EXHIBIT 10.2
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SECOND LIEN CREDIT AND GUARANTEE AGREEMENT
DATED AS OF
OCTOBER 31, 2006
AMONG
ENDEAVOUR INTERNATIONAL HOLDING B.V.,
AS BORROWER,
THE GUARANTORS PARTY HERETO,
THE LENDERS PARTY HERETO,
AND
CREDIT SUISSE,
AS ADMINISTRATIVE AGENT
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SOLE LEAD ARRANGER AND SOLE BOOKRUNNER
CREDIT SUISSE SECURITIES (USA) LLC
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS............................. 1
Section 1.01. Terms Defined Above.................................... 1
Section 1.02. Certain Defined Terms.................................. 2
Section 1.03. Types of Loans and Borrowings.......................... 30
Section 1.04. Terms Generally; Rules of Construction................. 30
Section 1.05. Accounting Terms and Determinations; GAAP-IFRS......... 31
ARTICLE II THE CREDITS................................................... 31
Section 2.01. Commitments............................................ 31
Section 2.02. Loans and Borrowings................................... 31
Section 2.03. Request for Borrowing.................................. 32
Section 2.04. Interest Elections..................................... 33
Section 2.05. Funding of Borrowings.................................. 34
Section 2.06. Termination of Commitments............................. 35
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES........ 35
Section 3.01. Repayment of Loans..................................... 35
Section 3.02. Interest............................................... 36
Section 3.03. Alternate Rate of Interest............................. 37
Section 3.04. Prepayments............................................ 37
Section 3.05. Fees................................................... 40
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS............. 40
Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs............................................... 40
Section 4.02. Presumption of Payment by the Borrower................. 41
Section 4.03. Certain Deductions by the Administrative Agent......... 41
Section 4.04. Disposition of Proceeds................................ 41
ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY..... 42
Section 5.01. Increased Costs........................................ 42
Section 5.02. Break Funding Payments................................. 43
Section 5.03. Taxes.................................................. 43
Section 5.04. Mitigation Obligations................................. 44
Section 5.05. Illegality............................................. 45
ARTICLE VI CONDITIONS PRECEDENT.......................................... 45
Section 6.01. Conditions Precedent................................... 45
ARTICLE VII REPRESENTATIONS AND WARRANTIES............................... 50
Section 7.01. Organization; Powers................................... 50
Section 7.02. Authority; Enforceability.............................. 50
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Section 7.03. Approvals; No Conflicts................................ 50
Section 7.04. Financial Condition; No Material Adverse Change........ 51
Section 7.05. Litigation............................................. 52
Section 7.06. Environmental Matters.................................. 52
Section 7.07. Compliance with the Laws and Agreements; No Defaults... 53
Section 7.08. Investment Company Act................................. 53
Section 7.09. Taxes.................................................. 53
Section 7.10. ERISA.................................................. 54
Section 7.11. Disclosure; No Material Misstatements.................. 55
Section 7.12. Insurance.............................................. 55
Section 7.13. [Intentionally omitted]................................ 55
Section 7.14. Subsidiaries........................................... 55
Section 7.15. Properties; Titles, Etc................................ 56
Section 7.16. Maintenance of Properties.............................. 57
Section 7.17. Prepayments and Gas Imbalances......................... 57
Section 7.18. Use of Loans........................................... 57
Section 7.19. Solvency............................................... 58
Section 7.20. Material Contracts..................................... 58
Section 7.21. Labor Matters.......................................... 58
Section 7.22. Transaction Documents.................................. 59
Section 7.23. Sanctioned Persons..................................... 59
Section 7.24. Security Instruments................................... 59
Section 7.25. Debt................................................... 59
ARTICLE VIII AFFIRMATIVE COVENANTS....................................... 60
Section 8.01. Financial Statements; Other Information................ 60
Section 8.02. Notices of Material Events............................. 63
Section 8.03. Existence; Conduct of Business......................... 64
Section 8.04. Payment of Obligations................................. 64
Section 8.05. Performance of Obligations under Loan Documents........ 64
Section 8.06. Operation and Maintenance of Properties................ 64
Section 8.07. Insurance.............................................. 66
Section 8.08. Books and Records; Inspection Rights................... 66
Section 8.09. Compliance with Laws................................... 66
Section 8.10. Environmental Matters.................................. 66
Section 8.11. Further Assurances..................................... 67
Section 8.12. Reserve Reports........................................ 68
Section 8.13. Title Information...................................... 70
Section 8.14. Additional Collateral; Additional Guarantors........... 70
Section 8.15. ERISA Compliance....................................... 71
Section 8.16. Hedging Arrangements................................... 72
Section 8.17. Marketing Activities................................... 72
Section 8.18. Performance of Material Contracts...................... 73
Section 8.19. Insurance Endorsements................................. 73
Section 8.20. Talisman Accession..................................... 73
ARTICLE IX NEGATIVE COVENANTS............................................ 74
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Section 9.01. Financial Covenants.................................... 74
Section 9.02. Debt................................................... 75
Section 9.03. Liens.................................................. 75
Section 9.04. Restricted Payments; Redemptions....................... 76
Section 9.05. Investments, Loans and Advances........................ 77
Section 9.06. Nature of Business..................................... 78
Section 9.07. Limitation on Leases................................... 78
Section 9.08. Proceeds of Loans...................................... 78
Section 9.09. ERISA Compliance....................................... 79
Section 9.10. Sale or Discount of Receivables........................ 79
Section 9.11. Mergers, Etc........................................... 79
Section 9.12. Sale of Properties..................................... 79
Section 9.13. Environmental Matters.................................. 80
Section 9.14. Transactions with Affiliates........................... 80
Section 9.15. Subsidiaries........................................... 80
Section 9.16. Negative Pledge Agreements; Dividend Restrictions...... 80
Section 9.17. Take-or-Pay or Other Prepayments....................... 81
Section 9.18. Swap Agreements........................................ 81
Section 9.19. Amendment, Etc., of Related Documents and Material
Contracts.............................................. 81
Section 9.20. Capital Expenditures................................... 81
Section 9.21. Sale and Lease-Back Transactions....................... 82
Section 9.22. Anti-Layering.......................................... 82
Section 9.23. Organizational Documents; Permitted Preferred Stock.... 82
Section 9.24. Exempted Subsidiary.................................... 83
ARTICLE X EVENTS OF DEFAULT; REMEDIES.................................... 83
Section 10.01. Events of Default...................................... 83
Section 10.02. Remedies............................................... 86
ARTICLE XI THE AGENTS.................................................... 88
Section 11.01. Appointment; Powers................................... 88
Section 11.02. Duties and Obligations of Agents....................... 88
Section 11.03. Action by Administrative Agent......................... 89
Section 11.04. Reliance by Administrative Agent....................... 89
Section 11.05. Subagents.............................................. 90
Section 11.06. Resignation or Removal of Administrative Agent......... 90
Section 11.07. Agents as Lenders...................................... 90
Section 11.08. No Reliance............................................ 90
Section 11.09. Administrative Agent May File Proofs of Claim.......... 91
Section 11.10. Authority of Administrative Agent to Release
Collateral and Liens................................... 91
Section 11.11. The Arranger........................................... 92
ARTICLE XII GUARANTEE.................................................... 92
Section 12.01. Guarantee; Limitation of Liability..................... 92
Section 12.02. Guarantee Absolute..................................... 93
Section 12.03. Waivers and Acknowledgments............................ 94
Section 12.04. Subrogation............................................ 95
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Section 12.05. Payments Free and Clear of Taxes, Etc.................. 95
Section 12.06. Subordination.......................................... 97
Section 12.07. Continuing Guarantee; Assignments under the Credit
Agreement.............................................. 98
Section 12.08. Guarantee Supplements.................................. 99
Section 12.09. Limitation of Guarantee................................ 99
ARTICLE XIII MISCELLANEOUS............................................... 99
Section 13.01. Notices................................................ 99
Section 13.02. Waivers; Amendments.................................... 100
Section 13.03. Expenses, Indemnity; Damage Waiver..................... 101
Section 13.04. Successors and Assigns................................. 104
Section 13.05. Survival; Revival; Reinstatement....................... 106
Section 13.06. Counterparts; Integration; Effectiveness............... 107
Section 13.07. Severability........................................... 107
Section 13.08. Right of Setoff........................................ 108
Section 13.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS................................................ 108
Section 13.10. Headings............................................... 109
Section 13.11. Confidentiality........................................ 109
Section 13.12. Interest Rate Limitation............................... 110
Section 13.13. EXCULPATION PROVISIONS................................. 111
Section 13.14. Third Party Beneficiaries.............................. 111
Section 13.15. USA PATRIOT Act Notice................................. 111
Section 13.16. Intercreditor Agreement................................ 112
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I List of Commitments
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Exhibit A Form of Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Interest Election Request
Exhibit D Form of Compliance Certificate
Exhibit F-1 Security Instruments
Exhibit F-2 Form of Security Agreement
Exhibit F-3 Form of Debentures
Exhibit G Form of Assignment and Assumption
Exhibit H Form of Solvency Certificate
Exhibit I Form of Intercreditor Agreement
Exhibit J Form of Guarantee Supplement
Schedule 1.02(a) Material Contracts
Schedule 1.02(b) Mortgaged Properties
Schedule 6.01(h) Local Counsel
Schedule 6.01(dd) Talisman-Related Closing Requirements
Schedule 7.12 Insurance
Schedule 7.14 Subsidiaries
Schedule 7.17 Prepayments and Gas Imbalances
Schedule 7.22 Default Notices
Schedule 7.24(a) Filing Offices
Schedule 9.05 Existing Investments
Schedule 12.01 Guarantors
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THIS SECOND LIEN CREDIT AND GUARANTEE AGREEMENT, dated as of October 31,
2006, is among: Endeavour International Holding B.V., a private limited
liability company formed under the laws of the Netherlands (the "Borrower"), the
Guarantors (as hereinafter defined), each of the Lenders from time to time party
hereto, and Credit Suisse, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Administrative
Agent").
RECITALS
A. Pursuant to the Acquisition Agreement (with such term and each other
capitalized term used but not defined in these Recitals having the meaning
assigned thereto in Article I hereof), the Borrower has agreed to acquire,
through its Subsidiary, Endeavour Energy UK Limited, a limited company organized
under the laws of England and Wales (the "Purchaser" or "Endeavour UK"), the
interests owned by Paladin Resources Limited, a limited company organized under
the laws of Scotland (the "Seller"), through Talisman Expro Limited, a limited
company formed under the laws of England and Wales (the "Acquired Business" or
"Talisman"), in the following UK North Sea assets (the "Acquisition"): (i) the
Alba and Caledonia fields, (ii) the Goldeneye field, (iii) the Bittern field,
(iv) the Ivanhoe, Xxx Xxx, Hamish, Xxxxx and Xxxxx xxxxxx, and (v) the Xxxxxxxx
field (all located in the UK North Sea) (collectively, the "Acquired Assets"),
and to consummate the other transactions described in paragraphs B through E
below. Consideration for such Acquisition to be paid by the Borrower to the
Seller shall be an aggregate amount of US$414.0 million, subject to adjustments
in accordance with the Acquisition Agreement (as defined below).
B. To consummate the transactions contemplated in the Acquisition
Agreement, (i) the Equity Contribution will be made, (ii) the Borrower will
obtain the First Lien Facilities in an aggregate principal amount not to exceed
US$216.5 million (composed of up to US$176.5 million under two debt tranches and
up to US$40.0 million under a letter of credit sub-facility), and (iii), the
Borrower has requested that the Lenders make Loans on the Effective Date in an
aggregate principal amount not to exceed US$75.0 million.
C. The proceeds of the Loans are to be used solely to finance (i) a portion
of the cost of the Acquisition and (ii) a portion of the fees and expenses
incurred in connection with the Transactions (in an aggregate amount not
exceeding US$44.0 million).
D. The provisions of this Agreement and the First Lien Credit Agreement are
(as between the Lenders and the lenders under the First Lien Credit Agreement)
subject to the provisions of the Intercreditor Agreement.
E. The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01. Terms Defined Above. As used in this Agreement,
each term defined above has the meaning indicated above.
Section 1.02. Certain Defined Terms. As used in this Agreement,
the following terms have the meanings specified below:
"4Q06 EBITDA" means the amount equal to the product of (a) EBITDA for the
period from and including the Effective Date through and including December 31,
2006 and (b) 1.5082.
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Acquired Assets" is defined as set forth in the Recitals hereto.
"Acquired Business" is defined as set forth in the Recitals hereto.
"Acquisition" has the meaning specified in the Recitals.
"Acquisition Agreement" means the Agreement dated May 26, 2006, among the
Seller, the Purchaser and Endeavour International, granting put and call options
over the entire issued share capital of the Acquired Business.
"Acquisition Documents" means the collective reference to the Acquisition
Agreement, all material exhibits and schedules thereto and all material
agreements expressly contemplated thereby.
"Additional Guarantor" has the meaning specified in Section 12.08.
"Adjusted LIBOR" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum equal to (a) LIBOR for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" has the meaning specified in the introductory
paragraph hereto.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied from time to time by the Administrative Agent.
"Affected Loans" has the meaning assigned such term in Section 5.05.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified; provided,
however, that, for purposes of Section 9.14 only, the term "Affiliate" shall
also include any Person that directly or indirectly owns 10% or more of any
class of Equity Interests of the Person specified or that is an officer or
director of the Person specified.
"Agents" means the Administrative Agent.
"Aggregate Commitments" is used herein as defined in the First Lien Credit
Agreement.
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"Agreement" means this Second Lien Credit and Guarantee Agreement, as the
same may from time to time be amended, amended and restated, supplemented or
otherwise modified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective from and including
the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, as the case may be.
"Annual Budget and Operating Plan" has the meaning assigned such term in
Section 8.01(p).
"Applicable Margin" means, for any day, (a) with respect to any Eurodollar
Loan, 7.00% per annum or (b) with respect to any ABR Loan, 6.00% per annum.
"Applicable Percentage" means, with respect to any Lender, a percentage
equal to a fraction the numerator of which is the aggregate outstanding
principal amount of the Loans (or, if no Loans are then outstanding, the
Commitment) of such Lender and the denominator of which is the aggregate
outstanding principal amount of the Loans (or, if no Loans are then outstanding,
the Commitments) of all Lenders.
"Approved Counterparty" means (a) the First Lien Agent, any First Lien
Lender or any Affiliate thereof, (b) any other Person whose long term senior
unsecured debt rating is A-/A3 by S&P or Xxxxx'x (or their equivalent) or higher
or (c) any other Person from time to time approved by Majority Lenders.
"Approved Petroleum Engineers" means Netherlands Xxxxxx & Associates,
Xxxxxxx, Xxxxx & Associates Ltd and/or such other reputable independent
petroleum engineer or other expert reasonably acceptable to the Administrative
Agent.
"Arranger" means Credit Suisse Securities (USA) LLC, in its capacities as
sole lead arranger and sole bookrunner hereunder.
"Asset Sale" means the sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise) by any Credit Party or any of its
Subsidiaries to any Person other than another Credit Party or a Wholly-Owned
Subsidiary of a Credit Party of (a) any Equity Interests of any of the
Subsidiaries (other than directors' qualifying shares) or (b) any other Property
of a Credit Party or any of its Subsidiaries (other than (i) Hydrocarbons,
inventory, damaged, obsolete, surplus or worn out assets, scrap and Permitted
Investments, in each case disposed of in the ordinary course of business, and
(ii) any sale, transfer or other disposition or series of related sales,
transfers or other dispositions having a value not in excess of US$750,000).
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"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit G or any other form approved by the Administrative Agent.
"Authorization" means an authorization, consent, approval, resolution,
license, exemption, filing, notarization or registration.
"Bank of Scotland" means the Governor and Company of the Bank of Scotland.
"Bankruptcy Law" has the meaning specified in Section 12.01(b).
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Borrowing" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means the "Tranche A Borrowing Base Amount" or the
"Tranche B Borrowing Base Amount" (each as defined in the First Lien Credit
Agreement), as the context shall require.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which banks in New York City are authorized or required by law to remain closed;
and if such day relates to a Borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such Borrowing or continuation, payment, prepayment, conversion or
Interest Period, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank market.
"Capital Expenditures" means, with respect to any Person for any period,
any expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations) or in respect of any capitalized software
development. For purposes of this definition, (a) the purchase price of
equipment that is purchased substantially contemporaneously with the trade-in or
sale of similar existing equipment or with insurance proceeds therefrom shall be
included in Capital Expenditures only to the extent of the gross amount by which
such purchase price exceeds the credit granted by the seller of such equipment
for the equipment being traded in at such time or the proceeds of such sale or
the amount of such insurance proceeds, as the case may be and (b) the term
"Capital Expenditures" shall not include any expenditures to the extent such
Person or its Subsidiaries are reimbursed in cash by a third party (other than a
Credit Party or any Subsidiary of a Credit Party) during the same period in
which such expenditure was made.
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"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP-IFRS, recorded as
capital leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Cash Distributions" means, with respect to any Person for any period, all
dividends and other distributions on any of the outstanding Equity Interests in
such Person, all purchases, redemptions, retirements, defeasances or other
acquisitions of any of the outstanding Equity Interests in such Person and all
returns of capital to the stockholders, partners or members (or the equivalent
persons) of such Person, in each case to the extent paid in cash by or on behalf
of such Person during such period.
"Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of a Credit Party or its Subsidiaries having
a Fair Market Value in excess of US$1,000,000.
"Certificate of Designation" means the Certificate of Designations, dated
as of October 19, 2006, of Series A Preferred Stock of Endeavour International.
A "Change in Control" shall be deemed to have occurred if (a) Endeavour
International shall fail to own, directly or indirectly, beneficially and of
record, shares representing 100% of each of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; (b)
a majority of the seats (other than vacant seats) on the board of directors of
the Borrower shall at any time be occupied by persons who were neither (i)
nominated by the board of directors of the Borrower, nor (ii) appointed by
directors so nominated; (c) the Borrower shall cease to directly or indirectly
own, beneficially and of record, 100% of the issued and outstanding Equity
Interests of the Acquired Business, other than non-voting Equity Interests
issued to employees as compensation; or (d) (x) any Person or two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of
Endeavour International (or other securities convertible into such Voting Stock)
representing 35% or more of the combined voting power of all Voting Stock of
Endeavour International, or (y) during any period of up to 24 consecutive
months, commencing after the date of this Agreement, individuals who at the
beginning of such 24-month period were directors of Endeavour International
shall cease for any reason to constitute a majority of the board of directors of
Endeavour International, or (z) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of Endeavour International.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 5.01(b), by any lending office of such Lender or by such Lender's
holding company, if any) with any request, guideline or directive
5
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time and the regulations promulgated and the rulings issued thereunder.
"Collateral" means all the "Collateral" as defined in any Security
Instrument and shall also include the Mortgaged Properties.
"Commitment" means (a) with respect to each Lender, the commitment of such
Lender to make Loans as set forth in Annex I or in the most recent Assignment
and Assumption executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Loans, which aggregate commitment shall be
US$75.0 million on the Effective Date.
"Consolidated Capital Expenditures" means, for any Measurement Period,
without duplication, the sum of all Capital Expenditures of Endeavour
International and its Consolidated Subsidiaries.
"Consolidated Current Assets" means, on any date, all assets of Endeavour
International and its Consolidated Subsidiaries on such date which, in
accordance with GAAP, would be classified on a consolidated balance sheet of
Endeavour International and its Consolidated Subsidiaries as "current assets,"
other than cash and cash equivalents.
"Consolidated Current Liabilities" means, on any date, all liabilities of
Endeavour International and its Consolidated Subsidiaries on such date which, in
accordance with GAAP, would be classified on a consolidated balance sheet of
Endeavour International and its Consolidated Subsidiaries as "current
liabilities".
"Consolidated Interest Expense" means, for any Measurement Period, without
duplication, the sum of total interest expense (including, without limitation,
that which is capitalized, the interest component under Capital Leases and the
implied interest component under Synthetic Leases) of Endeavour International
and its Consolidated Subsidiaries with respect to all outstanding Indebtedness
of Endeavour International and its Consolidated Subsidiaries.
"Consolidated Net Income" means with respect to the Credit Parties and
their respective Consolidated Subsidiaries, for any period, the aggregate of the
net income (or loss) of the Credit Parties and their respective Consolidated
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP-IFRS; provided, that there shall be excluded from such net income (to
the extent otherwise included therein) the following: (a) the net income of any
Person in which any Credit Party or any Consolidated Subsidiary has an interest
(which interest does not cause the net income of such other Person to be
consolidated with the net income of such Credit Party or Consolidated Subsidiary
in accordance with GAAP-IFRS), except to the extent of the amount of dividends
or distributions actually paid in cash during such period by such other Person
to such Credit Party or such Consolidated Subsidiary, as the case may be; (b)
the net income (but not loss) during such period of any Consolidated Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at
the time permitted by operation of the terms of its
6
charter or any agreement, instrument or Governmental Requirement applicable to
such Consolidated Subsidiary or is otherwise restricted or prohibited; (c) the
income or loss of any Person accrued prior to the date it becomes a Consolidated
Subsidiary or is merged into or consolidated with any Credit Party or any
Consolidated Subsidiary, or the date that such Person's assets are acquired by
any Credit Party or any Consolidated Subsidiary; (d) any extraordinary non-cash
gains or losses during such period; (e) non-cash gains or losses under FAS 133
resulting from the net change in Borrower's xxxx-to-market portfolio of
commodity price risk management activities during that period and (f) any gains
or losses attributable to writeups or writedowns of assets, including ceiling
test writedowns; and provided further that if any Credit Party or any
Consolidated Subsidiary on a consolidated basis shall acquire or dispose of any
material Property during such period, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition or disposition
(including the revenues and direct expenses (including any severance and ad
valorem taxes) of the Properties acquired or disposed of), as if such
acquisition or disposition had occurred on the first day of such period provided
further that Capital Expenditures paid with amounts available under Section
9.20(b) shall not be deducted in determining Consolidated Net Income for
purposes of determining Excess Cash Flow.
"Consolidated Subsidiaries" means each Subsidiary of any Credit Party
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of such Credit Party in accordance with GAAP-IFRS.
"Consolidated Working Capital" means, on any date, Consolidated Current
Assets minus Consolidated Current Liabilities on such date.
"Contracts" means all contracts, agreements, operating agreements, farm-out
or farm-in agreements, sharing agreements, mineral purchase agreements,
contracts for the purchase, exchange, transportation, processing or sale of
Hydrocarbons, rights-of-way, easements, surface leases, equipment leases,
permits, franchises, licenses, pooling or unitization agreements, and unit or
pooling designations and orders now or hereafter affecting any of the Oil and
Gas Properties, Operating Equipment, Fixture Operating Equipment, or
Hydrocarbons now or hereafter covered hereby, or which are useful or appropriate
in drilling for, producing, treating, handling, storing, transporting or
marketing oil, gas or other minerals produced from any of the Oil and Gas
Properties, and all as such contracts and agreements as they may be amended,
restated, modified, substituted or supplemented from time to time.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Convertible Senior Notes" means the US$81,250,000 convertible senior
notes, due 2012 of Endeavour International and any unsecured debt incurred to
refinance such convertible senior notes, provided the principal amount does not
exceed US$81,250,000.
"Credit Parties" means, collectively, the Borrower and each Guarantor.
7
"Cumulative Retained Excess Cash Flow Amount" means, at any date of
determination, an amount, not less than zero, determined on a cumulative basis
equal to the amount of consolidated Excess Cash Flow for all Fiscal Years of
Endeavour International and its Consolidated Subsidiaries ending after the
Closing Date (commencing with the Fiscal Year ending December 31, 2007) that is
not (and, in the case of any Fiscal Year of Endeavour International where the
respective required date of prepayment has not yet occurred pursuant to Section
3.04, will not on such date of required prepayment be) required to be applied in
accordance with Section 3.04.
"Current Liabilities" means, with respect to any Person, without
duplication (a) all Indebtedness of such Person that by its terms is payable on
demand or matures within one year after the date of determination (excluding any
Indebtedness renewable or extendible, at the option of such Person, to a date
more than one year from such date or arising under a revolving credit or similar
agreement that obligates the lender or lenders to extend credit during a period
of more than one year from such date), (b) all amounts of Debt of such Person
required to be paid or prepaid within one year after such date and (c) all other
items (including, without limitation, taxes accrued as estimated and trade
payables otherwise excluded from Indebtedness under clause (d) of the definition
thereof) that, in accordance with GAAP-IFRS, would be classified on the balance
sheet of such Person as current liabilities of such Person.
"Debentures" means the English law debentures (a) granted by Endeavour UK
to the Security Trustee, and (b) granted by Talisman to the Security Trustee (to
be entered into), (c) granted by the Borrower to the Security Trustee, and (d)
granted by Endeavour Energy Norge AS to the Security Trustee.
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all Obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes (including convertible notes)
or other similar instruments; (b) all Obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, surety or other bonds
and similar instruments; (c) all Obligations of such Person to pay the deferred
purchase price of Property or services (other than trade accounts payable and
accrued Obligations incurred in the ordinary course of business that are not
more than 180 days past the date of invoice except to the extent being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP-IFRS); (d) all Obligations under Capital
Leases; (e) all Obligations under Synthetic Leases; (f) all Debt (as defined in
the other clauses of this definition) of others secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
Obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others; (i) Obligations to deliver
commodities, goods or services, including, without limitation, Hydrocarbons, in
consideration of one or more advance payments made more than one month in
advance of the month in which the commodities, goods or services are to be
delivered; (j) all Obligations of such Person under conditional sale or other
title retention agreements relating to Property purchased by such Person
8
which shall have the commercial effect of a borrowing; (k) Obligations to pay
for goods or services even if such goods or services are not actually received
or utilized by such Person; (l) any Debt of a partnership for which such Person
is liable either by agreement, by operation of law or by a Governmental
Requirement but only to the extent of such liability; (m) Disqualified Capital
Stock; and (n) the undischarged balance of any production payment created by
such Person or for the creation of which such Person directly or indirectly
received payment. The Debt of any Person shall include all Obligations of such
Person of the character described above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
not included as a liability of such Person under GAAP-IFRS.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, or requires the payment of any cash dividend or any other
scheduled payment constituting a return of capital, in the case of each of the
foregoing, on or prior to the date that is one year after the earlier of (a) the
Maturity Date and (b) the date on which there are no Loans or other Obligations
hereunder outstanding.
"Disruption Event" means either or both of:
(a) a material disruption to those payment or communications systems or to
those financial markets which are, in each case, required to operate in order
for payments to be made in connection with the Facility (or otherwise in order
for the transactions contemplated by the Loan Documents to be carried out) which
disruption is not caused by, and is beyond the control of, any of the Parties;
or
(b) the occurrence of any other event which results in a disruption (of a
technical or systems-related nature) to the treasury or payments operations of a
Party preventing that, or any other Party;
(i) from performing its payment Obligations under the Loan Documents;
or
(ii) from communicating with other Parties in accordance with the
terms of the Loan Documents,
(and which (in either such case)) is not caused by, and is beyond the control
of, the Party whose operations are disrupted.
"dollars" or 'U.S. dollars" or "US$" refers to lawful money of the United
States of America.
9
"Due Diligence Report" means the due diligence report prepared by Ashurst
and addressed to the Security Trustee, in respect of the Mortgaged Property (as
defined in the First Lien Credit Agreement) dated no earlier than October 24,
2006.
"EBITDA" means, for any period, the sum of Consolidated Net Income for such
period plus (a) without duplication and to the extent deducted from Consolidated
Net Income in such period, the following expenses or charges: interest, income
and franchise taxes, depreciation, depletion, amortization and other non-cash
charges (other than write-downs of current assets), minus (b) without
duplication all non-cash income added to Consolidated Net Income and all cash
payments made during such period on account of non-cash charges added to
Consolidated Net Income pursuant to clause (a) in a previous period.
"Effective Date" means the date on which the conditions specified in
Article VI are satisfied (or waived in accordance with Section 13.02).
"Endeavour International" means Endeavour International Corporation, a
Nevada corporation.
"Environmental Laws" means any and all Governmental Requirements pertaining
in any way to (a) the protection of health and safety, (b) the environment, (c)
any emission, discharge, material, waste or substance including, without
limitation, Hydrocarbons, Petroleum and any and all radioactive materials,
substances or waste, which is capable of causing harm to any living organism or
the environment, or (d) the preservation or reclamation of natural resources, in
effect from time to time in any and all jurisdictions in which any Credit Party
or any of its Subsidiaries are conducting or at any time has conducted business,
or where any Property of any Credit Party or any of its Subsidiaries is located,
including without limitation, the European Union Emissions Trading Scheme
(Directive 2003/87/EC) and Habitats Directive (Directive 1992/43/EEC) and, in
the United Kingdom, the Greenhouse Gas Emissions Trading Scheme Regulations
2005, the Offshore Combustion Installations (Prevention and Control of
Pollution) Regulations 2001 and the Offshore Petroleum Activities (Oil
Pollution, Prevention and Control) Regulations 2005, in each case as amended,
and any other environmental conservation or protection Governmental
Requirements.
"Environmental License" means all Authorizations required by or issued
pursuant to any Environmental Law for the ownership of an interest in, or the
operation or development of, any Petroleum Asset, Hydrocarbon Interest, Oil and
Gas Property or other Property.
"Equity Contribution" means the indirect contribution by Endeavour
International to the Borrower of not less than US$175.0 million in aggregate
gross proceeds from the sale of preferred equity interests and common stock, all
on terms and conditions acceptable to the Administrative Agent.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
10
"Equity Issuance" means any issuance or sale by any Credit Party or any of
its Subsidiaries of any Equity Interests of such Credit Party or such
Subsidiary, as applicable, except in each case for (a) any issuance of
directors' qualifying shares, (b) sales or issuances of common stock of a Credit
Party to management or employees of the Credit Parties or their respective
Subsidiaries under any employee stock option or stock purchase plan or employee
benefit plan in existence from time to time, or (c) an issuance or sale of
Equity Interests by any Credit Party or any of its Subsidiaries to a Credit
Party, if the security interest of the Secured Creditors in such Equity
Interests created hereby is perfected pursuant to the applicable Security
Instruments.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC or the occurrence of any event or
condition described in Section 4042 of ERISA that constitutes grounds for the
termination of, or appointment of a trustee to administer the Plan, (e) receipt
of a notice of withdrawal liability pursuant to Section 4202 of ERISA, (f) the
filing pursuant to Section 412(d) of the Code or section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan, (g) the conditions for imposition of a lien under Section 302(f) of ERISA
shall have been met with respect to any Plan, or (h) the adoption of an
amendment to a Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBOR.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP-IFRS; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability Obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP-IFRS; (c) statutory
landlord's liens, operators', vendors', carriers', warehousemen's, repairmen's,
mechanics', suppliers', workers', materialmen's, construction or other like
Liens arising by operation of law in the ordinary course
11
of business or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties each of which is in respect of Obligations
that are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP-IFRS; (d) contractual Liens which arise in the ordinary
course of business under real property leases, operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with
GAAP-IFRS, provided that any such Lien referred to in this clause does not
materially impair the use of the Property covered by such Lien for the purposes
for which such Property is held by any Credit Party or its Subsidiaries or
materially impair the value of such Property subject thereto; (e) Liens arising
solely by virtue of any statutory or common law provision relating to banker's
liens, rights of set-off or similar rights and remedies and burdening only
deposit accounts or other funds maintained with a creditor depository
institution, provided that no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the depositor
in excess of those set forth by regulations promulgated by the Board and no such
deposit account is intended by Borrower or any Guarantor to provide collateral
to the depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of any Credit
Party or its Subsidiaries for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by any Credit Party or its Subsidiaries or
materially impair the value of such Property subject thereto; (g) Liens on cash
or securities pledged to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory Obligations, regulatory Obligations and other
Obligations of a like nature incurred in the ordinary course of business; (h)
Liens arising from Uniform Commercial Code financing filings regarding operating
leases entered into by any Credit Party or its Subsidiaries in the ordinary
course of business covering only the Property under such lease; and (i) Liens
arising out of judgments or awards in respect of which any Credit Party or its
Subsidiaries shall in good faith be prosecuting an appeal or proceedings for
review in respect of which there shall be secured a subsisting stay of execution
pending such appeal or proceedings; provided that the aggregate amount of all
such judgments or awards (and any cash and the Fair Market Value of any property
subject to such Liens) does not exceed US$5,000,000 at any time outstanding;
provided, further that no intention to subordinate the Lien granted in favor of
the Security Trustee on behalf of the Lenders is to be hereby implied or
expressed by the permitted existence of such Excepted Liens, subject as set out
in Clause 4.6 of the Debentures.
"Excess Cash Flow" means, with respect to any Fiscal Year of Endeavour
International and its Consolidated Subsidiaries, an amount equal to (a) EBITDA,
minus (b) Consolidated
12
Capital Expenditures, minus (c) Consolidated Interest Expense paid in cash,
minus (d) federal, state and other income taxes actually paid by Endeavour
International or its Consolidated Subsidiaries, minus (e) voluntary principal
prepayments of amounts owed under the Facility or, to the extent that revolving
commitments thereunder are permanently reduced in connection with such
repayments, under the First Lien Facility, minus (f) any increase in
Consolidated Working Capital for such fiscal year, measured as of the last day
of such Fiscal Year by comparison with Consolidated Working Capital on the first
day of such Fiscal Year, plus (g) any decrease in Consolidated Working Capital
for such fiscal year, measured as of the last day of such Fiscal Year by
comparison with Consolidated Working Capital on the first day of such Fiscal
Year.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Credit Party or any of its Subsidiaries hereunder or under any
other Loan Document, (a) income or franchise taxes imposed on (or measured by)
its net income, or by its overall gross income or receipts, by the United States
of America or such other jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Credit Party or any of its Subsidiaries
is located and (c) in the case of a Foreign Lender, any withholding tax that is
imposed by the jurisdiction in which the Borrower is organized with respect to
amounts of interest payable on a Loan and that are payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 5.03(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts with respect
to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
"Exempted Subsidiary" means Endeavour Energy Norge AS and any Subsidiary
that may from time to time be organized under the laws of the Republic of
Ireland that holds solely assets that shall be required to be owned by a Person
organized under the law of the Republic of Ireland; and provided, further, that
the net revenues at any time of all Subsidiaries organized under the laws of the
Republic of Ireland shall not constitute in the aggregate more than 5% of the
Proven Present Value at such time.
"Exploration Capital Expenditures" means Capital Expenditures in relation
to the exploration and appraisal of a Petroleum Asset including (a) geophysical
surveys, (b) preparation for and application to government licensing rounds, (c)
participation in drilling to locate an oil or gas reservoir, and (d) the
drilling of appraisal xxxxx after a discovery to delineate a reservoir.
"Facility" means the credit facility described in Article II of this
Agreement.
"Fair Market Value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy; provided, that for
the purposes of Section 9.12 hereof, the Fair Market Value of any assets subject
to any Asset Sale and the consideration received therefrom may be determined in
good faith by the Borrower, and such determination shall be conclusive absent
manifest error; provided, however, that the determination of Fair Market Value
13
shall be evidenced by a resolution of the Borrower's Board of Directors (or
equivalent body) if the Fair Market Value exceeds US$10.0 million.
"FAS 133" means Statement of Financial Accounting Standard 133 (and any
statements replacing, modifying or superseding such statement) adopted by the
Financial Accounting Standards Board.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Finance Party" means each of the Lenders, the Arranger and the
Administrative Agent.
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer, finance director or controller of such
Person. Unless otherwise specified, all references herein to a Financial Officer
means a Financial Officer of Endeavour International, which Financial Officer
may also act on behalf of the Borrower.
"First Lien Agent" means BNP Paribas in its capacity as "Agent" pursuant to
the First Lien Credit Agreement.
"First Lien Credit Agreement " means that certain secured revolving loan
and letter of credit facility agreement, dated on or about the date hereof,
among Endeavour International, certain affiliates (including the Borrower), the
lenders party thereto, the Bank of Scotland, as technical bank and account bank,
and BNP Paribas, as agent and security trustee, as such agreement may, from time
to time, be amended, amended and restated or otherwise modified in accordance
with its terms and the terms of the Intercreditor Agreement.
"First Lien Event of Default" has the definition specified in Section
8.02(a) hereof.
"First Lien Facilities" means the first lien revolving credit facility and
the first lien letter of credit facility, each as established pursuant to and in
accordance with the First Lien Credit Agreement.
"First Lien Lenders" means the lenders party to the First Lien Credit
Agreement.
"First Lien Loan Documents" has the meaning assigned to the term "Finance
Documents" in the First Lien Credit Agreement.
"Fiscal Year" means a fiscal year of the Credit Parties and each of their
respective Subsidiaries ending on December 31 in any calendar year; provided
that Fiscal Year 2006 shall be deemed to begin on the Effective Date.
"Fixture Operating Equipment" means any of the items described in the first
sentence of the definition of "Operating Equipment" which as a result of being
incorporated into realty or
14
structures or improvements located therein or thereon, with the intent that they
remain there permanently, constitute fixtures under the laws of the state in
which such equipment is located.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United States
of America, or as in effect from time to time subject to the terms and
conditions set forth in Section 1.05.
"GAAP-IFRS" means GAAP or IFRS, as the context may require.
"Governmental Authority" (a) means the government of (i) the United States
of America, (ii) the United Kingdom, and (iii) any other nation or any political
subdivision thereof, whether state or local; and (b) any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
(including, without limitation, those of the European Union), exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions over any Credit Party or any Subsidiary of any such Credit Party, or
any Properties of the foregoing.
"Governmental Requirement" means any law, treaty, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Guarantee" means the guarantee of the Guarantors set forth in Article XII
hereof, together with each other guarantee and Guarantee Supplement delivered
pursuant to Article XII hereof, in each case as amended, amended and restated,
modified or otherwise supplemented.
"Guarantee Supplement" has the meaning specified in Section 12.08.
"Guaranteed Obligations" has the meaning specified in Section 12.01(a).
"Guarantors" means the Guarantors listed on Schedule 12.01 hereto, any
Additional Guarantor (including, upon its accession to the Guarantee, Talisman),
and each other Affiliate of the Borrower that shall be required to execute and
deliver a guarantee pursuant to Section 8.11(c) and Section 12.08.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
15
"Hydrocarbon Interests" means all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
Unless otherwise indicated herein, each reference to the term "Hydrocarbon
Interests" shall mean Hydrocarbon Interests of each of the Credit Parties and
their respective Subsidiaries.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom. Unless otherwise indicated herein,
each reference to the term "Hydrocarbons" shall mean Hydrocarbons of each of the
Credit Parties and their respective Subsidiaries.
"IFRS" means (a) the International Financial Reporting Standards,
International Accounting Standards and interpretations of those standards issued
by the International Accounting Standards Board and the International Financial
Reporting Interpretations Committee and their predecessor bodies, with respect
to any Credit Party which has adopted the same, or (b) the generally accepted
accounting principles under the laws of the jurisdiction where the relevant
Credit Party is located, as the context may require.
"Indebtedness" means any and all amounts owing or to be owing by any Credit
Party or any of its Subsidiaries (whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising): (a) to the Administrative Agent or any Lender
under any Loan Document; (b) to any Person that is a Secured Swap Provider under
any Swap Agreement including any Swap Agreement in existence prior to the date
hereof, but excluding any additional transactions or confirmations entered into
(i) after such Person ceased to be a Secured Swap Provider or (ii) after
assignment by a Secured Swap Provider to another Person that is not an Approved
Counterparty, (c) to the First Lien Lenders and First Lien Agent under the First
Lien Credit Agreement and other First Lien Loan Documents, (d) to the Security
Trustee in respect of any of the above and (e) all renewals, extensions and/or
rearrangements of any of the items specified in clauses (a), (b) and (c) above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Independent Reserve Report" has the meaning set forth in Section 8.12(a)
hereof.
"Information Memorandum" means the document in the form approved by
Endeavour International concerning the First Lien Facilities and the Credit
Parties, which is prepared by BNP Paribas, as mandated lead arranger under the
First Lien Facilities and is to be distributed to selected financial
institutions for the purposes of the syndication of the First Lien Facilities
and of the Facility.
"Initial Reserve Reports" means the audit of standalone reserves prepared
by Xxxxxxx Xxxxx, and the report on the Enoch Field and Talisman's assets
prepared by Netherland Xxxxxx, in each case dated as of December 31, 2005.
16
"Insolvency Officer" means any liquidator, trustee in bankruptcy, judicial
custodian or manager, compulsory manager, receiver, administrative receiver,
administrator, curator, bewindvoerder, vereffenaar or similar officer, in each
case, appointed in any relevant jurisdiction.
"Intercreditor Agreement" means that certain Intercreditor Agreement, dated
on or about the date hereof, by and among the Borrower, the Guarantors, the
Secured Swap Providers, the Administrative Agent, the First Lien Lenders, the
Lenders and BNP Paribas (in its capacities as Security Trustee and First Lien
Agent), substantially in the form of Exhibit I hereto.
"Interest Coverage Ratio" means, for any Measurement Period, the ratio of
(a) EBITDA to (b) interest payable on, and amortization of debt discount in
respect of, all Debt for borrowed money, in each case, of or by the Credit
Parties and each of their respective Subsidiaries on a consolidated basis for or
during such Measurement Period.
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
Business Day of each March, June, September and December and (b) with respect to
any Eurodollar Loan, the last Business Day of the Interest Period applicable to
the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each
Business Day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day and (b) any Interest Period pertaining to
a Eurodollar Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last day of the
last calendar month of such Interest Period. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale) or any
capital contribution to any other Person; (b) the making of any deposit with, or
advance, loan or capital contribution to, assumption of Debt of, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other
17
Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding 90 days representing the purchase price of inventory or
supplies sold by such Person in the ordinary course of business); or (c) the
purchase or acquisition (in one or a series of transactions) of Property of
another Person that constitutes a business unit.
"Lenders" means (a) the Persons listed on Annex I (other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption), and (b) any Person that shall have become a party hereto pursuant
to an Assignment and Assumption.
"LIBOR" means with respect to any Eurodollar Borrowing for any Interest
Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the commencement of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by any service selected by the Administrative Agent that has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the
"LIBOR" shall be the interest rate per annum determined by the Administrative
Agent to be the average of the rates per annum at which deposits in dollars are
offered for such relevant Interest Period to major banks (such reference banks
to be chosen by the Administrative Agent and consented to by the Borrower, such
consent not to be unreasonably withheld) in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning of such
Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes, (b) production payments and the like payable out of Oil
and Gas Properties and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities. The term
"Lien" shall include easements, restrictions, servitudes, permits, conditions,
covenants running with the land, encroachments, exceptions or reservations.
"Limited Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, the proven and probable
oil and gas reserves attributable to the Oil and Gas Properties of the Credit
Parties and each of their respective Subsidiaries, together with a projection of
the rate of production and future revenues less severance and ad valorem taxes,
operating expenses and capital expenditures with respect thereto as of such
date, prepared by or under the supervision of the chief engineer of Endeavour
International, together with a writing from the chief engineer of Endeavour
International certifying that (a) there are no statements or conclusions in such
reserve report which are based upon or include materially misleading information
or fail to take into account material information regarding the matters reported
therein (it being understood that projections concerning volumes attributable to
the Oil and Gas Properties and production and cost estimates
18
contained in each reserve report are necessarily based upon professional
opinions, estimates and projections) and (b) such reserve report was prepared in
accordance with the procedures used to prepare the reserve report for the
corresponding date of the immediately preceding year and a writing from a
Responsible Officer of the Borrower certifying that except as set forth on an
exhibit to such writing, on a net basis, there are no gas imbalances,
take-or-pay or other prepayments in excess of the volume specified in Section
7.17 with respect to the Oil and Gas Properties evaluated in such reserve report
which would require the Borrower or any Subsidiary to deliver Hydrocarbons
either generally or produced from the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor.
"Loan Documents" means this Agreement, the Notes and the Security
Instruments.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time, Lenders holding more than 50% of the
outstanding aggregate principal amount of the Loans.
"Material Adverse Change" means any event, development or circumstance that
has a material adverse effect on (a) the ability of the Borrower, any of its
Subsidiaries or any Guarantor to perform any of its payment Obligations under
any Loan Document as and when they fall due to be performed; (b) the business,
property, operations or financial condition of the Borrower, its Subsidiaries
and the Guarantors (taken as a whole); (c) the validity or enforceability of any
provision of any Loan Document; (d) the rights and remedies of any Credit Party
under any Loan Document; or (e) the validity, enforceability, effectiveness or
priority of any security interest created or purported to be created under the
Loan Documents.
"Material Adverse Effect" means (a) a materially adverse effect on the
business, Property, liabilities (actual or contingent), operations, condition
(financial or otherwise), operating results or prospects of the Credit Parties
and each of their respective Subsidiaries, taken as a whole, (b) a material
impairment of the ability of the Credit Parties or their respective Subsidiaries
to perform any of its Obligations under any Loan Document to which it is or will
be a party or (c) a material impairment of the rights and remedies of or
benefits available to the Lenders under any Loan Document.
"Material Contracts" means each contract, license, and agreement listed on
Schedule 1.02(a).
"Material Indebtedness" means Debt (other than the Loans), or Obligations
in respect of one or more Swap Agreements, of any one or more of the Credit
Parties or their respective Subsidiaries in an aggregate principal amount
exceeding US$7,500,000. For purposes of determining Material Indebtedness, the
"principal amount" of the Credit Parties or their respective Subsidiaries in
respect of any Swap Agreement at any time shall be the Swap Termination Value.
"Maturity Date" means November 1, 2011.
19
"Measurement Period" means each period of four consecutive fiscal quarters
of the Borrower or, if less than four consecutive fiscal quarters of the
Borrower have been completed since the Effective Date, the fiscal quarters of
the Borrower that have been completed since the Effective Date; provided that,
(a) for purposes of determining an amount of EBITDA included in the calculation
of a financial ratio or financial covenant for the fiscal quarter ended December
31, 2006, such amount for the Measurement Period then ended shall equal 4Q06
EBITDA multiplied by four; (b) for purposes of determining an amount of any item
included in the calculation of a financial ratio or financial covenant for the
fiscal quarter ended March 31, 2007, such amount for the Measurement Period then
ended shall equal 4Q06 EBITDA plus such item for the fiscal quarter then ended
multiplied by two; and (c) for purposes of determining an amount of any item
included in the calculation of a financial ratio or financial covenant for the
fiscal quarter ended June 30, 2007, such amount for the Measurement Period then
ended shall equal 4Q06 EBITDA plus such item for the two most recent fiscal
quarters then ended multiplied by 4/3.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by any Credit Party which is
subject to the Liens existing and to exist under the terms of the Security
Instruments, which Properties as of the Effective Date are listed on Schedule
1.02(b).
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 3(37) or 4001 (a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash
proceeds (including cash proceeds subsequently received (as and when received)
in respect of non-cash consideration initially received), net of (i) selling
expenses (including reasonable broker's fees or commissions, legal fees, audit
and/or accounting fees, transfer and similar taxes and the Borrower's good faith
estimate of other taxes paid or payable by any Credit Party, its Subsidiaries,
its members or their members or partners in connection with such sale), (ii)
amounts provided as a reserve, in accordance with GAAP-IFRS, against any
liabilities under any indemnification Obligations or purchase price adjustment
associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute
Net Cash Proceeds) and (iii) the principal amount, premium or penalty, if any,
interest and other amounts on any Debt for borrowed money which is secured by
the Property sold in such Asset Sale and which is required to be repaid with
such proceeds (other than any such Debt assumed by the purchaser of such
Property); provided, however, that, if (x) the Borrower shall deliver a
certificate of a Financial Officer to the Administrative Agent at the time of
receipt thereof setting forth the Borrower's intent to reinvest such proceeds in
productive Property of a kind then used or usable in the business of the Credit
Parties and each of their respective Subsidiaries within 180 days of receipt of
such proceeds (which, for the avoidance of doubt, may include circumstances of a
farm-out, as described in Section 3.04(c)(i)) and (y) no Default shall have
occurred and shall be continuing at the time of such certificate or at the
proposed time of the application of such proceeds, such proceeds shall not
constitute Net Cash Proceeds except to the extent not so used at the end of such
180-day period, at which time such proceeds shall be deemed to be Net Cash
Proceeds; and (b) with respect to any issuance or
20
incurrence of Debt or any Equity Issuance, the cash proceeds thereof, net of all
Taxes and customary fees (including legal fees, accounting fees and advisory
fees), commissions, costs and other expenses incurred in connection therewith.
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"NYMEX" means the New York Mercantile Exchange (or its successor).
"Obligations" means, with respect to any Person, any payment, performance
or other obligation of such Person of any kind, including, without limitation,
any liability of such Person on any claim, whether or not the right of any
creditor to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 10.01(f).
Without limiting the generality of the foregoing, the Obligations of any Credit
Party under the Loan Documents include (a) the obligation to pay principal,
interest, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by such Credit Party under any Loan
Document and (b) the obligation of such Credit Party to reimburse any amount in
respect of any of the foregoing that any Lender, in its sole discretion, may
elect to pay or advance on behalf of such Credit Party.
"OFAC" has the meaning assigned such term in Section 7.23.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other Contracts,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil xxxxx, gas xxxxx, injection xxxxx
or other xxxxx, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools,
21
implements, cables, wires, towers, casing, tubing and rods, surface leases,
rights-of-way, easements and servitudes together with all additions,
substitutions, replacements, accessions and attachments to any and all of the
foregoing. Unless otherwise indicated herein, each reference to the term "Oil
and Gas Properties" shall mean Oil and Gas Properties of each Credit Party and
each of their respective Subsidiaries.
"Operating Equipment" means all surface or subsurface machinery, equipment,
facilities, supplies or other Property of whatsoever kind or nature now or
hereafter located on any of the Property affected by the Oil and Gas Properties
which are useful for the production, treatment, storage or transportation of
Hydrocarbons, including all oil xxxxx, gas xxxxx, water xxxxx, injection xxxxx,
casing, tubing, rods, pumping units and engines, christmas trees, derricks,
separators, gun barrels, flow lines, pipelines, tanks, gas systems (for
gathering, treating and compression), water systems (for treating, disposal and
injection), supplies, derricks, wells, power plants, poles, cables, wires,
meters, processing plants, compressors, dehydration units, lines, transformers,
starters and controllers, machine shops, tools, storage yards and equipment
stored therein, buildings and camps, telegraph, telephone and other
communication systems, roads, loading racks, shipping facilities and all
additions, substitutes and replacements for, and accessories and attachments to,
any of the foregoing. Operating Equipment shall not include any items
incorporated into realty or structures or improvements located therein or
thereon in such a manner that they no longer remain personality under the laws
of the jurisdiction in which such equipment is located.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Participant" has the meaning assigned such term in Section 13.04(c)(i).
"Party" means a party to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PDP" means Proven Developed-Producing Reserves.
"Permitted Investments" means:
(a) direct Obligations of, or Obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such Obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed by or placed
22
with, and money market deposit accounts issued or offered by, the Administrative
Agent or any domestic office of any commercial bank organized under the laws of
the United States of America or any State thereof that has a combined capital
and surplus and undivided profits of not less than US$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria of clause (c) above;
(e) investments in "money market funds" within the meaning of Rule 2a-7 of
the Investment Company Act of 1940, as amended, substantially all of whose
assets are invested in investments of the type described in clauses (a) through
(d) above; and
(f) investments in so-called "auction rate" securities rated AAA or higher
by S&P or Aaa or higher by Moody's and which have a reset date not more than 90
days from the date of acquisition thereof.
"Permitted Preferred Stock" means certain preferred stock, issued pursuant
to the Certificate of Designation dated October 19, 2006, with a face value not
to exceed US$125,000,000, issued by Endeavour International to fund, in part,
the Equity Contribution.
"Permitted Transaction" means:
(a) an intra-group re-organization on a solvent basis;
(b) the transfer of any Acquired Assets owned by the Acquired Business to
Endeavour UK, on terms (i) whereby such asset remains an Acquired Asset and (ii)
that ensure that the Security Trustee continues to have Collateral over such
Acquired Asset upon the same, or more beneficial, terms as the Collateral
granted in favor of the Security Trustee over such Acquired Asset before such
transfer and that the Lien that the Security Trustee has over such Acquired
Asset is not prejudiced or adversely affected in any way;
(c) the winding-up of the Acquired Business on a solvent basis at a time
when it has no assets whatsoever and is not a Borrower or Guarantor; or
(d) any other transaction agreed by the Majority Lenders.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Petroleum" means any mineral, oil or relative hydrocarbon (including
condensate and natural gas liquids) and natural gas existing in its natural
condition in strata (but not including coal or bituminous shale or other
stratified deposits from which oil can be extracted by destructive
distillation).
"Petroleum Asset" means (a) any Petroleum field, pipeline transmission
system or other Petroleum project, (b) the facilities relating to such field,
system or project and/or (c) the interests in such field, system, project or
facilities.
23
"Plan" means any employee pension benefit plan, as defined in Section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Post Petition Interest" has the meaning specified in Section 12.06(b).
"Present Value" means, as of any date of determination, the sum of (a) 100%
of the present value of future revenues less severance and ad valorem taxes,
operating expenses and capital expenditures of the proven Oil and Gas Properties
and (b) 50% of the present value of future revenues less severance and ad
valorem taxes, operating expenses and capital expenditures of the probable Oil
and Gas Properties, in each case as evaluated in the most recently delivered
Reserve Report, discounted at a rate of 10% per annum, and utilizing (i) for the
first three year period, the monthly crude oil (Dated Xxxxx) and natural gas
(NBP) prices, in each case based upon the actual monthly price quoted on NYMEX
for the applicable month, in effect at the time, and for the next 3 year period,
such prices to remain flat after such time at the average prices over the last
twelve months of such three year period, and (ii) an annual escalation factor of
3% for operating expenses for each year in such 3-year period and held flat
thereafter. The amount of the Present Value then in effect shall be (i) adjusted
on a dollar for dollar present value basis for any Oil and Gas Properties that
have been disposed of or acquired since the date of the most recently delivered
Reserve Report and (ii) adjusted to give effect to the Borrower's and its
Subsidiaries' commodity xxxxxx then in effect.
"Prime Rate" means the rate of interest per annum determined from time to
time by the Administrative Agent as its prime rate for loans in U.S. dollars in
effect at its principal office in New York City and notified to the Borrower.
"Project" means the Acquired Assets plus all additional facilities
constructed and assets acquired by the Borrower or its Subsidiaries in
connection with the Acquisition.
"Project Documents" mean (a) in relation to the Oil and Gas Properties: (i)
each joint operating agreement and/or unitization and unit operating agreement
relating thereto, each agreement relating to the development thereof or the
transportation, processing and/or storage of production therefrom and each
agreement for the sale or marketing of production therefrom and each other major
agreement relating to such Mortgaged Property and/or Hydrocarbons produced
therefrom, (ii) any Authorization required for the lawful exploitation,
development or operation of such or the production, transportation or sale of
Hydrocarbons therefrom (and including, without limitation, any Hydrocarbons
production license), and (iii) any development plan approved by any relevant
operating committee and/or any appropriate governmental or other regulatory
authority relating to that Mortgaged Property; (b) any documents relating to the
acquisition by any Credit Party or any Subsidiary of such Credit Party of any
interests in any Mortgaged Property or of any entity holding the interest in
such Mortgaged Property; and (c) any other document designated as such by the
Borrower and the Administrative Agent.
"Projection" is used herein as defined in the First Lien Credit Agreement.
24
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts, licenses and contract rights.
"Proven Present Value " means, on any date, 100% of the present value of
future revenues less severance and ad valorem taxes, operating expenses and
capital expenditures of the proven oil and gas reserves attributable to the Oil
and Gas Properties, as evaluated in the most recently delivered Reserve Report
in respect of proven oil and gas reserves attributable to the Oil and Gas
Properties, discounted at a rate of 10% per annum and utilizing the monthly
crude oil (Dated Xxxxx) and natural gas (NBP) prices, in each case based upon
(a) the actual monthly price quoted on NYMEX on such date for the corresponding
month through the 60th month from such date and (b) the arithmetic monthly
average for months 49 through 60 for each month after the 60th month. The amount
of the Proven Present Value then in effect shall be (x) calculated on a Pro
Forma Basis for any asset acquisitions or asset dispositions permitted pursuant
to this Agreement since the date of the most recently delivered Reserve Report
in respect of proven oil and gas reserves attributable to the Oil and Gas
Properties and (y) adjusted to give effect to each Credit Party's and its
Subsidiaries' commodity xxxxxx then in effect.
"Purchaser" has the meaning specified in the Recitals.
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, or defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. "Redeem" has the correlative meaning thereto.
"Register" has the meaning assigned such term in Section 13.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Documents" means the Acquisition Agreement and all other documents
effecting the Acquisition.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, trustees, officers, employees,
agents and advisors (including attorneys, accountants and experts) of such
Person and such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
25
"Required Principal Payments" means, with respect to any Person for any
period, the sum of all regularly scheduled principal payments or redemptions of
outstanding debt pursuant to the Borrowing made under this Agreement made during
such period which permanently reduces availability under the Facility.
"Reserve Secured Debt Coverage Ratio" means, with respect to any date, the
ratio of (a) Present Value to (b) Total Secured Debt of the Credit Parties and
each of their respective Subsidiaries on a consolidated basis for the most
recently completed Measurement Period.
"Reserve Total Debt Coverage Ratio" means, with respect to any date, the
ratio of (a) Present Value to (b) the Total Debt of the Credit Parties and each
of their respective Subsidiaries on a consolidated basis for the most recently
completed Measurement Period.
"Reserve Report" means any of each Initial Reserve Report, a Three-P
Reserve Report or a Limited Reserve Report.
"Responsible Officer" means, as to any Person, the chief executive officer,
the chief operating officer, the president, any Financial Officer or any other
officer or similar official thereof (including, without limitation, any director
of a non-United States entity) responsible for the administration of the
Obligations of such Person in respect of this Agreement and the other Loan
Documents. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.
"Restricted Debt" shall mean Debt of any Credit Party or its respective
Subsidiaries, the payment, prepayment, repurchase or defeasance of which is
restricted under Section 9.04(c).
"Restricted Payment" means any dividend payment or other distribution
(whether in cash, securities or other Property) with respect to any Equity
Interests (which, for the avoidance of doubt, shall include Permitted Preferred
Stock) in any Credit Party or its respective Subsidiaries, or any payment
(whether in cash, securities or other Property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in any
Credit Party or its respective Subsidiaries, or any option, warrant or other
right to acquire any such Equity Interests in any Credit Party or its respective
Subsidiaries.
"RPI" means the Retail Prices Index published by the Central Statistics
Office or such other replacement statistical measure published by the Central
Statistics Office from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Secured Creditors" has the meaning set forth in the Intercreditor
Agreement.
26
"Secured Swap Provider" means any Person that is a party to a Swap
Agreement with any Credit Party that entered into such Swap Agreement while such
Person was the First Lien Agent, a First Lien Lender or an Affiliate of any of
the foregoing Persons, whether or not such Person at any time ceases to be the
First Lien Agent, a First Lien Lender or an Affiliate of any of the foregoing
Persons, as the case may be.
"Security Agreement" means the New York law Security Agreement, dated on or
about the date of this Agreement, by each Credit Party, in favor of the Security
Trustee.
"Security Instruments" means the Security Agreement; the Debentures; the
Share Pledges and Charges; the Guarantee; the receivables pledge agreement made
between Endeavour Energy Norge AS and the Security Trustee, governed by
Norwegian law; and any other agreements, instruments or certificates described
or referred to in Exhibit F-1, and any and all other agreements, instruments,
consents or certificates now or hereafter executed and delivered by the Borrower
or any other Person (other than Swap Agreements or participation or similar
agreements between any Lender and any other lender or creditor with respect to
any Indebtedness pursuant to this Agreement) in connection with, or as security
for or to guarantee the payment or performance of the Indebtedness, the Notes or
this Agreement.
"Security Trustee" means BNP Paribas, in its capacity as "Security Trustee"
under the Security Agreement, the Debenture and the Intercreditor Agreement.
"Seller" has the meaning set forth in the Recitals hereto.
"Share Pledges and Charges" means (a) the charge over shares between the
Borrower and the Security Trustee, governed by English law, (b) the share pledge
agreement between the Borrower and the Security Trustee, governed by Norwegian
law (including all required notices, powers of attorney and acknowledgements),
(c) the agreement and deed of pledge of shares between the Borrower and the
Security Trustee, governed by the laws of The Netherlands, (d) the agreement and
deed of pledge of shares between the Borrower and the Security Trustee, governed
by the laws of The Netherlands, (e) the charge over shares between Endeavour UK
and the Security Trustee, governed by English law, and (f) each of the share
certificates, stock transfer forms and notices of assignment that are required
to be delivered pursuant thereto.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent or any Lender
(including any branch, Affiliate or other fronting office making or holding a
Loan) is subject, with respect to the Adjusted LIBOR, for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
27
"Subordinated Obligations" has the meaning specified in Section 12.06.
"Subsidiary" means: with respect to any Person (herein referred to as the
"parent"), any corporation, partnership, limited liability company, association
or other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, Controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a direct or indirect Subsidiary of Endeavour
International (to include, for the avoidance of doubt, the Acquired Business and
any entities that become Subsidiaries after the date of this Agreement).
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement; provided further, that no options to
purchase tangible Property for cash shall be a Swap Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or after
the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
xxxx-to-market value(s) for such Swap Agreements, as determined in good faith by
the Borrower or the applicable Subsidiary party to such Swap Agreements in
accordance with the terms thereof.
"Synthetic Lease" means, as to any Person, any lease (including a lease
that may be terminated by the lessee at any time) of any Property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under
GAAP-IFRS and (b) in respect of which the lessee retains or obtains ownership of
the Property so leased for U.S. Federal income tax purposes, other than any such
lease under which such Person is the lessor.
"Synthetic Purchase Agreement" shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which any Credit Party or any
Subsidiary is or may become obligated to make (a) any payment in connection with
a purchase by any third party from a Person other than a Credit Party any Equity
Interest or Restricted Debt or (b) any payment (other than on account of a
permitted purchase by it of any Equity Interest or Restricted Debt) the amount
of which is determined by reference to the price or value at any time of any
Equity Interest or Restricted Debt; provided that no phantom stock or similar
plan providing for payments only to current or former directors, officers or
employees of any Credit Party (or to their heirs or estates) shall be deemed to
be a Synthetic Purchase Agreement.
28
"Talisman" is defined as set forth in the Recitals hereto.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Three-P Reserve Report" means the Initial Reserve Reports and any other
reserve report, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth the proven, probable and possible oil and
gas reserves attributable to the Oil and Gas Properties of each Credit Party and
each of their respective Subsidiaries, together with a projection of the rate of
production and future revenues less severance and ad valorem taxes, operating
expenses and capital expenditures with respect thereto as of such date, prepared
by or under the supervision of the chief engineer of Endeavour International,
together with a writing from the chief engineer of Endeavour International
certifying that (a) there are no statements or conclusions in such reserve
report which are based upon or include materially misleading information or fail
to take into account material information regarding the matters reported therein
(it being understood that projections concerning volumes attributable to the Oil
and Gas Properties and production and cost estimates contained in each reserve
report are necessarily based upon professional opinions, estimates and
projections) and (b) such reserve report was prepared in accordance with the
procedures used to prepare the reserve report for the corresponding date of the
immediately preceding year and a writing from a Responsible Officer of the
Borrower certifying that except as set forth on an exhibit to such writing, on a
net basis, there are no gas imbalances, take-or-pay or other prepayments in
excess of the volume specified in Section 7.17 with respect to the Oil and Gas
Properties evaluated in such reserve report which would require the Borrower or
any Subsidiary to deliver Hydrocarbons either generally or produced from the Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor.
"Total Debt" means, at any date, the total aggregate amount of all Debt of
each Credit Party and each of their respective Subsidiaries on a consolidated
basis (including the Convertible Senior Notes and excluding Obligations required
to be reported under FAS 133) on such date.
"Total Leverage Ratio" means, at any date of determination, the ratio of
Total Debt of each of the Credit Parties and each of their respective
Subsidiaries on a consolidated basis at such date to EBITDA of each of the
Credit Parties and each of their respective Subsidiaries on a consolidated basis
for the most recently completed Measurement Period.
"Total Relevant Outstandings" is used herein as defined in the First Lien
Credit Agreement.
"Total Secured Debt" means, at any date, the total aggregate amount of all
Debt of each Credit Party and each of their respective Subsidiaries on a
consolidated basis (excluding Obligations required to be reported under FAS 133)
on such date that is not subordinated in right of payment to any other Debt of
any Credit Party or any its Subsidiaries and that is secured.
"Transaction Party" means the Borrower and each other party (not being a
Finance Party) who is party to any Loan Document.
29
"Transactions" means, collectively, (a) the execution, delivery and
performance by the Borrower of the Acquisition Agreement and the consummation of
the Acquisition and the other transactions contemplated thereby, (b) the
execution, delivery and performance by the Credit Parties and each of their
respective Subsidiaries of the Loan Documents and the First Lien Loan Documents,
and the making of the Borrowings hereunder, (c) the making of the Equity
Contribution, and (d) the payment of the related fees and expenses.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBOR.
"United States" and "United States persons" have the meanings specified in
Section 12.05(d).
"Unrestricted Cash and Cash Equivalents" means, with respect to any Person,
the sum of (a) all cash of such Person that would not be required to be
classified as restricted cash on a balance sheet prepared in accordance with
GAAP-IFRS, and (b) the aggregate amount of Permitted Investments owned by such
Person, in each case only to the extent such cash or Permitted Investment is
free and clear of all Liens (other than Liens pursuant to any Loan Document).
"USA PATRIOT Act" means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
"Voting Stock" means shares of capital stock issued by a corporation, or
equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.
"Wholly-Owned Subsidiary" of any Person shall mean a Subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the Equity Interests are, at the time
any determination is being made, owned, Controlled or held by such Person or one
or more wholly owned Subsidiaries of such Person or by such Person and one or
more wholly owned Subsidiaries of such Person.
Section 1.03. Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").
Section 1.04. Terms Generally; Rules of Construction. The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) except that any reference to a provision of the First Lien Credit Agreement
shall be construed as a reference to
30
that provision as in effect as of the date hereof, unless the Administrative
Agent shall have consented to an amendment or other modification to such
provision, in which case such reference shall be construed as a reference to
such provision as so amended or modified, any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any express
restrictions on such amendments, supplements or modifications set forth in the
Loan Documents), (b) any reference herein to any law shall be construed as
referring to such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, (c) any reference herein to any Person
shall be construed to include such Person's successors and assigns (subject to
the restrictions contained in the Loan Documents), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) except as otherwise specified herein, with respect to the
determination of any time period, the word "from" means "from and including" and
the word "to" means "to and including" and (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement. No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.
Section 1.05. Accounting Terms and Determinations; GAAP-IFRS.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP-IFRS, as in effect
at such time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any financial covenant in
Section 9.01 or any related definition to eliminate the effect of any change in
GAAP-IFRS occurring after the date of this Agreement on the operation of such
financial covenant (or if the Administrative Agent notifies the Borrower that
the Majority Lenders wish to amend Section 9.01 or any related definition for
such purpose), then the Borrower's compliance with such financial covenant shall
be determined on the basis of GAAP-IFRS in effect immediately before the
relevant change in GAAP-IFRS became effective, until either such notice is
withdrawn or such financial covenant is amended in a manner satisfactory to the
Borrower and the Majority Lenders.
ARTICLE II
THE CREDITS
Section 2.01. Commitments. Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, to make Loans to the Borrower on the
Effective Date in an aggregate principal amount equal to such Lender's
Commitment. No amounts paid or prepaid with respect to Loans may be reborrowed.
Section 2.02. Loans and Borrowings.
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(a) Term Borrowing; Several Obligations. Each Loan shall be made as a
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
Obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
US$1,000,000 and not less than US$5,000,000. At the time that each ABR Borrowing
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of US$1,000,000. Borrowings of more than one Type may be outstanding at
the same time, provided that there shall not at any time be more than a total of
eight Eurodollar Borrowings outstanding. Notwithstanding any other provision of
this Agreement, the Borrower shall not be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.
(d) Notes. Upon request of a Lender, the Loans made by such Lender
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A, dated, in the case of (i) any Lender party hereto as of
the date of this Agreement, as of the date of this Agreement or (ii) any Lender
that becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to such Lender and its
registered assigns, and otherwise duly completed. In the event that the
aggregate principal amount of any Lender's Loans decreases for any reason
(whether pursuant to Section 13.04(b) or otherwise), the Borrower shall, upon
request, deliver or cause to be delivered on the effective date of such
decrease, a new Note payable to such Lender and its registered assigns in a
principal amount equal to its Loan after giving effect to such decrease, and
otherwise duly completed. The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such Lender on
its books for its Note, and, prior to any transfer, may be endorsed by such
Lender on a schedule attached to such Note or any continuation thereof or on any
separate record maintained by such Lender. The entries in the books of any
Lender with respect to such payments shall be conclusive absent manifest error.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or Obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note. All Notes issued
by the Borrower pursuant hereto shall make clear reference to the existence of
the Intercreditor Agreement, and the effect thereof on the priority of the
Lender's interest in the Collateral.
Section 2.03. Request for Borrowing. To request the Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 am, New York
City time, three Business Days before
32
the date of the proposed Borrowing, or (b) in the case of an ABR Borrowing, not
later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing. Such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request in substantially the form of Exhibit B and signed by
the Borrower. Such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(v) the location and number of the Borrower's or other relevant
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04. Interest Elections.
(a) Conversion and Continuance. The Loans initially shall be of the
Type specified in the Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period of one month. Thereafter, the
Borrower may elect to convert the Borrowing to a different Type or to continue
the Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section 2.04. The Borrower may elect
different options with respect to different portions of the Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising the Borrowing, and the Loans comprising each such portion shall
thereafter be considered a separate Borrowing.
(b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone (a) in the case of a Eurodollar Borrowing, not later than
1:00 p.m., New York City time, three Business Days before the effective date of
the proposed conversion or continuation or (b) in the case of an ABR Borrowing,
not later than 1:00 p.m., New York City time, on the effective date of the
proposed
33
conversion or continuation. Each such telephonic Interest Election Request shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Interest Election Request in substantially
the form of Exhibit C and signed by the Borrower.
(c) Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. If such Interest Election
Request does not specify a Type, then the Borrowing shall be deemed to have
selected a Type of ABR Borrowing.
(d) Notice to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender's portion of each
resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election. If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
Section 2.05. Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make the Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by (x) in the case of a Eurodollar Borrowing, 8:00 a.m. New York
City time, or (y) in the case of an ABR
34
Borrowing, 12:00 noon New York City time, in each case to the account of the
Administrative Agent designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the
Borrower as specified by the Borrower in writing prior to the Effective Date.
Nothing herein shall be deemed to obligate any Lender to obtain the funds for
its Loan in any particular place or manner or to constitute a representation by
any Lender that it has obtained or will obtain the funds for its Loan in any
particular place or manner.
(b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received written notice from a Lender prior to the proposed
date of the Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of the Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the Borrowing available to the Administrative
Agent, then (i) the applicable Lender agrees to pay on demand, and (ii) the
Borrower agrees to pay within 30 days of demand or such earlier date as the
Borrower shall have unused and available commitments under the First Lien
Facilities in excess of such Lender's share of the Borrowing, to the
Administrative Agent such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in the
Borrowing.
Section 2.06. Termination of Commitments. The Commitments of each
Lender shall terminate immediately following the making of the Loans by such
Lender on the Effective Date pursuant to Section 2.01.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01. Repayment of Loans.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan on the Maturity Date.
35
(b) Notwithstanding anything herein to the contrary, optional
prepayments of the Loans in whole or part on or before the third anniversary of
the Effective Date shall be accompanied by the applicable prepayment fee set
forth in the following grid:
PREPAYMENT FEE GRID
Prepayment Fee
(as a percentage
of the principal
Date of Prepayment amounts prepaid)
------------------ ----------------
Prior to the first anniversary of the Effective Date 3.0%
On or after the first anniversary of the Effective Date but
prior to the second anniversary of the Effective Date 2.0%
On or after the second anniversary of the Effective Date but
prior to the third anniversary of the Effective Date 1.0%
On or after the third anniversary of the Effective Date 0.0%
(c) Amounts prepaid or repaid may not be reborrowed.
Section 3.02. Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBOR for the Interest Period in effect for
such Borrowing plus the Applicable Margin, but in no event to exceed the Highest
Lawful Rate.
(c) Post-Default. Notwithstanding the foregoing, if (i) an Event of
Default has occurred and is continuing, or (ii) any principal of or interest on
any Loan or any fee or other amount payable by any Credit Party hereunder or
under any other Loan Document is not paid when due, whether at stated maturity,
upon acceleration or otherwise, and including any prepayment pursuant to Section
3.04(c), then all Loans outstanding, in the case of an Event of Default, and
such overdue amount, in the case of a failure to pay amounts when due, shall
bear interest, after as well as before judgment, (x) in the case of principal,
at the rate otherwise applicable to such Loan pursuant to Section 3.02(a) or
3.02(b), as the case may be, plus an additional 2.00% per annum and (y) in all
other cases, at a rate per annum (computed on the basis of a year of 365 days
(or 366 days in a leap year) when the Alternate Base Rate is based on the Prime
Rate and on the basis of a year of 360 days at all other times) equal to the
rate that would be applicable to an ABR Loan plus an additional 2.00% per annum,
but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Maturity Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan, accrued interest on the principal amount repaid or prepaid
36
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion. Notwithstanding anything contained herein,
interest shall be payable, in any event, at least every three (3) months.
(e) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBOR or LIBOR shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.
Section 3.03. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBOR or LIBOR, as applicable, for such
Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBOR or LIBOR, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower,
Endeavour International and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall
be ineffective (and shall be deemed to be a request for an ABR Borrowing).
Section 3.04. Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, without
premium or penalty (other than any prepayment fee that may be required under
Section 3.01(b) and any break funding payments that may be required under
Section 5.02), but subject to prior notice in accordance with Section 3.04(b),
and no Lender may reject any such prepayment. Any partial optional prepayment
shall be in a principal amount of US$1,000,000 or a whole multiple of
US$1,000,000 in excess thereof, or, if less, the entire principal amount then
outstanding. Notwithstanding anything to the contrary herein, any prepayment of
a Eurodollar Loan shall be accompanied by all accrued interest thereon, together
with any additional amount required pursuant to Section 5.02. In connection with
any voluntary prepayments by the Borrower pursuant to Section 3.04, any
voluntary prepayment thereof shall be applied first to ABR Loans to the full
extent thereof before application to
37
Eurodollar Loans, in each case in a manner that minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 3.04.
(b) Notice and Terms of Optional Prepayment. The Borrower shall notify
the Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before the date of
prepayment. Each such notice shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid. Each such notice
shall be irrevocable and shall commit the Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein. Promptly following receipt
of any such notice relating to a Borrowing, the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 3.02 and prepayment fees to the extent required by
Section 3.01(b).
(c) Mandatory Prepayments.
(i) Asset Sales. The Borrower shall, not later than the third
Business Day following the receipt by any Credit Party or any Subsidiary thereof
of any Net Cash Proceeds in respect of any Asset Sale by such Credit Party or
Subsidiary, prepay outstanding Loans in accordance with Section 3.04(c)(v) in an
amount equal to 100% of the Net Cash Proceeds received with respect thereto;
provided that such prepayment shall only be required to the extent (if any) that
the amount of such Net Cash Proceeds exceeds all prepayments under the First
Lien Credit Agreement that the Borrower shall have made out of the proceeds of
such Net Cash Proceeds in order to reduce the outstandings thereunder to an
amount not less than 75% of the Borrowing Base of each tranche of the First Lien
Facilities immediately prior thereto. For the avoidance of doubt, such
prepayment requirement pursuant to this Section 3.04(c)(i) applies to any
insurance and condemnation proceeds. Each Credit Party or Subsidiary may
reinvest proceeds from the "farming out" of rights to develop any undeveloped
acreage, so long as such proceeds are reinvested in exploration or development
pursuant to such farming-out arrangement within 180 days of the receipt thereof.
(ii) Excess Cash Flow. The Borrower shall, on the 120th day
following the end of each Fiscal Year, prepay outstanding Loans in accordance
with Section 3.04(c)(v) in an amount equal to 75% of the Excess Cash Flow for
such Fiscal Year; provided that such prepayment shall only be required to the
extent (if any) that the amount of such Excess Cash Flow exceeds all prepayments
under the First Lien Credit Agreement that the Borrower shall have made out of
the proceeds of such Excess Cash Flow in order to reduce the outstandings
thereunder to an amount not less than 75% of the Borrowing Base of each tranche
of the First Lien Facilities immediately prior thereto.
(iii) Equity Issuance. In the event and on each occasion that an
Equity Issuance occurs (other than any cash proceeds from an Equity Issuance,
the proceeds of which
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are applied to fund the Equity Contribution), the Borrower shall, substantially
simultaneously with (and in any event not later than the third Business Day next
following) the occurrence of such Equity Issuance, prepay outstanding the Loans
in accordance with Section 3.04(c)(v), in an amount equal to 50% of the Net Cash
Proceeds from such Equity Issuance.
(iv) Debt Issuance. In the event that any Credit Party or
Subsidiary shall receive Net Cash Proceeds from the issuance, offering,
placement or incurrence of Debt (other than any cash proceeds from the issuance
of Debt permitted pursuant to Section 9.02), the Borrower shall, substantially
simultaneously with (and in any event not later than the third Business Day next
following) the receipt of such Net Cash Proceeds by such Person, prepay the
outstanding Loans in accordance with Section 3.04(c)(v), in an amount equal to
100% of such Net Cash Proceeds from such issuance, offering, placement or
incurrence of Debt.
(v) Application of Payment by Type of Loan. In connection with
any mandatory prepayments by the Borrower of the Loans pursuant to Section 3.04,
such prepayments shall be applied on a pro rata basis to the then outstanding
Loans being prepaid irrespective of whether such outstanding Loans are ABR Loans
or Eurodollar Rate Loans; provided that if no Lenders exercise the right to
waive a given mandatory prepayment of the Loans pursuant to Section 3.04, then,
with respect to such mandatory prepayment, the amount of such mandatory
prepayment shall be applied first to Loans that are ABR Loans to the full extent
thereof before application to Loans that are Eurodollar Loans in a manner that
minimizes the amount of any payments required to be made by the Borrower
pursuant to Section 3.04. Prepayments pursuant to this Section 3.04(c) shall be
accompanied by accrued interest to the extent required by Section 3.02. Any
Lender may elect, by notice to the Administrative Agent at or prior to the time
and in the manner specified by the Administrative Agent, prior to any prepayment
of Loans required to be made by the Borrower pursuant to this Section 3.04(c),
to decline all (but not a portion) of its pro rata share of such prepayment
(such declined amounts, the "Declined Proceeds"). Any Declined Proceeds shall be
offered one additional time to the Lenders not so declining such prepayment
(with such Lenders having the right to decline any prepayment with Declined
Proceeds at the time and in the manner specified by the Administrative Agent).
Any remaining Declined Proceeds shall be applied as determined by the Borrower
in accordance with this Agreement.
(vi) Certifications. The Borrower or the applicable Credit Party,
as the case may be, shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 3.04(c), (i) a certificate signed by
a Financial Officer of the Borrower or such Credit Party specifying the
outstanding principal amount under the First Lien Facilities setting forth in
reasonable detail the calculation of the amount of such prepayment and (ii) to
the extent practicable, at least three days prior written notice of such
prepayment. Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid; provided, however, that, if at the time of any
prepayment pursuant to Section 3.04(c) there shall be Borrowings of different
Types or Eurodollar Borrowings with different Interest Periods, and if some but
not all Lenders shall have accepted such mandatory prepayment, then the
aggregate amount of such mandatory prepayment shall be allocated ratably to each
outstanding Borrowing of the accepting Lenders.
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(d) No Premium or Penalty. Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 3.01(b) and Section 5.02.
(e) No Effect on Swap Agreements. Prepayments permitted or required
under this Section 3.04 shall not affect the Borrower's obligation to continue
making payments under any Swap Agreement, which shall remain in full force and
effect notwithstanding such prepayment, subject to the terms of such Swap
Agreement.
Section 3.05. Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees, or of
amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise)
prior to 12:00 noon, New York City time, on the date when due, in dollars that
constitute immediately available funds, without defense, deduction, recoupment,
set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be
refundable under any circumstances. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices specified in Section 13.01, except that payments pursuant to Section
5.01, Section 5.02, Section 5.03 and Section 13.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. Except as otherwise provided in
this Agreement, if any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
(c) Sharing of Payments by Lenders. If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans resulting in such Lender
receiving payment of a greater proportion of the
40
aggregate amount of its Loans and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans; provided that the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to a Credit Party or an Affiliate thereof (as to
which the provisions of this Section 4.01(c) shall apply). The Borrower consents
to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
Section 4.02. Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
Section 4.03. Certain Deductions by the Administrative Agent. If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(a) or Section 4.02 then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender's Obligations under such Sections until all such
unsatisfied Obligations are fully paid.
Section 4.04. Disposition of Proceeds. The Security Instruments
contain an assignment by each Credit Party unto and in favor of the Security
Trustee for the benefit of the Lenders of all of each such Credit Party's
interest in and to production and all proceeds attributable thereto which may be
produced from or allocated to the Mortgaged Property. The Security Instruments
further provide in general for the application of such proceeds to the
satisfaction of the Indebtedness and other Obligations described therein and
secured thereby. Notwithstanding the assignment contained in such Security
Instruments, until the occurrence of an Event of Default, (a) the Administrative
Agent and the Lenders agree that they will neither notify the purchaser or
purchasers of such production nor take any other action to cause such proceeds
to be remitted to the Security Trustee, the Administrative Agent or the Lenders,
but the Lenders will instead permit such proceeds to be paid to the applicable
Credit Party, and (b) the
41
Lenders hereby authorize the Administrative Agent to take such actions as may be
necessary to cause such proceeds to be paid to such Credit Party.
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01. Increased Costs. (a) Eurodollar Changes in Law. If
any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBOR); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
It is hereby acknowledged and agreed that no Finance Party shall be entitled to
make a claim against the Borrower under this Section 5.01 arising out of the
implementation of the "Basle II Accord"; provided that, for the avoidance of
doubt, any change to the Basle II Accord or any implementation of any increased
requirements in respect thereof may give rise to a claim under this Clause 5.01
to the extent of such change or increase.
(b) Capital Requirements. If any Lender determines in good faith that
any Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or such
Lender's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) Certificates. A certificate of a Lender setting forth in good
faith the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in Section 5.01(a) or (b) shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Effect of Failure or Delay in Requesting Compensation. Failure or
delay on the part of any Lender to demand compensation pursuant to this Section
5.01 shall not constitute a waiver of such Lender's right to demand such
compensation. Notwithstanding the foregoing, the Borrower shall not be required
to compensate a Lender pursuant to this Section 5.01 for any
42
increased cost or reductions incurred more than 365 days prior to the date that
such Lender notifies the Borrower of such increased costs of reductions and of
such Lender's intention to claim compensation therefor, provided that if the
change is retroactive, then such period of retroactivity shall be added to such
365 day period for the purpose of determining the earliest such cost or
reduction which may be compensated.
(e) Protection Absolute. The protection of this Section 5.01 shall be
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of the Change in Law that shall have occurred or been
imposed.
Section 5.02. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other than
on the last day of the Interest Period applicable thereto, or (c) the failure to
borrow, convert, continue or prepay any Eurodollar Loan on the date specified in
any notice delivered pursuant hereto, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBOR
that would have been applicable to such Loan, for the period from the date of
such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
eurodollar market.
A certificate of any Lender setting forth any amount or amounts that in good
faith such Lender is entitled to receive pursuant to this Section 5.02 shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
Section 5.03. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03(a)), the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or such Guarantor shall make such
deductions and (iii) the Borrower or such Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.
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(c) Indemnification by the Borrower and the Guarantors. The Borrower
and each Guarantor shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender
on or with respect to any payment by or on account of any obligation of the
Borrower or any Guarantor hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section 5.03) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate of the
Administrative Agent, a Lender as to the amount of such payment or liability
under this Section 5.03 shall be delivered to the Borrower and shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) If the Administrative Agent or any Lender determines that it has
received a refund of any Indemnified Taxes or Other Taxes as to which it has
been indemnified by the Borrower or any Guarantor and with respect to which the
Borrower or any Guarantor have paid additional amounts pursuant to this Section
5.03, it shall pay over such refund to the Borrower or such Guarantor (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower or such Guarantor under this Section 5.03 with respect to the
Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Borrower or such Guarantor,
upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower or such Guarantor (plus any penalties, interest
or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section 5.03(f) shall not be construed to require the Administrative Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower, any Guarantor
or any other Person.
Section 5.04. Mitigation Obligations. If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section
44
5.03, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and Obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 5.01 or
Section 5.03, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender or inconsistent with its internal policies or
applicable legal or regulatory restrictions. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
Section 5.05. Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful as a result of any Change
in Law for any Lender or its applicable lending office to honor its obligation
to make or maintain Eurodollar Loans either generally or having a particular
Interest Period hereunder, then (a) such Lender shall promptly notify the
Borrower and the Administrative Agent thereof and such Lender's obligation to
make such Eurodollar Loans shall be suspended (the "Affected Loans") until such
time as such Lender may again make and maintain such Eurodollar Loans and (b)
all Affected Loans which would otherwise be made by such Lender shall be made
instead as ABR Loans (and, if such Lender so requests by notice to Endeavour
International and the Administrative Agent, all Affected Loans of such Lender
then outstanding shall be automatically converted into ABR Loans on the date
specified by such Lender in such notice) and, to the extent that Affected Loans
are so made as (or converted into) ABR Loans, all payments of principal which
would otherwise be applied to such Lender's Affected Loans shall be applied
instead to its ABR Loans.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01. Conditions Precedent. The Obligations of the
Lenders to make Loans hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 13.02):
(a) (i) The Administrative Agent, the Arranger and the Lenders shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced prior to the Effective Date,
reimbursement or payment of all reasonable out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder, and (ii) (A) Shearman & Sterling
LLP, counsel to the Administrative Agent, and (B) each local counsel listed on
Schedule 6.01(h) hereto, shall each have received its reasonable fees, charges
and disbursements for services rendered in connection with the Transactions, due
and payable on or prior to the Effective Date.
(b) The Administrative Agent shall have received a certificate of the
Secretary, an Assistant Secretary or other duly authorized officer, satisfactory
to the Administrative Agent, of the Borrower and each Guarantor setting forth
(i) resolutions of its board of directors (or equivalent body) or its managing
member (and, if applicable, all the holders of the issued and outstanding shares
of such Guarantor) authorizing the execution, delivery and performance of the
Loan Documents to which it is a party, which shall be in full force and effect
without amendment or supercession at the date of such certificate, and, in the
case of the Borrower, the Borrowings
45
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect; (ii) the officers of the Borrower or
such Guarantor (A) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party, and (B) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby; (iii) specimen signatures of such authorized officers; and
(iv) the complete and up to date articles or certificate of incorporation and
bylaws, certificate of formation and partnership agreement, certificate of
formation and limited liability company agreement, memorandum of association and
articles of association, or other applicable formation documents (as the case
may be) of the Borrower and each Guarantor, in each case certified as being true
and complete without amendment or supercession (and to include, if applicable,
any certificate of change of name). The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives
notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received, in each jurisdiction
where such certificates are available, certificates as of a recent date
reasonably satisfactory to the Administrative Agent of the appropriate agencies
of the relevant Governmental Authority with respect to the existence,
qualification and good standing of the Borrower and each Guarantor.
(d) The Administrative Agent shall have received a compliance
certificate, which shall be substantially in the form of Exhibit D hereto, duly
and properly executed by a Responsible Officer of the Borrower and dated as of
the date of Effective Date.
(e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be reasonably requested by the
Administrative Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed Notes
payable to each Lender (or its registered assigns) that has requested the same
reasonably prior to the Effective Date in a principal amount equal to its
Commitment dated as of the date hereof.
(g) The Administrative Agent shall have received from each party
thereto copies (and the Security Trustee shall have received originals) of duly
executed counterparts of the Security Instruments, including the Security
Agreement, the Debentures, the Share Pledges and Charges and the other Security
Instruments, except for any Security Instrument to be entered into by Talisman.
In connection with the execution and delivery of the Security Instruments:
(i) The Administrative Agent shall be reasonably satisfied that
the Security Instruments create second priority, perfected Liens (subject only
to Excepted Liens and Liens created by the First Lien Loan Documents) on 100% of
the total value of the proven Oil and Gas Properties evaluated in the Initial
Reserve Reports (other than those Oil and Gas Properties owned by the Exempted
Subsidiary or excluded under Clause 4.7 of the Debenture); and
(ii) The Security Trustee shall have received stock or share
certificates, together with signed, undated, blank stock powers or stock
transfer forms (as and if applicable)
46
for each such certificate, representing all of the certificated issued and
outstanding stock, shares or other Equity Interests of each Person, the stock,
shares or other Equity Interests of which are required to be pledged pursuant to
the Security Agreement, the Debentures, the Guarantee, the Share Pledges and
Charges or any other Security Instrument, and any notice or other document
deliverable thereunder.
(h) The Administrative Agent shall have received, on behalf of itself
and the Lenders, favorable written opinions of (i) Ashurst, special English
counsel to the Borrower and the Guarantors; (ii) Xxxxxx & Xxxxxx LLP, special
New York counsel to the Borrower and the Guarantors; (iii) H. Xxx Xxxxxx,
General Counsel to Endeavour International Corporation; (iv) Shearman & Sterling
LLP (London office), special counsel to the Administrative Agent and the
Lenders; and (v) each joint local counsel listed on Schedule 6.02(h), in each
case (A) dated the Effective Date, (B) addressed to the Administrative Agent and
the Lenders, and (C) covering such other matters relating to the Loan Documents
and the Transactions as the Administrative Agent shall reasonably request, and
the Borrower hereby requests such counsel to deliver such opinions.
(i) The Administrative Agent shall have received (i) a copy of a
certificate of insurance coverage of each Credit Party and each other Subsidiary
evidencing that each Credit Party and each other Subsidiary are carrying
insurance in accordance with Section 7.12 hereof, which shall be endorsed or
otherwise amended to include a customary lender's loss payable endorsement and
to name the Security Trustee as loss payee, and (ii) a copy of a broker's letter
in customary form, in each case in form and substance satisfactory to the
Administrative Agent.
(j) The Administrative Agent shall have received title information as
the Security Trustee or the Administrative Agent may reasonably require, setting
forth the status of title to 100% of the total value of the proven Oil and Gas
Properties evaluated in the Initial Reserve Reports.
(k) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Properties (including, without limitation, oil
and gas processing facilities, Petroleum Assets and Oil and Gas Properties) of
each Credit Party and each other Subsidiary.
(l) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.
(m) The Administrative Agent shall have received (i) the financial
statements referred to in Section 7.04(a), (ii) the Initial Reserve Reports
accompanied by a certificate covering the matters described in Section 8.12(f)
and (iii) reports and other information in form, scope and substance
satisfactory to it concerning the environmental liabilities, if any, of the
Credit Parties or in respect of their Properties.
(n) The Administrative Agent shall have received the results of a
search of the Uniform Commercial Code filings (or equivalent filings and/or
registration systems) made with respect to the Borrower and each Guarantor in
the states (or other jurisdictions) of formation of such persons, in which the
chief executive office of each such Person is located and in the other
jurisdictions in which such persons maintain property, together with copies of
the financing
47
statements (or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Administrative Agent that the Liens indicated in
any such financing statement (or similar document) would be permitted under
Section 9.03 or have been or will be contemporaneously released or terminated.
(o) The Administrative Agent shall be reasonably satisfied with the
terms and conditions of the First Lien Credit Agreement, and the Borrower shall
have received gross proceeds thereunder of up to US$216.5 million (composed of
up to US$176.5 million under two debt tranches and up to US$40.0 million under a
letter of credit sub-facility) from the borrowings under the First Lien
Facilities.
(p) The Intercreditor Agreement shall have been duly executed by each
of the parties thereto, and shall be in full force and effect.
(q) The Equity Contribution shall have been made in full, on terms
satisfactory in all respects to the Administrative Agent and its counsel.
(r) The Administrative Agent shall have received such other documents
as the Administrative Agent or counsel to the Administrative Agent may
reasonably request.
(s) The Acquisition and the other transactions contemplated by the
Acquisition Agreement shall have been consummated contemporaneously herewith in
accordance with the Acquisition Agreement and applicable law, without giving
effect to any waiver of any material terms or conditions of the Acquisition
Agreement not approved by the Majority Lenders. The Administrative Agent shall
have received copies of the Acquisition Agreement and all certificates, opinions
and other documents delivered thereunder, certified by a Financial Officer as
being complete and correct.
(t) The Administrative Agent shall have received a certificate in the
form of Exhibit H or in form and substance satisfactory to the Administrative
Agent from a Responsible Officer of each Credit Party certifying that such
Credit Party, before and after giving effect to the Transactions to occur on the
Effective Date, is solvent.
(u) The Lenders shall have received, to the extent requested, all
documentation and other information required by regulatory authorities under
applicable "know your customer" and anti-money laundering rules and regulations,
including the USA PATRIOT Act and any United Kingdom-based Lenders shall have
received, to the extent requested, in addition the foregoing, documentation
required by any equivalent regime, rule, regulation or legislation in effect in
the United Kingdom.
(v) At the time of and immediately after giving effect to such Loans,
no Default shall have occurred and be continuing.
(w) The representations and warranties of each Credit Party and each
other Subsidiary set forth in this Agreement and in the other Loan Documents
shall be true and correct in all material respects on and as of the date of the
making of the Loans, except to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, such
48
representations and warranties shall continue to be true and correct as of such
specified earlier date.
(x) The Administrative Agent shall have received a notice of the
Borrowing as required by Section 2.03.
(y) The fee letter, dated as of October 10, 2006, by and among the
Administrative Agent, the Arranger and Endeavour International shall remain in
full force and effect.
(z) [Intentionally Omitted].
(aa) There shall not have occurred, since December 31, 2005, any
Material Adverse Change; provided, however, that none of the following shall be,
or will be at the Effective Date, deemed to constitute and shall not be taken
into account in determining the occurrence of a Material Adverse Change: any
effect or change that results from (i) the announcement or pendency of the
Transactions, (ii) the taking of any action required pursuant to the Acquisition
Agreement or expressly permitted by the written consent of Endeavour
International pursuant to the Acquisition Agreement (and, to the extent such
action could reasonably be expected to otherwise constitute a Material Adverse
Change, with the prior written consent of the Arranger), (iii) any change in the
economy or financial markets in general, (iv) changes in general in the
industries in which the Acquired Business operates that do not have a materially
disproportionate effect on the Acquired Business versus other competitors in the
industry, (v) decreases in the market price or consumption of Petroleum and
commodities derived therefrom on United Kingdom or world markets, (vi) adverse
weather conditions, or (vii) changes in applicable law or GAAP-IFRS.
(bb) The Administrative Agent shall notify the Borrower and the
Lenders in writing of the Effective Date, and such notice shall be conclusive
and binding. Notwithstanding the foregoing, the Obligations of the Lenders to
make Loans hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 13.02) at or prior to
3:00 p.m., New York City time (or such later time as consented to by the
Administrative Agent), on November 1, 2006 (and, in the event such conditions
are not so satisfied or waived, the Commitments shall terminate at such time).
(cc) Endeavour International, or such of its Subsidiaries as may be
agreed among the Credit Parties and the Administrative Agent, shall have
established a commodity price hedging program consistent with pricing
assumptions contained in the financial models of Endeavour International
previously provided to the Administrative Agent, in form and substance, and with
a counterparty or counterparties, acceptable to the Administrative Agent,
covering not less than 64% of projected PDP production for a period of not less
than five years from January 1, 2007.
(dd) The Administrative Agent is satisfied that the documents,
certificates, opinions and other instruments listed on Schedule 6.01(dd) will be
delivered to the Administrative Agent in form and substance satisfactory to the
Administrative Agent on the Effective Date.
49
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each Credit Party (or, in the case of Section 7.04(a) and (b) below, the
Borrower) represents and warrants to the Administrative Agent and the Lenders
that:
Section 7.01. Organization; Powers. Such Credit Party and each of
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has all requisite
power and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary, to own its assets and to carry on its business
as now conducted, and (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where failure to have such qualifications could not reasonably be expected to
result in a Material Adverse Change.
Section 7.02. Authority; Enforceability. The Transactions are
within such Credit Party's powers, and have been duly authorized by all
necessary action and, if required, stockholder, partner or member action
(including, without limitation, any action required to be taken by any class of
directors of such Credit Party or any other Person, whether interested or
disinterested, in order to ensure the due authorization of the Transactions).
Each Loan Document and Acquisition Document to which such Credit Party or any of
its Subsidiaries is a party has been, or is being, duly executed and delivered
by such Credit Party and each such Subsidiary, as applicable, and constitutes
(or will constitute) a legal, valid and binding obligation of such Credit Party
and each such Subsidiary, as applicable, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
Section 7.03. Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other third Person (including
shareholders or any class of directors, whether interested or disinterested, of
such Credit Party or any other Person), nor is any such consent, approval,
registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the other Security
Instruments as required by this Agreement, and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect and do not
have an adverse effect on the enforceability of the Loan Documents; (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of such Credit Party or any of its Subsidiaries, or any
order of any Governmental Authority; (c) will not violate or result in a default
under any indenture, credit agreement or other debt instrument or any other
material agreement or other instrument binding upon any Credit Party or any of
its Subsidiaries, or the respective Properties thereof, or give rise to a right
thereunder to require any payment to be made by such Credit Party or any of its
Subsidiaries; and (d) will not result in the creation or imposition of any Lien
on any Property now owned or hereafter acquired by such Credit Party or any of
its Subsidiaries (other than the Liens created by the Loan Documents and the
Liens created under the First Lien Loan Documents).
50
Section 7.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Administrative Agent
(i) audited financial information for the Acquired Business for each of the
three full Fiscal Years immediately preceding the Acquisition, as well as for
the portion of the current Fiscal Year ending June 30, 2006, addressing revenues
and operating expenses, accompanied by a letter from the Ernst & Young that they
have reviewed such financial information and they fairly present, in all
material respects, the financial position of the Acquired Assets as at the dates
indicated; and (ii) Endeavour International's consolidated balance sheets and
related statements of income, shareholder's equity and cash flows (A) as of and
for the Fiscal Years ended (x) 2003, audited and accompanied by the opinion of
LJSoldinger LLP and (y) as of and for the Fiscal Years ended 2004 and 2005,
audited and accompanied by the opinion of KPMG LLP, and (B) as of and for the
portion of the Fiscal Year ended June 30, 2006, certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the
financial condition and results of operations and cash flows of Endeavour
International and its consolidated Subsidiaries as of such dates and for such
periods. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of Endeavour International and its
consolidated Subsidiaries, as of the dates thereof. Such financial statements
were prepared (x) with respect to the Acquired Business, in accordance with
IFRS, and (y) with respect to Endeavour International, in accordance with GAAP,
in each case applied on a consistent basis, subject, in the case of unaudited
financial statements, to year-end audit adjustments and the absence of
footnotes.
(b) The Borrower has heretofore delivered to the Administrative Agent
its unaudited pro forma consolidated balance sheet and related pro forma
statements of income, stockholder's equity and cash flows as of December 31,
2005, prepared giving effect to the Transactions as if they had occurred, with
respect to such balance sheet, on such date and, with respect to such other
financial statements, on the first day of the 12-month period ending on such
date. Such pro forma financial statements have been prepared in good faith by
the Borrower, based on the assumptions used to prepare the pro forma financial
information contained in the Information Memorandum (which assumptions are
believed by the Borrower on the date hereof and on the Effective Date to be
reasonable), are based on the best information available to the Borrower as of
the date of delivery thereof, accurately reflect all adjustments required to be
made to give effect to the Transactions and present fairly, in all material
respects, on a pro forma basis the estimated consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and for such
period, assuming that the Transactions had actually occurred at such date or at
the beginning of such period, as the case may be.
(c) There has been no Material Adverse Change since December 31, 2005.
(d) Except for (i) the Obligations of the Borrower under the
Acquisition Documents, (ii) as disclosed on the pro forma balance sheet referred
to in Section 7.04(b), and (iii) with respect to Endeavour International, the
Convertible Senior Notes and Permitted Preferred Stock, such Credit Party does
not have on the date hereof any material Debt (including Disqualified Capital
Stock but excluding intercompany debt which would be eliminated in consolidated
financial statements of such Credit Party) or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or
51
unrealized or anticipated losses from any unfavorable commitments which could
reasonably be expected to have a Material Adverse Effect.
Section 7.05. Litigation.
(a) There are no actions, suits, investigations or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
knowledge of such Credit Party, threatened against or affecting such Credit
Party or its Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect, (ii) that involve any Loan Document or the Transactions, or (iii) that
could impair the consummation of the Acquisition on the time and in the manner
contemplated by the Acquisition Documents.
(b) Since the date of this Agreement, there has been no change in
status of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
Section 7.06. Environmental Matters. Except as could not be
reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to
take such actions could not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect):
(a) none of (i) such Credit Party or its Subsidiaries; (ii) any
Property of such Credit Party or its Subsidiaries; or (iii) the operations
conducted on any such Property violate any applicable order or requirement of
any court or Governmental Authority or any Environmental Laws.
(b) none of (i) such Credit Party or its Subsidiaries; (ii) any
Property of such Credit Party or its Subsidiaries; or (iii) the operations
conducted on any such Property by such Credit Party or its Subsidiaries or, to
the knowledge of such Credit Party, by any prior owner or operator of such
Property or operation, are in violation of or subject to any pending or
threatened action, claim, demand, suit, investigation, inquiry or proceeding by
or before any court, third party or Governmental Authority or to any Remedial
Work, in each case, under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations required to be obtained or filed under any Environmental Laws in
connection with (i) the operation or use of any and all Property by such Credit
Party and its Subsidiaries, or (ii) the business of such Credit Party and its
Subsidiaries, including, without limitation, past or present treatment, storage,
disposal or release of Hydrocarbons, Petroleum, or any hazardous substance, oil
and gas waste or solid waste into the environment, have been duly obtained or
filed, and such Credit Party and its Subsidiaries, as applicable, are in
compliance with the terms and conditions of all such notices, permits, licenses,
exemptions, approvals and similar authorizations.
(d) all Hydrocarbons, Petroleum and hazardous substances, solid waste
and oil and gas waste produced, handled or generated at any and all Property of
such Credit Party or its Subsidiaries have in the past been transported, treated
and disposed of in accordance with Environmental Laws and, to the knowledge of
such Credit Party or its Subsidiaries, all third-party transport carriers and
treatment and disposal facilities have been and are operating in compliance
52
with Environmental Laws and are not the subject of any existing, pending or
threatened action, claim, demand, suit, investigation or inquiry by any
Governmental Authority in connection with any Environmental Laws.
(e) no Hydrocarbons, Petroleum or hazardous substances, solid waste or
oil and gas waste have been disposed of or otherwise released and there has been
no threatened release of any Hydrocarbons, Petroleum or hazardous substances,
solid waste or oil and gas waste (i) at any location as a result of the
operations of such Credit Party or its Subsidiaries, or (ii) on, to or from any
Property of such Credit Party or its Subsidiaries.
(f) all Property and operations of such Credit Party and its
Subsidiaries satisfy all design, operation, and equipment requirements imposed
by applicable Environmental Law, and such Credit Party does not have any reason
to believe there are any facts, conditions, circumstances or legal developments
that can form the basis of any non-compliance by such Credit Party or its
Subsidiaries or any of their Properties with Environmental Law or any
Environmental License, or that may require such Credit Party or its
Subsidiaries, individually or in the aggregate, to incur in excess of
US$1,000,000 in order to maintain or achieve compliance with any Environmental
Law or Environmental License.
(g) Neither such Credit Party nor any Subsidiary has any contingent
liability for Remedial Work in connection with any release or threatened release
of any Hydrocarbons, Petroleum, hazardous substance, solid waste or oil and gas
waste into the environment.
Section 7.07. Compliance with the Laws and Agreements; No
Defaults.
(a) Such Credit Party and its Subsidiaries are in compliance with all
Governmental Requirements applicable to it or its Property and all agreements
and other instruments binding upon it or its Property, and possesses all
licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Neither such Credit Party nor any Subsidiary is in default nor has
any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require such Credit Party or a Subsidiary to Redeem or make any
offer to Redeem under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which such
Credit Party or its Subsidiaries or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08. Investment Company Act. Such Credit Party is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.
Section 7.09. Taxes.
53
(a) Except as could not be reasonably expected to have a Material
Adverse Effect, such Credit Party and each of its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except Taxes that are being contested in good faith by appropriate proceedings
and for which such Credit Party or such Subsidiary has set aside on its books
adequate reserves in accordance with GAAP-IFRS. The charges, accruals and
reserves on the books of such Credit Party and each of its Subsidiaries in
respect of Taxes and other governmental charges are adequate.
(b) Except as could not be reasonably expected to have a Material
Adverse Effect, no Tax Lien has been filed and, to the knowledge of such Credit
Party, no claim is being asserted with respect to any such Tax or other such
governmental charge.
Section 7.10. ERISA. Except as could not be reasonably expected
to have a Material Adverse Effect:
(a) such Credit Party, each of its Subsidiaries and each ERISA
Affiliate have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(b) each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) no liability to the PBGC (other than for the payment of current
premiums which are not past due) by such Credit Party, any of its Subsidiaries
or any ERISA Affiliate has been or is expected by such Credit Party, any of its
Subsidiaries or any ERISA Affiliate to be incurred with respect to any Plan. No
ERISA Event with respect to any Plan has occurred.
(d) full payment when due has been made of all amounts which such
Credit Party, any of its Subsidiaries or any ERISA Affiliate is required under
the terms of each Plan or applicable law to have paid as contributions to such
Plan as of the date hereof, and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Plan.
(e) the actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of such
Credit Party's or such Subsidiary's most recently ended Fiscal Years, exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities. The
term "actuarial present value of the benefit liabilities" shall have the meaning
specified in Section 4041 of ERISA.
(f) none of such Credit Party, any of its Subsidiaries or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in the
six-year period preceding the date hereof sponsored, maintained or contributed
to, any Multiemployer Plan.
(g) none of such Credit Party, any of its Subsidiaries or any ERISA
Affiliate is required to provide security under Section 401(a)(29) of the Code
due to a Plan amendment that results in an increase in current liability for the
Plan.
54
Section 7.11. Disclosure; No Material Misstatements.
(a) Such Credit Party has disclosed to the Administrative Agent and
the Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject, and all other matters known to
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. Neither the Information Memorandum nor any
of the other reports, financial statements, certificates or other information
furnished by or on behalf of such Credit Party or its Subsidiaries to the
Administrative Agent or any Lender or any of their Affiliates in connection with
the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that
(i) with respect to projected financial information, such Credit Party
represents only that such information was prepared in good faith based upon
accounting principles consistent with the historical audited financial
statements of the Acquired Business and upon assumptions believed to be
reasonable at the time and (ii) no representation or warranty is made with
respect to information of a general economic or general industry nature. There
is no fact peculiar to such Credit Party or its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or in the future is
reasonably likely to have a Material Adverse Effect and which has not been set
forth in this Agreement or the Loan Documents or the other documents,
certificates and statements furnished to the Administrative Agent or the Lenders
by or on behalf of such Credit Party or its Subsidiaries prior to, or on, the
date hereof in connection with the transactions contemplated hereby. There are
no statements or conclusions in any Reserve Report which are based upon or
include misleading information or fail to take into account material information
regarding the matters reported therein, it being understood that projections
concerning volumes attributable to the Oil and Gas Properties and production and
cost estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that such Credit Party and
its Subsidiaries do not warrant that such opinions, estimates and projections
will ultimately prove to have been accurate.
Section 7.12. Insurance. Schedule 7.12 sets forth a true,
complete and correct description of all insurance maintained by such Credit
Party or by its Subsidiaries as of the date hereof and the Effective Date. Such
Credit Party has, and has caused all of its Subsidiaries to have, (a) all
insurance policies sufficient for the compliance by each of them with all
applicable Governmental Requirements and all material agreements, and (b)
insurance coverage in at least amounts and against such risk (including, without
limitation, public liability) that are usually insured against by companies
similarly situated and engaged in the same or a similar business for the assets
and operations of such Credit Party and each of its Subsidiaries. The Security
Trustee has been named as loss payee under each policy.
Section 7.13. [Intentionally omitted].
Section 7.14. Subsidiaries. Schedule 7.14 sets forth, as of the
Effective Date after consummation of the Acquisition, the Subsidiaries of such
Credit Party and the percentage ownership interest of such Credit Party therein.
Except as set forth on Schedule 7.14, such Credit Party has no Subsidiaries.
Each Subsidiary of such Credit Party identified on
55
Schedule 7.14 is a Wholly-Owned Subsidiary thereof, unless otherwise stated. The
shares of capital stock or other ownership interests so indicated on Schedule
7.14 are fully paid and non-assessable and are owned by such Credit Party,
directly or indirectly, free and clear of all Liens (other than Liens permitted
by Section 9.03).
Section 7.15. Properties; Titles, Etc.
(a) After giving effect to the Transactions, and except as disclosed
in Section C of the Due Diligence Report, such Credit Party and each of its
Subsidiaries has good and defensible title to the material Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its material personal Properties, in each case, free and clear of
all Liens except Liens permitted by Section 9.03. After giving full effect to
the Excepted Liens, such Credit Party or such Subsidiary specified as the owner
owns the net interests in production attributable to the Hydrocarbon Interests
as reflected in the most recently delivered Reserve Report, and the ownership of
such Properties shall not in any material respect obligate such Credit Party or
such Subsidiary to bear the costs and expenses relating to the maintenance,
development and operations of each such Property in an amount in excess of the
working interest of each Property set forth in the most recently delivered
Reserve Report that is not offset by a corresponding proportionate increase in
such Credit Party's or such Subsidiary's net revenue interest in such Property.
(b) All material leases and agreements (including, without limitation,
the Project Documents) necessary for the conduct of the business of such Credit
Party and each of its Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to result in
a Material Adverse Change.
(c) The rights and Properties presently owned, leased or licensed by
such Credit Party and each of its Subsidiaries including, without limitation,
all easements and rights of way, include all rights and Properties necessary to
permit such Credit Party and each of its Subsidiaries to conduct their business
in all material respects in the same manner as its business has been conducted
prior to the date hereof.
(d) All of the Properties of such Credit Party and each of its
Subsidiaries which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.
(e) Such Credit Party and each of its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual Property material to its business, and the use thereof by such
Credit Party and each of its Subsidiaries does not infringe upon the rights of
any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change. Such Credit Party and each of its Subsidiaries each either own or have
valid licenses or other rights to use all databases, geological data,
geophysical data, engineering data, seismic data, maps, interpretations and
other technical information used in their businesses as presently conducted,
subject to the limitations contained in the agreements governing the use of the
same, which limitations are
56
customary for companies engaged in the business of the exploration and
production of Hydrocarbons, with such exceptions as could not reasonably be
expected to result in a Material Adverse Change.
(f) It does not own (outright or via undivided interests or similar
interests) any equipment that is not included in the Oil and Gas Properties
which individually, or in the aggregate with all equipment owned by all other
Credit Parties, has a value in excess of US$1,000,000.
Section 7.16. Maintenance of Properties. Except for such acts or
failures to act as could not be reasonably expected to have a Material Adverse
Effect, the Oil and Gas Properties (and Properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all Government Requirements and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties. Specifically in connection with the foregoing, except
for those as could not be reasonably expected to have a Material Adverse Effect,
(i) no Oil and Gas Property is subject to having allowable production reduced
below the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) and (ii) none of the xxxxx comprising a part of the Oil
and Gas Properties (or Properties unitized therewith) is deviated from the
vertical more than the maximum permitted by Government Requirements, and such
xxxxx are, in fact, bottomed under and are producing from, and the well bores
are wholly within, the Oil and Gas Properties (or in the case of xxxxx located
on Properties unitized therewith, such unitized Properties). All pipelines,
xxxxx, gas processing plants, platforms and other material improvements,
fixtures and equipment owned in whole or in part by such Credit Party or its
Subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing which are operated by such Credit Party or its
Subsidiaries, in a manner consistent with such Credit Party's or its
Subsidiaries' past practices (other than those the failure of which to maintain
in accordance with this Section 7.16 could not reasonably be expect to have a
Material Adverse Effect).
Section 7.17. Prepayments and Gas Imbalances. Except as set forth
in Schedule 7.17 or on the most recent certificate delivered pursuant to Section
8.12(f), on a net basis, there are no gas imbalances, take-or-pay or other
prepayments which would require such Credit Party or its Subsidiaries to deliver
Hydrocarbons produced from Oil and Gas Properties at some future time without
then or thereafter receiving full payment therefore.
Section 7.18. Use of Loans. The proceeds of the Loans shall be
used only for the purposes specified in the Recitals to this Agreement. None of
such Credit Party or any of its Subsidiaries are engaged principally, or as one
of its or their important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock (within the meaning of Regulation T, U or X of the Board). No part
of the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, for any purpose which violates,
or is inconsistent with, the provisions of Regulations T, U or X of the Board.
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Section 7.19. Solvency.
(a) Immediately after the consummation of the Transactions to occur on
the Effective Date (i) the fair value of the assets of such Credit Party and
each of its Subsidiaries on a consolidated basis, taken as a whole, at a fair
valuation, will exceed their aggregate debts and liabilities, subordinated,
contingent or otherwise, on a consolidated basis; (ii) the present fair saleable
value of the property of such Credit Party and each of its Subsidiaries, taken
as a whole, will be greater than the amount that will be required to pay the
probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) such Credit Party and its consolidated Subsidiaries, taken as a
whole, will be able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and
(iv) such Credit Party and each of its Subsidiaries, taken as a whole, will not
have unreasonably small capital with which to conduct the business in which they
are engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
(b) Neither such Credit Party nor any of its Subsidiaries is aware any
steps having been taken for (i) the winding-up, administration, or dissolution
of such Credit Party or its Subsidiaries (or any of their respective assets),
(ii) the appointment of any Insolvency Officer in relation to it or any other
Credit Party or their respective assets, or (iii) any analogous step in any
jurisdiction.
(c) In the case of any Subsidiary incorporated under the laws or
England and Wales, no administrator, receiver, liquidator or similar officer has
been appointed with respect to it or any of its Subsidiaries or any of its
respective assets, nor (so far as it is aware) is any petition, proceedings or
application for such appointment pending, nor has resolution for such
appointment been passed or notice of intent to make such appointment been
delivered.
Section 7.20. Material Contracts. Schedule 1.02(a) sets forth
each contract, license or agreement that is material to the operation of the
business of such Credit Party and each of its Subsidiaries, as of the Effective
Date. As of the Effective Date, except as could not be reasonably expected to
have a Material Adverse Effect, each of the Material Contacts is in full force
and effect. Neither such Credit Party nor any Subsidiary of such Credit Party is
in default under or in breach of any term or condition of any Material Contract
that has had or could reasonably be expected to have a Material Adverse Effect,
nor is it aware of any default under or breach of any term of condition of any
Material Contract by any other party thereto that has had or could reasonably be
expected to have a Material Adverse Effect.
Section 7.21. Labor Matters. Except as could not be reasonably
expected to have a Material Adverse Effect: (a) as of the date hereof and the
Effective Date, there are no strikes, lockouts or slowdowns against such Credit
Party or its Subsidiaries pending or, to the knowledge of such Credit Party,
threatened, (b) the hours worked by and payments made to employees of such
Credit Party or its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters, and (c) all payments due from such Credit Party or
any of its Subsidiaries, or for which any claim may be made against such Credit
Party or any of its Subsidiaries, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a
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liability on the books of such Credit Party or such Subsidiary. The consummation
of the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which such Credit Party or its Subsidiaries are bound.
Section 7.22. Transaction Documents. Such Credit Party has
delivered to the Administrative Agent a complete and correct copy of the
Acquisition Agreement (including all schedules, exhibits, amendments,
supplements and modifications thereto). Except as set forth on Schedule 7.22,
neither such Credit Party nor any of its Subsidiaries nor, to the knowledge of
such Credit Party, any other Person party thereto is in default in the
performance or compliance with any material provisions thereof. The Acquisition
Agreement complies in all material respects with all applicable laws.
Section 7.23. Sanctioned Persons. None of such Credit Party nor
any of its Subsidiaries, nor, to the knowledge of such Credit Party, any
director, officer, agent, employee or Affiliate of such Credit Party or its
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and
such Credit Party will not directly or indirectly use the proceeds of the Loans
or otherwise make available such proceeds to any Person or entity, for the
purpose of financing the activities of any Person currently subject to any U.S.
sanctions administered by OFAC.
Section 7.24. Security Instruments.
(a) Each Security Instrument, upon execution and delivery thereof by
the parties thereto, will create in favor of the Security Trustee, for the
benefit of the Secured Creditors (and in accordance with the terms of the
Intercreditor Agreement), a legal, valid and enforceable security interest in
the Collateral (as collectively defined in the Security Agreement and the other
Security Instruments) and the proceeds thereof, and subject to (i) any required
registration or filing of any Security Instrument with the appropriate office or
registrar, (ii) the delivery of any notices required to be delivered pursuant to
the Security Instrument which has not been delivered on the date that this
representation and warranty is, or is deemed to be, given, (iii) the filing of
financing statements in the required form in the appropriate offices (as
specified on Schedule 7.24(a)), and (iv) the giving of notice of any assignment
by the applicable debtor, the Lien created under the Security Agreement and
under each other Security Instrument will constitute a fully perfected Lien on,
and security interest in, all right, title and interest of such Credit Party and
each of its Subsidiaries in such, in each case prior and superior in right to
any other Person, other than with respect to Liens expressly permitted by
Section 9.03 and except as referred to in Clause 4.6 and 4.7 of the Debentures.
Section 7.25. Debt. Immediately after giving effect to the
Transactions and the other transactions contemplated hereby, each Credit Party
and each other Subsidiary shall have outstanding no Debt or preferred stock
other than (a) Indebtedness outstanding under this Agreement, (b) Debt under the
First Lien Facilities, (c) the Convertible Senior Notes, and (d) the Permitted
Preferred Stock and Debt otherwise permitted under Section 9.02.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full, the Borrower and
each other Credit Party (as the case may be) hereby covenant and agree with the
Lenders that:
Section 8.01. Financial Statements; Other Information. Endeavour
International and/or the Borrower will, and/or, if required by the terms of the
applicable covenant, each other Credit Party will or will cooperate with
Endeavour International as needed to furnish to the Administrative Agent (which
it shall then furnish to each Lender):
(a) Annual Audited Financial Statements. As soon as available, but in
any event (i) in accordance with then applicable law and not later than 120 days
after the end of its Fiscal Year, Endeavour International will deliver its
audited consolidated balance sheet and related statements of income,
stockholders' equity and cash flows of each, as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
Fiscal Year, all reported on by independent public accountants of recognized
national standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of Endeavour
International, and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, together with a certification from a
Financial Officer as to the Capital Expenditures and the Exploration Capital
Expenditures for such Fiscal Year; and (ii) in accordance with then applicable
law and not later than October 31st of each year, each of Endeavour UK and
Talisman will deliver its audited consolidated balance sheet and related
statements of income, stockholders' equity and cash flows of each, as of the end
of and for the previous year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all reported on by independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of each of Endeavour UK and Talisman, and their respective
Consolidated Subsidiaries on a consolidated basis in accordance with IFRS
consistently applied, together with a certification from the Financial Officer
of each as to their respective Capital Expenditures and the Exploration Capital
Expenditures for such Fiscal Year.
(b) Quarterly Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 45 days after
the end of each of the first three fiscal quarters of each Fiscal Year of
Endeavour International (beginning with the third quarter of 2006), the
consolidated balance sheet and related statements of income, stockholders'
equity and cash flows of each as of the end of and for such fiscal quarter and
the then elapsed portion of the Fiscal Year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous Fiscal Year, all
certified by a Financial Officer as presenting fairly in all material respects
the financial condition and results of operations of Endeavour International and
its
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Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Certificate of Financial Officer - Compliance. Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer of each relevant Credit Party in
substantially the form of Exhibit D hereto (i) certifying as to whether a
Default has occurred with respect to such Credit Party and, if such Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken by such Credit Party with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 9.01, and (iii)
stating whether any change in GAAP-IFRS or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 7.04 (or, in lieu thereof, the most recently delivered audited financial
statements pursuant to Section 8.01(a)) and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.
(d) Certificate of Financial Officer - Swap Agreements. Concurrently
with any delivery of financial statements under Section 8.01(a) and Section
8.01(b), a certificate of a Financial Officer of such Credit Party counterparty
to such Swap Agreement, in form and substance satisfactory to the Administrative
Agent, setting forth as of the last Business Day of such fiscal quarter or
Fiscal Year, a true and complete list of all Swap Agreements of such Credit
Party, the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net xxxx-to-market value
therefor, any new credit support agreements relating thereto not previously
disclosed in writing to the Administrative Agent, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.
(e) Certificate of Insurer - Insurance Coverage. Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required to
be carried by each Credit Party by Section 8.07, in form and substance
satisfactory to the Administrative Agent, and, if requested by the
Administrative Agent, all copies of the applicable policies.
(f) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other final report or letter (including any final "management letter")
submitted to each Credit Party by independent accountants in connection with any
annual, interim or special audit made by them of the books of such Credit Party,
and a copy of any final response by such Credit Party to such letter or report.
(g) SEC and Other Filings; Reports to Shareholders. Promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by each Credit Party with the SEC, or with
any national securities exchange, or distributed by such Credit Party to its
shareholders generally, as the case may be. Documents required to be delivered
pursuant to this clause (h) may be delivered electronically and if so delivered
shall be deemed to have been delivered on the date (x) on which such Credit
Party posts such documents, or provides a link thereto on such Credit Party's
website on the Internet; or (ii) on which such documents are posted on such
Credit Party's behalf on IntraLinks/SyndTrak or another relevant website, if
any, to which each Lender and the Administrative Agent have access
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(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) upon written request by the
Administrative Agent, such Credit Party shall deliver paper copies of such
documents to the Administrative Agent for further distribution to each Lender
until a written request to cease delivering paper copies is given by the
Administrative Agent and (ii) such Credit Party shall notify (which may be by
facsimile or electronic mail) the Administrative Agent of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents.
(h) Notices Under Material Instruments and Agreements. Promptly after
the furnishing or receiving thereof, copies of (i) any material financial
statement, report or notice furnished to or by any Person pursuant to the terms
of any preferred stock designation, indenture, loan or credit or other similar
agreement regarding or with respect to any Material Indebtedness (including with
respect to the First Lien Credit Agreement and all documents relating
thereto),other than this Agreement, and (ii) any notices or other correspondence
pertaining in each case to matters that may have a Material Adverse Effect, sent
or received with respect to any Material Contracts of any Credit Party, in each
case not otherwise required to be furnished to the Administrative Agent pursuant
to any other provision of this Section 8.01.
(i) Notice of Casualty Events. Prompt written notice, and in any event
within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event with respect to any Credit Party.
(j) Information Regarding the Credit Parties. Prompt written notice
(and, except in the case of the Acquisition, in any event at least 10 days prior
thereto) of any change (i) in any Credit Party's corporate name or in any trade
name used to identify such Person in the conduct of its business or in the
ownership of its Properties, (ii) in the location of any Credit Party's chief
executive office or principal place of business, (iii) in any Credit Party's
identity or corporate structure or in the jurisdiction in which such Person is
incorporated or formed, (iv) in any Credit Party's jurisdiction of organization
or such Person's organizational identification number in such jurisdiction of
organization, and (v) in any Credit Party's Federal taxpayer identification
number.
(k) Production and Lease Operating Statements. Within 45 days after
the end of each fiscal quarter, reports setting forth, for each calendar month
during the then current Fiscal Year to date the volume of production and sales
attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties of each Credit Party, and setting forth the related ad valorem,
severance and production taxes and lease operating expenses attributable thereto
and incurred for each such calendar month.
(l) Notices of Certain Changes. Promptly, but in any event within five
Business Days after the execution thereof, copies of any material amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other organizational document of
each Credit Party.
(m) PATRIOT Act. Promptly after the request by any Lender, all
documentation and other information that such Lender reasonably requests in
order to comply with its ongoing
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Obligations under applicable "know your customer" and anti-money laundering
rules and regulations, including the USA PATRIOT Act.
(n) First Lien Facilities Information. Promptly, but in any event
within 5 Business Days of delivery thereof to the First Lien Agent, a copy of
all information requested from any Credit Party by the First Lien Agent pursuant
to Clause 22.1.2 of the First Lien Credit Agreement.
(o) Other Requested Information. Promptly following any request to a
Credit Party therefor, such other information regarding the operations, business
affairs and financial condition of such Credit Party (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent may reasonably
request.
(p) Annual Budget and Operating Plan. (i) As soon as available, and in
any event not later than the 120th day following the end of each Fiscal Year, an
annual consolidated budget and operating plan (the "Annual Budget and Operating
Plan") for Endeavour International and its Subsidiaries, including a statement
of monthly projected production, projected production revenues, projected
operating expenses, Capital Expenditures, Exploration Capital Expenditures and
quarterly cash flows of the Credit Parties and their respective Subsidiaries on
a consolidated basis. Each Annual Budget and Operating Plan shall be accompanied
by certificates of Endeavour International and the Borrower, each signed by a
duly authorized officer, each certifying that, to the best of such officer's
knowledge, the budget is a reasonable estimate for the period covered thereby
and is in compliance with this Section 8.01(p).
Section 8.02. Notices of Material Events. Each Credit Party will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default hereunder or any "Default" as
defined in the First Lien Credit Agreement (a "First Lien Event of Default");
(b) the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against or affecting such Credit Party any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in
liability in excess of US$5,000,000, not substantially covered by insurance,
subject to normal deductibles;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of such Credit Party or any of its Subsidiaries in an aggregate amount
exceeding US$5,000,000;
(d) the cancellation or termination, or impending cancellation or
impending termination, of any insurance policy required to be maintained by such
Credit Party in accordance with Section 8.07 hereof (such notice to be given
promptly, but in any event within five days after the day on which such Credit
Party shall receive notice or shall acquire knowledge thereof); and
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(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Change.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.
Section 8.03. Existence; Conduct of Business. Each Credit Party
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which their Oil and Gas Properties are
located or the ownership of its Properties requires such qualification, except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Change; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 9.11.
Section 8.04. Payment of Obligations. Each Credit Party will, and
will cause each of its Subsidiaries to, pay its Obligations, including Tax
liabilities of such Credit Party and each of its Subsidiaries before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) such
Credit Party or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP-IFRS, and (c) the failure to make
payment pending such contest could not reasonably be expected to result in the
seizure or levy of any Property of such Credit Party or any of its Subsidiaries.
Section 8.05. Performance of Obligations under Loan Documents.
The Borrower will pay the Notes according to the reading, tenor and effect
thereof, and each Credit Party will, and will cause each of its Subsidiaries to,
do and perform every act and discharge all of the Obligations to be performed
and discharged by them under the Loan Documents, including, without limitation,
this Agreement, at the time or times and in the manner specified.
Section 8.06. Operation and Maintenance of Properties. Each
Credit Party, at its own expense, will, and will cause each of its Subsidiaries,
as applicable, to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements but excluding Environmental Laws, which are
the subject of Section 8.10, and all applicable laws, rules and regulations of
every other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom, except, in each case, where
the failure to comply could not reasonably be expected to result in a Material
Adverse Change.
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(b) operate and maintain in a careful and efficient manner in
accordance with the practices of the industry and in compliance with all
applicable contracts and agreements and in compliance with all Governmental
Requirements, including, without limitation, all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted
to regulate the gathering, transportation or processing of Hydrocarbons and
other minerals therefrom but excluding any Environmental Laws, which are the
subject of Section 8.10, except, in each case, where the failure to comply could
not reasonably be expected to result in a Material Adverse Change, all
pipelines, compressor stations, xxxxx, gas or crude oil processing facilities,
field gathering systems, tanks, tank batteries, pumps, pumping units, fixtures,
valves, fittings, machinery, parts, engines, boilers, meters, apparatus,
appliances, tools, implements, casing, tubing, rods, cables, wires, towers,
surface and other material improvements, fixtures and equipment owned in whole
or in part by such Credit Party or any of its Subsidiaries that are useful or
necessary to conduct normal operations relating to gathering, transportation,
processing or removal of Hydrocarbons and other minerals or CO(2) therefrom.
(c) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties,
all gas or crude oil processing facilities and other material Properties,
including, without limitation, all equipment, machinery and facilities.
(d) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties or gas or crude oil
processing facilities and will do all other things necessary to keep unimpaired
its rights with respect thereto and prevent any forfeiture thereof or default
thereunder.
(e) promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the Obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties, all gas or
crude oil processing facilities and other material Properties.
(f) operate its Oil and Gas Properties, all gas or crude oil
processing facilities and other material Properties or cause or make reasonable
and customary efforts to cause such Oil and Gas Properties, gas or crude oil
processing facilities and other material Properties to be operated in accordance
with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements.
(g) ensure that all Hydrocarbons won and saved from its Oil and Gas
Properties and which it is entitled to lift are dealt with in accordance with
good commercial practice and are sold (whether pursuant to a spot or term
contract) on the best terms (as to price and otherwise) as are reasonably
available to companies of comparable standing to such Credit Party or the
applicable Subsidiary at the date the relevant contract is entered into.
(h) to the extent such Credit Party is not the operator of any
Property, such Credit Party shall use reasonable efforts to cause the operator
to comply with this Section 8.06.
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Section 8.07. Insurance. Each Credit Party will, and will cause
each of its Subsidiaries to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The loss payable clauses or
provisions in said insurance policy or policies insuring any of the collateral
for the Loans shall be endorsed in favor of and made payable to the Security
Trustee as its interests may appear and, beginning on the 90th day following the
Effective Date, such policies shall name the Security Trustee, the
Administrative Agent and the Lenders (all subject to the terms of the
Intercreditor Agreement) as "additional insureds" and provide that the insurer
will endeavor to give at least 30 days prior notice of any cancellation to the
Administrative Agent. So long as no Event of Default has occurred and is
continuing, except as otherwise required by Section 9.12 and subject to the
Intercreditor Agreement, each Credit Party or applicable Subsidiary shall be
entitled to use the proceeds received from any insurance policy as a result of a
Casualty Event (without regarding to the threshold in the definition thereof) to
repair or replace the Property of such Credit Party or such Subsidiary subject
to such Casualty Event or to otherwise to enhance the value of the collateral
for the Indebtedness.
Section 8.08. Books and Records; Inspection Rights. Each Credit
Party will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. Each
Credit Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent, upon reasonable prior
notice, to visit and inspect its Properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
Section 8.09. Compliance with Laws. Each Credit Party will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its Property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
Section 8.10. Environmental Matters.
(a) Each Credit Party shall, at its sole expense, and in each case in
all material respects: (i) comply, and shall cause its Properties and operations
and each of its Subsidiaries and such Subsidiary's Properties and operations to
comply, with all applicable Environmental Laws; (ii) not dispose of or otherwise
release, and shall cause such Subsidiary not to dispose of or otherwise release,
any Petroleum, Hydrocarbon, oil and gas waste, hazardous substance, or solid
waste on, under, about or from any of such Credit Party's or such Subsidiary's
Properties or any other Property except as expressly permitted by an
Environmental License; (iii) timely obtain or file, and shall cause each
Subsidiary to timely obtain or file, all notices, permits, licenses, exemptions,
approvals, registrations or other authorizations required under applicable
Environmental Laws to be obtained or filed in connection with the operation or
use of each Credit Party's or any Subsidiary's Properties; and (iv) promptly
commence and diligently prosecute to completion, and shall cause each Subsidiary
to promptly commence and diligently prosecute to completion, any assessment,
evaluation, investigation, monitoring, containment, cleanup, removal,
66
repair, restoration, remediation or other remedial Obligations (collectively,
the "Remedial Work") in the event any Remedial Work is required under applicable
Environmental Laws because of or in connection with the actual or suspected
past, present or future disposal or other release of any Petroleum,
Hydrocarbons, oil and gas waste, hazardous substance or solid waste on, under,
about or from any of each Credit Party's or any Subsidiary's Properties or
operations.
(b) Each Credit Party will promptly notify the Administrative Agent in
writing of any threatened action, claim, demand, suit, investigation or inquiry
by any Governmental Authority by any landowner or other third party against such
Credit Party or its Subsidiaries or their Properties of which such Credit Party
has knowledge in connection with any Environmental Laws if such Credit Party
reasonably anticipates that such action, claim, demand, suit, investigation or
inquiry will result in liability (whether individually or in the aggregate) in
excess of US$2,500,000, not substantially covered by insurance, subject to
normal deductibles.
Section 8.11. Further Assurances.
(a) Each Credit Party at its sole expense (including, without
limitation, the payment of any stamp, registration and similar taxes and fees
that are payable in connection with each Security Instrument) will, and will
cause each of its Subsidiaries to:
(i) promptly execute and deliver to the Administrative Agent or
the Security Trustee all such other documents, agreements and instruments
reasonably requested by the Administrative Agent or the Security Trustee, as the
case may be, to comply with, cure any defects or accomplish the conditions
precedent, covenants and agreements of such Credit Party in the Loan Documents,
including the Notes, or to further evidence and more fully describe the
collateral intended as security for the Indebtedness, or to correct any
omissions in this Agreement or the Security Instruments, or to state more fully
the Obligations secured therein; and
(ii) promptly take all such steps (including the obtaining and/or
carrying out of all relevant approvals, filings, registrations or recordings) as
are available to it and as are reasonably necessary for the purposes of ensuring
that each Security Instrument (A) grants a valid second priority security
interest of the type it purports to create over the assets over which such is
purported to be granted by such Security Instrument, (B) is valid and
enforceable against any Credit Party (and, if the applicable security instrument
relates to a pledge of and/or security interest in the equity interests of any
Subsidiary, is valid and enforceable with respect to such equity interests)
which is party thereto and such Credit Party's (and, if applicable, such
Subsidiary's) Insolvency Officers and creditors, and (C) is not capable of being
avoided or set aside, whether in the winding up, administration or dissolution
or otherwise of such Credit Party (and, if applicable, such Subsidiary).
(b) Each Credit Party hereby authorizes the Administrative Agent, or
the Security Trustee on its behalf, to file one or more financing or
continuation statements, or make other filings, registrations or recordings as
the Administrative Agent or the Security Trustee may deem necessary or
advisable, and any amendments thereto, relative to all or any part of the
Mortgaged Property or other Property covered by the Lien of the Security
Instruments without the signature of such Credit Party or its Subsidiaries where
permitted by law. A carbon, photographic or other
67
reproduction of the Security Instruments or any financing statement covering the
Mortgaged Property, such other Property or any part thereof shall be sufficient
as a financing statement where permitted by law.
(c) Each Credit Party will cause any subsequently acquired or
organized Wholly-Owned Subsidiary (other than the Exempted Subsidiary) to become
a Guarantor by executing a Guarantee and each other applicable Security
Instrument in favor of the Security Trustee for the benefit of the Secured
Creditors. In addition, from time to time, the Borrower will, at its cost and
expense, promptly secure the Obligations by pledging or creating, or causing to
be pledged or created, perfected security interests with respect to such of its
assets and properties as the Security Trustee or the Administrative Agent shall
designate (it being understood that it is the intent of the parties that the
Obligations shall be secured by substantially all the assets of such Credit
Party (including real and other Properties acquired subsequent to the Effective
Date)). Such security interests and Liens will be created under the Security
Instruments and other security agreements, mortgages, deeds of trust and other
instruments and documents in form and substance satisfactory to the Security
Trustee and the Administrative Agent, and each Credit Party shall deliver or
cause to be delivered to the Administrative Agent all such instruments and
documents (including legal opinions, title insurance policies and lien searches)
as the Security Trustee or Administrative Agent shall reasonably request to
evidence compliance with this Section 8.11. Each Credit Party agrees to provide
such evidence as the Security Trustee or the Administrative Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien. In furtherance of the foregoing, each Credit Party
will give prompt notice to the Security Trustee and the Administrative Agent of
the acquisition by it or any of the Subsidiaries of any real property (or any
interest in real property) having a value in excess of US$1,000,000.
(d) Upon the acquisition of any Property by any Credit Party other
than an Exempted Subsidiary, and such Property, in the judgment of the Security
Trustee, shall not already be subject to a perfected security interest, as
required by the Security Instruments, in favor of the Security Trustee for the
benefit of the Secured Creditors, then each Credit Party shall, in each case at
such Credit Party's expense, with respect to such Property, perfect and maintain
the validity, effectiveness and priority of any of the Security Instruments and
any of the Liens intended to be created thereunder.
Section 8.12. Reserve Reports.
(a) On or before March 15 of each year, commencing March 15, 2007, the
Borrower shall furnish to the Administrative Agent a Three-P Reserve Report.
Such Three-P Reserve Report, to be dated as of December 31 of the immediately
preceding year, shall be prepared by one or more Approved Petroleum Engineers,
who shall certify that (i) there are no statements or conclusions in such
Three-P Reserve Report which are based upon or include materially misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each Three-P Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Borrower does not
warrant that such opinions, estimates and projections will ultimately prove to
have been accurate, and (ii) that such Three-P Reserve Report was prepared (x)
in the case of the Three-P Reserve Report dated as of December 31, 2006, in
accordance with the procedures used
68
in the Initial Reserve Report, and (y) in the case of each subsequent Three-P
Reserve Report, in accordance with the procedures used in the immediately
preceding December 31 Three-P Reserve Report (an "Independent Reserve Report").
(b) [Intentionally omitted]
(c) On or before May 15, August 15 and November 15 of each year,
commencing May 15, 2007, the Borrower shall furnish to the Administrative Agent
a Limited Reserve Report. Such Limited Reserve Report, to be dated,
respectively, as of March 31, June 30 and September 30 of such year shall be
prepared by or under the supervision of the chief engineers of the Borrower and
any other applicable Credit Parties, who shall certify that (i) there are no
statements or conclusions in such Limited Reserve Report which are based upon or
include materially misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates contained in each Limited Reserve Report are
necessarily based upon professional opinions, estimates and projections and that
no Credit Party, nor any Subsidiary of any Credit Party, warrants that such
opinions, estimates and projections will ultimately prove to have been accurate,
and (ii) that such Limited Reserve Report was prepared (x) in the case of the
Limited Reserve Report dated as of May 15, 2007, in accordance with the
procedures used in the Initial Reserve Report, except that such Limited Reserve
Report shall be prepared under the supervision of the chief engineers of the
Borrower and shall not include "possible" oil and gas reserves, and (y) in the
case of each subsequent Limited Reserve Report, in accordance with the
procedures used in the immediately preceding Limited Reserve Report.
(d) Following the occurrence of an event which, in the reasonable
judgment of the Administrative Agent, would have a Material Adverse Effect on
the risk profile or financial performance of the Acquired Assets, or result in a
Material Adverse Change with respect to any Credit Party or any of their
respective Subsidiaries, taken as a whole, as soon as commercially practicable
following a request therefor from the Administrative Agent, but in any event
within 60 days after such request, the Borrower shall furnish to the
Administrative Agent (which shall furnish to each Lender) an Independent Reserve
Report.
(e) In the event that a "Reserves Report" (as defined in the First
Lien Credit Agreement) is furnished to the First Lien Agent pursuant to Clause
22.5.1(A), Clause 22.5.1(B) or Clause 22.5.1(C) of the First Lien Credit
Agreement, the Borrower shall, within two Business Days thereof, furnish to the
Administrative Agent (which shall in turn furnish to each Lender) such Reserves
Report delivered to the First Lien Agent.
(f) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent a certificate from a Responsible Officer of
the Borrower and each other applicable Credit Party, certifying that in all
material respects: (i) the information contained in the Reserve Report and any
other information delivered in connection therewith is true and correct, (ii)
the Borrower and/or the applicable Credit Party owns good and defensible title
to the Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by Section 9.03,
(iii) except as set forth on an exhibit to the certificate, on a net basis there
are no gas imbalances, take-or-pay or other prepayments in excess of the volume
69
specified in Section 7.17 with respect to its Oil and Gas Properties evaluated
in such Reserve Report which would require any Credit Party or any of their
Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor, (iv) none of their Oil and Gas Properties have been sold since
the date of the last Reserve Report except as set forth on an exhibit to the
certificate, which certificate shall list all of its Oil and Gas Properties sold
and in such detail as reasonably required by the Administrative Agent, and (v)
attached thereto is a schedule of the Oil and Gas Properties evaluated by such
Reserve Report that are Mortgaged Properties and demonstrating the percentage of
the value of the Oil and Gas Properties evaluated by such Reserve Report that
the value of such Mortgaged Properties represent.
Section 8.13. Title Information. (a) On or before the delivery to
the Administrative Agent of each Reserve Report required by Section 8.12(a), the
Borrower will deliver title information in form and substance reasonably
acceptable to the Administrative Agent covering the proven Oil and Gas
Properties evaluated by such Reserve Report that were not included in the
immediately preceding Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 90 days of notice
from the Administrative Agent that material title defects or exceptions exist
with respect to such additional Properties, either (i) cure or cause to be cured
any such material title defects or exceptions (including defects or exceptions
as to priority) which are not permitted by Section 9.03 raised by such
information, (ii) substitute acceptable Mortgaged Properties with no material
title defects or exceptions except for Excepted Liens having an equivalent value
or (iii) deliver title information in form and substance acceptable to the
Administrative Agent.
(c) If the Borrower is unable to cure or cause to be cured any
material title defect requested by the Security Trustee or the Administrative
Agent to be cured within the 90-day period or the Borrower does not comply with
the requirements to provide acceptable title information covering all the proven
Oil and Gas Properties evaluated in the most recent Reserve Report, such default
shall not be a Default, but instead to the extent that any material title defect
exists with respect to any Mortgaged Property after the 90-day period has
elapsed, such Mortgaged Property shall not be included within the calculation of
Present Value for purposes of Section 9.12 until such time as the Borrower
becomes in compliance with the requirement to provide acceptable title
information on such Property.
Section 8.14. Additional Collateral; Additional Guarantors.
(a) In connection with the delivery of each Reserve Report, the
Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(f)(v)) to confirm that the list of
Mortgaged Properties and the list of proven Oil and Gas Properties evaluated in
the most recently completed Reserve Report after giving effect to exploration
and production activities, acquisitions, dispositions and production are
identical. The Borrower shall, and Endeavour International shall cause its
Subsidiaries (other than the Exempted Subsidiary) to, grant to the Security
Trustee as security for the Indebtedness, a valid second-priority, perfected
Lien (subject only to Liens permitted by Section 9.03(a) (but only to the extent
such Liens secure Debt permitted pursuant to Section 9.02(b)) and to Excepted
Liens) on proven
70
Oil and Gas Properties not already subject to a Lien of the Security
Instruments. All such Liens will be created and perfected by and in accordance
with the provisions of mortgages, deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Security Trustee and the Administrative Agent and
in sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In order to comply with the foregoing, if
any Subsidiary places a Lien, other than an Excepted Lien, on its Oil and Gas
Properties and such Subsidiary is not a Guarantor, then it shall become a
Guarantor and comply with Section 8.14(b).
(b) Endeavour International shall promptly cause each Person that
shall from time to time become a Subsidiary (other than the Exempted Subsidiary)
to guarantee the Indebtedness pursuant to the Guarantee (including the execution
of a Guarantee Supplement). In connection with the making of such guarantee,
Endeavour International shall, or shall cause such Subsidiary to, (i) execute
and deliver (x) a security agreement supplement (in the form attached to the
Security Agreement as Exhibit D thereto), and (x) a debenture under the laws of
England and Wales (or a similar agreement under the applicable law of such
Subsidiary's jurisdiction), in each case as may be required by the
Administrative Agent or the Security Trustee; (ii) pledge all of the Equity
Interests of such Subsidiary (including, without limitation, delivery of
original stock certificates evidencing any certificated Equity Interests of such
Subsidiary, together with an appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof) in any other
Subsidiary; and (iii) execute and deliver such other additional closing
documents, certificates and legal opinions as shall reasonably be requested by
the Administrative Agent or the Security Trustee.
(c) Subject to the terms of the Intercreditor Agreement and
contemporaneously with the granting of any Lien on any Property to or for the
benefit of any agent or lender under the First Lien Credit Agreement, the
Borrower or applicable Credit Party shall grant to the Security Trustee a Lien
interest (subject only to Excepted Liens and Liens permitted by Section 9.03(a))
on such Property for the benefit of the Lenders to secure the Indebtedness. All
such Liens will be created and perfected by and in accordance with the
provisions of the applicable Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and the Security Trustee and
in a sufficient number of executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes. In order to comply with the
foregoing, if any Subsidiary places such a Lien on its Oil and Gas Properties
and such Subsidiary is not a Guarantor, then it shall become a Guarantor and
comply with Section 8.14(b).
Section 8.15. ERISA Compliance. Endeavour International will
promptly furnish and will cause its Subsidiaries and any ERISA Affiliate to
promptly furnish to the Administrative Agent (a) immediately upon becoming aware
of the occurrence of any ERISA Event or of any "prohibited transaction," as
described in Section 406 of ERISA or in Section 4975 of the Code that could
reasonably be expected to have a Material Adverse Effect, in connection with any
Plan or any trust created thereunder, a written notice signed by the President
or the principal Financial Officer, the Subsidiary or the ERISA Affiliate, as
the case may be, specifying the nature thereof, what action Endeavour
International, the Subsidiary or the ERISA Affiliate is taking or proposes to
take with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
71
thereto, and (b) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan.
Section 8.16. Hedging Arrangements.
(a) As soon as practicable, but in no event later than 5 Business Days
after the Effective Date, the Borrower and/or its Subsidiaries shall enter into
commodity price xxxxxx establishing minimum fixed prices reasonably acceptable
to the Administrative Agent on a volume of Hydrocarbons equal to not less than
64% of the projected production from proven, developed, producing Oil and Gas
Properties of the Borrower and its Subsidiaries for the five year period after
January 1, 2007 with one or more Approved Counterparties.
(b) Thereafter, (x) each such Credit Party shall maintain in effect,
and shall cause its Subsidiaries to maintain in effect, Swap Agreements with one
or more Approved Counterparties that establish minimum fixed prices reasonably
acceptable to the Administrative Agent on a volume of Hydrocarbons equal to not
less than 60% of projected production from proven, developed, producing Oil and
Gas Properties of the Borrower and its Subsidiaries for the succeeding twelve
calendar months on a rolling twelve calendar month basis, and (y) such Credit
Party shall not, and shall not suffer its Subsidiaries to, enter from time to
time, into Swap Agreements that establish minimum fixed prices on a volume of
Hydrocarbons greater than 75% of projected production from proved, developed,
producing Oil and Gas Properties of the Borrower and its Subsidiaries for the
succeeding twelve calendar months on a rolling twelve-calendar-month basis;
provided in each case that (i) the Borrower and each other Credit Party may
proportionally reduce its hedge position through the termination or unwinding of
Swap Agreements in connection with the sale of Oil and Gas Properties pursuant
to Section 9.12 such that the Borrower's hedge position following such sale of
Oil and Gas Properties and corresponding reduction in hedge position shall cover
a substantially similar percentage of the total volume of Hydrocarbons produced
by the Borrower for the applicable periods as did the Borrower's hedge position
prior to the sale of such Oil and Gas Properties and corresponding reduction in
hedge position, and (ii) if as a result of any sale of Oil and Gas Properties
pursuant to Section 9.12 the notional volumes of all Swap Agreements of the
Borrower in respect of commodities or basis swaps relating to such commodities
exceeds 100% of the reasonably anticipated projected production from proven,
developed, producing Oil and Gas Properties for the succeeding twelve calendar
months following such sale, the Borrower shall reduce its hedge position through
the novation, termination or unwinding of Swap Agreements or otherwise such that
the Borrower's hedge position in respect of all commodities Swap Agreements
shall not exceed 100% of the reasonably anticipated projected production from
proven, developed, producing Oil and Gas Properties for such succeeding twelve
calendar month period.
(c) Not later than the 120th day after the Effective Date, the
Borrower shall enter into, and for a minimum of 30 months thereafter maintain,
Swap Agreements acceptable to the Administrative Agent in respect of interest
rates with one or more Approved Counterparties that result in at least 50% of
the aggregate principal amount outstanding under the Facility being subject to a
fixed rate reasonably acceptable to the Administrative Agent.
Section 8.17. Marketing Activities. No Credit Party will and no
Credit Party will permit any of its Subsidiaries to, engage in marketing
activities for any Hydrocarbons
72
or enter into any contracts related thereto other than (a) contracts for the
sale of Hydrocarbons scheduled or reasonably estimated to be produced from their
proven Oil and Gas Properties during the period of such contract, (b) contracts
for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proven Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Credit Parties and
each of their respective Subsidiaries that such Credit Party or any such
Subsidiary has the right to market pursuant to joint operating agreements,
unitization agreements or other similar contracts that are usual and customary
in the oil and gas business, and (c) other contracts for the purchase and/or
sale of Hydrocarbons of third parties (i) which have generally offsetting
provisions (i.e. corresponding pricing mechanics, delivery periods and volumes)
such that no material "position" is taken and (ii) for which appropriate credit
support has been taken to alleviate the material credit risks of the
counterparty thereto
Section 8.18. Performance of Material Contracts. Each Credit
Party, at its own expense, will, and will cause each Subsidiary, as applicable,
to promptly perform and observe, in all material respects, the terms and
provisions of each Related Document and Material Contract to be performed or
observed by it, maintain each such Related Document and Material Contract in
full force and effect, enforce such Related Document and Material Contract in
accordance with its terms in all material respects, take all such action to such
end as may be from time to time requested by the Administrative Agent and, upon
request of the Administrative Agent, make to each other party to each such
Related Document or Material Contract such demands and requests for information
and reports or for action as any Credit Party or any of its Subsidiaries is
entitled to make under such Related Document or Material Contract, except in
each such case where non-performance could not be reasonably expected to result
in a Material Adverse Change.
Section 8.19. Insurance Endorsements. Endeavour International
will, and will cause each of its applicable Subsidiaries to, within 45 days of
the Effective Date, cause each insurance policy of each Credit Party to name the
Security Trustee, the Administrative Agent and the Lenders (all subject to the
terms of the Intercreditor Agreement) as "additional insureds".
Section 8.20. Talisman Accession. Endeavour International will
cause Talisman to, not later than 11:59 p.m. London time on the Effective Date:
(a) deliver to the Administrative Agent copies of (i) each of the
documents, certificates, opinions and other instruments listed in paragraphs 1,
2 and 5 of Schedule 6.01(dd) hereto, and (ii) such documents as the
Administrative Agent may reasonably require to ascertain compliance with
paragraphs 6, 7 and 8 of Schedule 6.01(dd) hereto;
(b) execute and deliver to the Security Trustee (with a copy to the
Administrative Agent) (i) the documents listed in paragraph 3 of Schedule
6.01(dd) hereto, (ii) an agreement evidencing Talisman's accession to the
Intercreditor Agreement, and (iii) a security agreement supplement (in the form
attached to the Security Agreement as Exhibit D), in each case dated as of the
Effective Date; and
(c) execute and deliver to the Administrative Agent a Guarantee
Supplement, dated as of the Effective Date.
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ARTICLE IX
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full, the Borrower and each
other Credit Party (as the case may be) hereby covenant and agree with the
Lenders that:
Section 9.01. Financial Covenants.
(a) Maximum Total Leverage Ratio. Endeavour International and the
other Credit Parties will not permit the Total Leverage Ratio at the end of any
fiscal quarter to be greater than the amount set forth below for each fiscal
quarter in each Fiscal Year as set forth below:
Quarters ending in Fiscal Year Ratio
------------------------------ ------------
2006 and 2007 2.75 : 1.00
2008 2.375 : 1.00
2009 2.00 : 1.00
2010 1.75 : 1.00
2011 1.50 : 1.00
(b) Interest Coverage Ratio. Endeavour International and the other
Credit Parties will not permit the Interest Coverage Ratio at the end of any
fiscal quarter to be less than 3.0 : 1.0.
(c) Reserve Total Debt Coverage Ratio. Endeavour International and the
other Credit Parties will not permit the Reserve Total Debt Coverage Ratio at
the end of any fiscal quarter to be less than the ratio set forth below for such
fiscal quarter:
Quarters ending in Fiscal Year Ratio
------------------------------ ------------
Fiscal Year
2006 0.75 : 1.00
Thereafter 1.00 : 1.00
(d) Reserve Secured Debt Coverage Ratio. Endeavour International and
the other Credit Parties will not permit the Reserve Secured Debt Coverage Ratio
at the end of any fiscal quarter to be less than the ratio set forth below for
such fiscal quarter:
Quarters ending in Fiscal Year Ratio
------------------------------ ------------
Fiscal Year
2006 1.15 : 1.00
2007 and 2008 1.25 : 1.00
Thereafter 1.50 : 1.00
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Section 9.02. Debt. Each Credit Party will not, and will not
permit any Subsidiary to, incur, create, assume or permit to exist any Debt,
except:
(a) The Notes or other Indebtedness arising under the Loan Documents.
(b) Debt incurred under and in compliance with the First Lien Credit
Agreement (such Debt not to exceed a total aggregate amount outstanding at any
time of $250,000,000), and any guarantees thereof by any of the Guarantors.
(c) Debt incurred for purchase money indebtedness, Capital Leases,
Synthetic Leases and other Debt incurred in the ordinary course of business for
the purchase of equipment, computers, furniture, automobiles and similar
incidentals (and not for working capital or acquisitions of drilling rigs) in an
aggregate principal amount for all Credit Parties not to exceed US$20,000,000 at
any time.
(d) Debt associated with worker's compensation claims, performance,
bid, surety or similar bonds or surety Obligations required by Governmental
Requirements or by third parties in the ordinary course of business in
connection with the operation of its Properties.
(e) Intercompany Debt between Credit Parties, only if such Debt is
pledged to the Security Trustee under the Security Instruments.
(f) Endorsements of negotiable instruments for collection in the
ordinary course of business.
(g) Refinancings of the First Lien Facilities so long as the aggregate
total of such refinancings is no greater than the amount outstanding under the
First Lien Facilities immediately prior to such refinancing, plus the reasonable
costs and expenses of such refinancing.
(h) The Convertible Senior Notes.
(i) Amounts issued as Permitted Preferred Stock.
(j) Swap Agreements entered into in accordance with Section 9.18
hereof.
(k) Unsecured Debt not to exceed US$5,000,000 at any time outstanding.
Section 9.03. Liens. Each Credit Party will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any of its Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens securing Debt permitted by Section 9.02(c), provided that
(i) such Liens do not at any time encumber any Property other than the Property
financed by such Debt and
75
(ii) the Debt secured thereby does not exceed the cost of the Property being
acquired on the date of acquisition.
(d) Liens on Property not constituting Collateral and not otherwise
permitted by the foregoing clauses of this Section 9.03; provided that the
aggregate principal or face amount of all Debt secured under this Section
9.03(d) for all Credit Parties shall not exceed US$1,000,000 in the aggregate at
any time.
(e) Liens on cash or cash equivalents pledged to secure Obligations
under any Swap Agreement permitted by Section 9.18 in an aggregate amount for
all Credit Parties at any time not to exceed US$2,500,000.
(f) Other Liens securing Debt outstanding in an aggregate amount not
to exceed US$2,500,000 at any time outstanding.
Section 9.04. Restricted Payments; Redemptions. Each Credit Party
will not, and will not permit any of its Subsidiaries to, declare or make,
directly or indirectly, any Restricted Payment (including pursuant to any
Synthetic Purchase Agreement), return any capital to its stockholders, members
or partners or make any distribution of their Property to their Equity Interest
holders (which, for the avoidance of doubt, shall include holders of the
Permitted Preferred Stock), except (i) the Borrower may declare and pay
dividends with respect to its Equity Interests payable solely in additional
shares of its Equity Interests (other than Disqualified Capital Stock); (ii)
Subsidiaries of Credit Parties may declare and pay dividends ratably with
respect to their Equity Interests; and (iii) so long as no Default shall have
occurred and be continuing or would result therefrom, each Credit Party may
repurchase its Equity Interests owned by employees of such Credit Party or its
Subsidiaries or make payments to employees of such Credit Party or its
Subsidiaries upon termination of employment in connection with the exercise of
stock options, stock appreciation rights or similar equity incentives or equity
based incentives pursuant to management incentive plans or in connection with
the death or disability of such employees in an aggregate amount not to exceed
US$1,000,000 for all Credit Parties in any Fiscal Year.
(b) Each Credit Party will not, and will not permit any of its
Subsidiaries to, permit any waiver, supplement, modification, amendment,
termination or release of (i) any indenture, instrument or agreement pursuant to
which any Material Indebtedness of the Credit Parties or their respective
Subsidiaries is outstanding, if the effect of such waiver, supplement,
modification, amendment, termination or release would materially increase the
Obligations of the obligor or confer additional material rights on the holder of
such Debt, in a manner adverse to any Credit Party, any other Subsidiary or the
Lenders; provided that the foregoing will not prohibit any waiver, supplement,
modification or amendment of the First Lien Loan Documents expressly permitted
by the Intercreditor Agreement, and (ii) except to effect a transaction
permitted by Section 9.11, its certificate or articles of incorporation,
by-laws, operating, management or partnership agreement or other organizational
documents to the extent such waiver, supplement, modification, amendment,
termination or release would be adverse to the Lenders in any material respect.
(c) Each Credit Party will not, and will not permit any of its
Subsidiaries to, (i) make any distribution, whether in cash, property,
securities or a combination thereof, other than
76
periodic dividends in the form of equity interests in Endeavour International as
contemplated by the Certificate of Designation, (ii) pay, or offer or commit to
pay, or directly or indirectly (including pursuant to any Synthetic Purchase
Agreement) Redeem any Debt (other than the Loans), other than regular scheduled
payments of principal and interest as and when due (to the extent not prohibited
by applicable subordination provisions), or (iii) pay in cash any amount in
respect of any Debt or preferred Equity Interests that may at the obligor's
option be paid in kind or in other securities, provided, however, that this
paragraph (c) shall not prohibit (x) mandatory prepayments of Debt under Clause
9 of the First Lien Credit Agreement (or any successor section thereof pursuant
to which mandatory prepayments of Debt thereunder are required to be made) in
amounts required under, and in accordance with, the First Lien Credit Agreement,
and (y) optional prepayments of Debt under the First Lien Credit Agreement in
accordance with the terms thereof and the Intercreditor Agreement and not in a
manner inconsistent with the requirements of Section 3.04(c) hereof.
Section 9.05. Investments, Loans and Advances. Each Credit Party
will not, and will not permit any of its Subsidiaries to, make or permit to
remain outstanding following the consummation of the Transactions any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
(a) Investments which are described on Schedule 9.05.
(b) accounts receivable arising in the ordinary course of business.
(c) Permitted Investments.
(d) Investments in the form of Loans or of advances creating
Indebtedness (i) made by a Credit Party in or to any other Credit Party, and
(ii) made by any other Subsidiary in or to any Credit Party or any of its own
Subsidiaries.
(e) subject to the limits in Section 9.06, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems related thereto (or in Equity Interests of any Person owning such
Properties or otherwise engaged in the oil and gas business; provided that, (i)
any such Investment shall be of 100% of the Equity Interests of such Person such
that such Person becomes a Wholly-Owned Subsidiary of such Credit Party, and
(ii) such Investment is made in compliance with Section 8.14) or related to
farm-out, farm-in, joint operating, joint venture or area of mutual interest
agreements, gathering systems, pipelines or other similar arrangements which are
usual and customary in the oil and gas exploration and production business
located within the geographic boundaries of the Irish, United Kingdom,
Netherlands, German, Danish, or Norwegian sectors of the North Sea region;
provided that (A) such Credit Party shall be in compliance, on a pro forma basis
after giving effect to any such Investment, with the financial covenants set
forth in Section 9.01 recomputed as at the last day of the most recently ended
fiscal quarter of such Credit Party for which financial statements are
available, (B) no Default shall have occurred and be continuing or would result
therefrom, (C) after giving effect to such Investment, the sum of (I) such
Credit Party's and its Subsidiaries' Unrestricted Cash and Cash Equivalents on
hand plus (II) the Aggregate Commitments less the Total Relevant Outstandings,
shall not be less than US$20,000,000 and (D) the aggregate principal amount of
all Investments made pursuant to this paragraph (e) shall not exceed
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US$20,000,000 in any Fiscal Year and US$60,000,000 in the aggregate; provided
that such Credit Party shall have delivered to the Administrative Agent a
certificate of a Financial Officer of such Credit Party certifying as to the
foregoing and containing reasonably detailed calculations in support thereof in
form and substance satisfactory to the Administrative Agent.
(f) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
or other amounts owing to any Credit Party or its Subsidiaries as a result of a
bankruptcy or other insolvency proceeding of the obligor in respect of such
debts or upon the enforcement of any Lien in favor of such Credit Party or its
Subsidiaries; provided that such Credit Party shall give the Administrative
Agent prompt written notice in the event that the aggregate amount of all
Investments held at any one time under this Section 9.05(f) exceeds
US$1,000,000.
(g) each Credit Party may make loans and advances in the ordinary
course of business to their respective employees so long as the aggregate
principal amount thereof for all Credit Parties at any time outstanding
(determined without regard to any write-downs or write-offs of such loans and
advances) shall not exceed US$2,000,000.
(h) other Investments (including Investments in Subsidiaries that are
not Guarantors) not to exceed US$5,000,000 in the aggregate at any time
(determined without regard to any write-downs or write-offs of such
Investments).
Section 9.06. Nature of Business. Each Credit Party will not, and
will not permit any of its Subsidiaries to, allow any material change to be made
in the general nature of its business as currently conducted by it and business
activities reasonably incidental thereto. From and after the date hereof, no
Credit Party nor any of its Subsidiaries will acquire or make any other
expenditure (whether such expenditure is capital, operating or otherwise) in
excess of US$2,500,000 per Fiscal Year in or related to, any Oil and Gas
Properties not located within the Irish, United Kingdom, Netherlands, German,
Danish, or Norwegian sectors of the North Sea region.
Section 9.07. Limitation on Leases. The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal), under leases or lease agreements (excluding Capital Leases,
Synthetic Leases, leases of Hydrocarbon Interests, and leases of compressor
equipment) which would cause the aggregate amount of all payments made by the
Credit Parties and each of their respective Subsidiaries pursuant to all such
leases or lease agreements, including, without limitation, any residual payments
at the end of any lease, to exceed US$2,500,000 in any period of twelve
consecutive calendar months during the life of such leases.
Section 9.08. Proceeds of Loans. The Borrower will not permit the
proceeds of the Loans to be used for any purpose other than those permitted by
Section 7.18. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be
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in effect. If requested by the Administrative Agent (which request may be made
at the direction of a Lender), the Borrower will furnish to the Administrative
Agent (and the Administrative Agent may further distribute to the Lenders), a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 or such other form referred to in Regulation U, Regulation T or Regulation X
of the Board, as the case may be.
Section 9.09. ERISA Compliance. The Borrower will not, and will
not permit any Subsidiary to, at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which such Credit Party, a Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code that could reasonably be expected to result
in liability to the Borrower, a Subsidiary and/or an ERISA Affiliate in excess
of US$5,000,000.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in
a manner, or take any other action with respect to any Plan, which could result
in any liability of such Credit Party, a Subsidiary or any ERISA Affiliate to
the PBGC that could reasonably be expected to result in liability to the
Borrower, a Subsidiary and/or an ERISA Affiliate in excess of US$5,000,000.
Section 9.10. Sale or Discount of Receivables. Each Credit Party
will not, and will not permit any of its Subsidiaries to, discount or sell (with
or without recourse) any of its notes receivable or accounts receivable.
Section 9.11. Mergers, Etc. Except for Permitted Transactions,
each Credit Party will not, and will not permit any of its Subsidiaries to,
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property (whether now owned or hereafter
acquired) to any other Person; provided that if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing (a) any Wholly-Owned Subsidiary may merge into any Credit Party in a
transaction in which such Credit Party is the surviving corporation, (b) any
Wholly-Owned Subsidiary may merge into or consolidate with any other
Wholly-Owned Subsidiary in a transaction in which the surviving entity is a
Wholly-Owned Subsidiary and no Person other than a Credit Party or a
Wholly-Owned Subsidiary receives any consideration (provided that if any party
to any such transaction is a Guarantor, the surviving entity of such transaction
shall be a Guarantor) and (c) such Credit Party and any of its Subsidiaries may
effect a merger or consolidation in order to effect the Acquisition, the
Transactions, and any acquisition permitted by, and in accordance with, Section
9.05(e).
Section 9.12. Sale of Properties. Each Credit Party will not, and
will not permit any Subsidiary to, make an Asset Sale or farm-out any Property
except (a) with respect to Asset Sales other than Casualty Events, where cash
payment at least equal to the Fair Market Value of the asset sold is received
contemporaneously with such Asset Sale; and (b) for (i) sales or other
dispositions (including Casualty Events) of Oil and Gas Properties or interests
therein or Subsidiaries owning Oil and Gas Properties to which there were no
reserves attributed in the
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Reserve Report most recently delivered to the Lenders, (ii) the sale or transfer
of equipment that is no longer necessary for the business of such Credit Party
or such Subsidiary or is replaced by equipment of at least comparable value and
use, and (iii) sales or other dispositions (including Casualty Events) of Oil
and Gas Properties (other than those Oil & Gas Properties described in clause
(a) above) or any interest therein or Subsidiaries owning Oil and Gas Properties
(other than those Oil & Gas Properties described in clause (i) above); provided
that, with respect to any sale or other disposition pursuant to this clause
(iii), (A) such Asset Sales may be made if the Net Cash Proceeds thereof are
used to repay Debt under the First Lien Credit Agreement to the extent payments
are required due to a reduction in the borrowing base thereunder (and such
payments shall no longer be required once prepayments under the First Lien
Credit Agreement shall have reduced the outstandings thereunder to no more than
75% of the then-current Borrowing Base of each tranche of the First Lien
Facilities), and (B) except as provided in clause (A) above, the present value
of all such Oil and Gas Properties sold during a given Fiscal Year shall not
exceed 10% of the Proven Present Value of the Oil and Gas Properties of such
Credit Party and its Subsidiaries; provided, further that, if any such sale or
other disposition is of a Subsidiary owning Oil and Gas Properties, such sale or
other disposition shall include all the Equity Interests of any such Subsidiary.
Section 9.13. Environmental Matters. Each Credit Party will not,
and will not permit any of its Subsidiaries to, cause or permit any of its
Property or operations to be in violation of, or do anything or permit anything
to be done which will subject any such Property or operations to any Remedial
Work under any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if
any, pertaining to such Property or operations where such violations or Remedial
Work could reasonably be expected to result in a Material Adverse Change.
Section 9.14. Transactions with Affiliates. Each Credit Party
will not, and will not permit any of its Subsidiaries to, enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than other Guarantors and the Borrower) unless such transactions are otherwise
permitted under this Agreement and are upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm's length transaction
with a Person not an Affiliate.
Section 9.15. Subsidiaries. Each Credit Party will not, and will
not permit any of its Subsidiaries to, create or acquire any additional
Subsidiary unless such Credit Party gives written notice to the Administrative
Agent and the Security Trustee of such creation or acquisition and complies with
Section 8.14(b), (b) each Credit Party will not, and will not permit any of its
Subsidiaries to, sell, assign or otherwise dispose of any Equity Interests in
any Subsidiary except in compliance with Section 9.12(c), and (c) each Credit
Party will not permit any of its Subsidiaries to issue any Equity Interests
except to the Borrower or a Guarantor and only in compliance with Section 9.05.
Section 9.16. Negative Pledge Agreements; Dividend Restrictions.
Other than with respect to the terms of the First Lien Credit Agreement and the
Intercreditor Agreement, each Credit Party will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any contract,
agreement or understanding which in any way
80
prohibits or restricts the granting, conveying, creation or imposition of any
Lien on any of its Property in favor of the Security Trustee and the Lenders or
restricts any Subsidiary from paying dividends or making distributions to such
Credit Party or making or repaying loans or advances to any Credit Party or
guaranteeing any Debt of any Credit Party or its Subsidiaries (other than Swap
Agreements permitted hereunder (but only to the extent such contain an
enforceable restriction of such Person's ability to assign or transfer its
rights thereunder) and other than Capital Leases, Synthetic Leases or other
agreements creating Liens permitted by Sections 9.03(c), (d) or (e) if such
restrictions or conditions apply only to the Property subject to the Lien
permitted by such Sections 9.03(c), (d) or (e)).
Section 9.17. Take-or-Pay or Other Prepayments. Except as set
forth on Schedule 7.17, each Credit Party will not, and will not permit any of
its Subsidiaries to, allow take-or-pay or other prepayments with respect to the
Oil and Gas Properties of such Credit Party or its Subsidiaries that would
require such Credit Party or such Subsidiary to deliver Hydrocarbons at some
future time without then or thereafter receiving full payment therefor.
Section 9.18. Swap Agreements. Endeavour International will not,
and will not permit any of its Subsidiaries to, enter into any Swap Agreements
with any Person other than (a) Swap Agreements required or permitted pursuant to
Section 8.16; and (b) Swap Agreements in respect of interest rates with an
Approved Counterparty, as follows: (i) Swap Agreements effectively converting
interest rates from fixed to floating, the notional amounts of which (when
aggregated with all other Swap Agreements of the Borrower and its Subsidiaries
then in effect effectively converting interest rates from fixed to floating) do
not exceed 50% of the then outstanding principal amount of the Borrower's Debt
for borrowed money which bears interest at a fixed rate (after netting out any
Swap Agreements then in effect effectively converting interest rates from
floating to fixed) and (ii) Swap Agreements effectively converting interest
rates from floating to fixed, the notional amounts of which (when aggregated
with all other Swap Agreements of the Borrower and its Subsidiaries then in
effect effectively converting interest rates from floating to fixed) do not
exceed 75% of the then outstanding principal amount of the Borrower's Debt for
borrowed money which bears interest at a floating rate (after netting out any
Swap Agreements then in effect effectively converting interest rates from fixed
to floating).
Section 9.19. Amendment, Etc., of Related Documents and Material
Contracts. Each Credit Party will not, and will not permit any of its
Subsidiaries to cancel, assign or terminate any Related Document or Material
Contract or consent to or accept any cancellation, assignment or termination
thereof, amend, modify or change in any manner any term or condition of any
Related Document or Material Contract or give any consent, waiver or approval
thereunder, waive any default under or any breach of any term or condition of
any Related Document or Material Contract, agree in any manner to any other
amendment, modification or change of any term or condition of any Related
Document or Material Contract, or permit any of its Subsidiaries to do any of
the foregoing, except, in each case, to the extent such actions are taken in the
ordinary course of business or relate to administrative matters and which, in
any event, could not reasonably be expected to result in a Material Adverse
Change.
Section 9.20. Capital Expenditures. (a) Endeavour International
will not, and it will not permit any of its Subsidiaries to make (i) aggregate
total Capital Expenditures
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(which shall include all Exploration Capital Expenditures), or (ii) Exploration
Capital Expenditures, as the case may be, in excess of the respective limits set
for such activities in any Fiscal Year (which limits shall apply to Endeavour
International and its Subsidiaries on a consolidated basis), as set forth in the
table below, plus any amount available for such activities under subsection (b)
of this Section 9.20 for such Fiscal Year.
ANNUAL EXPLORATION
ANNUAL CAPITAL CAPITAL
FISCAL YEAR EXPENDITURE LIMIT EXPENDITURE LIMIT
----------- ----------------- ------------------
2006 $ 20,000,000 $15,000,000
2007 $ 95,000,000 $50,000,000
2008 $140,000,000 $50,000,000
2009 $ 65,000,000 $50,000,000
2010 $ 60,000,000 $50,000,000
2011 $ 60,000,000 $50,000,000
(b) In addition to the limits set forth in clause (a) above, Endeavour
International and its Subsidiaries may apply any Cumulative Retained Excess Cash
Flow Amounts to Capital Expenditures of any kind (including, without limitation,
to Exploration Capital Expenditures), and such expenditures shall not serve to
reduce the amount of Excess Cash Flow in any calculation thereof.
Section 9.21. Sale and Lease-Back Transactions. Each Credit Party
will not, and will not permit any of its Subsidiaries to, enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any Property used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such Property or other Property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
Section 9.22. Anti-Layering. Notwithstanding any other provision
hereof, each Credit Party will not, and will not permit any of its Subsidiaries
to, (a) incur, create, issue, assume, guarantee or otherwise become directly or
indirectly liable for any Debt secured by a Lien that is subordinate or junior
in priority to the Liens securing the First Lien Facilities and senior in
priority to the Liens securing the payment of any Indebtedness or (b) incur,
assume or permit to exist any Lien that is subordinate or junior in priority to
the Liens securing the First Lien Facilities and senior in priority to the Liens
securing the payment of any Indebtedness.
Section 9.23. Organizational Documents; Permitted Preferred
Stock. Each Credit Party will not, and will not permit any of its Subsidiaries
to (a) materially amend, modify or otherwise change its organizational
documents, by-laws and other governing documents or (b) amend, modify or
otherwise change any documents relating to Permitted Preferred Stock.
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Section 9.24. Exempted Subsidiary. The Exempted Subsidiary will
not, and no Credit Party shall cause the Exempted Subsidiary to, acquire any
assets, either directly or by way of merger, consolidation or similar
transaction, other than assets, the ownership of which by a non-Norwegian
entity, would be prohibited by applicable law.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01. Events of Default. One or more of the following
events shall constitute an "Event of Default":
(a) The Borrower or any Guarantor shall fail to pay (i) any principal
of any Loan when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof, by acceleration or
otherwise, or (ii) any interest on any Loan or any fee or any other amount
(other than an amount referred to in Section 10.01(a)) payable under any Loan
Document, when and as the same shall become due and payable, unless, in the case
of payments under clause (ii) above, such failure to pay is (x) caused by
technical or administrative errors or a Disruption Event, and (y) is remedied
within five Business Days of the applicable due date.
(b) The Borrower or any Guarantor shall fail to observe or perform any
covenant, condition or agreement contained in Section 8.01(j), Section 8.02,
Section 8.03, Section 8.14(c), Section 8.15, Section 8.16(a), Section 8.16(c),
or in Article IX.
(c) The Borrower or any Guarantor shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in Section 10.01(a) or Section 10.01(b)) or any other Loan Document,
and such failure (i) shall continue unremedied for a period of 10 Business Days
after the earlier of (A) the giving of notice thereof by the Administrative
Agent or the Security Trustee to the Borrower or such Guarantor (which notice
will be given at the request of any Lender) and (B) the Borrower or the relevant
Credit Party (as the case may be) becoming aware of such failure, and (ii) is,
in the reasonable opinion of the Administrative Agent, capable of remedy.
(d) Any representation or warranty made or deemed made by or on behalf
of any Credit Party in or in connection with any Loan Document or any amendment
or modification of any Loan Document or waiver under such Loan Document, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect (without duplication of any materiality, Material Adverse
Effect, Material Adverse Change or other similar qualifier contained in any such
representation and warranty) when made or deemed made, unless the circumstances
giving rise to the misrepresentation are (i) capable of remedy, and (ii) are
remedied within 10 Business Days of the earlier of (A) the Administrative Agent
or the Security Trustee giving notice and (B) the Borrower or the relevant
Credit Party (as the case may be) becoming aware of the misrepresentation.
(e) Any of the following occurs in respect of the Borrower or any
Guarantor or any of their respective Subsidiaries:
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(i) any of its Debt is not paid when due and payable (after the
expiry of any originally applicable grace period);
(ii) any of its Indebtedness or other Debt (A) becomes
prematurely due and payable, (B) is placed on demand; or (C) is capable of being
declared by a creditor to be prematurely due and payable or being placed on
demand, in each case, as a result of an event of default (howsoever described,
and to include an exercise of a "put" option with respect to the Convertible
Senior Notes); or
(iii) any commitment for its Indebtedness is cancelled or
suspended as a result of an event of default (howsoever described),
unless the aggregate amount of Debt or Indebtedness, as the case may be, falling
within Sections 10.01(e)(i), 10.01(e)(ii) or 10.01(e)(iii), as the case may be,
is less than US$10,000,000 (or its equivalent in one or more other currencies).
(f) The Borrower or any Guarantor (i) is, or is deemed for the
purposes of any law to be, unable to pay its debts as they fall due or
insolvent; (ii) admits its inability to pay its debts as they fall due; (iii)
suspends making payments on any of its debts or announces an intention to do so;
(iv) by reason of actual or anticipated financial difficulties, begins
negotiations with any creditor for the rescheduling of any of its indebtedness;
or (v) has a moratorium declared in respect of any of its indebtedness.
(g) (i) Except as provided in Section 10.01(g)(i), any of the
following occurs in respect of the Borrower or any Guarantor (A) any step is
taken with a view to a faillissement, surseance van betaling, composition,
assignment or similar arrangement with any of its creditors; (B) a meeting of it
is convened for the purpose of considering any resolution for (or to petition
for) its winding-up, administration, or dissolution or any such resolution is
passed; (C) any person presents a petition, files an application or takes any
other analogous steps for its winding-up, administration, or dissolution; (D) an
order for its winding-up, administration, or dissolution is made; (E) any
Insolvency Officer is appointed in respect of it or any of its assets; (F) its
directors or other officers request the appointment of an Insolvency Officer;
(G) a notice under section 36 of the Tax Collection Act of The Netherlands
(Invorderingswet 1990) or section 16(d) of the Social Insurance Co-ordination
Act of The Netherlands (Coordinatiewet Sociale Verzekeringen) is filed upon any
Credit Party or any Subsidiary of a Credit Party that is incorporated or
established in The Netherlands; or (H) any other analogous step or procedure is
taken in any jurisdiction.
(ii) Section 10.01(g)(i) shall not apply to (A) any step or
procedure which is part of a Permitted Transaction; (B) a petition for
winding-up presented by a creditor which is being contested in good faith and
with due diligence and is discharged or struck out within 14 days; or (C) any
petition, action, proceeding or step which is demonstrated by the Borrower to
the reasonable satisfaction of the Administrative Agent to be frivolous,
vexatious or otherwise an abuse of process of court; provided that it is
dismissed within 60 days.
(h) Any steps are taken to enforce any security interest or realize
against any Collateral securing Debt in excess of US$5,000,000 (or its
equivalent in one or more other currencies), in aggregate, over any part of the
assets of the Borrower or any Guarantor.
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(i) Any prejudgment attachment (conservatoir Beslag), expropriation
attachment, sequestration, distress, execution, diligence or analogous event
affects any asset(s) of any Credit Party or any Subsidiary having an aggregate
value in excess of US$5,000,000 (or its equivalent in one or more other
currencies) and is not discharged within 14 days unless it is any petition,
action, proceeding or step which is demonstrated by the Borrower to the
reasonable satisfaction of the Agent to be frivolous, vexatious or otherwise an
abuse of process of court.
(j) There occurs, in relation to the Borrower or any Guarantor, any
event anywhere which, in the reasonable opinion of the Majority Lenders,
corresponds with any of those mentioned in Section 10.01(f), (g), (h) or (i).
(k) The Borrower or any Guarantor threatens to cease to carry on
business except as part of a Permitted Transaction.
(l) It is or becomes unlawful for (i) the Borrower or any Guarantor to
perform any of its material Obligations under any Project Document, or (ii) the
Borrower, any Guarantor or any Transaction Party to perform any of its payment
Obligations or other material Obligations under the Loan Documents.
(m) Any Loan Document, the guarantee of any Guarantor or any security
interest purported to be created or evidenced by any Security Instrument is not
effective or is unenforceable or is alleged by the Borrower, any Guarantor or
any Transaction Party to be ineffective or unenforceable for any reason.
(n) The Borrower, and Guarantor, or any Transaction Party repudiates a
Loan Document or evidences an intention to repudiate a Loan Document.
(o) Any direct or indirect Subsidiary of Endeavour International that
holds any interests in any Acquired Assets or Guarantor is not, or ceases to be,
a wholly-owned (directly or indirectly) Subsidiary of Endeavour International.
(p) All or any part of any Project Document is not, or ceases to be, a
legal, valid and binding obligation of any person expressed to be party to it in
circumstances which are reasonably likely to result in a Material Adverse
Change.
(q) Any party to any Project Document defaults under that Project
Document in circumstances which are reasonably likely to result in a Material
Adverse Change.
(r) All or any part of any Project Document is suspended, terminated
or revoked in circumstances which are reasonably likely to result in a Material
Adverse Change.
(s) A decision is taken to abandon an Acquired Asset unless such a
decision was taken in compliance with Clause 23.13.2 of the First Lien Credit
Agreement (with respect to a "Borrowing Base Asset" as defined in the First Lien
Credit Agreement); provided, however, that this clause (s) shall not apply to a
decision to abandon any Acquired Asset that shall then not be a "Borrowing Base
Asset" as so defined.
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(t) All or any part of the interest of the Borrower or any Guarantor
in any Acquired Asset (or any Hydrocarbons or revenues or other moneys arising
in respect of it) is nationalized, expropriated, compulsorily acquired or seized
by any government or any governmental or public sector agency, or any such
government or agency takes, or officially announces that it will take, any step
with a view to any of the foregoing and the same is reasonably likely to result
in a Material Adverse Change.
(u) Any judgment is made or award is issued against the Borrower, any
Guarantor or any of their respective Subsidiaries in relation to any litigation,
arbitration or administrative proceedings in an amount equal to or exceeding
US$10,000,000 (or its equivalent in one or more other currencies) or any
litigation, arbitration or administrative proceeding is instituted or current in
respect of the Borrower, any Guarantor or any of their respective Subsidiaries
which would be reasonably likely, if adversely determined, to result in a
Material Adverse Change.
(v) Any Authorization necessary for the ownership of any interest in,
the development or the operation of, any Acquired Asset is revoked, cancelled,
surrendered, terminated or varied and the same would be reasonably likely to
result in a Material Adverse Change.
(w) An event occurs which is reasonably likely to result in a Material
Adverse Change as compared to the position as at the date of this Agreement.
(x) Any audited financial statements delivered to the Administrative
Agent under this Agreement or the First Lien Agent under the First Lien Credit
Agreement is qualified in any material way.
(y) At any time any act, condition or thing required to be done,
fulfilled or performed (other than by the Credit Parties) in order to make each
Loan Document to which any the Borrower, any Guarantor or any Transaction Party
is a party admissible in evidence in the country in which such party is
incorporated is not done, fulfilled or performed to the extent or in a respect
such that the effect thereof is materially to impair the legality, validity or
enforceability of the Obligations of the Borrower, any Guarantor or any
Transaction Party under the Loan Documents.
(z) Any "Projection" (as defined in the First Lien Credit Agreement)
adopted pursuant to Clause 7 of the First Lien Credit Agreement demonstrates
that any Credit Party or any of their respective Subsidiaries will not be able
to discharge all their payment Obligations arising prior to the Maturity Date as
and when the same are anticipated to fall due.
(aa) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in liability of any Credit Party or any of their respective Subsidiaries
in an aggregate amount exceeding US$5,000,000.
(bb) a Change in Control shall occur.
Section 10.02. Remedies.
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(a) In the case of an Event of Default other than one described in
Section 10.01(f) or Section 10.01(g), at any time thereafter during the
continuance of such Event of Default, the Administrative Agent may, and at the
request of the Majority Lenders, shall, by notice to Endeavour International and
the Security Trustee, take either or both of the following actions, at the same
or different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Notes and the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
Obligations of the Borrower and each Guarantor accrued hereunder and under the
Notes and the other Loan Documents, shall become due and payable immediately,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Borrower and each Guarantor; and in case of an Event of Default described in
10.01(f) or Section 10.01(g), the Notes and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and the other
Obligations of the Borrower and each Guarantor accrued hereunder and under the
Notes and the other Loan Documents, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower and each Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
(c) Subject to the terms of the Intercreditor Agreement, all proceeds
realized from the liquidation or other disposition of collateral or otherwise
received after maturity of the Notes, whether by acceleration or otherwise,
shall be applied:
(i) first, to payment or reimbursement of that portion of the
Indebtedness constituting fees, expenses and indemnities payable to the
Administrative Agent in its capacity as such;
(ii) second, pro rata to payment or reimbursement of that portion
of the Indebtedness constituting fees, expenses and indemnities payable to the
Lenders;
(iii) third, pro rata to payment of accrued interest on the
Loans;
(iv) fourth, pro rata to payment of principal outstanding on the
Loans and Indebtedness referred to in clause (b) of the definition of
Indebtedness owing to the Administrative Agent, the Arranger, a Lender or an
Affiliate of the foregoing;
(v) fifth, pro rata to any other Indebtedness; and
(vi) sixth, any excess, after all of the Indebtedness shall have
been indefeasibly paid in full in cash, shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.
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ARTICLE XI
THE AGENTS
Section 11.01. Appointment; Powers. Each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
Section 11.02. Duties and Obligations of Agents. The Agents shall
have no duties or Obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) the Agents
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing (the use of the term "agent"
herein and in the other Loan Documents with reference to the Administrative
Agent is not intended to connote any fiduciary or other implied (or express)
Obligations arising under agency doctrine of any applicable law; rather, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties), (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except as provided in
Section 11.03, and (c) except as expressly set forth herein, the Administrative
Agent shall have no duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any of the Credit Parties or their
respective Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in Article VI or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent
or as to those conditions precedent expressly required to be to the
Administrative Agent's satisfaction, (vi) the existence, value, perfection or
priority of any collateral security or the financial or other condition of any
of the Credit Parties or each of their respective Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its Obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein. For
purposes of determining compliance with the conditions specified in Article VI,
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior
to the proposed closing date specifying its objection thereto.
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Section 11.03. Action by Administrative Agent. The Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 13.02), and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under
any other Loan Documents unless it shall (a) receive written instructions from
the Majority Lenders or the Lenders, as applicable, (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 13.02) specifying the action to be taken and (b) be
indemnified to its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing to take
any such action. The instructions as aforesaid and any action taken or failure
to act pursuant thereto by the Administrative Agent shall be binding on all of
the Lenders. If a Default has occurred and is continuing, then the
Administrative Agent shall take such action with respect to such Default as
shall be directed by the requisite Lenders in the written instructions (with
indemnities) described in this Section 11.03, provided that, unless and until an
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best interests of
the Lenders. In no event, however, shall the Administrative Agent be required to
take any action which exposes such Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Majority Lenders or the Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 13.02), and otherwise the Administrative
Agent shall not be liable for any action taken or not taken by it hereunder or
under any other Loan Document or under any other document or instrument referred
to or provided for herein or therein or in connection herewith or therewith
INCLUDING ITS OWN ORDINARY NEGLIGENCE, except to the extent such liability is
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted primarily from the gross negligence or willful
misconduct of the Administrative Agent.
Section 11.04. Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon and each of the Borrower and the Lenders hereby waives the right
to dispute the Administrative Agent's record of such statement. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts. The Administrative Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent.
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Section 11.05. Subagents. The Administrative Agent may perform
any and all its duties and exercise its rights and powers by or through any one
or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding Sections of this Article XI shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 11.06. Resignation or Removal of Administrative Agent.
Subject to the appointment and acceptance of a successor Agent as provided in
this Section 11.06, the Administrative Agent may resign at any time by notifying
the Lenders and the Borrower, and the Administrative Agent may be removed at any
time with or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right, subject to the approval of
the Borrower (not to be unreasonably withheld or delayed), to appoint a
successor; provided that, the consent of the Borrower shall not be required if
an Event of Default has occurred and is continuing. If no successor shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation or removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and Obligations hereunder. The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the Agent's
resignation hereunder, the provisions of this Article XI and Section 13.03 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.
Section 11.07. Agents as Lenders. Each bank serving as an Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any of the Credit Parties or their
respective Subsidiaries or other Affiliate thereof as if it were not an Agent
hereunder.
Section 11.08. No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document, any
related agreement or any document furnished hereunder or thereunder. The Agent
shall not be required to keep themselves informed as to the performance or
observance by the Credit Parties or their
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respective Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent or the Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates.
Section 11.09. Administrative Agent May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any of the Credit Parties or their respective
Subsidiaries, the Administrative Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 13.03) allowed in such judicial proceeding;
and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 13.03.
Nothing contained herein shall be deemed to authorize an Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 11.10. Authority of Administrative Agent to Release
Collateral and Liens. Each Lender hereby authorizes the Administrative Agent and
the Security Trustee to release any collateral that is permitted to be sold or
released pursuant to the terms of the Loan Documents. Each Lender hereby
authorizes the Administrative Agent to execute and deliver to the Security
Trustee or the Borrower, at the Borrower's sole cost and expense, any and all
releases of Liens, termination statements, assignments or other documents
reasonably requested by the Borrower or the Security Trustee, as the case may
be, in connection
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with any sale or other disposition of Property to the extent such sale or other
disposition is permitted by the terms of Section 9.12 or is otherwise authorized
by the terms of the Loan Documents.
Section 11.11. The Arranger. The Arranger shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
ARTICLE XII
GUARANTEE
Section 12.01. Guarantee; Limitation of Liability.
(a) Each Guarantor, jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of each other Credit Party
now or hereafter existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or any other Finance Party in enforcing any rights
under this Guarantee or any other Loan Document. Without limiting the generality
of the foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Credit Party to any Finance Party under or in respect of the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such other
Credit Party.
(b) Each Guarantor, and by its acceptance of this Guarantee, the
Administrative Agent and each other Finance Party, hereby confirms that it is
the intention of all such Persons that this Guarantee and the Obligations of
each Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guarantee and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, each other Finance Party and each Guarantor hereby
irrevocably agree that the Obligations of each Guarantor under this Guarantee at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guarantee not constituting a fraudulent
transfer or conveyance. For purposes hereof, "Bankruptcy Law" means any
proceeding of the type referred to in Section 11.09 of this Agreement or Title
11, U.S. Code, or any similar foreign, federal or state law for the relief of
debtors.
(c) Each Guarantor hereby unconditionally and irrevocably agrees
that in the event any payment shall be required to be made to any Finance Party
under this Guarantee or any other guarantee, such Guarantor will contribute, to
the maximum extent permitted by law, such amounts
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to each other Guarantor so as to maximize the aggregate amount paid to the
Finance Parties under or in respect of the Loan Documents.
Section 12.02. Guarantee Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of any
Finance Party with respect thereto. The Obligations of each Guarantor under or
in respect of this Guarantee are independent of the Guaranteed Obligations, or
any other Obligations, of any other Credit Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guarantee, irrespective of whether any
action is brought against any Credit Party or any of such Credit Party's
Subsidiaries or whether any Credit Party or any of such Credit Party's
Subsidiaries is joined in any such action or actions. The liability of each
Guarantor under this Guarantee shall be irrevocable, absolute and unconditional,
and each Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Credit Party under or in respect of the Loan Documents, or any
other amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Credit Party or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of, or
consent to departure from, any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral or any other collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner
of sale or other disposition of any Collateral or any other collateral for all
or any of the Guaranteed Obligations or any other Obligations of any Credit
Party under the Loan Documents or any other assets of any Credit Party or any of
its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Credit Party or any of its Subsidiaries;
(f) any failure of any Finance Party to disclose to any Credit Party
any information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party now
or hereafter known to such Finance Party (each Guarantor waiving any duty on the
part of the Finance Parties to disclose such information);
(g) the failure of any other Person to execute or deliver this
Guarantee, any Guarantee Supplement (as hereinafter defined) or any other
guarantee or agreement or the release
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or reduction of liability of any Guarantor or other guarantor or surety with
respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by any
Finance Party that might otherwise constitute a defense available to, or a
discharge of, any Credit Party or any other guarantor or surety.
This Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Finance Party or any other Person upon the
insolvency, bankruptcy or reorganization of any Credit Party or any of such
Credit Party's Subsidiaries or otherwise, all as though such payment had not
been made.
Section 12.03. Waivers and Acknowledgments.
(a) Each Guarantor hereby unconditionally and irrevocably waives
promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guarantee and any requirement that any Finance Party protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Credit Party or any other Person or any
Collateral.
(b) Each Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guarantee and acknowledges that this Guarantee is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
(c) Each Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Finance Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such
Guarantor to proceed against any of the other Credit Parties, any other
guarantor or any other Person or any Collateral and (ii) any defense based on
any right of set-off or counterclaim against or in respect of the Obligations of
such Guarantor hereunder.
(d) Each Guarantor acknowledges that the Security Trustee may, without
notice to or demand upon such Guarantor and without affecting the liability of
such Guarantor under this Guarantee, foreclose under any mortgage by nonjudicial
sale, and each Guarantor hereby waives any defense to the recovery by the
Security Trustee and the other Finance Parties against such Guarantor of any
deficiency after such nonjudicial sale and any defense or benefits that may be
afforded by applicable law or any statute or law in any other jurisdiction
having similar effect.
(e) Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Finance Party to disclose to such Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party or
any of its Subsidiaries now or hereafter known by such Finance Party.
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(f) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in 12.02 and this Section 12.03
are knowingly made in contemplation of such benefits.
Section 12.04. Subrogation. Each Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against the Borrower, any other Guarantor or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's Obligations under or in respect of this Guarantee or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Finance Party against the Borrower,
any other Credit Party or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower, any other Credit Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guarantee or in respect of any Indebtedness shall have been paid in full in
cash, all Letters of Credit, the First Lien Facilities and all secured Swap
Agreements shall have expired or been terminated and the Commitments shall have
expired or been terminated. If any amount shall be paid to any Guarantor in
violation of the immediately preceding sentence at any time prior to the latest
of (a) the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guarantee, and (b) the Maturity, such amount shall be
received and held in trust for the benefit of the Finance Parties, shall be
segregated from other property and funds of such Guarantor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guarantee,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guarantee thereafter arising. If (i) any Guarantor
shall make payment to any Finance Party of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guarantee shall have been paid in full in cash, and (iii) the
Maturity Date shall have occurred, the Finance Parties will, at such Guarantor's
request and expense, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment made by such Guarantor
pursuant to this Guarantee.
Section 12.05. Payments Free and Clear of Taxes, Etc.
(a) Any and all payments made by any Guarantor under or in respect of
this Guarantee or any other Loan Document shall be made, in accordance with
Section 5.03, free and clear of and without deduction for any and all present or
future Taxes. If any Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable under or in respect of this Guarantee or any
other Loan Document to any Finance Party, (i) the sum payable by such Guarantor
shall be increased as may be necessary so that after such Guarantor and the
Administrative Agent have made all required deductions (including deductions
applicable to
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additional sums payable under this Section 12.05, such Finance Party receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Guarantor shall make all such deductions and (iii) such Guarantor
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, each Guarantor agrees to pay any present or future
Other Taxes that arise from any payment made by or on behalf of such Guarantor
under or in respect of this Guarantee or any other Loan Document or from the
execution, delivery or registration of, performance under, or otherwise with
respect to, this Guarantee and the other Loan Documents.
(c) Each Guarantor will indemnify each Finance Party for and hold it
harmless against the full amount of Taxes and Other Taxes, and for the full
amount of taxes of any kind imposed by any jurisdiction on amounts payable under
this Section 12.05, imposed on or paid by such Finance Party and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date such Finance Party makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by or on
behalf of any Guarantor, such Guarantor shall furnish to the Administrative
Agent, at its address referred to in Section 13.01, the original or a certified
copy of a receipt evidencing such payment. In the case of any payment hereunder
by or on behalf of any Guarantor through an account or branch outside the United
States or by or on behalf of such Guarantor by a payor that is not a United
States person, if such Guarantor determines that no Taxes are payable in respect
thereof, such Guarantor shall furnish, or shall cause such payor to furnish, to
the Administrative Agent, at such address, an opinion of counsel acceptable to
the Administrative Agent stating that such payment is exempt from Taxes. For
purposes of subsections (d) and (e) of this Section 12.05, the terms "United
States" and "United States person" shall have the meanings specified in Section
7701 of the Internal Revenue Code.
(e) Upon the reasonable request in writing of any Guarantor, each
Finance Party organized under the laws of a jurisdiction outside the United
States shall, on or prior to the date of its execution and delivery of the
Credit Agreement in the case of each initial Lender and on or prior to the date
of the Assignment and Acceptance pursuant to which it becomes a Finance Party in
the case of each other Finance Party, and from time to time thereafter upon the
reasonable request in writing by any Guarantor (but only so long thereafter as
such Finance Party remains lawfully able to do so), provide each of the
Administrative Agent and such Guarantor with two original Internal Revenue
Service forms 1001 or 4224 or (in the case of a Finance Party that has certified
in writing to the Administrative Agent that it is not a "bank" as defined in
Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such
Finance Party delivers a form W-8, a certificate representing that such Finance
Party is not a "bank" for purposes of Section 881(c) of the Internal Revenue
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Finance Party is exempt from or entitled to a reduced rate of United
States withholding tax on payments under the Credit Agreement or the Notes or,
in the case of a Finance Party providing a form W-8, certifying that such
Finance Party is a foreign
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corporation, partnership, estate or trust. If the forms provided by a Finance
Party at the time such Finance Party first becomes a party to the Credit
indicate a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Finance Party provides the appropriate form certifying that a lesser
rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such forms; provided,
however, that if, in the case of a Finance Party becoming a party to the Credit
Agreement, at the date of the Assignment and Acceptance pursuant to which a
Finance Party becomes a party to the Credit Agreement, the Finance Party
assignor was entitled to payments under subsection (a) of this Section 12.05 in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Finance Party assignee on such date. If any form or document
referred to in this subsection (e) and requested by any Guarantor pursuant to
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form 1001, 4224 or W-8 (or the related
certificate described above), that the applicable Finance Party reasonably
considers to be confidential, such Finance Party shall give notice thereof to
the applicable Guarantor and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Finance Party has failed to
provide any Guarantor following such Guarantor's request therefor pursuant to
subsection (e) above with the appropriate form described in subsection (e) above
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e) above), such Finance Party shall not be
entitled to indemnification under subsection (a) or (c) of this Section 12.05
with respect to Taxes imposed by the United States by reason of such failure;
provided, however, that should a Finance Party become subject to Taxes because
of its failure to deliver a form required hereunder, such Guarantor shall take
such steps as such Finance Party shall reasonably request to assist such Finance
Party to recover such Taxes.
(g) If any Finance Party determines that it has actually and finally
realized, by reason of a refund, deduction or credit of any Taxes paid or
reimbursed by any Guarantor pursuant to subsection (a) or (c) above in respect
of payments under the Loan Documents, a current monetary benefit that it would
otherwise not have obtained, and that would result in the total payments under
this Section 12.05 exceeding the amount needed to make such Finance Party whole,
such Finance Party shall pay to such Guarantor, with reasonable promptness
following the date on which it actually realizes such benefit, an amount equal
to the lesser of the amount of such benefit or the amount of such excess, in
each case net of all out-of-pocket expenses in securing such refund, deduction
or credit.
Section 12.06. Subordination.
Each Guarantor hereby subordinates any and all debts, liabilities and other
Obligations owed to each Guarantor by each other Credit Party (the "Subordinated
Obligations") to the Guaranteed Obligations to the extent and in the manner
hereinafter set forth in this Section 12.06:
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(a) Prohibited Payments, Etc. Except during the continuance of a
Default (including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to any other Credit Party), each Guarantor may receive
regularly scheduled payments from any other Credit Party on account of the
Subordinated Obligations. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to any other Credit Party), however, unless the
Administrative Agent otherwise agrees, each Guarantor shall not demand, accept
or take any action to collect any payment on account of the Subordinated
Obligations.
(b) Prior Payment of Guaranteed Obligations. In any proceeding under
any Bankruptcy Law relating to any other Credit Party, each Guarantor agrees
that the Finance Parties shall be entitled to receive payment in full in cash of
all Guaranteed Obligations (including all interest and expenses accruing after
the commencement of a proceeding under any Bankruptcy Law, whether or not
constituting an allowed claim in such proceeding ("Post Petition Interest"))
before each Guarantor receives payment of any Subordinated Obligations.
(c) Turn-Over. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to any other Credit Party), each Guarantor shall, if the
Administrative Agent so requests, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Finance Parties and
deliver such payments to the Administrative Agent on account of the Guaranteed
Obligations (including all Post Petition Interest), together with any necessary
endorsements or other instruments of transfer, but without reducing or affecting
in any manner the liability of any Guarantor under the other provisions of this
Guarantee.
(d) Administrative Agent Authorization. After the occurrence and
during the continuance of any Default (including the commencement and
continuation of any proceeding under any Bankruptcy Law relating to any other
Credit Party), the Administrative Agent is authorized and empowered (but without
any obligation to so do), in its discretion, (i) in the name of each Guarantor,
to collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all Post Petition Interest), and (ii) to require
each Guarantor (A) to collect and enforce, and to submit claims in respect of,
Subordinated Obligations and (B) to pay any amounts received on such Obligations
to the Administrative Agent for application to the Guaranteed Obligations
(including any and all Post Petition Interest).
Section 12.07. Continuing Guarantee; Assignments under the Credit
Agreement. This Guarantee is a continuing guarantee and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guarantee, and
(ii) the Maturity Date, (b) be binding upon each Guarantor and its successors
and assigns and (c) inure to the benefit of and be enforceable by the Finance
Parties and their successors, transferees and assigns. Without limiting the
generality of clause (iii) of the immediately preceding sentence, any Finance
Party may assign or otherwise transfer all or any portion of its rights and
Obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitments, the Loans owing to it and the Note or Notes held
by it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Finance Party herein or
otherwise, in each case
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as and to the extent provided in Section 12.04. The Guarantors shall not have
the right to assign their rights hereunder or any interest herein without the
prior written consent of the Finance Parties.
Section 12.08. Guarantee Supplements. Upon the execution and
delivery by any Person (including Talisman) of a guarantee supplement in
substantially the form of Exhibit J hereto (each, a "Guarantee Supplement"), (a)
such Person shall be referred to as an "Additional Guarantor" and shall become
and be a Guarantor hereunder, and each reference in this Guarantee or any other
Loan Document to a "Guarantor" shall also mean and be a reference to such
Additional Guarantor, and (b) each reference herein to "this Guarantee",
"hereunder", "hereof" or words of like import referring to this Guarantee, and
each reference in any other Loan Document to the "Guarantee", "thereunder",
"thereof" or words of like import referring to this Guarantee, shall mean and be
a reference to this Guarantee as supplemented by such Guarantee Supplement.
Section 12.09. Limitation of Guarantee. Notwithstanding any other
provision of any Loan Document, the amount guaranteed by each Guarantor
hereunder shall be limited to the extent, if any, required so that its
obligations under this Article XII shall not be subject to avoidance under
Section 548 of Title 11 of the United States Code, or to being set aside or
annulled under any applicable law or regulation relating to fraud on creditors.
In determining the limitations, if any, on the amount of any Guarantor's
obligations hereunder pursuant to the preceding sentence, it is the intention of
the parties hereto that any rights of subrogation or contribution which such
Guarantor may have under this Article XII, any other agreement or applicable law
or regulation shall be taken into account.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 13.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower or other Credit Party, (A) to Endeavour
International Holding X.X., Xxxxxxxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx
Xxxxxxxxxxx, Attention: Xxxxxxxxx Xxxxx (Telecopy No. x00 00 000 00 00); with a
copy to (B) Endeavour International Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxx Xxxxxxxxx (Telecopy No. (000) 000-0000),
and (C) Endeavour Energy UK Limited, 000 Xx. Xxxxxx'x Xxxx, Xxxxxx XX0X 0XX,
Attention Xxxxx Xxxxxx (Telecopy No. x00 0 000 000 0000);
(ii) if to the Administrative Agent, to it at Eleven Madison
Avenue, OMA-2, New York, New York 10010, Attention of Xxxxxx Xxxxx, Agency Group
Manager (Telecopy No. (000) 000-0000); and
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(iii) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II, Article III, Article IV and Article V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 13.02. Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any other
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Administrative
Agent, any other Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section
13.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any other
Agent, any Lender may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower,
each Guarantor and the Majority Lenders or by the Borrower, each Guarantor and
the Administrative Agent with the consent of the Majority Lenders; provided that
no such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Indebtedness hereunder or under any other Loan Document,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment or prepayment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or any other Indebtedness
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Maturity Date without the
written consent of
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each Lender affected thereby, (iv) change Section 4.01(b) or Section 4.01(c) in
a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) waive or amend Section 8.14
without the written consent of each Lender, (vi) release any Guarantor (except
as set forth in the Guarantee or the Security Agreement or the Debentures),
release all or any substantial portion of the Collateral (other than as provided
in Section 11.10), or reduce the percentage set forth in Section 8.14(a) to less
than the threshold established in Section 8.14, without the written consent of
each Lender, (vii) change the description of the Obligations secured or
guaranteed by the Security Instruments or the priority of payments set forth in
Section 10.02(c) without the written consent of each Lender adversely affected
thereby, provided that the addition of a new secured obligation shall not be
deemed to adversely affect any other Finance Party or (viii) change any of the
provisions of this Section 13.02(b) or the definition of "Majority Lenders" or
any other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other
Loan Documents, without the written consent of each Lender; provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, any other Agent hereunder or under any other
Loan Document without the prior written consent of the Administrative Agent or
such other Agent, as the case may be.
Section 13.03. Expenses, Indemnity; Damage Waiver. (a) The
Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, including, without limitation, the reasonable fees,
charges and disbursements of counsel and other outside consultants for the
Administrative Agent, the reasonable travel, photocopy, mailing, courier,
telephone and other similar expenses, and the cost of environmental assessments,
audits and surveys and appraisals, in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration (both before and after the execution hereof and
including advice of counsel to the Administrative Agent as to the rights and
duties of the Administrative Agent and the Lenders with respect thereto) of this
Agreement and the other Loan Documents and any amendments, modifications or
waivers of or consents related to the provisions hereof or thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all costs, expenses, Taxes, assessments and other charges incurred by any Agent
or any Lender in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or any
Security Instrument or any other document referred to therein, and (iii) all
reasonable out-of-pocket expenses incurred by any Agent or any Lender, including
the fees, charges and disbursements of any counsel for any Agent or any Lender
(which shall be limited to one counsel to the Administrative Agent and the
Lenders (exclusive of one local counsel to the Administrative Agent and the
Lenders in each appropriate jurisdiction), unless (x) the interests of the
Administrative Agent and the Lenders are sufficiently divergent, in which case
one additional counsel may be appointed and (y) if the interests of any Lender
or group of Lenders (other than all of the Lenders) are distinctly or
disproportionately affected, one additional counsel for such Lender or group of
Lenders)), in connection with the enforcement or protection of its rights in
connection with this Agreement or any other Loan Document, including its rights
under this Section 13.03, or in connection with the Loans made hereunder,
including, without limitation, all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.
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(b) THE BORROWER AGREES TO INDEMNIFY EACH AGENT, THE ARRANGER AND EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING
THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED
BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS
A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (II) THE FAILURE
OF THE BORROWER, ANY GUARANTOR OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY
LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT,
(III) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR
COVENANT OF THE BORROWER, ANY GUARANTOR OR ANY SUBSIDIARY SET FORTH IN ANY OF
THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (IV) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (V)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (VI) THE OPERATIONS OF THE BUSINESS OF
THE BORROWER, ANY GUARANTOR OR ANY SUBSIDIARY BY THE BORROWER, ANY GUARANTOR OR
ANY SUBSIDIARY, (VII) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (VIII) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER, ANY GUARANTOR OR ANY SUBSIDIARY OR
ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, RELATED TO THE PRESENCE,
GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL,
ARRANGEMENT OF DISPOSAL OR TREATMENT OF PETROLEUM, HYDROCARBONS, OIL AND GAS
WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES AT ANY LOCATION, (IX) THE ACTUAL OR
ALLEGED BREACH OR NON-COMPLIANCE BY THE BORROWER, ANY GUARANTOR OR ANY
SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER, ANY GUARANTOR
OR ANY SUBSIDIARY, (X) THE PAST OWNERSHIP BY THE BORROWER, ANY GUARANTOR OR ANY
SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT
IN PRESENT LIABILITY, (XI) THE ACTUAL OR ALLEGED PRESENCE, USE, RELEASE,
STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT,
ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF PETROLEUM,
HYDROCARBONS, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON,
UNDER, AT OR FROM ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER, ANY
GUARANTOR
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OR ANY SUBSIDIARY, (XII) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER, ANY GUARANTOR OR ANY SUBSIDIARIES, OR (XIII) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (XIV) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY (AND
REGARDLESS OF WHETHER SUCH MATTER IS INITIATED BY A THIRD PARTY OR BY THE
BORROWER, ANY GUARANTOR OR ANY OF THEIR RESPECTIVE AFFILIATES) AND REGARDLESS OF
WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO
EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT
OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED PRIMARILY FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to any Agent under Section 13.03(a) or (b), each Lender
severally agrees to pay to such Agent such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against such Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and the Borrower hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or the use
of the proceeds thereof.
(e) All amounts due under this Section 13.03 shall be payable on
written demand therefor.
(f) The provisions of this Section 13.03 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Lender.
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Section 13.04. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) no Credit Party may assign or otherwise
transfer any of its rights or Obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or Obligations hereunder except in accordance with
this Section 13.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent
provided in Section 13.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section 13.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and Obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of the Administrative
Agent.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent and determined on an aggregate basis in the event of
concurrent assignments to Related Funds (as defined below)) shall not be less
than US$1,000,000 unless the Administrative Agent otherwise consent (such
consent not to be unreasonably withheld or delayed);
(B) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and Obligations
under this Agreement;
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of US$3,500 (which fee may be waived or reduced
in the sole discretion of the Administrative Agent and shall not be payable in
the case of any assignment by or to any Arranger or any of its Affiliates);
provided that only one such fee shall be payable in the case of concurrent
assignments to two or more Related Funds; and
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire and applicable tax
forms.
The term "Related Funds" shall mean, with respect to any Lender that is a fund
or commingled investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is
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managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
(iii) Subject to Section 13.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and Obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its Obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and Obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 13.03). Any assignment or transfer
by a Lender of rights or Obligations under this Agreement that does not comply
with this Section 13.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and Obligations in
accordance with Section 13.04(c). Notwithstanding any other provision of this
Agreement, if (A) a Lender assigns or transfers any of its rights or obligations
under the Loan Documents or changes its lending office; and (B) as a result of
circumstances existing at the date the assignment, transfer or change occurs,
the Borrower would be obliged to make a payment to the new Lender or Lender
acting through its new lending office under Section 5.03(a) or (c), then the new
Lender or Lender acting through its new lending office is only entitled to
receive payment under Section 5.03(a) or (c) to the same extent as the existing
Lender or Lender acting through its previous lending office would have been if
the assignment, transfer or change had not occurred.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the "Register"). The entries in the Register shall be conclusive absent
manifest error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire and applicable tax forms (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in Section 13.04(b) and any written consent to such assignment
required by Section 13.04(b), the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this Section 13.04(b).
(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and Obligations
under this Agreement (including all or a
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portion of the Loans owing to it); provided that (A) such Lender's Obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such Obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and Obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the proviso to Section 13.02 that affects
such Participant. In addition such agreement must provide that the Participant
be bound by the provisions of Section 13.03. Subject to Section 13.04(c)(ii),
the Borrower agrees that each Participant shall be entitled to the benefits of
Section 5.01, Section 5.02 and Section 5.03 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Section 13.04(b).
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 13.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 4.01(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 5.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 5.03(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure Obligations of
such Lender, including, without limitation, any pledge or assignment to secure
Obligations to a Federal Reserve Bank, and this Section 13.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its Obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(e) Notwithstanding any other provisions of this Section 13.04, no
transfer or assignment of the interests or Obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Credit Parties or any of their respective
Subsidiaries to file a registration statement with the SEC or to qualify the
Loans under the "Blue Sky" laws of any state.
Section 13.05. Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made by
each Credit Party herein and in the certificates or other instruments delivered
in connection with or pursuant to this Agreement or any other Loan Document
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making
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of any Loans, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that the Administrative Agent, any other Agent,
or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid. The provisions of Section 5.01, Section
5.02, Section 5.03 and Section 13.03 and Article XI shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans or the termination of this
Agreement, any other Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds of
any Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 13.06. Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(c) Except as provided in Article VI, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 13.07. Severability. Any provision of this Agreement or
any other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to
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such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof or thereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
Section 13.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other Obligations (of
whatsoever kind, including, without limitations Obligations under Swap
Agreements) at any time owing by such Lender or Affiliate to or for the credit
or the account of any Credit Party against any of and all the Obligations of any
Credit Party owed to such Lender now or hereafter existing under this Agreement
or any other Loan Document, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and
although such Obligations may be unmatured. The rights of each Lender under this
Section 13.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender or its Affiliates may have.
Section 13.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS
EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.09.
(c) EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE
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OTHER LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN 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.
NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT
OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS AGAINST THE BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(d) EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.
(e) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13.01. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
(f) WITHOUT PREJUDICE TO ANY OTHER MODE OF SERVICE ALLOWED UNDER ANY
RELEVANT LAW, EACH CREDIT PARTY INCORPORATED IN ENGLAND AND WALES (I)
IRREVOCABLY APPOINTS ENDEAVOUR UK AS ITS AGENT FOR SERVICE OF PROCESS IN
RELATION TO ANY PROCEEDINGS BEFORE THE ENGLISH COURTS IN CONNECTION WITH THIS
AGREEMENT AND (II) AGREES THAT FAILURE BY A PROCESS AGENT TO NOTIFY THE RELEVANT
CREDIT PARTY OF THE PROCESS WILL NOT INVALIDATE THE PROCEEDINGS CONCERNED. EACH
OF THE CREDIT PARTIES EXPRESSLY AGREES AND CONSENTS TO THE PROVISIONS OF THIS
SECTION 13.09(F).
Section 13.10. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
Section 13.11. Confidentiality. Each of the Administrative Agent
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, trustees, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
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Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 13.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
Obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to any Credit Party and its
Obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 13.11 or (ii) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section 13.11, "Information" means all information received
from any Credit Party relating to any Credit Party and their businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by the Borrower or a
Subsidiary. Any Person required to maintain the confidentiality of Information
as provided in this Section 13.11 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Section 13.12. Interest Rate Limitation. It is the intention of
the parties hereto that each Lender shall conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it (including the laws of the
United States of America or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
110
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 13.12 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 13.12.
Section 13.13. EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
Section 13.14. Third Party Beneficiaries. Except as specifically
set forth in Section 13.16 hereof, this Agreement, the other Loan Documents, and
the agreement of the Lenders to make Loans hereunder are solely for the benefit
of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any other Agent
or any Lender for any reason whatsoever. There are no third party beneficiaries
other than the (x) Security Trustee to the extent that reference to the Security
Trustee is explicitly made herein, and (y) the First Lien Lenders, to the extent
set forth in Section 13.16 hereof.
Section 13.15. USA PATRIOT Act Notice. Each Lender and the
Administrative Agent hereby notifies each Credit Party that pursuant to the
requirements of the
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USA PATRIOT Act, it is required to obtain, verify and record information that
identifies each Credit Party, which information includes the name and address of
the Credit Parties and other information that will allow such Lender to identify
the Credit Parties in accordance with the USA PATRIOT Act.
Section 13.16. Intercreditor Agreement. Reference is made to the
Intercreditor Agreement. Each Lender hereunder (a) acknowledges that it has
received a copy of the Intercreditor Agreement, (b) consents to the
subordination of Liens provided for in the Intercreditor Agreement, (c) agrees
that it will be bound by and will take no actions contrary to the provisions of
the Intercreditor Agreement, and (d) authorizes and instructs each of the
Administrative Agent and the Security Trustee to enter into the Intercreditor
Agreement on behalf of such Lender. The foregoing provisions are intended as an
inducement to the First Lien Lenders and the Security Trustee to permit the
incurrence of Indebtedness hereunder, and such First Lien Lenders are intended
third party beneficiaries of such provisions.
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The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
BORROWER: ENDEAVOUR INTERNATIONAL HOLDING B.V.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By: /s/ Xxx Xxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: ENDEAVOUR INTERNATIONAL CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: ENDEAVOUR OPERATING CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: END OPERATING MANAGEMENT COMPANY
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: END MANAGEMENT COMPANY
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: ENDEAVOUR ENERGY NETHERLANDS B.V.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: ENDEAVOUR ENERGY NETHERLANDS B.V.
By: /s/ Xxx Xxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GUARANTOR: ENDEAVOUR ENERGY UK LIMITED
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADMINISTRATIVE AGENT: CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
as Administrative Agent
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Associate
