Second Lien Term Loan Agreement Dated as of September 2, 2008 among ABC Funding, Inc., as Borrower, CIT Capital USA Inc., as Administrative Agent, and The Lenders Party Hereto Sole Lead Arranger and Sole Bookrunner CIT Capital Securities LLC
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Β
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Dated
as of
September
2, 2008
Β
among
Β
as
Borrower,
Β
CIT
Capital USA Inc.,
as
Administrative Agent,
Β
and
Β
The
Lenders Party Hereto
Β
Β
Sole
Lead Arranger and Sole Bookrunner
Β
CIT
Capital Securities LLC
Β
REFERENCE
IS MADE TO THE INTERCREDITOR AGREEMENT DATED AS OF SEPTEMBER 2, 2008 (AS
AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
βINTERCREDITOR AGREEMENTβ), AMONG THE BORROWER, CIT CAPITAL USA INC., AS FIRST
LIEN ADMINISTRATIVE AGENT (AS DEFINED THEREIN), AND CIT CAPITAL USA INC., AS
SECOND LIEN ADMINISTRATIVE AGENT (AS DEFINED THEREIN).Β Β EACH LENDER
HEREUNDER (A) ACKNOWLEDGES THAT IT HAS RECEIVED A COPY OF THE INTERCREDITOR
AGREEMENT, (B) CONSENTS TO THE SUBORDINATION OF LIENS PROVIDED FOR IN THE
INTERCREDITOR AGREEMENT, (C) AGREES THAT IT WILL BE BOUND BY AND WILL TAKE NO
ACTIONS CONTRARY TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND (D)
AUTHORIZES AND INSTRUCTS THE SECOND LIEN ADMINISTRATIVE AGENT TO ENTER INTO THE
INTERCREDITOR AGREEMENT AS SECOND LIEN ADMINISTRATIVE AGENT AND ON BEHALF OF
SUCH LENDER.Β Β THE FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT
TO THE LENDERS UNDER THE FIRST LIEN CREDIT AGREEMENT TO PERMIT THE INCURRENCE OF
INDEBTEDNESS UNDER THIS AGREEMENT AND TO EXTEND CREDIT TO THE BORROWER AND SUCH
LENDERS ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS.
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TABLE
OF CONTENTS
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ARTICLE
I
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DEFINITIONS
AND ACCOUNTING MATTERS
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Section
1.01Terms Defined Above
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Section
1.02Certain Defined Terms
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Section
1.03Types of Loans and Borrowings
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|
Section
1.04Terms Generally; Rules of
Construction
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|
Section
1.05Accounting Terms and Determinations;
GAAP
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ARTICLE
II
Β
Β
THE
CREDITS
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Β
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Section
2.01Commitments
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Section
2.02Loans and Borrowings
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Β
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Section
2.03Requests for Loans
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Β
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Section
2.04Interest Elections; Conversions
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Section
2.05Funding of Loans
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Section
2.06Total Reserve Value
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Section
2.07Intercreditor Agreement
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Section
2.08Termination
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ARTICLE
III
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PAYMENTS
OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
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|
Section
3.01Repayment of Loans
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Section
3.02Interest
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Section
3.03Alternate Rate of Interest
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Section
3.04Prepayments
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ARTICLE
IV
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Β
PAYMENTS;
PRO RATA TREATMENT; SHARING OF SET-OFFS
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Section
4.01Payments Generally; Pro Rata Treatment; Sharing of
Set-offs
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Section
4.02Presumption of Payment by the
Borrower
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Section
4.03Certain Deductions by the Administrative
Agent
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Section
4.04Disposition of Proceeds
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ARTICLE
V
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INCREASED
COSTS; BREAK FUNDING PAYMENTS; TAXES
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|
Section
5.01Increased Costs
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Section
5.02Break Funding Payments
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Section
5.03Taxes
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Section
5.04Designation of Different Lending
Office
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ARTICLE
VI
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Β
CONDITIONS
PRECEDENT
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Section
6.01Effective Date
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ARTICLE
VII
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Β
REPRESENTATIONS
AND WARRANTIES
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Section
7.01Organization; Powers
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Section
7.02Authority; Enforceability
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Section
7.03Approvals; No Conflicts
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Section
7.04Financial Condition; No Material Adverse
Change
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Section
7.05Litigation
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|
Section
7.06Environmental Matters
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|
Section
7.07Compliance with the Laws and Agreements; No
Defaults
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Section
7.08Investment Company Act
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Section
7.09Taxes
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Section
7.10ERISA
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Section
7.11Disclosure; No Material
Misstatements
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Section
7.12Insurance
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Section
7.13Restriction on Liens
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Section
7.14Subsidiaries
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Section
7.15Location of Business and
Offices
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Section
7.16Properties; Titles, Etc.
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Section
7.17Maintenance of Properties
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Section
7.18Gas Imbalances, Prepayments
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Section
7.19Marketing of Production
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Section
7.20Swap Agreements
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Section
7.21Use of Loans
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Section
7.22Solvency
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Section
7.23Casualty Events
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Section
7.24Material Agreements
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Section
7.25No Brokers
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Section
7.26Reliance
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Section
7.27Payments by Purchasers of
Production
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Section
7.28Existing Accounts Payable
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Section
7.29Development Plan
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Section
7.30Acquisition
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ARTICLE
VIII
Β
Β
AFFIRMATIVE
COVENANTS
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Β
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Section
8.01Financial Statements; Ratings Change; Other
Information
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Section
8.02Notices of Material Events
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Section
8.03Existence; Conduct of Business
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Section
8.04Payment of Obligations
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Section
8.05Operation and Maintenance of
Properties
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Section
8.06Insurance
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Section
8.07Books and Records; Inspection
Rights
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Section
8.08Compliance with Laws
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Section
8.09Environmental Matters
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Section
8.10Further Assurances
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Section
8.11Reserve Reports
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Section
8.12Title Information
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Section
8.13Additional Collateral; Additional
Guarantors
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Section
8.14ERISA Compliance
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Section
8.15Swap Agreements
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Section
8.16Marketing Activities
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Section
8.17Development Plan
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Section
8.18Operating Account
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Section
8.19Overriding Royalty Interest.
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Section
8.20Filing of Proxy/ Information
Statement
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ARTICLE
IX
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Β
NEGATIVE
COVENANTS
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Section
9.01Financial Covenants
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Section
9.02Debt
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Section
9.03Liens
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Section
9.04Dividends, Distributions and
Redemptions
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Section
9.05Investments, Loans and Advances
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Section
9.06Nature of Business
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Section
9.07Limitation on Leases
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Section
9.08Proceeds of Notes
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Section
9.09ERISA Compliance
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Section
9.10Sale or Discount of Receivables
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Section
9.11Mergers, Etc.
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|
Section
9.12Sale of Properties
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Section
9.13Environmental Matters
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Section
9.14Material Agreements
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Section
9.15Transactions with Affiliates
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Section
9.16Subsidiaries
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Section
9.17Negative Pledge Agreements; Dividend
Restrictions
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Section
9.18Gas Imbalances, Take-or-Pay or Other
Prepayments
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Section
9.19Swap Agreements
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Section
9.20Development Plan
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Section
9.21Acquisition Documents
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ARTICLE
X
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Β
EVENTS OF
DEFAULT; REMEDIES
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|
Section
10.01Events of Default
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Section
10.02Remedies.
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ARTICLE
XI
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Β
THE
ADMINISTRATIVE AGENT
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Β
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Section
11.01Appointment; Powers
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Section
11.02Duties and Obligations of Administrative
Agent
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Section
11.03Action by Administrative Agent
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Section
11.04Reliance by Administrative
Agent
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Section
11.05Subagents
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Section
11.06Resignation or Removal of Administrative
Agent
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Section
11.07Administrative Agent as Lender
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Section
11.08No Reliance.
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Section
11.09Administrative Agent May File Proofs of
Claim
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Section
11.10Authority of Administrative Agent to Release Collateral and
Liens
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Section
11.11The Arranger
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ARTICLE
XII
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Β
MISCELLANEOUS
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Section
12.01Notices
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Section
12.02Waivers; Amendments
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Section
12.03Expenses, Indemnity; Damage
Waiver
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Section
12.04Successors and Assigns
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Section
12.05Survival; Revival;
Reinstatement
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Section
12.06Counterparts; Integration;
Effectiveness
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Section
12.07Severability
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Section
12.08Right of Setoff
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Section
12.09GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS
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Section
12.10Headings
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Section
12.11Confidentiality
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Section
12.12Interest Rate Limitation
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Section
12.13EXCULPATION PROVISIONS
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Section
12.14No Third Party Beneficiaries
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Section
12.15USA Patriot Act Notice
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ANNEXES,
EXHIBITS AND SCHEDULES
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Annex
IΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β List
of Commitments
Exhibit
AΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Note
Exhibit
BΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Borrowing Request
Exhibit
CΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Interest Election Request
Exhibit
DΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Compliance Certificate
Exhibit
EΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Development
Plan
Exhibit
FΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Security
Instruments
Exhibit
GΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Assignment and Assumption
Exhibit
HΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Form
of Assignment of Overriding Royalty Interest
Schedule
1.02Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Approved
Counterparties
Schedule
6.01Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
Β Β Β Β Β Β Β Β Β Hedging
Program
Schedule
7.05Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Litigation
Schedule
7.14Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Subsidiaries
and Partnerships
Schedule
7.18Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Gas
Imbalances
Schedule
7.19Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Marketing
Contracts
Schedule
7.20Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Swap
Agreements
Schedule
7.24Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Material
Agreements
Schedule
7.28Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Existing
Accounts Payable
Β
Β
Β
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THIS SECOND LIEN TERM LOAN
AGREEMENT dated as of September 2, 2008, is among
ABC Funding, Inc., a corporation duly formed and existing under the laws of the
State of Nevada (the βBorrowerβ), each of
the Lenders from time to time party hereto and CIT Capital USA
Inc.Β (in its
individual capacity, βCITβ),
as administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the βAdministrative
Agentβ).
Β
R E C I T A L
S
Β
A.Β Β Β Β Β Β Β Β Β Β Β The
Borrower has requested that the Lenders provide a second lien term loan to the
Borrower.
Β
B.Β Β Β Β Β Β Β Β Β Β Β The
Lenders have agreed to make such loans subject to the terms and conditions of
this Agreement.
Β
C.Β Β Β Β Β Β Β Β Β Β Β In
consideration of the mutual covenants and agreements herein contained and of the
loans and commitments hereinafter referred to, the parties hereto agree as
follows:
Β
ARTICLE
I
Β
Definitions
and Accounting Matters
Β
Section
1.01Β Terms Defined
Above.Β Β As used in this Agreement, each term defined above has
the meaning indicated above.
Β
Section
1.02Β Certain Defined
Terms.Β Β As used in this Agreement, the following terms have the
meanings specified below:
Β
βABRβ, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.
Β
βAcquisitionβ means
the acquisition of all of the issued and outstanding shares of common stock, par
value $0.01, per share of Voyager pursuant to the terms and conditions of the
Acquisition Documents.
Β
βAcquisition
Documentsβ means (a) the Stock Purchase and Sale Agreement between
Voyager Gas Holdings L.P., as Seller, and Borrower, as Buyer dated May 22, 2008,
to be effective as of September 2, 2008 as amended by the First Agreement to
Stock Purchase and Sale Agreement dated August 15, 2008 and the Second Amendment
to Stock Sale and Purchase Agreement dated September 2, 2008 and (b) the
Registration Rights Agreement related thereto.
Β
βAcquisition
Propertiesβ means all of the issued and outstanding shares of common
stock, par value $0.01, per share of Voyager and other properties acquired by
the Borrower or any Guarantor pursuant to the Acquisition
Documents.
Β
βAdjusted LIBO Rateβ
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.
Β
βAffiliateβ means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
Β
βAggregate
Commitmentsβ means the Commitments of all the Lenders in the aggregate
amount of $22,000,000.
Β
βAgreementβ means this
Second Lien Term Loan, as the same may from time to time be amended, modified,
supplemented or restated.
Β
βAlternate Base Rateβ
means, for any day, a rate per annum equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus one-half percent (1/2%).Β Β Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
βApplicable Marginβ
means, for any day, (a) with respect to any Eurodollar Loan, a rate per annum
equal to 5.00% for the first twelve months after the Effective Date and then
7.50% thereafter and (b) with respect to any ABR Loan, a rate per annum equal to
4.00% for the first twelve months after the Effective Date and then 6.50%
thereafter.
βApproved
Counterpartyβ means (a) any βLenderβ as such term is defined under the
Senior Revolving Credit Agreement or any Affiliate of a Lender; (b) any other
Person whose long term senior unsecured debt rating is A-/A3 by S&P or
Xxxxxβx (or their equivalent) or higher or (c) with regard to Swap Agreements in
respect of commodities, and subject to the conditions set forth therein, any
other Person listed on Schedule 1.02 of the Senior Revolving Credit Agreement as
of the Effective Date or approved by the Administrative Agent in writing
hereafter, provided that, with respect to (b) and (c) above, such Person shall
have executed an intercreditor agreement in form and substance reasonably
acceptable to the Administrative Agent.
Β
βApproved Fundβ means
(i) any Person (other than a natural person) engaged in making, purchasing,
holding, or investing in commercial loans and similar extensions of credit and
that is advised, administered, or managed by a Lender, an Affiliate of a Lender
(or an entity or an Affiliate of an entity that administers, advises or manages
a Lender); (ii) with respect to any Lender that is an investment fund, any other
investment fund that invests in loans and that is advised, administered or
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor; and (iii) any third party which provides βwarehouse
financingβ to a Person described in the preceding clause (i) or (ii) (and any
Person described in said clause (i) or (ii) shall also be deemed an Approved
Fund with respect to such third party providing such warehouse
financing).
Β
βApproved Petroleum
Engineersβ means (a) Xxxxx X. Xxxxx Associates, Inc., and (b) any other
independent petroleum engineer reasonably acceptable to the Administrative
Agent.
Β
βArrangerβ means CIT Capital Securities
LLC, in its capacities as the sole lead arranger and sole bookrunner with
respect to the transactions contemplated hereby.
Β
βAssignment and
Assumptionβ means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 12.04(a)), and accepted by the
Administrative Agent, in the form of Exhibit G or any other form approved by the
Administrative Agent.
Β
βAssignment of Overriding
Royalty Interestβ means that certain Assignment of Overriding Royalty
Interest in the form attached hereto as Exhibit H.
Β
βBoardβ means the
Board of Governors of the Federal Reserve System of the United States of America
or any successor Governmental Authority.
Β
βBorrowingβ means
Loans of the same Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans, as to which a single Interest Period is in
effect.
Β
βBorrowing Requestβ
means a request by the Borrower for a Borrowing in accordance with Section 2.03.
Β
βBusiness Dayβ means
any day that is not a Saturday, Sunday or other day on which commercial banks in
New York City or Houston, Texas are authorized or required by law to remain
closed; and if such day relates to a Borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such Borrowing or continuation, payment, prepayment, conversion or
Interest Period, any day which is also a day on which banks are open for
dealings in dollar deposits in the London interbank market.
Β
βCapital Expendituresβ
means, in respect of any Person, for any period, the aggregate (determined
without duplication) of all exploration and development expenditures and costs
that should be capitalized in accordance with GAAP and any other expenditures
that are capitalized on the balance sheet of such Person in accordance with
GAAP.
Β
βCapital Leasesβ
means, in respect of any Person, all leases which shall have been, or should
have been, in accordance with GAAP, recorded as capital leases on the balance
sheet of the Person liable (whether contingent or otherwise) for the payment of
rent thereunder.
Β
βCash Receiptsβ means
all cash or cash equivalents received by or on behalf of the Borrower and its
Subsidiaries with respect to the following: (a) sales from the Oil and Gas
Properties (including any other working interest owner receipts received by
Borrower or its Affiliates as operator of Oil and Gas Properties), (b) cash
representing operating revenue earned or to be earned by the Borrower and its
Subsidiaries, (c) any insurance proceeds received by the Borrower or its
Subsidiaries, (d) any net proceeds from Swap Agreements and (e) any other cash
or cash equivalents received by the Borrower or its Subsidiaries from whatever
source; provided that
advances under the Loans, and any capital contributions or transfers made to the
Borrower by any of its members, or by the Borrower to any of its Subsidiaries,
shall not constitute βCash Receiptsβ.
Β
βCasualty Eventβ means
any loss, casualty or other insured damage to any Property of the Borrower or
any of its Subsidiaries in an amount greater than $250,000, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of such Property having a fair market of value to such
Property in excess of $250,000.
Β
βChange in Controlβ
means the occurrence of the following events (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group of
Equity Interests representing more than 20% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Borrower, (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated, (c) the acquisition of direct or indirect
Control of the Borrower by any Person or group other than the Permitted Holders
and (d) the management or board of directors of the Borrower is, in the
reasonable opinion of the Lenders, substantially diminished as a result of the
departure of any one or combination of the Permitted Holders; provided that in
the event of the death or permanent disability of any one of the Permitted
Holders, the Borrower shall have sixty (60) days to provide the Lenders with
satisfactory evidence that such death or permanent disability will not
substantially diminish the management or board of directors of the
Borrower.
Β
βChange in Lawβ means
(a) the adoption of any law, rule or regulation after the date of this Agreement
by any Governmental Authority, (b) any change in any law, rule or regulation or
in the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 5.01(b)), by any lending office of
such Lender or by such Lenderβs holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement.
Β
βCodeβ means the
Internal Revenue Code of 1986, as amended from time to time, and any successor
statute.
Β
βCommitmentβ means,
with respect to each Lender, the obligation of such Lender to make the Loan to
the Borrower pursuant to Section 2.01 on
the Effective Date in an aggregate principal amount not to exceed the amount set
forth opposite such Lenderβs name on Annex I under the caption
βCommitmentβ.
Β
βConsolidated Net
Incomeβ means with respect to the Borrower and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower and the Consolidated Subsidiaries after allowances for taxes for such
period determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (a) the net income of any Person in which the Borrower
or any Consolidated Subsidiary has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
the Borrower and its Consolidated Subsidiaries in accordance with GAAP), except
to the extent of the amount of dividends or distributions actually paid in cash
during such period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (b) the net income (but not loss) during such
period of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (d) any extraordinary gains or
losses during such period; (e) non-cash gains, losses or adjustments under FASB
Statement Nos. 133 or 143; and (f) any gains or losses attributable to writeups
or writedowns of assets, including ceiling test writedowns and writedowns under
FASB Statements Nos. 19, 142 and 144; and provided further that
if the Borrower or any Consolidated Subsidiary shall acquire or dispose of any
Property during such period, then Consolidated Net Income shall be calculated
after giving pro forma
effect to such acquisition or disposition, as if such acquisition or disposition
had occurred on the first day of such period.
Β
βConsolidated
Subsidiariesβ means each Subsidiary of the Borrower (whether now existing
or hereafter created or acquired) the financial statements of which shall be (or
should have been) consolidated with the financial statements of the Borrower in
accordance with GAAP.
Β
βControlβ means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.Β Β For the purposes
of this definition, and without limiting the generality of the foregoing, any
Person that owns directly or indirectly 10% or more of the Equity Interests
having ordinary voting power for the election of the directors or other
governing body of a Person (other than as a limited partner of such other
Person) will be deemed to βcontrolβ such other Person.Β Β βControllingβ and
βControlledβ
have meanings correlative thereto.
Β
βDebtβ means, for any
Person, without duplication and on a consolidated basis, the sum of the
following (without duplication): (a) all obligations of such Person for borrowed
money or evidenced by bonds, bankersβ acceptances, debentures, notes or other
similar instruments; (b) all obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, surety or other bonds and similar
instruments; (c) all accounts payable and all accrued expenses, liabilities or
other obligations of such Person to pay the deferred purchase price of Property
or services in each case which are greater than sixty (60) days past the date of
invoice or delinquent; (d) all obligations under Capital Leases; (e) all
obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by) a
Lien on any Property of such Person, whether or not such Debt is assumed by such
Person; (g) all Debt (as defined in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt (howsoever such assurance shall be made) to
the extent of the lesser of the amount of such Debt and the maximum stated
amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(i)Β obligations to deliver commodities, goods or services, including,
without limitation, Hydrocarbons, in consideration of one or more advance
payments, other than gas balancing arrangements in the ordinary course of
business; (j) obligations to pay for goods or services whether or not such goods
or services are not actually received or utilized by such Person; (k) any Debt
of a partnership for which such Person is liable either by agreement, by
operation of law or by a Governmental Requirement but only to the extent of such
liability; (l) Disqualified Capital Stock of such Person; and (m) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received
payment.Β Β The Debt of any Person shall include all obligations of such
Person of the character described above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
not included as a liability of such Person under GAAP.
Β
βDefaultβ means any
event or condition which constitutes an Event of Default or that upon notice,
lapse of time or both would, unless cured or waived, become an Event of
Default.
Β
βDevelopment Planβ
shall mean the Borrowerβs Plan of Development for the Oil and Gas Properties and
the related Hydrocarbon Interests as of the Effective Date attached as Exhibit E as the same
may be amended from time to time pursuant to Section
9.20.
Β
βDisqualified Capital
Stockβ means any Equity Interest that, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable) or
upon the happening of any event, matures or is mandatorily redeemable for any
consideration other than other Equity Interests (which would not constitute
Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise,
or is convertible or exchangeable for Debt or redeemable for any consideration
other than other Equity Interests (which would not constitute Disqualified
Capital Stock) at the option of the holder thereof, in whole or in part, on or
prior to the date that is one year after the Termination Date.
Β
βdollarsβ or β$β
refers to lawful money of the United States of America.
Β
βEBITDAXβ means, for
any period, the sum of Consolidated Net Income for such period plus the
following expenses or charges to the extent deducted from Consolidated Net
Income in such period: interest, income taxes, depreciation, depletion,
amortization, exploration expenses and other similar noncash charges, minus all
noncash income added to Consolidated Net Income; provided that EBITDAX for the
fiscal quarters ending December 31, 2008, March 31, 2009 and June 30, 2009 shall
be calculated as follows:
Β
(a)Β Β Β Β Β Β Β Β Β Β Β for
the fiscal quarter ending December 31, 2008, EBITDAX shall be EBITDAX for such
quarter multiplied by four.
Β
(b)Β Β Β Β Β Β Β Β Β Β Β for
the fiscal quarter ending March 31, 2009, EBITDAX shall be EBITDAX for the
six-month period ending on such date multiplied by two.
Β
(c)Β Β Β Β Β Β Β Β Β Β Β for
the fiscal quarter ending June 30, 2009, EBITDAX shall be EBITDAX or the
nine-month period ending on such date multiplied by four/thirds.
Β
Thereafter,
EBITDAX shall be calculated using EBITDAX for the period of four fiscal quarters
ending on the last day of the fiscal quarter immediately preceding the date of
determination for which financial statements are available.
Β
βEffective Dateβ means
the date on which the conditions specified in Section 6.01 are satisfied (or waived in
accordance with Section
12.02).
Β
βEnvironmental Lawsβ
means any and all Governmental Requirements pertaining in any way to health,
safety, the environment, the preservation or reclamation of natural resources,
or the management, Release or threatened Release of any Hazardous Materials, in
effect in any and all jurisdictions in which the Borrower or any Subsidiary is
conducting, or at any time has conducted, business, or where any Property of the
Borrower or any Subsidiary is located, including without limitation, the Oil
Pollution Act of 1990 (βOPAβ), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 (βCERCLAβ), as amended,
the Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 (βRCRAβ),
as amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Law, as amended, and
other environmental conservation or protection Governmental Requirements. The
term βoilβ shall have the meaning specified in OPA, the terms βhazardous substanceβ
and βreleaseβ
(or βthreatened
releaseβ) have the meanings specified in CERCLA, the terms βsolid wasteβ and
βdisposalβ (or
βdisposedβ)
have the meanings specified in RCRA and the term βoil and gas wasteβ
shall have the meaning specified in Section 91.1011 of the Texas Natural
Resources Code (βSection 91.1011β);
provided,
however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (b)
to the extent the laws of the state or other jurisdiction in which any Property
of the Borrower or any Subsidiary is located establish a meaning for βoil,β βhazardous substance,β
βrelease,β
βsolid waste,β
βdisposalβ or
βoil and gas
wasteβ which is broader than that specified in either OPA, CERCLA, RCRA
or Section 91.1011, such broader meaning shall apply.
Β
βEnvironmental Permitβ
means any permit, registration, license, notice, approval, consent, exemption,
variance, or other authorization required under or issued pursuant to applicable
Environmental Laws.
Β
βEquity Interestsβ
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such Equity
Interest.
Β
βERISAβ means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statute.
Β
βERISA Affiliateβ
means each trade or business (whether or not incorporated) which together with
the Borrower or a Subsidiary would be deemed to be a βsingle employerβ within
the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o)
of section 414 of the Code.
Β
βEurodollarβ, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
Β
βEvent of Defaultβ has
the meaning assigned such term in Section 10.01.
Β
βExcepted Liensβ
means:Β Β (a) Liens for Taxes, assessments or other governmental charges
or levies which are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (b) Liens in connection with workersβ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlordβs liens, operatorsβ,
vendorsβ, carriersβ, warehousemenβs, repairmenβs, mechanicsβ, suppliersβ,
workersβ, materialmenβs, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens which arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (e) Liens arising solely by virtue of
any statutory or common law provision relating to bankerβs liens, rights of
set-off or similar rights and remedies and burdening only deposit accounts or
other funds maintained with a creditor depository institution, provided that no
such deposit account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth by
regulations promulgated by the Board and no such deposit account is intended by
Borrower or any of its Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, that do not secure
any monetary obligations and which in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business; (h) judgment and attachment Liens not giving rise
to an Event of Default, provided that 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; (i) consents to assignment and similar contractual
provisions affecting Oil and Gas Property to the extent and only to the extent,
such consents are not affected by or required for the execution, delivery,
performance and enforcement of any Loan Document or, if affected or required,
have been obtained and (j) preferential rights to purchase and similar
contractual provisions affecting an Oil and Gas Property to the to the extent
and only to the extent, such consents are not affected by delivery of any Loan
Document or, if affected, have been waived; provided, further that Liens
described in clauses (a) through (e) shall remain βExcepted Liensβ only for so
long as no action to enforce such Lien has been commenced and no intention to
subordinate the first priority Lien granted in favor of the Administrative Agent
and the Lenders is to be hereby implied or expressed by the permitted existence
of such Excepted Liens.
Β
βExcluded Taxesβ
means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower or any Guarantor hereunder or under any other Loan Document, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the United
States of America (or any political subdivision thereof) or such other
jurisdiction (or any political subdivision thereof) under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower or any Guarantor is
located, and (c) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lenderβs failure to comply with Section 5.03(e), except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts with respect to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
Β
βExisting
Credit Agreementβ meansΒ that
certain Credit Agreement, dated as of March 22, 2005, as amended as of October
3, 2005, June 30, 2006 and July 31, 2006, among Voyager and Bank of Texas,
N.A.
Β
βFederal Funds Effective
Rateβ means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by JPMorgan
Chase Bank, N.A. from three Federal funds brokers of recognized standing
selected by it.
Β
βFee Letterβ means,
collectively, (a) that certain Proposal Letter dated as of August 19, 2008, by
and between the Borrower and the Administrative Agent and (b) that certain
Second Lien Fee Letter dated as of September 2, 2008, by and between the
Borrower and the Administrative Agent.
Β
βFinancial Officerβ
means, for any Person, the chief financial officer, principal accounting
officer, treasurer or controller of such Person.Β Β Unless otherwise
specified, all references herein to a Financial Officer means a Financial
Officer acting on behalf of the Borrower.
Β
βFinancial Statementsβ
means the financial statement or statements of the Borrower and its Consolidated
Subsidiaries referred to in Section
7.04(a).
Β
βForeign Lenderβ means
any Lender that is organized under the laws of a jurisdiction other than that in
which the Borrower is located.Β Β For purposes of this definition, the
United States of America, each State thereof and the District of Columbia shall
be deemed to constitute a single jurisdiction.
Β
βForeign Subsidiaryβ
means any Subsidiary that is not organized under the laws of the United States
of America or any state thereof or the District of Columbia.
Β
βGAAPβ means generally
accepted accounting principles in the United States of America as in effect from
time to time subject to the terms and conditions set forth in Section 1.05.
Β
βGeneral and Administrative
Costsβ means reasonable, normal and customary expenses and costs paid or
payable that are classified as general and administrative costs, including
salaries and all other compensation to the management of the Borrower,
consulting fees, salary, rent, supplies, travel and entertainment, insurance,
accounting, legal, engineering and broker related fees, required to manage the
affairs of the Borrower.
Β
βGovernmental
Authorityβ means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government over the
Borrower, any Subsidiary, any of their Properties, the Administrative Agent or
any Lender.
Β
βGovernmental
Requirementβ means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), whether now or hereinafter in effect,
including, without limitation, Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.
Β
βGuarantorsβ means any
Subsidiary of the Borrower that guarantees the Indebtedness pursuant to Section
8.13(b).
βGuaranty Agreementβ
means that certain Second Lien Guaranty and Collateral Agreement executed by the
Borrower and the Guarantors in form and substance reasonably acceptable to the
Administrative Agent unconditionally guarantying on a joint and several basis,
payment of the Indebtedness, as the same may be amended, modified or
supplemented from time to time.
Β
βHazardous Materialβ
means any substance regulated or as to which liability might arise under any
applicable Environmental Law and including without limitation:Β Β (a)
any chemical, compound, material, product, byproduct, substance or waste defined
as or included in the definition or meaning of βhazardous substance,β βhazardous
material,β βhazardous waste,β βsolid waste,β βtoxic waste,β βextremely hazardous
substance,β βtoxic substance,β βcontaminant,β βpollutant,β or words of similar
meaning or import found in any applicable Environmental Law; (b) Hydrocarbons,
petroleum products, petroleum substances, natural gas, oil, oil and gas waste,
crude oil, and any components, fractions, or derivatives thereof; and (c)
radioactive materials, explosives, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon, infectious or medical wastes.
Β
βHighest Lawful Rateβ
means, with respect to each Lender, the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Notes or on other Indebtedness under laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws
allow as of the date hereof.
Β
βHydrocarbon
Interestsβ means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever
nature.
Β
βHydrocarbonsβ means
oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.
Β
βIndebtednessβ means
any and all amounts owing or to be owing by the Borrower, any Subsidiary or any
Guarantor (whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter
arising): (a) to the Administrative Agent or any Lender under any Loan Document;
(b) to any Approved Counterparty under any Swap Agreement between the Borrower
or any Subsidiary and such Approved Counterparty and (c) all renewals,
extensions and/or rearrangements of any of the above.
Β
βIndemnified Taxesβ
means Taxes other than Excluded Taxes.
Β
βInitial Reserve
Reportβ means the reports prepared on behalf of the Borrower by Xxxxx X.
Xxxxx Associates, Inc. dated as of May 13, 2008, with respect to certain Oil and
Gas Properties of the Borrower and its Subsidiaries as of April 1,
2008.
βIntercreditor
Agreementβ means that certain Intercreditor Agreement dated as of even
date herewith, among the Borrower, the Subsidiaries of the Borrower named
therein, CIT, as administrative agent for and on behalf of the Lenders, and CIT,
as administrative agent for and on behalf of lenders under the Senior Revolving
Credit Agreement, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
Β
βInterest Election
Requestβ means a request by the Borrower to convert or continue a
Borrowing in accordance with Section
2.04.
Β
βInterest Payment
Dateβ means (a) with respect to any ABR Loan, the last day of each March,
June, September and December and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three monthsβ duration, each day prior to the last day of such
Interest Period that occurs at intervals of three monthsβ duration after the
first day of such Interest Period.
Β
βInterest Periodβ
means with respect to any Eurodollar Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, three or six months thereafter, as the Borrower may
elect; provided, that (a) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest
Period.Β Β For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such
Borrowing.
Β
βInvestmentβ means,
for any Person: (a) the acquisition (whether for cash, Property, services or
securities or otherwise) of Equity Interests of any other Person, the
contribution of capital to any other Person, or any agreement to make any such
acquisition (including, without limitation, any βshort saleβ or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale) or capital contribution; (b) the making of any deposit
with, or advance, loan or capital contribution to, assumption of Debt of,
purchase or other acquisition of any other Debt or equity participation or
interest in, or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding ninety (90) days representing the purchase price of inventory, goods
or supplies sold by such Person in the ordinary course of business); or (c) the
entering into of any guarantee of, or other contingent obligation (including the
deposit of any Equity Interests to be sold) with respect to, Debt or other
liability of any other Person and (without duplication) any amount committed to
be advanced, lent or extended to such Person.
Β
βLendersβ means the
Persons listed on Annex I and any Person that shall have become a party hereto
pursuant to an Assignment and Assumption, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Assumption.
Β
βLIBO Rateβ means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page
of such service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of such
service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the commencement of such Interest Period, as the rate
for dollar deposits with a maturity comparable to such Interest
Period.Β Β In the event that such rate is not available at such time for
any reason, then the βLIBO Rateβ with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of an amount
comparable to such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered by the principal London office of a banking
institution selected by the Administrative Agent in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period.
Β
βLienβ means any
interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute or contract, and whether such obligation or claim is fixed
or contingent, and including but not limited to (a) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and
Gas Properties.Β Β The term βLienβ shall include
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.
Β
βLoan Documentsβ means
this Agreement, the Notes, the Fee Letter, the Intercreditor Agreement, the
Lock-up Agreement, the Warrant Agreement, the Assignment of Overriding Royalty
Interest and the Security Instruments.
Β
βLoansβ means the
loans made by the Lenders to the Borrower pursuant to this
Agreement.
Β
βLock-up Agreementβ
means that certain Lock-up Agreement, dated September 2, 2008, between CIT and
the Permitted Holders.
Β
βMajority Lendersβ
means, at any time while any Loans are outstanding, Lenders holding more than
fifty percent (50%) of the outstanding aggregate principal amount of the Loans,
provided, that if there are only two Lenders, both Lenders shall be required to
constitute the βMajority Lendersβ.
Β
βMaterial Adverse
Effectβ means a material adverse change in, or material adverse effect on
(a) the business, operations, Property or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower, any Subsidiary or any Guarantor to perform any of its obligations
under any Loan Document, (c) the validity or enforceability of any Loan Document
or (d) the rights and remedies of or benefits available to the Administrative
Agent or any Lender under any Loan Document.
Β
βMaterial Agreementsβ
has the meaning assigned such term in Section 7.24.
Β
βMaterial
Indebtednessβ means Debt (other than the Loans), or obligations in
respect of one or more Swap Agreements, of any one or more of the Borrower and
its Subsidiaries in an aggregate principal amount exceeding $250,000.Β Β For
purposes of determining Material Indebtedness, the βprincipal amountβ of the
obligations of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the Swap Termination Value.
Β
Β βMoodyβsβ means
Xxxxxβx Investors Service, Inc. and any successor thereto that is a nationally
recognized rating agency.
Β
βMortgaged Propertyβ
means any Property owned by the Borrower or any Guarantor which is subject to
the Liens existing and to exist under the terms of the Security
Instruments.
Β
βMultiemployer Planβ
means a Plan which is a multiemployer plan as defined in section 3(37) or 4001
(a)(3) of ERISA.
Β
βNet Cash Proceedsβ
means:
Β
(a)Β with
respect to any disposition by the Borrower or any of its Subsidiaries, the
excess, if any, of (i) the sum of cash and cash equivalents received in
connection with such transaction (including any cash or cash equivalents
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Indebtedness that is secured by the applicable
asset and that is required to be repaid in connection with such transaction, (B)
the reasonable and customary out-of-pocket expenses incurred by the Borrower or
such Subsidiary in connection with such transaction and (C) income taxes
reasonably estimated to be actually payable within two years of the date of the
relevant transaction as a result of any gain recognized in connection therewith;
provided that, if the amount of any estimated taxes pursuant to subclause (C)
exceeds the amount of taxes actually required to be paid in cash in respect of
such disposition, the aggregate amount of such excess shall constitute Net Cash
Proceeds; and
Β
(b)Β with
respect to a Casualty Event, the sum of the cash and cash equivalents received
in connection with such Casualty Event shall constitute Net Cash
Proceeds.
Β
βNotesβ means the
promissory notes of the Borrower described in Section 2.02(d) and being substantially in
the form of Exhibit A, together with all amendments, modifications,
replacements, extensions and rearrangements thereof.
Β
βOil and Gas
Propertiesβ means (a) Hydrocarbon Interests; (b) the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d)Β all
operating agreements, contracts and other agreements, including production
sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of
Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and
Properties in any manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests and (g) all Properties, rights, titles, interests and
estates described or referred to above, including any and all Property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
Β
βOperating Accountβ
means (a) the deposit account 0000000 maintained at the Borrowerβs expense with
Amegy Bank of Texas existing on the Effective Date or (b) if the foregoing
account is closed, a deposit account opened with an bank reasonably acceptable
to the Administrative Agent in accordance with Section 8.18(b) maintained at the
Borrowerβs expense.
βOperating Account
Bankβ means the bank where Borrower maintains the Operating
Account.
Β
Β βOrganizational
Documentsβ means, with respect to any Person, (a) in the case of any
corporation, the certificate of incorporation and by-laws (or similar documents)
of such Person, (b) in the case of any limited liability company, the
certificate of formation and limited liability company agreement (or similar
documents) of such Person, (c) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such Person, (d) in the case of any general partnership, the
partnership agreement (or similar document) of such Person and (e) in any other
case, the functional equivalent of the foregoing.
Β
βOther Taxesβ means
any and all present or future stamp or documentary taxes or any other excise or
Property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement and any other Loan Document.
Β
βORIβ has the meaning
assigned such term in Section 8.19(a).
Β
βParticipantβ has the
meaning assigned such term in Section
12.04(c)(i).
Β
βPatriot Actβ has the
meaning assigned such term in Section
12.15.
Β
βPermitted Holdersβ
means Xxxxxx X. Xxxx, an employee and director; Xxxx X. Xxxxx, an employee;
Xxxxx Xxxxx, a consultant; and Xxxx X. Xxxxxx, a director, in each case of the
Borrower.
Β
βPersonβ means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other
entity.
Β
βPlanβ means any
employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is
currently or hereafter sponsored, maintained or contributed to by the Borrower,
a Subsidiary or an ERISA Affiliate or (b) was at any time during the six
calendar years preceding the date hereof, sponsored, maintained or contributed
to by the Borrower or a Subsidiary or an ERISA Affiliate.
Β
βPost Default Rateβ
shall mean, in respect of the principal of any Loan or any other amount payable
by the Borrower under this Agreement or any other Loan Document, a rate per
annum during the period commencing on the date of occurrence of an Event of
Default until such amount is paid in full or all Events of Default are cured or
waived equal to the applicable interest rate plus three percent 3% per annum,
but in no event to exceed the Highest Lawful Rate.
Β
βPrime Rateβ means the
rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank, N.A. as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.Β Β Such rate
is set by the JPMorgan Chase Bank, N.A. as a general reference rate of interest,
taking into account such factors as the JPMorgan Chase Bank, N.A. may deem
appropriate; it being understood that many of the JPMorgan Chase Bank, N.A.βs
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the JPMorgan Chase Bank, N.A. may make various commercial or other loans at
rates of interest having no relationship to such rate.
Β
βPropertyβ means any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, cash, securities,
accounts and contract rights.
Β
βProved Reservesβ
means βProved Reservesβ as defined in the Definitions for Oil and Gas Reserves
(in this paragraph, the βDefinitionsβ) promulgated by the Society of Petroleum
Engineers (or any generally recognized successor) as in effect at the time in
question.Β Β βProved Developed Producing
Reservesβ means Proved Reserves which are categorized as both βDevelopedβ
and βProducingβ in the Definitions, βProved Developed
Nonproducing Reservesβ means Proved Reserves which are categorized as
both βDevelopedβ and βNonproducingβ in the Definitions, and βProved Undeveloped
Reservesβ means Proved Reserves which are categorized as βUndevelopedβ in the
Definitions
Β
βRedemptionβ means
with respect to any Debt, the repurchase, redemption, prepayment, repayment,
defeasance or any other acquisition or retirement for value (or the segregation
of funds with respect to any of the foregoing) of such Debt.Β Β βRedeemβ has the
correlative meaning thereto.
Β
βRegisterβ has the
meaning assigned such term in Section
12.04(b)(iv).
Β
βRegulation Dβ means
Regulation D of the Board, as the same may be amended, supplemented or replaced
from time to time.
Β
βRelated Partiesβ
means, with respect to any specified Person, such Personβs Affiliates and the
respective directors, officers, employees, agents and advisors (including
attorneys, accountants and experts) of such Person and such Personβs
Affiliates.
Β
βReleaseβ means any
depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding,
abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping, or disposing.
Β
βRemedial Workβ has
the meaning assigned such term in Section
8.09(a).
Β
βRequired Lendersβ
means, at any time while any Loans are outstanding, Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the outstanding aggregate
principal amount of the Loans, provided, that if there are only two Lenders,
both Lenders shall be required to constitute the βRequired
Lendersβ.
Β
βReserve Reportβ means
a report, in form and substance reasonably satisfactory to the Administrative
Agent, setting forth, as of each January 1st or July 1st (or such other
specified βas ofβ date contemplated by Section 2.06) the proved oil and gas
reserves attributable to the Oil and Gas Properties of the Borrower and the
Subsidiaries, together with a projection of the rate of production and future
net income, taxes, operating expenses and Capital Expenditures with respect
thereto as of such date, based upon the economic assumptions consistent with the
Administrative Agentβs lending requirements at the time.
Β
βResponsible Officerβ
means, as to any Person, the Chief Executive Officer, the President, any
Financial Officer or any Vice President of such Person.Β Β Unless
otherwise specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of the Borrower.
Β
βRestricted Paymentβ
means any dividend or other distribution (whether in cash, securities or other
Property) with respect to any Equity Interests in the Borrower or any of its
Subsidiaries, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any of its Subsidiaries or any option,
warrant or other right to acquire any such Equity Interests in the Borrower or
any of its Subsidiaries.
Β
βSECβ means the
Securities and Exchange Commission or any successor Governmental
Authority.
Β
βSecurity Instrumentsβ
means the Guaranty Agreement, mortgages, deeds of trust and other agreements,
instruments or certificates described or referred to in Exhibit F, and any and
all other agreements, guarantees, instruments, consents or certificates now or
hereafter executed and delivered by the Borrower or any other Person in
connection with, or as security for the payment or performance of the
Indebtedness, the Notes or this Agreement, as such agreements may be amended,
modified, supplemented or restated from time to time.
Β
βSenior Indebtednessβ
means the βIndebtednessβ as defined in the Senior Revolving Credit
Agreement.
Β
βSenior Revolving Credit
Agreementβ means that certain Credit Agreement dated of even date
herewith among the Borrower, CIT, as the administrative agent, and the other
agents and lenders from time to time party thereto, together with all other
amendments, modifications and supplements thereto and refinancing thereof
permitted by the Intercreditor Agreement.
Β
βSenior Revolving Credit
Documentsβ means the Senior Revolving Credit Agreement, the Senior
Revolving Credit Notes and any βLoan Documentsβ (as defined therein), in each
case, together with all amendments, modifications and supplements
thereto.
Β
βSenior Revolving Credit
Notesβ means the Notes from time to time issued pursuant to the Senior
Revolving Credit Agreement.
Β
βS&Pβ means
Standard & Poorβs Ratings Group, a division of The XxXxxx-Xxxx Companies,
Inc., and any successor thereto that is a nationally recognized rating
agency.
Β
βStatutory Reserve
Rateβ means a fraction (expressed as a decimal), the numerator of which
is the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Administrative Agent is subject with respect to the Adjusted
LIBO Rate, for eurocurrency funding (currently referred to as βEurocurrency
Liabilitiesβ in Regulation D of the Board).Β Β Such reserve percentages
shall include those imposed pursuant to such Regulation D.Β Β Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation.Β Β The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
Β
βSubsidiaryβ means:
(a) any Person of which at least a majority of the outstanding Equity Interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors, manager or other governing body of such Person (irrespective
of whether or not at the time Equity Interests of any other class or classes of
such Person shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Borrower or one or more of its Subsidiaries or by the Borrower and one or
more of its Subsidiaries and (b) any partnership of which the Borrower or any of
its Subsidiaries is a general partner.Β Β Unless otherwise indicated
herein, each reference to the term βSubsidiaryβ shall
mean a Subsidiary of the Borrower.
Β
βSwap Agreementβ means
any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement, whether exchange traded,
βover-the-counterβ or otherwise, involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan providing for
payments only on account of services provided by current or former directors,
officers, employees or consultants of the Borrower or the Subsidiaries shall be
a Swap Agreement.
Β
βSwap Termination
Valueβ means, in respect of any one or more Swap Agreements, after taking
into account the effect of any legally enforceable netting agreement relating to
such Swap Agreements, (a) for any date on or after the date such Swap Agreements
have been closed out and termination value(s) determined in accordance
therewith, such termination value(s) and (b) for any date prior to the date
referenced in clause (a), the amount(s) determined as the xxxx to market
value(s) for such Swap Agreements, as determined by the counterparties to such
Swap Agreements.
Β
βSynthetic Leasesβ
means, in respect of any Person, all leases which shall have been, or should
have been, in accordance with GAAP, treated as operating leases on the financial
statements of the Person liable (whether contingently or otherwise) for the
payment of rent thereunder and which were properly treated as indebtedness for
borrowed money for purposes of U.S. federal income taxes, if the lessee in
respect thereof is obligated to either purchase for an amount in excess of, or
pay upon early termination an amount in excess of, 80% of the residual value of
the Property subject to such operating lease upon expiration or early
termination of such lease.
Β
βTaxesβ means any and
all present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.
Β
βTermination Dateβ
means three and a half years from the Effective Date.
Β
βTotal Reserve Valueβ
means, with respect to any Proved Reserves expected to be produced from any Oil
and Gas Properties, the net present value, discounted at 10% per annum, of the
future net revenues expected to accrue to the Borrowerβs and its Subsidiariesβ
collective interests in such reserves during the remaining expected economic
lives of such reserves.Β Β Each calculation of such expected future net
revenues shall be made in accordance with the then existing standards of the
Society of Petroleum Engineers, provided that in any event (a) appropriate
deductions shall be made for severance and ad valorem taxes, and for operating,
gathering, transportation and marketing costs required for the production and
sale of such reserves, (b) the pricing assumptions used in determining Total
Reserve Value for any particular reserves shall be based upon (i) annual
quotations on the New York Mercantile Exchange for Xxxxx Hub (natural gas) or
Cushing, Oklahoma (oil) futures on the date of the relevant Reserve Report for
each calendar year to the extent such quotations are available for future
periods, provided that with respect to quotations for calendar years after the
fifth calendar year, the quotation for the fifth calendar year shall be applied,
(ii) with respect to future periods for which quotations are not available on
the New York Mercantile Exchange, constant pricing for such periods based on the
quotation for the last period for which a quotation is available on the New York
Mercantile Exchange for Xxxxx Hub (natural gas) or Cushing, Oklahoma (oil), (c)
operating expenses shall be held constant, (d) future Capital Expenditures shall
be expressed in current year dollars (i.e., inflation shall not be assumed), (e)
to the extent basis Swap Agreements are not in place, the cash-flows derived
from the pricing assumptions set forth in clause (b) above shall be further
adjusted to account for the historical basis differentials for each month during
the preceding 12-month period calculated by comparing realized crude oil and
natural gas prices to Cushing, Oklahoma and Xxxxx Hub NYMEX prices for each
month during such period and (f) to the extent that Swap Agreements are in
place, the cash-flows derived from the pricing assumptions set forth in clause
(b) above shall be, (i) in the case of volumes subject to a swap or other fixed
priced hedge, at the applicable fixed price and (ii) in the case of volumes
subject to a floor or ceiling hedge (including a collar), at the price set out
in the preceding clause (b)(i), but not to exceed such ceiling or to be less
than such floor.
Β
βTransactionsβ means,
with respect to (a) the Borrower, the execution, delivery and performance by the
Borrower of this Agreement and each other Loan Document and Acquisition Document
to which it is a party, the Acquisition, the borrowing of Loans, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder, and the grant
of Liens by the Borrower on Mortgaged Properties and other Properties pursuant
to the Security Instruments and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document and Acquisition Document to
which it is a party, the Acquisition, the guaranteeing of the Indebtedness and
the other obligations under the Guaranty Agreement by such Guarantor and such
Guarantorβs grant of the security interests and provision of collateral under
the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged
Properties and other Properties pursuant to the Security
Instruments.
Β
βTypeβ, when used in
reference to any Loan or Borrowing, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Borrowing, is determined by reference
to the Alternate Base Rate or the Adjusted LIBO Rate.
Β
βVoyagerβ means
Voyager Gas Corporation, a Delaware corporation.
Β
βWarrant Agreementβ
means that certain Warrant Agreement, dated September 2, 2008, between Borrower
and CIT to purchase an aggregate of 24,199,996 shares of common stock, par value
$0.001 per share, of the Borrower.
Β
βWarrantsβ means the
warrants of the Borrower issued to CIT pursuant to the Warrant
Agreement.
Β
Section
1.03Β Types of Loans and
Borrowings.Β Β For purposes of this Agreement, Loans and
Borrowings, respectively, may be classified and referred to by Type (e.g., a
βEurodollar
Loanβ or a βEurodollar
Borrowingβ).
Β
Section
1.04Β Terms Generally; Rules of
Construction.Β Β The definitions of terms herein shall apply
equally to the singular and plural forms of the terms
defined.Β Β Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms.Β Β The words
βincludeβ, βincludesβ and βincludingβ shall be deemed to be followed by the
phrase βwithout limitationβ.Β Β The word βwillβ shall be construed to
have the same meaning and effect as the word βshallβ.Β Β Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents), (b)
any reference herein to any law shall be construed as referring to such law as
amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Personβs successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) the words βhereinβ, βhereofβ and
βhereunderβ, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with
respect to the determination of any time period, the word βfromβ means βfrom and
includingβ and the word βtoβ means βto and includingβ and (f) any reference
herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to,
this Agreement.Β Β No provision of this Agreement or any other Loan
Document shall be interpreted or construed against any Person solely because
such Person or its legal representative drafted such provision.
Β
Section
1.05Β Accounting Terms and
Determinations; GAAP.Β Β Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished to the Administrative Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which the Borrowerβs independent
certified public accountants concur and which are disclosed to the
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior
periods.
Β
ARTICLE
II
Β
The
Credits
Β
Section
2.01Β Commitments.Β Β Subject
to the terms and conditions set forth herein, each Lender agrees on the
Effective Date to make a Loan in dollars to the Borrower in an aggregate
principal amount equal to such Lenderβs Commitment.Β Β The Commitments
are not revolving and amounts repaid or prepaid may not be re-borrowed under any
circumstance.Β Β Any portion of the Commitments not utilized by the
Borrower on or before 4:00 p.m. New York City time on the Effective Date shall
be permanently cancelled.
Β
Section
2.02Β Loans and
Borrowings.
Β
(a)Β Borrowings; Several
Obligations.Β Β Each Loan shall be made by the Lenders ratably in
accordance with their respective Commitments on the Effective
Date.Β Β The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments are several and no Lender shall be responsible for any
other Lenderβs failure to make Loans as required.
Β
(b)Β Types of
Loans.Β Β Subject to Section
3.03, the Borrower may request a Borrowing hereunder comprised entirely of
ABR Loans or Eurodollar Loans.Β Β Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
Β
(c)Β Minimum Amounts; Limitation
on Number of Borrowings.Β Β At the commencement of each Interest
Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate
amount that is an integral multiple of $250,000 and not
less than $250,000.Β Β At
the time that each ABR Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $250,000 and not
less than $250,000.Β Β Borrowings
of more than one Type may be outstanding at the same time, provided that there
shall not at any time be more than a total of five (5) Eurodollar
Borrowings outstanding.Β Β Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Termination Date.
Β
(d)Β Notes.Β Β The
Loans made by each Lender shall be evidenced by a single promissory note of the
Borrower in substantially the form of Exhibit A, dated, in the case of (i) any
Lender party hereto as of the date of this Agreement, as of the date of this
Agreement or (ii) any Lender that becomes a party hereto pursuant to an
Assignment and Assumption, as of the effective date of the Assignment and
Assumption payable to the order of such Lender in a principal amount equal to
its Commitments or Loans as in effect on such date and otherwise duly
completed.Β Β The date, amount, Type, interest rate and, if applicable,
Interest Period of each Loan made by each Lender, and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books
for its Note, and, prior to any transfer, the transferee shall be recorded in
the Register.Β Β Prior to recordation in the Register of the transfer,
the Borrower and its agent shall be entitled to treat the registered holder of
the Note as the owner in fact thereof for all purposes.
Β
Section
2.03Β Requests for
Loans.Β Β No later than 2:00p.m., Houston, Texas time, on the
Effective Date, the Borrower shall request the Loans by notifying the
Administrative Agent by telephone, fax (or electronic communication, if
arrangements for doing so have been approved by the Administrative Agent), and
shall confirm such request by delivering to the Administrative Agent a written
Loan Notice in substantially the form of Exhibit B and signed by the
Borrower.Β Β Such telephonic or written Loan Notice shall specify the
following information in compliance with Section 2.02:
Β
(i)Β the date
of such Borrowing, which shall be the Effective Date;
Β
(ii)Β whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
Β
(iii)Β in the
case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term
βInterest Periodβ; and
Β
(iv)Β the
location and number of the Borrowerβs account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.
Β
If no
election as to the Type of Borrowing is specified, then the requested Borrowing
shall be an ABR Borrowing.Β Β If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one monthβs duration.
Β
Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lenderβs Loan to be made as part of the requested Borrowing.
Β
Section
2.04Β Interest
Elections;
Conversions.
Β
(a)Β Conversion and
Continuance.Β Β The Borrowing initially shall be of the Type
specified in the Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in the Borrowing
Request.Β Β Thereafter, the Borrower may elect to convert the Borrowing
to a different Type or to continue the Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04.Β Β The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
Β
(b)Β Interest Election Requests;
Conversion Requests.Β Β To make an election or conversion, as the
case may be, pursuant to this Section
2.04, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower was requesting
a Borrowing of the Type resulting from such election to be made on the effective
date of such election.Β Β Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in
substantially the form of Exhibit C and signed by the Borrower.
Β
(c)Β Information in Interest
Election Requests.Β Β Each telephonic and written Interest
Election Request shall specify the following information in compliance with Section 2.02:
Β
(i)Β the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting
Borrowing);
Β
(ii)Β the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;
Β
(iii)Β whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and
Β
(iv)Β if the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term βInterest Periodβ.
Β
If any
such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one monthβs duration.
Β
(d)Β Notice to Lenders by the
Administrative Agent.Β Β Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lenderβs portion of each resulting
Borrowing.
Β
(e)Β Effect of Failure to Deliver
Timely Interest Election Request and Events of Default.Β Β If the
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such
Interest Period such Borrowing shall be converted to an ABR
Borrowing.Β Β Notwithstanding any contrary provision hereof, if an Event
of Default has occurred and is continuing:Β Β (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing (and any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
Β
Section
2.05Β Funding of
Loans.
Β
(a)Β Funding by
Lenders.Β Β Each Lender shall make each Loan to be made by it
hereunder on the Effective Date by wire transfer of immediately available funds
by 1:00 p.m., New York City time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the
Lenders.Β Β The Administrative Agent will make such Loans available to
the Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower and designated by the Borrower in the Borrowing
Request.Β Β Nothing herein shall be deemed to obligate any Lender to
obtain the funds for its Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
its Loan in any particular place or manner.
Β
(b)Β Presumption of Funding by
the Lenders.Β Β Unless the Administrative Agent shall have
received notice from a Lender prior to the Effective Date that such Lender will
not make available to the Administrative Agent such Lenderβs share of the
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.05(a) and may, in reliance upon
such assumption, make available to the Borrower a corresponding
amount.Β Β In such event, if a Lender has not in fact made its share of
the applicable Borrowing available to the Administrative Agent, then the
applicable Lender severally and the Borrower agrees to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans.Β Β If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lenderβs Loan included in the Borrowing.
Β
Section
2.06Β Total Reserve
Value.Β Β The initial Total Reserve Value shall be
$75,634,000.Β Β In connection with each semi-annual redetermination, the
Borrower shall deliver to the Administrative Agent a certificate, in form
reasonably satisfactory to the Administrative Agent, no later than May 1st and
November 1st of each year, setting forth in sufficient detail the Borrowerβs
calculation of Total Reserve Value as of the immediately preceding April 1st and
October 1st, commencing May 1, 2009.Β Β The Borrower shall calculate the
Total Reserve Value based upon the applicable definitions of this Agreement, and
provide with each such certificate the Reserve Report and other information used
by the Borrower in calculating the Total Reserve Value.Β Β In addition
to the foregoing, the Total Reserve Value shall be subject to further adjustment
from time to time in accordance with Section 9.12.
Β
Section
2.07Β Intercreditor
Agreement.Β Β Each Lender hereunder (a) acknowledges that it has
received a copy of the Intercreditor Agreement, (b) consents to the
subordination of Liens provided for in the Intercreditor Agreement, (c) agrees
that it will be bound by and will take no actions contrary to the provisions of
the Intercreditor Agreement and (d) authorizes and instructs the Administrative
Agent to enter into the Intercreditor Agreement as Second Lien Administrative
Agent (as defined therein) on behalf of such Lender.Β Β The foregoing
provisions are intended as an inducement to the lenders under the Senior
Revolving Credit Agreement to permit the incurrence of Indebtedness under this
Agreement and to extend credit to the Borrower and such lenders are intended
third party beneficiaries of such provisions.
Β
Section
2.08Β Termination.Β Β The
Commitments shall terminate at 4:00 p.m. New York City time on the Effective
Date.
Β
ARTICLE
III
Β
Payments
of Principal and Interest; Prepayments; Fees
Β
Section
3.01Β Repayment of
Loans.Β Β The Borrower hereby unconditionally promises to pay to
the Administrative Agent for the account of each Lender the then unpaid
principal amount of each Loan in full in cash on the Termination
Date.
Β
Section
3.02Β Interest.
Β
(a)Β ABR
Loans.Β Β The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
Β
(b)Β Eurodollar
Loans.Β Β The Loans comprising each Eurodollar Borrowing shall
bear interest at the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin, but in no event to exceed the Highest
Lawful Rate.
Β
(c)Β Post-Default
Rate.Β Β Notwithstanding the foregoing, (i)Β if an Event of
Default has occurred and is continuing, or if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower or any Guarantor
hereunder or under any other Loan Document is not paid when due, whether at
stated maturity, upon acceleration or otherwise, then all Loans outstanding, in
the case of an Event of Default, and such overdue amount, in the case of a
failure to pay amounts when due, shall bear interest, after as well as before
judgment, at the Post Default Rate, but in no event to exceed the Highest Lawful
Rate, and (ii)Β but in no event to exceed the Highest Lawful
Rate.
Β
(d)Β Interest Payment
Dates.Β Β Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination Date;
provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the
event of any repayment or prepayment of any Loan (other than an optional
prepayment of an ABR Loan prior to the Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
Β
(e)Β Interest Rate
Computations.Β Β All interest hereunder shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), except that interest computed by
reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day).Β Β The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error, and be binding upon the parties
hereto.
Β
Section
3.03Β Alternate Rate of
Interest.Β Β If prior to the commencement of any Interest Period
for a Eurodollar Borrowing:
Β
(a)Β the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate for such Interest Period;
or
Β
(b)Β the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period;
Β
then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Β
Section
3.04Β Prepayments.
Β
(a)Β Optional
Prepayments.Β Β Subject to any break funding costs payable
pursuant to Section 5.02 and prior
notice in accordance with Section 3.04(b), the Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part as
follows:
Β
(i)Β at any
time during the period commencing on the first Business Day after the Effective
Date to and including the first anniversary of the Effective Date, with a
premium equal to 2% of such amount prepaid;
Β
(ii)Β at any
time during the period commencing on the first Business Day after the first
anniversary of the Effective Date to and including the second anniversary of the
Effective Date, with a premium equal to 1% of such amount prepaid;
Β
(iii)Β at any
time during the period commencing on the first Business Day after the second
anniversary of the Effective Date, without premium or penalty; and
Β
(iv)Β provided
that, each prepayment is in an amount that is an integral multiple of $250,000,
or if such amount is less than $250,000, the outstanding principal amount of the
Loans.
Β
(b)Β Notice and Terms of Optional
Prepayment.Β Β The Borrower shall notify the Administrative Agent
by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York
City time, three (3) Business Days before the date of prepayment, or (ii) in the
case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City
time, one Business Day before the date of prepayment.Β Β Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be
prepaid.Β Β Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof.Β Β Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing.Β Β Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.
Β
(c)Β Mandatory
Prepayments.
Β
(i)Β The
Borrower shall prepay the Loans in amounts equal to, if required pursuant to Section 9.12, 100% of the Net Cash Proceeds
of any sale of any Oil and Gas Property of the Borrower.Β Β Such
prepayment shall be made no later than two (2) Business Day after the receipt of
such proceeds.
Β
(ii)Β The
Borrower shall prepay the Loans in amounts equal to 100% of the Net Cash
Proceeds of any Casualty Event related to the Borrower or any of its
Subsidiaries.Β Β Such prepayment shall be made no later than 20 Business
Days after the receipt of such proceeds.
Β
(iii)Β Notwithstanding
anything herein to the contrary, if the amount of any Net Cash Proceeds referred
to in Section 3.04(c)(i) or Section 3.04(c)(ii) would otherwise be a required
prepayment under the terms of the Senior Revolving Credit Agreement, then
prepayment shall only be required under this Agreement to the extent any excess
Net Cash Proceeds remain after making such prepayment.
Β
(iv)Β Notwithstanding
anything herein to the contrary, if any of the amounts referred to in Section
3.04(c)(i) or Section 3.04(c)(ii) will otherwise be used to prepay the Senior
Revolving Credit Notes or reinvested (including for actual repair and
replacement following a Casualty Event) in assets used or useful in carrying on
the business of the Borrower and its Subsidiaries having a fair market value at
least equal to the fair market value of the assets sold, leased or otherwise
disposed of or to improve or replace any existing assets of the Borrowers and
its Subsidiaries within 90 days after the receipt thereof, then prepayment shall
only be required to the extent any excess Net Cash Proceeds remain after making
such prepayment or reinvestment during such 90-day period.Β Β If the
Borrower plans such prepayment or reinvestment with the Net Cash Proceeds
described in Section 3.04(c)(i) or Section 3.04(c)(ii), then it shall deliver
and certify such intention in a certificate from the Financial Officer of the
Borrower to the Administrative Agent no later than (A) two (2) Business Day
after the receipt of such Net Cash Proceeds under Section 3.04(c)(i) and (B) 20
Business Days after the receipt of such Net Cash Proceeds under Section
3.04(c)(ii).Β Β Subject to Section 3.05(b), any of the Net Cash Proceeds
remaining after such 90-day period, the completion of such repair or replacement
or after the Borrower has discontinued its good faith pursuit of such repairs or
replacement will be promptly applied as a prepayment of the Loan.
Β
(d)Β Administrative Agent
Fees.Β Β The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent as outlined in the
Fee Letter.
Β
ARTICLE
IV
Β
Payments;
Pro Rata Treatment; Sharing of Set-offs
Β
Section
4.01Β Payments Generally; Pro Rata
Treatment; Sharing of Set-offs.
Β
(a)Β Payments by the
Borrower.Β Β The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest or fees or of amounts
payable under Section 5.01, Section 5.01(d), Section 5.03 or otherwise) prior to 12:00
noon, New York City time, on the date when due, in immediately available funds,
without defense, deduction, recoupment, set-off or
counterclaim.Β Β Fees, once paid, shall be fully earned and shall not be
refundable under any circumstances.Β Β Any amounts received after such
time on any date may, in the discretion of the Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of
calculating interest thereon.Β Β All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except that payments pursuant
to Section 5.01, Section 5.01(d), Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto.Β Β The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.Β Β If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.Β Β All payments hereunder shall be made in
dollars.
Β
(b)Β Application of Insufficient
Payments.Β Β If at any time insufficient funds are received by
and available to the Administrative Agent to pay fully all amounts of
principal,Β Β interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
Β
(c)Β Sharing of Payments by
Lenders.Β Β If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on its Loan resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loan and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall
not be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loan to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this Section 4.01(c) shall apply).Β Β The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such
participation.
Β
Section
4.02Β Presumption of Payment by
the Borrower.Β Β Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount
due.Β Β In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
Β
Section
4.03Β Certain Deductions by the
Administrative Agent.Β Β If any Lender shall fail to make any
payment required to be made by it pursuant to Section 2.05(b) or Section 4.02 then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lenderβs obligations under such Sections until all
such unsatisfied obligations are fully paid.
Β
Section
4.04Β Disposition of
Proceeds.Β Β The Security Instruments contain an assignment by
the Borrower and/or the Guarantors unto and in favor of the Administrative Agent
for the benefit of the Lenders of all of the Borrowerβs or each Guarantorβs
interest in and to production and all proceeds attributable thereto which may be
produced from or allocated to the Mortgaged Property.Β Β The Security
Instruments further provide in general for the application of such proceeds to
the satisfaction of the Indebtedness and other obligations described therein and
secured thereby.Β Β Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Lenders will instead permit such proceeds to be paid to the Borrower and its
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Subsidiaries.
Β
ARTICLE
V
Β
Increased
Costs; Break Funding Payments; Taxes
Β
Section
5.01Β Increased
Costs.
Β
(a)Β Eurodollar Changes in
Law.Β Β If any Change in Law shall:
Β
(i)Β impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate); or
Β
(ii)Β impose on
any Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;
Β
and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Loan (or of maintaining its obligation to
make any such Loan) or to reduce the amount of any sum received or receivable by
such Lender (whether of principal, interest or otherwise), then the Borrower
will pay to such Lender such additional amount or amounts as will compensate
such Lender for such additional costs incurred or reduction
suffered.
Β
(b)Β Capital
Requirements.Β Β If any Lender determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lenderβs capital or on the capital of such Lenderβs holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lenderβs holding company
could have achieved but for such Change in Law (taking into consideration such
Lenderβs policies and the policies of such Lenderβs holding company with respect
to capital adequacy), then from time to time the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lenderβs holding company for any such reduction suffered.
Β
(c)Β Certificates.Β Β A
certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in Section 5.01(a) or (b) shall be delivered to the Borrower and
shall be conclusive absent manifest error.Β Β The Borrower shall pay
such Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
Β
(d)Β Effect of Failure or Delay
in Requesting Compensation.Β Β Failure or delay on the part of
any Lender to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of
such Lenderβs right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender pursuant to this Section 5.01 for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lenderβs intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 365-day period referred to above shall be
extended to include the period of retroactive effect thereof.
Β
Section
5.02Β Break Funding
Payments.Β Β In the event of (a) the payment of any principal of
any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any Eurodollar Loan into an ABR Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event.Β Β In
the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market.
Β
A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error.Β Β The Borrower
shall pay such Lender the amount shown as due on any such certificate within ten
(10) days after receipt thereof.
Β
Section
5.03Β Taxes.
Β
(a)Β Payments Free of
Taxes.Β Β Any and all payments by or on account of any obligation
of the Borrower or any Guarantor under any Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower or any Guarantor shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i)Β the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03(a)), the Administrative
Agent or the Lender receives an amount equal to the sum it would have received
had no such deductions been made, (ii)Β the Borrower or such Guarantor shall
make such deductions and (iii)Β the Borrower or such Guarantor shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
Β
(b)Β Payment of Other Taxes by
the Borrower.Β Β The Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
Β
(c)Β Indemnification by the
Borrower.Β Β The Borrower shall indemnify the Administrative
Agent and each Lender within ten (10) days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 5.03) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.Β Β A
certificate of the Administrative Agent or a Lender as to the amount of such
payment or liability under this Section
5.03 shall be delivered to the Borrower and shall be conclusive absent
manifest error.
Β
(d)Β Evidence of
Payments.Β Β As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
Β
(e)Β Status of
Lenders.Β Β Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement or any other Loan Document shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will permit such payments to be made
without withholding or at a reduced rate.Β Β In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will determine whether or not such
Lender is subject to backup withholding or information reporting
requirements.
Β
(f)Β Treatment of Certain
Refunds.Β Β If the Administrative Agent, a Lender or the Issuing
Bank determines, in its sole discretion, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section with respect to the Indemnified Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent , such Lender or the Issuing Bank, as the case may be,
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the
Borrower, upon the request of the Administrative Agent, such Lender or the
Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the Issuing Bank in the
event the Administrative Agent, such Lender or the Issuing Bank is required to
repay such refund to such Governmental Authority.Β Β This paragraph
shall not be construed to require the Administrative Agent , any Lender or the
Issuing Bank to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other
Person.
Β
Section
5.04Β Designation of Different
Lending Office.Β Β If any Lender requests compensation under Section 5.01, or ifΒ the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such
Lender.Β Β The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.
Β
ARTICLE
VI
Β
Conditions
Precedent
Β
Section
6.01Β Effective
Date.Β Β The obligations of the Lenders to make Loans hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 12.02):
Β
(a)Β The
Administrative Agent, the Arranger and the Lenders shall have received all
commitment, facility and agency fees, including those set forth in the Fee
Letter, and all other fees and amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including, without limitation, the fees and expenses of Xxxxxx &
Xxxxxx L.L.P., counsel to the administrative agent under the Senior Revolving
Credit Agreement).
Β
(b)Β The
Administrative Agent shall have received a certificate of the Responsible
Officer of the Borrower and each Guarantor setting forth (i) resolutions of its
board of directors with respect to the authorization of the Borrower or such
Guarantor to execute and deliver the Loan Documents to which it is a party and
to enter into the transactions contemplated in those documents, (ii) the
officers of the Borrower or such Guarantor (A) who are authorized to sign the
Loan Documents to which the Borrower or such Guarantor is a party and (B) who
will, until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the transactions contemplated hereby, (iii) specimen signatures of such
authorized officers, and (iv) the Organizational Documents of the Borrower and
such Guarantor, certified as being true and complete.Β Β The
Administrative Agent and the Lenders may conclusively rely on such certificate
until the Administrative Agent receives notice in writing from the Borrower to
the contrary.
Β
(c)Β The
Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of the
Borrower and each Guarantor.
Β
(d)Β The
Administrative Agent shall have received a compliance certificate which shall be
substantially in the form of Exhibit D, duly and properly executed by a
Responsible Officer and dated as of the date of Effective Date.
Β
(e)Β The
Administrative Agent shall have received from each party hereto counterparts (in
such number as may be requested by the Administrative Agent) of this Agreement
signed on behalf of such party.
Β
(f)Β The
Administrative Agent shall have received duly executed Notes payable to the
order of each Lender in a principal amount equal to its Commitment dated as of
the date hereof.
Β
(g)Β The
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of
the Security Instruments, including the Guaranty Agreement and the other
Security Instruments described on Exhibit F.Β Β In connection with the
execution and delivery of the Security Instruments, the Administrative Agent
shall:
Β
(i)Β be
reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Liens created by the Senior Revolving Credit
Documents and Excepted Liens identified in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition)
on at least 80% of the Total Reserve Value of the Oil and Gas Properties
evaluated in the Initial Reserve Report; and
Β
(ii)Β be
reasonably satisfied that all other Property constituting security for the
Second Lien Term Loan Agreement is subject to a first priority, perfected Lien
(subject to the Liens created by the Senior Revolving Credit Documents and
Excepted Liens identified in clauses (a) to (d) and (f) of the definition
thereof, but subject to the provisos at the end of such definition) in favor of
the Administrative Agent under the Security Instruments.
Β
(h)Β The
Administrative Agent shall have received an opinion of Xxxxxxxx & Knight,
LLP, special counsel to the Borrower, in form and substance satisfactory to the
Administrative Agent.
Β
(i)Β The
Administrative Agent shall have received a certificate of insurance coverage of
the Borrower evidencing that the Borrower is carrying insurance in accordance
with Section 7.12.
Β
(j)Β The
Administrative Agent shall have received title information as the Administrative
Agent may reasonably require satisfactory to the Administrative Agent setting
forth the status of title to at least 80% of the Total Reserve Value of the Oil
and Gas Properties evaluated in the Initial Reserve Report.
Β
(k)Β The
Administrative Agent shall be reasonably satisfied with the environmental
condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.
Β
(l)Β The
Administrative Agent shall have received a certificate of a Responsible Officer
of the Borrower certifying that the Borrower has received all consents and
approvals required by Section
7.03.
Β
(m)Β The
Administrative Agent shall have received the financial statements referred to in
Section 7.04(a) and the Initial Reserve
Report accompanied by a certificate covering the matters described in Section 8.11(c).
Β
(n)Β The
Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties of the Borrower and the
Subsidiaries for each of the following jurisdictions:Β Β Nevada,
TexasΒ and any other jurisdiction requested by the Administrative
Agent; other than those being assigned or released on or prior to the Effective
Date or Liens permitted by Section
9.03.
Β
(o)Β The
Borrower and the Lenders shall have agreed upon the Development Plan, which
shall be reasonably satisfactory to the Lenders.
Β
(p)Β The
Administrative Agent shall (i) be satisfied with the terms of the payoff letter
from Bank of Texas, N.A., evidencing payment in full of the loans under the
Existing Credit Agreement, and have received executed copies of the same and
(ii) have received evidence that the Liens associated with such Debt, if any,
are being released contemporaneously with the funding under this
Agreement.
Β
(q)Β The
Administrative Agent shall be satisfied that there is no litigation seeking to
enjoin or prevent the financing contemplated hereby or by the Senior Revolving
Credit Agreement.
Β
(r)Β The
Senior Revolving Credit Agreement and the Intercreditor Agreement shall be duly
executed and delivered and be in form and substance reasonably satisfactory to
the Administrative Agent.
Β
(s)Β The
Administrative Agent shall be reasonably satisfied that there is unused
availability under the Senior Revolving Credit Agreement of at least $2,250,000
as of the Effective Date after giving effect to the loans made
thereunder.
Β
(t)Β The
Administrative Agent shall have received a duly executed account control
agreement between Operating Account Bank, Borrower and the Administrative Agent,
the terms and conditions for which shall be satisfactory to the Administrative
Agent.
Β
(u)Β The
Administrative Agent shall have received (i) a certificate of a Responsible
Officer of the Borrower certifying:Β Β (A) that the Borrower is
concurrently consummating the Acquisition in accordance with the terms of the
Acquisition Documents (with all of the material conditions precedent thereto
having been satisfied in all material respects by the parties thereto) and
acquiring substantially all of the Acquisition Properties contemplated by the
Acquisition Documents; (B) as to the final purchase price for the Acquisition
Properties after giving effect to all adjustments as of the closing date
contemplated by the Acquisition Documents and specifying, by category, the
amount of such adjustment; (C) that attached thereto is a true and complete list
of the Acquisition Properties which have been excluded from the Acquisition
pursuant to the terms of the Acquisition Documents, specifying with respect
thereto the basis of exclusion as (1) title defect, (2) preferential purchase
right, (3) environmental or (4) casualty loss; (D) that attached thereto is a
true and complete list of all Acquisition Properties for which any seller has
elected to cure a title defect, (E) that attached thereto is a true and complete
list of all Acquisition Properties for which any seller has elected to remediate
an adverse environmental condition, and (F) that attached thereto is a true and
complete list of all Acquisition Properties which are currently pending final
decision by a third party regarding purchase of such property in accordance with
any preferential right; (ii) a true and complete executed copy of each of the
Acquisition Documents; (iii) original counterparts or copies, certified as true
and complete, of the assignments, deeds and leases for all of the Acquisition
Properties; and (iv) such other related documents and information as the
Administrative Agent shall have reasonably requested.
Β
(v)Β The
Administrative Agent shall have received evidence that all Liens associated with
such Acquisition, if any, are being released contemporaneously with the funding
under this Agreement.
Β
(w)Β The
Administrative Agent shall have received evidence that the Borrower has put in
place the hedging program described on Schedule 6.01(w).
Β
(x)Β The
Administrative Agent shall have received satisfactory evidence that the Borrower
has received an equity contribution from Natural Gas Partners L.P. in an amount
not less than $7,000,000.
Β
(y)Β The
Administrative Agent shall be satisfied with the terms of the Assignment of
Overriding Royalty Interest, and have received executed counterparts of the
same.
Β
(z)Β The
Administrative Agent shall be satisfied with the terms of the Warrant Agreement
to purchase shares of Borrower, and have received executed counterparts of the
same.
Β
(aa)Β The
Administrative Agent shall have received duly executed counterparts to the
Lock-up Agreement between CIT and the Permitted Holders, the form and substance
of which shall be satisfactory to the Administrative Agent.
Β
(bb)Β At the
time of and immediately after giving effect to the funding of such Loans, no
Default shall have occurred and be continuing.
Β
(cc)Β At the
time of and immediately after giving effect to the funding of the Loans, no
event, development or circumstance has occurred or shall then exist that has
resulted in, or could reasonably be expected to have, a Material Adverse
Effect.
Β
(dd)Β The
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the Effective Date, except to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, on and as of
the Effective Date, such representations and warranties shall continue to be
true and correct as of such specified earlier date.
Β
(ee)Β The
making of such Loan would not conflict with, or cause any Lender to violate or
exceed, any applicable Governmental Requirement, and no Change in Law shall have
occurred, and no litigation shall be pending or threatened, which does or, with
respect to any threatened litigation, seeks to, enjoin, prohibit or restrain,
the making or repayment of any Loan, or the consummation of the transactions
contemplated by this Agreement or any other Loan Document.
Β
(ff)Β The
receipt by the Administrative Agent of a Borrowing Request in accordance with
Section 2.03.
Β
(gg)Β The
Administrative Agent shall have received such other documents as the
Administrative Agent or special counsel to the Administrative Agent may
reasonably request.
Β
The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and
binding.Β Β Notwithstanding the foregoing, the obligations of the
Lenders to make Loans hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m., New
York City time, on September 30, 2008
(and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
Β
ARTICLE
VII
Β
Representations
and Warranties
Β
The
Borrower represents and warrants to the Lenders that both before and after
giving effect to the Acquisition:
Β
Section
7.01Β Organization;
Powers.Β Β Each of the Borrower and the Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority, and has
all material governmental licenses, authorizations, consents and approvals
necessary, to own its assets and to carry on its business as now conducted, and
is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where failure to have such power,
authority, licenses, authorizations, consents, approvals and qualifications
could not reasonably be expected to have a Material Adverse Effect.
Β
Section
7.02Β Authority;
Enforceability.Β Β The Transactions are within the Borrowerβs and
each Guarantorβs corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action (including, without limitation,
any action required to be taken by any class of directors of the Borrower or any
other Person, whether interested or disinterested, in order to ensure the due
authorization of the Transactions).Β Β Each Loan Document to which the
Borrower and each Guarantor is a party has been duly executed and delivered by
the Borrower and such Guarantor and constitutes a legal, valid and binding
obligation of the Borrower and such Guarantor, as applicable, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditorsβ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
Β
Section
7.03Β Approvals; No
Conflicts.Β Β The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including shareholders or any
class of directors, whether interested or disinterested, of the Borrower or any
other Person), nor is any such consent, approval, registration, filing or other
action necessary for the validity or enforceability of any Loan Document or the
consummation of the transactions contemplated thereby, except such as have been
obtained or made and are in full force and effect other than (i) the recording
and filing of the Security Instruments as required by this Agreement and (ii)
those third party approvals or consents which, if not made or obtained, would
not cause a Default hereunder, could not reasonably be expected to have a
Material Adverse Effect or do not have an adverse effect on the enforceability
of the Loan Documents, (b) will not violate any applicable law or regulation or
any Organizational Document of the Borrower or any Subsidiary or any order of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by the Borrower or such Subsidiary and (d) will not result in
the creation or imposition of any Lien on any Property of the Borrower or any
Subsidiary (other than the Liens created by the Loan Documents).
Β
Section
7.04Β Financial Condition; No
Material Adverse Change.
Β
(a)Β The
Borrower has heretofore furnished to the Lenders (i) its audited or unaudited,
as applicable, consolidated balance sheet and statements of income, stockholders
equity and cash flows (A) as of and for the fiscal year ended June 30, 2007,
reported on by Xxxxxx & Xxxxxx PC, independent public accountants and (B) as
of and for the fiscal quarter and the portion of the fiscal year ended March 31,
2008, certified by its chief financial officer and (ii) the audited consolidated
balance sheet and statements of income, stockholders equity and cash flows for
Voyager as of December 31, 2007.Β Β Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the unaudited
quarterly financial statements.
Β
(b)Β Since
December 31, 2007, (i) there has been no event, development or circumstance that
has had or could reasonably be expected to have a Material Adverse
Effect.
Β
(c)Β Neither
the Borrower nor any Subsidiary has on the date hereof any material Debt
(including Disqualified Capital Stock) or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
the Financial Statements.
Β
Section
7.05Β Litigation.
Β
(a)Β Except as
set forth on ScheduleΒ 7.05, there are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower, any Subsidiary, any Permitted Holder or involving the Acquisition
(i) as to which there is a reasonable possibility of an adverse determination
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect, (ii) that involve any
Loan Document, any Acquisition Document or the Transactions or that could impair
the consummation of the Acquisition on the time and in the manner contemplated
by the Acquisition Documents.
Β
(b)Β Since the
date of this Agreement, there has been no change in the status of the matters
disclosed in ScheduleΒ 7.05 that, individually or in the aggregate, has
resulted in a Material Adverse Effect.
Β
Section
7.06Β Environmental
Matters.Β Β Except for such matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Borrower:
Β
(a)Β the
Borrower and the Subsidiaries and each of their respective Properties and
operations thereon are, and within all applicable statute of limitation periods
have been, in compliance with all applicable Environmental Laws.
Β
(b)Β the
Borrower and the Subsidiaries have obtained all Environmental Permits required
for their respective operations and each of their Properties, with all such
Environmental Permits being currently in full force and effect, and none of
Borrower or the Subsidiaries has received any written notice or otherwise has
knowledge that any such existing Environmental Permit will be revoked or that
any application for any new Environmental Permit or renewal of any existing
Environmental Permit will be protested or denied.
Β
(c)Β there are
no claims, demands, suits, orders, inquiries, or proceedings concerning any
violation of, or any liability (including as a potentially responsible party)
under, any applicable Environmental Laws that is pending or, to Borrowerβs
knowledge, threatened against the Borrower or any Subsidiary or any of their
respective Properties or as a result of any operations at such
Properties.
Β
(d)Β none of
the Properties of the Borrower or any Subsidiary contain or have contained
any:Β Β (i) underground storage tanks; (ii) asbestos-containing
materials; (iii) landfills or dumps; (iv) hazardous waste management units as
defined pursuant to RCRA or any comparable state law; or (v) sites on or
nominated for the National Priority List promulgated pursuant to CERCLA or any
state remedial priority list promulgated or published pursuant to any comparable
state law.
Β
(e)Β there has
been no Release or, to the Borrowerβs knowledge, threatened Release, of
Hazardous Materials at, on, under or from the Borrowerβs or any Subsidiaryβs
Properties, there are no investigations, remediations, abatements, removals, or
monitorings of Hazardous Materials required under applicable Environmental Laws
at such Properties and, to the knowledge of the Borrower, none of such
Properties are adversely affected by any Release or threatened Release of a
Hazardous Material originating or emanating from any other real
property.
Β
(f)Β neither
the Borrower nor any Subsidiary has received any written notice asserting an
alleged liability or obligation under any applicable Environmental Laws with
respect to the investigation, remediation, abatement, removal, or monitoring of
any Hazardous Materials at, under, or Released or threatened to be Released from
any real properties offsite the Borrowerβs or any Subsidiaryβs Properties and,
to the Borrowerβs knowledge, there are no conditions or circumstances that could
reasonably be expected to result in the receipt of such written
notice.
Β
(g)Β there has
been no exposure of any Person or Property to any Hazardous Materials as a
result of or in connection with the operations and businesses of any of the
Borrowerβs or the Subsidiariesβ Properties that could reasonably be expected to
form the basis for a claim for damages or compensation.
Β
(h)Β the
Borrower and the Subsidiaries have provided to the Lenders complete and correct
copies of all environmental site assessment reports, investigations, studies,
analyses, and correspondence on environmental matters (including matters
relating to any alleged non-compliance with or liability under Environmental
Laws) that are in any of the Borrowerβs or its Subsidiariesβ possession or
control and relating to their respective Properties or operations
thereon.
Β
Section
7.07Β Compliance with the Laws and
Agreements; No Defaults.
Β
(a)Β Each of
the Borrower and each Subsidiary is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other authorizations granted by
Governmental Authorities necessary for the ownership of its Property and the
conduct of its business, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Β
(b)Β Neither
the Borrower nor any of its Subsidiaries is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require the Borrower or a Subsidiary to Redeem or make any offer to Redeem under
any indenture, note, credit agreement or instrument pursuant to which any
Material Indebtedness is outstanding or by which the Borrower or any of its
Subsidiaries or any of their Properties is bound.
Β
(c)Β No
Default has occurred and is continuing.
Β
Section
7.08Β Investment Company
Act.Β Β Neither the Borrower nor any of its Subsidiaries is an
βinvestment companyβ or a company βcontrolledβ by an βinvestment company,β
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.
Β
Section
7.09Β Taxes.Β Β Each
of the Borrower and its Subsidiaries has timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower or
such Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.Β Β The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of Taxes and other governmental charges are, in the reasonable
opinion of the Borrower, adequate.Β Β No Tax Lien has been filed and, to
the knowledge of the Borrower, no claim is being asserted with respect to any
such Tax or other such governmental charge.
Β
Section
7.10Β ERISA.
Β
(a)Β The
Borrower, the Subsidiaries and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan.
Β
(b)Β Each Plan
is, and has been, established and maintained in substantial compliance with its
terms, ERISA and, where applicable, the Code.
Β
(c)Β No act,
omission or transaction has occurred which could result in imposition on the
Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly)
of (i) either a civil penalty assessed pursuant to subsections (c), (i), (l) or
(m) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of
SubtitleΒ D of the Code or (ii) breach of fiduciary duty liability damages
under section 409 of ERISA.
Β
(d)Β Full
payment when due has been made of all amounts which the Borrower, the
Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan as of the date
hereof.
Β
(e)Β Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by the
Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time
without any material liability.
Β
(f)Β Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any employee pension benefit
plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA,
section 302 of ERISA or section 412 of the Code.
Β
Section
7.11Β Disclosure; No Material
Misstatements.Β Β The Borrower has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate
or other restrictions to which it or any of its Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.Β Β None
of the other reports, financial statements, certificates or other information
furnished by or on behalf of the Borrower or any Subsidiary to the
Administrative Agent or any Lender or any of their Affiliates in connection with
the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contained, when taken as a whole at the time of
delivery, any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.Β Β There is no fact peculiar to the Borrower or
any Subsidiary which could reasonably be expected to have a Material Adverse
Effect or in the future is reasonably likely to have a Material Adverse Effect
and which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated
hereby.Β Β There are no statements or conclusions in any Reserve Report
which are based upon or include misleading information or fail to take into
account material information regarding the matters reported therein, it being
understood that projections concerning volumes attributable to the Oil and Gas
Properties of the Borrower and Subsidiaries and production and cost estimates
contained in each Reserve Report are necessarily based upon professional
opinions, estimates and projections and that the Borrower and Subsidiaries do
not warrant that such opinions, estimates and projections will ultimately prove
to have been accurate.
Β
Section
7.12Β Insurance.Β Β The
Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance
policies sufficient for the compliance by each of them with all material
Governmental Requirements and all material agreements and (b) insurance coverage
in at least amounts and against such risk (including, without limitation, public
liability) that are usually insured against by companies similarly situated and
engaged in the same or a similar business for the assets and operations of the
Borrower and its Subsidiaries.Β Β The Administrative Agent and the
Lenders have been named as additional insureds in respect of such liability
insurance policies and the Administrative Agent has been named as loss payee
with respect to Property loss insurance.
Β
Section
7.13Β Restriction on
Liens.Β Β Neither the Borrower nor any of the Subsidiaries is a
party to any material agreement or arrangement (other than Capital Leases
creating Liens permitted by Section
9.03(c), but then only on the Property subject of such Capital Lease), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Administrative Agent and
the Lenders on or in respect of their Properties to secure the Indebtedness and
the Loan Documents.
Β
Section
7.14Β Subsidiaries.Β Β Except
as set forth on Schedule 7.14 or as disclosed in writing to the Administrative
Agent (which shall promptly furnish a copy to the Lenders), which shall be a
supplement to Schedule 7.14, the Borrower has no Subsidiaries and the Borrower
has no Foreign Subsidiaries.
Β
Section
7.15Β Location of Business and
Offices.Β Β The Borrowerβs jurisdiction of organization is
Nevada; the name of the Borrower as listed in the public records of its
jurisdiction of organization is ABC Funding, Inc. and in the future will not
change such name except to Cross Canyon Energy Corp. or as permitted under the
Guaranty Agreement; and the organizational identification number of the Borrower
in its jurisdiction of organization is C12847-2004 (or, in each case, as set
forth in a notice delivered to the Administrative Agent pursuant to Section
8.01(m)
in accordance with Section
12.01).Β Β The
Borrowerβs principal place of business and chief executive offices are located
at the address specified in Section 12.01
(or as set forth in a notice delivered pursuant to Section 8.01(m) and Section 12.01(c)).Β Β Each
Subsidiaryβs jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.15 (or as set forth
in a notice delivered pursuant to Section
8.01(m)).
Β
Section
7.16Β Properties; Titles,
Etc.
Β
(a)Β As of the
date of the Acquisition, each of the Borrower and its Subsidiaries has good and
defensible title to the Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each
case, free and clear of all Liens except Liens permitted by Section 9.03.Β Β After giving full
effect to the Excepted Liens and any Liens created pursuant to the Senior
Revolving Credit Agreement but before giving effect to the Assignment of
Overriding Royalty Interest, the Borrower or the Subsidiary specified as the
owner owns the net interests in production attributable to the Hydrocarbon
Interests as reflected in the most recently delivered Reserve Report, and the
ownership of such Properties shall not in any material respect obligate the
Borrower or such Subsidiary to bear the costs and expenses relating to the
maintenance, development and operations of each such Property in an amount in
excess of the working interest of each Property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in the Borrowerβs or such Subsidiaryβs net revenue interest in such
Property.
Β
(b)Β All
material leases and agreements necessary for the conduct of the business of the
Borrower and its Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.
Β
(c)Β The
rights and Properties presently owned, leased or licensed by the Borrower and
the Subsidiaries including, without limitation, all easements and rights of way,
include all rights and Properties necessary to permit the Borrower and the
Subsidiaries to conduct their business in all material respects in the same
manner as its business has been conducted prior to the date hereof.
Β
(d)Β All of
the Properties of the Borrower and the Subsidiaries which are reasonably
necessary for the operation of their businesses are in good working condition
and are maintained in accordance with prudent business standards.
Β
(e)Β The
Borrower and each Subsidiary owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by the Borrower and such Subsidiary does not and
will not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.Β Β The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.
Β
Section
7.17Β Maintenance of
Properties.Β Β Except for such acts or failures to act as could
not be reasonably expected to have a Material Adverse Effect, the Oil and Gas
Properties (and Properties unitized therewith) of the Borrower and its
Subsidiaries have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all Governmental Requirements and in
conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of the Oil and Gas Properties of the Borrower and its
Subsidiaries.Β Β Specifically in connection with the foregoing, except
for those as could not be reasonably expected to have a Material Adverse Effect,
(a) no Oil and Gas Property of the Borrower or any Subsidiary is subject to
having allowable production reduced below the full and regular allowable
(including the maximum permissible tolerance) because of any overproduction
(whether or not the same was permissible at the time) and (b) none of the xxxxx
comprising a part of the Oil and Gas Properties (or Properties unitized
therewith) of the Borrower or any Subsidiary is deviated from the vertical more
than the maximum permitted by Governmental Requirements, and such xxxxx are, in
fact, bottomed under and are producing from, and the well bores are wholly
within, the Oil and Gas Properties (or in the case of xxxxx located on
Properties unitized therewith, such unitized Properties) of the Borrower or such
Subsidiary.Β Β All pipelines, xxxxx, gas processing plants, platforms
and other material improvements, fixtures and equipment owned in whole or in
part by the Borrower or any of its Subsidiaries that are necessary to conduct
normal operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by the
Borrower or any of its Subsidiaries, in a manner consistent with the Borrowerβs
or its Subsidiariesβ past practices (other than those the failure of which to
maintain in accordance with this Section 7.17 could not reasonably be expected
to have a Material Adverse Effect).
Β
Section
7.18Β Gas Imbalances,
Prepayments.Β Β Except as set forth on Schedule 7.18 or on the
most recent certificate delivered pursuant to Section 8.11(c), on a net basis there are no
gas imbalances, take or pay or other prepayments which would require the
Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from the
Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor exceeding two percent (2%) of the Borrowerβs and its
Subsidiariesβ Proved Reserves of natural gas (on an mcf equivalent basis) in the
aggregate.
Β
Section
7.19Β Marketing of
Production.Β Β Except for contracts listed and in effect on the
date hereof on Schedule 7.19, and thereafter either disclosed in writing to the
Administrative Agent or included in the most recently delivered Reserve Report
(with respect to all of which contracts the Borrower represents that it or its
Subsidiaries are receiving a price for all production sold thereunder which is
computed substantially in accordance with the terms of the relevant contract and
are not having deliveries curtailed substantially below the subject Propertyβs
delivery capacity), no material agreements exist which are not cancelable on
sixty (60) days notice or less without penalty or detriment for the sale of
production from the Borrowerβs or its Subsidiariesβ Hydrocarbons (including,
without limitation, calls on or other rights to purchase, production, whether or
not the same are currently being exercised) that (a) pertain to the sale of
production at a fixed price and (b) have a maturity or expiry date of longer
than six (6) months from the date hereof.
Β
Section
7.20Β Swap
Agreements.Β Β Schedule 7.20, as of the date hereof, and after
the date hereof, each report required to be delivered by the Borrower pursuant
to Section 8.01(d), sets forth, a true and
complete list of all Swap Agreements of the Borrower and each Subsidiary, the
material terms thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net xxxx to market value thereof, all
credit support agreements relating thereto (including any margin required or
supplied) and the counterparty to each such agreement.
Β
Section
7.21Β Use of
Loans.Β Β The proceeds of the Loans shall be used to provide
working capital for exploration and production operations as set forth in the
Development Plan, to refinance Debt under the Existing Credit Agreement, to
provide funding in connection with the Acquisition and for general corporate
purposes.Β Β The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board).Β Β No part of the proceeds of any Loan will be used for any
purpose which violates the provisions of Regulations T, U or X of the
Board.
Β
Section
7.22Β Solvency.Β Β After
giving effect to the transactions contemplated hereby, (a) the aggregate assets
(after giving effect to amounts that could reasonably be received by reason of
indemnity, offset, insurance or any similar arrangement), at a fair valuation,
of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate
Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt
becomes absolute and matures, (b) each of the Borrower and the Guarantors has
not incurred and does not intend to incur, and does not believe that it will
incur, Debt beyond its ability to pay such Debt (after taking into account the
timing and amounts of cash to be received by each of the Borrower and the
Guarantors and the amounts to be payable on or in respect of its liabilities,
and giving effect to amounts that could reasonably be received by reason of
indemnity, offset, insurance or any similar arrangement) as such Debt becomes
absolute and matures and (c) each of the Borrower and the Guarantors will not
have (and will have no reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.
Β
Section
7.23Β Casualty
Events.Β Β Since December 31, 2007, neither the business nor any
Properties of the Borrower have been materially and adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any domestic or foreign
Governmental Authority, riot, activities or armed forces or acts of God or of
any public enemy, in any such case that could reasonably be expected to have a
Material Adverse Effect.
Β
Section
7.24Β Material
Agreements.Β Β Set forth on Schedule 7.24 hereto is a complete
and correct list of all material agreements and other instruments maintained as
of the date of this Agreement by the Borrower setting forth each counterparty
thereto (other than the Loan Documents) relating to the purchase, transportation
by pipeline, gas processing, marketing, development, sale and supply of
Hydrocarbons, farmout arrangements, joint operating agreements, contract
operating agreements or other material contracts (excluding oil and gas leases
of the Borrower) to which the Borrower is a party on or after the Effective Date
or by which its Properties is bound on or after the Effective Date (collectively
βMaterial
Agreementsβ) and copies of such documents have been provided to the
Administrative Agent.Β Β All such agreements are in full force and
effect and the Borrower is not in default thereunder, nor is there any uncured
default by any Affiliate predecessor in interest to the Borrower or, to the
Borrowerβs knowledge, by any predecessor in interest to the Borrower (other than
an Affiliate predecessor) or counterparty thereto, nor has the Borrower altered
any material item of such agreements since the Effective Date without the prior
written consent of the Lenders
Β
Section
7.25Β No
Brokers.Β Β No Person, other than Global Hunter Securities, LLC,
is entitled to any brokerage fee or finders fee or similar fee or commission in
connection with arranging the Loans contemplated by this Agreement.
Β
Section
7.26Β Reliance.Β Β In
connection with the negotiation of and the entering into this Agreement, the
Borrower acknowledges and represents that none of the Lenders, the
Administrative Agent, the Arranger, or any representative of any of the
foregoing is acting as a fiduciary or financial or investment advisor for it; it
is not relying upon any representations (whether written or oral) of such
Persons; it has consulted with its own legal, regulatory, tax, business
investment, financial and accounting advisors to the extent it has deemed
necessary, and it has made its own investment, hedging, and trading decisions
based upon its own judgment and upon any advice from such advisors as it has
deemed necessary and not upon any view expressed by any Lender, the
Administrative Agent, the Arranger, or any representative of any of the
foregoing; it has not been given by any Lender, the Administrative Agent, the
Arranger, or any representative of any of the foregoing (directly or indirectly
through any other Person) any advice, counsel, assurance, guarantee, or
representation whatsoever as to the expected or projected success,
profitability, return, performance, result, effect, consequence, or benefit
(either legal, regulatory, tax, financial, accounting, or otherwise) of this
Agreement or the transactions contemplated hereby; and it is entering into this
Agreement and the other Loan Documents with a full understanding of all of the
risks hereof and thereof (economic and otherwise), and it is capable of assuming
and willing to assume (financially and otherwise) those risks.
Β
Section
7.27Β Payments by Purchasers of
Production.Β Β All proceeds from the sale of the Borrowerβs
interests in Hydrocarbons from its Oil and Gas Properties are currently being
paid in full to the Borrower by the purchaser thereof on a timely basis and at
prices and terms comparable to market prices and terms generally available at
the time such prices and terms were negotiated for oil and gas production from
producing areas situated near such Oil and Gas Properties, and none of such
proceeds are currently being held in suspense by such purchaser or any other
Person.
Β
Section
7.28Β Existing Accounts
Payable.Β Β Set forth on Schedule 7.28 hereto is a complete and
correct list of all existing accounts payable of the Borrower that as the date
hereof were more than thirty (30) days past due.
Β
Section
7.29Β Development
Plan.Β Β The Development Plan complies in all material respects
with all applicable restrictive covenants and Governmental Requirements and with
all applicable Environmental Laws.Β Β The Development Plan covers all
work reasonably necessary (a) to drill and complete all xxxxx scheduled to be
drilled thereunder, (b) to construct, install and commence operations of the
production facilities related thereto and (c) to complete and operate all
injection xxxxx as contemplated in connection therewith.Β Β The budget
(including the budget for capital costs described therein) for the Development
Plan has been prepared by the Borrower in good faith and represents the total
costs and expenses anticipated by the Borrower.Β Β The development
schedule in the Development Plan is realistic and feasible.
Β
Section
7.30Β Acquisition.Β Β The
copies of the Acquisition Documents previously delivered by the Borrower to the
Administrative Agent are true, accurate and complete and have not been amended
or modified in any manner, other than pursuant to amendments or modifications
previously delivered to the Administrative Agent.Β Β No party to any
Acquisition Document is in default in respect of any material term or obligation
thereunder.
Β
ARTICLE
VIII
Β
Affirmative
Covenants
Β
Until the
principal of and interest on each Loan and all fees payable hereunder and all
other amounts payable under the Loan Documents shall have been paid in full, the
Borrower covenants and agrees with the Lenders that:
Β
Section
8.01Β Financial Statements;
Ratings Change; Other Information.Β Β The Borrower will furnish
to the Administrative Agent and each Lender:
Β
(a)Β Annual Financial
Statements.Β Β As soon as available, but in any event in
accordance with then applicable law and not later than ninety (90) days after
the end of each fiscal year of the Borrower, its audited consolidated balance
sheet and related statements of operations, stockholdersβ equity and cash flows
as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by Xxxxxx &
Xxxxxx PC or any independent public accountants reasonably acceptable to the
Administrative Agent (without a βgoing concernβ or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied.
Β
(b)Β Quarterly Financial
Statements.Β Β As soon as available, but in any event in
accordance with then applicable law and not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, its consolidated balance sheet and related statements of
operations, stockholdersβ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by a Financial Officer as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.
Β
(c)Β Certificate of Financial
Officer -- Compliance.Β Β Concurrently with any delivery of
financial statements under Section 8.01(a)
or Section 8.01(b), a certificate of a
Financial Officer in substantially the form of Exhibit D hereto (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.12(b) and Section 9.01, (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the
audited financial statements referred to in Section 7.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate, and (iv) if, at any time, all the Consolidated
Subsidiaries of the Borrower are not Consolidated Subsidiaries, setting forth
consolidating spreadsheets that show all Consolidated Subsidiaries and the
eliminating entries, in such form as would be presentable to the auditors of the
Borrower.
Β
(d)Β Certificate of Financial
Officer β Swap Agreements.Β Β Concurrently with any delivery of
financial statements under Section 8.01(a)
and Section 8.01(b), a certificate of a
Financial Officer, in form and substance satisfactory to the Administrative
Agent, setting forth as of the last Business Day of such fiscal quarter or
fiscal year, a true and complete list of all Swap Agreements of the Borrower and
each Subsidiary, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net xxxx-to-market
value therefor, any new credit support agreements relating thereto not listed on
Schedule 7.20, any margin required or supplied under any credit support
document, and the counterparty to each such agreement.
Β
(e)Β Certificate of Insurer --
Insurance Coverage.Β Β Upon change or renewal, a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.06, in form and substance
satisfactory to the Administrative Agent, and, if requested by the
Administrative Agent or any Lender, all copies of the applicable
policies.
Β
(f)Β Other Accounting
Reports.Β Β Promptly upon receipt thereof, a copy of each other
report or letter submitted to the Borrower or any of its Subsidiaries by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any such Subsidiary, and a copy of
any response by the Borrower or any such Subsidiary, or the board of directors
of the Borrower or any such Subsidiary, to such letter or report.
Β
(g)Β Notices Under Material
Instruments.Β Β Promptly after the furnishing thereof, copies of
any financial statement, report or notice furnished to or by any Person pursuant
to the terms of any preferred stock designation, indenture, loan or credit or
other similar agreement, other than this Agreement and not otherwise required to
be furnished to the Lenders pursuant to any other provision of this Section 8.01.
Β
(h)Β Reports to
Shareholders.Β Β Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials distributed by the Borrower to its shareholders
generally.
Β
(i)Β SEC and Other
Filings.Β Β Promptly after the same become publicly available,
notice of all reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the SEC.
Β
(j)Β Lists of
Purchasers.Β Β Concurrently with the delivery of any Reserve
Report to the Administrative Agent pursuant to Section 8.11, a list of all Persons
purchasing Hydrocarbons from the Borrower or any Subsidiary.
Β
(k)Β Notice of Sales of Oil and
Gas Properties.Β Β In the event the Borrower or any Subsidiary
intends to sell, transfer, assign or otherwise dispose of any Oil or Gas
Properties or any Equity Interests in any Subsidiary in accordance with Section 9.12, prior written notice of such
disposition, the price thereof and the anticipated date of closing and any other
details thereof requested by the Administrative Agent or any
Lender.
Β
(l)Β Notice of
Litigation/Casualty Events.Β Β Prompt written notice, and in any
event within three (3) Business Days, of the Borrowerβs or any Subsidiariesβ
receipt of any demand letter, or being served with notice of the filing of any
lawsuit or arbitration proceeding or the commencement of any action or
proceeding or the occurrence of any Casualty Event.
Β
(m)Β Information Regarding
Borrower and Guarantors.Β Β Prompt written notice (and in any
event within thirty (30) days prior thereto) of any change (i)Β in the
Borrower or any Guarantorβs corporate name or in any trade name used to identify
such Person in the conduct of its business or in the ownership of its
Properties, (ii)Β in the location of the Borrower or any Guarantorβs chief
executive office or principal place of business, (iii)Β in the Borrower or
any Guarantorβs identity or corporate structure or in the jurisdiction in which
such Person is incorporated or formed, (iv) in the Borrower or any Guarantorβs
jurisdiction of organization or such Personβs organizational identification
number in such jurisdiction of organization, and (v)Β in the Borrower or any
Guarantorβs federal taxpayer identification number.
Β
(n)Β Other
Reports.Β Β The Borrower shall prepare and provide the Lenders
and Administrative Agent the following reports:
Β
(i)Β on a
monthly basis by the 45th day of
each month after the end of each calendar month, a report setting forth, for the
immediately preceding calendar month, the volume of production and sales
attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties described in the most recent Reserve Report, and setting forth
the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar
month;
Β
(ii)Β on a
quarterly basis by the 30th of each
month after the end of each calendar quarter, an updated report setting forth
the Borrowerβs forecasted Capital Expenditure budget for following three (3)
month period; and
Β
(iii)Β such
other information as the Administrative Agent may reasonably request, including,
but not limited to, an unaudited income statement, a consolidated balance sheet
and a statement of cash flow (with such statement to show any variations from
the budget previously delivered), copies of the Borrowerβs bank account
statements, statement of expenses for the preceding month, notice of any
material changes with regard to oil and gas prices received, contracts or
production expenses or any material litigation affecting the operation of the
Oil and Gas Properties of the Borrower.
Β
(o)Β Notices of Certain
Changes.Β Β Promptly, but in any event within five (5) Business
Days after the execution thereof, copies of any amendment, modification or
supplement to the Organizational Documents, any preferred stock designation or
any other organizational document of the Borrower or any
Subsidiary.
Β
(p)Β Notices Relating to
Acquisition.Β Β In the event that after the Effective
Date:Β Β (i) the Borrower is required or elects to purchase any of the
Acquisition Properties which had been excluded from, or return any of the
Acquisition Properties which had been included in, the Acquisition Properties in
accordance with the terms of the Acquisition Documents, (ii) the Borrower is
required to honor any preferential purchase right in respect of any Acquisition
Property which has not been waived, (iii) any matter being disputed in
accordance with the terms of the Acquisition Documents is resolved or (iv) the
Borrower and the seller(s) calculate and agree upon the "closing adjustment
statement" or "post-closing adjustment statement" as contemplated by the
Acquisition Documents, then, in each such case, the Borrower shall promptly give
the Administrative Agent notice in reasonable detail of such
circumstances.
Β
(q)Β Other Requested
Information.Β Β Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary (including, without limitation, any
Plan or Multiemployer Plan and any reports or other information required to be
filed under ERISA), or compliance with the terms of this Agreement or any other
Loan Document, in each case, as the Administrative Agent or any Lender may
reasonably request.
Β
(r)Β Ratings
Change.Β Β Promptly after Xxxxxβx or S&P shall have announced
a change in the rating established or deemed to have been established for any
Material Indebtedness, written notice of such rating change.
Β
Section
8.02Β Notices of Material
Events.Β Β The Borrower will furnish to the Administrative Agent
and each Lender prompt written notice of the following:
Β
(a)Β the
occurrence of any Default;
Β
(b)Β the
filing or commencement of, or the threat in writing of, any action, suit,
proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against or affecting the Borrower or any Affiliate
thereof not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
Β
(c)Β any other
development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.
Β
Each
notice delivered under this Section 8.02
shall be accompanied by a statement of a Responsible Officer setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
Β
Section
8.03Β Existence; Conduct of
Business.Β Β The Borrower will, and will cause each Subsidiary
to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business and maintain,
if necessary, its qualification to do business in each jurisdiction in which its
Oil and Gas Properties is located or the ownership of its Properties requires
such qualification, except where the failure to so qualify could not reasonably
be expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.11.
Β
Section
8.04Β Payment of
Obligations.Β Β The Borrower will, and will cause each Subsidiary
to, pay its obligations, including Tax liabilities of the Borrower and all of
its Subsidiaries before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
Β
Section
8.05Β Operation and Maintenance of
Properties.Β Β The Borrower, at its own expense, will, and will
cause each Subsidiary to:
Β
(a)Β operate
its Oil and Gas Properties and other material Properties or cause such Oil and
Gas Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all Governmental Requirements, including, without limitation, applicable
proration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect;
Β
(b)Β keep,
preserve and maintain all Property material to the conduct of its business in
good working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material Oil and Gas Properties and other material
Properties, including, without limitation, all equipment, machinery and
facilities;
Β
(c)Β promptly
pay and discharge, or make reasonable and customary efforts to cause to be paid
and discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its Oil and Gas
Properties and will do all other things necessary to keep unimpaired their
rights with respect thereto and prevent any forfeiture thereof or default
thereunder;
Β
(d)Β promptly
perform or make reasonable and customary efforts to cause to be performed, in
accordance with industry standards, the obligations required by each and all of
the assignments, deeds, leases, sub-leases, contracts and agreements affecting
its interests in its Oil and Gas Properties and other material
Properties;
Β
(e)Β operate
its Oil and Gas Properties and other material Properties or cause or make
reasonable and customary efforts to cause such Oil and Gas Properties and other
material Properties to be operated in accordance with the practices of the
industry and in material compliance with all applicable contracts and agreements
and in compliance in all material respects with all Governmental Requirements;
and
Β
(f)Β to the
extent the Borrower is not the operator of any Property, the Borrower shall use
reasonable efforts to cause the operator to comply with this Section 8.05.
Β
Section
8.06Β Insurance.Β Β The
Borrower will, and will cause each Subsidiary to, maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.Β Β The
loss payable clauses or provisions in said insurance policy or policies insuring
any of the collateral for the Loans shall be endorsed in favor of and made
payable to the Administrative Agent as its interests may appear and such
policies shall name the Administrative Agent and the Lenders as βadditional
insuredsβ and provide that the insurer will endeavor to give at least thirty
(30) days prior notice of any cancellation to the Administrative
Agent.
Β
Section
8.07Β Books and Records;
Inspection Rights.Β Β The Borrower will, and will cause each
Subsidiary to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities.Β Β The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, undertake
appraisals of such Properties and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested.
Β
Section
8.08Β Compliance with
Laws.Β Β The Borrower will, and will cause each Subsidiary to,
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its Property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
Β
Section
8.09Β Environmental
Matters.
Β
(a)Β The
Borrower shall at its sole expense: (i) comply, and shall cause its Properties
and operations and each Subsidiary and each Subsidiaryβs Properties and
operations to comply, with all applicable Environmental Laws, the breach of
which could be reasonably expected to have a Material Adverse Effect; (ii) not
Release or threaten to Release, and shall cause each Subsidiary not to Release
or threaten to Release, any Hazardous Material on, under, about or from any of
the Borrowerβs or its Subsidiariesβ Properties or any other property offsite the
Property to the extent caused by the Borrowerβs or any of its Subsidiariesβ
operations except in compliance with applicable Environmental Laws, the Release
or threatened Release of which could reasonably be expected to have a Material
Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to
timely obtain or file, all Environmental Permits, if any, required under
applicable Environmental Laws to be obtained or filed in connection with the
operation or use of the Borrowerβs or its Subsidiariesβ Properties, which
failure to obtain or file could reasonably be expected to have a Material
Adverse Effect; (iv) promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the βRemedial Workβ) in
the event any Remedial Work is required or reasonably necessary under applicable
Environmental Laws because of or in connection with the actual or suspected
past, present or future Release or threatened Release of any Hazardous Material
on, under, about or from any of the Borrowerβs or its Subsidiariesβ Properties,
which failure to commence and diligently prosecute to completion could
reasonably be expected to have a Material Adverse Effect; (v) conduct, and cause
its Subsidiaries to conduct, their respective operations and businesses in a
manner that will not expose any Property or Person to Hazardous Materials that
could reasonably be expected to form the basis for a claim for damages or
compensation that would have a Material Adverse Effect; and (vi)Β establish
and implement, and shall cause each Subsidiary to establish and implement, such
procedures as may be necessary to continuously determine and assure that the
Borrowerβs and its Subsidiariesβ obligations under this Section 8.09(a) are timely and fully satisfied, which
failure to establish and implement could reasonably be expected to have a
Material Adverse Effect.
Β
(b)Β The
Borrower will promptly, but in no event later than five (5) days of the
occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any Person against
the Borrower or its Subsidiaries or their Properties of which the Borrower has
knowledge in connection with any Environmental Laws if the Borrower could
reasonably anticipate that such action will result in liability (whether
individually or in the aggregate) in excess of $100,000, not fully covered by
insurance, subject to normal deductibles.
Β
(c)Β The
Borrower will, and will cause each Subsidiary to, provide environmental
assessments, audits and tests in accordance with the most current version of the
American Society of Testing Materials standards upon request by the
Administrative Agent and the Lenders and no more than once per year in the
absence of any Event of Default (or as otherwise required to be obtained by the
Administrative Agent or the Lenders by any Governmental Authority), in
connection with any Oil and Gas Properties or other Properties.
Β
Section
8.10Β Further
Assurances.
Β
(a)Β The
Borrower at its sole expense will, and will cause each Subsidiary to, promptly
execute and deliver to the Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Administrative Agent to
comply with, cure any defects or accomplish the conditions precedent, covenants
and agreements of the Borrower or any Subsidiary, as the case may be, in the
Loan Documents, including the Notes, or to further evidence and more fully
describe the collateral intended as security for the Indebtedness, or to correct
any omissions in this Agreement or the Security Instruments, or to state more
fully the obligations secured therein, or to perfect, protect or preserve any
Liens created pursuant to this Agreement or any of the Security Instruments or
the priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
Β
(b)Β The
Borrower hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Mortgaged Property without the signature of the Borrower or any
other Guarantor where permitted by law.Β Β A carbon, photographic or
other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as a
financing statement where permitted by law.
Β
Section
8.11Β Reserve
Reports.
Β
(a)Β Commencing
on November 1, 2008 and on or before each April 1 and October 1 of each year
thereafter, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower
and its Subsidiaries as of the immediately preceding January 1st and July
1st.Β Β The Reserve Report as of January 1 of each year shall be
prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve
Report of each year shall be prepared by or under the supervision of the chief
reserve engineer of the Borrower who shall certify such Reserve Report to be
true and accurate and to have been prepared in accordance with the procedures
used in the immediately preceding January 1 Reserve Report.
Β
(b)Β In the
event any party elects a redetermination of the Total Reserve Value as of a
specified date other than May 1 and November 1 pursuant to Section 2.06, the
Borrower shall furnish to the Administrative Agent and the Lenders a Reserve
Report prepared by or under the supervision of the chief reserve engineer of the
Borrower who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report and shall provide such Reserve Report with an
βas ofβ date as required by the Administrative Agent as soon as possible, but in
any event no later than thirty (30) days following the receipt of such
request.
Β
(c)Β With the
delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer
certifying that in all material respects: (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
true and correct, (ii) the Borrower or its Subsidiaries owns good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.18 with respect to its Oil and
Gas Properties evaluated in such Reserve Report which would require the Borrower
or any Subsidiary to deliver Hydrocarbons either generally or produced from such
Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor, (iv) none of their Oil and Gas Properties have been sold
since the date of the last Total Reserve Value determination except as set forth
on an exhibit to the certificate, which certificate shall list all of its Oil
and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which the Borrower could reasonably be
expected to have been obligated to list on Schedule 7.19 had such agreement been
in effect on the date hereof and (vi) attached thereto is a schedule of the Oil
and Gas Properties evaluated by such Reserve Report that are Mortgaged
Properties and demonstrating the percentage of the Total Reserve Value of the
Oil and Gas Properties that the value of such Mortgaged Properties represent in
compliance with Section
8.13(a).
Β
Section
8.12Β Title
Information.
Β
(a)Β On or
before the delivery to the Administrative Agent and the Lenders of each Reserve
Report required by Section 8.11(a), the
Borrower will deliver title information in form and substance acceptable to the
Administrative Agent covering enough of the Oil and Gas Properties evaluated by
such Reserve Report that were not included in the immediately preceding Reserve
Report, so that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the Total Reserve ValueΒ of the Oil and Gas
Properties evaluated by such Reserve Report.
Β
(b)Β If the
Borrower has provided title information for additional Properties under Section 8.12(a), the Borrower shall, within
forty-five (45) days of notice from the Administrative Agent that title defects
or exceptions exist with respect to such additional Properties, either (i) cure
any such title defects or exceptions (including defects or exceptions as to
priority) which are not permitted by Section
9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens (other
than Excepted Liens described in clauses (e), (g) and (h) of such definition)
having an equivalent value or (iii) deliver title information in form and
substance acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, satisfactory title information on at least 80% of
the Total Reserve ValueΒ of the Oil and Gas
Properties evaluated by such Reserve Report.
Β
(c)Β If the
Borrower is unable to cure any title defect requested by the Administrative
Agent or the Lenders to be cured within the 45-day period or the Borrower does
not comply with the requirements to provide acceptable title information
covering 80% of the Total Reserve Value of the Oil and Gas Properties evaluated
in the most recent Reserve Report, such default shall not be a Default, but
instead the Administrative Agent and/or the Majority Lenders shall have the
right to exercise the following remedy in their sole discretion from time to
time, and any failure to so exercise this remedy at any time shall not be a
waiver as to future exercise of the remedy by the Administrative Agent or the
Lenders.Β Β To the extent that the Administrative Agent or the Majority
Lenders are not satisfied with title to any Mortgaged Property after the 60-day
period has elapsed, such unacceptable Mortgaged Property shall not count towards
the 80% requirement, and the Administrative Agent may send a notice to the
Borrower and the Lenders that the then Total Reserve Value shall be reduced by
an amount as determined by the Majority Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 80%
of the value of the Oil and Gas Properties.Β Β This new Total Reserve
Value shall become effective immediately after receipt of such
notice.
Β
Section
8.13Β Additional Collateral;
Additional Guarantors.
Β
(a)Β In
connection with each redetermination of the Total Reserve Value, the Borrower
shall review the Reserve Report and the list of current Mortgaged Properties (as
described in Section 8.11(c)(vi)) to
ascertain whether the Mortgaged Properties represent at least 80% of the Total
Reserve Value of the Oil and Gas Properties evaluated in the most recently
completed Reserve Report after giving effect to exploration and production
activities, acquisitions, dispositions and production.Β Β In the event
that the Mortgaged Properties do not represent at least 80% of such Total
Reserve Value, then the Borrower shall, and shall cause its Subsidiaries to,
grant, within thirty (30) days of delivery of the certificate required under Section 8.11(c), to the Administrative Agent
as security for the Indebtedness a first-priority Lien interest (provided that
(i) Liens under the Senior Revolving Credit Documents may exist and (ii)
Excepted Liens of the type described in clauses (a) to (d) and (f) of the
definition thereof may exist, but subject to the provisos at the end of such
definition) on additional Oil and Gas Properties not already subject to a Lien
of the Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such Total Reserve
Value.Β Β All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and in sufficient executed
(and acknowledged where necessary or appropriate) counterparts for recording
purposes.Β Β In order to comply with the foregoing, if any Subsidiary
places a Lien on its Oil and Gas Properties and such Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with Section 8.13(b).
Β
(b)Β In the
event that (i) the Borrower forms or acquires any Subsidiary, the Borrower shall
promptly cause such Subsidiary to guarantee the Indebtedness pursuant to the
Guaranty Agreement.Β Β In connection with any such guaranty, the
Borrower shall, or shall cause such Subsidiary to, (A) execute and deliver a
supplement to the Guaranty Agreement executed by such Subsidiary, (B) pledge all
of the Equity Interests of such new Subsidiary (including, without limitation,
delivery of original stock certificates evidencing the Equity Interests of such
Subsidiary, together with an appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof) and (C)
execute and deliver such other additional closing documents, certificates and
legal opinions as shall reasonably be requested by the Administrative
Agent.
Β
(c)Β The
Borrower agrees that it will not, and will not permit any Subsidiary to, xxxxx x
Xxxx on any Property to secure the Senior Revolving Credit Notes without first
(i) giving fifteen (15) daysβ prior written notice to the Administrative Agent
thereof and (ii) granting to the Administrative Agent to secure the Indebtedness
a first-priority, perfected Lien (subject only to a Lien under the Senior
Revolving Credit Documents) on this same Property pursuant to Security
Instruments in form and substance satisfactory to the Administrative
Agent.Β Β In connection therewith, the Borrower shall, or shall cause
its Subsidiaries to, execute and deliver such other additional closing
documents, certificates and legal opinions as shall reasonably be requested by
the Administrative Agent.
Β
Section
8.14Β ERISA
Compliance.Β Β The Borrower will promptly furnish and will cause
the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) promptly after the filing thereof with the United
States Secretary of Labor or the Internal Revenue Service, copies of each annual
and other report with respect to each Plan or any trust created thereunder, and
(ii) immediately upon becoming aware of the occurrence of any of any βprohibited
transaction,β as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by the President or the principal Financial Officer, the
Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature
thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service or the Department of Labor
with respect thereto.
Β
Section
8.15Β Swap
Agreements.Β Β The Borrower shall (i) enter into Swap Agreements
with an Approved Counterparty on terms and conditions reasonably satisfactory to
the Administrative Agent and Lenders, and (ii) shall neither assign, terminate
or unwind any such Swap Agreements nor sell any Swap Agreements if the effect of
such action (when taken together with any other Swap Agreements executed
contemporaneously with the taking of such action) would have the effect of
canceling its positions under such Swap Agreements required
hereby.Β Β The Borrower shall from time to time enter into Swap
Agreements in respect of commodities so that the notional volumes of all Swap
Agreements, in the aggregate, are more than 50% of the reasonably anticipated
projected production from the Borrowerβs Proved Developed Producing Reserves for
each month continuing through and including the date that is thirty six (36)
months following the effective date of each such Swap
Agreement.Β Β Notwithstanding anything to the contrary in this
Agreement, the Borrower shall not assign, terminate or unwind any Swap Agreement
entered into on or before the Effective Date.
Β
Section
8.16Β Marketing
Activities.Β Β The Borrower will not, and will not permit any of
its Subsidiaries to, engage in marketing activities for any Hydrocarbons or
enter into any contracts related thereto other than (i) contracts for the sale
of Hydrocarbons scheduled or reasonably estimated to be produced from their
proved Oil and Gas Properties during the period of such contract, (ii) contracts
for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) which have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
βpositionβ is taken and (B) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.
Β
Section
8.17Β Development
Plan.
Β
(a)Β The
Borrower shall obtain all consents from Governmental Authorities necessary to
implement and complete in all material respects the Development Plan as in
effect on the Effective Date.
Β
(b)Β The
Borrower shall comply with the capital expenditure limits set in Section 9.01(c), except for any
modification of the Development Plan which is permitted by the terms of Section 9.19.Β Β Promptly following
such modification, the Borrower shall provide the Administrative Agent a true
and correct copy of such modification.
Β
Section
8.18Β Operating
Account.
Β
(a)Β All Cash
Receipts to be received by the Borrower shall be deposited, and the Borrower
shall direct (and hereby agrees to direct) each payor of any Cash Receipts
existing now and in the future to make payment to the Operating
Account.Β Β The Administrative Agent shall send notice to the Borrower
that the Administrative Agent is sending or has sent a notice to the Operating
Account Bank that the Administrative Agent is exercising its right to take
control of the Operating Account; provided that such action is in accordance
with the Intercreditor Agreement.Β Β With respect to the Operating
Account, the Administrative Agent shall receive copies of the Borrowerβs bank
account statements, statement of expenses for the preceding month and such other
supporting information as shall from time to time be requested by the
Administrative Agent.
Β
(b)Β Upon the
request of the Administrative Agent, the Borrower shall (i) close the deposit
account #0000000 with Amegy Bank of Texas and (ii) establish and maintain, at
the Borrowerβs expense, a new operating account with a bank reasonably
acceptable to the Administrative Agent.
Β
Section
8.19Β Overriding Royalty
Interest.Β Β As additional consideration for the making of the
Loans by CIT, the Borrower agrees, and agrees to cause its Subsidiaries, to
grant, assign and convey to CIT a overriding royalty interests (βORI(s)β) of 1.00% of
the net revenue interests in the Oil and Gas Properties of the Borrower and its
Subsidiaries on the Effective Date or owned by the Borrower and its Subsidiaries
during the later of (i) the term of this Agreement and (ii) the period from the
Effective Date to two (2) calendar years after the Effective
Date.Β Β The overriding royalty interests required to be assigned hereby
shall:
Β
(i)Β be
substantially in the form of the Assignment of Overriding Royalty Interest
attached hereto as Exhibit H and be subject to the terms and conditions set
forth therein, including put, call and assignment rights and rights of first
refusal and any other agreements currently in existence as of the time of the
acquisition of such Properties and validly affecting the underlying leases or
the Borrowerβs interest therein;
Β
(ii)Β be
effective as of the Effective Date;
Β
(iii)Β be
executed and filed for recording by the Borrower promptly after the receipt,
delivery and recording of applicable assignments into the Borrower establishing
its interest of record in any Oil and Gas Properties;
Β
(iv)Β be
delivered by the Borrower to CIT promptly after its return from recording;
and
Β
(v)Β survive
any termination of this Agreement.
Β
Section
8.20Β Filing of Proxy/ Information
Statement.Β Β Borrower shall within five (5) Business Days of the
Effective Date file with the SEC either a preliminary (a) information statement
on Schedule 14C, indicating that holders owning in excess of fifty percent (50%)
of Borrowerβs issued and outstanding common stock have approved amending the
Borrowerβs articles of incorporation to increase the number of authorized shares
that the Borrower may issue to 149,000,000 or (b) proxy statement on Schedule
14A, seeking to obtain approval by the holders of in excess of fifty percent
(50%) of the Borrowerβs issued and outstanding common stock to amend the
Borrowerβs articles of incorporation to increase the number of authorized shares
that the Borrower may issue to 149,000,000.
Β
ARTICLE
IX
Β
Negative
Covenants
Β
Until the
principal of and interest on each Loan and all fees payable hereunder and all
other amounts payable under the Loan Documents have been paid in full, the
Borrower covenants and agrees with the Lenders that:
Β
Section
9.01Β Financial
Covenants.
Β
(a)Β Total Reserve Value to Debt
Ratio.Β Β The Borrower will not, as of any date of determination
permit its ratio of (i) Total Reserve Value as in effect on such date of
determination to (ii) Total Debt as of such date of determination to be less
than 2.0 to 1.0.
Β
(b)Β Ratio of Debt to
EBITDAX.Β Β The Borrower will not, at any time, permit its ratio
of Debt as of such time to EBITDAX to be greater than 4.0 to 1.0.
Β
(c)Β Capital
Expenditures.Β Β The Borrower will not and will not permit its
Subsidiaries to either make or commit or agree to make any Capital Expenditure
(by purchase or Capital Lease or incur costs associated with the exploration and
development of Borrowerβs or its Subsidiariesβ Oil and Gas Properties) outside
the Development Plan, after the Effective Date, that would cause the aggregate
amount of all such Capital Expenditures to exceed $250,000 unless otherwise
agreed to by the Administrative Agent.
Β
Section
9.02Β Debt.Β Β The
Borrower will not, and will not permit any Subsidiary to, incur, create, assume
or suffer to exist any Debt, except:
Β
(a)Β the Notes
or other Indebtedness arising under the Loan Documents or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness arising under the
Loan Documents;
Β
(b)Β accounts
payable and accrued expenses, liabilities or other obligations to pay the
deferred purchase price of Property or services, from time to time incurred in
the ordinary course of business which are not greater than sixty (60) days past
the date of invoice or delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP;
Β
(c)Β Debt
under Capital Leases not to exceed $200,000 in aggregate principal amount at any
time outstanding;
Β
(d)Β Debt
associated with bonds or surety obligations required by Governmental
Requirements in connection with the operation of the Oil and Gas
Properties;
Β
(e)Β intercompany
Debt between the Borrower and any Subsidiary or between Subsidiaries to the
extent permitted by Section 9.05(f);
provided that such Debt is not held, assigned, transferred, negotiated or
pledged to any Person other than the Borrower or one of its Subsidiaries, and,
provided further, that any such Debt owed by either the Borrower or a Guarantor
shall be subordinated to the Indebtedness on terms set forth in the Guaranty
Agreement;
Β
(f)Β Debt now
or hereafter outstanding under the Senior Revolving Credit Agreement, provided
that the aggregate principal amount of the Senior Revolving Credit Agreement
shall not exceed $50,000,000;
Β
(g)Β Indebtedness
as set forth on Schedule 9.02; and
Β
(h)Β other
Debt not to exceed $100,000 in the aggregate at any one time
outstanding.
Β
Section
9.03Β Liens.Β Β The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
Β
(a)Β Liens
securing the payment of any Indebtedness;
Β
(b)Β Excepted
Liens;
Β
(c)Β Liens
securing Capital Leases permitted by Section
9.02(c) but only on the Property under lease; and
Β
(d)Β Liens on
Property securing Indebtedness; provided, however, that such Property is subject
to a Lien in favor of the Administrative Agent which secures the Indebtedness,
this Agreement, the other Loan Documents pursuant to the Intercreditor Agreement
and Security Instruments satisfactory to the Administrative Agent.
Β
Section
9.04Β Dividends, Distributions and
Redemptions.
Β
(a)Β The
Borrower will not, and will not permit any of its Subsidiaries to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
return any capital to its stockholders or make any distribution of its Property
to its Equity Interest holders, except (i) the Borrower may declare and pay
dividends with respect to its Equity Interests payable solely in additional
shares of its Equity Interests (other than Disqualified Capital Stock), (ii)
Subsidiaries may declare and pay dividends and make distributions to the
Borrower with respect to their Equity Interests and (iii) the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries.
Β
Section
9.05Β Investments, Loans and
Advances.Β Β The Borrower will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any Investments in or to any
Person, except that the foregoing restriction shall not apply to:
Β
(a)Β accounts
receivable arising in the ordinary course of business;
Β
(b)Β direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of creation thereof;
Β
(c)Β commercial
paper maturing within one year from the date of creation thereof rated in the
highest grade by S&P or Xxxxxβx;
Β
(d)Β deposit
accounts or deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any other
Person at any office located in the United States which is organized under the
laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $100,000,000 (as of the date of such bank
or trust companyβs most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to time,
by S&P or Xxxxxβx, respectively;
Β
(e)Β deposits
in money market funds investing exclusively in Investments described in Section 9.05(b), Section 9.05(c) or Section 9.05(d);
Β
(f)Β Investments
(i) made by the Borrower in or to the Guarantors, (ii) made by any Subsidiary in
or to the Borrower or any Guarantor;
Β
(g)Β Β Investments
in direct ownership interests in additional Oil and Gas Properties and gas
gathering systems related thereto or related to farm-out, farm-in, joint
operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar arrangements which are usual and customary
in the oil and gas exploration and production business located within the
geographic boundaries of the United States of America;
Β
(h)Β Investments
in stock, obligations or securities received in settlement of debts arising from
Investments permitted under this Section
9.05 owing to the Borrower or any Subsidiary as a result of a bankruptcy or
other insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its Subsidiaries;
provided that the Borrower shall give the Administrative Agent prompt written
notice in the event that the aggregate amount of all Investments held at any one
time outstanding under this Section
9.05(h) exceeds $100,000;
and
Β
(i)Β Other
Investments not to exceed $200,000 in the aggregate at any time.
Β
Section
9.06Β Nature of
Business.Β Β The Borrower will not, and will not permit any
Subsidiary to, allow any material change to be made in the character of its
business as an independent oil and gas exploration and production
company.Β Β From and after the date hereof, the Borrower and its
Subsidiaries will not acquire or make any other expenditure (whether such
expenditure is capital, operating or otherwise) in or related to, any Oil and
Gas Properties not located within the geographical boundaries of the United
States.
Β
Section
9.07Β Limitation on
Leases.Β Β The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal but
excluding Capital Leases and leases of Hydrocarbon Interests), under leases or
lease agreements which would cause the aggregate amount of all payments made by
the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $150,000 in any period
of twelve consecutive calendar months during the life of such leases without the
approval of the Majority Lenders.
Β
Section
9.08Β Proceeds of
Notes.Β Β The Borrower will not permit the proceeds of the Notes
to be used for any purpose other than those permitted by Section
7.21.Β Β Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.Β Β If requested by the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 or such other form referred to in Regulation U, Regulation T or Regulation X
of the Board, as the case may be.
Β
Section
9.09Β ERISA
Compliance.Β Β The Borrower will not, and will not permit any
Subsidiary to, at any time:
Β
(a)Β engage
in, or permit any ERISA Affiliate to engage in, any transaction in connection
with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected
to either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m)
of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
Code.
Β
(b)Β fail to
make, or permit any ERISA Affiliate to fail to make, full payment when due of
all amounts which, under the provisions of any Plan, agreement relating thereto
or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required
to pay as contributions thereto.
Β
(c)Β contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to
contribute to or assume an obligation to contribute to (i) any employee welfare
benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former employees of
such entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability, or (ii) any employee
pension benefit plan, as defined in section 3(2) of ERISA, that is subject to
Title IV of ERISA, section 302 of ERISA or section 412 of the Code.
Β
Section
9.10Β Sale or Discount of
Receivables.Β Β Except for receivables obtained by the Borrower
or any Subsidiary out of the ordinary course of business or the settlement of
joint interest billing accounts in the ordinary course of business or discounts
granted to settle collection of accounts receivable or the sale of defaulted
accounts arising in the ordinary course of business in connection with the
compromise or collection thereof and not in connection with any financing
transaction, the Borrower will not, and will not permit any Subsidiary to,
discount or sell (with or without recourse) any of its notes receivable or
accounts receivable.
Β
Section
9.11Β Mergers,
Etc.Β Β The Borrower will not, and will not permit any Subsidiary
to, merge into or with or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property to any other Person (whether now owned
or hereafter acquired) (any such transaction, a βconsolidationβ), or liquidate
or dissolve; provided that any Subsidiary may participate in a consolidation
with the Borrower (provided that the Borrower shall be the continuing or
surviving entity) or any other Subsidiary provided that if one of such
Subsidiaries is a wholly-owned Subsidiary, then the surviving Person shall be a
wholly-owned Subsidiary.
Β
Section
9.12Β Sale of
Properties.Β Β Without the consent of the Lenders, the Borrower
will not, and will not permit any Subsidiary to, sell, assign, farm-out, convey
or otherwise transfer (including through the sale of a production payment or
overriding royalty interest) any Property except for (a) the sale of
Hydrocarbons in the ordinary course of business; (b) farmouts of undeveloped
acreage and assignments in connection with such farmouts with the approval of
the Administrative Agent; (c) the sale or transfer of equipment that is no
longer necessary for the business of the Borrower or such Subsidiary or is
replaced by equipment of at least comparable value and use; (d) the sale or
other disposition (including Casualty Events) of any Oil and Gas Property or any
interest therein or any Subsidiary owning Oil and Gas Properties; provided that
(i) 100% of the consideration received in respect of such sale or other
disposition shall be cash, (ii) the consideration received in respect of such
sale or other disposition shall be equal to or greater than the fair market
value of the Oil and Gas Property, interest therein or the Subsidiary subject of
such sale or other disposition (as reasonably determined by the board of
directors of the Borrower and, if requested by the Administrative Agent, the
Borrower shall deliver a certificate of a Responsible Officer of the Borrower
certifying to that effect), (iii) if such sale or other disposition of Oil and
Gas Property or Subsidiary owning Oil and Gas Properties included in the most
recently delivered Reserve Report during any period has a fair market value in
excess of $250,000, individually or in the aggregate, the Total Reserve Value
shall be reduced, effective immediately upon such sale or disposition, by an
amount equal to the value, if any, assigned such Property in the most recently
delivered Reserve Report used in the most recent determination of Total Reserve
Value, (iv)Β an amount equal to 100% of the Net Cash Proceeds received from
such sale, lease or other disposition shall be used in accordance with Section
3.04(c) and (v) if any such sale or other disposition is of a Subsidiary owning
Oil and Gas Properties, such sale or other disposition shall include all the
Equity Interests of such Subsidiary; and (e) sales and other dispositions of
Properties not regulated by Section
9.12(a) to (d) having a fair market value not to exceed $250,000 during any
12-month period
Β
Section
9.13Β Environmental
Matters.Β Β The Borrower will not, and will not permit any
Subsidiary to, cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to a
Release or threatened Release of Hazardous Materials, exposure to any Hazardous
Materials, or to any Remedial Work under any Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations, Release or threatened Release, exposure, or Remedial work could
reasonably be expected to have a Material Adverse Effect.
Β
Section
9.14Β Material
Agreements.Β Β The Borrower will not, and will not permit any
Subsidiary to, enter into or amend or otherwise modify any Material Agreement or
any other contract or agreement that involves an individual commitment from such
Person of more than $100,000 in the aggregate in any twelve month period (except
for such contracts and agreements that relate to the projects contemplated in
the Development Plan, with all such new or modified Material Agreements related
to projects contemplated in the Development Plan to be in form and substance
reasonably satisfactory to the Administrative Agent).
Β
Section
9.15Β Transactions with
Affiliates.Β Β The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate (other than the Guarantors and wholly-owned Subsidiaries of
the Borrower) unless such transactions are otherwise permitted under this
Agreement and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable armβs length transaction with a Person not an
Affiliate.
Β
Section
9.16Β Subsidiaries.Β Β The
Borrower will not, and will not permit any Subsidiary to, create or acquire any
additional Subsidiary unless the Borrower gives written notice to the
Administrative Agent of such creation or acquisition and complies with Section 8.13(b).Β Β The Borrower
shall not, and shall not permit any Subsidiary to, sell, assign or otherwise
dispose of any Equity Interests in any Subsidiary.Β Β Neither the
Borrower nor any Subsidiary shall have any Foreign Subsidiaries.
Β
Section
9.17Β Negative Pledge Agreements;
Dividend Restrictions.Β Β The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any contract,
agreement or understanding (other than this Agreement, the Senior Revolving
Credit Agreement, the Security Instruments or Capital Leases creating Liens
permitted by Section 9.03(c)) which in any
way prohibits or restricts the granting, conveying, creation or imposition of
any Lien on any of its Property in favor of the Administrative Agent and the
Lenders or restricts any Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor, or which requires the consent of
or notice to other Persons in connection therewith.
Β
Section
9.18Β Gas Imbalances, Take-or-Pay
or Other Prepayments.Β Β The Borrower will not, and will not
permit any Subsidiary to, allow gas imbalances, take-or-pay or other prepayments
with respect to the Oil and Gas Properties of the Borrower or any Subsidiary
that would require the Borrower or such Subsidiary to deliver Hydrocarbons at
some future time without then or thereafter receiving full payment therefor to
exceed two percent (2%) of the Borrowerβs and its Subsidiariesβ Proved Reserves
of natural gas (on an mcf equivalent basis) in the aggregate.
Β
Section
9.19Β Swap
Agreements.Β Β The Borrower will not, and will not permit any
Subsidiary to, enter into any Swap Agreements with any Person other than (a)
Swap Agreements in respect of commodities (i) with an Approved Counterparty and
(ii) for each month of the thirty-six (36) month period following the date on
which each such Swap Agreement is executed, the notional volumes for which (when
aggregated with other commodity Swap Agreements then in effect other than basis
differential swaps on volumes already hedged pursuant to other Swap Agreements)
do not exceed, as of the date such Swap Agreement is executed, 75% of the
reasonably anticipated projected production from Proved Developed Producing
Reserves for each month during the period during which such Swap Agreement is in
effect for each of crude oil and natural gas, calculated separately or (b) Swap
Agreements in respect of interest rates with an Approved Counterparty, as
follows:Β Β (i) Swap Agreements effectively converting interest rates
from fixed to floating, the notional amounts of which (when aggregated with all
other Swap Agreements of the Borrower and its Subsidiaries then in effect
effectively converting interest rates from fixed to floating) do not exceed 50%
of the then outstanding principal amount of the Borrowerβs Debt for borrowed
money which bears interest at a fixed rate and (ii) Swap Agreements effectively
converting interest rates from floating to fixed, the notional amounts of which
(when aggregated with all other Swap Agreements of the Borrower and its
Subsidiaries then in effect effectively converting interest rates from floating
to fixed) do not exceed 75% of the then outstanding principal amount of the
Borrowerβs Debt for borrowed money which bears interest at a floating
rate.Β Β In no event shall any Swap Agreement contain any requirement,
agreement or covenant for the Borrower or any Subsidiary to post collateral or
margin to secure their obligations under such Swap Agreement or to cover market
exposures.
Β
Section
9.20Β Development
Plan.Β Β Without the prior written consent of the Majority
Lenders, the Borrower shall not (a) amend, modify or supplement any term of the
Development Plan if the effect of such amendment, modification, supplement or
waiver would be to materially and adversely affect the commercial terms of the
Development Plan or the schedule of the Development Plan or (b) terminate the
Development Plan.
Β
Section
9.21Β Acquisition
Documents.Β Β The Borrower will not, and will not permit any of
its Subsidiaries to, amend, modify or supplement any of the Acquisition
Documents if the effect thereof could reasonably be expected to have a Material
Adverse Effect (and provided that the Borrower promptly furnishes to the
Administrative Agent a copy of such amendment, modification or
supplement).
Β
ARTICLE
X
Β
Events
of Default; Remedies
Β
Section
10.01Β Events of
Default.Β Β One or more of the following events shall constitute
an βEvent of
Defaultβ:
Β
(a)Β the
Borrower shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof, by acceleration or otherwise.
Β
(b)Β the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in Section 10.01(a)) payable under any Loan
Document, when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of three (3) Business Days.
Β
(c)Β any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Subsidiary in or in connection with any Loan Document or any amendment or
modification of any Loan Document or waiver under such Loan Document, or in any
report, certificate, financial statement or other document furnished pursuant to
or in connection with any Loan Document or any amendment or modification thereof
or waiver thereunder, shall prove to have been incorrect when made or deemed
made.
Β
(d)Β the
Borrower or any Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in Section
8.01(m), Section 8.02(a), Section 8.03, Section 8.13, Section 8.14, Section 8.20 or in Article IX.
Β
(e)Β the
Borrower or any Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan
Document, and such failure shall continue unremedied for a period of thirty (30)
days after the earlier to occur of (i) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender)
or (ii) a Responsible Officer of the Borrower or such Subsidiary otherwise
becoming aware of such default.
Β
(f)Β the
Borrower or any Subsidiary shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable.
Β
(g)Β any event
or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity.
Β
(h)Β an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of the
Borrower or any Subsidiary or its debts, or of a substantial part of its assets,
under anyΒ Β Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
forty-five (45) days or an order or decree approving or ordering any of the
foregoing shall be entered.
Β
(i)Β the
Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file
any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in Section 10.01(h), (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; or any stockholder of the Borrower
shall make any request or take any action for the purpose of calling a meeting
of the stockholders of the Borrower to consider a resolution to dissolve and
wind-up the Borrowerβs affairs.
Β
(j)Β the
Borrower or any Subsidiary shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due.
Β
(k)Β (i) one
or more judgments for the payment of money in an aggregate amount in excess of
$50,000 (to
the extent not covered by independent third party insurance provided by insurers
of the highest claims paying rating or financial strength as to which the
insurer does not dispute coverage and is not subject to an insolvency
proceeding) or (ii) any one or more non-monetary judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, shall be rendered against the Borrower, any Subsidiary or any
combination thereof and, in either such case, the same shall remain undischarged
for a period of thirty (30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of the Borrower or any Subsidiary to enforce
any such judgment.
Β
(l)Β the Loan
Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms against the Borrower or a
Guarantor party thereto or shall be repudiated by any of them, or cease to
create a valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Agreement, or the Borrower or any Subsidiary or any of their
Affiliates shall so state in writing.
Β
(m)Β a Change
in Control shall occur.
Β
(n)Β an event,
development or circumstance shall have occurred or shall exist that has resulted
in a Material Adverse Effect.
Β
(o)Β the
Intercreditor Agreement, after delivery thereof shall for any reason, except to
the extent permitted by the terms thereof, cease to be in full force and effect
and valid, binding and enforceable in accordance with its terms against the
Borrower or shall be repudiated by the Borrower, or any payment by the Borrower
or any Guarantor is made in violation of the terms of the Intercreditor
Agreement.
Β
Section
10.02Β Remedies.
Β
(a)Β In the
case of an Event of Default other than one described in Section 10.01(h), Section 10.01(i), or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
declare the Notes and the Loans then outstanding to be due and payable in whole
(or in part, in which case any principal not so declared to be due and payable
may thereafter be declared to be due and payable), and thereupon the principal
of the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower and the Guarantors
accrued hereunder and under the Notes and the other Loan Documents, shall become
due and payable immediately, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other notice of any kind, all of
which are hereby waived by the Borrower and each Guarantor; and in case of an
Event of Default described in Section
10.01(h), Section 10.01(i), or Section 10.01(j), the Notes and the
principal of such Loans then outstanding, together with accrued interest thereon
and all fees and the other obligations of the Borrower and the Guarantors
accrued hereunder and under such Notes and the other Loan Documents, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.
Β
(b)Β In the
case of the occurrence and continuance of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
Β
(c)Β All
proceeds realized from the liquidation or other disposition of collateral or
otherwise received after maturity of the Notes, whether by acceleration or
otherwise, shall be applied:
Β
(i)Β first, to payment or
reimbursement of that portion of the Indebtedness constituting fees, expenses
and indemnities payable to the Administrative Agent in its capacity as
such;
Β
(ii)Β second, pro rata to payment
or reimbursement of that portion of the Indebtedness constituting fees, expenses
and indemnities payable to the Lenders;
Β
(iii)Β third, pro rata to payment of
accrued interest on the Loans;
Β
(iv)Β fourth, pro rata to payment
of principal outstanding on the Loans and Indebtedness referred to in Clause (b)
of the definition of Indebtedness owing to an Approved
Counterparty;
Β
(v)Β fifth, pro rata to any other
Indebtedness; and
Β
(vi)Β sixth, any excess, after all
of the Indebtedness shall have been indefeasibly paid in full in cash, shall be
paid to the Borrower or as otherwise required by any Governmental
Requirement.
Β
ARTICLE
XI
Β
The
Administrative Agent
Β
Section
11.01Β Appointment;
Powers.Β Β Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof and the other Loan Documents,
together with such actions and powers as are reasonably incidental
thereto.
Β
Section
11.02Β Duties and Obligations of
Administrative Agent.Β Β The Administrative Agent shall not have
any duties or obligations except those expressly set forth in the Loan
Documents.Β Β Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing (the use
of the term βagentβ herein and in the other Loan Documents with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law;
rather, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties), (b) the Administrative Agent shall have no duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except
as expressly set forth herein, the Administrative Agent shall not have any duty
to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity.Β Β The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or under any other Loan Document or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or in
any other Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, (v) the satisfaction of any condition set forth in
Article VI or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent or as to those conditions precedent expressly required to
be to the Administrative Agentβs satisfaction, (vi) the existence, value,
perfection or priority of any collateral security or the financial or other
condition of the Borrower and its Subsidiaries or any other obligor or
guarantor, or (vii) any failure by the Borrower or any other Person (other than
itself) to perform any of its obligations hereunder or under any other Loan
Document or the performance or observance of any covenants, agreements or other
terms or conditions set forth herein or therein.Β Β For purposes of
determining compliance with the conditions specified in Article VI, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.
Β
Section
11.03Β Action by Administrative
Agent.Β Β The Administrative Agent shall have no duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Majority Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 12.02) and in all cases the
Administrative Agent shall be fully justified in failing or refusing to act
hereunder or under any other Loan Documents unless it shall (a) receive written
instructions from the Majority Lenders or the Lenders, as applicable, (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such
action.Β Β The instructions as aforesaid and any action taken or failure
to act pursuant thereto by the Administrative Agent shall be binding on all of
the Lenders.Β Β If a Default has occurred and is continuing, then the
Administrative Agent shall take such action with respect to such Default as
shall be directed by the requisite Lenders in the written instructions (with
indemnities) described in this Section
11.03, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the
Lenders.Β Β In no event, however, shall the Administrative Agent be
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement, the Loan Documents or
applicable law.Β Β The Administrative Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Majority Lenders or the Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 12.02), and otherwise the
Administrative Agent shall not be liable for any action taken or not taken by it
hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own
gross negligence or willful misconduct.
Β
Section
11.04Β Reliance by Administrative
Agent.Β Β The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper
Person.Β Β The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower and the Lenders hereby waives the right to dispute the Administrative
Agentβs record of such statement, except in the case of gross negligence or
willful misconduct by the Administrative Agent.Β Β The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.Β Β The Administrative Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative
Agent.
Β
Section
11.05Β Subagents.Β Β The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent.Β Β The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.Β Β The exculpatory provisions of the
preceding Sections of this Article 10.02(a) shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Β
Section
11.06Β Resignation or Removal of
Administrative Agent.Β Β Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section 11.06, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower, and the
Administrative Agent may be removed at any time with or without cause by the
Majority Lenders.Β Β Upon any such resignation or removal, the Majority
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor.Β Β If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Administrative Agent gives notice of its resignation or
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent
which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank.Β Β Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.Β Β The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor.Β Β After the Administrative Agentβs resignation
hereunder, the provisions of this Article 10.02(a) and Section 12.03 shall continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Β
Section
11.07Β Administrative Agent as
Lender.Β Β Each Person serving as an Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if it were not an Administrative
Agent hereunder.
Β
Section
11.08Β No
Reliance.
Β
(a)Β Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and each other Loan Document to which it
is a party.Β Β Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent, any other Agent or any other
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.Β Β The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries.Β Β Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, neither the Administrative Agent nor the
Arranger shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower (or any of its Affiliates) which may come into the
possession of such Agent or any of its Affiliates.Β Β In this regard,
each Lender acknowledges that Xxxxxx & Xxxxxx L.L.P. is acting in this
transaction as special counsel to the Administrative Agent and its Affiliates
under the Senior Revolving Credit Agreement only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document.Β Β Each
other party hereto will consult with its own legal counsel to the extent that it
deems necessary in connection with the Loan Documents and the matters
contemplated therein.
Β
(b)Β The
Lenders acknowledge that the Administrative Agent and the Arranger are acting
solely in administrative capacities with respect to the structuring and
syndication of this facility and have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their
administrative duties, responsibilities and liabilities specifically as set
forth in the Loan Documents and in their capacity as Lenders
hereunder.Β Β In structuring, arranging or syndicating this facility,
each Lender acknowledges that the Administrative Agent and/or Arranger may be an
agent or lender under these Notes, the Senior Revolving Credit Agreement, other
loans or other securities and waives any existing or future conflicts of
interest associated with the their role in such other debt
instruments.Β Β If in its administration of this facility or any other
debt instrument, the Administrative Agent determines (or is given written notice
by any Lender that a conflict exists), then it shall eliminate such conflict
within ninety (90) days or resign pursuant to Section 11.06 and shall have no
liability for action taken or not taken while such conflict
existed.
Β
Section
11.09Β Administrative Agent May
File Proofs of Claim.Β Β In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Borrower or
any of its Subsidiaries, the Administrative Agent (irrespective of whether the
principal of any Loan shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
Β
(a)Β to file
and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other Indebtedness that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent under
Section 12.03) allowed in such judicial
proceeding;
Β
(b)Β to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;
Β
and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section
12.03.
Β
Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such
proceeding.
Β
Section
11.10Β Authority of Administrative
Agent to Release Collateral and Liens.Β Β Each Lender hereby
authorizes the Administrative Agent to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan
Documents.Β Β Each Lender hereby authorizes the Administrative Agent to
execute and deliver to the Borrower, at the Borrowerβs sole cost and expense,
any and all releases of Liens, termination statements, assignments or other
documents reasonably requested by the Borrower in connection with any sale or
other disposition of Property to the extent such sale or other disposition is
permitted by the terms of Section 9.12 or
is otherwise authorized by the terms of the Loan Documents.
Β
Section
11.11Β The
Arranger.Β Β The Arranger shall have no duties, responsibilities
or liabilities under this Agreement and the other Loan Documents other than its
duties, responsibilities and liabilities in its capacity as a Lender
hereunder.
Β
ARTICLE
XII
Β
Miscellaneous
Β
Section
12.01Β Notices.
Β
(a)Β Except in
the case of notices and other communications expressly permitted to be given by
telephone (and subject to Section
12.01(b)), all notices and other communications provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by telecopy, as follows:
Β
(i)Β Β if
to the Borrower, to it at 0000 XX 0000 Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention of Xxxxxx X. Xxxx (Telecopy No. 281-315-8863), with a copy to Xxxxxxxx
& Xxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxxxxx Xxxxx, Esq.;
Β
(ii)Β if to the
Administrative Agent and related to amendments, consents, waivers, financial
statements, operating reports, reserve reports, etc, to it at 000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, attention of Xxxx Xxxxxxxxxx (Telecopy No. (000)
000-0000) with a copy to 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
attention of Xxxxx Xxxxxxxxx (Telecopy No. (000) 000-0000); and
Β
(iii)Β if to the
Administrative Agent and related to rate sets, drawdown requests, paydowns,
interest, fees, etc., to it at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000,
attention of Xxxxx XxXxxxx (Telecopy No. (000) 000-0000) with a copy to 000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, attention of Xxxxx Xxxxxxxxx
(Telecopy No. (000) 000-0000).
Β
(b)Β Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II, Article III, Article IV and Article V unless otherwise agreed by the
Administrative Agent and the applicable Lender.Β Β The Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
Β
(c)Β Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.Β Β All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
Β
Section
12.02Β Waivers;
Amendments.
Β
(a)Β No
failure on the part of the Administrative Agent, the Arranger or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege, or any abandonment or discontinuance of steps to
enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.Β Β The rights and remedies of the Administrative Agent, the
Arranger and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.Β Β No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section 12.02(b), and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.Β Β Without limiting the generality of the foregoing, the
making of a Loan shall not be construed as a waiver of any Default, regardless
of whether the Administrative Agent, the Arranger or any Lender may have had
notice or knowledge of such Default at the time.
Β
(b)Β Neither
this Agreement nor any provision hereof nor any Security Instrument nor any
provision thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Majority
Lenders or by the Borrower and the Administrative Agent with the consent of the
Majority Lenders; provided that no such agreement shall (i) increase the
Commitment of any Lender without the written consent of such Lender, (ii) modify
the definition of βTotal Reserve Valueβ (iii) reduce the principal amount of any
Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby, (iv)
postpone the scheduled date of payment or prepayment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or any other
Indebtedness hereunder or under any other Loan Document, or reduce the amount
of, waive or excuse any such payment, or postpone or extend the Termination Date
without the written consent of each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender, (vi) waive or amend Section 3.04(c), Section 6.01, Section 8.13 or Section 10.02(c) or change the definition of
the terms βForeign Subsidiaryβ or βSubsidiaryβ, without the written consent of
each Lender, (vii) release any Guarantor (except as set forth in the Guaranty
Agreement), release any of the collateral (other than as provided in Section 11.10), or reduce the percentage set
forth in Section 8.13(a) to less than
80%, without the written consent of each Lender, or (viii) change any of the
provisions of this Section 12.02(b) or
the definitions of βRequired Lendersβ or βMajority Lendersβ or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or under any other Loan Documents or
make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent as the case may
be.Β Β Notwithstanding the foregoing, any supplement to Schedule 7.14
(Subsidiaries) shall be effective simply by delivering to the Administrative
Agent a supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the
Lenders.
Β
Section
12.03Β Expenses, Indemnity; Damage
Waiver.
Β
(a)Β The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of counsel and other outside
consultants for the Administrative Agent, the reasonable travel, photocopy,
mailing, courier, telephone and other similar expenses, and the cost of
environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by the Administrative Agent or any Lender in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any Security Instrument or any other document
referred to therein, (iii) all out-of-pocket expenses incurred by any
Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this Section 12.03, or in connection with the
Loans made, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.
Β
(b)Β THE
BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ARRANGER AND EACH LENDER,
AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING
CALLED AN βINDEMNITEEβ) AGAINST,
AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS
OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE
PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT,
INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF
THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv)
ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM (v) ANY OTHER ASPECT OF THE LOAN
DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE
LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE
SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT,
DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID
WASTES OR HAZARDOUS MATERIALS ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR
NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE
BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF
THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD
RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE,
TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR
TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES
OR HAZARDOUS MATERIALS ON ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF
HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR
ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
Β
(c)Β To the
extent that the Borrower fails to pay any amount required to be paid by it to
the Administrative Agent or the Arranger under Section 12.03(a) or (b), each Lender severally agrees to pay to
the Administrative Agent or the Arranger, as the case may be, such Lenderβs
ratable share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Arranger in its capacity as such.
Β
(d)Β To the
extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the Transactions, any Loan or the use of the proceeds
thereof.
Β
(e)Β All
amounts due under this Section 12.03 shall
be payable promptly after written demand therefor.
Β
Section
12.04Β Successors and
Assigns.
Β
(a)Β The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void) and (ii) no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section 12.04.Β Β Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in Section 12.04(c)) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
Β
(b)Β (i)
Subject to the conditions set forth in Section
12.04(b)(ii), any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
Β
(A)Β the
Borrower, provided that no consent of the Borrower shall be required if such
assignment is to a Lender, an Affiliate of a Lender, or, if an Event of Default
has occurred and is continuing, is to any other assignee; and
Β
(B)Β the
Administrative Agent, provided that no consent of the Administrative Agent shall
be required for an assignment to an assignee that is a Lender immediately prior
to giving effect to such assignment.
Β
(ii)Β Assignments
shall be subject to the following additional conditions:
Β
(A)Β except in
the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lenderβs Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing;
Β
(B)Β each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lenderβs rights and obligations under this Agreement;
Β
(C)Β the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and
Β
(D)Β the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
any information reasonably requested by the Administrative Agent.
Β
(iii)Β Subject
to Section 12.04(b)(iv) and the acceptance
and recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lenderβs rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03).Β Β Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 12.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 12.04(c).
Β
(iv)Β The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders and principal amount of the Loans owing to, each Lender pursuant to
the terms hereof from time to time (the βRegisterβ).Β Β The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the
contrary.Β Β The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.Β Β In connection with any changes to the
Register, if necessary, the Administrative Agent will reflect the revisions on
Annex I and forward a copy of such revised Annex I to the Borrower and each
Lender.
Β
(v)Β Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assigneeβs providing any information reasonably
requested by the Administrative Agent (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in this Section 12.04(b) and any written consent to
such assignment required by Section
12.04(a), the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the
Register.Β Β No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this Section 12.04(b).
Β
(c)Β
Β
(i)Β Any
Lender may, without the consent of the Borrower or the Administrative Agent sell
participations to one or more banks or other entities (a βParticipantβ) in all
or a portion of such Lenderβs rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A)Β such Lenderβs obligations under this Agreement shall
remain unchanged, (B)Β such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C)Β the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lenderβs rights and
obligations under this Agreement.Β Β Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the proviso to Section 12.02
that affects such Participant.Β Β In addition such agreement must
provide that the Participant be bound by the provisions of Section 12.03.Β Β Subject to Section 12.04(c)(ii), the Borrower agrees
that each Participant shall be entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to Section 12.04.Β Β To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender,
provided such Participant agrees to be subject to Section 4.01(c) as though it were a
Lender.
Β
(ii)Β A
Participant shall not be entitled to receive any greater payment under Section 5.01 or Section 5.03 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrowerβs prior written consent.Β Β A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.03 unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as though it were a
Lender.
Β
(d)Β Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including, without limitation, any pledge or assignment to secure obligations to
a Federal Reserve Bank, and this Section
12.04(d) shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
Β
(e)Β Notwithstanding
any other provisions of this Section
12.04, no transfer or assignment of the interests or obligations of any
Lender or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower and the Guarantors to
file a registration statement with the SEC or to qualify the Loans under the
βBlue Skyβ laws of any state.
Β
Section
12.05Β Survival; Revival;
Reinstatement.
Β
(a)Β All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default or incorrect representation or warranty at the time
any Loan is made hereunder, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any fee or any other
amount payable under this Agreement is outstanding and unpaid.Β Β The
provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article 10.02(a) shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, or the termination of this Agreement, any
other Loan Document or any provision hereof or thereof.
Β
(b)Β To the
extent that any payments on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Administrative Agentβs and the
Lendersβ Liens, security interests, rights, powers and remedies under this
Agreement and each Loan Document shall continue in full force and
effect.Β Β In such event, each Loan Document shall be automatically
reinstated and the Borrower shall take such action as may be reasonably
requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Β
Section
12.06Β Counterparts; Integration;
Effectiveness.
Β
(a)Β This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.
Β
(b)Β This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof.Β Β THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.Β Β THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Β
(c)Β Except as
provided in Section 6.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.Β Β Delivery
of an executed counterpart of a signature page of this Agreement or any other
Loan Document by telecopy or electronic transmission shall be effective as
delivery of a manually executed counterpart thereof.
Β
Section
12.07Β Severability.Β Β Any
provision of this Agreement or any other Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof or thereof; and the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Β
Section
12.08Β Right of
Setoff.Β Β If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations (of whatsoever kind, including,
without limitations obligations under Swap Agreements) at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower or any
Subsidiary against any of and all the obligations of the Borrower or any
Subsidiary owed to such Lender now or hereafter existing under this Agreement or
any other Loan Document, irrespective of whether or not such Lender shall have
made any demand under this Agreement or any other Loan Document and although
such obligations may be unmatured.Β Β The rights of each Lender under
this Section 12.08 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have.
Β
Section
12.09Β GOVERNING LAW;
JURISDICTION;
CONSENT TO SERVICE OF PROCESS.
Β
(a)Β THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE
INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS
LOCATED.Β Β CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
NOT APPLY TO THIS AGREEMENT OR THE NOTES.
Β
(b)Β ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.Β Β EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.Β Β THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND
DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY
COURT OTHERWISE HAVING JURISDICTION.
Β
(c)Β EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.Β Β NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
Β
(d)Β EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE,
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 12.09.
Β
Section
12.10Β Headings.Β Β Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.
Β
Section
12.11Β Confidentiality.Β Β Each
of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliatesβ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement
or any other Loan Document, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section 12.11, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any Swap Agreement relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section 12.11 or (ii)
becomes available to the Administrative Agent or any Lender on a
non-confidential basis from a source other than the Borrower.Β Β For the
purposes of this Section 12.11, βInformationβ means
all information received from the Borrower or any Subsidiary relating to the
Borrower or any Subsidiary and their businesses, other than any such information
that is available to the Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by the Borrower or a Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential.Β Β Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Β
Section
12.12Β Interest Rate
Limitation.Β Β It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to
it.Β Β Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it (including the laws of the
United States of America and the State of Texas or any other jurisdiction whose
laws may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as
follows:Β Β (a) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Indebtedness (or, to the extent
that the principal amount of the Indebtedness shall have been or would thereby
be paid in full, refunded by such Lender to the Borrower); and (b) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower).Β Β All sums paid or agreed to
be paid to any Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by law applicable to such Lender, be
amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law.Β Β If at any time and from time to time
(a) the amount of interest payable to any Lender on any date shall be computed
at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (b) in respect of any
subsequent interest computation period the amount of interest otherwise payable
to such Lender would be less than the amount of interest payable to such Lender
computed at the Highest Lawful Rate applicable to such Lender, then the amount
of interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section
12.12.Β Β To the extent that Chapter 303 of the Texas Finance Code
is relevant for the purpose of determining the Highest Lawful Rate applicable to
a Lender, such Lender elects to determine the applicable rate ceiling under such
Chapter by the weekly ceiling from time to time in effect.Β Β Chapter
346 of the Texas Finance Code does not apply to the Borrowerβs obligations
hereunder.
Β
Section
12.13Β EXCULPATION
PROVISIONS.Β Β EACH OF THE PARTIES HERETO SPECIFICALLY AGREES
THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.Β Β EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE
OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
βCONSPICUOUS.β
Β
Section
12.14Β No Third Party
Beneficiaries.Β Β This Agreement, the other Loan Documents, and
the agreement of the Lenders to make Loans hereunder are solely for the benefit
of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent or any Lender for
any reason whatsoever.Β Β There are no third party
beneficiaries.
Β
Section
12.15Β USA Patriot Act
Notice.Β Β Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the βPatriot Actβ), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Patriot Act.
Β
Section
12.16Β Original Issue
Discount.Β Β The Borrower and CIT agree that (i) the initial
Loans hereunder and the related ORIs and Warrants conveyed in connection with
such initial Loans constitute βInvestment Unitsβ as that term is defined in
section 1273(c)(2) of the Code, (ii) the βissue priceβ of CITβs Investment Unit
as defined in section 1273(b)(2) of the Code is equal to the amount of CITβs
share of the Loan, (iii) the fair market value of the ORIs is $206,000, (iv) the
fair market value of the Warrants is $402,688 and (v) the issue price of CITβs
initial Loan for purposes of computing interest accruals is equal to the amount
of CITβs initial Loan reduced by the fair market value of the ORIs and the
Warrants.Β Β All computations under this 12.16 shall be made by the
Administrative Agent and shall be provided to the Borrower as necessary to
enable the Borrower to timely comply with its tax reporting
obligations.Β Β None of the Borrower, its Subsidiaries, the
Administrative Agent or CIT shall take any position inconsistent with the
foregoing on any report, return claim for refund or other filing for federal,
state or other tax purposes unless all such parties agree otherwise or as
otherwise may be required (to the satisfaction of all such parties, each in its
reasonable discretion) by Applicable Law.
Β
[SIGNATURES
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Β
Β
Β
Β
Β
The
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.
Β
BORROWER:Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β ABC FUNDING, INC.
Β
By:Β /s/Β
Xxxx X.
XxxxxΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
Β Β Β Β Β
Xxxx X. Xxxxx
Β Β Β Β Β
Chief Financial Officer
Signature Page to Second Lien Term
Loan
Β
Β
Β
ADMINISTRATIVE
AGENT:Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β CIT
CAPITAL USA INC.
as
Administrative Agent
By:Β /s/Β
Xxxxx
XxxxxxxxΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
Β Β Β Β Β
Xxxxx Xxxxxxxx
Β Β Β Β Β
Vice President
Signature Page to Second Lien Term
Loan
Β
Β
Β
LENDERS:Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β CIT CAPITAL USA
INC.
Β
By:
/s/Β Xxxxx
XxxxxxxxΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
Β Β Β Β Β
Xxxxx Xxxxxxxx
Β Β Β Β Β
Vice President
Signature Page to Second Lien Term
Loan
Β
Β
Β
ANNEX
I
Β
LIST
OF COMMITMENTS
Β
Aggregate
Commitments
Β
Name
of Lender
|
Percentage
of Aggregate Commitments
|
Commitments
|
CIT
Capital USA Inc.
|
100%
|
$22,000,000
|
TOTAL
|
100%
|
$22,000,000
|
Annex I
Β
Β
Β
[Exhibits
and Schedules Omitted]
Β
Annex I
Β
Β
Β