender of its
Percentage Share of costs reasonably expected by the Agent or the Collateral
Agent, as the case may be, to be incurred in connection therewith. Each of the
Agent and the Collateral Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders. Such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and all future holders of the Notes. In no event shall the Agent or the
Collateral Agent be required to take any action that exposes such agent to
personal liability or that is contrary to any Loan Document or applicable
Requirement of Law.
8.5 Notice of Default. Neither the Agent nor the Collateral Agent shall be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless such agent has received notice from a Lender or the 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 an agent
receives such a notice, such agent shall promptly give notice thereof to the
Lenders. The Agent and the Collateral Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided that unless and until the Agent and the Collateral
Agent shall have received such directions, subject to the provisions of Section
7.2, each of the Agent and the Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders. In the event that the officer of the Agent or the Collateral Agent
primarily responsible for the lending relationship with the Borrower or the
officer of any Lender primarily responsible for the lending relationship
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with the Borrower becomes aware that a Default or Event of Default has occurred
and is continuing, such agent or such Lender, as the case may be, shall use its
good faith efforts to inform the other Lenders and/or the other agent, as the
case may be, promptly of such occurrence. Notwithstanding the preceding
sentence, failure to comply with the preceding sentence shall not result in any
liability to the Agent, the Collateral Agent, or any Lender.
8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that none of the Agent, the Collateral Agent, the Documentation
Agent, the Co-Arranger, the Arranger, any other Lender or any of their
respective officers, directors, employees, agents, attorneys-in- fact or
affiliates has made any representation or warranty to such Lender and that no
act by the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger, or any other Lender hereafter taken, including any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent, the Collateral Agent, the Documentation
Agent, the Co-Arranger, the Arranger, or any Lender to any other Lender. Each
Lender represents to the Agent, the Collateral Agent, the Documentation Agent,
the Co-Arranger and the Arranger that it has, independently and without reliance
upon the Agent, the Collateral Agent, the Documentation Agent, the Co-Arranger,
the Arranger, or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, condition (financial and otherwise) and
creditworthiness of the Borrower and the value of the Collateral and other
Properties of the Borrower and has made its own decision to enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger, or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
condition (financial and otherwise) and creditworthiness of the Borrower and the
value of the Collateral and other Properties of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent or the Collateral Agent hereunder, none of the Agent, the
Collateral Agent, the Documentation Agent, the Co-Arranger or the Arranger shall
have any duty or ability to provide any Lender with any credit or other
information concerning the business, response operations, property, condition
(financial and otherwise), or creditworthiness of the Borrower or the value of
the Collateral or other Properties of the Borrower which may come into the
possession of the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger or any of their respective officers, directors,
employees, agents, attorneys- in- fact or affiliates.
8.7 Indemnification. EACH LENDER AGREES TO INDEMNIFY THE AGENT, THE
COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER AND THE ARRANGER AND
EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES (TO THE EXTENT NOT REIMBURSED BY THE BORROWER
AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWER TO DO SO), RATABLY ACCORDING
TO THE PERCENTAGE SHARE OF SUCH LENDER, FROM AND AGAINST ANY AND ALL
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE AGENT,
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THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER, THE ARRANGER OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER DOCUMENT CONTEMPLATED OR
REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION TAKEN
OR OMITTED BY THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE
CO-ARRANGER, THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH
ANY OF THE FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS
IMPOSED, INCURRED OR ASSERTED AS A RESULT OF THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE
CO-ARRANGER, THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES; PROVIDED THAT NO LENDER
SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER,
THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE
THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.
8.8 Restitution. Should the right of the Agent, the Collateral Agent or
any Lender to realize funds with respect to the Obligations be challenged and
any application of such funds to the Obligations be reversed, whether by
Governmental Authority or otherwise, or should the Borrower otherwise be
entitled to a refund or return of funds distributed to the Lenders in connection
with the Obligations, the Agent, the Collateral Agent or such Lender, as the
case may be, shall promptly notify the Lenders of such fact. Not later than
Noon, Eastern Standard or Daylight Saving Time, as the case may be, of the
Business Day following such notice, each Lender shall pay to the Agent an amount
equal to the ratable share of such Lender of the funds required to be returned
to the Borrower. The ratable share of each Lender shall be determined on the
basis of the percentage of the payment all or a portion of which is required to
be refunded originally distributed to such Lender, if such percentage can be
determined, or, if such percentage cannot be determined, on the basis of the
Percentage Share of such Lender. The Agent shall forward such funds to the
Borrower or to the Lender required to return such funds. If any such amount due
to the Agent is made available by any Lender after Noon, Eastern Standard or
Daylight Saving Time, as the case may be, of the Business Day following such
notice, such Lender shall pay to the Agent (or the Lender required to return
funds to the Borrower, as the case may be) for its own account interest on such
amount at a rate equal to the Federal Funds Rate for the period from and
including the date on which restitution to the Borrower is made by the Agent (or
the Lender required to return funds to the Borrower, as the case may be) to but
not including the date on which such Lender failing to timely forward its share
of funds required to be returned to the Borrower shall have made its ratable
share of such funds available.
8.9 Agents in Individual Capacity. Each of the Agent, the Documentation
Agent and the Collateral Agent and their Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower and
any Subsidiary of Borrower as though the Agent and the Collateral Agent were not
agents hereunder. With respect to any Note issued to
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the Lender serving as the Collateral Agent, the Collateral Agent shall have the
same rights and powers under this Agreement as a Lender and may exercise such
rights and powers as though it were not the Collateral Agent. The terms "Lend
er" and "Lenders" shall include the Collateral Agent in its individual capacity.
8.10 Successor Agent. Provided that a successor agent has been appointed
and has accepted such appointment as provided below, the Agent or the Collateral
Agent may resign upon 30 days' notice to the Lenders and the Borrower. If the
Agent or the Collateral Agent shall resign as an agent under this Agreement and
the other Loan Documents, Lenders for which the Percentage Shares of Commitments
aggregate at least sixty-six and two-thirds percent (66 2/3%) shall appoint from
among the Lenders a successor agent or collateral agent, as the case may be, for
the Lenders, whereupon such successor agent or collateral agent shall succeed to
the rights, powers and duties of such agent. The term "Agent" or "Collateral
Agent" shall mean such successor agent effective upon its appointment. Upon
written acceptance by such successor agent (a copy of which shall be furnished
to the Borrower), the rights, powers, and duties of the former agent as Agent or
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former agent or any of the parties to this Agreement or any
holders of the Notes. After the resignation of the Agent or the Collateral Agent
hereunder as an agent, the provisions of this Article VIII and Sections 5.13 and
5.17 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was an agent under this Agreement and the other Loan Documents.
8.11 Applicable Parties. The provisions of Sections 8.1 through 8.9 of
this Article are solely for the benefit of the Agent, the Collateral Agent, the
Documentation Agent, the Co-Arranger, the Arranger and the Lenders, and neither
the Borrower nor any Subsidiary of Borrower shall have any rights as a third
party beneficiary or otherwise or any obligations under any of the provisions of
this Article. In performing functions and duties hereunder and under the other
Loan Documents, the Agent and the Collateral Agent shall act solely as the agent
of the Lenders and do not assume, nor shall either be deemed to have assumed,
any obligation or relationship of trust or agency with or for the Borrower or
any Subsidiary of Borrower or any legal representative, successor, or assign of
the Borrower or any Subsidiary of Borrower.
ARTICLE IX.
MISCELLANEOUS
9.1 Assignments; Participations.
(a) The Borrower may not assign any of its rights or
obligations under any Loan Documents without the prior consent of
the Agent and the Lenders and may not in any event assign such
rights and obligations to any entity holding "plan assets" of any
employee benefit plan subject to Title I of ERISA or any plan
subject to Section 4975 of the Code.
(b) With the written consent of the Agent, and so long as no
Event of Default shall have occurred, and be continuing, the
Borrower (which consents shall not be unreasonably withheld), any
Lender may assign to one or more
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Eligible Assignees all or a portion of its rights and obligations
under this Agreement pursuant to an Assignment Agreement; provided
that, no Lender may assign any of its rights and obligations under
this Agreement prior to the completion of the primary syndication.
Except with the consent of the Agent, and, so long as no Event of
Default shall have occurred and be continuing, the Borrower (which
consents shall not be unreasonably withheld), in the case of any
assignment of any Loans and/or Commitment, any such assignment shall
be in the amount of at least $5,000,000 (or any whole multiple of
$1,000,000 in excess thereof). The assignee shall pay to the Agent a
transfer fee in the amount of $3,500 for each such assignment. Any
such assignment shall become effective upon the execution and
delivery to the Agent of, and as of the effective date of, the
Assignment Agreement and the consent of the Agent, and, so long as
no Event of Default shall have occurred and be continuing, the
Borrower. Promptly following receipt of an executed Assignment
Agreement, the Agent shall send to the Borrower a copy of such
executed Assignment Agreement. Promptly following receipt of such
executed Assignment Agreement, the Borrower shall execute and
deliver, at its own expense, new Notes to the assignee and, if
applicable, the assignor, in accordance with their respective
interests, whereupon the prior Notes of the assignor and, if
applicable, the assignee, shall be canceled and returned to the
Borrower. Upon the effectiveness of any assignment pursuant to this
Section 9.1(b) the assignee shall become a "Lender," if not already
a "Lender," for all purposes of the Loan Documents, and the assignor
shall be relieved of its obligations hereunder from and after the
date of such assignment to the extent of such assignment. If the
assignor no longer holds any rights or obligations under this
Agreement, such assignor shall cease to be a "Lender" hereunder,
except that its rights under Section 5.17 shall not be affected.
(c) With the written consent of the Agent, and so long as no
Event of Default shall have occurred, and be continuing, the
Borrower (which consents shall not be unreasonably withheld), each
Lender may transfer, grant, or assign Participations in all or any
portion of its interests hereunder to any Person pursuant to this
Section 9.1(c), provided that such Lender shall remain a "Lender"
for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder.
Notwithstanding the preceding, no Lender may transfer, grant or
assign Participations in all or any portion of its interests
hereunder to any Person prior to the completion of the primary
syndication. In the case of any such participation, the participant
shall not have any rights under any Loan Document, the rights of the
participant in respect of such participation to be against the
granting Lender as set forth in the agreement with such Lender
creating such participation, and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation. Each participation agreement shall provide that the
Lender that has sold or granted the participation shall retain the
sole right to take or refrain from taking any action under the Loan
Documents, except that such participation agreement may provide that
such Lender shall not, without the consent of the participant, agree
to any amendment or waiver that would have the effect, to the extent
any such amendment or waiver pertains to the type of Commitment(s)
or Loan(s) of such
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participant so that such participant would be affected thereby, of
(i) increasing the Commitment of such Lender, (ii) extending the
Commitment Termination Date, (iii) reducing the principal on the
Loans of such Lender, (iv) reducing the rate of interest on the
Loans or the Notes of such Lender, (v) reducing the amount of such
Lender's participation in any fees payable pursuant to Sections 2.15
or 2.16, (vi) extending the time of scheduled payment of any
Obligation in which such participation has been granted, or (vii)
releasing any Subsidiary Guaranty other than in accordance with
Section 5.18 of this Agreement. All amounts payable to any Lender
under Article 2 shall be determined as if such Lender had not sold
any participations. Each agreement creating a participation must be
in writing and include an agreement by the participant to be bound
by the provisions of Section 9.9.
(d) The Lenders may furnish any information concerning the
Borrower or its Subsidiaries in the possession of the Lenders from
time to time to assignees and participants and prospective assignees
and participants, provided that such Persons agree in writing to be
bound by the provisions of Section 9.9.
(e) Notwithstanding anything in this Section to the contrary,
any Lender may assign and pledge all or any of its Notes or any
interest therein to any Federal Reserve Bank or the United States
Treasury as collateral security. No such assignment or pledge shall
release the assigning or pledging Lender from its obligations
hereunder.
(f) Each Lender party to this Agreement represents, and each
additional Lender which becomes a party to this Agreement shall be
deemed to have represented to the Borrower that it is an Eligible
Assignee. Each Lender Party to this Agreement represents to the
Borrower that, and each person that becomes a Lender pursuant to an
Assignment Agreement or otherwise in accordance with Section 2.25
shall be deemed to have represented to the Borrower upon becoming a
Lender that it is acquiring its interest in the Loan(s) and/or
Note(s) with assets that are either (i) not assets of any employee
benefit plan (or its related trust) which is subject to Title I of
ERISA or Section 4975 of the Code or (ii) assets of any employee
benefit plan (or its related trust) which is subject to Title I of
ERISA or Section 4975 of the Code, but there is available an
exemption from the prohibited transaction rules under Section 406(a)
of ERISA and Section 4975 of the Code and such exemption is
immediately applicable to each transaction contemplated by the Loan
Documents to the extent that any party to such transaction is a
"party in interest" as defined in Section 3(14) of ERISA or a
"disqualified person" as defined in Section 4975 of the Code, with
respect to such plan assets.
9.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein and in the other Loan Documents made shall survive the execution and
delivery of the Notes and the Security Instruments and shall remain in force and
effect so long as any Obligation is outstanding or any Commitments exist.
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9.3 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be promptly confirmed in writing,
all notices, requests, and communications hereunder or in connection herewith or
with any other Loan Document shall be in writing (including by telecopy but
excluding electronic e- mail). Unless otherwise expressly provided herein, any
such notice, request, demand, or other communication shall be deemed to have
been duly given or made when delivered by hand, or, in the case of delivery by
mail, two Business Days after deposited in the mail, certified mail, return
receipt requested, postage prepaid, or, in the case of telecopy notice, when
receipt thereof is acknowledged orally or by written confirmation report,
addressed to each party at the "Address for Notices" specified below its name on
the signature pages hereof or at such other address within the United States as
shall be designated by such party in a notice given to the Agent and the
Borrower.
9.4 Parties in Interest. All covenants and agreements herein made or
entered into by or on behalf of the Borrower, the Agent, the Collateral Agent or
the Lenders shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Collateral Agent or the Lenders, as the case may be, and their
respective legal representatives, successors, and permitted assigns. Nothing
herein shall be deemed to give the Agent a right to assign its obligations or to
merge into or with any other entity except as permitted hereby. 9.5 Rights of
Third Parties. All provisions herein are imposed solely and exclusively for the
benefit of the Agent, the Collateral Agent, the Lenders and the Borrower and
their successors and permitted assigns. No other Person shall have any right,
benefit, priority, or interest hereunder or as a result hereof or have standing
to require satisfaction of provisions hereof in accordance with their terms.
9.6 No Waiver; Rights Cumulative. No course of dealing on the part of the
Agent, the Collateral Agent or the Lenders or their officers or employees, nor
any failure or delay by the Agent, the Collateral Agent or the Lenders with
respect to exercising any of their rights under any Loan Document shall operate
as a waiver thereof. The rights of the Agent, the Collateral Agent and the
Lenders under the Loan Documents shall be cumulative and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.
Neither the making of any Loan nor the issuance of a Letter of Credit shall
constitute a waiver of any of the covenants, warranties, or conditions of the
Borrower contained herein. In the event any Borrower is unable to satisfy any
such covenant, warranty, or condition, neither the making of any Loan nor the
issuance of a Letter of Credit shall have the effect of precluding the Agent or
the Lenders from thereafter declaring such inability to be an Event of Default
as hereinabove provided.
9.7 Severability. In the event any one or more of the provisions contained
in any of the Loan Documents shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of any Loan Document.
9.8 Amendments; Waivers. Neither this Agreement nor any of the other Loan
Documents nor any terms hereof or thereof may be amended, supplemented,
modified, or waived except in writing and in accordance with the provisions of
this Section. The Agent and the
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Borrower may, from time to time with the written consent of the Required
Lenders, enter into written amendments, supplements, or modifications to the
Loan Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or thereunder or waiving, on such terms and conditions as the
Agent may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such amendment, supplement,
modification, or waiver shall (a) except as provided in clause (c) below or in
Section 5.18, extend the time of scheduled payment of any Obligation, change the
rate of interest thereon, extend the Commitment Termination Date, extend the
Final Maturity, reduce any fee payable for the account of the Lenders hereunder,
release any, all or substantially all of the Collateral, release any Subsidiary
Guaranty, reduce the amount of any Obligation, increase the Commitment Amount,
except in accordance with Section 2.12 change the Borrowing Base or any other
provision applicable to the determination of the Borrowing Base or amend,
modify, or waive any provision of this Section or Sections 2.12, 5.13, 5.17 or
8.10, change the percentage specified in the definition of the Required Lenders,
or consent to the assignment or transfer by the Borrower or any Subsidiary
Guarantor of any of their rights or obligations under this Agreement or the
other Loan Documents, in any such case without the written consent of all
Lenders, (b) amend, modify, or waive any provision of Article VIII or the rights
or obligations of the Agent (including its rights and obligations as issuer of
the Letters of Credit), or the Collateral Agent without the written consent of
such agent, or (c) amend, modify, or waive any provision relating to any Hedging
Agreement without the written consent of the Lender party thereto or whose
Affiliate is a party thereto. Any such amendment, supplement modification, or
waiver shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Lender Parties, the Agent, and the Collateral Agent
and all future holders of the Notes. Notwithstanding the foregoing, during each
Sales Period, the Collateral Agent may release items of Collateral sold by the
Borrower or any Subsidiary of the Borrower in accordance with Section 5.18. In
the event of any waiver, the Borrower, the Lenders, the Agent, and the
Collateral Agent shall be restored to their respective former positions and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right with respect thereto.
9.9 Confidentiality. In the event that the Borrower or any Subsidiary of
Borrower provides to the Agent, the Collateral Agent or the Lenders information
belonging to any Borrower or any Affiliate of the Borrower, the Age nt, the
Collateral Agent and the Lenders and each other Lender Party shall thereafter
maintain such information in confidence. This obligation of confidence shall not
apply to such portions of the information which (i) are in the public domain,
(ii) hereafter become part of the public domain without the Agent, the
Collateral Agent or the Lenders or any Lender Party breaching their obligation
of confidence herein or in any other Loan Document, (iii) are previously known
by the Agent, the Collateral Agent or the Lenders or any Lender Party from some
source other than the Borrower or any Affiliate of the Borrower not known to
have a duty of confidentiality to the Borrower, (iv) are hereafter developed by
the Agent, the Collateral Agent or the Lenders or any Lender Party without using
the information thus provided, (v) are hereafter obtained by or available to the
Agent, the Collateral Agent or the Lenders or any Lender Party from a third
party who owes no obligation of confidence to the Borrower or any Subsidiary of
the Borrower with respect to such
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information or through any other means other than through disclosure by the
Borrower or any Affiliate of the Borrower to the Agent, the Collateral Agent or
the Lenders or any Lender Party, (vi) are disclosed with the Borrower's consent,
(vii) must be disclosed pursuant to any Requirement of Law, (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding or (ix) as may be requested by
any Governmental Authority pursuant to any bank examination or audit; provided,
however, that to the extent practicable and unless otherwise prohibited by any
Requirement of Law, any Person disclosing any non-public information pursuant to
clauses (vii) or (viii) shall endeavor in good faith to give the Borrower at
least five (5) days' prior written notice of such disclosure. Further, the
Agent, the Collateral Agent or a Lender may disclose any such information to any
other Lender or successor agent, any independent petroleum engineers or
consultants, any independent certified public accountants, any legal counsel
employed by such Person in connection with this Agreement or any other Loan
Document, including the enforcement or exercise of all rights and remedies
hereunder or thereunder, or any assignee or participant (including prospective
assignees and participants) in the Loans; provided, however, that the Agent, the
Collateral Agent or the Lenders impose on the Person to whom such information is
disclosed the same obligation to maintain the confidentiality of such
information as is imposed upon it hereunder and such Person agrees in writing to
be bound by the terms hereof.
9.10 Governing Law. THIS AGREEMENT AND THE NOTES AND EACH SUBSIDIARY
GUARANTY SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
9.11 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE AGENT OR THE COLLATERAL AGENT, IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN ACCORDANCE WITH THIS
SECTION.
9.12 Appointment of Agent for Service of Process. The Borrower hereby
irrevocably designates CT Corporation System, or such other corporate process
agent as is acceptable to the Agent, as the designee, appointee and agent of
such Borrower to receive, for and on behalf of such Borrower, service of process
out of any of the aforementioned courts in any legal action or proceeding with
respect to this Agreement, any other Loan Document or any document related
thereto. It is understood that a copy of such process served by such agent will
be promptly forwarded by mail to the Borrower at its address specified below its
name on the signature pages hereof, but the failure of the Borrower to receive
such copy shall not affect in any way the service of such process. The Borrower
further irrevocably consents to the service of process of any of the courts
mentioned in Section 9.11 in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at such address, such service to become effective four days after mailing.
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law.
77
9.13 Waiver of Rights to Jury Trial. THE BORROWER, THE AGENT, THE
COLLATERAL AGENT, AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE AGENT, THE COLLATERAL AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.
9.14 Integration. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY
PRIOR AGREEMENT BETWEEN OR AMONG THE PARTIES, WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
9.15 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same agreement.
9.16 L/C Documents. In the event of a direct conflict between an express
provision of this Agreement and an express provision of any other Loan Document,
this Agreement shall control with respect to such express provision. Without
limiting the generality of the foregoing, no provision of any Letter of Credit
Application or any other document or instrument executed in connection with any
Letter of Credit shall give the Agent or the issuer of such Letter of Credit
greater rights than such Persons have under this Agreement with respect to the
same subject matter.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first above written.
BORROWER:
KCS ENERGY, INC.
By:_____________________________________
Address for Notices:
Principal Place of Business
and Chief Executive Office:
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
S-1
AGENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By:_____________________________________
Address for Notices:
000 Xxxxxxxxx Xxxxxx,
0xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
with copies to:
CANADIAN IMPERIAL BANK OF COMMERCE
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
2
COLLATERAL AGENT AND A LENDER:
CIBC INC.
By:_____________________________________
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address for Notices:
000 Xxxxxxxxx Xxxxxx,
0xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Telecopy: (000) 000-0000
with copies to:
CIBC INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
3
LENDER:
GUARANTY BANK
By:_____________________________________
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Address for Notices:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
4