EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
among
DELTA PETROLEUM CORPORATION,
as Borrower,
The Financial Institutions Listed on Schedule 1.1 Hereto,
as Banks,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,
BANK OF OKLAHOMA, N.A.,
as Syndication Agent,
and
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agent
$250,000,000
dated as of
November 17, 2006
X.X. XXXXXX SECURITIES INC.,
as Sole Lead Arranger and Bookrunner
TABLE OF CONTENTS
Page No.
Article I TERMS DEFINED 2
Section 1.1 Definitions 2
Section 1.2 Accounting Terms and Determinations 22
Section 1.3 Petroleum Terms 22
Section 1.4 Money 22
Article II THE CREDIT 23
Section 2.1 Commitments 23
Section 2.2 Method of Borrowing 26
Section 2.3 Method of Requesting Letters of Credit 27
Section 2.4 Notes 27
Section 2.5 Interest Rates; Payments 28
Section 2.6 Mandatory Prepayments 29
Section 2.7 Voluntary Prepayments 30
Section 2.8 Voluntary Reduction of Commitments 30
Section 2.9 Termination of Commitments; Final Maturity
of Revolving Loan 30
Section 2.10 Voluntary Increase of Total Commitment 30
Section 2.11 Application of Payments 30
Section 2.12 Commitment Fee 31
Section 2.13 Agency and other Fees 31
Article III GENERAL PROVISIONS 31
Section 3.1 Delivery and Endorsement of Notes 31
Section 3.2 General Provisions as to Payments 31
Article IV BORROWING BASE 32
Section 4.1 Reserve Report; Proposed Borrowing Base 32
Section 4.2 Scheduled Redeterminations of the Borrowing
Base; Procedures and Standards 32
Section 4.3 Special Redetermination 33
Section 4.4 Asset Disposition Adjustment 34
Section 4.5 Borrowing Base Deficiency 34
Article V COLLATERAL AND GUARANTEES 35
Section 5.1 Security 35
Section 5.2 Guarantees 36
Article VI CONDITIONS PRECEDENT 36
Section 6.1 Conditions to Amendment and Restatement,
Initial Borrowing and Participation in
Letter of Credit Exposure 36
Section 6.2 Conditions to Each Borrowing and each
Letter of Credit 39
Section 6.3 Materiality of Conditions 40
Article VII REPRESENTATIONS AND WARRANTIES 40
Section 7.1 Corporate Existence and Power 40
Section 7.2 Credit Party and Governmental Authorization;
Contravention 40
Section 7.3 Binding Effect 41
Section 7.4 Financial Information 41
Section 7.5 Litigation 41
Section 7.6 ERISA 41
Section 7.7 Taxes and Filing of Tax Returns 42
Section 7.8 Ownership of Properties Generally 42
Section 7.9 Mineral Interests 42
Section 7.10 Licenses, Permits, Etc 43
Section 7.11 Compliance with Law 43
Section 7.12 Full Disclosure 43
Section 7.13 Organizational Structure; Nature of Business 43
Section 7.14 Environmental Matters 44
Section 7.15 Burdensome Obligations 45
Section 7.16 Fiscal Year 45
Section 7.17 No Default 45
Section 7.18 Government Regulation 45
Section 7.19 Insider 45
Section 7.20 Gas Balancing Agreements and Advance Payment
Contracts 45
Article VIII AFFIRMATIVE COVENANTS 46
Section 8.1 Information 46
Section 8.2 Business of Credit Parties 48
Section 8.3 Maintenance of Existence 48
Section 8.4 Title Data 48
Section 8.5 Right of Inspection 48
Section 8.6 Maintenance of Insurance 49
Section 8.7 Payment of Taxes and Claims 49
Section 8.8 Compliance with Laws and Documents 49
Section 8.9 Operation of Properties and Equipment. 50
Section 8.10 Environmental Law Compliance 50
Section 8.11 ERISA Reporting Requirements 50
Section 8.12 Additional Documents 51
Section 8.13 Environmental Review 51
Article IX NEGATIVE COVENANTS 52
Section 9.1 Incurrence of Debt 52
Section 9.2 Restricted Payments 52
Section 9.3 Negative Pledge 52
Section 9.4 Consolidations and Mergers 52
Section 9.5 Asset Dispositions 52
Section 9.6 Amendments to Organizational Documents; Other
Material Agreements 53
Section 9.7 Use of Proceeds 53
Section 9.8 Investments 54
Section 9.9 Transactions with Affiliates 54
Section 9.10 ERISA 54
Section 9.11 Hedge Transactions 54
Section 9.12 Fiscal Year 55
Section 9.13 Change in Business 55
Section 9.14 Obligations to Unrestricted Subsidiaries 55
Article X FINANCIAL COVENANTS 55
Section 10.1 Current Ratio 55
Section 10.2 Consolidated Net Debt to Consolidated EBITDAX 55
Article XI DEFAULTS 55
Section 11.1 Events of Default 55
Article XII AGENTS 57
Section 12.1 Appointment; Nature of Relationship 57
Section 12.2 Powers 58
Section 12.3 General Immunity 58
Section 12.4 No Responsibility for Loans, Recitals, etc 58
Section 12.5 Action on Instructions of Banks 59
Section 12.6 Employment of Agents and Counsel 59
Section 12.7 Reliance on Documents; Counsel 59
Section 12.8 Administrative Agent's Reimbursement and
Indemnification 59
Section 12.9 Notice of Default 60
Section 12.10 Rights as a Bank 60
Section 12.11 Bank Credit Decision 60
Section 12.12 Successor Administrative Agent 60
Section 12.13 Delegation to Affiliates 61
Section 12.14 Execution of Collateral Documents 61
Section 12.15 Collateral Releases 61
Section 12.16 Agents 61
Article XIII CHANGE IN CIRCUMSTANCES 62
Section 13.1 Increased Cost and Reduced Return 62
Section 13.2 Limitation on Type of Loans 63
Section 13.3 Illegality 64
Section 13.4 Treatment of Affected Loans 64
Section 13.5 Compensation 64
Section 13.6 Taxes 65
Section 13.7 Discretion of Banks as to Manner of Funding 66
Article XIV MISCELLANEOUS 67
Section 14.1 Notices 67
Section 14.2 No Waivers 67
Section 14.3 Expenses; Indemnification 67
Section 14.4 Right of Set-off; Adjustments 68
Section 14.5 Amendments and Waivers 69
Section 14.6 Survival 69
Section 14.7 Limitation on Interest 70
Section 14.8 Invalid Provisions 70
Section 14.9 Waiver of Consumer Credit Laws 70
Section 14.10 Assignments and Participations 70
Section 14.11 TEXAS LAW 74
Section 14.12 Consent to Jurisdiction; Waiver of Immunities 74
Section 14.13 Counterparts; Effectiveness 75
Section 14.14 No Third Party Beneficiaries 75
Section 14.15 COMPLETE AGREEMENT 75
Section 14.16 WAIVER OF JURY TRIAL 75
Section 14.17 Confidentiality 75
Section 14.18 USA Patriot Act 76
EXHIBITS
EXHIBIT A FORM OF FACILITY GUARANTY
EXHIBIT B FORM OF PROMISSORY NOTE
EXHIBIT C FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT D FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT E FORM OF REQUEST FOR BORROWING
EXHIBIT F FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT G FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT H FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT I FORM OF CERTIFICATE OF PRINCIPAL EXECUTIVE AND
FINANCIAL OFFICER
EXHIBIT J FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT K FORM OF AMENDMENT FOR INCREASED OR NEW COMMITMENT
EXHIBIT L FORM OF CERTIFICATE OF EFFECTIVENESS
SCHEDULES
SCHEDULE 1.1 FINANCIAL INSTITUTIONS
SCHEDULE 7.5 LITIGATION
SCHEDULE 7.10 LICENSES, PERMITS, ETC.
SCHEDULE 7.13 ORGANIZATIONAL STRUCTURE
SCHEDULE 7.14 ENVIRONMENTAL DISCLOSURE
SCHEDULE 7.19 INSIDER
SCHEDULE 9.8 EXISTING INVESTMENTS
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered
into as of the 17th day of November, 2006, among DELTA PETROLEUM CORPORATION,
a Delaware corporation ("Borrower"), JPMORGAN CHASE BANK, N.A., successor by
merger to Bank One, NA (Main Office Chicago), as Administrative Agent
("Administrative Agent"), BANK OF OKLAHOMA, N.A., as Syndication Agent
("Syndication Agent"), U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent
("Documentation Agent"), and the financial institutions listed on Schedule
1.1 hereto as Banks (individually a "Bank" and collectively "Banks").
W I T N E S S E T H:
WHEREAS, Borrower, Administrative Agent, and each of the financial
institutions named and defined therein as Banks ( "Existing Banks") and
agents, are parties to that certain Credit Agreement dated as of November 5,
2004, pursuant to which Existing Banks provided certain loans and extensions
of credit to Borrower (as heretofore amended, the "Existing Credit
Agreement"); and
WHEREAS, subject to the conditions precedent set forth herein, the
parties hereto desire to amend and restate the Existing Credit Agreement in
its entirety in the form of this Agreement, and Borrower desires to obtain
Borrowings (as herein defined) (a) to refinance the indebtedness under the
Existing Credit Agreement, and (b) for other purposes permitted herein; and
WHEREAS, after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the terms hereof, the Commitment
Percentage (as herein defined) of each Bank hereunder will be as set forth on
Schedule 1.1 hereto; and
WHEREAS, X.X. Xxxxxx Securities Inc. has been appointed Sole Lead
Arranger and Bookrunner for the credit facility provided herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the satisfaction of each condition precedent
contained in Section 6.1 hereof, the satisfaction of which shall be evidenced
by the execution by Borrower and Administrative Agent of the Certificate of
Effectiveness (as herein defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date in the form of this Agreement.
It is the intention of Borrower, Administrative Agent and Banks that this
Agreement supersedes and replaces the Existing Credit Agreement in its
entirety; provided that, (a) such amendment and restatement shall operate to
renew, amend and modify certain of the rights and obligations of the parties
under the Existing Credit Agreement as provided herein, but shall not act as
a novation thereof, and (b) the Liens securing the Obligations under and as
defined in the Existing Credit Agreement shall not be extinguished, but shall
be carried forward and shall secure such obligations and indebtedness as
renewed, amended, restated and modified hereby. The parties hereto further
agree as follows:
ARTICLE I
TERMS DEFINED
Section 1.1 Definitions. The following terms, as used herein, have
the following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined by Administrative Agent to be equal to
the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Administrative Agent" means JPMorgan Chase Bank, N.A., successor by
merger to Bank One, NA (Main Office Chicago), a national banking association,
in its capacity as administrative agent for Banks hereunder or any successor
thereto.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment
of the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is, or is to
be, paid in advance of actual delivery of such production to or for the
account of the purchaser regardless of such production, or (b) grants an
option or right of refusal to the purchaser to take delivery of such
production in lieu of payment, and, in either of the foregoing instances, the
Advance Payment is, or is to be, applied as payment in full for such
production when sold and delivered or is, or is to be, applied as payment for
a portion only of the purchase price thereof or of a percentage or share of
such production; provided that inclusion of the standard "take or pay"
provision in any gas sales or purchase contract or any other similar contract
shall not, in and of itself, constitute such contract as an Advance Payment
Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by,
or is under common control with, such Person and, with respect to any Credit
Party, means, any director, executive officer, general partner or limited
liability company manager of such Credit Party and any Person who holds ten
percent (10%) or more of the voting stock, partnership interests, membership
interests or other ownership interests of such Credit Party. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, membership
interests or partnership interests, or by contract or otherwise.
"Agent" means Administrative Agent, Syndication Agent, Documentation
Agent, Sole Lead Arranger, Bookrunner, or any other agent appointed hereunder
from time to time, and "Agents" means Administrative Agent, Syndication
Agent, Documentation Agent, Sole Lead Arranger, Bookrunner, and any other
agent appointed hereunder from time to time, collectively.
"Agreement" means this Amended and Restated Credit Agreement as the same
may hereafter be modified, amended or supplemented from time to time.
"Annualized Consolidated EBITDAX" means, for purposes of calculating the
financial ratio set forth in Section 10.2 for each Rolling Period ending on
or prior to September 30, 2007, Borrower's actual Consolidated EBITDAX for
such Rolling Period multiplied by the factor determined for such Rolling
Period in accordance with the table below:
Rolling Period Ending Factor
March 31, 2007 4
June 30, 2007 2
September 30, 2007 1.333
"Amber" means Amber Resources Company of Colorado, a Delaware
corporation.
"Applicable Environmental Law" means any duly promulgated federal, state
or local law, ordinance or regulation, as well as any order, decree, permit,
judgment, injunction, variance, exemption or waiver issued, enacted,
promulgated, approved, or entered thereunder, applicable to the protection of
the environment or public health, the use, handling, transportation,
disposal, discharge or storage of Hazardous Substances, or environmental
conditions on, under, or about any real property owned, leased or operated at
any time by any Credit Party or any other party including, without
limitation, soil, groundwater, and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of
Revolving Loan, the "Lending Office" of such Bank (or of an affiliate of such
Bank) designated for such Type of Revolving Loan on the signature pages
hereof or such other office of such Bank (or an affiliate of such Bank) as
such Bank may from time to time specify to Administrative Agent and Borrower
by written notice in accordance with the terms hereof as the office by which
Revolving Loans of such Type are to be made and maintained.
"Applicable Margin" means, on any date, with respect to each Type of
Revolving Loan, an amount determined by reference to the ratio of Outstanding
Credit to the Borrowing Base on such date in accordance with the table below:
Ratio of Outstanding Applicable Margin Applicable Margin
Credit to Borrowing Base for Eurodollar Loans for Base Rate Loans
> .90 to 1 2.000% 0.500%
> .75 to 1 and < .90 to 1 1.750% 0.250%
> .50 to 1 and < .75 to 1 1.500% 0.000%
< .50 to 1 1.250% 0.000%
"Approved Fund" means any Fund that is administered or managed by (a) a
Bank, (b) an Affiliate of a Bank, or (c) an entity or an Affiliate of an
entity that administers or manages a Bank.
"Approved Petroleum Engineer" means any reputable firm of independent
petroleum engineers as shall be selected by Borrower and approved by
Administrative Agent, such approval not to be unreasonably withheld.
"Asset Disposition" means the sale, assignment, lease, license,
transfer, exchange or other disposition by any Credit Party of all or
substantially all of its right, title and interest in any Borrowing Base
Property.
"Assignment and Acceptance Agreement" has the meaning given such term in
Section 14.10(c)(i).
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, its Chief Accounting
Officer, any of its Vice Presidents, its Treasurer or its corporate
Secretary.
"Availability" means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.
"Bank" means any financial institution reflected on Schedule 1.1 hereto
as having a Commitment and its successors and permitted Assignees, and
"Banks" shall mean all Banks.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
automatically and without notice to Borrower or any Bank on the effective
date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means the portion of the principal of the Revolving
Loan bearing interest with reference to the Base Rate.
"Bonds Company" means The Bonds Company, a Colorado corporation.
"Bookrunner" means JPMSI, in its capacity as bookrunner for the credit
facility hereunder or any successor thereto.
"Borrower" means Delta Petroleum Corporation, a Delaware corporation.
"Borrower Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit C attached hereto (with applicable conforming changes) to
be executed by Borrower pursuant to which Borrower shall pledge to
Administrative Agent, for the ratable benefit of Banks, all of the issued and
outstanding Equity owned by Borrower of each Restricted Subsidiary described
therein to secure the Obligations.
"Borrower's Knowledge" means the actual knowledge of the Chief Executive
Officer, President, Chief Financial Officer and General Counsel of Borrower.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
"Base Rate Borrowing," and any Borrowing which will constitute a Eurodollar
Loan, is referred to herein as a "Eurodollar Borrowing."
"Borrowing Base" has the meaning set forth in Section 4.1 hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any,
by which the Outstanding Credit on such date exceeds the Borrowing Base in
effect on such date; provided, that, for purposes of determining the
existence and amount of any Borrowing Base Deficiency, Letter of Credit
Exposure will not be deemed to be outstanding to the extent it is secured by
cash in the manner contemplated by Section 2.1(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by
Banks for purposes of establishing the Borrowing Base.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing
are made available to Borrower or to satisfy any obligation of any Credit
Party.
"Castle" means Castle Texas Exploration Limited Partnership, a Texas
limited partnership.
"Certificate of Effectiveness" means a Certificate of Effectiveness in
the form of Exhibit L hereto to be executed by Borrower and Administrative
Agent upon the satisfaction of each of the conditions precedent contained in
Section 6.1 hereof.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit H attached hereto to be executed and
delivered by an Authorized Officer of Borrower pursuant to Section
6.1(a)(xiv) hereof.
"Change of Control" means (a) that, for any reason, (i) any Person or
group (as defined in Sections 13(d)(3) or 14(d)(2) of the Exchange Act) shall
become the direct or indirect beneficial owner (as defined in Section
13(d)(3) of the Exchange Act) of greater than thirty percent (30%) of the
total voting power of all classes of capital stock then outstanding of
Borrower entitled (without regard to the occurrence of any contingency) to
vote in elections of directors of Borrower, or (ii) any Credit Party (other
than Borrower) shall cease to be a wholly owned direct or indirect Subsidiary
of Borrower, or (b) a "Change of Control" (or similar defined term) as
defined in any of the Permitted Senior Unsecured Debt Documents.
"Closing Date" means the date upon which all of the conditions precedent
set forth in Section 6.1 have been satisfied, which date shall be set forth
in the Certificate of Effectiveness; provided, that, in no event shall such
date be later than November 17, 2006.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to Section 2.1 hereof, as such Commitment may be terminated, reduced
or increased from time to time in accordance with the provisions hereof. On
the Closing Date, the amount of each Bank's Commitment is the amount set
forth opposite such Bank's name on Schedule 1.1 hereto; provided, that after
giving effect to any Assignment and Acceptance Agreement, the Commitment of
each Bank shall be the amount set forth in the Register maintained by
Administrative Agent pursuant to Section 14.10(c)(iv) hereof.
"Commitment Fee Percentage" means, on any date, the percentage
determined by reference to the ratio of Outstanding Credit to the Borrowing
Base on such date in accordance with the table below:
Ratio of Outstanding Credit Commitment Fee
to Borrowing Base Percentage
> .90 to 1 0.500%
> .75 to 1 and < .90 to 1 0.375%
> .50 to 1 and < .75 to 1 0.375%
< .50 to 1 0.300%
"Commitment Increase" has the meaning given such term in Section 2.10.
"Commitment Percentage" means, with respect to each Bank, the Commitment
Percentage for such Bank set forth on Schedule 1.1 hereto; provided, that
after giving effect to any Assignment and Acceptance Agreement, the
Commitment Percentage of each Bank shall be the amount set forth in the
Register maintained by Administrative Agent pursuant to Section 14.10(c)(iv)
hereof.
"Consolidated Current Assets" means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time. For purposes
of this definition, any non-cash gains on any Hedge Transaction for any
period of determination shall be excluded from the determination of current
assets of such Person and its Consolidated Subsidiaries.
"Consolidated Current Liabilities" means, for any Person at any time,
the current liabilities of such Person and its Consolidated Subsidiaries at
such time, but, in the case of Borrower, excluding the current portion (if
any) of the outstanding principal balance of the Revolving Loan and the
current portion of deferred Taxes. For purposes of this definition, any non-
cash losses or charges on any Hedge Transaction for any period of
determination shall be excluded from the determination of current liabilities
of such Person and its Consolidated Subsidiaries.
"Consolidated EBITDAX" means, for any Person for any period: (a)
Consolidated Net Income of such Person for such period; plus, to the extent
deducted in the calculation of Consolidated Net Income, (b) the sum of (i)
income or franchise Taxes paid or accrued; (ii) Consolidated Net Interest
Expense; (iii) amortization, depletion and depreciation expense; (iv) any
non-cash losses or charges on any Hedge Transaction for that period; (v)
other non-cash charges (excluding accruals for cash expenses made in the
ordinary course of business); and (vi) costs and expenses associated with,
and attributable to, oil and gas capital expenditures that are expensed
rather than capitalized; less, to the extent included in the calculation of
Consolidated Net Income, (c) the sum of (i) the income of any Person (other
than wholly-owned Subsidiaries of such Person) unless such income is received
by such Person in a cash distribution; (ii) gains or losses from sales or
other dispositions of assets (other than Hydrocarbons produced in the normal
course of business); (iii) any non-cash gains on any Hedge Transaction for
that period; (iv) extraordinary or non-recurring gains, net of extraordinary
or non-recurring "cash" losses; and (v) costs and expenses associated with,
and attributable to, oil and gas capital expenditures that are expensed
rather than capitalized. Notwithstanding anything to the contrary contained
herein, all calculations of Consolidated EBITDAX shall be (A) in all
respects, acceptable to, and approved by, Administrative Agent, and (B) for
any applicable period of determination during which Borrower has consummated
an acquisition or disposition (to the extent permitted hereunder) of
properties or assets, calculated and determined on a pro forma basis as if
such acquisition or disposition was consummated on the first day of such
applicable period.
"Consolidated Net Debt" means, for any Person for any period,
Consolidated Total Debt of such Person and its Consolidated Subsidiaries
determined on a consolidated basis for such period, less the aggregate amount
of cash and cash equivalents held by such Person and its Consolidated
Subsidiaries as of any applicable date of determination.
"Consolidated Net Income" means, for any Person for any period, the net
income (or loss) of such Person and its Consolidated Subsidiaries for such
period.
"Consolidated Net Interest Expense" means, for any Person for any
period, the remainder of the following for such Person and its Consolidated
Subsidiaries for such period: (a) interest expense, minus (b) interest
income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements; provided, that, for the purpose of determining Consolidated
Current Assets, Consolidated Current Liabilities, Consolidated EBITDAX,
Consolidated Net Income, Consolidated Net Interest Expense and Consolidated
Total Debt, the terms Consolidated Subsidiary and Consolidated Subsidiaries
shall be deemed to exclude Bonds Company, DHS, PGR and CRB.
"Consolidated Total Debt" means, for any Person for any period, all Debt
of such Person and its Consolidated Subsidiaries determined on a consolidated
basis for such period.
"Continue," "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.5 hereof and/or Article XIII hereof of a
Eurodollar Loan from one Interest Period to the next Interest Period.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.5 and/or Article XIII hereof of all or a portion of one
Type of Revolving Loan into another Type of Revolving Loan.
"CRB" means CRB Partners, LLC, a Delaware limited liability company.
"Credit Parties" means, collectively, Borrower and each Restricted
Subsidiary, and "Credit Party" means any one of the foregoing.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all other indebtedness (including capitalized lease obligations, other
than usual and customary oil and gas leases) of such Person on which interest
charges are customarily paid or accrued, (d) all Guarantees by such Person,
(e) the unfunded or unreimbursed portion of all letters of credit issued for
the account of such Person, (f) any amount owed by such Person representing
the deferred purchase price of property or services other than accounts
payable incurred in the ordinary course of business and in accordance with
customary trade terms and which are not more than (90) days past the invoice
date, and (g) all liability of such Person as a general partner of a
partnership for obligations of such partnership of the nature described in
(a) through (f) preceding.
"DEC" means Delta Exploration Company, Inc., a Colorado corporation,
which is a wholly-owned Subsidiary of Borrower.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, in respect of any principal of the Revolving Loan
or any other amount payable by Borrower under any Loan Paper which is not
paid when due (whether at stated maturity, by acceleration, or otherwise), a
rate per annum during the period commencing on the due date until such amount
is paid in full equal to the sum of (i) two percent (2%), plus (ii) the
Applicable Margin for Base Rate Loans, plus (iii) the Base Rate as in effect
from time to time (provided, that if such amount in default is principal of a
Eurodollar Borrowing and the due date is a day other than the last day of an
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day
of the Interest period therefor, the sum of (a) two percent (2%), plus (b)
the Applicable Margin for Eurodollar Loans, plus (c) the Eurodollar Rate for
such Borrowing for such Interest Period as provided in Section 2.5 hereof,
and thereafter, the rate provided for above in this definition).
"DHS" means DHS Holding Company, a Delaware corporation.
"Distribution" by any Person, means (a) with respect to any stock issued
by such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership,
joint venture, limited liability company, membership or other interest, (b)
the declaration or payment of any dividend or other distribution on or with
respect to any stock, partnership, joint venture, limited liability company,
membership or other interest of such Person, and (c) any other payment by
such Person with respect to such stock, partnership, joint venture, limited
liability company, membership or other interest of such Person.
"Documentation Agent" means U.S. Bank National Association, in its
capacity as Documentation Agent for Banks hereunder or any successor thereto.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Chicago, Illinois or Dallas, Texas, are
authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, (a) its office located
at its address identified on Schedule 1.1 hereto as its Domestic Lending
Office, (b) its office located at its address identified on the Register as
its Domestic Lending Office, or (c) such other office as such Bank may
hereafter designate as its Domestic Lending Office by notice to Borrower and
Administrative Agent.
"DPCA" means DPCA LLC, a Delaware limited liability company.
"Environmental Complaint" means any complaint, summons, citation,
notice, directive, order, claim, litigation or judgment from any federal,
state or municipal authority or any other party against any Credit Party
involving (a) a Hazardous Discharge from, onto or about any real property
owned, leased or operated at any time by any Credit Party, (b) a Hazardous
Discharge caused, in whole or in part, by any Credit Party or by any Person
acting on behalf of or at the instruction of any Credit Party, or (c) any
violation of any Applicable Environmental Law by any Credit Party.
"Equity" means shares of capital stock or a partnership, profits,
capital, member or other equity interest, or options, warrants or any other
rights to substitute for or otherwise acquire the capital stock or a
partnership, profits, capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under
common control with any Credit Party as determined under section 4001(a)(14)
of ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable Eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, (a) its office,
branch or affiliate located at its address identified on Schedule 1.1 hereto
as its Eurodollar Lending Office, (b) its office, branch or affiliate located
at its address identified on the Register as its Eurodollar Lending Office,
or (c) such other office, branch or affiliate of such Bank as it may
hereafter designate as its Eurodollar Lending Office by notice to Borrower
and Administrative Agent.
"Eurodollar Loans" means Revolving Loans that bear interest at rates
based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the applicable British Bankers' Association LIBOR rate for deposits
in Dollars as reported by any generally recognized financial information
service as of 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period, and having a maturity equal to such
Interest Period; provided, that, if no such British Bankers' Association
LIBOR rate is available to Administrative Agent, the applicable Eurodollar
Rate for the relevant Interest Period shall instead be the rate determined by
Administrative Agent to be the rate at which JPMorgan or one of its Affiliate
banks offers to place deposits in Dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two (2)
Eurodollar Business Days prior to the first day of such Interest Period, in
the appropriate amount of JPMorgan's relevant Eurodollar Loan and having a
maturity equal to such Interest Period.
"Events of Default" has the meaning set forth in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Existing Banks" has the meaning assigned to such term in the recitals
hereto.
"Existing Credit Agreement" has the meaning assigned to such term in the
recitals hereto.
"Existing Mortgages" means the mortgages, deeds of trust, security
agreements, assignments, pledges, assignments and amendments to mortgages,
amendments to mortgages and other documents, instruments and agreements which
establish Liens on certain of Borrower's and its Subsidiaries' oil and gas
properties and related assets to secure Borrower's and its Subsidiaries'
obligations under the Existing Credit Agreement.
"Existing Reserve Report" means an engineering and economic analysis of
the Borrowing Base Properties prepared effective as of October 1, 2006 by
Borrower's internal engineers.
"Facility Guaranty" means a Guaranty substantially in the form of
Exhibit A attached hereto to be executed by each Restricted Subsidiary of
Borrower in favor of Banks, pursuant to which such Restricted Subsidiary of
Borrower guarantees payment and performance in full of the Obligations.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day; provided that (a) if the day for which such
rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next succeeding
Domestic Business Day, and (b) if such rate is not so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for any day shall be
the average rate charged to Administrative Agent on such day on such
transactions as determined by Administrative Agent.
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer"
shall mean the highest ranking executive officer of such Person with
responsibility for accounting, financial reporting, cash management and
similar functions.
"Fiscal Quarter" means the fiscal quarter of Borrower, ending on the
last day of each March, June, September and December of each year.
"Fiscal Year" means the fiscal year of Borrower, ending on December 31.
"Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
its business.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the SEC, the American Institute of
Certified Public Accountants acting through its Accounting Principles Board
or by the Financial Accounting Standards Board or through other appropriate
boards or committees thereof and which are consistently applied for all
periods after the Closing Date so as to properly reflect the financial
condition, and the results of operations and changes in financial position,
of Borrower and its Consolidated Subsidiaries, except that any accounting
principle or practice (i) required to be changed by the SEC, Accounting
Principles Board or Financial Accounting Standards Board (or other
appropriate board or committee thereof) in order to continue as a generally
accepted accounting principle or practice may be so changed, or (ii) adopted
in response to an SEC comment.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production
therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish,
or municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements, by agreement to keep-
well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions, by "comfort letter" or other
similar undertaking of support or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), provided, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real
property owned, leased or operated at any time by any Credit Party or any
real property owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law
or which is otherwise regulated by any Applicable Environmental Law or is
required to be investigated and/or remediated by or pursuant to any
Applicable Environmental Law.
"Hedge Agreements" means, collectively, any agreement, instrument,
arrangement or schedule or supplement thereto evidencing any Hedge
Transaction.
"Hedge Transaction" means any financial derivative transaction pursuant
to which a Person xxxxxx risks related to commodity prices, interest rates,
currency exchange rates, securities prices or financial market conditions.
Hedge Transactions expressly includes (a) financial derivative transactions
under SFAS 133, (b) financial derivative transactions that do not qualify as
a hedge transaction under SFAS 133 and pursuant to which a Person xxxxxx
risks related to commodity prices, and (c) Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith, and all
products, by-products and all other substances derived therefrom or the
processing thereof, and all other minerals and substances, including, but not
limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam,
water, carbon dioxide, helium, and any and all other minerals, ores, or
substances of value, and the products and proceeds therefrom, including,
without limitation, all gas resulting from the in-situ combustion of coal or
lignite.
"Immaterial Title Deficiencies" means, with respect to Borrowing Base
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties in an amount greater than three
percent (3%) of the Recognized Value of all Borrowing Base Properties.
"Indirect Subsidiary" has the meaning given such term in the definition
of "Subsidiary Pledge Agreement."
"Initial Borrowing Base" means a Borrowing Base in the amount of
$130,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Initial Total Commitment" means a Total Commitment in the amount of
$250,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Commitment Increase (if any)
after the Closing Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and
each Continuation of Eurodollar Loans and each Conversion of all or part of
the Base Rate Loan to Eurodollar Loans, the period commencing on the date of
such Borrowing, Continuation or Conversion and ending one (1), two (2), three
(3) or, subject to availability, six (6) or twelve (12) months thereafter, as
Borrower may elect in the applicable Request for Borrowing or Notice of
Continuation or Conversion; provided, that:
(a) any Interest Period which would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Eurodollar Business Day
of a calendar month;
(c) if any Interest Period includes a date on which any payment of
principal of the Eurodollar Loans which are the subject of such Borrowing,
Continuation or Conversion is required to be made hereunder, but does not end
on such date, then (i) the principal amount of such Eurodollar Loans required
to be repaid on such date shall have an Interest Period ending on such date,
and (ii) the remainder of each such Eurodollar Loans shall have an Interest
Period determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of
the stock or other securities of, or interests in, any other Person;
provided, that, "Investment" shall not include current customer and trade
accounts which are payable in accordance with customary trade terms.
"JPMorgan" means JPMorgan Chase Bank, N.A., successor by merger to Bank
One, NA (Main Office Chicago), a national banking association, in its
capacity as a Bank.
"JPMSI" means X.X. Xxxxxx Securities Inc.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion
of Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit
issued hereunder, a fee in an amount equal to the greater of (a) $500, or (b)
a percentage of the stated amount of such Letter of Credit (calculated on a
per annum basis based on the stated term of such Letter of Credit) determined
by reference to the ratio of the Outstanding Credit to the Borrowing Base in
effect on the date such Letter of Credit is issued in accordance with the
table below:
Ratio of Outstanding Credit Per Annum Letter of
to Borrowing Base Credit Fee Percentage
> .90 to 1 2.000%
> .75 to 1 and < .90 to 1 1.750%
> .50 to 1 and < .75 to 1 1.500%
< .50 to 1 1.250%
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit issued hereunder, a fee equal to one eighth of one percent (.125%) per
annum of the stated amount of such Letter of Credit.
"Letter of Credit Issuer" has the meaning set forth in Section 2.1(b).
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, financing statement or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the Credit
Parties shall be deemed to own subject to a Lien any asset which is acquired
or held subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Loan Papers" means this Agreement, the Notes, each Facility Guaranty
which may now or hereafter be executed, each Borrower Pledge Agreement which
may now or hereafter be executed, each Subsidiary Pledge Agreement which may
now or hereafter be executed, the Existing Mortgages (including all
amendments thereto), all Mortgages now or at any time hereafter delivered
pursuant to Section 5.1, all Letters of Credit, the Certificate of
Effectiveness and all other certificates, documents or instruments delivered
in connection with this Agreement, as the foregoing may be amended from time
to time.
"Margin Regulations" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event that has or
would reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition, results of operations or prospects
of Borrower, individually, or the Credit Parties, taken as a whole, (b) the
right or ability of any Credit Party to fully, completely and timely perform
its obligations under the Loan Papers, (c) the validity or enforceability of
any Loan Paper against any Credit Party which is a party thereto, or (d) the
validity, perfection or priority of any material Lien intended to be created
under or pursuant to any Loan Paper to secure the Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral
Interest owned by any Credit Party is bound, a net gas imbalance to all such
Credit Parties in excess of $500,000 in the aggregate.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged
on the portion of the Revolving Loan owed to such Bank at such time to exceed
the maximum amount which such Bank would be allowed to contract for, charge,
take, reserve, or receive under applicable Laws after taking into account, to
the extent required by applicable Laws, any and all relevant payments or
charges under the Loan Papers. To the extent the Laws of the State of Texas
are applicable for purposes of determining the "Maximum Lawful Rate," such
term shall mean the "indicated rate ceiling" from time to time in effect
under Chapter 303 of the Texas Finance Code, as amended, substituted for or
restated, or, if permitted by applicable Law and effective upon the giving of
the notices required by such Chapter 303 (or effective upon any other date
otherwise specified by applicable Law), the "quarterly ceiling" or
"annualized ceiling" from time to time in effect under such Chapter 303,
whichever Administrative Agent (with the approval of Required Banks) shall
elect to substitute for the "indicated rate ceiling," and vice versa, each
such substitution to have the effect provided in such Chapter 303, and
Administrative Agent (with the approval of Required Banks) shall be entitled
to make such election from time to time and one or more times and, without
notice to Borrower, to leave any such substitute rate in effect for
subsequent periods in accordance with such Chapter 303.
"Maximum Total Commitment Amount" means $350,000,000.
"Mineral Interests" means rights, estates, titles, and interests in and
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interest, production payment, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by
contract, by order, or by operation of Laws, which now or hereafter include
all or any part of the foregoing.
"Monthly Date" means the last day of each calendar month.
"Mortgages" means all mortgages, deeds of trust, amendments to
mortgages, security agreements, assignments of production, pledge agreements,
collateral mortgages, collateral chattel mortgages, collateral assignments,
financing statements and other documents, instruments and agreements
evidencing, creating, perfecting or otherwise establishing the Liens required
by Section 5.1 hereof. All Mortgages shall be in form and substance
satisfactory to Administrative Agent in its sole discretion. The term
"Mortgages" shall include, without limitation, the Existing Mortgages,
including, without limitation, any amendments to the Existing Mortgages.
"Note" means a promissory note of Borrower payable to the order of a
Bank, in substantially the form of Exhibit B hereto, in the amount of such
Bank's Commitment, evidencing the obligation of Borrower to repay to such
Bank its Commitment Percentage of the Revolving Loan, together with all
modifications, extensions, renewals, and rearrangements thereof, and "Notes"
means all of such Notes collectively.
"Notice of Continuation or Conversion" has the meaning set forth in
Section 2.5(c).
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of
any Bank arising pursuant to the Loan Papers or pursuant to any Hedge
Agreement or Hedge Transaction entered into with any Bank or any Affiliate of
any Bank, and all interest accrued thereon and costs, expenses, and
attorneys' fees incurred in the enforcement or collection thereof, regardless
of whether such indebtedness, obligations and liabilities are direct,
indirect, fixed, contingent, liquidated, unliquidated, joint, several or
joint and several.
"Oil & Gas Hedge Transaction" means a Hedge Transaction pursuant to
which any Person xxxxxx the price to be received by it for future production
of Hydrocarbons.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.
"Participant" has the meaning given such term in Section 14.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens securing the Obligations;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the operation
of the subject property, and for the purposes of this Agreement, a minor
defect in title shall include, but not be limited to, easements, rights-of-
way, servitudes, permits, surface leases and other similar rights in respect
of surface operations, and easements for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other easements and
rights-of-way, on, over or in respect of any of the properties of any Credit
Party that are customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests which
are not more than sixty (60) days delinquent (except to the extent permitted
by Section 8.7);
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's Liens and other similar Liens arising by operation of Law in the
ordinary course of business which are not more than sixty (60) days
delinquent (except to the extent permitted by Section 8.7);
(e) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action, as permitted by Section 8.7;
(f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including,
without limitation, any royalty, overriding royalty, net profits interest,
production payment, carried interest or reversionary working interest; and
(g) Liens, charges and encumbrances upon Borrower's assets, other
than Borrowing Base Properties, which in the aggregate, do not have a value
in excess of $1,000,000.
"Permitted Investments" means (a) readily marketable direct obligations
of the United States of America (or investments in mutual funds or similar
funds which invest solely in such obligations), (b) fully insured demand or
time deposits and certificates of deposit with maturities of one year or less
of any commercial bank operating in the United States having capital and
surplus in excess of $500,000,000, (c) commercial paper of a domestic issuer
if at the time of purchase such paper is rated in one of the two highest
ratings categories of Standard and Poor's Corporation or Xxxxx'x Investors
Service, (d) Investments by any Credit Party in a Subsidiary of Borrower that
has provided a Facility Guaranty and the Equity of which has been pledged to
Administrative Agent pursuant to a Borrower Pledge Agreement or a Subsidiary
Pledge Agreement, (e) Investments in Amber, Bonds Company, PGR and CRB
existing on the Closing Date and described on Schedule 9.8 attached hereto,
(f) Investments in entities formed solely to acquire surface properties
associated with oil and gas assets of a Credit Party, (g) Investments in DHS
in an aggregate amount outstanding at any time not to exceed $71,000,000
(measured on a cost basis), provided, that, any Investments in DHS in an
aggregate amount exceeding $21,000,000 (measured on a cost basis) shall only
be permitted to the extent such Investments are made either (i) with the
proceeds received by Borrower from the issuance and sale of Borrower's Equity
or the sale of assets not included in the Borrowing Base, and only to the
extent such proceeds have been specifically dedicated by Borrower for such
Investment as described and set forth in detail in the most recent
certificate of Financial Officer delivered to each Bank pursuant to Section
8.1(c) hereof, or (ii) as the result of the receipt of non-cash consideration
from the issuance of Borrower's Equity and the contribution of such non-cash
consideration to DHS, (h) provided no Default, Event of Default or Borrowing
Base Deficiency exists on the date of any such Investment, and no Default,
Event of Default or Borrowing Base Deficiency would result therefrom,
Investments in Collbran Valley Gas Gathering, LLC in an aggregate amount
outstanding at any time not to exceed $3,000,000 (measured on a cost basis),
and (i) other Investments; provided, that, the aggregate amount of all other
Investments made pursuant to this clause (i) outstanding at any time shall
not exceed $15,000,000 (measured on a cost basis).
"Permitted Senior Unsecured Debt" means senior unsecured Debt of
Borrower resulting from the issuance by Borrower of its 7% Senior Notes due
2015 in an original aggregate principal amount of $150,000,000 under that
certain Indenture dated as of March 15, 2005 among Borrower, the Subsidiary
guarantors party thereto and U.S. Bank National Association, as Trustee.
"Permitted Senior Unsecured Debt Documents" means, collectively, all
indentures, promissory notes, Guarantees or other documents or instruments
issued or given in connection with, evidencing and/or otherwise pertaining
to, the Permitted Senior Unsecured Debt.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including a Government Authority.
"PGR" means PGR Partners, LLC, a Colorado limited liability company.
"Piper" mean Piper Petroleum Company, a Colorado corporation, which is a
wholly-owned Subsidiary of Borrower.
"Plan" means (i) with respect to a Credit Party, an employee benefit
plan within the meaning of section 3(3) of ERISA, and any other similar plan,
policy or arrangement, including an employment contract, whether formal or
informal and whether legally binding or not, under which any Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party, or such present or former employee's
dependents or beneficiaries, has any current or future right to benefits
resulting from the present or former employee's employment relationship with
any Credit Party, and (ii) with respect to an ERISA Affiliate, a plan
described in clause (i) preceding if, and only if, such plan is subject to
Title IV of ERISA.
"Prime Rate" means the per annum rate of interest established from time
to time by JPMorgan or its parent as its prime rate, which rate may not be
the lowest rate of interest charged by Administrative Agent to its customers.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests
which constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"Purchasers" has the meaning given such term in Section 14.10(c).
"Quarterly Date" means the last day of each March, June, September and
December.
"Recognized Value" means, with respect to all Proved Mineral Interests,
the portion of the Borrowing Base which JPMorgan attributes to such Proved
Mineral Interests for purposes of the most recent redetermination of the
Borrowing Base pursuant to Article IV hereof (or for purposes of determining
the initial Borrowing Base in the event no such redetermination has
occurred), based upon the discounted present value of the estimated net cash
flow to be realized from the production of Hydrocarbons from all such Proved
Mineral Interests.
"Redetermination" means any Scheduled Redetermination, Special
Redetermination, or other redetermination of the Borrowing Base pursuant to
Section 4.4. Notwithstanding anything to the contrary contained herein, no
redetermination of the Borrowing Base pursuant to Section 4.4 shall be deemed
or construed to be a Special Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each May 1 and November 1, commencing May 1, 2007, (b) with
respect to any Special Redetermination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date
of a request for a Special Redetermination, and (c) with respect to any
redetermination of the Borrowing Base pursuant to Section 4.4, the date of
the consummation of any applicable Asset Disposition. The Closing Date shall
also constitute a Redetermination Date for purposes of this Agreement.
"Register" has the meaning given such term in Section 14.10(c)(iv).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Request for Borrowing" has the meaning set forth in Section 2.2(a).
"Request for Letter of Credit" has the meaning set forth in Section
2.2(a).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Required Reserve Value" means Proved Mineral Interests that have a
Recognized Value of not less than eighty percent (80%) of the Recognized
Value of all Proved Mineral Interests held by Borrower and its Subsidiaries
and included in the Borrowing Base.
"Reserve Report" means an unsuperseded engineering analysis of the
Mineral Interests owned by Borrower, in form and substance reasonably
acceptable to Administrative Agent, prepared in accordance with customary and
prudent practices in the petroleum engineering industry and Financial
Accounting Standards Board Statement 69. Each Reserve Report required to be
delivered by March 15 of each year pursuant to Section 4.1 shall be prepared
by the Approved Petroleum Engineer. Each other Reserve Report shall be
prepared by either (i) the Approved Petroleum Engineer, or (ii) Borrower's
in-house staff, and shall include a detailed reconciliation from the most
recently delivered Reserve Report prepared by the Approved Petroleum
Engineer. Notwithstanding the foregoing, in connection with any Special
Redetermination requested by Borrower, the Reserve Report shall be in form
and scope mutually acceptable to Borrower and Administrative Agent. Until
superseded, the Existing Reserve Report shall be considered the Reserve
Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against in the
case of Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by
such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets
which include Eurodollar Loans. The Adjusted Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person, (b) any capital contribution, loan or advance by
any Credit Party to any Unrestricted Subsidiary, (c) the issuance of a
Guarantee by any Credit Party with respect to any Debt or other obligation of
any Unrestricted Subsidiary, other than Guarantees of Permitted Senior
Unsecured Debt permitted by Section 9.1(d) hereof, (d) the retirement,
redemption, defeasance, repurchase or prepayment prior to scheduled maturity
by such Person or any Affiliate of such Person of any Debt of such Person, or
(e) the retirement, redemption or payment by Borrower or any Affiliate of
Borrower of any part of the principal of the Permitted Senior Unsecured Debt
at any time prior to the termination of all Commitments and the payment and
performance in full of the Obligations.
"Restricted Subsidiary" means, as of the Closing Date, Castle, DEC, DPCA
and Piper, and shall also mean any other Subsidiary of Borrower which
Borrower thereafter designates as a "Restricted Subsidiary;" provided, that,
no Subsidiary of Borrower will be a Restricted Subsidiary unless (a) one
hundred percent (100%) of its issued and outstanding Equity has been pledged
to Administrative Agent to secure the Obligations pursuant to a Borrower
Pledge Agreement or a Subsidiary Pledge Agreement, and (b) it has executed a
Facility Guaranty.
"Revolving Loan" means the revolving credit loan in an amount
outstanding at any time not to exceed the lesser of (i) the Borrowing Base
then in effect, and (ii) the amount of (a) the Total Commitment then in
effect less (b) the amount of the Letter Credit Exposure then outstanding to
be made by Banks to Borrower in accordance with Section 2.1 hereof. The
Revolving Loan may be comprised of the Base Rate Loan and one or more
Eurodollar Loans as Borrower may select in a Request for Borrowing or a
Notice of Continuation or Conversion.
"Rolling Period" means (a) for the Fiscal Quarters ending on March 31,
2007, June 30, 2007 and September 30, 2007, the applicable period commencing
on January 1, 2007 and ending on the last day of such applicable fiscal
quarter, and (b) for the Fiscal Quarter ending on December 31, 2007, and for
each Fiscal Quarter thereafter, any period of four (4) consecutive Fiscal
Quarters ending on the last day of such applicable Fiscal Quarter.
"Schedule" means a "schedule" attached to this Agreement and
incorporated herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 4.2.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Sole Lead Arranger" means JPMSI, in its capacity as sole lead arranger
for the credit facility hereunder or any successor thereto.
"Special Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 4.3.
"Specified Asset Sale" means the sale, assignment, lease, license,
transfer, exchange or other disposition by Borrower of all or substantially
all of its right, title and interest in PGR or its assets.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions (including that of a general partner) are at the time
directly or indirectly owned, collectively, by such Person and any
Subsidiaries of such Person. The term "Subsidiary" shall include
Subsidiaries of Subsidiaries (and so on).
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit D attached hereto (with applicable conforming changes) to
be executed by each existing and/or future Restricted Subsidiary of Borrower
to the extent such Restricted Subsidiary owns any outstanding Equity of any
other Restricted Subsidiary of Borrower (for purposes of this definition and
Section 5.1(d) hereof, such Restricted Subsidiary is referred to herein and
therein as an "Indirect Restricted Subsidiary"), pursuant to which such
Indirect Restricted Subsidiary shall pledge to Administrative Agent, for the
ratable benefit of Banks, all of the issued and outstanding Equity owned by
such Indirect Restricted Subsidiary of each Restricted Subsidiary of such
Indirect Restricted Subsidiary described therein to secure the Obligations.
"Syndication Agent" means Bank of Oklahoma, N.A., in its capacity as
Syndication Agent for Banks hereunder or any successor thereto.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any
nature whatsoever, from time to time or at any time imposed by Law or any
Governmental Authority. "Tax" means any one of the foregoing.
"Termination Date" means November 17, 2010.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $250,000,000, as such amount may be reduced or increased
from time to time pursuant to the terms hereof; provided, that, the Total
Commitment shall never exceed the Maximum Total Commitment Amount.
"Transferee" has the meaning given such term in Section 14.10(d).
"Type" means, with reference to a Revolving Loan, the characterization
of such Revolving Loan as the Base Rate Loan or a Eurodollar Loan based on
the method by which the accrual of interest on such Revolving Loan is
calculated.
"Unrestricted Subsidiary" means any Subsidiary of Borrower which is not
a Restricted Subsidiary and shall include, as of the Closing Date, Amber,
DHS, Bonds Company, CRB and PGR.
Section 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be expressed in U.S.
dollars and shall be prepared in accordance with GAAP, applied on a basis
consistent with the most recent audited consolidated financial statements of
Borrower and its Consolidated Subsidiaries delivered to Banks except for
changes concurred in by Borrower's independent certified public accountants
and which are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to Banks pursuant to
Section 8.1(a) or Section 8.1(b); provided, that, unless Required Banks shall
otherwise agree in writing, no such change shall modify or affect the manner
in which compliance with the covenants contained in Article X are computed
such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.
Section 1.3 Petroleum Terms. As used herein, the terms "proved
reserves," "proved developed reserves," "proved developed producing
reserves," "proved developed nonproducing reserves," and "proved undeveloped
reserves" have the meaning given such terms from time to time and at the time
in question by the Society of Petroleum Engineers of the American Institute
of Mining Engineers.
Section 1.4 Money. Unless expressly stipulated otherwise, all
references herein to "dollars," "money," "funds," "payments," "prepayments"
or similar financial or monetary terms, are references to currency of the
United States of America.
ARTICLE II
THE CREDIT
Section 2.1 Commitments.
(a) Each Bank severally agrees, subject to Section 2.1(c), Section
6.1 and Section 6.2 and the other terms and conditions set forth in this
Agreement, to lend to Borrower from time to time prior to the Termination
Date amounts requested by Borrower not to exceed in the aggregate at any one
time outstanding, the amount of such Bank's Commitment reduced by an amount
equal to the sum of (i) such Bank's Letter of Credit Exposure plus (ii) such
Bank's Commitment Percentage of the outstanding principal balance of the
Revolving Loan. Each Borrowing shall be (A) in an aggregate principal amount
of $1,000,000 or any larger integral multiple of $100,000 (except that any
Base Rate Borrowing may be in an amount equal to the Availability at such
time), and (B) made from the Banks ratably in accordance with their
respective Commitment Percentages. Subject to the foregoing limitations and
the other provisions of this Agreement, prior to the Termination Date
Borrower may borrow under this Section 2.1(a), repay amounts borrowed and
request new Borrowings to be made under this Section 2.1(a). The Total
Commitment as of the Closing Date is the Initial Total Commitment.
(b) Administrative Agent, or such Bank designated by Administrative
Agent which (without obligation to do so) consents to the same ("Letter of
Credit Issuer") will, from time to time prior to the date which is five (5)
Domestic Business Days prior to the Termination Date, upon request by
Borrower, issue Letters of Credit for the account of Borrower or any
Restricted Subsidiary designated by Borrower, so long as (i) the sum of (A)
the total Letter of Credit Exposure then existing, and (B) the amount of the
requested Letter of Credit does not exceed $15,000,000, and (ii) Borrower
would be entitled to a Borrowing under Section 2.1(a) and Section 2.1(c) in
the amount of the requested Letter of Credit. Not less than three (3)
Domestic Business Days prior to the requested date of issuance of any such
Letter of Credit, Borrower (and any Restricted Subsidiary for whose account
such Letter of Credit is being issued) shall execute and deliver to Letter of
Credit Issuer, Letter of Credit Issuer's customary letter of credit
application. Each Letter of Credit shall be in the minimum amount of $10,000
and shall be in form and substance acceptable to Letter of Credit Issuer. No
Letter of Credit shall have an expiration date later than the earlier of (1)
the Termination Date, or (2) one (1) year from the date of issuance (or, in
the case of any renewal or extension thereof, one (1) year after such renewal
or extension). Upon the date of issuance of a Letter of Credit, Letter of
Credit Issuer shall be deemed to have sold to each other Bank, and each other
Bank shall be deemed to have unconditionally and irrevocably purchased from
Letter of Credit Issuer, a non recourse participation in the related Letter
of Credit and Letter of Credit Exposure equal to such Bank's Commitment
Percentage of such Letter of Credit and Letter of Credit Exposure. Upon
request of any Bank, but not less often than quarterly, Administrative Agent
shall provide notice to each Bank by telephone, teletransmission or telex
setting forth each Letter of Credit issued and outstanding pursuant to the
terms hereof and specifying the beneficiary and expiration date of each such
Letter of Credit, each Bank's percentage of each such Letter of Credit and
the actual dollar amount of each Bank's participation held by Letter of
Credit Issuer thereof for such Bank's account and risk. At the time of
issuance of each Letter of Credit, Borrower shall pay to Administrative Agent
in respect of such Letter of Credit (a) the applicable Letter of Credit Fee,
and (b) the applicable Letter of Credit Fronting Fee. Administrative Agent
shall distribute the Letter of Credit Fee payable upon the issuance of each
Letter of Credit to Banks in accordance with their respective Commitment
Percentages, and Administrative Agent shall distribute the Letter of Credit
Fronting Fee to Letter of Credit Issuer for its own account. Any (y)
material amendment or modification, or (z) renewal or extension of any Letter
of Credit shall be deemed to be the issuance of a new Letter of Credit for
purposes of this Section 2.1(b). Notwithstanding anything to the contrary
contained herein, Borrower shall pay to Letter of Credit Issuer in connection
with the issuance of each Letter of Credit and/or any amendment or
modification of any nature to any existing Letter of Credit, Letter of Credit
Issuer's usual and customary fees for the issuance of, amendments or
modifications to, and processing of, Letters of Credit.
Immediately upon the occurrence of an Event of Default and the
acceleration of the Obligations hereunder, and also on the date which is five
(5) Domestic Business Days prior to the Termination Date, Borrower shall
deposit with Administrative Agent cash in such amounts as Administrative
Agent may request, up to a maximum amount equal to the aggregate existing
Letter of Credit Exposure of all Banks; provided, that, in the case of any of
the Events of Default specified in Section 11.1(g) or Section 11.1(h), an
amount equal to the aggregate existing Letter of Credit Exposure of all Banks
shall be due and payable without any notice to Borrower or any other act by
Administrative Agent or any Bank. Any amounts so deposited shall be held by
Administrative Agent for the ratable benefit of all Banks as security for the
outstanding Letter of Credit Exposure and the other Obligations, and Borrower
will, in connection therewith, execute and deliver such security agreements
in form and substance satisfactory to Administrative Agent which
Administrative Agent may, in its discretion, require. As drafts or demands
for payment are presented under any Letter of Credit, Administrative Agent
shall apply such cash to satisfy such drafts or demands. When all Letters of
Credit have expired and the Obligations have been repaid in full (and no Bank
has any obligation to lend or issue Letters of Credit hereunder) or such
Event of Default has been cured to the satisfaction of Required Banks,
Administrative Agent shall release to Borrower any remaining cash deposited
under this Section 2.1(b). Whenever Borrower is required to make deposits
under this Section 2.1(b) and fails to do so on the day such deposit is due,
Administrative Agent or any Bank may, without notice to Borrower, make such
deposit (whether by application of proceeds of any collateral for the
Obligations, by transfers from other accounts maintained with any Bank or
otherwise) using any funds then available to any Bank of any Credit Party,
any guarantor or any other party liable for repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower
hereby agrees to reimburse each Letter of Credit Issuer immediately upon
demand by such Letter of Credit Issuer, and in immediately available funds,
for any payment or disbursement made by such Letter of Credit Issuer under
any Letter of Credit issued by it. Payment shall be made by Borrower with
interest on the amount so paid or disbursed by Letter of Credit Issuer from
and including the date payment is made under any Letter of Credit to and
including the date of payment, at the lesser of (i) the Maximum Lawful Rate,
or (ii) the Default Rate. The obligations of Borrower under this paragraph
will continue until all Letters of Credit have expired and all reimbursement
obligations with respect thereto have been paid in full by Borrower and until
all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Letter of Credit Issuer upon
demand for all amounts paid under Letters of Credit as set forth in the
immediately preceding paragraph hereof; provided, however, if Borrower for
any reason fails to reimburse Letter of Credit Issuer in full upon demand,
Banks shall reimburse Letter of Credit Issuer in accordance with each Banks'
Commitment Percentage for amounts due and unpaid from Borrower as set forth
hereinbelow; provided, however, that no such reimbursement made by Banks
shall discharge Borrower's obligations to reimburse Letter of Credit Issuer.
All reimbursement amounts payable by any Bank under this Section 2.1(b) shall
include interest thereon at the Federal Funds Rate, from the date of the
payment of such amounts by Letter of Credit Issuer to the date of
reimbursement by such Bank. No Bank shall be liable for the performance or
nonperformance of the obligations of any other Bank under this paragraph.
The reimbursement obligations of Banks under this paragraph shall continue
after the Termination Date and shall survive termination of this Agreement
and the other Loan Papers.
Borrower shall indemnify and hold Administrative Agent, Letter of Credit
Issuer and each Bank, and their respective officers, directors,
representatives and employees harmless from loss for any claim, demand or
liability which may be asserted against any or such indemnified party in
connection with actions taken under Letters of Credit or in connection
therewith (including losses resulting from the negligence of any or such
indemnified party), and shall pay each indemnified party for reasonable fees
of attorneys and legal costs paid or incurred by each indemnified party in
connection with any matter related to Letters of Credit, except for losses
and liabilities incurred as a direct result of the gross negligence or
willful misconduct of such indemnified party, IT BEING THE EXPRESS INTENTION
OF THE PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR THE
CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for any reason
fails to indemnify or pay Administrative Agent or Letter of Credit Issuer as
set forth herein in full, Banks shall indemnify and pay such indemnified
party upon demand, in accordance with each Bank's Commitment Percentage of
such amounts due and unpaid from Borrower; provided, however, that, no such
payment made by Banks shall discharge Borrower's obligation to indemnify or
pay such indemnified party in accordance with the terms hereof. The
provisions of this paragraph shall survive the termination of this Agreement.
Neither Administrative Agent nor any other Letter of Credit Issuer makes
any representation or warranty, nor assumes any responsibility with respect
to the validity, legality, sufficiency or enforceability of any letter of
credit application executed and delivered in connection with any Letter of
Credit issued hereunder or any document relative thereto or to the
collectibility thereunder. Neither Administrative Agent nor any other Letter
of Credit Issuer assumes any responsibility for the financial condition of
Borrower or for the performance of any obligation of Borrower.
Administrative Agent and each other Letter of Credit Issuer may use its
discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in
it or which it may be entitled to take or assert with respect to any Letter
of Credit or any letter of credit application. FURTHERMORE, EXCEPT AS SET
FORTH HEREIN, NEITHER ADMINISTRATIVE AGENT NOR ANY OTHER LETTER OF CREDIT
ISSUER SHALL BE UNDER ANY LIABILITY TO ANY BANK, WITH RESPECT TO ANYTHING
ADMINISTRATIVE AGENT OR ANY SUCH LETTER OF CREDIT ISSUER MAY DO OR REFRAIN
FROM DOING IN THE EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND
RESPONSIBILITY OF ADMINISTRATIVE AGENT AND SUCH LETTER OF CREDIT ISSUER BEING
TO HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS AS ADMINISTRATIVE AGENT
OR SUCH LETTER OF CREDIT ISSUER HANDLES ITS OWN SHARE. NEITHER
ADMINISTRATIVE AGENT NOR ANY OTHER LETTER OF CREDIT ISSUER SHALL HAVE ANY
DUTIES OR RESPONSIBILITIES EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND THOSE
DUTIES AND LIABILITIES SHALL BE SUBJECT TO THE LIMITATIONS AND QUALIFICATIONS
SET FORTH HEREIN. FURTHERMORE, NEITHER ADMINISTRATIVE AGENT, ANY LETTER OF
CREDIT ISSUER, NOR ANY OF THEIR DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE
LIABLE FOR ANY ACTION TAKEN OR OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR
OMITTED IS EXPRESSLY SET FORTH HEREIN) UNDER OR IN CONNECTION HEREWITH OR
UNDER ANY OTHER INSTRUMENT OR DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Neither Administrative Agent nor any
other Letter of Credit Issuer shall incur any liability to any Bank,
Borrower, or any Affiliate of any Bank or Borrower, in acting upon any
notice, document, order, consent, certificate, warrant or other instrument
reasonably believed by Administrative Agent or such Letter of Credit Issuer
to be genuine or authentic and to be signed by the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur
Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder, in an amount which would
cause (i) such Bank's Commitment Percentage of the Outstanding Credit to
exceed its Commitment Percentage of the existing Borrowing Base, or (ii) the
Outstanding Credit to exceed the Borrowing Base then in effect. No Bank
shall be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency. Nothing in this Section 2.1(c) shall be deemed to limit any
Bank's obligation to reimburse any Letter of Credit Issuer with respect to
its participation in Letters of Credit as a result of the drawing under any
Letter of Credit pursuant to Section 2.1(b).
Section 2.2 Method of Borrowing.
(a) In order to request any Borrowing under Section 2.1, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Borrowing (herein so called) prior to 11:00 a.m.
(Chicago, Illinois time), (i) on the Borrowing Date specified for a proposed
Base Rate Borrowing, and (ii) at least three (3) Eurodollar Business Days
before the Borrowing Date of a proposed Eurodollar Borrowing. Each such
Request for Borrowing shall be substantially in the form of Exhibit E
attached hereto, and shall specify:
(i) the Borrowing Date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Eurodollar Business
Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative Agent
shall promptly notify each Bank of the contents thereof and the amount of the
Borrowing to be loaned by such Bank pursuant thereto, and such Request for
Borrowing shall not thereafter be revocable by Borrower.
(c) Not later than 12:00 noon (Chicago, Illinois time) on the date
of each Borrowing, each Bank shall make available its Commitment Percentage
of such Borrowing, in Federal or other funds immediately available in
Chicago, Illinois to Administrative Agent at its address set forth on
Schedule 2.1 hereto. Unless Administrative Agent determines that any
applicable condition specified in Section 6.2 has not been satisfied,
Administrative Agent will make the funds so received from Banks available to
Borrower at Administrative Agent's aforesaid address.
Section 2.3 Method of Requesting Letters of Credit.
(a) In order to request any Letter of Credit hereunder, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Letter of Credit (herein so called) prior to 12:00 noon
(Chicago, Illinois time) at least three (3) Domestic Business Days before the
date specified for issuance of such Letter of Credit. Each Request for
Letter of Credit shall be substantially in the form of Exhibit F attached
hereto, shall be accompanied by the applicable Letter of Credit Issuer's duly
completed and executed letter of credit application and agreement and shall
specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including the name
and address of the beneficiary, the stated amount, the expiration date and
the conditions under which drafts under such Letter of Credit are to be
available; and
(iii) the purpose of such Letter of Credit.
(b) Upon receipt of a Request for Letter of Credit, Administrative
Agent shall promptly notify each Bank and the proposed Letter of Credit
Issuer of the contents thereof, including the amount of the requested Letter
of Credit, and such Request for Letter of Credit shall not thereafter be
revocable by Borrower.
(c) No later than 12:00 noon (Chicago, Illinois time) on the date
each Letter of Credit is requested to be issued, unless Administrative Agent
or the applicable Letter of Credit Issuer determines that any applicable
condition precedent set forth in Section 6.2 hereof has not been satisfied,
Administrative Agent or such other applicable Letter of Credit Issuer will
issue and deliver such Letter of Credit pursuant to the instructions of
Borrower.
Section 2.4 Notes. Each Bank's Commitment Percentage of the
Revolving Loan shall be evidenced by a single Note payable to the order of
such Bank in an amount equal to such Bank's Commitment.
Section 2.5 Interest Rates; Payments.
(a) The principal amount of the Base Rate Loan outstanding from day
to day shall bear interest at a rate per annum equal to the sum of (i) the
Applicable Margin plus (ii) the applicable Base Rate in effect from day to
day; provided that in no event shall the rate charged hereunder or under the
Notes exceed the Maximum Lawful Rate. Interest on the Base Rate Loan shall
be payable as it accrues on each Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding from
day to day shall bear interest for the Interest Period applicable thereto at
a rate per annum equal to the sum of (i) the Applicable Margin plus (ii) the
applicable Adjusted Eurodollar Rate; provided that in no event shall the rate
charged hereunder or under the Notes exceed the Maximum Lawful Rate.
Interest on any portion of the principal of each Eurodollar Loan subject to
an Interest Period of one (1), two (2) or three (3) months shall be payable
on the last day of the Interest Period applicable thereto. Interest on any
portion of the principal of each Eurodollar Loan subject to an Interest
Period of six (6) or twelve (12) months shall be payable on the last day of
the Interest Period applicable thereto and on each Quarterly Date.
(c) So long as no Default or Event of Default shall be continuing,
subject to the provisions of this Section 2.5, Borrower shall have the option
of having all or any portion of the principal outstanding under the Revolving
Loan be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall
bear interest at rates determined by reference to the Base Rate and the
Adjusted Eurodollar Rate, respectively; provided, that each Eurodollar Loan
shall be in a minimum amount of $2,000,000 and shall be in an amount which is
an integral multiple of $500,000. Prior to the termination of each Interest
Period with respect to each Eurodollar Loan, Borrower shall give written
notice (a "Notice of Continuation or Conversion") in the form of Exhibit G
attached hereto to Administrative Agent of the Type of Loan which shall be
applicable to the principal of such Eurodollar Loan upon the expiration of
such Interest Period. Such Notice of Continuation or Conversion shall be
given to Administrative Agent at least one (1) Domestic Business Day, in the
case of a Base Rate Loan selection and three (3) Eurodollar Business Days, in
the case of a Eurodollar Loan selection, prior to the termination of the
Interest Period then expiring. If Borrower shall specify a Eurodollar Loan,
such Notice of Continuation or Conversion shall also specify the length of
the succeeding Interest Period (subject to the provisions of the definition
of such term) selected by Borrower. Each Notice of Continuation or
Conversion shall be irrevocable and effective upon notification thereof to
Administrative Agent. If the required Notice of Continuation or Conversion
shall not have been timely received by Administrative Agent, Borrower shall
be deemed to have elected that the principal of the Eurodollar Loan subject
to the Interest Period then expiring be Converted to the Base Rate Loan upon
the expiration of such Interest Period and Borrower will be deemed to have
given Administrative Agent notice of such election. Subject to the
limitations set forth in this Section 2.5(c) on the amount and number of
Eurodollar Loans, Borrower shall have the right to Convert all or any part of
the Base Rate Loan to a Eurodollar Loan by giving Administrative Agent a
Notice of Continuation or Conversion of such election at least three (3)
Eurodollar Business Days prior to the date on which Borrower elects to make
such Conversion (a "Conversion Date"). The Conversion Date selected by
Borrower shall be a Eurodollar Business Day. Notwithstanding anything in
this Section 2.5 to the contrary, no portion of the principal of the Base
Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar Loan may be
Continued as such when any Default or Event of Default has occurred and is
continuing, but each such Eurodollar Loan shall be automatically Converted to
the Base Rate Loan on the last day of each applicable Interest Period.
Borrower shall not be permitted to have more than five (5) Eurodollar Loans
in effect at any time.
(d) Notwithstanding anything to the contrary set forth in Section
2.5(a) or Section 2.5(b) above, after the occurrence of an Event of Default,
interest shall accrue on the outstanding principal balance of the Revolving
Loan, and to the extent permitted by Law, on the past due but unpaid interest
on the Revolving Loan and all other past due Obligations from the period from
and including the occurrence of such Event of Default to but excluding the
date the same is remedied at a rate per annum equal to the lesser of (i) the
Default Rate, and (ii) the Maximum Lawful Rate.
(e) Administrative Agent shall determine each interest rate
applicable to the Revolving Loan in accordance with the terms hereof.
Administrative Agent shall promptly notify Borrower and Banks by telex,
telecopy or cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Base Rate or the Eurodollar Rate
hereunder (the "contract rate") is limited to the Maximum Lawful Rate, any
subsequent reductions in the contract rate shall not reduce the rate of
interest on the Revolving Loan below the Maximum Lawful Rate until the total
amount of interest accrued equals the amount of interest which would have
accrued if the contract rate had at all times been in effect. In the event
that at maturity (stated or by acceleration), or at final payment of any
Note, the total amount of interest paid or accrued on such Note is less than
the amount of interest which would have accrued if the contract rate had at
all times been in effect with respect thereto, then at such time, to the
extent permitted by law, Borrower shall pay to the holder of such Note an
amount equal to the difference between (i) the lesser of the amount of
interest which would have accrued if the contract rate had at all times been
in effect and the amount of interest which would have accrued if the Maximum
Lawful Rate had at all times been in effect, and (ii) the amount of interest
actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be
computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest payable hereunder on the Base
Rate Loan shall be computed based on the actual number of days elapsed
assuming that each calendar year consisted of 365 days (or 366 days in a leap
year).
Section 2.6 Mandatory Prepayments.
(a) Upon the occurrence of any Borrowing Base Deficiency, Borrower
shall make the mandatory prepayments of the Revolving Loan required by
Section 4.5 hereof.
(b) At any time that Borrower becomes obligated to prepay all or
part of the Permitted Senior Unsecured Debt, Borrower shall, prior to any
prepayment of the Permitted Senior Unsecured Debt, prepay the Revolving Loans
and reduce the Commitments in full.
Section 2.7 Voluntary Prepayments. Borrower may, subject to Section
13.5 and the other provisions of this Agreement, prepay the principal of the
Revolving Loan in whole or in part. Any partial prepayment shall be in a
minimum amount of $1,000,000 and shall be in an integral multiple of
$100,000.
Section 2.8 Voluntary Reduction of Commitments. Borrower may, by
notice to Administrative Agent three (3) Domestic Business Days prior to the
effective date of any such reduction, reduce the Total Commitment (and
thereby reduce the Commitment of each Bank ratably) in amounts not less than
$10,000,000 and in an amount which is an integral multiple of $10,000,000 or,
if less, the remaining amount of the Commitments. On the effective date of
any such reduction, Borrower shall, to the extent required as a result of
such reduction, make a principal payment on the Revolving Loan in an amount
sufficient to cause the principal balance of the Revolving Loan then
outstanding to be equal to or less than the Total Commitment as thereby
reduced. Notwithstanding the foregoing, Borrower shall not be permitted to
voluntarily reduce the Total Commitment to an amount less than the aggregate
Letter of Credit Exposure of all Banks.
Section 2.9 Termination of Commitments; Final Maturity of Revolving
Loan. The Total Commitment (and the Commitment of each Bank) shall
terminate, and the entire outstanding principal balance of the Revolving
Loan, all interest accrued thereon, all accrued but unpaid fees hereunder and
all other outstanding Obligations shall be due and payable in full on the
Termination Date.
Section 2.10 Voluntary Increase of Total Commitment. So long as no
Default or Event of Default has occurred and is continuing, or will result
therefrom, and so long as no Borrowing Base Deficiency exists, Borrower shall
have the right to increase the Total Commitment by increasing the existing
Commitments and/or obtaining additional Commitments (the amount of such
increase is herein called the "Commitment Increase"), either from (a) one or
more of the Banks, or (b) another financial institution; provided, that (i)
Borrower shall have notified Administrative Agent (which shall promptly
deliver a copy to each Bank) in writing of the amount of the Commitment
Increase, (ii) each Bank shall have had the option to increase its Commitment
up to its pro rata share (such pro rata share to be computed prior to the
addition of any new Bank under the terms of this Section 2.10 and Section
14.10(f) hereof) of the Commitment Increase within ten (10) Domestic Business
Days following receipt of notice from Administrative Agent pursuant to clause
(i) above, (iii) Administrative Agent shall have approved any new Bank (such
approval not to be unreasonably withheld after giving effect to the terms of
clause (ii) hereof), (iv) any such new Bank shall have assumed all of the
rights and obligations of a "Bank" hereunder, (v) the procedure described in
Section 14.10(f) shall have been complied with, and (vi) after giving effect
to the Commitment Increase, the Total Commitment shall not exceed the Maximum
Total Commitment Amount. Notwithstanding anything to the contrary contained
herein, the Commitment of any Bank may not be increased without the prior
written consent of such Bank.
Section 2.11 Application of Payments. Each repayment pursuant to
Section 2.6, Section 2.7, Section 2.8, Section 2.9, and Section 4.5 shall be
made together with accrued interest on the amount repaid to the date of
payment, and shall be applied in accordance with Section 3.2 and the other
provisions of this Agreement.
Section 2.12 Commitment Fee. On the Termination Date, on each
Quarterly Date prior to the Termination Date, and, in the event the
Commitments are terminated in their entirety prior to the Termination Date,
on the date of such termination, Borrower shall pay to Administrative Agent,
for the ratable benefit of each Bank based on each Bank's Commitment
Percentage, a commitment fee equal to the Commitment Fee Percentage in effect
from day to day (applied on a per annum basis and computed on the basis of
actual days elapsed and as if each calendar year consisted of 365 days (or
366 days in a leap year)) of the average daily Availability for the Fiscal
Quarter (or portion thereof) ending on the date such payment is due.
Section 2.13 Agency and other Fees. Borrower shall pay to
Administrative Agent and its Affiliates such other fees and amounts as
Borrower shall be required to pay to Administrative Agent and its Affiliates
from time to time pursuant to any separate agreement between Borrower and
Administrative Agent or such Affiliates. Such fees and other amounts shall
be retained by Administrative Agent and its Affiliates, and no Bank (other
than JPMorgan) shall have any interest therein. Administrative Agent may
disburse any fees paid to Administrative Agent and its Affiliates pursuant to
this Section 2.13 in any manner Administrative Agent desires in its sole
discretion.
ARTICLE III
GENERAL PROVISIONS
Section 3.1 Delivery and Endorsement of Notes. On the Closing Date,
Administrative Agent shall deliver to each Bank the Note payable to such
Bank. Each Bank may endorse (and prior to any transfer of its Note shall
endorse) on the schedules attached and forming a part thereof appropriate
notations to evidence the date and amount of its Commitment Percentage of
each Borrowing, the Interest Period applicable thereto, and the date and
amount of each payment of principal made by Borrower with respect thereto;
provided that the failure by any Bank to so endorse its Note shall not affect
the liability of Borrower for the repayment of all amounts outstanding under
such Note together with interest thereon. Each Bank is hereby irrevocably
authorized by Borrower to endorse its Note and to attach to and make a part
of any such Note a continuation of any such schedule as required.
Section 3.2 General Provisions as to Payments.
(a) Borrower shall make each payment of principal of, and interest
on, the Revolving Loan, and all fees payable hereunder shall be paid, not
later than 12:00 noon (Chicago, Illinois time) on the date when due, in
Federal or other funds immediately available in Chicago, Illinois, to
Administrative Agent at its address set forth on Schedule 1.1 hereto, without
defense, set-off, deduction or counterclaim. Administrative Agent will
promptly (and if such payment is received by Administrative Agent by 10:00
a.m. (Chicago, Illinois time), and otherwise if reasonably possible, on the
same Domestic Business Day) distribute to each Bank its Commitment Percentage
of each such payment received by Administrative Agent for the account of
Banks. Whenever any payment of principal of, or interest on, the Base Rate
Loan or of fees shall be due on a day which is not a Domestic Business Day,
the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on,
any portion of any Eurodollar Loan shall be due on a day which is not a
Eurodollar Business Day, the date for payment thereof shall be extended to
the next succeeding Eurodollar Business Day (subject to the provisions of the
definition of Interest Period). If the date for any payment of principal is
extended by operation of Law or otherwise, interest thereon shall be payable
for such extended time. Borrower hereby authorizes Administrative Agent to
charge from time to time against Borrower's accounts with Administrative
Agent any amount then due.
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Revolving Loan shall be
applied first to Eurodollar Loans outstanding with Interest Periods ending on
the date of such payment, then to the Base Rate Loan, and then to Eurodollar
Loans next maturing until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank shall be applied
first to the payment of all proper costs incurred by Administrative Agent in
connection with the collection thereof (including reasonable expenses and
disbursements of Administrative Agent), second to the payment of all proper
costs incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of Banks), third to the reimbursement
of any advances made by Banks to effect performance of any unperformed
covenants of any Credit Party under any of the Loan Papers, fourth to the
payment of any unpaid fees required pursuant to Section 2.13, fifth to the
payment of any unpaid fees required pursuant to Section 2.1(b) and Section
2.12, sixth, to the payment of all accrued but unpaid interest, seventh, to
the payment to each Bank of its Commitment Percentage of the outstanding
principal of the Revolving Loan and to satisfy all obligations and
liabilities then due under Hedge Agreements with each such Bank (and/or its
Affiliates), such payments to be made pro rata to each Bank (and/or its
Affiliates) owed such Obligations in proportion to all such payments owed to
all Banks (and/or their Affiliates) in respect of such Obligations, and
eighth to establish the deposits required in Section 2.1(b). All payments
received by a Bank after the occurrence of an Event of Default for
application to the principal of the Revolving Loan shall be applied by such
Bank in the manner provided in Section 3.2(b).
ARTICLE IV
BORROWING BASE
Section 4.1 Reserve Report; Proposed Borrowing Base. The aggregate
amount of credit available to Borrower under this Agreement shall be limited
by a Borrowing Base (herein so called) which shall be determined by Banks at
the times and in accordance with the standards and procedures set forth in
this Article IV. As soon as available and in any event by March 15, and
August 31 of each year, commencing March 15, 2007, Borrower shall deliver to
Administrative Agent and each Bank a Reserve Report prepared as of the
immediately preceding December 31 and June 30, respectively. Simultaneously
with the delivery to Administrative Agent and each Bank of each Reserve
Report, Borrower shall notify Administrative Agent and each Bank of the
amount of the Borrowing Base which Borrower requests become effective on the
next Redetermination Date (or such date promptly following such
Redetermination Date as Required Banks shall elect).
Section 4.2 Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards. Based in part on the Reserve Reports made
available to Banks pursuant to Section 4.1, Banks shall redetermine the
Borrowing Base on or prior to the next Redetermination Date (or such date
promptly thereafter as reasonably possible based on the engineering and other
information available to Banks). Any Borrowing Base which becomes effective
as a result of any Redetermination of the Borrowing Base shall be subject to
the following restrictions: (a) such Borrowing Base shall not exceed the
Borrowing Base requested by Borrower pursuant to Section 4.1 or Section 4.3
(as applicable), (b) such Borrowing Base shall not exceed the Total
Commitment then in effect, (c) to the extent such Borrowing Base represents
an increase from the Borrowing Base in effect prior to such Redetermination,
such Borrowing Base shall be approved by all Banks, and (d) to the extent
such Borrowing Base represents a decrease in the Borrowing Base in effect
prior to such Redetermination, or a reaffirmation of such prior Borrowing
Base, such Borrowing Base shall be approved by Required Banks. Each
Redetermination shall be made by Banks in their sole discretion. Without
limiting such discretion, Borrower acknowledges and agrees that Banks (i) may
make such assumptions regarding appropriate existing and projected pricing
for Hydrocarbons as they deem appropriate in their sole discretion, (ii) may
make such assumptions regarding projected rates and quantities of future
production of Hydrocarbons from the Mineral Interests owned by Borrower as
they deem appropriate in their sole discretion, (iii) may consider the
projected cash requirements of the Credit Parties, (iv) are not required to
consider any asset other than Proved Mineral Interests owned by Borrower
which are subject to first and prior Liens in favor of Administrative Agent
for the ratable benefit of Banks to the extent required by Section 5.1
hereof, and (v) may make such other assumptions, considerations and
exclusions as Banks deem appropriate in the exercise of their sole
discretion. It is further acknowledged and agreed that each Bank may
consider such other credit factors as it deems appropriate in the exercise of
its sole discretion and shall have no obligation in connection with any
Redetermination to approve any increase from the Borrowing Base in effect
prior to such Redetermination. Promptly following any Redetermination of the
Borrowing Base, Administrative Agent shall notify Borrower of the amount of
the Borrowing Base as redetermined, which Borrowing Base shall be effective
as of the date specified in such notice, and shall remain in effect for all
purposes of this Agreement until the next Redetermination.
Section 4.3 Special Redetermination.
(a) In addition to Scheduled Redeterminations and the other
Redeterminations provided for in this Article IV, Borrower and Required Banks
shall each be permitted to request a Special Redetermination of the Borrowing
Base once in each period between Scheduled Redeterminations. Any request by
Required Banks pursuant to this Section 4.3(a) shall be submitted to
Administrative Agent and Borrower. Any request by Borrower pursuant to this
Section 4.3(a) shall be submitted to Administrative Agent and each Bank and
at the time of such request Borrower shall (i) deliver to Administrative
Agent and each Bank a Reserve Report, and (ii) also notify Administrative
Agent and each Bank of the Borrowing Base requested by Borrower in connection
with such Special Redetermination.
(b) Any Special Redetermination shall be made by Banks in accordance
with the procedures and standards set forth in Section 4.2; provided, that,
no Reserve Report will be required to be delivered to Administrative Agent
and Banks in connection with any Special Redetermination requested by
Required Banks pursuant to Section 4.3(a) above.
Section 4.4 Asset Disposition Adjustment. In addition to the other
Redeterminations provided for in this Article IV, Required Banks shall be
permitted to redetermine the Borrowing Base in connection with, and
simultaneously with, the consummation of an Asset Disposition described in
the proviso of Section 9.5(c), and reduce the Borrowing Base by an amount
equal to the Borrowing Base value of the Borrowing Base Properties which are
the subject of such Asset Disposition (which shall be the Borrowing Base
value assigned thereto by Administrative Agent and approved by Required
Banks). In the event Required Banks elect to redetermine the Borrowing Base
in accordance with this Section 4.4, Administrative Agent shall notify
Borrower promptly, but in any event no less than one (1) Domestic Business
Day prior to the consummation of the Asset Disposition, of the amount of the
Borrowing Base as redetermined, which Borrowing Base shall be effective as of
the date specified in such notice, and shall remain in effect for all
purposes of this Agreement until the next Redetermination. Notwithstanding
anything to the contrary contained herein, Borrower agrees that any such
Redetermination pursuant to this Section 4.4 shall not be construed or deemed
to be a Special Redetermination hereunder.
Section 4.5 Borrowing Base Deficiency. To the extent a Borrowing
Base Deficiency exists after giving effect to any Redetermination (other than
in connection with a Redetermination pursuant to Section 4.4 hereof),
Borrower shall, within ten (10) days following notice thereof from
Administrative Agent, provide written notice (the "Election Notice") to
Administrative Agent stating the action which Borrower proposes to take to
remedy such Borrowing Base Deficiency, and Borrower shall thereafter, at its
option, either (a) within thirty (30) days following the delivery of the
Election Notice, make a prepayment or prepayments of principal on the
Revolving Loan in an amount sufficient to eliminate such Borrowing Base
Deficiency, and if such Borrowing Base Deficiency cannot be eliminated
pursuant to this Section 4.5 by prepayment of the Revolving Loan in full (as
a result of outstanding Letter of Credit Exposure), Borrower shall also at
such time deposit with Administrative Agent sufficient cash to be held by
Administrative Agent to secure outstanding Letter of Credit Exposure in the
manner contemplated by Section 2.1(b) as necessary to eliminate such
Borrowing Base Deficiency, (b) eliminate such Borrowing Base Deficiency by
making three (3) consecutive mandatory prepayments of principal on the
Revolving Loan, each of which shall be in the amount of one-third (1/3rd) of
the amount of such Borrowing Base Deficiency, commencing on the first Monthly
Date following the delivery of the Election Notice, and continuing on each
Monthly Date thereafter, (c) within ninety (90) days following the delivery
of the Election Notice, submit (and pledge as collateral pursuant to Article
V hereof) additional oil and gas properties owned by Borrower and its
Subsidiaries for consideration in connection with the determination of the
Borrowing Base which Administrative Agent and Banks deem sufficient in their
sole discretion to eliminate such Borrowing Base Deficiency, or (d) eliminate
such Borrowing Base Deficiency through a combination of prepayments on the
Revolving Loan and submission of additional oil and gas properties for
inclusion in the Borrowing Base as set forth in subclauses (a) and (c) above.
Notwithstanding the foregoing, upon any Redetermination of the Borrowing Base
pursuant to Section 4.4 hereof which results in a Borrowing Base Deficiency
(or increase in an existing Borrowing Base Deficiency), Borrower shall,
within one (1) Domestic Business Day of such Redetermination, make a
mandatory prepayment of principal on the Revolving Loan in an amount
sufficient to eliminate such Borrowing Base Deficiency.
ARTICLE V
COLLATERAL AND GUARANTEES
Section 5.1 Security.
(a) The Obligations shall be secured by first and prior Liens
(subject only to Permitted Encumbrances) covering and encumbering (i) the
Required Reserve Value of all Borrowing Base Properties, together with all
related assets and interests, including, without limitation, all operating
equipment, accounts, inventory, contract rights and all products, proceeds
and other interests relating to the ownership, operation and/or production of
such Borrowing Base Properties, and (ii) all of the issued and outstanding
Equity owned by Borrower and each Restricted Subsidiary of each Restricted
Subsidiary. On the Closing Date, Borrower shall (A) deliver to
Administrative Agent for the ratable benefit of each Bank, the Mortgages
(including, without limitation, amendments to the Existing Mortgages) in form
and substance acceptable to Administrative Agent and duly executed by
Borrower and/or its Subsidiaries, together with such other assignments,
conveyances, amendments, agreements and other writings, including, without
limitation, UCC-1 and UCC-3 financing statements (each duly authorized and
executed, as applicable) as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect first and prior Liens (subject
only to Permitted Encumbrances) in all Borrowing Base Properties and other
interests of Borrower required by this Section 5.1(a), (B) execute and
deliver to Administrative Agent (1) a Borrower Pledge Agreement, and (2) such
UCC-1 and UCC-3 financing statements as Administrative Agent shall request to
fully evidence and perfect the Liens created by such Borrower Pledge
Agreement, and (C) deliver to Administrative Agent the certificate(s)
evidencing the issued and outstanding Equity of each existing Subsidiary of
Borrower, duly endorsed or accompanied by appropriate blank stock powers.
Borrower hereby authorizes Administrative Agent, and its agents, successors
and assigns, to file any and all necessary financing statements under the
Uniform Commercial Code, assignments or continuation statements as necessary
from time to time (in Administrative Agent's discretion) to perfect (or
continue perfection of) the Liens granted pursuant to the Loan Papers.
(b) On or before each Redetermination Date after the Closing Date
and at such other times as Administrative Agent or Required Banks shall
request or as otherwise required hereunder, including, without limitation,
pursuant to Section 4.5 hereof, Borrower and its Restricted Subsidiaries
shall execute and deliver to Administrative Agent, for the ratable benefit of
each Bank, Mortgages in form and substance acceptable to Administrative Agent
and duly executed by Borrower and any such Restricted Subsidiary (as
applicable) together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements (each duly authorized and executed) as Administrative Agent shall
deem necessary or appropriate to grant, evidence and perfect the Liens
required by Section 5.1(a) preceding with respect to Borrowing Base
Properties acquired by Borrower and its Restricted Subsidiaries subsequent to
the last date on which Borrower or any such Restricted Subsidiary was
required to execute and deliver Mortgages pursuant to this Section 5.1(b), or
which, for any other reason are not the subject of valid, enforceable,
perfected first priority Liens (subject only to Permitted Encumbrances) in
favor of Administrative Agent for the ratable benefit of Banks.
(c) At any time Borrower or any of its Subsidiaries is required to
execute and deliver Mortgages and/or Assignments and Amendments to Mortgages
to Administrative Agent pursuant to this Section 5.1, Borrower shall also
deliver to Administrative Agent such opinions of counsel (including, if so
requested, title opinions addressed to Administrative Agent) and other
evidence of title as Administrative Agent shall deem necessary or appropriate
to verify (i) Borrower's or such Subsidiary's title to the Required Reserve
Value of the Proved Mineral Interests which are subject to such Mortgages,
and (ii) the validity and perfection of the Liens created by such Mortgages
and such other matters regarding such Mortgages as Administrative Agent shall
reasonably request.
(d) To the extent required or contemplated by the terms of Section
5.1(a)(ii), Borrower or any Indirect Restricted Subsidiary (as applicable)
shall execute and deliver to Administrative Agent a Borrower Pledge Agreement
or a Subsidiary Pledge Agreement (as applicable) together with (i) all
certificates (or other evidence acceptable to Administrative Agent)
evidencing the issued and outstanding Equity of any such Restricted
Subsidiary of every class owned by Borrower or such Indirect Restricted
Subsidiary (as applicable) which shall be duly endorsed or accompanied by
stock powers executed in blank (as applicable), and (ii) such UCC-1 financing
statements as Administrative Agent shall deem necessary or appropriate to
grant, evidence and perfect the Liens required by Section 5.1(a)(ii) in the
issued and outstanding Equity of each such Restricted Subsidiary.
Section 5.2 Guarantees. Payment and performance of the Obligations
shall be fully guaranteed by each Restricted Subsidiary pursuant to a
Facility Guaranty, and Borrower shall cause any such applicable Restricted
Subsidiary to execute and deliver to Administrative Agent such Facility
Guaranty.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Amendment and Restatement, Initial
Borrowing and Participation in Letter of Credit Exposure. The amendment and
restatement of the Existing Credit Agreement on the terms set forth herein,
and the obligation of each Bank to loan its Commitment Percentage of the
initial Borrowing hereunder and the obligation of Administrative Agent to
issue (or cause another Bank to issue) any Letter of Credit issued hereunder
is subject to the satisfaction of each of the following conditions:
(a) Closing Deliveries. Administrative Agent shall have received
each of the following documents, instruments and agreements, each of which
shall be in form and substance and executed in such counterparts as shall be
acceptable to Administrative Agent and each Bank and each of which shall,
unless otherwise indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the amount of
such Bank's Commitment, duly executed by Borrower;
(ii) the Mortgages (including any amendments to the Existing
Mortgages) to be executed on the Closing Date pursuant to Section 5.1(a),
duly executed and delivered by Borrower and each Subsidiary of Borrower (as
applicable), together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements, tax affidavits and applicable department of revenue
documentation, in form and substance satisfactory to Administrative Agent,
creating first and prior Liens in all Borrowing Base Properties (subject only
to Permitted Encumbrances);
(iii) Facility Guarantees duly executed by each existing Restricted
Subsidiary of Borrower;
(iv) a Borrower Pledge Agreement duly executed by Borrower together
with (A) certificates evidencing one hundred percent (100%) of the issued and
outstanding Equity of each existing Restricted Subsidiary of Borrower of
every class (all certificates delivered pursuant to this Section 6.1(a)(iv)
shall be duly endorsed or accompanied by duly executed blank stock powers),
and (B) such financing statements (duly authorized) as Administrative Agent
shall request to perfect the Liens granted pursuant to such Borrower Pledge
Agreement;
(v) such financing statements (including, without limitation, the
financing statements referenced in subclauses (ii) and (iv) above) in form
and substance acceptable to Administrative Agent (duly authorized) as
Administrative Agent shall specify to fully evidence and perfect all Liens
contemplated by the Loan Papers, all of which shall be filed of record in
such jurisdictions as Administrative Agent shall require in its sole
discretion;
(vi) a copy of the articles or certificate of incorporation,
certificate of organization, or comparable charter documents, and all
amendments thereto, of each Credit Party accompanied by a certificate that
such copy is true, correct and complete, and dated within twenty (20) days of
the Closing Date (or within such other period as acceptable to Administrative
Agent), issued by the appropriate Governmental Authority of the jurisdiction
of incorporation of each such Credit Party, and accompanied by a certificate
of the Secretary or comparable Authorized Officer of each such Credit Party
that such copy is true, correct and complete on the Closing Date;
(vii) a copy of the bylaws, regulations or comparable charter
documents, and all amendments thereto, of each Credit Party accompanied by a
certificate of the Secretary or comparable Authorized Officer of each such
Credit Party that such copy is true, correct and complete as of Closing Date;
(viii) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as Administrative
Agent has requested relating to the existence of each Credit Party and to the
effect that each such Credit Party is in good standing with respect to the
payment of franchise and similar Taxes and is duly qualified to transact
business in such jurisdictions;
(ix) a certificate of incumbency of all officers of each Credit
Party who will be authorized to execute or attest to any Loan Paper, dated
the Closing Date, executed by the Secretary or comparable Authorized Officer
of each such Credit Party;
(x) copies of resolutions or comparable authorizations approving the
Loan Papers and authorizing the transactions contemplated by this Agreement
and the other Loan Papers, duly adopted by the Board of Directors (or
comparable authority) of each Credit Party accompanied by certificates of the
Secretary or comparable officer of each such Credit Party that such copies
are true and correct copies of resolutions duly adopted at a meeting of or
(if permitted by applicable Law and, if required by such Law, by the bylaws
or comparable charter documents of each such Credit Party, as applicable) by
the unanimous written consent of the Board of Directors (or comparable
authority) of each such Credit Party, as applicable, and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the Closing Date;
(xi) an opinion of Xxxxx Xxxxxx & Xxxxxx LLP, counsel to Borrower,
dated the Closing Date, favorably opining as to the enforceability of each of
the Loan Papers and otherwise in form and substance satisfactory to
Administrative Agent and Banks;
(xii) such opinions of local counsel as Administrative Agent shall
require in each jurisdiction where Mortgages will be filed, each dated the
Closing Date, favorably opining as to the enforceability of the applicable
Mortgages in each applicable jurisdiction and otherwise in form and substance
satisfactory to Administrative Agent and Banks;
(xiii) a certificate signed by an Authorized Officer of Borrower
stating that (A) the representations and warranties contained in this
Agreement and the other Loan Papers are true and correct in all respects, and
(B) no Default or Event of Default has occurred and is continuing;
(xiv) a Certificate of Ownership Interests signed by an Authorized
Officer of Borrower in the form of Exhibit H attached hereto;
(xv) copies of all reports in Borrower's files (or otherwise
reasonably available to Borrower) pertaining to Borrower's Mineral Interests
and operations, which report(s) shall not reflect the existence of facts or
circumstances which would constitute a material violation of any Applicable
Environmental Law or which are likely to result in a material liability to
any Credit Party; and
(xvi) certificates from Borrower's insurance broker setting forth
the insurance maintained by Borrower and stating that such insurance is in
full force and effect, and which certificates shall evidence that such
insurance complies with the requirements of Section 8.6.
(b) Title Review. Administrative Agent or its counsel shall have
completed a review of title to the Required Reserve Value of all Borrowing
Base Properties and such review shall not have revealed any condition or
circumstance which would reflect that the representations and warranties
contained in Section 7.8 and Section 7.9 hereof are inaccurate in any
respect.
(c) No Material Adverse Change. No Material Adverse Change shall
have occurred since December 31, 2005.
(d) No Legal Prohibition. The transactions contemplated by this
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent or any Bank to any material adverse change in its assets,
liabilities, financial condition, operations or prospects or subject any
Credit Party to a Material Adverse Change.
(e) No Litigation. No litigation, arbitration or similar proceeding
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
(f) Closing Fees. Borrower shall have paid to Administrative Agent
for the ratable benefit of each Bank, and shall have paid to Administrative
Agent and its Affiliates (for its own account), the fees to be paid on the
Closing Date pursuant to Section 2.13.
(g) Other Matters. All matters related to this Agreement, the other
Loan Papers, and the Credit Parties shall be acceptable to each Bank in its
sole discretion, and each Credit Party shall have delivered to Administrative
Agent and each Bank such evidence as they shall request to substantiate any
matters related to this Agreement and the other Loan Papers as Administrative
Agent or any Bank shall request.
Upon satisfaction of each of the conditions set forth in this Section
6.1, Borrower and Administrative Agent shall execute the Certificate of
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and
completely be amended and restated on the terms set forth herein without
necessity of any other action on the part of any Bank, any Agent or Borrower.
Until execution and delivery of the Certificate of Effectiveness, the
Existing Credit Agreement shall remain in full force and effect in accordance
with its terms. Each Bank hereby authorizes Administrative Agent to execute
the Certificate of Effectiveness on its behalf and acknowledges and agrees
that the execution of the Certificate of Effectiveness by Administrative
Agent shall be binding on each such Bank.
Section 6.2 Conditions to Each Borrowing and each Letter of Credit.
The obligation of each Bank to loan its Commitment Percentage of each
Borrowing and the obligation of any Letter of Credit Issuer to issue, extend,
amend or renew any Letter of Credit on the date such Letter of Credit is to
be issued, extended, amended or renewed is subject to the further
satisfaction of the following conditions:
(a) timely receipt by Administrative Agent of a Request for
Borrowing or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall have
occurred and be continuing and the funding of such Borrowing or the issuance
of the requested Letter of Credit (as applicable) shall not cause a Default
or Event of Default;
(c) the representations and warranties of each Credit Party
contained in this Agreement and the other Loan Papers shall be true and
correct on and as of the date of such Borrowing or issuance of such Letter of
Credit (as applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred since December
31, 2005; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on
the date of such Borrowing and the date of issuance of each Letter of Credit
as to the facts specified in Section 6.2(b) through Section 6.2(f).
Section 6.3 Materiality of Conditions. Each condition precedent
herein is material to the transactions contemplated herein, and time is of
the essence in respect of each thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each Bank
that each of the following statements is true and correct on the date hereof,
will be true and correct on the Closing Date, and will be true and correct on
the occasion of each Borrowing and the issuance of each Letter of Credit:
Section 7.1 Corporate Existence and Power. Each Credit Party (a) is
a corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the
Laws of its jurisdiction of incorporation or organization, (b) has all
corporate, partnership or limited liability company power (as applicable) and
all material governmental licenses, authorizations, consents and approvals
required to carry on its businesses as now conducted and as proposed to be
conducted, and (c) is duly qualified to transact business as a foreign
corporation, partnership or limited liability company (as applicable) in each
jurisdiction where a failure to be so qualified could reasonably be expected
to have a Material Adverse Effect.
Section 7.2 Credit Party and Governmental Authorization;
Contravention. The execution, delivery and performance of this Agreement and
the other Loan Papers by each Credit Party (to the extent each Credit Party
is a party to this Agreement and such Loan Papers) are within such Credit
Party's corporate, partnership or limited liability company powers (as
applicable), when executed will be duly authorized by all necessary
corporate, partnership or limited liability company action (as applicable),
require no action by or in respect of, or filing with, any Governmental
Authority (except for filings and recordings to perfect Liens granted
pursuant to such Loan Papers) and do not contravene, or constitute a default
under, any provision of (a) applicable Law (including, without limitation,
the Margin Regulations), (b) the articles or certificate of incorporation,
bylaws, regulations, partnership agreement or comparable charter documents of
any Credit Party, or (c) any agreement, judgment, injunction, order, decree
or other instrument binding upon any Credit Party or result in the creation
or imposition of any Lien on any asset of any Credit Party other than the
Liens securing the Obligations.
Section 7.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of Borrower; the other Loan Papers when executed and
delivered in accordance with this Agreement, will constitute valid and
binding obligations of each Credit Party executing the same; and each Loan
Paper is, or when executed and delivered, will be, enforceable against each
Credit Party which executes the same in accordance with its terms except as
(a) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer or conveyance or similar Laws affecting
creditors rights generally, and (b) the availability of equitable remedies
may be limited by equitable principles of general applicability.
Section 7.4 Financial Information.
(a) The most recent annual audited consolidated balance sheet of
Borrower and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, present fairly, in all material respects, in conformity with GAAP, the
consolidated financial position of Borrower as of the end of such Fiscal Year
and its consolidated results of operations and cash flows for such Fiscal
Year.
(b) The most recent quarterly unaudited consolidated balance sheet
of Borrower delivered to Banks, and the related unaudited consolidated
statements of operations and cash flows for the portion of Borrower's Fiscal
Year then ended, present fairly, in all material respects, in conformity with
GAAP applied on a basis consistent with the financial statements referred to
in Section 7.4(a), the consolidated financial position of Borrower as of such
date and its consolidated results of operations and cash flows for such
portion of Borrower's Fiscal Year.
(c) Since the date of Borrower's most recent annual and quarterly
consolidated balance sheet and consolidated statements of operations and cash
flow delivered to Banks, there has been no material adverse change in the
assets, liabilities, financial position, results of operations or prospects
of Borrower, individually, or the Credit Parties, taken as a whole.
Section 7.5 Litigation. Except for matters disclosed on Schedule
7.5 attached hereto, there is no action, suit or proceeding pending against,
or to the knowledge of any Credit Party, threatened against any Credit Party
before any Governmental Authority in which there is a reasonable possibility
of an adverse decision which could reasonably be expected to have a Material
Adverse Effect or which could in any manner draw into question the validity
of the Loan Papers.
Section 7.6 ERISA. No Credit Party maintains or has ever maintained
or been obligated to contribute to any Plan covered by Title IV of ERISA or
subject to the funding requirements of section 412 of the Code or section 302
of ERISA. Each Plan maintained by any Credit Party or any ERISA Affiliate of
any Credit Party is in compliance in all material respects with all
applicable Laws. Except in such instances where an omission or failure would
not have a Material Adverse Effect, (a) all returns, reports and notices
required to be filed with any regulatory agency with respect to any Plan have
been filed timely, and (b) no Credit Party nor any ERISA Affiliate of any
Credit Party has failed to make any contribution or pay any amount due or
owing as required by the terms of any Plan. There are no pending or, to the
best of Borrower's knowledge, threatened claims, lawsuits, investigations or
actions (other than routine claims for benefits in the ordinary course)
asserted or instituted against, and no Credit Party nor any ERISA Affiliate
of any Credit Party has knowledge of any threatened litigation or claims
against, the assets of any Plan or its related trust or against any fiduciary
of a Plan with respect to the operation of such Plan that are likely to
result in liability of any Credit Party having a Material Adverse Effect.
Except in such instances where an omission or failure would not have a
Material Adverse Effect, each Plan that is intended to be "qualified" within
the meaning of section 401(a) of the Code is, and has been during the period
from its adoption to date, so qualified, both as to form and operation and
all necessary governmental approvals have been or will be timely obtained,
and additionally, such Plan is either a prototype plan entitled to rely on
the opinion letter issued by the Internal Revenue Service as to the qualified
status of such Plan under section 401(a) of the Code to the extent provided
in Revenue Procedure 2005-15, or such Plan has been determined by the
Internal Revenue Service to be so qualified. No Credit Party nor any ERISA
Affiliate of any Credit Party has engaged in any prohibited transactions,
within the meaning of section 406 of ERISA or section 4975 of the Code, in
connection with any Plan which would result in liability of any Credit Party
having a Material Adverse Effect. No Credit Party maintains or contributes
to any Plan that provides a post-employment health benefit, other than a
benefit required under section 601 of ERISA, or maintains or contributes to a
Plan that provides health benefits that is not fully funded except where the
failure to fully fund such Plan could not reasonably be expected to have a
Material Adverse Effect. No Credit Party maintains, has established or has
ever participated in a multiple employer welfare benefit arrangement within
the meaning of section 3(40)(A) of ERISA.
Section 7.7 Taxes and Filing of Tax Returns. Each Credit Party has
filed all material tax returns required to have been filed and has paid all
Taxes shown to be due and payable on such returns, including interest and
penalties, and all other Taxes which are payable by such party, to the extent
the same have become due and payable, other than Taxes with respect to which
a failure to pay would not have a Material Adverse Effect. No Credit Party
knows of any proposed material Tax assessment against it and all material Tax
liabilities of each Credit Party are adequately provided for. No income tax
liability of any Credit Party has been asserted by the Internal Revenue
Service or other Governmental Authority for Taxes in excess of those already
paid.
Section 7.8 Ownership of Properties Generally. Except for
Immaterial Title Deficiencies, each Credit Party has good and defensible
title to all material properties and assets purported to be owned by it,
including, without limitation, all assets reflected in the balance sheets
referred to in Section 7.4(a) and Section 7.4(b) and all assets which are
used by the Credit Parties in the operation of their respective businesses,
and none of such properties or assets is subject to any Lien other than
Permitted Encumbrances.
Section 7.9 Mineral Interests. Borrower has good and defensible
title to all Mineral Interests described in the Reserve Report, including,
without limitation, all Borrowing Base Properties, free and clear of all
Liens except Permitted Encumbrances and Immaterial Title Deficiencies. With
the exception of Immaterial Title Deficiencies, all such Mineral Interests
are valid, subsisting, and in full force and effect, and all rentals,
royalties, and other amounts due and payable in respect thereof have been
duly paid, except those being contested in good faith. Without regard to any
consent or non-consent provisions of any joint operating agreement covering
any of Borrower's Proved Mineral Interests, and with the exception of
Immaterial Title Deficiencies, Borrower's share of (a) the costs for each
Proved Mineral Interest described in the Reserve Report is not greater than
the decimal fraction set forth in the Reserve Report, before and after
payout, as the case may be, and described therein by the respective
designations "working interests," "WI," "gross working interest," "GWI," or
similar terms, and (b) production from, allocated to, or attributed to each
such Proved Mineral Interest is not less than the decimal fraction set forth
in the Reserve Report, before and after payout, as the case may be, and
described therein by the designations "net revenue interest," "NRI," or
similar terms. In all material respects, each well drilled in respect of
each Proved Producing Mineral Interest described in the Reserve Report (y) is
capable of, and is presently, producing Hydrocarbons in commercially
profitable quantities, and Borrower is currently receiving payments for its
share of production, with no funds in respect of any thereof being presently
held in suspense, other than any such funds being held in suspense pending
delivery of appropriate division orders, and (z) has been drilled, bottomed,
completed, and operated in material compliance with all applicable Laws and
no such well which is currently producing Hydrocarbons is subject to any
penalty in production by reason of such well having produced in excess of its
allowable production.
Section 7.10 Licenses, Permits, Etc. Except as disclosed on
Schedule 7.10 attached hereto, each Credit Party possesses such valid
franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities, as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain or maintain any such item would not have a Material Adverse Effect.
Section 7.11 Compliance with Law. The business and operations of
each Credit Party have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which do not (either
individually or collectively) have a Material Adverse Effect.
Section 7.12 Full Disclosure. All information heretofore furnished
by each Credit Party to Administrative Agent or any Bank for purposes of or
in connection with this Agreement, any Loan Paper or any transaction
contemplated hereby or thereby is, and all such information hereafter
furnished by or on behalf of any Credit Party to Administrative Agent or any
Bank will, when taken as a whole, be, true, complete and accurate in every
material respect. The Credit Parties have disclosed or have caused to be
disclosed to Banks in writing any and all facts which could reasonably be
expected to result in a Material Adverse Change.
Section 7.13 Organizational Structure; Nature of Business. As of
the Closing Date, (a) Borrower has no direct, wholly-owned Subsidiaries,
other than Castle, DPCA, DEC, Bonds Company and Piper, (b) Borrower, Castle,
DPCA, DEC and Piper are primarily engaged in the business of acquiring,
exploring, developing and operating Mineral Interests and the production,
processing and marketing of Hydrocarbons therefrom and related activities,
(c) Borrower owns approximately (i) ninety-two percent (92%) of the issued
and outstanding Equity of Amber, (ii) seventy-four percent (74%) of the
issued and outstanding Equity of PGR, and (iii) fifty-six percent (56%) of
the issued and outstanding Equity of CRB, (d) Amber has no assets other than
a right to receive a portion of the proceeds from certain litigation against
the Federal Government relative to offshore California, (e) PGR is engaged in
the exploration and development of Mineral Interests, (f) CRB has rights in
certain Mineral Interests, (g) Borrower owns forty nine and one half percent
(49.5%) of the issued and outstanding Equity of DHS, (h) DHS is engaged in
the drilling business, (i) Borrower is the general partner of Castle, and (j)
Bonds Company owns a ranch in the State of Colorado which provides access to
certain adjacent Mineral Interests in which one or more Credit Parties has an
interest. Schedule 7.13 attached hereto accurately reflects (i) the
jurisdiction of incorporation or organization of each Credit Party, (ii) each
jurisdiction in which each Credit Party is qualified to transact business as
a foreign corporation, foreign partnership or foreign limited liability
company, (iii) the authorized, issued and outstanding Equity of each Credit
Party, and (iv) all outstanding warrants, options, subscription rights,
convertible securities or other rights to purchase Equity of each Credit
Party.
Section 7.14 Environmental Matters. Except for matters disclosed on
Schedule 7.14 attached hereto, no operation conducted by any Credit Party and
no real or personal property now or previously owned or leased by any Credit
Party (including, without limitation, any Credit Party's Mineral Interests)
and no operations conducted thereon by a Credit Party, and to any Credit
Parties' knowledge, no operations of any other Person or any prior owner,
lessee or operator of any such properties, is or has been in violation of any
Applicable Environmental Law other than violations which neither individually
nor in the aggregate will have a Material Adverse Effect. Except for matters
disclosed on Schedule 7.14 attached hereto, no Credit Party, nor any such
property nor operation is the subject of any existing, pending or, to any
Credit Party's knowledge, threatened Environmental Complaint which could,
individually or in the aggregate, have a Material Adverse Effect. All
notices, permits, licenses, and functionally equivalent authorizations,
required to be obtained or filed under Applicable Environmental Laws in
connection with the ownership of each tract of real property or operations of
any Credit Party thereon and each item of personal property owned, leased or
operated by any Credit Party, including, without limitation, notices,
licenses, permits and authorizations required in connection with any past or
present treatment, storage, disposal, or release of Hazardous Substances into
the environment, have been duly obtained or filed except to the extent the
failure to obtain or file such notices, licenses, permits and authorizations
would not have a Material Adverse Effect. All Hazardous Substances generated
at each tract of real property owned, leased or operated by any Credit Party
have been transported, treated, and disposed of only by carriers or
facilities maintaining valid permits under RCRA (as hereinafter defined) or
other Applicable Environmental Laws for the conduct of such activities to the
extent that RCRA and/or such other Applicable Environmental Laws applied to
such Hazardous Substances and such transport, treatment and disposal
activities, except in such cases where the failure to obtain such permits
would not, individually or in the aggregate, have a Material Adverse Effect.
Except for matters disclosed on Schedule 7.14 attached hereto, and matters
which were not subject to enforcement under Federal, State or local guidance
or policy, there have been no Hazardous Discharges in excess of applicable
reporting quantities or which were not otherwise authorized by any permit
license or functionally equivalent authorization, which were not in
compliance with Applicable Environmental Laws other than Hazardous Discharges
which would not, individually or in the aggregate, have a Material Adverse
Effect. Except for matters disclosed on Schedule 7.14 attached hereto, no
Credit Party has any contingent liability in connection with any such
Hazardous Discharge which could reasonably be expected to have a Material
Adverse Effect. As used in this Section 7.14, the term "RCRA" shall mean the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Recovery Act of 1976, as amended by
the Solid Waste Disposal Act of 1980, and the Hazardous and Solid Waste
Amendments of 1984, as the same may be further amended and in effect from
time to time, as such Act existed and applied at the time of the treatment,
transport, storage, disposal or discharge at issue.
Section 7.15 Burdensome Obligations. No Credit Party, nor any of
the properties of any Credit Party, is, to Borrower's Knowledge, subject to
any Law or any pending or threatened change of Law or subject to any
restriction under its articles (or certificate) of incorporation, bylaws,
regulations, partnership agreement or comparable charter documents or under
any agreement or instrument to which any Credit Party or by which any Credit
Party or any of their properties may be subject or bound, which is so unusual
or burdensome as to be likely in the foreseeable future to have a Material
Adverse Effect. Without limiting the foregoing, no Credit Party is a party
to or bound by any agreement (other than the Loan Papers and other than
pursuant to the Permitted Senior Unsecured Debt Documents) or subject to any
order of any Governmental Authority which prohibits or restricts in any way
the right of such Credit Party or any Restricted Subsidiary to make
Distributions.
Section 7.16 Fiscal Year. Borrower's Fiscal Year is January 1
through December 31.
Section 7.17 No Default. Neither a Default nor an Event of Default
has occurred or will exist after giving effect to the transactions
contemplated by this Agreement or the other Loan Papers.
Section 7.18 Government Regulation. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have
been amended), the Investment Company Act of 1940 or any other Law which
regulates the incurring by such Credit Party of Debt, including, but not
limited to Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services.
Section 7.19 Insider. Except as disclosed on Schedule 7.19 attached
hereto, no Credit Party is, and no Person having "control" (as that term is
defined in 12 U.S.C. section 375(b) or regulations promulgated thereunder) of
any Credit Party is an "executive officer," "director" or "shareholder" of
any Bank or any bank holding company of which any Bank is a Subsidiary or of
any Subsidiary of such bank holding company.
Section 7.20 Gas Balancing Agreements and Advance Payment Contracts.
On the date of this Agreement, (a) there is no Material Gas Imbalance, and
(b) the aggregate amount of all Advance Payments received by any Credit Party
under Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $500,000.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or
any amount payable under any Note remains unpaid or any Letter of Credit
remains outstanding:
Section 8.1 Information. Borrower will deliver, or cause to be
delivered, to each Bank:
(a) as soon as available and in any event within ninety (90) days
(or such shorter time as required to be filed with the SEC) after the end of
each Fiscal Year, consolidated balance sheets of Borrower as of the end of
such Fiscal Year and the related consolidated statements of income and
statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by
Borrower in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing and reasonably acceptable to
Administrative Agent;
(b) as soon as available and in any event within forty-five (45)
days (or such shorter time as required to be filed with the SEC) after the
end of each of the first three (3) Fiscal Quarters of each Fiscal Year,
consolidated balance sheets of Borrower as of the end of such Fiscal Quarter
and the related consolidated statements of income and statements of cash flow
for such quarter and for the portion of Borrower's Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of
Borrower's previous Fiscal Year; all financial statements delivered pursuant
to this Section 8.1(b) shall be certified as to fairness of presentation,
GAAP (except for the absence of footnotes and normal year end adjustments)
and consistency by a Financial Officer of Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Section 8.1(a) and Section 8.1(b), a certificate of
the principal executive and Financial Officer of Borrower in the form of
Exhibit I attached hereto, (i) setting forth in reasonable detail the
calculations required to establish whether Borrower was in compliance with
the requirements of Article X on the date of such financial statements, (ii)
stating whether there exists on the date of such certificate any Default and,
if any Default then exists, setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto, (iii)
stating whether or not such financial statements fairly reflect in all
material respects the results of operations and financial condition of
Borrower as of the date of the delivery of such financial statements and for
the period covered thereby, (iv) setting forth (A) whether as of such date
there is a Material Gas Imbalance and, if so, setting forth the amount of net
gas imbalances under Gas Balancing Agreements to which Borrower is a party or
by which any Mineral Interests owned by Borrower is bound, and (B) the
aggregate amount of all Advance Payments received under Advance Payment
Contracts to which Borrower is a party or by which any Mineral Interests
owned by Borrower is bound which have not been satisfied by delivery of
production, if any, (v) setting forth a summary of the Hedge Transactions to
which Borrower is a party on such date, (vi) setting forth in reasonable
detail (A) the amount of any proceeds received in connection with any Equity
issuance described in the proviso in clause (g) of the definition of
"Permitted Investments," (B) the amount and specific application of any such
proceeds since the delivery of the last certificate to be provided pursuant
to this Section 8.1(c), and (C) the designation and proposed use of any such
unutilized proceeds by Borrower, (vii) stating as of such date whether
Borrower is in compliance with the terms of clause (f) of the definition of
"Permitted Investment," and (viii) setting forth the other information
described in Exhibit I attached hereto;
(d) promptly upon the filing thereof, copies of all final
registration statements, post effective amendments thereto and annual,
quarterly or special reports which any Credit Party shall have filed with the
SEC; provided, however, that so long as Borrower is subject to the reporting
requirements of either Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, and is timely filing reports with the SEC on its
Electronic Data Gathering Analysis and Retrieval System, it is not required
to furnish such reports or statements to each Bank unless any Bank
specifically requests copies of such reports or statements be furnished to
such Bank;
(e) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating (i) any potential, actual or alleged
non-compliance with or violation of the requirements of any Applicable
Environmental Law which could reasonably be expected to result in liability
to any Credit Party for fines, clean up or any other remediation obligations
or any other liability in excess of $5,000,000 in the aggregate; (ii) any
threatened Hazardous Discharge which Hazardous Discharge would impose on any
Credit Party a duty to report to a Governmental Authority or to pay cleanup
costs or to take remedial action under any Applicable Environmental Law which
could reasonably be expected to result in liability to any Credit Party for
fines, clean up and other remediation obligations or any other liability in
excess of $5,000,000 in the aggregate; or (iii) the existence of any Lien
arising under any Applicable Environmental Law securing any obligation to pay
fines, clean up or other remediation costs or any other liability in excess
of $5,000,000 in the aggregate. Without limiting the foregoing, each Credit
Party shall provide to Banks promptly upon receipt of same by any Credit
Party copies of all environmental consultants or engineers reports received
by any Credit Party which would render the representation and warranty
contained in Section 7.14 untrue or inaccurate in any respect;
(f) in the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 8.1(e) hereof or Administrative
Agent or any Bank otherwise learns of any event or condition under which any
such notice would be required, then, upon request of Required Banks, Borrower
shall within thirty (30) days of such request, cause to be furnished to
Administrative Agent and each Bank a report by an environmental consulting
firm reasonably acceptable to Administrative Agent and Required Banks,
stating that a review of such event, condition or circumstance has been
undertaken (the scope of which shall be acceptable to Administrative Agent
and Required Banks) and detailing the findings, conclusions and
recommendations of such consultant. Borrower shall bear all expenses and
costs associated with such review and updates thereof;
(g) promptly after any Authorized Officer of any Credit Party
becoming aware of the occurrence of any Default, a certificate of an
Authorized Officer of Borrower setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto;
(h) no later than March 15 and August 31 of each year, commencing
March 15, 2007, reports of production volumes, revenue, expenses and product
prices for all Borrowing Base Properties for the periods of six (6) months
ending the preceding December 31 and June 30, respectively. Such reports
shall be prepared on an accrual basis and shall be reported on a field by
field basis;
(i) promptly notify Banks of any Material Adverse Change;
(j) promptly notify Banks of any material litigation involving any
Credit Party;
(k) promptly notify Banks of any change in Borrower's Fiscal Year
from that reflected in Section 7.16 hereof;
(l) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent,
at the request of any Bank, may reasonably request; and
(m) promptly after such delivery or receipt, copies of any financial
or other report or notice delivered to, or received from, any holders of
Permitted Senior Unsecured Debt, which report or notice has not been
delivered to Banks hereunder; and
(n) promptly upon the entering into of any Oil and Gas Hedge
Transaction, a certificate of the principal Financial Officer of Borrower,
(i) setting forth in reasonable detail the calculations required to establish
whether Borrower is in compliance with the requirements of Section 9.11
hereof as of the date of such certificate and after giving effect to such Oil
and Gas Hedge Transaction, and (ii) setting forth a summary of the Oil and
Gas Hedge Transactions to which Borrower is a party as of the date of such
certificate.
Section 8.2 Business of Credit Parties. The primary business of the
Credit Parties will be (and will continue to be) the acquisition,
exploration, development and operation of Mineral Interests and the
production, processing and marketing of Hydrocarbons therefrom and related
activities.
Section 8.3 Maintenance of Existence. Borrower shall, and shall
cause each other Credit Party to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of
incorporation or organization, and (b) maintain its good standing and
qualification to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could have a
Material Adverse Effect.
Section 8.4 Title Data. In addition to the title information
required by Section 5.1(c) and Section 6.1(b) hereof, Borrower shall, upon
the reasonable request of Required Banks, cause to be delivered to
Administrative Agent such title opinions and other information regarding
title to Mineral Interests owned by Borrower as are appropriate to determine
the status thereof.
Section 8.5 Right of Inspection. Borrower will permit, and will
cause each other Credit Party to permit, any officer, employee or agent of
Administrative Agent to visit and inspect any of the assets of any Credit
Party, examine each Credit Party's books of record and accounts, take copies
and extracts therefrom, and discuss the affairs, finances and accounts of
each Credit Party with such Credit Party's officers, accountants and
auditors, at reasonable times upon at least one (1) Domestic Business Day's
advance notice to Borrower, all at the expense of Borrower.
Section 8.6 Maintenance of Insurance. Borrower will, and will cause
each other Credit Party to, at all times maintain or cause to be maintained
insurance covering such risks as are customarily carried by businesses
similarly situated, including, without limitation, the following: (a)
workers' compensation insurance; (b) employer's liability insurance; (c)
comprehensive general public liability and property damage insurance; (d)
insurance against (other than losses or damage to property owned by Borrower
which is self insured) losses customarily insured against as a result of
damage by fire, lightning, hail, tornado, explosion and other similar risk;
and (e) comprehensive automobile liability insurance. All loss payable
clauses or provisions in all policies of insurance maintained by any Credit
Party pursuant to this Section 8.6 shall be endorsed in favor of and made
payable to Administrative Agent for the ratable benefit of Banks, as their
interests may appear. Administrative Agent shall, during the continuance of
an Event of Default, have the right, for the ratable benefit of Banks, to
collect, and Borrower hereby assigns to Administrative Agent for the ratable
benefit of Banks (and hereby agrees to cause each other Credit Party to
assign), any and all monies that may become payable under any such policies
of insurance by reason of damage, loss or destruction of any of property
which stands as security for the Obligations or any part thereof, and
Administrative Agent may, during the continuance of an Event of Default, at
its election, either apply for the ratable benefit of Banks all or any part
of the sums so collected toward payment of the Obligations, whether or not
such Obligations are then due and payable, in such manner as Administrative
Agent may elect or release same to the applicable Credit Party.
Section 8.7 Payment of Taxes and Claims. Borrower will, and will
cause each other Credit Party to, pay (a) all Taxes imposed upon it or any of
its assets or with respect to any of its franchises, business, income or
profits before any material penalty or interest accrues thereon, and (b) all
material claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which
by Law have or might become a Lien (other than a Permitted Encumbrance) on
any of its assets; provided, however, no payment of Taxes or claims shall be
required if (i) the amount, applicability or validity thereof is currently
being contested in good faith by appropriate action promptly initiated and
diligently conducted in accordance with good business practices and no
material part of the property or assets of Borrower, and no part of the
assets of any Subsidiary of Borrower which would be material to Borrower, is
subject to any pending levy or execution, (ii) Borrower, and any Subsidiary
of Borrower, as and to the extent required in accordance with GAAP, shall
have set aside on their books reserves (segregated to the extent required by
GAAP) deemed by them to be adequate with respect thereto, and (iii) Borrower
has notified Administrative Agent of such circumstances, in detail reasonably
satisfactory to Administrative Agent.
Section 8.8 Compliance with Laws and Documents. Borrower will, and
will cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles) of incorporation, bylaws, regulations and similar
organizational documents and all Material Agreements to which any Credit
Party is a party, if a violation, alone or when combined with all other such
violations, could reasonably be expected to have a Material Adverse Effect.
Section 8.9 Operation of Properties and Equipment.
(a) Borrower will, and will cause each other Credit Party to,
maintain, develop and operate its Mineral Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express
or implied, of all oil and gas leases relating to such Mineral Interests so
long as such Mineral Interests are capable of producing Hydrocarbons and
accompanying elements in paying quantities, except where such failure to
maintain, develop, operate, observe or comply could not reasonably be
expected to have a Material Adverse Effect.
(b) Borrower will, and will cause each other Credit Party to, comply
in all respects with all contracts and agreements applicable to or relating
to its Mineral Interest or the production and sale of Hydrocarbons and
accompanying elements therefrom, except to the extent a failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
(c) Borrower will, and will cause each other Credit Party to, at all
times maintain, preserve and keep all operating equipment used with respect
to its Mineral Interests in proper repair, working order and condition, and
make all necessary or appropriate repairs, renewals, replacements, additions
and improvements thereto so that the efficiency of such operating equipment
shall at all times be properly preserved and maintained, except where such
failure to comply could not reasonably be expected to have a Material Adverse
Effect; provided, further that, no item of operating equipment need be so
repaired, renewed, replaced, added to or improved, if Borrower shall in good
faith determine that such action is not necessary or desirable for the
continued efficient and profitable operation of the business of such Credit
Party.
Section 8.10 Environmental Law Compliance. Except to the extent a
failure to comply could not reasonably be expected to have a Material Adverse
Effect, Borrower will, and will cause each other Credit Party to, comply with
all Applicable Environmental Laws, including, without limitation, (a) all
licensing, permitting, notification and functionally equivalent requirements
of Applicable Environmental Laws, and (b) all provisions of all Applicable
Environmental Laws regarding storage, discharge, release, transportation,
treatment and disposal of Hazardous Substances. Borrower will, and will
cause each other Credit Party to, promptly pay and discharge when due all
legal debts, claims, liabilities and obligations with respect to any clean-up
or remediation measures necessary to comply with Applicable Environmental
Laws.
Section 8.11 ERISA Reporting Requirements. Borrower shall furnish,
or cause to be furnished, to Administrative Agent:
(a) promptly and in any event (i) within thirty (30) days after
Borrower or any ERISA Affiliate receives notice from any regulatory agency of
the commencement of an audit, investigation or similar proceeding with
respect to a Plan, and (ii) within ten (10) days after Borrower or any ERISA
Affiliate contacts the Internal Revenue Service for the purpose of
participation in a closing agreement or any employee plans compliance
resolution system submission with respect to a Plan which could reasonably be
expected to have a Material Adverse Effect or knows or has reason to know
that any event with respect to any Plan of Borrower or any ERISA Affiliate
has occurred that is reasonably believed by Borrower to potentially have a
Material Adverse Effect, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect
thereto, together with a copy of any notice of such event that is given to
the PBGC;
(b) promptly and in any event within thirty (30) days after the
receipt by Borrower of a request therefor by a Bank, copies of any annual and
other report (including Schedule B thereto) with respect to a Plan filed by
Borrower or any ERISA Affiliate with the United States Department of Labor,
the Internal Revenue Service or the PBGC;
(c) notification within thirty (30) days of the effective date
thereof of any material increases in the benefits, or material change in the
funding method, of any existing Plan which is not a multiemployer plan (as
defined in section 4001(a)(3) of ERISA), or the establishment of any material
new Plans, or the commencement of contributions to any Plan to which Borrower
or any ERISA Affiliate was not previously contributing; and
(d) promptly after receipt of written notice of commencement
thereof, notice of all (i) claims made by participants or beneficiaries with
respect to any Plan, and (ii) actions, suits and proceedings before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Borrower or any ERISA
Affiliate with respect to any Plan, except those which, in the aggregate, if
adversely determined could not reasonably be expected to have a Material
Adverse Effect.
Section 8.12 Additional Documents. Borrower will, and will cause
each other Credit Party to, cure promptly any defects in the creation and
issuance of each Note, and the execution and delivery of this Agreement and
the other Loan Papers and, at Borrower's expense, Borrower shall promptly and
duly execute and deliver to each Bank, and cause each other Credit Party to
promptly and duly execute and deliver to each Bank, upon reasonable request,
all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of the
Credit Parties in this Agreement and the other Loan Papers as may be
reasonably necessary or appropriate in connection therewith.
Section 8.13 Environmental Review. Borrower shall deliver to
Administrative Agent prior to the completion by any Credit Party of any
material acquisition of Mineral Interests or related assets, other than an
acquisition of additional interests in Mineral Interests in which a Credit
Party previously held an interest, any report or reports (including, without
limitation, any Phase I environmental reports) obtained by Borrower in the
course of such acquisition setting forth the results of any environmental
review of such Mineral Interests and related assets. Additionally, if
requested by Administrative Agent or Required Banks in writing in connection
with any such material acquisition, and not otherwise obtained by Borrower
and delivered to Administrative Agent in accordance with the foregoing
provisions of this Section 8.13, Borrower shall deliver to Administrative
Agent, within forty-five (45) days of Administrative Agent's or Required
Banks' written request, a report or reports related to any such material
acquisition which shall be in form, scope and detail appropriate for a Phase
I environmental report and reasonably acceptable to Administrative Agent from
environmental engineering firms reasonably acceptable to Administrative
Agent, and which shall set forth the results of a Phase I environmental
review of the Mineral Interests and related assets which are the subject of
such material acquisition. All of the reports delivered to Administrative
Agent pursuant to this Section 8.13 shall not reflect the existence of facts
or circumstances which would constitute a material violation of any
Applicable Environmental Law or which are likely to have a Material Adverse
Effect. Any such reports shall be confidential and subject to the
requirements of Section 14.17.
ARTICLE IX
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable
under any Note remains unpaid or any Letter of Credit remains outstanding:
Section 9.1 Incurrence of Debt. Borrower will not, nor will
Borrower permit any other Credit Party to, incur, become or remain liable for
any Debt other than (a) the Obligations, (b) payables incurred in the
ordinary course of business (other than in connection with a loan or lending
transaction) that are not more than sixty (60) days past due, from the date
of invoice or demand, except such payables being contested in good faith in
accordance with Section 8.7 hereof, (c) Permitted Senior Unsecured Debt, (d)
Guarantees of Permitted Senior Unsecured Debt, and (e) other unsecured Debt
in an aggregate amount outstanding at any time not to exceed $5,000,000.
Section 9.2 Restricted Payments. Borrower will not, nor will
Borrower permit any other Credit Party to, directly or indirectly, declare or
pay, or incur any liability to declare or pay, any Restricted Payment;
provided, that (a) any Subsidiary of Borrower may make Distributions to
Borrower, and (b) any Credit Party may make Distributions to any other Credit
Party that has provided a Facility Guaranty, and all of the Equity of which
owned by Borrower or any Indirect Restricted Subsidiary has been pledged to
Administrative Agent pursuant to a Borrower Pledge Agreement or a Subsidiary
Pledge Agreement (as applicable).
Section 9.3 Negative Pledge. Borrower will not, nor will Borrower
permit any other Credit Party to, create, assume or suffer to exist any Lien
on any of their respective assets, other than Permitted Encumbrances.
Section 9.4 Consolidations and Mergers. Borrower will not, nor will
Borrower permit any other Credit Party to, consolidate or merge with or into
any other Person; provided, that, so long as no Default or Event of Default
exists or will result, Borrower or any Restricted Subsidiary may merge or
consolidate with any other Person so long as Borrower or such Restricted
Subsidiary is the surviving Person and, in the case of a Restricted
Subsidiary, a wholly owned Subsidiary of Borrower.
Section 9.5 Asset Dispositions. Borrower will not, nor will
Borrower permit any other Credit Party to, sell, lease, transfer, abandon or
otherwise dispose of any asset other than (a) the sale in the ordinary course
of business of Hydrocarbons produced from Borrower's Mineral Interests, (b)
provided such sale or disposition occurs on or prior to March 31, 2007, the
Specified Asset Sale, and (c) the sale, lease, transfer, abandonment,
exchange or other disposition of other assets; provided, that, no sale,
lease, transfer, abandonment, exchange or other disposition by Borrower or
any of its Subsidiaries of Borrowing Base Properties with an aggregate value
(which, in the case of assets consisting of Mineral Interests, shall be the
Recognized Value of such Mineral Interests and, in the case of any exchange,
shall be the net value or net Recognized Value realized or resulting from
such exchange) in any period between Scheduled Redeterminations (for purposes
of this clause (c) the Closing Date will be deemed to be a Scheduled
Redetermination) in excess of five percent (5%) of the Borrowing Base then in
effect shall be permitted pursuant to this clause (c) unless each of the
following conditions is satisfied: (i) Borrower shall have provided
Administrative Agent with not less than ten (10) Domestic Business Days
written notice of such sale, lease, transfer, abandonment, exchange or other
disposition, which notice shall include a specific description of the assets
to be sold, leased, transferred, abandoned, exchanged or otherwise disposed,
(ii) any Redetermination of the Borrowing Base pursuant to Section 4.4 hereof
shall have occurred, (iii) all mandatory prepayments required by Section 2.6
in connection with such sale, lease, transfer, abandonment, exchange or other
disposition are made concurrently with the closing thereof, (iv) no Borrowing
Base Deficiency will exist after consummation of such sale, lease, transfer,
abandonment, exchange or other disposition (and application of the proceeds
thereof to the mandatory prepayments required by Section 2.6), and (v) no
Default has occurred which is continuing. In no event will Borrower sell,
transfer or dispose of any Equity in any Restricted Subsidiary nor will any
Credit Party (other than Borrower) issue or sell any Equity or any option,
warrant or other right to acquire such Equity or security convertible into
such Equity to any Person other than a Credit Party which is directly or
indirectly wholly-owned by a Credit Party.
Section 9.6 Amendments to Organizational Documents; Other Material
Agreements. Borrower will not, nor will Borrower permit any other Credit
Party to, enter into or permit any modification or amendment of, or waive any
material right or obligation of any Person under, (a) its certificate or
articles of incorporation, bylaws, partnership agreement, regulations or
other organizational documents, other than amendments, modifications and
waivers which will not, individually or in the aggregate, have a Material
Adverse Effect, or (b) the Permitted Senior Unsecured Debt Documents, other
than amendments, modifications and waivers the effect of which would not (i)
make the terms of any Permitted Senior Unsecured Debt materially more onerous
to Borrower or any of its affiliates, (ii) subject Borrower or any of its
affiliates to any additional material obligation, (iii) increase the
principal of, or rate of interest on, any Permitted Senior Unsecured Debt,
(iv) accelerate the date fixed for any payment of principal or interest on
any Permitted Senior Unsecured Debt, or (v) increase the percentage of
holders of such Permitted Senior Unsecured Debt required for any such
amendment, modification or waiver from the percentage required on the date of
issuance of such Permitted Senior Unsecured Debt.
Section 9.7 Use of Proceeds. The proceeds of Borrowings will not be
used for any purpose other than (a) working capital, (b) to finance the
acquisition, exploration and development of Mineral Interests and related
assets and activities, (c) for general corporate purposes, and (d) to
refinance existing Debt and obligations outstanding under the Existing Credit
Agreement. None of such proceeds (including, without limitation, proceeds of
Letters of Credit issued hereunder) will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, and none of such proceeds will be used in
violation of applicable Law (including, without limitation, the Margin
Regulations). Letters of Credit will be issued hereunder only for the
purpose of securing bids, tenders, bonds, contracts and other obligations
entered into in the ordinary course of Borrower's business, and otherwise to
guaranty payment and performance in accordance with the ordinary practice of
Borrower's business. Without limiting the foregoing, no Letters of Credit
will be issued hereunder for the purpose of or providing credit enhancement
with respect to any Debt or equity security of any Credit Party or to secure
any Credit Party's obligations with respect to Hedge Transactions entered
into with a Person which is not a Bank or an Affiliate of such Bank.
Section 9.8 Investments. Borrower will not, nor will Borrower
permit any other Credit Party to, directly or indirectly, make or have
outstanding any Investment other than Permitted Investments.
Section 9.9 Transactions with Affiliates. Borrower will not, nor
will Borrower permit any other Credit Party to, engage in any transaction
with an Affiliate unless such transaction is as favorable to such party as
could be obtained in an arm's length transaction with an unaffiliated Person
in accordance with prevailing industry customs and practices.
Section 9.10 ERISA. Except in such instances where there would not
be a Material Adverse Effect, Borrower will not, nor will Borrower permit any
other Credit Party to (a) take any action or fail to take any action which
would result in a violation of ERISA, the Code or other Laws applicable to
the Plans maintained or contributed to by it or any ERISA Affiliate, or (b)
modify the term of, or the funding obligations or contribution requirements
under any existing Plan, establish a new Plan, or become obligated or incur
any liability under a Plan that is not maintained or contributed to by
Borrower or any ERISA Affiliate as of the Closing Date.
Section 9.11 Hedge Transactions. Borrower will not, nor will
Borrower permit any other Credit Party to, enter into any Oil and Gas Hedge
Transactions (which Oil and Gas Hedge Transactions shall not have a tenor of
greater than thirty-six (36) months, in each case measured from the date any
such Oil and Gas Hedge Transaction is entered into) which would cause the
amount of (a) oil which is the subject of Oil and Gas Hedge Transactions in
existence at such time to exceed (i) for the period commencing on June 30,
2006 and continuing through and including December 31, 2007 (the "Initial
Measurement Period"), one hundred percent (100%) of Borrower's anticipated
production of oil from Proved Producing Mineral Interests (as reflected in
the most recent Reserve Report delivered to Administrative Agent pursuant to
Section 4.1 hereof), and (ii) for the period commencing on January 1, 2008
and continuing thereafter, eighty percent (80%) of Borrower's anticipated
production of oil from Proved Producing Mineral Interests (as reflected in
the most recent Reserve Report delivered to Administrative Agent pursuant to
Section 4.1 hereof), and (b) gas which is the subject of Oil and Gas Hedge
Transactions in existence at such time to exceed (i) for the Initial
Measurement Period, one hundred percent (100%) of Borrower's anticipated
production of gas from Proved Producing Mineral Interests (as reflected in
the most recent Reserve Report delivered to Administrative Agent pursuant to
Section 4.1 hereof), and (ii) for the period commencing on January 1, 2008
and continuing thereafter, eighty percent (80%) of Borrower's anticipated
production of gas from Proved Producing Mineral Interests (as reflected in
the most recent Reserve Report delivered to Administrative Agent pursuant to
Section 4.1 hereof). Promptly upon entering into any Oil and Gas Hedge
Transaction, Borrower shall provide to each Bank the certificate required by
Section 8.1(n) hereof.
Section 9.12 Fiscal Year. Borrower will not, nor will Borrower
permit any other Credit Party to, change its Fiscal Year.
Section 9.13 Change in Business. Borrower will not, nor will
Borrower permit any other Credit Party to, engage in any type of business
other than the businesses engaged in by such parties on the date hereof as
described in Section 7.13 or Section 8.2 hereof.
Section 9.14 Obligations to Unrestricted Subsidiaries. Borrower
will not, nor will Borrower permit any other Credit Party to, incur any
liability, Debt or obligation to any Unrestricted Subsidiary of any nature,
or have any liability (whether by operation of law or otherwise) for any
liability, Debt or obligation of any Unrestricted Subsidiary.
ARTICLE X
FINANCIAL COVENANTS
Borrower agrees that so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable
under any Note remains unpaid or any Letter of Credit remains outstanding:
Section 10.1 Current Ratio. As of the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending March 31, 2007, Borrower will not
permit its ratio of Consolidated Current Assets to Consolidated Current
Liabilities to be less than 1.0 to 1.0.
Section 10.2 Consolidated Net Debt to Consolidated EBITDAX.
Commencing with the Fiscal Quarter ending March 31, 2007, Borrower will not
permit, as of the last day of any Fiscal Quarter, its ratio of Consolidated
Net Debt (for the Fiscal Quarter ending on such date) to Consolidated EBITDAX
(for each Rolling Period ending on such date or Annualized Consolidated
EBITDAX for such Rolling Period in the case of a Rolling Period ending on or
prior to September 30, 2007) to be greater than (a) 4.25 to 1.0 for the
Rolling Periods ending on Xxxxx 00, 0000 xxx Xxxx 00, 0000, (x) 4.00 to 1.0
for the Rolling Periods ending on September 30, 2007 and December 31, 2007,
and (c) 3.75 to 1.0 for the Rolling Period ending on March 31, 2008 and for
each Rolling Period thereafter.
ARTICLE XI
DEFAULTS
Section 11.1 Events of Default. If one or more of the following
events (collectively "Events of Default" and individually an "Event of
Default") shall have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any Note
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Section 4.5, Section 8.1, Section 8.2, Section 8.3,
Section 8.6, Article IX or Article X of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant
or agreement contained in this Agreement or the other Loan Papers (other than
those referenced in Section 11.1(a), Section 11.1(b) and Section 11.1(c)) and
such failure continues for a period of thirty (30) days after the earlier of
(i) the date any Authorized Officer of any Credit Party acquires knowledge of
such failure, or (ii) written notice of such failure has been given to any
Credit Party by Administrative Agent or any Bank;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove
to have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on any
Debt of such Person in a principal amount equal to or greater than
$5,000,000, and such default shall continue for thirty (30) days, or any
other event or condition shall occur which (i) results in the acceleration of
the maturity of any such Debt, or (ii) entitles the holder of such Debt to
accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar Law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate, partnership or limited liability company
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of sixty (60)
days; or an order for relief shall be entered against any Credit Party under
the federal bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of
money aggregating in excess of $5,000,000 shall be rendered against any
Credit Party and such judgment or order shall continue unsatisfied and
unstayed for thirty (30) days;
(j) (i) any event occurs with respect to any Plan or Plans pursuant
to which any Credit Party incurs a liability due and owing at the time of
such event, without existing funding therefor, for benefit payments under
such Plan or Plans in excess of $1,000,000; or (ii) any Credit Party, any
ERISA Affiliate, or any other "party-in-interest" or "disqualified person,"
as such terms are defined in section 3(14) of ERISA and section 4975(e)(2) of
the Code, shall engage in transactions which in the aggregate result in a
direct or indirect liability to any Credit Party or any ERISA Affiliate in
excess of $1,000,000 under section 409 or 502 of ERISA or section 4975 of the
Code which either (A) results in a Lien on any Credit Party's assets which is
not a Permitted Encumbrance, or (B) continues unsatisfied for a period of
thirty (30) days after any Authorized Officer of any Credit Party first
acquires knowledge of such liability;
(k) a Change of Control shall occur;
(l) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party,
or any Credit Party shall deny that it has any further liability or
obligation under any of the Loan Papers, or any Lien created by the Loan
Papers shall for any reason (other than the release thereof in accordance
with the Loan Papers) cease to be a valid, first priority, perfected Lien
(subject to Permitted Encumbrances) upon any of the Proved Mineral Interests
purported to be covered thereby, except as a result of any action or inaction
of Administrative Agent or Banks; or
(m) in addition to, and not in limitation of, the provisions
contained in clause (f) above, a default or event of default shall occur
under any Permitted Senior Unsecured Debt Document, which such default or
event of default shall not be remedied prior to the expiration of any
applicable period of grace or cure under the applicable Permitted Senior
Unsecured Debt Document;
then, and in every such event, Administrative Agent shall without
presentment, notice or demand (unless expressly provided for herein) of any
kind (including, without limitation, notice of intention to accelerate and
acceleration), all of which are hereby waived, (a) if requested by Required
Banks, terminate the Commitments and they shall thereupon terminate, and (b)
if requested by Required Banks, take such other actions as may be permitted
by the Loan Papers including, declaring the Notes (together with accrued
interest thereon) to be, and the Notes shall thereupon become, immediately
due and payable; provided that, in the case of any of the Events of Default
specified in Section 11.1(g) or Section 11.1(h), without any notice to any
Credit Party or any other act by Administrative Agent or Banks, the
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable.
ARTICLE XII
AGENTS
Section 12.1 Appointment; Nature of Relationship. JPMorgan Chase
Bank, N.A. is hereby appointed by each of the Banks as its contractual
representative and Administrative Agent hereunder and under each other Loan
Paper, and each Bank irrevocably authorizes Administrative Agent to act as
the contractual representative of such Bank with the rights and duties
expressly set forth herein and in the other Loan Papers. Administrative
Agent agrees to act as such contractual representative and Administrative
Agent upon the express conditions contained in this Article XII.
Notwithstanding the use of the defined term "Administrative Agent," it is
expressly understood and agreed that Administrative Agent shall not have any
fiduciary responsibilities to any Bank by reason of this Agreement or any
other Loan Paper and that Administrative Agent is merely acting as the
contractual representative of the Banks with only those duties as are
expressly set forth in this Agreement and the other Loan Papers. In its
capacity as the Banks' contractual representative, Administrative Agent (a)
does not hereby assume any fiduciary duties to any of the Banks, (b) is a
"representative" of the Banks within the meaning of the term "secured party"
as defined in the Illinois Uniform Commercial Code, and (c) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Papers. Each of the
Banks hereby agree not to assert any claim against Administrative Agent on
any theory of liability for breach of fiduciary duty, any and all of which
claims each Bank hereby waives.
Section 12.2 Powers. Administrative Agent shall have and may
exercise such powers under the Loan Papers as are specifically delegated to
Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. Administrative Agent shall have no
implied duties to the Banks, or any obligation to the Banks to take any
action thereunder except any action specifically provided by the Loan Papers
to be taken by Administrative Agent.
Section 12.3 General Immunity. Neither Administrative Agent nor any
of its directors, officers, agents or employees shall be liable to Borrower
or any Bank for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Paper or in connection herewith or
therewith except to the extent such action or inaction is determined in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.
Section 12.4 No Responsibility for Loans, Recitals, etc. Neither
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in connection with
any Loan Paper or any Borrowing hereunder; (b) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Paper,
including, without limitation, any agreement by an obligor to furnish
information directly to each Bank; (c) the satisfaction of any condition
specified in Article VI, except receipt of items required to be delivered
solely to Administrative Agent; (d) the existence or possible existence of
any Default or Event of Default; (e) the validity, enforceability,
effectiveness, sufficiency or genuineness of any Loan Paper or any other
instrument or writing furnished in connection therewith; (f) the value,
sufficiency, creation, perfection or priority of any Lien in any collateral
security; or (g) the financial condition of Borrower or any guarantor of any
of the Obligations or of any of Borrower's or any such guarantor's respective
Subsidiaries. Administrative Agent shall have no duty to disclose to the
Banks information that is not required to be furnished by Borrower to
Administrative Agent at such time, but is voluntarily furnished by Borrower
to JPMorgan (either in its capacity as Administrative Agent or in its
individual capacity). Except as expressly set forth herein, Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to any Credit Party that is
communicated to or obtained by it or any of its Affiliates.
Section 12.5 Action on Instructions of Banks. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Paper in accordance with written
instructions signed by the Required Banks, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of
the Banks. The Banks hereby acknowledge that Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Paper unless
it shall be requested in writing to do so by Required Banks. Administrative
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Paper unless it shall first be indemnified
to its satisfaction by the Banks pro rata against any and all liability, cost
and expense that it may incur by reason of taking or continuing to take any
such action.
Section 12.6 Employment of Agents and Counsel. Administrative Agent
may execute any of its duties as Administrative Agent hereunder and under any
other Loan Paper by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between Administrative Agent and the Banks and all
matters pertaining to Administrative Agent's duties hereunder and under any
other Loan Paper.
Section 12.7 Reliance on Documents; Counsel. Administrative Agent
shall be entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to
be genuine and correct and to have been signed or sent by the proper Person
or Persons, and, in respect to legal matters, upon the opinion of counsel
selected by Administrative Agent, which counsel may be employees of
Administrative Agent.
Section 12.8 Administrative Agent's Reimbursement and
Indemnification. Banks agree to reimburse and indemnify Administrative Agent
ratably in proportion to their respective Commitments (or, if the Commitments
have been terminated, in proportion to their Commitments immediately prior to
such termination) (a) for any amounts not reimbursed by Borrower for which
Administrative Agent is entitled to reimbursement by Borrower under the Loan
Papers, (b) for any other expenses incurred by Administrative Agent on behalf
of the Banks, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Papers (including, without
limitation, for any expenses incurred by Administrative Agent in connection
with any dispute between Administrative Agent and any Bank or between two or
more of the Banks) and (c) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent in any way relating to or arising out of the
Loan Papers or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any
such amounts incurred by or asserted against Administrative Agent in
connection with any dispute between Administrative Agent and any Bank or
between two or more of the Banks), or the enforcement of any of the terms of
the Loan Papers or of any such other documents; provided that no Bank shall
be liable for any of the foregoing to the extent any of the foregoing is
found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of
Administrative Agent. The obligations of the Banks under this Section 12.8
shall survive payment of the Obligations and termination of this Agreement.
Section 12.9 Notice of Default. Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless Administrative Agent has received written notice
from a Bank or Borrower referring to this Agreement describing such Default
or Event of Default and stating that such notice is a "notice of default".
In the event that Administrative Agent receives such a notice, Administrative
Agent shall give prompt notice thereof to the Banks.
Section 12.10 Rights as a Bank. In the event Administrative Agent
is a Bank, Administrative Agent shall have the same rights and powers
hereunder and under any other Loan Paper with respect to its Commitment and
its Revolving Loans as any Bank and may exercise the same as though it were
not Administrative Agent, and the term "Bank" or "Banks" shall, at any time
when Administrative Agent is a Bank, unless the context otherwise indicates,
include in its individual capacity. Administrative Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Loan Paper, with Borrower or any of its
Subsidiaries in which Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.
Section 12.11 Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon Administrative Agent, Sole Lead
Arranger, Bookrunner or any other Agent or Bank and based on the financial
statements prepared by Borrower and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Papers. Each Bank also acknowledges
that it will, independently and without reliance upon Administrative Agent,
Sole Lead Arranger, Bookrunner or any other Agent or Bank and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Papers.
Section 12.12 Successor Administrative Agent. Administrative Agent
may resign at any time by giving written notice thereof to Banks and
Borrower, such resignation to be effective upon the appointment of a
successor Administrative Agent or, if no successor Administrative Agent has
been appointed, forty-five (45) days after the retiring Administrative Agent
gives notice of its intention to resign. Upon any such resignation, Required
Banks shall have the right to appoint, on behalf of Borrower and the Banks, a
successor Administrative Agent, which shall be approved by Borrower, such
approval not to be unreasonably withheld; provided, that, Borrower shall not
have the right to approve any successor Administrative Agent appointed during
the continuance of any Default. If no successor Administrative Agent shall
have been so appointed by Required Banks within thirty (30) days after the
resigning Administrative Agent's giving notice of its intention to resign,
then the resigning Administrative Agent may appoint, on behalf of Borrower
and Banks, a successor Administrative Agent which shall be approved by
Borrower, such approval not to be unreasonably withheld; provided, that,
Borrower shall not have the right to approve any successor Administrative
Agent appointed during the continuance of any Default. If Administrative
Agent has resigned and no successor Administrative Agent has been appointed,
Banks may perform all the duties of Administrative Agent hereunder and
Borrower shall make all payments in respect of the Obligations to the
applicable Bank and for all other purposes shall deal directly with the
Banks. No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a commercial
bank having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Administrative Agent. Upon the
effectiveness of the resignation of Administrative Agent, the resigning
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the Loan Papers. After the effectiveness of the
resignation of an Administrative Agent, the provisions of this Article XII
shall continue in effect for the benefit of such Administrative Agent in
respect of any actions taken or omitted to be taken by it while it was acting
as Administrative Agent hereunder and under the other Loan Papers. In the
event that there is a successor to Administrative Agent by merger, or
Administrative Agent assigns its duties and obligations to an Affiliate
pursuant to this Section 12.12, then the term "Prime Rate" as used in this
Agreement shall mean the prime rate, base rate or other analogous rate of the
new Administrative Agent.
Section 12.13 Delegation to Affiliates. Borrower and Banks agree
that Administrative Agent may delegate any of its duties under this Agreement
to any of its Affiliates. Any such Affiliate (and such Affiliate's
directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which
Administrative Agent is entitled under Article XII and Article XIII.
Section 12.14 Execution of Collateral Documents. Without limiting
the powers and authority of Administrative Agent described herein, the Banks
hereby empower and authorize Administrative Agent to execute and deliver to
Borrower on their behalf the Mortgages (including, without limitation, any
amendments to the Existing Mortgages), the Certificate of Effectiveness, the
Borrower Pledge Agreements, the Subsidiary Pledge Agreements and all related
financing statements and any other financing statements, agreements,
documents or instruments as shall be necessary or appropriate to effect the
purposes of the foregoing instruments.
Section 12.15 Collateral Releases. Banks hereby empower and
authorize Administrative Agent to execute and deliver to Borrower on their
behalf any agreements, documents or instruments as shall be necessary or
appropriate to effect any releases of collateral which shall be permitted by
the terms hereof or of any other Loan Paper or which shall otherwise have
been approved by Required Banks (or, if required by the terms of Section
14.5, all of the Banks) in writing.
Section 12.16 Agents. None of the Banks (if any) identified in, or
appointed at any time under, this Agreement as a "Documentation Agent," "Co-
Documentation Agent," "Syndication Agent" and/or a "Co-Syndication Agent"
shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Banks as such.
Without limiting the foregoing, none of any such Agents shall have or be
deemed to have a fiduciary relationship with any Bank. Each Bank hereby
makes the same acknowledgments with respect to any such Agents as it makes
with respect to Administrative Agent in Section 12.11.
ARTICLE XIII
CHANGE IN CIRCUMSTANCES
Section 13.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof by
any Governmental Authority, central bank, or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Loans, its
Note, or its obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Bank (or its Applicable Lending
Office) under this Agreement or its Note in respect of any Eurodollar Loans
(other than taxes imposed on the overall net income of such Bank or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, compulsory loan, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Adjusted Eurodollar
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Bank (or its
Applicable Lending Office), including the Commitment of such Bank hereunder;
or
(iii) shall impose on such Bank (or its Applicable Lending Office)
or on the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Eurodollar Loans or to reduce any sum received
or receivable by such Bank (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Loans, then the Borrower
shall pay to such Bank on demand such amount or amounts as will compensate
such Bank for such increased costs or reductions incurred or experienced
within one hundred twenty (120) days of such demand. If any Bank requests
compensation by Borrower under this Section 13.1(a), the Borrower may, by
notice to such Bank (with a copy to Administrative Agent), suspend the
obligation of such Bank to make or Continue Eurodollar Loans or to Convert
all or part of the Base Rate Loan owing to such Bank into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in
effect (in which case the provisions of Section 13.4 shall be applicable);
provided, that such suspension shall not affect the right of such Bank to
receive the compensation so requested.
(b) If, after the date hereof, any Bank shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency, has
or would have the effect of reducing the rate of return on the capital of
such Bank or any corporation controlling such Bank as a consequence of such
Bank's obligations hereunder to a level below that which such Bank or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then, from time to time upon demand, Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
reductions experienced within one hundred twenty (120) days of such demand;
provided, that, if such adoption, change, request or directive giving rise to
such reductions is retroactive, then the one hundred twenty (120) day period
referred to above shall be extended to include the period of retroactive
effect thereof.
(c) Each Bank shall promptly notify Borrower and Administrative
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this Section
13.1 and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to it. Any Bank claiming compensation under this Section
13.1 shall furnish to Borrower and Administrative Agent a statement setting
forth the additional amount or amounts to be paid to it hereunder which shall
be conclusive in the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
Section 13.2 Limitation on Type of Loans. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) Required Banks determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to Banks of funding
Eurodollar Loans for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof
specifying the relevant Type of Revolving Loans and the relevant amounts or
periods, and so long as such condition remains in effect, Banks shall be
under no obligation to make additional Revolving Loans of such Type, Continue
Revolving Loans of such Type, or to Convert Revolving Loans of any other Type
into Revolving Loans of such Type, and Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Revolving Loans of
the affected Type, either prepay such Revolving Loans or Convert such
Revolving Loans into another Type of Revolving Loan in accordance with the
terms of this Agreement.
Section 13.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans
hereunder, then such Bank shall promptly notify Borrower thereof and such
Bank's obligation to make or Continue Eurodollar Loans and to Convert other
Types of Revolving Loans into Eurodollar Loans shall be suspended until such
time as such Bank may again make, maintain, and fund Eurodollar Loans (in
which case the provisions of Section 13.4 shall be applicable).
Section 13.4 Treatment of Affected Loans. If the obligation of any
Bank to make particular Eurodollar Loans or to Continue Revolving Loans, or
to Convert Revolving Loans of another Type into Revolving Loans of a
particular Type shall be suspended pursuant to Section 13.1 or Section 13.3
hereof (Revolving Loans of such Type being herein called "Affected Loans" and
such Type being herein called the "Affected Type"), such Bank's Affected
Loans shall be automatically Converted into the Base Rate Loan on the last
day(s) of the then current Interest Period(s) for Affected Loans (or, in the
case of a Conversion required by Section 13.3 hereof, on such earlier date as
such Bank may specify to Borrower with a copy to Administrative Agent) and,
unless and until such Bank gives notice as provided below that the
circumstances specified in Section 13.1 or Section 13.3 hereof that gave rise
to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to the Base
Rate Loan; and
(b) all Revolving Loans that would otherwise be made or Continued by
such Bank as Revolving Loans of the Affected Type shall be made or Continued
instead as part of the Base Rate Loan, and all Revolving Loans of such Bank
that would otherwise be Converted into Revolving Loans of the Affected Type
shall be Converted instead into (or shall remain) as part of the Base Rate
Loan.
If such Bank gives notice to Borrower (with a copy to Administrative
Agent) that the circumstances specified in Section 13.1 or Section 13.3
hereof that gave rise to the Conversion of such Bank's Affected Loans
pursuant to this Section 13.4 no longer exist (which such Bank agrees to do
promptly upon such circumstances ceasing to exist) at a time when Revolving
Loans of the Affected Type made by other Banks are outstanding, such Bank's
portion of the Base Rate Loan shall be automatically Converted, on the first
day(s) of the next succeeding Interest Period(s) for such outstanding
Revolving Loans of the Affected Type, to the extent necessary so that, after
giving effect thereto, all Revolving Loans held by Banks holding Revolving
Loans of the Affected Type and by such Bank are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 13.5 Compensation. Upon the request of any Bank, Borrower
shall pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result
of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Revolving
Loan) on a date other than the last day of the Interest Period for such Loan;
or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VI to
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on
the date for such Borrowing, Conversion, Continuation, or prepayment
specified in the relevant Request for Borrowing, Notice of Continuation or
Conversion, or other notice of Borrowing, prepayment, Continuation, or
Conversion under this Agreement.
Section 13.6 Taxes.
(a) Any and all payments by Borrower to or for the account of any
Bank or Administrative Agent hereunder or under any other Loan Paper shall be
made free and clear of and without deduction for any and all present or
future Taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Bank
and Administrative Agent, Taxes imposed on its income, and franchise Taxes
imposed on it (all such non-excluded Taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred
to in this Section 13.6 as "Non-Excluded Taxes"). If Borrower shall be
required by Law to deduct any Non-Excluded Taxes from or in respect of any
sum payable under this Agreement or any other Loan Paper to any Bank or
Administrative Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 13.6) such Bank or Administrative
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, (iii)
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law, and (iv)
Borrower shall furnish to Administrative Agent, at its address set forth on
Schedule 1.1 hereto, the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, Borrower agrees to pay any and all present or
future stamp or documentary Taxes and any other excise or property Taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Paper or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Paper
(hereinafter referred to as "Other Taxes").
(c) Borrower agrees to indemnify each Bank and Administrative Agent
for the full amount of Non-Excluded Taxes and Other Taxes (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 13.6) paid by such Bank or
Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Bank organized under the Laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on Schedule 1.1 hereto and on or
prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by Borrower or
Administrative Agent (but only so long as such Bank remains lawfully able to
do so), shall provide Borrower and Administrative Agent, at the time or times
prescribed by applicable Law, with such properly completed and executed
documentation prescribed by applicable Law (or reasonably requested by
Borrower) certifying that such Bank is entitled to benefits under an income
tax treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, and certifying that such
Bank is entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Loan Papers.
(e) For any period with respect to which a Bank has failed to
provide Borrower and Administrative Agent with the appropriate form pursuant
to Section 13.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 13.6(a), Section 13.6(b) or Section 13.6(c) with respect to
Non-Excluded Taxes imposed by the United States; provided, however, that
should a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding Tax, become subject to Non-Excluded Taxes because of its failure
to deliver a form required hereunder, Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Non-
Excluded Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 13.6, then such Bank will agree
to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of Non-
Excluded Taxes, Borrower shall furnish to Administrative Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 13.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
Section 13.7 Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for
the purposes of this Agreement all determinations hereunder shall be made as
if such Bank had actually funded and maintained each Eurodollar Loan during
the Interest Period for such Eurodollar Loan through the purchase of deposits
having a maturity corresponding to the last day of such Interest Period and
bearing an interest rate equal to the Adjusted Eurodollar Rate for such
Interest Period.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telecopy or similar writing) and shall be given, if to Administrative
Agent or any Bank, at its address or telecopier number set forth on Schedule
1.1 hereto, and if given to Borrower, at its address or telecopy number set
forth on the signature pages hereof (or in either case, at such other address
or telecopy number as such party may hereafter specify for the purpose by
notice to the other parties hereto). Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified in this Section 14.1 and the
appropriate answerback is received or receipt is otherwise confirmed, (b) if
given by mail, three (3) Domestic Business Days after deposit in the mails
with first class postage prepaid, addressed as aforesaid, or (c) if given by
any other means, when delivered at the address specified in this Section
14.1; provided that notices to Administrative Agent under Article II or
Article III shall not be effective until received.
Section 14.2 No Waivers. No failure or delay by Administrative
Agent or any Bank in exercising any right, power or privilege hereunder or
under any Note or other Loan Paper shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by Law or in any of the other Loan Papers.
Section 14.3 Expenses; Indemnification.
(a) Borrower agrees to pay on demand all reasonable costs and
expenses of Administrative Agent, Sole Lead Arranger and Bookrunner in
connection with the syndication, preparation, execution, delivery,
modification, and amendment of this Agreement, the other Loan Papers, and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for Administrative Agent with respect
thereto and with respect to advising Administrative Agent as to its rights
and responsibilities under the Loan Papers. Borrower further agrees to pay
on demand all costs and expenses of Administrative Agent and Banks, if any
(including, without limitation, reasonable attorneys' fees and expenses), in
connection with (i) the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Loan Papers and the other documents to be
delivered hereunder, and (ii) any forbearance or workout, or any
modifications to the Loan Papers, following an Event of Default. Each demand
for payment of costs and expenses shall include a reasonably detailed list of
such costs and expenses, and such costs and expenses payable hereunder shall
not include the allocated costs of internal counsel of any Agent or Bank.
(b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS EACH AGENT AND
EACH BANK AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY")
FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY
BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH
CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT
LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING
OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE REVOLVING LOAN (INCLUDING ANY OF THE FOREGOING ARISING FROM
THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF
AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN
THIS SECTION 14.3 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY CREDIT PARTIES,
ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER
PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR
NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AGREES
NOT TO ASSERT ANY CLAIM AGAINST ANY AGENT, ANY BANK, ANY OF THEIR AFFILIATES,
OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS,
AND ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO
THE LOAN PAPERS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE REVOLVING LOAN.
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 14.3 shall survive the payment in full of the Revolving Loan and
all other amounts payable under this Agreement.
Section 14.4 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Bank (and each of its Affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by Law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Bank (or any of its Affiliates) to or for the credit or the
account of any Credit Party against any and all of the Obligations,
irrespective of whether such Bank shall have made any demand under this
Agreement or Note held by such and although such obligations may be
unmatured. Each Bank agrees promptly to notify the affected Credit Party
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this Section 14.4 are
in addition to other rights and remedies (including, without limitation,
other rights of set-off) that such Bank may have.
(b) If any Bank (a "benefitted Bank") shall at any time receive any
payment of all or part of the amounts owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in respect
of such other Bank's amounts owing to it, or interest thereon, such
benefitted Bank shall purchase for cash from the other Banks a participating
interest in such portion of each such other Bank's amounts owing to it, or
shall provide such other Banks with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such benefitted Bank to
share the excess payment or benefits of such collateral or proceeds ratably
with each other Bank; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted Bank,
such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. Borrower
agrees that any Bank so purchasing a participation from a Bank pursuant to
this Section 14.4 may, to the fullest extent permitted by Law, exercise all
of its rights of payment (including the right of set-off) with respect to
such participation as fully as if such Person were the direct creditor of
Borrower in the amount of such participation.
Section 14.5 Amendments and Waivers. Subject to the provisions of
Section 14.10(f), any provision of this Agreement, the Notes or any other
Loan Paper may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by Borrower and Required Banks (and, if the
rights or duties of any Agent are affected thereby, by such Agent); provided
that no such amendment or waiver shall, unless signed by all Banks, (a)
increase the Commitment of any Bank, (b) reduce the principal of or rate of
interest on any Revolving Loan or any fees or other amounts payable hereunder
or for termination of any Commitment, (c) change the percentage of the Total
Commitment, or the number of Banks which shall be required for Banks or any
of them to take any action under this Section 14.5 or any other provision of
this Agreement, (d) extend the due date for, or forgive any principal,
interest, fees or reimbursement obligations due hereunder, (e) release any
material guarantor or other material party liable for all or any part of the
Obligations or release any material part of the collateral for the
Obligations or any part thereof other than releases required pursuant to
sales of collateral which are expressly permitted by Section 9.5 hereof, (f)
amend or modify any of the provisions of Article IV hereof or the definitions
of any terms defined therein, or (g) increase any Borrowing Base above the
Borrowing Base then in effect.
Section 14.6 Survival. All representations, warranties and
covenants made by any Credit Party herein or in any certificate or other
instrument delivered by it or in its behalf under the Loan Papers shall be
considered to have been relied upon by Banks and shall survive the delivery
to Banks of such Loan Papers or the extension of the Revolving Loan (or any
part thereof), regardless of any investigation made by or on behalf of Banks.
The indemnity provided in Section 14.3(b) herein shall survive the repayment
of all credit advances hereunder and/or the discharge or release of any Lien
granted hereunder or in any other Loan Paper, contract or agreement between
Borrower or any other Credit Party and any Agent or any Bank.
Section 14.7 Limitation on Interest. Regardless of any provision
contained in the Loan Papers, Banks shall never be entitled to receive,
collect, or apply, as interest on the Revolving Loan, any amount in excess of
the Maximum Lawful Rate, and in the event any Bank ever receives, collects or
applies as interest any such excess, such amount which would be deemed
excessive interest shall be deemed a partial prepayment of principal and
treated hereunder as such; and if the Revolving Loan is paid in full, any
remaining excess shall promptly be paid to Borrower. In determining whether
or not the interest paid or payable under any specific contingency exceeds
the Maximum Lawful Rate, Borrower and Banks shall, to the extent permitted
under applicable Law, (a) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof and (c) amortize, prorate, allocate and
spread, in equal parts, the total amount of the interest throughout the
entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided,
however, that if the unpaid principal balance thereof is paid and performed
in full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the
Maximum Lawful Rate, Banks shall refund to Borrower the amount of such excess
and, in such event, Banks shall not be subject to any penalties provided by
any Laws for contracting for, charging, taking, reserving or receiving
interest in excess of the Maximum Lawful Rate.
Section 14.8 Invalid Provisions. If any provision of the Loan
Papers is held to be illegal, invalid, or unenforceable under present or
future Laws effective during the term thereof, such provision shall be fully
severable, the Loan Papers shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
thereof, and the remaining provisions thereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom. Furthermore, in lieu of such
illegal, invalid, or unenforceable provision there shall be added
automatically as a part of the Loan Papers a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
Section 14.9 Waiver of Consumer Credit Laws. Pursuant to Chapter
346 of the Texas Finance Code, as amended, Borrower agrees that such Chapter
346 shall not govern or in any manner apply to the Revolving Loan.
Section 14.10 Assignments and Participations.
(a) Successors and Assigns. The terms and provisions of the Loan
Papers shall be binding upon and inure to the benefit of Borrower and Banks
and their respective successors and assigns permitted hereby, except that (i)
Borrower shall not have the right to assign its rights or obligations under
the Loan Papers without the prior written consent of each Bank, (ii) any
assignment by any Bank must be made in compliance with Section 14.10(c), and
(iii) any transfer by participation must be made in compliance with Section
14.10(b). Any attempted assignment or transfer by any party not made in
compliance with this Section 14.10(a) shall be null and void, unless such
attempted assignment or transfer is treated as a participation in accordance
with Section 14.10(b). The parties to this Agreement acknowledge that clause
(ii) of this Section 14.10(a) relates only to absolute assignments and this
Section 14.10(a) does not prohibit assignments creating security interests,
including, without limitation, (x) any pledge or assignment by any Bank of
all or any portion of its rights under this Agreement and any Note to a
Federal Reserve Bank or (y) in the case of a Bank which is a Fund, any pledge
or assignment of all or any portion of its rights under this Agreement and
any Note to its trustee in support of its obligations to its trustee;
provided, however, that no such pledge or assignment creating a security
interest shall release the transferor Bank from its obligations hereunder
unless and until the parties thereto have complied with the provisions of
Section 14.10(c). Administrative Agent may treat the Person which made any
Revolving Loan or which holds any Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 14.10(c); provided,
however, that Administrative Agent may in its discretion (but shall not be
required to) follow instructions from the Person which made any Revolving
Loan or which holds any Note to direct payments relating to such Revolving
Loan or Note to another Person. Any assignee of the rights to any Revolving
Loan or any Note agrees by acceptance of such assignment to be bound by all
the terms and provisions of the Loan Papers. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Revolving Loan
(whether or not a Note has been issued in evidence thereof), shall be
conclusive and binding on any subsequent holder or assignee of the rights to
such Revolving Loan.
(b) Participations.
(i) Any Bank may at any time sell to one or more banks or other
entities ("Participants") participating interests in any Revolving Loan owing
to such Bank, any Note held by such Bank, any Commitment of such Bank or any
other interest of such Bank under the Loan Papers. In the event of any such
sale by a Bank of participating interests to a Participant, such Bank's
obligations under the Loan Papers shall remain unchanged, such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Bank shall remain the owner of its Revolving Loans and
the holder of any Note issued to it in evidence thereof for all purposes
under the Loan Papers, all amounts payable by Borrower under this Agreement
shall be determined as if such Bank had not sold such participating
interests, and Borrower and Administrative Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under the Loan Papers.
(ii) Each Bank shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Papers other than any amendment, modification or waiver
with respect to any Revolving Loan or Commitment in which such Participant
has an interest which would require consent of all of the Banks pursuant to
the terms of Section 14.5 or of any other Loan Paper.
(iii) Borrower agrees that each Participant shall be deemed to have
the right of setoff provided in Section 14.4 in respect of its participating
interest in amounts owing under the Loan Papers to the same extent as if the
amount of its participating interest were owing directly to it as a Bank
under the Loan Papers; provided, that each Bank shall retain the right of
setoff provided in Section 14.4 with respect to the amount of participating
interests sold to each Participant. Banks agree to share with each
Participant, and each Participant, by exercising the right of setoff provided
in Section 14.4, agrees to share with each Bank, any amount received pursuant
to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 14.4 as if each Participant were a Bank. Borrower
further agrees that each Participant shall be entitled to the yield
protection provisions contained in Article XIII to the same extent as if it
were a Bank and had acquired its interest by assignment pursuant to Section
14.10(c); provided, that (A) a Participant shall not be entitled to receive
any greater payment under Article XIII than the Bank who sold the
participating interest to such Participant would have received had it
retained such interest for its own account, unless the sale of such interest
to such Participant is made with the prior written consent of Borrower, and
(B) any Participant not incorporated under the laws of the United States of
America or any State thereof agrees to comply with the provisions of Section
13.6 to the same extent as if it were a Bank.
(c) Assignments.
(i) Any Bank may at any time assign to one or more banks or other
entities ("Purchasers") all or any part of its rights and obligations under
the Loan Papers. The parties to such assignment shall execute and deliver an
Assignment and Acceptance Agreement (herein so called) which shall be
substantially in the form of Exhibit J or in such other form as may be agreed
to by the parties thereto. Each such assignment with respect to a Purchaser
which is not a Bank or an Affiliate of a Bank or an Approved Fund shall
either be in an amount equal to the entire applicable Commitment and
Revolving Loans of the assigning Bank or (unless each of Borrower and
Administrative Agent otherwise consents) be in an aggregate amount not less
than $5,000,000. The amount of the assignment shall be based on the
Commitment or outstanding Revolving Loans (if the Commitment has been
terminated) subject to the assignment, determined as of the date of such
assignment or as of the "Effective Date," if the "Effective Date" is
specified in the Assignment and Acceptance Agreement.
(ii) The consent of Borrower shall be required prior to an
assignment becoming effective unless Purchaser is a Bank, an Affiliate of a
Bank or an Approved Fund, provided that the consent of Borrower shall not be
required if a Default has occurred and is continuing. The consent of
Administrative Agent shall be required prior to an assignment becoming
effective unless the Purchaser is a Bank, an Affiliate of a Bank or an
Approved Fund. The consent of Letter of Credit Issuer shall be required
prior to an assignment of a Commitment becoming effective unless Purchaser is
a Bank, an Affiliate of a Bank or an Approved Fund. Any consent required
under this Section 14.10(c)(ii) shall not be unreasonably withheld or
delayed.
(iii) Upon (A) delivery to Administrative Agent of an Assignment and
Acceptance Agreement, together with any consents required by Section
14.10(c)(i) and (ii), and (B) payment of a $3,500 fee to Administrative Agent
for processing such assignment (unless such fee is waived by Administrative
Agent), such assignment shall become effective on the effective date
specified in such Assignment and Acceptance Agreement. On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Bank party to this Agreement and any other Loan Paper executed by or on
behalf of Banks and shall have all the rights and obligations of a Bank under
the Loan Papers, to the same extent as if it were an original party thereto,
and the transferor Bank shall be released with respect to the Commitment and
Revolving Loans assigned to such Purchaser without any further consent or
action by Borrower, Banks or Administrative Agent. In the case of an
assignment covering all of the assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a Bank hereunder but shall
continue to be entitled to the benefits of, and subject to, those provisions
of this Agreement and the other Loan Papers which survive payment of the
Obligations and termination of the applicable agreement. Any assignment or
transfer by a Bank of rights or obligations under this Agreement that does
not comply with this Section 14.10(c) shall be treated for purposes of this
Agreement as a sale by such Bank of a participation in such rights and
obligations in accordance with Section 14.10(b). Upon the consummation of
any assignment to a Purchaser pursuant to this Section 14.10(c), the
transferor Bank, Administrative Agent and Borrower shall make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are
issued to such transferor Bank and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
(iv) Administrative Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at one of its offices in Chicago, Illinois
or Dallas, Texas a copy of each Assignment and Acceptance Agreement delivered
to it and a register for the recordation of the names and addresses of the
Banks, and the Commitments of, and principal amounts of the Revolving Loans
owing to, each Bank pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and Borrower,
Administrative Agent and Banks may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Bank hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by Borrower and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.
(d) Dissemination of Information. Borrower authorizes each Bank to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Papers by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Bank's possession
concerning the creditworthiness of Borrower and its Subsidiaries, including,
without limitation, any information contained in any financial reports;
provided, that, each Transferee and prospective Transferee agrees to be bound
by Section 14.17 of this Agreement.
(e) Tax Treatment. If any interest in any Loan Paper is transferred
to any Transferee which is not incorporated under the laws of the United
States or any State thereof, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 13.6.
(f) Procedures for Commitment Increases and Addition of New Banks.
This Agreement permits certain increases of a Bank's Commitment and the
admission of new Banks providing new Commitments, none of which requires any
consent or approvals from the other Banks. Any amendment hereto for such a
Commitment Increase or addition shall be in the form attached hereto as
Exhibit K and shall only require the written signatures of Administrative
Agent, Borrower and the Bank(s) being added or increasing their Commitment.
On the effective date of any such Commitment Increase, Administrative Agent,
Borrower and applicable Banks shall make appropriate arrangements so that new
Notes or, as appropriate, replacement Notes are issued to the applicable
Banks, in each case in principal amounts reflecting their respective
Commitments, after giving effect to such Commitment Increase. In addition,
within a reasonable period of time after the effective date of any Commitment
Increase, Administrative Agent shall, and is hereby authorized and directed
to, revise Schedule 1.1 to reflect such Commitment Increase and shall
distribute such revised Schedule 1.1 to each of the Banks and Borrower,
whereupon such revised Schedule 1.1 shall replace the old Schedule 1.1 and
become part of this Agreement. On the first Domestic Business Day
immediately following any such Commitment Increase, all outstanding Base Rate
Loans shall be reallocated among the Banks (including any newly added
Bank(s)) in accordance with the Banks' respective revised pro rata shares of
such outstanding Base Rate Loans. Eurodollar Loans shall not be reallocated
among the Banks prior to the expiration of the applicable Interest Periods in
effect at the time of any such Commitment Increase.
Section 14.11 TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER
LOAN PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT
THE LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE
OBLIGATIONS IS LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF
THE LIENS IN FAVOR OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH
PROPERTY, AND (B) THE EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH
RESPECT TO SUCH PROPERTY.
Section 14.12 Consent to Jurisdiction; Waiver of Immunities.
(a) Borrower hereby irrevocably submits to the jurisdiction of any
Texas State or Federal court sitting in the Northern District of Texas over
any action or proceeding arising out of or relating to this Agreement or any
other Loan Papers, and Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Texas State or Federal court. Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the delivery by
Federal Express or other nationally recognized overnight delivery service of
copies of such process to such Person at its address specified in Section
14.1. Borrower agrees that a final judgment on any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
(b) Nothing in this Section 14.12 shall affect any right of Banks to
serve legal process in any other manner permitted by Law or affect the right
of any Bank to bring any action or proceeding against any Credit Party or
their properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
such Person hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other Loan Papers.
Section 14.13 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. Subject to the terms and conditions herein set forth, this
Agreement shall become effective when Administrative Agent shall have
received counterparts hereof signed by all of the parties hereto or, in the
case of any Bank as to which an executed counterpart shall not have been
received, Administrative Agent shall have received telegraphic or other
written confirmation from such Bank of execution of a counterpart hereof by
such Bank.
Section 14.14 No Third Party Beneficiaries. Except for the
provisions hereof inuring to the benefit of Agents not a party to this
Agreement, it is expressly intended that there shall be no third party
beneficiaries of the covenants, agreements, representations or warranties
herein contained other than third party beneficiaries permitted pursuant to
Section 14.10.
Section 14.15 COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS
AND THE CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, AND THE
CREDIT PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG BANKS, AGENTS,
AND THE CREDIT PARTIES.
Section 14.16 WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT
AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
Section 14.17 Confidentiality. Administrative Agent and each Bank
(each, a "Lending Party") agrees to keep confidential any information
furnished or made available to it by Borrower pursuant to this Agreement that
is marked confidential; provided, that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party
or any Affiliate of any Lending Party, or any officer, director, employee,
agent, or advisor of any Lending Party or any Affiliate of any Lending Party,
(b) to any other Person if reasonably incidental to the administration of the
credit facility provided herein, (c) as required by any Law, rule or
regulation, (d) upon the order of any court or administrative agency, (e)
upon the request or demand of any regulatory agency or authority or self-
regulatory body, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure
by any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a
party relating to the Obligations or any Loan Paper, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement
or any other Loan Paper, and (i) subject to provisions substantially similar
to those contained in this Section 14.17, to any actual or proposed
participant or assignee.
Section 14.18 USA Patriot Act. Each Bank hereby notifies Borrower
that, pursuant to the requirements of the USA Patriot Act (Title III of Pub.
L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to
obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information
that will allow such Bank to identify Borrower in accordance with the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year
first above written.
[signature pages to follow]
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BORROWER:
DELTA PETROLEUM CORPORATION,
a Delaware corporation
By: /s/ Kvein X. Xxxxx,
Xxxxx X. Xxxxx,
Chief Financial Officer and Treasurer
Address for Notice:
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Fax No. (000) 000-0000
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
ADMINISTRATIVE AGENT:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: /s/ J. Xxxxx Xxxxxx
J. Xxxxx Xxxxxx,
Senior Vice President
BANK:
JPMORGAN CHASE BANK, N.A.
By: /s/ J. Xxxxx Xxxxxx
J. Xxxxx Xxxxxx,
Senior Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
SYNDICATION AGENT:
BANK OF OKLAHOMA, N.A.,
as Syndication Agent
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Senior Vice President
BANK:
BANK OF OKLAHOMA, N.A.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Senior Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
DOCUMENTATION AGENT:
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agent
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
CAPITAL ONE, NATIONAL ASSOCIATION
(f/k/a Hibernia National Bank)
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
BANK OF SCOTLAND
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: First Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
NATEXIS BANQUES POPULAIRES
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Director
By: /s/ Xxxxx X. Xxxxxxx III
Name: Xxxxx X. Xxxxxxx III
Title: Managing Director
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
STERLING BANK
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Assistant Vice President
SIGNATURE PAGE TO
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DELTA PETROLEUM CORPORATION, AS BORROWER,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 1.1 THERETO, AS BANKS
BANK:
KEYBANK, N.A.
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Senior Vice President
SCHEDULE 1.1
Financial Institutions
COMMITMENT
BANKS COMMITMENT AMOUNT PERCENTAGE
JPMorgan Chase Bank, N.A. $ 42,307,692.30 16.00000000%
Bank of Oklahoma, N.A. $ 34,615,384.62 13.00000000%
U.S. Bank National Association $ 34,615,384.62 13.84615385%
Capital One, National Association $ 23,076,923.08 9.00000000%
Bank of Scotland $ 23,076,923.08 9.00000000%
Deutsche Bank Trust Company Americas $ 23,076,923.08 9.23076923%
Natexis Banques Populaires $ 23,076,923.08 9.00000000%
Sterling Bank $ 23,076,923.07 9.00000000%
KeyBank, N.A. $ 23,076,923.07 9.23076923%
Totals: $ 250,000,000.00 100.00%
BANKS DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE ADDRESS FOR NOTICE
JPMorgan Chase Bank, N.A. 00 Xxxxx Xxxxxxxx 00 Xxxxx Xxxxxxxx 0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxx 0 Xxxxx 7 Mail Code: TX1-2448
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxx Attn: Xxxxxxx Xxxx Attn: J. Xxxxx Xxxxxx
Tel. No. (000) 000-0000 Tel. No. (000) 000-0000 Tel. No. (000) 000-0000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
e-mail: e-mail: e-mail:
xxxxxxx.xxxx@xxxxxxxx.xxx xxxxxxx.xxxx@xxxxxxxx.xxx xxxxx.xxxxxx@xxxxxxxx.xxx
Bank of Oklahoma, N.A. 0000 Xxxxxxxx 0000 Xxxxxxxx 0000 Xxxxxxxx
Xxxxx 0000 Xxxxx 0000 Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx Attn: Xxxx Xxxxxx Attn: Xxxxxxx X. Xxxxx
Tel No. (000) 000-0000 Tel No. (000) 000-0000 Tel. No. (000) 000-0000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
e-mail: xxxxxxxx@xxxx.xxx e-mail: xxxxxxxx@xxxx.xxx e-mail: xxxxxx@xxxx.xxx
U.S. Bank National 000 XX Xxx 000 XX Xxx 000 Xxxxxxxxxxx Xxxxxx
Association PD-OR-P7LS PO-OR-P7LS DN-CO-T8E
Xxxxxxxx, Xxxxxx 00000 Xxxxxxxx, Xxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx Attn: Xxxxx Xxxxxxx Attn: Xxxxxxx X. Xxxxxx
Tel No. (000) 000-0000 Tel No. (000) 000-0000 Tel No.: (000) 000-0000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No.: (000) 000-0000
e-mail:
xxxxxxx.xxxxxx@xxxxxx.xxx
Capital Xxx, Xxxxxxxx 000 Xxxxxxxxxx Xxxxxx 000 Xxxxxxxxxx Xxxxxx 000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx Attn: Xxxxx Xxxxx Attn: Xxxxx Xxxxx
Tel No. (000) 000-0000 Tel No. (000) 000-0000 Tel No. (000) 000-0000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
e-mail: xxxxxx@xxxxxxxx.xxx e-mail: xxxxxx@xxxxxxxx.xxx e-mail: xxxxxx@xxxxxxxx.xxx
Bank of Scotland 000 Xxxxx Xxxxxx 000 Xxxxx Xxxxxx 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx Attn: Xxxxxxx Xxxxxx Attn: Xxx XxXxxxx and
Tel No. (000) 000-0000 Tel No. (000) 000-0000 Xxxxxxx Xxxxxx
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Tel No.: (000) 000-0000/0036
e-mail: e-mail: Fax No.: (000) 000-0000
Shirley_Vargas@bankof Shirley_Vargas@bankof e-mail:
xxxxxxxx.xxx xxxxxxxx.xxx Xxx_XxXxxxx@xxxxxxxxxxxxxx.xxx
Richard_Butler@bankofscotland.
com
Deutsche Bank Trust _______________________ ______________________ _______________________
Company Americas _______________________ ______________________ _______________________
Attn: _________________ Attn: ________________ Attn: _________________
Tel. No. (___) ___-____ Tel No.: (___) ________ Tel No.: (___) ________
e-mail: ______@________ e-mail: ______@________ e-mail: ______@________
Natexis Banques Populaires _______________________ ______________________ _______________________
_______________________ ______________________ _______________________
Attn: _________________ Attn: ________________ Attn: _________________
Tel. No. (___) ___-____ Tel No.: (___) ________ Tel No.: (___) ________
e-mail: ______@________ e-mail: ______@________ e-mail: ______@________
Sterling Bank _______________________ ______________________ _______________________
_______________________ ______________________ _______________________
Attn: _________________ Attn: ________________ Attn: _________________
Tel. No. (___) ___-____ Tel No.: (___) ________ Tel No.: (___) ________
e-mail: ______@________ e-mail: ______@________ e-mail: ______@________
KeyBank, N.A. _______________________ ______________________ _______________________
_______________________ ______________________ _______________________
Attn: _________________ Attn: ________________ Attn: _________________
Tel. No. (___) ___-____ Tel No.: (___) ________ Tel No.: (___) ________
e-mail: ______@________ e-mail: ______@________ e-mail: ______@________
Administrative Agent - Address:
0000 Xxxx Xxxxxx, 0xx Xxxxx
Mail Code TX1-2448
Xxxxxx, Xxxxx 00000
Attn: J. Xxxxx Xxxxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
SCHEDULE 7.5
LITIGATION
None
SCHEDULE 7.10
LICENSES, PERMITS, ETC.
None
SCHEDULE 7.13
ORGANIZATIONAL STRUCTURE
1. Credit Party: Delta Petroleum Corporation ("Borrower")
Jurisdiction of Incorporation: Delaware
Jurisdiction of Qualification as a Foreign Corporation: California,
Colorado, Kansas, Louisiana, Montana, New Mexico, Oklahoma, Pennsylvania,
Texas, Utah, Washington and Wyoming
Authorized, issued and outstanding Equity of Borrower:
Authorized: Common Stock, $0.01 par value, 300,000,000
shares
Preferred Stock, $0.01 par value,
3,000,000 shares
Issued and Outstanding: 53,425,701 shares of Common Stock
No shares of Preferred Stock
Outstanding warrants, options, subscription rights, convertible
securities or other rights to Equity of Borrower: See Attachment
2. Credit Party: Delta Exploration Company, Inc. ("DEC")
Jurisdiction of Incorporation: Colorado
Jurisdiction of Qualification as a Foreign Corporation: Pennsylvania
Authorized, issued and outstanding Equity of DEC:
Authorized: Common Stock, $0.01 par value, 300,000,000
shares
Preferred Stock, $0.10 par value,
3,000,000 shares
Issued and Outstanding: 100 shares of Common Stock
No shares of Preferred Stock
Outstanding warrants, options, subscription rights, convertible
securities or other rights to Equity of DEC: None.
3. Credit Party: Piper Petroleum Company ("Piper")
Jurisdiction of Incorporation: Colorado
Jurisdiction of Qualification as a Foreign Corporation: Kansas,
Mississippi and Texas
Authorized, issued and outstanding Equity of Piper:
Authorized: Common Stock, $0.01 par value, 1,000
shares
Issued and Outstanding: 100 shares
Outstanding warrants, options, subscription rights, convertible
securities or other rights to Equity of Piper: None
4. Credit Party: DPCA LLC ("DPCA")
Jurisdiction of Incorporation: Delaware
Jurisdiction of Qualification as a Foreign LLC: None
Authorized, issued and outstanding Equity of DPCA:
Delta Petroleum Corporation is the sole member/manager of DPCA, owning
the only membership interest.
Outstanding warrants, options, subscription rights, convertible
securities or other rights to Equity of DPCA: None
5. Credit Party: Castle Texas Exploration Limited Partnership ("Castle")
Jurisdiction of Incorporation: Texas
Jurisdiction of Qualification as a Foreign LP: None
Authorized, issued and outstanding Equity of Castle:
Delta Petroleum Corporation is the sole general partner and sole limited
partner of Castle, owning the only general partnership interest and
limited partnership interest.
Outstanding warrants, options, subscription rights, convertible
securities or other rights to Equity of Castle: None
SCHEDULE 7.14
ENVIRONMENTAL DISCLOSURE
None
SCHEDULE 7.19
INSIDER
No Credit Party is, and no Person having "control" (as that term is defined
in 12 U.S.C. section 375(b) or regulations promulgated thereunder) of any
Credit Party is an "executive officer," "director" or "shareholder" of any
Bank or any bank holding company of which any Bank is a Subsidiary or of any
Subsidiary of such bank holding company, except that Xxxxx X. Xxxxxx
currently serves as a member of the Board of Directors of Community Banks of
Colorado.
SCHEDULE 9.8
EXISTING INVESTMENTS
