EXHIBIT 10.1
EXECUTION COPY
Amended and Restated Credit Agreement
Dated as of
April 7, 2005
among
St. Xxxx Xxxx & Exploration Company,
as Borrower,
Wachovia Bank, National Association,
as Administrative Agent,
Xxxxx Fargo Bank, N.A.,
As Syndication Agent,
BNP Paribas,
Comerica Bank - Texas,
and
JPMorgan Chase Bank, N.A.,
As Co-Documentation Agents,
and
The Lenders Party Hereto
with
Wachovia Securities, Inc.,
As Joint Lead Arranger and
Sole Bookrunner
and
Xxxxx Fargo Bank, N.A.,
As Joint Lead Arranger
$500,000,000 Senior Secured
Revolving Credit Facility
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS...................................1
Section 1.01 Terms Defined Above.......................................1
Section 1.02 Certain Defined Terms.....................................1
Section 1.03 Types of Loans and Borrowings............................19
Section 1.04 Terms Generally..........................................19
Section 1.05 Accounting Terms and Determinations; GAAP................20
ARTICLE II THE CREDITS........................................................20
Section 2.01 Commitments..............................................20
Section 2.02 Loans and Borrowings.....................................20
Section 2.03 Requests for Borrowings..................................21
Section 2.04 Interest Elections.......................................22
Section 2.05 Funding of Borrowings....................................24
Section 2.06 Termination, Reduction and Increase of Aggregate
Commitment............................................24
Section 2.07 Borrowing Base...........................................26
Section 2.08 Letters of Credit........................................29
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES..............33
Section 3.01 Repayment of Loans........................................33
Section 3.02 Interest..................................................33
Section 3.03 Alternate Rate of Interest................................34
Section 3.04 Prepayments...............................................34
Section 3.05 Fees......................................................36
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS..................37
Section 4.01 Payments Generally; Pro Rata Treatment;
Sharing of Set-offs...................................37
Section 4.02 Presumption of Payment by the Borrower...................38
Section 4.03 Certain Deductions by the Administrative Agent...........38
Section 4.04 Disposition of Proceeds..................................39
ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY..........39
Section 5.01 Increased Costs..........................................39
Section 5.02 Break Funding Payments...................................40
Section 5.03 Taxes....................................................41
Section 5.04 Designation of Different Lending Office..................42
Section 5.05 Illegality...............................................42
Section 5.06 Replacement of Lenders...................................42
ARTICLE VI CONDITIONS PRECEDENT...............................................43
i
Section 6.01 Effective Date...........................................43
Section 6.02 Each Credit Event........................................45
ARTICLE VII REPRESENTATIONS AND WARRANTIES....................................46
Section 7.01 Organization; Powers.....................................46
Section 7.02 Authority; Enforceability................................46
Section 7.03 Approvals; No Conflicts..................................46
Section 7.04 Financial Condition; No Material Adverse Change..........47
Section 7.05 Litigation...............................................47
Section 7.06 Environmental Matters....................................48
Section 7.07 Compliance with the Laws and Agreements; No Defaults.....49
Section 7.08 Investment Company Act...................................49
Section 7.09 Public Utility Holding Company Act.......................49
Section 7.10 Taxes....................................................49
Section 7.11 ERISA....................................................49
Section 7.12 Disclosure; No Material Misstatements....................50
Section 7.13 Insurance................................................51
Section 7.14 Restriction on Liens.....................................51
Section 7.15 Subsidiaries.............................................51
Section 7.16 Location of Business and Offices.........................51
Section 7.17 Properties; Titles, Etc..................................52
Section 7.18 Maintenance of Properties................................53
Section 7.19 Gas Imbalances, Prepayments..............................53
Section 7.20 Marketing of Production..................................53
Section 7.21 Swap Agreements..........................................54
Section 7.22 Use of Loans and Letters of Credit.......................54
Section 7.23 Solvency.................................................54
Section 7.24 Material Agreements......................................54
ARTICLE VIII AFFIRMATIVE COVENANTS............................................54
Section 8.01 Financial Statements; Ratings Change; Other Information..55
Section 8.02 Notices of Material Events...............................57
Section 8.03 Existence; Conduct of Business...........................57
Section 8.04 Payment of Obligations...................................57
Section 8.05 Performance of Obligations under Loan Documents..........58
Section 8.06 Operation and Maintenance of Properties..................58
Section 8.07 Insurance................................................59
Section 8.08 Books and Records; Inspection Rights.....................59
Section 8.09 Compliance with Laws.....................................59
Section 8.10 Environmental Matters....................................59
Section 8.11 Further Assurances.......................................60
Section 8.12 Reserve Reports..........................................61
Section 8.13 Title Information........................................62
Section 8.14 Additional Collateral; Additional Guarantors.............62
Section 8.15 ERISA Compliance.........................................63
Section 8.16 Performance of Material Agreements.......................64
ii
ARTICLE IX NEGATIVE COVENANTS.................................................64
Section 9.01 Financial Covenants......................................64
Section 9.02 Debt.....................................................64
Section 9.03 Liens....................................................65
Section 9.04 Dividends, Distributions and Redemptions.................65
Section 9.05 Investments, Loans and Advances..........................66
Section 9.06 Designation of Material Subsidiaries.....................67
Section 9.07 Nature of Business; International Operations.............67
Section 9.08 Limitation on Leases.....................................67
Section 9.09 Proceeds of Notes........................................67
Section 9.10 ERISA Compliance.........................................68
Section 9.11 Sale or Discount of Receivables..........................69
Section 9.12 Mergers, Etc.............................................69
Section 9.13 Sale of Properties.......................................69
Section 9.14 Environmental Matters....................................70
Section 9.15 Transactions with Affiliates.............................70
Section 9.16 Subsidiaries.............................................70
Section 9.17 Negative Pledge Agreements; Dividend Restrictions........70
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments.........70
Section 9.19 Swap Agreements..........................................71
Section 9.20 Preservation of Material Agreements......................71
Section 9.21 Release of Liens.........................................71
ARTICLE X EVENTS OF DEFAULT; REMEDIES.........................................72
Section 10.01 Events of Default........................................72
Section 10.02 Remedies.................................................74
ARTICLE XI THE ADMINISTRATIVE AGENT...........................................74
Section 11.01 Appointment; Powers......................................74
Section 11.02 Duties and Obligations of Administrative Agent...........75
Section 11.03 Action by Administrative Agent...........................75
Section 11.04 Reliance by Administrative Agent.........................76
Section 11.05 Subagents................................................76
Section 11.06 Resignation or Removal of Administrative Agent...........76
Section 11.07 Administrative Agent as Lenders.........................77
Section 11.08 No Reliance..............................................77
Section 11.09 Authority of Administrative Agent to Release
Collateral and Liens..................................77
Section 11.10 Syndication Agent and Co-Documentation Agents............78
ARTICLE XII MISCELLANEOUS.....................................................78
Section 12.01 Notices..................................................78
Section 12.02 Waivers; Amendments......................................79
Section 12.03 Expenses, Indemnity; Damage Waiver.......................80
Section 12.04 Successors and Assigns...................................82
Section 12.05 Survival; Revival; Reinstatement.........................85
Section 12.06 Counterparts; Integration; Effectiveness.................86
iii
Section 12.07 Severability.............................................86
Section 12.08 Right of Setoff..........................................86
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS....................................87
Section 12.10 Headings.................................................88
Section 12.11 Confidentiality..........................................88
Section 12.12 Interest Rate Limitation.................................89
Section 12.13 EXCULPATION PROVISIONS...................................90
Section 12.14 Existing Credit Agreement................................90
Section 12.15 USA Patriot Act Notice...................................90
Annex I.. List of Commitments
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C Form of Legal Opinion of Xxxxxxx Xxxxx
Xxxxxxx & Xxxxxxxxx, LLP, special
counsel to the Borrower and the Guarantors
Exhibit D-1 Security Instruments
Exhibit D-2 Form of Guaranty Agreement
Exhibit D-3 Form of Pledge - Borrower
Exhibit D-4 Form of Pledge - Xxxxx
Exhibit E Form of Assignment and Assumption
Exhibit F-1 Form of Commitment Increase Certificate
Exhibit F-2 Form of Additional Lender Certificate
Schedule 7.05 Litigation
Schedule 7.15 Subsidiaries and Partnerships;
Non-Material Subsidiaries
Schedule 7.19 Gas Imbalances
Schedule 7.20 Marketing Contracts
Schedule 7.21 Swap Agreements
Schedule 7.24 Material Agreements
Schedule 9.05(a) Investments
Schedule 9.05(h) Existing Investments (Non-Oil and Gas)
iv
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 7, 2005,
is by and among ST. XXXX XXXX & EXPLORATION COMPANY, a corporation duly
formed and existing under the laws of the State of Delaware (the "Borrower");
--------
each of the Lenders from time to time party hereto; WACHOVIA BANK, NATIONAL
ASSOCIATION (in its individual capacity, "Wachovia"), as administrative agent
--------
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent") XXXXX FARGO BANK, N.A., as Syndication
--------------------
Agent; and BNP PARIBAS, COMERICA BANK-TEXAS, and JPMORGAN CHASE BANK, N.A., as
Co-Documentation Agents.
The parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Amended and Restated
---------------------
Credit Agreement, each term defined above has the meaning indicated above.
Section 1.02 Certain Defined Terms. As used in this Amended and Restated
-----------------------
Credit Agreement, the following terms have the meanings specified below:
"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.
"Additional Lender" has the meaning assigned to such term in Section
------------------
2.06(c)(i).
"Additional Lender Certificate" has the meaning assigned to such term in
-------------------------------
Section 2.06(c)(ii)F.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
------------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in a
-----------------------------
form supplied 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.
"Aggregate Commitment" at any time means the aggregate amount of the
---------------------
Commitments of all the Lenders, as reduced, increased or terminated from time to
time pursuant to the terms hereof; provided that the Aggregate Commitment shall
-------- ----
not at any time exceed the Maximum Credit Amount; and provided further that, the
-------- ------- ----
initial Aggregate Commitment hereunder is $200,000,000 for the period from and
including the Effective Date to but excluding the date such amount is reduced,
increased or terminated pursuant to the terms hereof.
"Aggregate Revolving Credit Exposures" at any time means the aggregate
---------------------------------------
amount of the Revolving Credit Exposures of all of the Lenders.
"Agreement" means this Amended and Restated Credit Agreement, as the same
---------
may from time to time be amended, modified, supplemented or restated.
"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 or (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, with respect to any ABR Loan or
------------------
Eurodollar Loan, or with respect to any commitment fees payable hereunder, as
the case may be, the rate per annum set forth in the Borrowing Base Utilization
Grid below based upon the Borrowing Base Utilization Percentage then in effect:
Borrowing Base Utilization Grid
--------------------------- ------------ ------------- ------------ -------------
Borrowing Base
Utilization
Percentage <50% >50% <75% >75% <90% >90%
--------------------------- ------------ ------------- ------------ -------------
Eurodollar Loans 1.000% 1.250% 1.500% 1.750%
--------------------------- ------------ ------------- ------------ -------------
ABR Loans 0.000% 0.000% 0.250% 0.500%
--------------------------- ------------ ------------- ------------ -------------
Commitment Fee
Rate 0.250% 0.300% 0.375% 0.375%
--------------------------- ------------ ------------- ------------ -------------
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then until such time as the Reserve Report is
delivered the "Applicable Margin" means the rate per annum set forth on the grid
-----------------
when the Borrowing Base Utilization Percentage is at its highest level.
"Applicable Percentage" means, with respect to any Lender, the percentage
----------------------
of the Aggregate Commitments represented by such Lender's Commitment as such
percentage is set forth on Annex I.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender
----------------------
and (b) any other Person whose long term senior unsecured debt rating is
BBB+/Baa1 by S&P or Xxxxx'x (or their equivalent) or higher.
"Approved Fund" means (a) a CLO and (b) with respect to any Lender that is
--------------
a fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
2
"Approved Petroleum Engineers" means (a) Netherland, Xxxxxx &
--------------------------------
Associates, Inc., (b) Xxxxx Xxxxx Company Petroleum Consultants, L.P. and (c)
any other independent petroleum engineers reasonably acceptable to the
Administrative Agent.
"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 E or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
--------------------
Date to but excluding the Termination Date.
"Board" means the Board of Governors of the Federal Reserve System of the
-----
United States of America or any successor Governmental Authority.
"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 at any time an amount equal to the amount determined
--------------
in accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c), Section 9.12(a), Section 9.13 or Section 9.21.
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
--------------------------------------
expressed as a percentage, the numerator of which is the Aggregate Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
"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 commercial banks in Charlotte, North Carolina or Houston, Texas are
authorized or required by law to remain closed; and if such day relates to a
Borrowing or continuation of, a payment or prepayment of principal of or
interest on, or a conversion of or into, or the Interest Period for, a
Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing
or continuation, payment, prepayment, conversion or Interest Period, any day
which is also a day on which dealings in dollar deposits are carried out in the
London interbank market.
"Capital Leases" means, in respect of any Person, all leases which shall
---------------
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any uninsured loss, uninsured casualty or other
---------------
uninsured damage to, or any nationalization, taking under power of eminent
domain or by condemnation or similar proceeding of, any Property of the Borrower
or any of its Material Subsidiaries having a fair market value in excess of
$1,000,000.
"Change in Control" means (a) the acquisition of ownership, directly or
-----------------
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
3
thereunder as in effect on the date hereof), of Equity Interests representing
more than 30% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Borrower, (b) occupation of a majority
of the seats (other than vacant seats) on the board of directors of the Borrower
by Persons who were neither (i) nominated by the board of directors of the
Borrower nor (ii) appointed by directors so nominated or (c) the acquisition of
direct or indirect Control of the Borrower by any Person or group.
"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 the Issuing Bank
(or, for purposes of Section 5.01(b)), by any lending office of such Lender or
by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CLO" means any entity (whether a corporation, partnership, trust or
---
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
----------
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Applicable Percentage of the Aggregate Commitment.
The amount of each Lender's initial Commitment is set forth opposite such
Lender's name on Annex I under the caption "Commitment."
"Commitment Fee Rate" has the meaning set forth in the definition of
---------------------
"Applicable Margin".
-----------------
"Commitment Increase Certificate" has the meaning assigned to such term in
--------------------------------
Section 2.06(c)(ii)E.
"Consolidated Net Income" means with respect to the Borrower and the
-------------------------
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
4
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) any non-cash gains or losses during such period; (d) any gains or
losses attributable to writeups or writedowns of assets, including impairments
of oil and gas properties; (e) xxxx-to-market adjustments related to the
utilization of derivative instruments; and (f) changes in the liability
associated with the future payments of amounts under the Net Profits Interest
Bonus Plan.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower (whether
--------------------------
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
"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 ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"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 or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person to pay the deferred purchase price of Property or services; (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 a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others or to purchase the Debt or
Property of others; (i) obligations to deliver commodities, goods or services,
including, without limitation, Hydrocarbons, in consideration of one or more
advance payments, other than gas balancing arrangements in the ordinary course
of business; (j) obligations to pay for goods or services whether or not such
goods or services are actually received or utilized by such Person; (k) any Debt
of a partnership for which such Person is liable either by agreement, by
operation of law or by a Governmental Requirement but only to the extent of such
liability; (l) Disqualified Capital Stock; and (m) the undischarged balance of
any production payment created by such Person or for the creation of which such
Person directly or indirectly received payment. 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
5
that any such obligation is not included as a liability of such Person under
GAAP; provided, however, the contingent obligations of Borrower or any
Subsidiary of Borrower pursuant to any purchase and sale agreement, stock
purchase agreement, merger agreement or similar agreement shall not constitute
"Debt" within this definition so long as none of same contains an obligation to
pay money over time. It is hereby understood and agreed that in calculating the
amount of Debt in respect of borrowed money, the effect of Financial Accounting
Standards Board Statement No. 133 shall be disregarded.
"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, 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, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of America.
-------
"EBITDA" means, for any period, the sum of Consolidated Net Income for such
------
period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, taxes, depreciation,
depletion, amortization, noncash impairment charges and other noncash charges,
minus all noncash income added to Consolidated Net Income. Noncash charges
include xxxx-to-market adjustments related to the utilization of derivative
instruments and changes in the liability associated with the future payments of
amounts under the Net Profits Interest Bonus Plan.
"Effective Date" means the date on which the conditions specified in
---------------
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
--------------------
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements pertaining
------------------
in any way to health, safety, the environment or the preservation or reclamation
of natural resources, in effect in any and all jurisdictions in which the
Borrower or any Subsidiary is conducting or at any time has conducted business,
or where any Property of the Borrower or any Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
------
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as
----
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
6
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements. The term
"oil" shall have the meaning specified in OPA, the terms "hazardous substance"
--------------------
and "release" (or "threatened release") have the meanings specified in CERCLA,
------- -------------------
the terms "solid waste" and "disposal" (or "disposed") have the meanings
------------ -------- --------
specified in RCRA and the term "oil and gas waste" shall have the meaning
------------------
specified in Section 91.1011 of the Texas Natural Resources Code ("Section
-------
91.1011"); provided, however, that (a) in the event either OPA, CERCLA, RCRA or
-------
Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction
in which any Property of the Borrower or any Subsidiary is located establish a
meaning for "oil," "hazardous substance," "release," "solid waste," "disposal"
--- -------------------- ------- ----------- --------
or "oil and gas waste" which is broader than that specified in either OPA,
------------------
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
"Equity Interests" means shares of capital stock, partnership interests,
-----------------
joint venture interest or interests in comparable entities, 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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute.
"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 (e) any other event or condition
which might constitute grounds under section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
"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 LIBO Rate.
"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
7
have been maintained in accordance with GAAP; (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; (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 of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (e) Liens arising solely by virtue of
any statutory or common law provision relating to 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 of its Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (g) Liens on cash or
securities pledged to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory obligations, regulatory obligations and other
obligations of a like nature incurred in the ordinary course of business; (h)
Liens on existing and future cash, U.S. government securities, and letters of
credit securing or supporting Swap Agreements permitted pursuant to Section
9.19; and (i) judgment and attachment Liens not giving rise to an Event of
Default, provided that any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced; provided,
further that Liens described in clauses (a) through (e) shall remain "Excepted
Liens" only for so long as no action to enforce such Lien has been commenced and
8
no intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.
"Excluded Taxes" means, with respect to the Administrative Agent, any
---------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income 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 the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender,
any withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign 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).
"Existing Credit Agreement" means that certain Credit Agreement dated as of
-------------------------
January 27, 2002, among the Borrower, Wachovia Bank, National Association, as
administrative agent, and the lenders party thereto, as the same has been
heretofore amended and supplemented from time to time.
"Federal Funds Effective Rate" means, for any day, the weighted average
------------------------------
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
-----------------
officer, treasurer or controller of the Borrower.
"Financial Statements" means the financial statement or statements of the
---------------------
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"5.75% Senior Convertible Notes" means those certain 5.75% Senior
-----------------------------------
Convertible Notes due 2022, in the aggregate amount of $100,000,000 issued by
the Borrower March 20, 2002.
"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.
9
"GAAP" means generally accepted accounting principles in the United States
----
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"Governmental Authority" means the government of the United States of
-----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Material Subsidiary, any of their Properties,
any Agent, the Issuing Bank or any Lender.
"Governmental Requirement" means any law, 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.
"Guarantors" means the Material Subsidiaries, and each other Subsidiary
----------
that guarantees the Indebtedness pursuant to Section 8.14(b).
"Guaranty Agreement" means an agreement executed by the Guarantors in
-------------------
substantially the form of Exhibit D-2, as the same may be amended, modified or
supplemented from time to time.
"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 of the State of Texas 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.
"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.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
------------
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
------------
Borrower or any Guarantor: (a) to the Administrative Agent, the Issuing Bank or
any Lender under any Loan Document; (b) to any Lender or any Affiliate of a
Lender under any present or future Swap Agreements entered into between the
Borrower or any Guarantor and any Lender or any Affiliate of a Lender,
including, without limitation, the Swap Agreements entered into with a Lender or
an Affiliate of a Lender and listed on attached Schedule 7.21, and (c) all
renewals, extensions and/or rearrangements of any of the above.
10
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Information Memorandum" means the Confidential Information Memorandum
-----------------------
dated February, 2005, relating to the Borrower and the Transactions.
"Initial Reserve Report" means (a) the report of the Borrower, which
------------------------
includes reserve estimates as prepared by Xxxxx Xxxxx Company, L.P. and
Netherland, Xxxxxx Associates, Inc., dated as of January 1, 2005, with respect
to the value of the Oil and Gas Properties of the Borrower and its Material
Subsidiaries as of December 31, 2004, and (b) the report of the Manager of
Reservoir Engineering of the Borrower dated as of December 31, 2004, with
respect to the value of the Oil and Gas Properties of the Borrower and its
Material Subsidiaries as of December 31, 2004.
"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
-----------------------
day of each calendar month and (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each 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
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
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
Business Day of the last calendar month 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.
"Interim Redetermination" has the meaning assigned such term in Section
------------------------
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
------------------------------
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"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); (b) the
making of any deposit with, or advance, loan or other extension of credit to,
11
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold by such Person in the ordinary course of
business) or (c) the entering into of any guarantee (excluding performance
guarantees) of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.
"Issuing Bank" means Wachovia, in its capacity as the issuer of Letters of
------------
Credit hereunder, and its successors in such capacity as provided in Section
2.08(j). The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with respect to Letters
------------
of Credit issued by such Affiliate.
"LC Commitment" at any time means $50,000,000.
-------------
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
----------------
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Annex I, any Person that shall have
-------
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto pursuant to
Section 2.06(c).
"Letter of Credit" means any letter of credit issued pursuant to this
------------------
Agreement, and the outstanding letters of credit issued under the Existing
Credit Agreement, more particularly described on attached Annex II.
"Letter of Credit Agreements" means all letter of credit applications and
----------------------------
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with the
Issuing Bank relating to any Letter of Credit.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
----------
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
---------
12
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement 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 or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
----
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
---------------
Agreements, the Letters of Credit 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 while no Loans or LC Exposure is
-----------------
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Commitments; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding at least sixty-six and two-thirds percent (66-2/3%)
of the outstanding aggregate principal amount of the Loans or participation
interests in Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).
"Material Adverse Effect" means a material adverse effect on (a) the
-------------------------
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower, any Subsidiary or any Guarantor to perform any of its obligations
under any Loan Document or (c) the rights and remedies of or benefits available
to the Administrative Agent, the Issuing Bank or any Lender under any Loan
Document.
"Material Agreements" means each agreement (whether one or more) described
--------------------
or referred to on Schedule 7.24.
"Material Indebtedness" means Debt (other than the Loans and Letters of
----------------------
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $15,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
13
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.
"Material Subsidiary" means a Subsidiary of Borrower that owns a
---------------------
Substantial Portion of the Property of Borrower and its Subsidiaries.
"Maturity Date" means April 7, 2010.
-------------
"Maximum Credit Amount" means at any time an amount equal to the lesser of
----------------------
(a) the then effective Borrowing Base and (b) $500,000,000.
"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 the Borrower or any
-------------------
Material Subsidiary which is subject to the Liens existing and to exist under
the terms of the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
-------------------
in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in Section
--------------------------
2.07(d).
"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.
"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 agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or 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,
14
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"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 hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning set forth in Section 12.04(c)(i).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
----
thereto.
"Permitted Refinancing Debt" means Debt (for purposes of this definition,
----------------------------
"new Debt") incurred in exchange for, or proceeds of which are used to
---------
refinance, all of any other Debt (the "Refinanced Debt"); provided that (a) such
---------------
new Debt is in an aggregate principal amount not in excess of the sum of (i) the
aggregate principal amount then outstanding of the Refinanced Debt (or, if the
Refinanced Debt is exchanged or acquired for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount) and (ii) an amount necessary to pay any fees and expenses,
including premiums, related to such exchange or refinancing; (b) such new Debt
has a stated maturity no earlier than the stated maturity of the Refinanced Debt
and an average life no shorter than the average life of the Refinanced Debt; (c)
such new Debt does not have a stated interest rate in excess of the stated
interest rate of the Refinanced Debt; (d) such new Debt does not contain any
covenants which are more onerous to the Borrower and its Subsidiaries than those
imposed by the Refinanced Debt and (e) such new Debt (and any guarantees
thereof) is subordinated in right of payment to the Indebtedness (or, if
applicable, the Guaranty Agreement) to at least the same extent as the
Refinanced Debt and is otherwise subordinated on terms substantially reasonably
satisfactory to the Administrative Agent.
"Person" means any natural person, corporation, limited liability company,
------
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"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.
"Pledge - Borrower" means that certain Pledge and Security Agreement from
-----------------
the Borrower in favor of the Administrative Agent, pledging to the
Administrative Agent as security for the Indebtedness all equity interests held
by the Borrower in the Material Subsidiaries (other than NPC Inc.), in
substantially the form of Exhibit D-3, as the same may be amended, modified or
supplemented from time to time.
"Pledge - Xxxxx" means that certain Amended and Restated Pledge and
--------------
Security Agreement from Xxxxx Petroleum Corporation in favor of the
15
Administrative Agent, pledging to the Administrative Agent as security for the
Indebtedness all equity interests held by Xxxxx Petroleum Corporation in NPC
Inc., in substantially the form of Exhibit D-4, as the same may be amended,
modified or supplemented from time to time.
"Prime Rate" means the rate of interest per annum publicly announced from
----------
time to time by Wachovia as its prime rate in effect at its principal office in
Charlotte, North Carolina; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
Such rate is set by Wachovia as a general reference rate of interest, taking
into account such factors as Wachovia may deem appropriate; it being understood
that many of Wachovia's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate actually charged to any
customer and that Wachovia may make various commercial or other loans at rates
of interest having no relationship to such rate.
"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 and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in Section
------------------------
2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
-------------------------------
Section 2.07(c)(ii).
"Redemption" means the repurchase, redemption, prepayment, repayment or
----------
defeasance (or the segregation of funds with respect to any of the foregoing) of
the Material Indebtedness; provided, however, the term Redemption shall not
-------- -------
include early termination of a Swap Agreement due to an ISDA "Termination Event"
to the extent the amount due at termination exceeds $15,000,000. "Redeem" has
------
the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled Redetermination
--------------------
or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).
"Refinanced Debt" has the meaning assigned such term in the definition of
----------------
"Permitted Refinancing Debt".
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
--------
"Regulation D" means Regulation D of the Board, as the same may be amended,
------------
supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
----------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
-------------
"Reserve Report" means a report, in form and substance reasonably
---------------
satisfactory to the Administrative Agent, setting forth, as of each December
31st or June 30th (or such other date in the event of an Interim
Redetermination) the oil and gas reserves attributable to the Oil and Gas
16
Properties of the Borrower and the Material Subsidiaries, together with a
projection of the rate of production and future net income, taxes, operating
expenses and capital expenditures with respect thereto as of such date, based
upon the pricing assumptions consistent with SEC reporting requirements at the
time.
"Responsible Officer" means, as to any Person, the Chief Executive Officer,
-------------------
the President, any Financial Officer or any Vice President of such Person.
Unless otherwise specified, all references to a Responsible Officer herein shall
mean a Responsible Officer of the Borrower.
"Restricted Payment" means any dividend or other distribution (whether in
-------------------
cash, securities or other Property) with respect to any Equity Interests in the
Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
"Revolving Credit Exposure" means, with respect to any Lender at any time,
--------------------------
the sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"Scheduled Redetermination" has the meaning assigned such term in Section
--------------------------
2.07(b).
"Scheduled Redetermination Date" means the date on which a Borrowing Base
--------------------------------
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"SEC" means the Securities and Exchange Commission or any successor
---
Governmental Authority.
"Security Instruments" means the Guaranty Agreement, the Pledge, all
---------------------
assignments, mortgages, deeds of trust, amendments and supplements to mortgages
and deeds of trust, and all other agreements, instruments or certificates
described or referred to in Exhibit D-1, and any and all other agreements,
instruments or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than Swap Agreements with the Lenders or any
Affiliate of a Lender 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 the payment or
performance of the Indebtedness, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated 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.
"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 is subject, with
17
respect to the Adjusted LIBO Rate, 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.
"Subsidiary" means: (a) any Person of which at least a majority of the
----------
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries and (b) any partnership of which the Borrower or any of its
Subsidiaries is a general partner. Unless otherwise indicated herein, each
reference to the term "Subsidiary" shall mean a Subsidiary of the Borrower.
----------
"Substantial Portion" means, with respect to the Property of the Borrower
--------------------
and its Subsidiaries, Property which represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries or property which is
responsible for more than 10% of the consolidated net sales or of the
consolidated net income of the Borrower and its Subsidiaries, in each case, as
would be shown in the consolidated financial statements of the Borrower and its
Subsidiaries at the beginning of the twelve-month period ending with the month
in which such determination is made (or if financial statements have not been
delivered hereunder for that month which begins the twelve-month period, then
the financial statements delivered hereunder for the quarter ending immediately
prior to that month).
"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.
"Synthetic Leases" means, in respect of any Person, all leases which shall
-----------------
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
18
"Taxes" means any and all present or future taxes, levies, imposts, duties,
-----
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" means the earlier of the Maturity Date and the date of
-----------------
termination of the Commitments.
"Total Debt" means, at any date, all Debt of the Borrower and the
-----------
Consolidated Subsidiaries on a consolidated basis, exclusive of all accounts
payable, accrued expenses, liabilities or other obligations to pay the deferred
purchase price of Property or services to the extent any of same was included in
Debt of the Borrower and the Consolidated Subsidiaries on a consolidated basis.
"Transactions" means, with respect to (a) the Borrower, the execution,
------------
delivery and performance by the Borrower of this Agreement, and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) each Material Subsidiary, the execution, delivery
and performance by such Material Subsidiary of each Loan Document to which it is
a party, the guaranteeing of the Indebtedness and the other obligations under
the Guaranty Agreement by such Material Subsidiary and such Material
Subsidiary's grant of the security interests and provision of collateral
thereunder, and the grant of Liens by such Material Subsidiary on Mortgaged
Properties and other Properties pursuant to the Security Instruments.
"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 LIBO Rate.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
------------------------
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries.
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. 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) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns (subject to the restrictions contained herein), (c) the words "herein",
19
"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 and (d) all references 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.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
-------------------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Banks shall otherwise agree in writing, no such change
shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II
The Credits
Section 2.01 Commitments. Subject to the terms and conditions set forth
-----------
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
Aggregate Revolving Credit Exposures exceeding the Aggregate Commitments then in
effect. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, repay and reborrow the Loans.
Section 2.02 Loans and Borrowings.
--------------------
(a) Borrowings; Several Obligations. Each Loan shall be made as
---------------------------------
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
$1,000,000 and not less than $3,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
20
multiple of $500,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(f).
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 six (6) 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. The Loans made by each Lender shall be evidenced by a
-----
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the assignment and assumption, or (iii) any Lender that becomes a party
hereto in connection with an increase in the Aggregate Commitment pursuant to
Section 2.06(c), as of the effective date of such increase, payable to the order
of such Lender in a principal amount equal to its Commitment as in effect on
such date, and otherwise duly completed. In the event that any Lender's
Commitment increases or decreases for any reason (whether pursuant to Section
2.06, Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be
delivered on the effective date of such increase or decrease, a new Note payable
to the order of such Lender in a principal amount equal to its Commitment after
giving effect to such increase or 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. 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.
Section 2.03 Requests for Borrowings To request a Borrowing, the Borrower
------------------------
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 1:00 p.m., Charlotte, North
Carolina time, three Business Days before the date of the proposed Borrowing or
(b) in the case of a ABR Borrowing, not later than 1:00 p.m., Charlotte, North
Carolina time, one Business Day before the date of the proposed Borrowing;
provided that any such notice of an ABR Borrowing to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.08(f) may be given not later
than 11:00 a.m., Charlotte, North Carolina time, on the date of the proposed
Borrowing. Each 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 a form approved by the Administrative Agent
and signed by the Borrower. Each 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
in the United States;
21
(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";
(v) the amount of the then effective Borrowing Base, the
current Aggregate Revolving Credit Exposures (without regard to the requested
Borrowing) and the pro forma Aggregate Revolving Credit Exposures (giving effect
to the requested Borrowing); and
(vi) the location and number of the Borrower's 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. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the Aggregate Revolving Credit Exposures to exceed the
Aggregate Commitments then in effect.
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. Each Borrowing initially shall be
--------------------------
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such 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 affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(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 by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
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 a form approved by the Administrative Agent
and signed by the Borrower.
22
(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".
(d) 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.
(e) 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.
(f) 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 (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
23
Section 2.05 Funding of Borrowings.
---------------------
(a) Funding by Lenders. Each Lender shall make each Loan to be
------------------
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 2:00 p.m. Charlotte, North Carolina time, to the
account of the Administrative Agent most recently 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 maintained with the Administrative Agent in
Charlotte, North Carolina and designated by the Borrower in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.08(f) shall be remitted by the
Administrative Agent to the Issuing Bank.
(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 any Borrowing that such Lender will not make available to
the Administrative Agent such Lender's share of such 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 applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans; provided, however, such demands shall be made first upon the
-------- -------
applicable Lender and then upon the Borrower. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
Section 2.06 Termination, Reduction and Increase of Aggregate Commitment.
-----------------------------------------------------------
(a) Scheduled Termination of Commitments. Unless previously
----------------------------------------
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Maximum Credit Amount or the Borrowing Base is terminated or reduced to
zero, then the Commitments shall terminate on the effective date of such
termination or reduction.
(b) Optional Termination and Reduction of Aggregate Commitment.
----------------------------------------------------------
(i) The Borrower may at any time terminate, or from time to
time reduce, the Aggregate Commitment; provided that A. each reduction of the
Aggregate Commitment shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and B. the Borrower shall not terminate
or reduce the Aggregate Commitment if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.04(c), the Aggregate
Revolving Credit Exposures would exceed the Aggregate Commitments.
24
(ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Commitment under Section
2.06(b)(i) at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Commitment shall be permanent and may
not be reinstated except pursuant to Section 2.06(c). Each reduction of the
Aggregate Commitment shall be made ratably among the Lenders in accordance with
each Lender's Applicable Percentage.
(c) Optional Increase in Aggregate Commitment.
-----------------------------------------
(i) Subject to the conditions set forth in Section
2.06(c)(ii), the Borrower may increase the Aggregate Commitment then in effect
by increasing the Commitment of a Lender or by causing a Person acceptable to
the Administrative Agent that at such time is not a Lender to become a Lender
(an "Additional Lender").
-----------------
(ii) Any increase in the Aggregate Commitment shall be subject
to the following additional conditions:
A. such increase shall not be less than $10,000,000 unless
the Administrative Agent otherwise consents;
B. no Default shall have occurred and be continuing at the
effective date of such increase;
C. on the effective date of such increase, no Eurodollar
Borrowings shall be outstanding (or if any Eurodollar Borrowings are
outstanding, then the effective date of such increase shall be the last day of
the Interest Period in respect of such Eurodollar Borrowings);
D. each Lender shall have had the option to increase its
Commitment by its Applicable Percentage of the amount of such increase; provided
--------
that, no Lender's Commitment may be increased without the consent of such
----
Lender;
E. if the Borrower elects to increase the Aggregate
Commitment by increasing the Commitment of a Lender, the Borrower and such
Lender shall execute and deliver to the Administrative Agent a certificate
substantially in the form of Exhibit F-1 (a "Commitment Increase Certificate"),
--------------------------------
and further, in the event a new Note is required to reflect the increased
Commitment of such Lender, then in that case, the Borrower shall deliver a new
Note (after presentation of same to Borrower by the Administrative Agent)
payable to the order of such Lender in a principal amount equal to its
Commitment after giving effect to such increase, and otherwise duly completed,
together with a processing and recordation fee of $3,500 payable by the Borrower
to the Administrative Agent and the reimbursement by the Borrower of the
reasonable legal fees of counsel to the Administrative Agent;
F. If the Borrower elects to increase the Aggregate
Commitment by causing an Additional Lender to become a party to this Agreement,
then the Borrower and such Additional Lender shall execute and deliver to the
25
Administrative Agent a certificate substantially in the form of Exhibit F-2 (an
"Additional Lender Certificate"), together with an Administrative Questionnaire
-----------------------------
and a processing and recordation fee of $3,500 payable by such Additional Lender
and the reimbursement by the Borrower of the reasonable legal fees of counsel to
the Administrative Agent, and the Borrower shall deliver a Note (after
presentation of same to Borrower by the Administrative Agent) payable to the
order of such Additional Lender in a principal amount equal to its Commitment,
and otherwise duly completed.
(iii) Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the
Commitment Increase Certificate or the Additional Lender Certificate (or if any
Eurodollar Borrowings are outstanding, then the last day of the Interest Period
in respect of such Eurodollar Borrowings): A. the amount of the Aggregate
Commitment shall be increased as set forth therein, and B. in the case of an
Additional Lender Certificate, any Additional Lender party thereto shall be a
party to this Agreement and the other Loan Documents and have the rights and
obligations of a Lender under this Agreement and the other Loan Documents. In
addition, the Lender or the Additional Lender, as applicable, shall purchase a
pro rata portion of the Aggregate Revolving Credit Exposures of each of the
other Lenders (and such Lenders hereby agree to sell and to take all such
further action to effectuate such sale) such that each Lender (including any
Additional Lender, if applicable) shall hold its Applicable Percentage of the
Aggregate Revolving Credit Exposures after giving effect to the increase in the
Aggregate Commitment;
(iv) Upon its receipt of a duly completed Commitment Increase
Certificate or an Additional Lender Certificate, executed by the Borrower and
the Lender or the Borrower and the Additional Lender party thereto, as
applicable, the processing and recording fee referred to in Section 2.06(c)(ii),
the Administrative Questionnaire referred to in Section 2.06(c)(ii), if
applicable, and the written consent of the Administrative Agent to such increase
required by Section 2.06(c)(i), the Administrative Agent shall accept such
Commitment Increase Certificate or Additional Lender Certificate and record the
information contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv). No increase in the
Aggregate Commitment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this Section 2.06(c)(iv); and
(G) after giving effect to an increase in the Aggregate
Commitment, the Aggregate Commitment shall not exceed the Maximum Credit Amount.
Section 2.07 Borrowing Base.
--------------
(a) Initial Borrowing Base. For the period from and including the
-----------------------
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $400,000,000. Notwithstanding the foregoing, the
Borrowing Base shall be subject to further adjustments from time to time
pursuant to this Section 2.07 and Section 8.13(c), Section 9.12(a), Section 9.13
and Section 9.21.
(b) Scheduled and Interim Redeterminations. Subject to Section
----------------------------------------
2.07(d), the Borrowing Base shall be redetermined (a "Scheduled
---------
Redetermination") no later than April 1 and October 1 of each year, commencing
---------------
October 1, 2005. In addition, the Borrower may, by notifying the Administrative
26
Agent thereof, and the Administrative Agent may, at the direction of the
Majority Lenders, by notifying the Borrower thereof, one time during any
12-month period, elect to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations (an "Interim Redetermination") in accordance with
------------------------
this Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
-----------------------------------------------
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of A. the Reserve Report and the certificate required to be
delivered by the Borrower to the Administrative Agent, in the case of a
Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case
of an Interim Redetermination, pursuant to Section 8.12(b) and (c), and B. such
other reports, data and supplemental information, including, without limitation,
the information provided pursuant to Section 8.12(c), as may, from time to time,
be reasonably requested by the Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the information
-------------------
contained in the Engineering Reports and shall, in good faith, propose a new
Borrowing Base (the "Proposed Borrowing Base") based upon such information and
-------------------------
such other information (including, without limitation, the status of title
information with respect to the Oil and Gas Properties as described in the
Engineering Reports and the existence of any other Debt) as the Administrative
Agent deems appropriate and consistent with its normal oil and gas lending
criteria as it exists at the particular time.
(ii) The Administrative Agent shall notify the Borrower and
the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing Base
-------------------------
Notice"):
------
A. in the case of a Scheduled Redetermination 1. if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before March 15th and September 15th of such year
following the date of delivery or 2. if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i); and
B. in the case of an Interim Redetermination, promptly,
and in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been approved
by all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed
Borrowing Base that would decrease or maintain the Borrowing Base then in effect
must be approved or be deemed to have been approved by the Majority Lenders as
provided in this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing
Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed
27
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If at the end of such fifteen (15) days, any Lender
has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Majority Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Majority Lenders, as applicable, have not
approved or deemed to have approved, as aforesaid, then for purposes of this
Section 2.07, the Administrative Agent shall poll the Lenders to ascertain the
highest Borrowing Base then acceptable (aa) to the Majority Lenders, if such
amount would decrease the Borrowing Base then in effect, or (bb) to all of the
Lenders, if such amount would increase the Borrowing Base then in effect, which
amount shall become the new Borrowing Base, effective on the date specified in
Section 2.07(d).
(iv) If any Lender refuses to approve a Proposed Borrowing
Base pursuant to Section 2.07(c)(iii), the Borrower shall have the right to
cause the Commitment of such dissenting Lender to be replaced pursuant to
Section 5.06.
(d) Effectiveness of a Redetermined Borrowing Base. After a
---------------------------------------------------
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or Majority Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
--------------------
Notice"), and such amount shall become the new Borrowing Base, effective and
------
applicable to the Borrower, the Agents, the Issuing Bank and the Lenders:
A. in the case of a Scheduled Redetermination, 1. if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then no later than April 1 or October 1, as applicable,
following such notice, or 2. if the Administrative Agent shall not have received
the Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then on the Business
Day next succeeding delivery of such notice; and
B. in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
C. Such amount shall then become the Borrowing Base until
the next Scheduled Redetermination Date, the next Interim Redetermination Date
or the next adjustment to the Borrowing Base under Section 8.13(c), Section
9.12(a) or Section 9.13, whichever occurs first. Notwithstanding the foregoing,
no Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrower.
28
Section 2.08 Letters of Credit.
-----------------
(a) General. Subject to the terms and conditions set forth herein,
-------
the Borrower may request the issuance of Letters of Credit for its own account
or for the account of any of its Material Subsidiaries, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
--------------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than three (3) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:
(i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit to be amended, renewed or extended;
(ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to
expire (which shall comply with Section 2.08(d));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing
Base, the current Aggregate Revolving Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma Aggregate Revolving Credit
Exposures (giving effect to the requested Letter of Credit or the requested
amendment, renewal or extension of an outstanding Letter of Credit).
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the Aggregate Revolving
Credit Exposures shall not exceed the Aggregate Commitments.
29
(c) If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on the Issuing Bank's standard form in
connection with any request for a Letter of Credit.
(d) Expiration Date. Each Letter of Credit shall expire at or
----------------
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(e) Participations. By the issuance of a Letter of Credit (or an
--------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender's Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(f), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(e) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
(f) Reimbursement. If the Issuing Bank shall make any LC
-------------
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, Charlotte, North Carolina time, on the
date that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 12:00 noon, Charlotte, North Carolina
time, on such date, or, if such notice has not been received by the Borrower
prior to such time on such date, then not later than 12:00 noon Charlotte, North
Carolina time, on (i) the Business Day that the Borrower receives such notice,
if such notice is received prior to 12:00 noon, Charlotte, North Carolina time,
on the day of receipt, or (ii) the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that if such LC Disbursement is not
less than $1,000,000, the Borrower may, subject to the conditions to Borrowing
set forth herein, request in accordance with Section 2.03 that such payment be
financed with a ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower makes such a request
(and if the Borrower fails to make such a request and has not made the relevant
reimbursement, it shall be deemed to have made such a request), the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this Section
30
2.08(f), the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this Section
2.08(f) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank
as their interests may appear.
(g) Obligations Absolute. The Borrower's obligation to reimburse
---------------------
LC Disbursements as provided in Section 2.08(f) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit or any Letter of Credit
Agreement, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.08(g), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower's obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised all requisite care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(h) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
31
(i) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(f)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(i) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(f) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(j) Replacement of the Issuing Bank. The Issuing Bank may be
----------------------------------
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 3.05(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of the Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(k) Cash Collateralization. If (i) any Event of Default shall
-----------------------
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this Section 2.08(k), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Material Subsidiary
described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to
the Administrative Agent, for the benefit of the Issuing Bank and the Lenders,
an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(k) shall be absolute and
32
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and the Guarantor's obligations under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the written request and instruction of the Borrower but at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other obligations of
the Borrower and the Guarantors under this Agreement or the other Loan
Documents. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, and the Borrower
is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01 Repayment of Loans. 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 Termination Date.
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 LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, if any
------------------
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
33
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), 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
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(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 LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.
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 LIBO Rate or the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Majority Lenders
that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making
or maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
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, subject
to prior notice in accordance with Section 3.04(b).
34
(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 1:00 p.m. Charlotte, North Carolina time, three Business Days
before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 1:00 p.m. Charlotte, North Carolina time, one Business
Day before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid. 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.
(c) Mandatory Prepayments.
---------------------
(i) If, after giving effect to any termination or reduction of
the Aggregate Commitment pursuant to Section 2.06(b), the Aggregate Revolving
Credit Exposures exceeds the Aggregate Commitments, then the Borrower shall A.
prepay the Borrowings in an aggregate principal amount equal to such excess, or
add to the Mortgaged Property, Oil and Gas Properties, having value, as
determined by the Administrative Agent and the Majority Lenders, equal to or
greater than such excess, or a combination thereof and B. if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(k). The Borrower will be
obligated to make such prepayment, provide such collateral and/or deposit of
cash collateral within ninety (90) days following such termination or reduction
of the Aggregate Commitment; provided that all payments required to be made
pursuant to this Section 3.04(c)(i) must be made on or prior to the Termination
Date.
(ii) Upon any redetermination of or adjustment to the amount
of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the
Aggregate Revolving Credit Exposures exceeds the redetermined or adjusted
Borrowing Base, then the Borrower shall A. prepay the Borrowings in an aggregate
principal amount equal to such excess, or add to the Mortgaged Property, Oil and
Gas Properties, having value, as determined by the Administrative Agent and the
Majority Lenders, equal to or greater than such excess, or a combination thereof
and B. if any excess remains after prepaying all of the Borrowings as a result
of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an
amount equal to such excess to be held as cash collateral as provided in Section
2.08(k). The Borrower shall be obligated to make such prepayment, provide such
collateral and/or deposit of cash collateral within ninety (90) days following
its receipt of the New Borrowing Base Notice in accordance with Section 2.07(d)
or the date the adjustment occurs; provided that all payments required to be
made pursuant to this Section 3.04(c)(ii) must be made on or prior to the
Termination Date.
(iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.12(a), Section 9.13 or Section 9.21, if the Aggregate Revolving Credit
Exposures exceeds the Borrowing Base as adjusted, then the Borrower shall A.
prepay the Borrowings in an aggregate principal amount equal to such excess, or
add to the Mortgaged Property, Oil and Gas Properties, having value, as
35
determined by the Administrative Agent and the Majority Lenders, equal to or
greater than such excess, or a combination thereof and B. if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(k). The Borrower shall be
obligated to make such prepayment, provide such collateral and/or deposit of
cash collateral within ninety (90) days following such adjustment to the
Borrowing Base (or, if sooner, on the date the Borrower receives cash proceeds
as a result of a disposition pursuant to Section 9.13); provided that all
payments required to be made pursuant to this Section 3.04(c)(iii) must be made
on or prior to the Termination Date.
(iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
(v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.
(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 5.02.
Section 3.05 Fees.
----
(a) Commitment Fees. The Borrower agrees to pay to the
-----------------
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the daily unused amount of
the Commitment of such Lender during the period from and including the date of
this Agreement to but excluding the Termination Date. Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the Termination Date, commencing on the first such
date to occur after the date hereof. All commitment fees 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), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
---------------------
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
36
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, provided
that in no event shall such fee be less than $300 during any quarter, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing
after the Termination Date shall be payable on demand. Any other fees payable to
the Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10
days after demand. All participation fees and fronting fees 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), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(c) Administrative Agent 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
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 1:00 p.m. Charlotte, North
Carolina time, on the date when due, in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, 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 12.01, except payments
to be made directly to the Issuing Bank as expressly provided herein and except
that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section
12.03 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. 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, unreimbursed LC Disbursements, interest and
37
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 and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements 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 or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements 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 and participations in LC
Disbursements 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
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). 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
----------------------------------------------
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank 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 or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank 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(b), Section 2.08(e), Section 2.08(f) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
38
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 the Borrower and/or the Material Subsidiaries unto and in favor of
the Administrative Agent for the benefit of the Lenders of all of the Borrower's
or each Material Subsidiary'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 Administrative Agent
or the Lenders, but the Lenders will instead permit such proceeds to be paid to
the Borrower and its Material Subsidiaries and b. the Lenders hereby authorize
the Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or such Material Subsidiaries.
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 LIBO Rate); 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.
(b) Capital Requirements. If any Lender or the Issuing Bank
---------------------
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy), then from time
39
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) Certificates. A certificate of a Lender or the Issuing Bank
------------
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank 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 or the Issuing Bank, as the
case may be, 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 or the Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender's or
the Issuing Bank's right to demand such compensation.
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 LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
40
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 Material Subsidiary 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 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, Lender or Issuing Bank
(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 shall make such deductions
and (iii) the Borrower 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.
(c) Indemnification by the Borrower. The Borrower shall indemnify
-------------------------------
the Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate of the Administrative Agent, a Lender or the Issuing Bank 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 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) Tax Refunds. If the Administrative Agent or a Lender
------------
determines, in its reasonable discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 5.03, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 5.03 with respect to the Taxes or Other Taxes giving rise to
41
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, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent 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 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 which it deems confidential) to the Borrower or any other Person.
Section 5.04 Designation of Different Lending Office. 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 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. 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 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 the Borrower 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.
Section 5.06 Replacement of Lenders. 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 5.03, or if any Lender defaults in its obligation to fund
Loans hereunder, or if any Lender refuses to approve a Proposed Borrowing Base
pursuant to Section 2.07(c)(iii) and as a result, the Borrower elects to replace
such dissenting Lender pursuant to Section 2.07(c)(iv), then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
42
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
ARTICLE VI
Conditions Precedent
Section 6.01 Effective Date. The obligations of the Lenders to make Loans
---------------
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02):
(a) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date, including,
without limitation, to the extent invoiced, reimbursement or payment of all of
the Administrative Agent's out-of-pocket expenses including, without limitation,
the reasonable fees, charges and disbursements of counsel for the Administrative
Agent, required to be reimbursed or paid by the Borrower hereunder.
(b) The Administrative Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each of the Borrower and each
Guarantor setting forth (i) resolutions of its board of directors with respect
to the authorization of the Borrower or such Guarantor to execute and deliver
the Loan Documents to which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of the Borrower or such
Guarantor (y) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (z) 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 articles or certificate of incorporation and bylaws of the Borrower and
such Guarantor, certified as being true and complete. 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 certificates of
the appropriate State agencies 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 B, duly and
properly executed by a Responsible Officer and dated as of the Effective Date.
43
(e) The Administrative Agent shall have received the Initial
Reserve Report.
(f) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(g) The Administrative Agent shall have received duly executed
Notes payable to the order of each Lender in a principal amount equal to its
Commitment dated as of the date hereof.
(h) The Administrative Agent shall have received from each party
thereto duly executed and completed counterparts (in such number as may be
requested by the Administrative Agent) of the Security Instruments, including
the Pledge, the Guaranty Agreement and the other Security Instruments described
on Exhibit D-1. In connection with the execution and delivery of the Security
Instruments, the Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but subject
to the provisos at the end of such definition) on at least 70% of the total
value of the Oil and Gas Properties evaluated in the Initial Reserve Report
sufficient in the reasonable opinion of the Administrative Agent to justify a
Borrowing Base of $400,000,000 on the Effective Date hereof; and
(ii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Guarantors.
(i) The Administrative Agent shall have received an opinion of
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, special counsel to the Borrower and
the Guarantors, substantially in the form of Exhibit C hereto.
(j) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(k) The Administrative Agent shall have received copies of title
information in form and substance satisfactory to the Administrative Agent,
setting forth the status of title to at least 70% of the total value of the Oil
and Gas Properties evaluated in the Initial Reserve Report and the
Administrative Agent shall be reasonably satisfied with the status of title
reflected therein.
(l) The Administrative Agent shall be reasonably satisfied with
the environmental condition of the Oil and Gas Properties of the Borrower and
its Material Subsidiaries.
(m) 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.
44
(n) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).
(o) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties the
Borrower and the Material Subsidiaries for each of the following jurisdictions:
Colorado, Delaware, Louisiana, Montana, New Mexico, North Dakota, Oklahoma,
Texas, Utah, and Wyoming and any other jurisdiction requested by the
Administrative Agent; other than those being assigned or released on or prior to
the Effective Date or Liens permitted by Section 9.03.
(p) The proceeds of the initial Loans shall be used to renew,
rearrange, modify and extend the outstanding amounts under the Existing Credit
Agreement and all "Commitments" (as defined in the Existing Credit Agreement)
thereunder shall have been terminated.
(q) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 3:00 p.m., Charlotte, North Carolina time, on April 14, 2005
(and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
Section 6.02 Each Credit Event. The obligation of each Lender to make a
------------------
Loan on the occasion of any Borrowing (including the initial funding), and of
the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent any such representations
and warranties are expressly limited to an earlier date, in which case, on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.
45
(d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing Request
in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.
Each Borrowing and each issuance, amendment, renewal or extension of any
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in Section 6.02(a)
through (e).
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 7.01 Organization; Powers. Each of the Borrower and the Material
---------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
--------------------------
Borrower's and each Guarantor's corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action. Each Loan
Document to which the Borrower and each Guarantor is a party has been duly
executed and delivered by the Borrower and such Guarantor and constitutes a
legal, valid and binding obligation of the Borrower and such Guarantor, as
applicable, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
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, nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
46
Instruments as required by this Agreement and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any Material Subsidiary or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any
Material Subsidiary or its Properties, or give rise to a right thereunder to
require any payment to be made by the Borrower or such Material Subsidiary and
(d) will not result in the creation or imposition of any Lien on any Property of
the Borrower or any Material Subsidiary (other than the Liens created by the
Loan Documents).
Section 7.04 Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal year ended December 31, 2004, reported on by
Deloitte & Touche, independent public accountants. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such date and for such period in accordance with GAAP.
(b) Since December 31, 2004, (i) there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Material Subsidiaries, taken as
a whole and (ii) the business of the Borrower and its Material Subsidiaries has
been conducted only in the ordinary course consistent with past business
practices.
(c) Neither the Borrower nor any Material Subsidiary has on the
date hereof (i) any material Debt (including Disqualified Capital Stock) ,
except as referred to or reflected or provided for in the Financial Statements,
or (ii) any contingent liabilities, off-balance sheet liabilities or
partnerships, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, incurred
outside the ordinary course of the Borrower's or such Material Subsidiary's
business.
Section 7.05 Litigation.
----------
(a) Except as set forth on Schedule 7.05, there are no material
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Material Subsidiary (i) not
fully covered by insurance (except for normal deductibles) 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, or (ii) that involve any Loan Document or
the Transactions.
(b) Since the date of this Agreement, there has been no change in
the status of the matters disclosed in Schedule 7.05 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
47
Section 7.06 Environmental Matters. Except as could not be reasonably
----------------------
expected 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
to have a Material Adverse Effect):
(a) neither any Property of the Borrower or any Material
Subsidiary nor the operations conducted thereon violate any order or requirement
of any court or Governmental Authority or any Environmental Laws.
(b) no Property of the Borrower or any Material Subsidiary nor the
operations currently conducted thereon or, to the knowledge of the Borrower, by
any prior owner or operator of such Property or operation, are in violation of
or subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or
similar authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of the Borrower and each
Material Subsidiary, including, without limitation, past or present treatment,
storage, disposal or release of a hazardous substance, oil and gas waste or
solid waste into the environment, have been duly obtained or filed, and the
Borrower and each Material Subsidiary are in compliance with the terms and
conditions of all such notices, permits, licenses and similar authorizations.
(d) all hazardous substances, solid waste and oil and gas waste,
if any, generated at any and all Property of the Borrower or any Material
Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.
(e) the Borrower has taken all steps reasonably necessary to
determine and has determined that no oil, 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 oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of the Borrower or any Material Subsidiary
except in compliance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Borrower and
each Material Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA, and the Borrower does not have any
reason to believe that such Property, to the extent subject to the OPA, will not
be able to maintain compliance with the OPA requirements during the term of this
Agreement.
48
(g) neither the Borrower nor any Material Subsidiary has any known
contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
----------------------------------------------------
(a) Each of the Borrower and each Material Subsidiary is in
compliance with all Governmental Requirements applicable to it or its Property
and all agreements and other instruments binding upon it or its Property, and
possesses all licenses, permits, franchises, exemptions, approvals and other
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 the Borrower nor any Material 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 the Borrower or a Material Subsidiary to Redeem or make
any offer to do any of the foregoing under any indenture, note, credit agreement
or instrument pursuant to which any Material Indebtedness is outstanding or by
which the Borrower or any Material Subsidiary or any of their Properties is
bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. Neither the Borrower nor any
-------------------------
Subsidiary is 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 Public Utility Holding Company Act. Neither the Borrower nor
-----------------------------------
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of, or subject
to regulation under, the Public Utility Holding Company Act of 1935, as amended.
Section 7.10 Taxes. Each of the Borrower and its Subsidiaries has timely
-----
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Borrower, adequate. No Tax Lien has been
filed and, to the knowledge of the Borrower, no claim is being asserted with
respect to any such Tax or other such governmental charge.
Section 7.11 ERISA.
-----
(a) The Borrower, the Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.
49
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or
is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan as of the
date hereof, 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.
(f) 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 the
Borrower's most recently ended fiscal year, 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.
(g) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) Neither the Borrower, the Subsidiaries nor 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.
Section 7.12 Disclosure; No Material Misstatements. The Borrower has
----------------------------------------
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which it or any of its Material Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial statements,
50
certificates or other information furnished by or on behalf of the Borrower or
any Material Subsidiary to the Administrative Agent or any Lender or any of
their Affiliates in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) 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, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. There
is no fact peculiar to the Borrower or any Material Subsidiary which could
reasonably be expected to have a Material Adverse Effect or in the future is
reasonably likely to have a Material Adverse Effect and which has not been set
forth in this Agreement or the Loan Documents or the other documents,
certificates and statements furnished to the Administrative Agent or the Lenders
by or on behalf of the Borrower or any Material Subsidiary prior to, or on, the
date hereof in connection with the transactions contemplated hereby. There are
no material 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.
Section 7.13 Insurance. The Borrower has, and has caused all its Material
---------
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Material
Subsidiaries.
Section 7.14 Restriction on Liens. Neither the Borrower nor any of the
---------------------
Material Subsidiaries is a party to any material agreement or arrangement (other
than Capital Leases creating Liens permitted by Section 9.03(c), but then only
on the Property subject of such Capital Lease), or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Indebtedness and the Loan Documents.
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
------------
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower
has no Subsidiaries. Schedule 7.15 identifies each Subsidiary that is a Material
Subsidiary, and each Material Subsidiary on such schedule is a Wholly-Owned
Subsidiary.
Section 7.16 Location of Business and Offices. The Borrower's jurisdiction
--------------------------------
of organization is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of organization is St. Xxxx Xxxx & Exploration
Company; and the organizational identification number of the Borrower in its
jurisdiction of organization is 44728. The Borrower's principal place of
business and chief executive offices are located at the address specified in
Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(m)
and Section 12.01(c)). Each Material Subsidiary's jurisdiction of organization,
name as listed in the public records of its jurisdiction of organization,
organizational identification number in its jurisdiction of organization, and
the location of its principal place of business and chief
51
executive office is stated on Schedule 7.15 (or as set forth in a notice
delivered pursuant to Section 8.01(m)).
Section 7.17 Properties; Titles, Etc. Except for matters which could not
-------------------------
reasonably be expected to have a Material Adverse Effect:
(a) Each of the Borrower and the Material Subsidiaries has good
and defensible title to the Oil and Gas Properties evaluated in the most
recently delivered Reserve Report and good title to all its personal Properties,
in each case, free and clear of all Liens except Liens permitted by Section
9.03. After giving full effect to the Excepted Liens, the Borrower or the
Material Subsidiary specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or such Material Subsidiary to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower's or such
Material Subsidiary's net revenue interest in such Property.
(b) All material leases and agreements necessary for the conduct
of the business of the Borrower and the Material 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 would affect
in any material respect the conduct of the business of the Borrower and the
Material Subsidiaries, taken as a whole.
(c) The rights and Properties presently owned, leased or licensed
by the Borrower and the Material Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and the Material 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 the Borrower and the Material
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) The Borrower and each Material Subsidiary owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Borrower and such
Material Subsidiary 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 Effect. The Borrower
and its Material Subsidiaries either own or have valid licenses or other rights
to use all databases, geological data, geophysical data, engineering data,
seismic data, maps, interpretations and other technical information used in
their businesses as presently conducted, subject to the limitations contained in
the agreements governing the use of the same, which limitations are customary
for companies engaged in the business of the exploration and production of
52
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.
Section 7.18 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 the Borrower or any of its Material Subsidiaries that are
necessary to conduct normal operations are being maintained in a state adequate
to conduct normal operations, and with respect to such of the foregoing which
are operated by the Borrower or any of its Material Subsidiaries, in a manner
consistent with the Borrower's or its Material Subsidiaries' past practices
(other than those the failure of which to maintain in accordance with this
Section 7.18 could not reasonably be expect to have a Material Adverse Effect).
Section 7.19 Gas Imbalances, Prepayments. As of the date hereof, except as
----------------------------
set forth on Schedule 7.19 or on the most recent certificate delivered pursuant
to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of its Material
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding three million mcf of gas (on an mcf equivalent basis) in the
aggregate.
Section 7.20 Marketing of Production. Except for contracts listed and in
-----------------------
effect on the date hereof on Schedule 7.20, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Material Subsidiaries are receiving a price for all production
sold thereunder which is computed substantially in accordance with the terms of
the relevant contract and are not having deliveries curtailed substantially
below the subject Property's delivery capacity), no material agreements exist
which are not cancelable on 60 days notice or less without penalty or detriment
for the sale of production from the Borrower's or its Material Subsidiaries'
Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised)
that (a) pertain to the sale of production at a fixed price and (b) have a
maturity or expiry date of longer than six (6) months from the date hereof.
53
Section 7.21 Swap Agreements. Schedule 7.21, as of the date hereof, and
----------------
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(d), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Material Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net xxxx to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.22 Use of Loans and Letters of Credit. The proceeds of the Loans
----------------------------------
and the Letters of Credit shall be used (a) to provide working capital for
exploration, development and production operations, (b) to finance the
acquisition of Oil & Gas Properties, (c) to renew, rearrange, modify and
extend the Debt under the Existing Credit Agreement, and (d) for general
corporate purposes. The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation U or X of the
Board). No part of the proceeds of any Loan or Letter of Credit will be used for
any purpose which violates the provisions of Regulations U or X of the Board.
Section 7.23 Solvency. After giving effect to the transactions contemplated
--------
hereby, (a) the aggregate assets (after giving effect to amounts that could
reasonably be received by reason of indemnity, offset, insurance or any similar
arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as
a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Borrower and the Guarantors will not have incurred or intended to incur, and
will not believe that it will incur, Debt beyond its ability to pay such Debt
(after taking into account the timing and amounts of cash to be received by each
of the Borrower and the Guarantors and the amounts to be payable on or in
respect of its liabilities, and giving effect to amounts that could reasonably
be received by reason of indemnity, offset, insurance or any similar
arrangement) as such Debt becomes absolute and matures and (c) each of the
Borrower and the Guarantors will not have (and will have no reason to believe
that it will have thereafter) unreasonably small capital for the conduct of its
business.
Section 7.24 Material Agreements. The Borrower has delivered or caused to
--------------------
be delivered to the Administrative Agent true and correct copies of the Material
Agreements. The Material Agreements have not been modified, terminated, assigned
or pledged by Borrower or any Material Subsidiary, as applicable, are in full
force and effect and no party is in default in the performance of its
obligations thereunder in any material respect.
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 and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
54
Section 8.01 Financial Statements; Ratings Change; Other Information. The
--------------------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. Within 90 days after the end of
----------------------------
each fiscal year of the Borrower, its audited consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Deloitte & Touche
or other 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 the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.
(b) Quarterly Financial Statements. Within 45 days after the end
-------------------------------
of each of the first three fiscal quarters of each fiscal year of the Borrower,
its consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal quarter
and the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(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 in substantially the form of
Exhibit B hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 8.13(b) and Section
9.01 and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
Section 7.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate.
(d) Listing of Swap Agreements. Concurrently with any delivery of
--------------------------
financial statements under Section 8.01(a) and Section 8.01(b), a true and
complete list of all Swap Agreements of the Borrower and each Material
Subsidiary as of the last Business Day of such fiscal quarter or fiscal year,
which shall depict the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net
xxxx-to-market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.20, any margin required or supplied under any
credit support document, and the counterparty to each such agreement.
(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
by Section 8.07, in form and substance satisfactory to the Administrative Agent,
55
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.
(f) Other Accounting Reports. Promptly upon receipt thereof, a
-------------------------
copy of each other report or letter submitted to the Borrower or any of its
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower or any such
Subsidiary, and a copy of any response by the Borrower or any such Subsidiary,
or the Board of Directors of the Borrower or any such Subsidiary, to such letter
or report.
(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 the Borrower or any Subsidiary
with the SEC, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be.
(h) Notices Under Material Instruments. Promptly after the
-------------------------------------
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
(i) Lists of Purchasers. Promptly following the written request
-------------------
from the Administrative Agent thereof, a list of all Persons purchasing
Hydrocarbons from the Borrower or any Material Subsidiary.
(j) Notice of Sales of Oil and Gas Properties. In the event the
------------------------------------------
Borrower or any Material Subsidiary intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties or any Equity Interests in any
Subsidiary in accordance with Section 9.13 for consideration in excess of
$5,000,000, prior written notice of such disposition, the price thereof and the
anticipated date of closing.
(k) 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.
(l) Issuance of Permitted Refinancing Debt. In the event the
------------------------------------------
Borrower intends to refinance any Debt with the proceeds of Permitted
Refinancing Debt, prior written notice of such intended offering therefor, the
amount thereof and the anticipated date of closing and will furnish a copy of
the preliminary offering memorandum (if any) and the final offering memorandum
(if any).
(m) Information Regarding Borrower and Guarantors. Prompt written
---------------------------------------------
notice (and in any event within thirty (30) days upon becoming aware thereof) of
any change (i) in the Borrower or any Guarantor'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 the Borrower or any
Guarantor's chief executive office or principal place of business, (iii) in the
Borrower or any Guarantor's identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) in the
Borrower or any Guarantor's jurisdiction of organization or such Person's
56
organizational identification number in such jurisdiction of organization, and
(v) in the Borrower or any Guarantor's federal taxpayer identification number.
(n) Other Requested Information. Promptly following any request
----------------------------
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.
Section 8.02 Notices of Material Events. The Borrower will furnish to the
---------------------------
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;
(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 the Borrower and its Subsidiaries in an aggregate amount exceeding
$2,000,000; and
(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 8.03 Existence; Conduct of Business. The Borrower will, and will
-------------------------------
cause each Material Subsidiary to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.12.
Section 8.04 Payment of Obligations. The Borrower will, and will cause each
----------------------
Material Subsidiary to, pay its obligations, including Tax liabilities of the
Borrower and all of its Subsidiaries before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) the Borrower or such Material
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect or
result in the seizure or levy of any Property of the Borrower or any Subsidiary.
57
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
-----------------------------------------------
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will and will cause each Material Subsidiary 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. Except for matters
-----------------------------------------
that could not reasonably be expected to result in a Material Adverse Effect,
the Borrower, at its own expense, will, and will cause each Material Subsidiary
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 and Environmental Laws, and all
applicable laws, rules and regulations of every other Governmental Authority
from time to time constituted to regulate the development and operation of its
Oil and Gas Properties and the production and sale of Hydrocarbons and other
minerals therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities.
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
(d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties.
(e) operate its Oil and Gas Properties and other material
Properties or cause or make reasonable and customary efforts to cause such Oil
and Gas Properties and other material Properties to be operated in accordance
with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements.
(f) to the extent the Borrower or a Material Subsidiary is not the
operator of any Property, the Borrower shall use reasonable efforts to cause the
operator to comply with this Section 8.06.
58
Section 8.07 Insurance. The Borrower will, and will cause each Material
---------
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.
Section 8.08 Books and Records; Inspection Rights. The Borrower will, and
--------------------------------------
will cause each Material Subsidiary to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each Material Subsidiary to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its Properties, to examine and make extracts from its books and
records, 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. The Borrower will, and will cause each
----------------------
Material Subsidiary to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 8.10 Environmental Matters.
---------------------
(a) The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties or any other Property to the extent caused by the
Borrower's or any of its Subsidiaries' operations except in compliance with
applicable Environmental Laws, the disposal or release of which could reasonably
be expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
--------------
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
59
assure that the Borrower's and its Subsidiaries' obligations under this Section
8.10(a) are timely and fully satisfied, which failure to establish and implement
could reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five
days of the occurrence of a triggering event, notify the Administrative Agent
and the Lenders in writing of any threatened action, investigation or inquiry by
any Governmental Authority or any threatened demand or lawsuit by any landowner
or other third party against the Borrower or its Subsidiaries or their
Properties of which the Borrower has knowledge in connection with any
Environmental Laws (excluding routine testing and corrective action) if the
Borrower reasonably anticipates that such action will result in liability
(whether individually or in the aggregate) in excess of $500,000, not fully
covered by insurance, subject to normal deductibles.
(c) In connection with any future acquisitions of Oil and Gas
Properties or other Properties, the Borrower will and will cause each Subsidiary
to provide environmental audits and tests in accordance with American Society of
Testing Materials standards upon request by the Administrative Agent and the
Lenders, except in circumstances in which the Borrower or any Subsidiary is
acquiring an additional interest in an Oil and Gas Property or other Property.
Section 8.11 Further Assurances.
------------------
(a) The Borrower at its expense will, and will cause each Material
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower or any Material
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the reasonable discretion of the Administrative
Agent, in connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
the Borrower or any Material Subsidiary where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law. The Administrative
Agent will promptly send the Borrower any financing or continuation statements
it files without the signature of the Borrower or any other Guarantor and the
Administrative Agent will promptly send the Borrower the filing or recordation
information with respect thereto.
60
Section 8.12 Reserve Reports.
---------------
(a) On or before February 28th (or February 29th, as applicable)
and August 31st of each year, commencing August 31. 2005, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report. The
Reserve Report as of December 31 of each year shall have the majority of PV-10
value prepared or audited by one or more Approved Petroleum Engineers, and the
Reserve Report as of June 30 of each year shall be prepared by or under the
supervision of the Manager of Reservoir Engineering of the Borrower who shall
certify such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding December 31
Reserve Report.
(b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the Manager of Reservoir Engineering of the Borrower
who shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
December 31 Reserve Report. For any Interim Redetermination requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower
shall provide such Reserve Report with an "as of" date as required by the
Administrative Agent as soon as possible, but in any event no later than thirty
(30) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or its Material
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.19 with
respect to its Oil and Gas Properties evaluated in such Reserve Report which
would require the Borrower or any Material Subsidiary to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, (iv) none of
their Oil and Gas Properties have been sold since the date of the last Borrowing
Base determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on Schedule
7.20 had such agreement been in effect on the date hereof and 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 Borrowing
Base that the value of such Mortgaged Properties represent.
61
Section 8.13 Title Information.
-----------------
(a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 70% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 70% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect requested
by the Administrative Agent or the Lenders to be cured within the 60-day period
or the Borrower does not comply with the requirements to provide acceptable
title information covering 70% of the value of the Oil and Gas Properties
evaluated in the most recent Reserve Report, such default shall not be a
Default, but instead the Administrative Agent and/or the Majority Lenders shall
have the right to exercise the following remedy in their sole discretion from
time to time, and any failure to so exercise this remedy at any time shall not
be a waiver as to future exercise of the remedy by the Administrative Agent or
the Lenders. To the extent that the Administrative Agent or the Majority Lenders
are not satisfied with title to any Mortgaged Property after the 60-day period
has elapsed, such unacceptable Mortgaged Property shall not count towards the
70% requirement, and the Administrative Agent may send a notice to the Borrower
and the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Majority Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 70%
of the value of the Oil and Gas Properties. This new Borrowing Base shall become
effective immediately after receipt of such notice.
Section 8.14 Additional Collateral; Additional Guarantors.
--------------------------------------------
(a) In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at least 70% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 70% of such total value, then the Borrower shall, and shall
cause its Material Subsidiaries to, grant to the Administrative Agent as
62
security for the Indebtedness a first-priority Lien interest (subject only to
Excepted Liens of the type described in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition)
on additional Oil and Gas Properties not already subject to a Lien of the
Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 70% of such total value. All such Liens will
be created and perfected by and in accordance with the provisions of deeds of
trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Material Subsidiary places a Lien on its Oil
and Gas Properties and such Material Subsidiary is not a Guarantor, then it
shall become a Guarantor and comply with Section 8.14(b).
(b) In the event that any Subsidiary becomes a Material Subsidiary
after the Closing Date, the Borrower shall promptly cause such Subsidiary to
guarantee the Indebtedness pursuant to the Guaranty Agreement. In connection
with any such guaranty, the Borrower shall, or shall cause such Subsidiary to,
A. execute and deliver a supplement to the Guaranty Agreement executed by such
Subsidiary, B. pledge all of the Equity Interests of such new Subsidiary
(including, without limitation, delivery of original stock certificates
evidencing the Equity Interests of such Subsidiary, together with an appropriate
undated stock powers for each certificate duly executed in blank by the
registered owner thereof) and C. execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Administrative Agent.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will
----------------
cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (ii) 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, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or the principal Financial
Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying
the nature thereof, what action the Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, and (iii) 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. With respect to each Plan (other than
a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and
ERISA Affiliate to, (i) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and (k)
thereof) and of section 302 of ERISA (determined without regard to sections 303,
304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.
63
Section 8.16 Performance of Material Agreements. The Borrower will perform
----------------------------------
and observe, and cause each Material Subsidiary to perform and observe, in all
material respects each of the provisions of the Material Agreements to which it
is a party on its part to be performed or observed prior to the termination
thereof.
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 and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 9.01 Financial Covenants.
-------------------
(a) Ratio of Total Debt to EBITDA. The Borrower will not, at any
-----------------------------
time, permit its ratio of Total Debt as of such time to EBITDA for the four
fiscal quarters ending on the last day of the fiscal quarter immediately
preceding the date of determination for which financial statements are available
to be greater than 3.5 to 1.0.
(b) Current Ratio. The Borrower will not permit, as of the last
--------------
day of any fiscal quarter, its ratio of (i) consolidated current assets
(including the unused amount of the total Commitments) to (ii) consolidated
current liabilities (excluding non-cash obligations under FAS 133 and the
current portion of the Aggregate Commitment) to be less than 1.0 to 1.0.
Section 9.02 Debt. Neither the Borrower nor any Material Subsidiary will
----
incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan
Documents or any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents.
(b) Debt of the Borrower and its Material Subsidiaries existing on
the date hereof that is reflected in the Financial Statements, and any Permitted
Refinancing Debt in respect thereof.
(c) accounts payable (for the deferred purchase price of Property
or services) from time to time incurred in the ordinary course of business which
are not greater than sixty (60) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP.
(d) Debt under Capital Leases not to exceed $5,000,000.
(e) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties.
64
(f) intercompany Debt between the Borrower and any Material
Subsidiary or between Material Subsidiaries to the extent permitted by Section
9.05(g); provided that such Debt is not held, assigned, transferred, negotiated
or pledged to any Person other than the Borrower or one of its Wholly-Owned
Subsidiaries, and, provided further, that any such Debt owed by either the
Borrower or a Guarantor shall be subordinated to the Indebtedness on terms set
forth in the Guaranty Agreement.
(g) endorsements of negotiable instruments for collection in the
ordinary course of business.
(h) non-recourse Debt secured by Property other than Oil and Gas
Properties evaluated by the Lenders for purposes of establishing the Borrowing
Base not to exceed $10,000,000 in the aggregate at any one time outstanding.
(i) other Debt not to exceed $5,000,000 in the aggregate at any
one time outstanding.
Section 9.03 Liens. Neither the Borrower nor any Material Subsidiary will
-----
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 Capital Leases permitted by Section 9.02(d) but
only on the Property under lease.
(d) Liens securing any Permitted Refinancing Debt provided that
any such Permitted Refinancing Debt is not secured by any additional or
different Property not securing the Refinanced Debt.
(e) Liens on Property securing non-recourse Debt permitted by
Section 9.02(h).
Section 9.04 Dividends, Distributions and Redemptions. The Borrower will
------------------------------------------
not, and will not permit any of its Subsidiaries to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, return any
capital to its stockholders or make any distribution of its Property to its
Equity Interest holders, except (a) the Borrower may declare and pay dividends
with respect to its Equity Interests payable solely in additional shares of its
common stock (other than Disqualified Capital Stock), (b) so long as no Event of
Default shall have occurred which is continuing, the Borrower may declare and
pay annual cash dividends not to exceed $0.25 per common share on an annual
basis, (c) Subsidiaries may declare and pay dividends ratably with respect to
their Equity Interests, and (d) the Borrower may make Restricted Payments
pursuant to and in accordance with restricted stock plans, stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries.
65
Section 9.05 Investments, Loans and Advances. Neither the Borrower nor any
--------------------------------
Material Subsidiary will make or permit to remain outstanding any Investments in
or to any Person, except that the foregoing restriction shall not apply to:
(a) Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05(a).
(b) accounts receivable arising in the ordinary course of
business.
(c) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof.
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or Xxxxx'x.
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Xxxxx'x, respectively or, in the case of any Foreign
Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary
conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency).
(f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
(g) Investments i. made by the Borrower in or to the Guarantors,
and ii. made by a Guarantor in or to the Borrower or any other Guarantor.
(h) subject to the limits in Section 9.07, Investments (including,
without limitation, capital contributions) in general or limited partnerships or
other types of entities (each a "venture") entered into by the Borrower or a
-------
Material Subsidiary with others in the ordinary course of business; provided
that i. any such venture is engaged exclusively in oil and gas exploration,
development, production, processing and related activities, including
transportation, except for existing Investments described or referred to on
Schedule 9.05(h) and Investments permitted by Section 9.05(i), ii. the interest
in such venture is acquired in the ordinary course of business and on fair and
reasonable terms and iii. such venture interests acquired and capital
contributions made (valued as of the date such interest was acquired or the
contribution made) do not exceed, in the aggregate at any time outstanding an
amount equal to $10,000,000.
(i) subject to the limits in Section 9.07, additional Investments
(including, without limitation, capital contributions) in the ventures described
or referred to on Schedule 9.05(h) and new Investments (including, without
limitation, capital contributions) in ventures entered into by the Borrower or a
Material Subsidiary with others in the ordinary course of business; provided
that i. any such venture is not engaged exclusively in oil and gas exploration,
66
development, production, processing and related activities, including
transportation, ii. the interest in such venture is acquired in the ordinary
course of business and on fair and reasonable terms and iii. such venture
interests acquired and capital contributions made (valued as of the date such
interest was acquired or the contribution made) do not exceed, in the aggregate
at any time outstanding an amount equal to $10,000,000.
(j) subject to the limits in Section 9.07, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems related thereto or related to farm-out, farm-in, joint operating, joint
venture or area of mutual interest agreements, gathering systems, pipelines or
other similar arrangements which are usual and customary in the oil and gas
exploration and production business located within the geographic boundaries of
the United States of America.
(k) so long as no Event of Default shall have occurred which is
continuing, from and after the date hereof, the Borrower may make repurchases of
its stock; provided, however, during any time the Borrower's ratio of Total Debt
-------- -------
to consolidated tangible net worth is greater than 2.50 to 1.00, the aggregate
amount paid by the Borrower in connection with such repurchases shall not exceed
$50,000,000.
Section 9.06 Designation of Material Subsidiaries. Unless designated as a
------------------------------------
Non-Material Subsidiary on Schedule 7.15 as of the date hereof or thereafter,
assuming compliance with Section 9.16, any Person that becomes a Subsidiary of
the Borrower or any of its Material Subsidiaries shall be classified as a
Material Subsidiary.
Section 9.07 Nature of Business; International Operations. Neither the
-----------------------------------------------
Borrower nor any Material Subsidiary will allow any material change to be made
in the character of its business as an independent oil and gas exploration and
production company. From and after the date hereof, the Borrower and its
Subsidiaries will not acquire or make any other expenditure (whether such
expenditure is capital, operating or otherwise) in or related to, any Oil and
Gas Properties not located within the geographical boundaries of the United
States or Canada in excess of $10,000,000 in the aggregate.
Section 9.08 Limitation on Leases. Neither the Borrower nor any Material
---------------------
Subsidiary will create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal but
excluding Capital Leases and leases of Hydrocarbon Interests), under leases or
lease agreements which would cause the aggregate amount of all payments made by
the Borrower and the Material Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $3,000,000 in any period of twelve consecutive calendar
months during the life of such leases.
Section 9.09 Proceeds of Notes. The Borrower will not permit the proceeds
-----------------
of the Notes to be used for any purpose other than those permitted by Section
7.22. 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 U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
67
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U or Regulation X of the Board, as the case may be.
Section 9.10 ERISA Compliance. The Borrower and the Subsidiaries will not
-----------------
at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code.
(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 the Borrower, a Subsidiary or any ERISA Affiliate to
the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV
of ERISA to 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) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
(g) acquire, or permit any ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, 1. any Multiemployer Plan, or 2. any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds 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.
68
(h) incur, or permit any ERISA Affiliate to incur, a liability to
or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, a
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Except for receivables
----------------------------------
obtained by the Borrower or any Material Subsidiary out of the ordinary course
of business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, neither the Borrower nor any Material
Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.12 Mergers, Etc. Neither the Borrower nor any Material Subsidiary
------------
will 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 to any other Person (any such
transaction, a "consolidation"); provided that
-------------
(a) the Borrower or any Material Subsidiary may participate in a
consolidation with any other Person; provided that (i) no Default is continuing,
(ii) any such consolidation would not cause a Default hereunder, (iii) if the
Borrower consolidates with any Person, the Borrower shall be the surviving
Person, (iv) if any Material Subsidiary consolidates with any Person (other than
the Borrower or a Material Subsidiary) and such Material Subsidiary is not the
surviving Person, such surviving Person shall expressly assume in writing (in
form and substance satisfactory to the Administrative Agent) all obligations of
such Material Subsidiary under the Loan Documents and (v) the Borrowing Base
will be redetermined using the procedures for an Interim Redetermination in
accordance with Section 2.07; and
(b) any Material Subsidiary may participate in a consolidation
with the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or any other Material Subsidiary and if one of such
Material Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person
shall be a Wholly-Owned Subsidiary.
Section 9.13 Sale of Properties. The Borrower will not, and will not permit
------------------
any Material Subsidiary to, sell, assign, farm-out, convey or otherwise transfer
any Property except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in connection with
such farmouts; (c) the sale or transfer of equipment that is no longer necessary
for the business of the Borrower or such Material Subsidiary or is replaced by
equipment of at least comparable value and use; (d) the sale, transfer or other
69
disposition of Equity Interests in non-Material Subsidiaries; sales or other
dispositions of Oil and Gas Properties or any interest therein or Material
Subsidiaries owning Oil and Gas Properties; provided that (i) if such sales or
other dispositions of Oil and Gas Properties or Material Subsidiaries owning Oil
and Gas Properties included in the most recently delivered Reserve Report during
any period between two successive Scheduled Redetermination Dates has a fair
market value in excess of $10,000,000, individually or in the aggregate, the
Borrowing Base shall be reduced, effective immediately upon such sale or
disposition, by an amount equal to the value, if any, assigned such Property in
the most recently delivered Reserve Report and (ii) if any such sale or other
disposition is of a Material Subsidiary owning Oil and Gas Properties, such sale
or other disposition shall include all the Equity Interests of such Material
Subsidiary; and (f) sales and other dispositions of Properties not regulated by
Section 9.13(a) to (e) having a fair market value not to exceed $10,000,000
during any 12-month period.
Section 9.14 Environmental Matters. Neither the Borrower nor any Material
----------------------
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.
Section 9.15 Transactions with Affiliates. Neither the Borrower nor any
------------------------------
Material Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate (other than the Guarantors and Wholly-Owned
Subsidiaries of the Borrower) unless such transactions are otherwise permitted
under this Agreement and are upon fair and reasonable terms no less favorable to
it than it would obtain in a comparable arm's length transaction with a Person
not an Affiliate.
Section 9.16 Subsidiaries. The Borrower shall not, and shall not permit any
------------
Material Subsidiary to, create or acquire any additional Material Subsidiary or
redesignate a Subsidiary as a Material Subsidiary unless the Borrower gives
written notice to the Administrative Agent of such creation or acquisition and
complies with Section 8.14(b). The Borrower shall not, and shall not permit any
Material Subsidiary to, sell, assign or otherwise dispose of any Equity
Interests in any Material Subsidiary except in compliance with Section 9.13(e).
Section 9.17 Negative Pledge Agreements; Dividend Restrictions. Neither the
-------------------------------------------------
Borrower nor any Material Subsidiary will create, incur, assume or suffer to
exist any contract, agreement or understanding (other than this Agreement, the
Security Instruments or Capital Leases creating Liens permitted by Section
9.03(c)) which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the
Administrative Agent and the Lenders or restricts any Material Subsidiary from
paying dividends or making distributions to the Borrower or any Guarantor, or
which requires the consent of or notice to other Persons in connection
therewith.
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower
------------------------------------------------
will not allow (on a net basis) gas imbalances, take-or-pay or other prepayments
with respect to the Oil and Gas Properties of the Borrower or any Material
70
Subsidiary that would require the Borrower or such Material Subsidiary to
deliver Hydrocarbons at some future time without then or thereafter receiving
full payment therefor to exceed three million mcf of gas (on an mcfe equivalent
basis) in the aggregate.
Section 9.19 Swap Agreements. Neither the Borrower nor any Material
----------------
Subsidiary will enter into any Swap Agreements with any Person other than (a)
Swap Agreements in respect of commodities (i) with an Approved Counterparty and
(ii) the notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect) do not exceed, as of the date such Swap Agreement is
executed, 75% of the reasonably anticipated projected production from proved,
developed, producing Oil and Gas Properties for each month during the period
during which such Swap Agreement is in effect, (b) Swap Agreements effectively
converting interest rates from floating to fixed (i) with an Approved
Counterparty and (ii) the notional amounts of which (when aggregated with other
interest rate Swap Agreements then in effect effectively converting interest
rates from floating to fixed) do not exceed 100% of principal amount of the
Borrower's floating rate Debt in respect of borrowed money, (c) Swap Agreements
effectively converting interest rates from fixed to floating (i) with an
Approved Counterparty and (ii) the notional amounts of which (when aggregated
with other interest rate Swap Agreements then in effect effectively converting
interest rates from fixed to floating) do not exceed 100% of principal amount of
the Borrower's fixed rate Debt in respect of borrowed money (including, without
limitation, the Borrower's 5.75% Senior Convertible Notes), and (d) Swap
Agreements in respect of currencies (i) with an Approved Counterparty, (ii) such
transactions are to hedge actual or expected fluctuations in currencies and are
not for speculative purposes and (iii) such transactions do not involve
termination or expiry dates longer than six (6) months after the trade date in
respect thereof. In no event shall any Swap Agreement contain any requirement,
agreement or covenant for the Borrower or any Material Subsidiary to post
collateral or margin to secure their obligations under such Swap Agreement or to
cover market exposures other than usual and customary requirements to deliver
letters of credit or post cash collateral.
Section 9.20 Preservation of Material Agreements. Except for acts which
-------------------------------------
could not reasonably be expected to have a Material Adverse Effect or which are
taken in the ordinary course of business, neither the Borrower nor any Material
Subsidiary, as the case may be, will agree to any change, modification or
amendment to or waiver of any of the terms or provisions of any of the Material
Agreements. Neither the Borrower nor any Material Subsidiary, as the case may
be, will take any action or permit any action to be taken by others which will
release any Person from its obligations or liabilities under any of the Material
Agreements.
Section 9.21 Release of Liens. The Borrower shall be entitled to cause
----------------
Mortgaged Properties having an aggregate fair market value not to exceed
$15,000,000 to be released from the Liens created by and existing under the
Security Instruments without the consent of the Lenders; provided that (a) no
-------- ----
Event of Default shall have occurred which is continuing, (b) only one such
release may be made between Schedule Redeterminations of the Borrowing Base, (c)
following any such release, the total value of the remaining Mortgaged Property
shall be sufficient to support the Aggregate Commitment in the sole opinion of
the Administrative Agent, and (d) following any such release, the Administrative
Agent shall adjust the then current Borrowing Base to take into account the
release of such Mortgaged Properties and any mandatory prepayment required as a
result thereof shall be made at the time of such release.
71
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 shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days.
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Material Subsidiary in or in connection with any
Loan Document or any amendment or modification of any Loan Document or waiver
under such Loan Document, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been incorrect in any respect material to the Borrower's creditworthiness or to
the rights or interests of the Lenders when made or deemed made.
(d) the Borrower or any Material Subsidiary shall fail to observe
or perform any covenant, condition or agreement contained in Section 8.03 or in
ARTICLE IX.
(e) the Borrower or any Material Subsidiary shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in Section 10.01(a), Section 10.01(b) or Section
10.01(d)) or any other Loan Document, and such failure shall continue unremedied
for a period of 30 days after the earlier to occur of A. notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or B. a Responsible Officer of the Borrower or such Material
Subsidiary otherwise becoming aware of such default.
(f) the Borrower or any Material Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to applicable grace periods), unless such payment is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
72
to its scheduled maturity or require the Borrower or any Material Subsidiary to
make an offer in respect thereof; provided, however, early termination of a Swap
-------- -------
Agreement (that is Material Indebtedness) due solely to an ISDA "Termination
Event" is not an Event of Default hereunder.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Material Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Material Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered.
(i) the Borrower or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Material Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing.
(j) the Borrower or any Material Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due.
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 (to the extent not covered by independent third
party insurance provided by insurers of the highest claims paying rating or
financial strength as to which the insurer does not dispute coverage and is not
subject to an insolvency proceeding) shall be rendered against the Borrower, any
Material Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days and for which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Material
Subsidiary to enforce any such judgment.
(l) the Loan Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto, or cease to create a
valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Agreement, or the Borrower or any Guarantor or any of their
Affiliates shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect.
(n) a Change in Control shall occur.
73
(o) the Borrower shall fail to pay any mandatory prepayment or
provide additional collateral as provided in Section 3.04(c)
Section 10.02 Remedies.
--------
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
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 the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(k)), shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower and each Guarantor; and in
case of an Event of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and 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 the
Guarantors accrued hereunder and under the Notes and the other Loan Documents
(including, without limitation, the payment of cash collateral to secure the LC
Exposure as provided in Section 2.08(k)), 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) 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: first, to reimbursement
of expenses and indemnities provided for in this Agreement and the Security
Instruments; second, to accrued interest on the Notes; third, to fees; fourth,
pari passu to (i) Indebtedness owing to a Lender or an Affiliate of a Lender
under any Swap Agreement permitted hereby and (ii) pro rata to principal
outstanding on the Notes; fifth, to any other Indebtedness; sixth, to serve as
cash collateral to be held by the Administrative Agent to secure the LC
Exposure; and any excess shall be paid to the Borrower or as otherwise required
by any Governmental Requirement.
ARTICLE XI
The Administrative Agent
Section 11.01 Appointment; Powers. Each of the Lenders and the Issuing Bank
-------------------
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
74
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
-------------------------------------------------------
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (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 not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. 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,
(vi) the existence, value, perfection or priority of any collateral security or
the financial or other condition of the Borrower and its Subsidiaries or any
other obligor or guarantor, or (vii) any failure by the Borrower or any other
Person (other than itself) to perform any of its obligations hereunder or under
any other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein.
Section 11.03 Action by Administrative Agent. The Administrative Agent
--------------------------------
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) and in all cases the Administrative Agent shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. 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 the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
75
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 the Administrative 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 12.02), and otherwise shall not be liable
for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.
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, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent's record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. 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.
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 Administrative Agent as provided
in this Section 11.06, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank 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,
in consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation or removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
76
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this ARTICLE XI and Section 12.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.
Section 11.07 Administrative Agent as Lenders. Wachovia, serving as
----------------------------------
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not
Administrative 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
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or 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 the Administrative Agent or any of its Affiliates. In
this regard, each Lender acknowledges that Xxxxxx & Xxxxxx L.L.P. is acting
in this transaction as special counsel to the Administrative Agent only, except
to the extent otherwise expressly stated in any legal opinion or any Loan
Document. Each other party hereto will consult with its own legal counsel to the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
Section 11.09 Authority of Administrative Agent to Release Collateral and
-------------------------------------------------------------
Liens.Each Lender and the Issuing Bank hereby authorizes the Administrative
-----
Agent to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents. Each Lender and the Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower's sole cost and expense, any and all releases of
77
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.13 or is otherwise authorized by the terms of the Loan Documents.
Section 11.10 Syndication Agent and Co-Documentation Agents. The Lenders
-----------------------------------------------
identified in this Agreement as Syndication Agent and as a Co-Documentation
Agent shall not have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, the Syndication Agent and the Co-Documentation
Agents shall not have or be deemed to have a fiduciary relationship with any
Lender.
ARTICLE XII
Miscellaneous
Section 12.01 Notices.
-------
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to Section 12.01(b)),
all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at 0000 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxx, Xxxxxxxx 00000, Attention of Xxxxx X. Xxxxxxxxxx (Telecopy No.
303/861-0934);
(ii) if to the Administrative Agent, to it at 000 Xxxxx
Xxxxxxx Xxxxxx, 0xx Xxxxx XX 0680, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention of
Xxxx XxxXxxx (Telecopy No. 704/383-0288), with a copy to Wachovia Securities, at
0000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000, Attention of Xxx Xxxxxxxxx
(Telecopy No. 713/650-6354);
(iii) if to the Issuing Bank, to it at 000 Xxxxx Xxxxxxx
Xxxxxx, 0xx Xxxxx XX 0680, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention of Xxxx
XxxXxxx (Telecopy No. 704/383-0288); and
(iv) 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
78
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
-------------------
(a) No failure on the part of the Administrative Agent, the
Issuing Bank 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, the Issuing Bank 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
12.02(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 or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank 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 and the Majority Lenders or by the Borrower and the Administrative
Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Commitment or the Maximum Credit Amount of any Lender
without the written consent of such Lender, (ii) increase the Borrowing Base or
modify Section 2.07, without the written consent of all of the Lenders, (iii)
reduce the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, or reduce any other
Indebtedness hereunder or under any other Loan Document, without the written
consent of each Lender affected thereby, (iv) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or any other Indebtedness hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Termination Date without the written consent
of each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) change the definition of the
term "Material Subsidiary", without the written consent of each Lender, (vii)
release any Guarantor (except as set forth in the Guaranty Agreement), release
all or substantially all of the collateral, or reduce the percentage set forth
in Section 8.14 to less than 70%, without the written consent of each Lender, or
(viii) change any of the provisions of this Section 12.02(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 or the Issuing Bank
79
hereunder or under any other Loan Document without the prior written consent of
the Administrative Agent or the Issuing Bank, as the case may be.
Notwithstanding the foregoing, any supplement to Schedule 7.15 (Subsidiaries)
shall be effective simply by delivering to the Administrative Agent a
supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
----------------------------------
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of counsel
and other outside consultants for the Administrative Agent, the reasonable
travel, photocopy, mailing, courier, telephone and other similar expenses, and
the cost of environmental audits and surveys and appraisals, in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by the Administrative Agent or any Lender in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any Security Instrument or any other document
referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iv) all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or
any Lender, including the reasonable fees, charges and disbursements of any
counsel for the Administrative Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this
Section 12.03, or in connection with the Loans made or Letters of Credit issued
hereunder, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE
ISSUING BANK 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 REASONABLE FEES, CHARGES AND DISBURSEMENTS OF
ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
DIRECTLY ARISING OUT OF, DIRECTLY IN CONNECTION WITH, OR DIRECTLY 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
80
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN
DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii)
ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT
OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv)
ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING,
WITHOUT LIMITATION, A. ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR
PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH
SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR
B. THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE
NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS
PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS,
(vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE
BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT
ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS,
(viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY
OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION,
STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF
DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE
BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER
OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR
ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH
OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL
OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
81
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or the Issuing Bank under
Section 12.03(a) or (b), each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, 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 the Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
Section 12.04 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 (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 12.04. 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 (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in Section 12.04(c)) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
82
(b) (i) Subject to the conditions set forth in Section
12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:
A. the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund (as defined below) or, if an Event of Default has occurred and is
continuing, any other assignee; and
B. the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment to an assignee that
is a Lender immediately prior to giving effect to such assignment.
(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) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
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 $3,500;
D. the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; and
E. in the case of an assignment to a CLO, the assigning
Lender shall retain the sole right to approve any amendment, modification or
waiver of any provision of this Agreement, provided that the Assignment and
Assumption between such Lender and such CLO may provide that such Lender will
not, without the consent of such CLO, agree to any amendment, modification or
waiver described in the first proviso to Section 12.02 that affects such CLO.
(iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
83
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 12.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(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 Maximum Credit Amount of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank 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, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. In
connection with any changes to the Register, if necessary, the Administrative
Agent will reflect the revisions on Annex I and forward a copy of such revised
Annex I to the Borrower, the Issuing Bank and each Lender.
(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 (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(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 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, 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 portion of its
Commitment and 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, the Issuing
Bank 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
12.02 that affects such Participant. In addition such agreement must provide
that the Participant be bound by the provisions of Section 12.03. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
84
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.
(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 any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
Section 12.05 Survival; Revival; Reinstatement.
--------------------------------
(a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank 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 or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 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, the expiration or termination of the Letters of Credit
and the Commitments 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
85
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 12.06 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 Section 6.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. 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 12.07 Severability. Any provision of this Agreement or any other
------------
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to 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.
Section 12.08 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
the Borrower or any Material Subsidiary against any of and all the obligations
of the Borrower or any Material Subsidiary owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.
86
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
----------------------------------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE
EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR,
CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE
STATE WHERE SUCH LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS AND HEREBY CONFERS AN IRREVOCABLE SPECIAL POWER, AMPLE AND SUFFICIENT,
TO CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT DENVER, COLORADO AS
ITS DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING
IN TEXAS TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH PROCEEDING AND AGREES THAT THE
FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF ANY SUCH SERVICE OF PROCESS TO THE
BORROWER SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF ANY CLAIM
BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE
TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN TEXAS REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT
ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION. EACH PARTY IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN Section 12.01
OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO Section 12.01 (OR ITS
87
ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE UPON RECEIPT.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER
JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS Section 12.09.
Section 12.10 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 12.11 Confidentiality. Each of the Administrative Agent, the
---------------
Issuing Bank 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, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section 12.11, "Information" means all
-----------
information received from the Borrower or any Material Subsidiary relating to
88
the Borrower or any Material Subsidiary and their businesses, other than any
such information that is available to the Administrative Agent, the Issuing Bank
or any Lender on a nonconfidential basis prior to disclosure by the Borrower or
a Material Subsidiary; provided that, in the case of information received from
the Borrower or any Material Subsidiary after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section 12.11 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
Section 12.12 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 and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (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,
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 12.12 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 12.12. To the extent that Chapter 303 of
89
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate applicable to a Lender, such Lender elects to determine the
applicable rate ceiling under such Chapter by the weekly ceiling from time to
time in effect. Chapter 346 of the Texas Finance Code does not apply to the
Borrower's obligations hereunder.
Section 12.13 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 12.14 Existing Credit Agreement. This Agreement amends and restates
-------------------------
the Existing Credit Agreement in its entirety. On the date of the initial
funding of Loans hereunder, the loans and other Debt of the Borrower under the
Existing Credit Agreement shall be renewed, rearranged, modified and extended
with the proceeds of the initial funding and the "Commitments" of the lenders
under the Existing Credit Agreement shall be superseded by this Agreement and
terminated (except as otherwise expressly provided in Section 12.05(a) of the
Existing Credit Agreement with respect to the survival of certain covenants and
agreements made by the Borrower in the Existing Credit Agreement). The
undersigned waive any right to receive any notice of such termination and any
right to receive any notice of prepayment of amounts owed under the Existing
Credit Agreement. Each Lender that was a party to the Existing Credit Agreement
hereby agrees to return to the Borrower, with reasonable promptness, any
promissory note delivered by the Borrower to such Lender in connection with the
Existing Credit Agreement.
Section 12.15 USA Patriot Act Notice. Each Lender hereby notifies the
----------------------
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
90
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
BORROWER: ST XXXX XXXX & EXPLORATION COMPANY
By: /S/ XXXXX X. XXXXXXXXXX
-----------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President - Finance, Secretary and
Treasurer
AGENTS AND LENDERS: WACHOVIA BANK, NATIONAL
ASSOCIATION, Individually and as
Administrative Agent
By: /S/ XXXXXX X. XXXXXXX
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
XXXXX FARGO BANK, N.A., Individually
and as Syndication Agent
By: /S/ XXXXX XXXXXXXXX
-------------------
Name: Xxxxx Xxxxxxxxx
---------------
Title: Relationship Manager, AVP
-------------------------
JPMORGAN CHASE BANK, N.A., Individually
and as Co-Documentation Agent
By: /S/ XXXXXXXXX XXXXXX
--------------------
Name: Xxxxxxxxx Xxxxxx
----------------
Title: Associate
---------
COMERICA BANK-TEXAS, Individually and
as Co-Documentation Agent
By: /S/ XXXXX X. XXXXXX
-------------------
Name: Xxxxx X. Xxxxxx
---------------
Title: Vice President
--------------
BNP PARIBAS, Individually and as
Co-Documentation Agent
By: /S/ XXXXX XXXXXX
----------------
Name: Xxxxx Xxxxxx
------------
Title: Vice President
--------------
By: /S/XXXXX XXXXXX
---------------
Name: Xxxxx Xxxxxx
------------
Title: Vice President
--------------
ROYAL BANK OF CANADA
By: /S/ XXXXX X XXXXXXX
-------------------
Name: XXXXX X. XXXXXXX
----------------
Title: AUTHORIZED SIGNATORY
--------------------
BANK OF SCOTLAND
By: /S/ XXXXX XXXXX
---------------
Name: XXXXX XXXXX
-----------
Title: ASSISTANT VICE PRESIDENT
------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /S/ XXXX X. XXXXXXXX
--------------------
Name: Xxxx X. Xxxxxxxx
----------------
Title: Vice President
--------------
HIBERNIA NATIONAL BANK
By: /S/ XXXXX XXXXXXX
-----------------
Name: Xxxxx Xxxxxxx
-------------
Title: Vice President
--------------
KEY BANK
By: /S/ XXXXXX XXXXX
----------------
Name: Xxxxxx Xxxxx
------------
Title: Vice President
--------------
ANNEX I
LIST OF COMMITMENTS
---------------------------------------- ----------------------- ------------
Name of Lender Applicable Percentage Commitment
---------------------------------------- ----------------------- ------------
Wachovia Bank, National Association 11.625% $23,250,000
---------------------------------------- ----------------------- ------------
Xxxxx Fargo Bank, N.A. 11.625% $23,250,000
---------------------------------------- ----------------------- ------------
JPMorgan Chase Bank, N.A. 11.000% $22,000,000
---------------------------------------- ----------------------- ------------
Comerica Bank - Texas 11.000% $22,000,000
---------------------------------------- ----------------------- ------------
BNP Paribas 11.000% $22,000,000
---------------------------------------- ----------------------- ------------
U.S. Bank National Association 10.000% $20,000,000
---------------------------------------- ----------------------- ------------
Royal Bank of Canada 8.750% $17,500,000
---------------------------------------- ----------------------- ------------
Bank of Scotland 8.750% $17,500,000
---------------------------------------- ----------------------- ------------
Hibernia National Bank 8.750% $17,500,000
---------------------------------------- ----------------------- ------------
Key Bank 7.500% $15,000,000
---------------------------------------- ----------------------- ------------
TOTAL 100.00% $200,000,000
---------------------------------------- ----------------------- ------------
EXHIBIT A
[FORM OF] NOTE
[$___________] [__________], 200[__]
FOR VALUE RECEIVED, St. Xxxx Xxxx & Exploration Company, a Delaware
corporation (the "Borrower") hereby promises to pay to the order of
[______________________________] (the "Lender"), at the principal office of
Wachovia Bank, National Association (the "Administrative Agent"), at
[______________________________], the principal sum of
[______________________________] Dollars ($[_________]) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Loans made by the
Lender to the Borrower under the Credit Agreement, as hereinafter defined), in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of each
Loan made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, may be endorsed by the Lender on the schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender. 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 this Note.
This Note is one of the Notes referred to in the Amended and Restated
Credit Agreement dated as of April 7, 2005 among the Borrower, the
Administrative Agent, and the other agents and lenders signatory thereto
(including the Lender), and evidences Loans made by the Lender thereunder (such
Credit Agreement as the same may be amended, supplemented or restated from time
to time, the "Credit Agreement"). Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the other Loan Documents. The
Credit Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS.
ST. XXXX XXXX & EXPLORATION COMPANY
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
EXHIBIT B
[FORM OF]
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he/she is the
[________________________]of St. Xxxx Xxxx & Exploration Company, a Delaware
corporation (the "Borrower"), and that as such he/she is authorized to execute
this certificate in the foregoing capacity and on behalf of the Borrower. With
reference to the Amended and Restated Credit Agreement dated as of April 7, 2005
(together with all amendments, supplements or restatements thereto being the
"Agreement") among the Borrower, Wachovia Bank, National Association, as
Administrative Agent, and the other agents and lenders (the "Lenders") which are
or become a party thereto, and such Lenders, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower contained in Article
VII of the Agreement and in the Loan Documents and otherwise made in writing by
or on behalf of the Borrower pursuant to the Agreement and the Loan Documents
were true and correct when made, and are repeated at and as of the time of
delivery hereof and are true and correct in all material respects at and as of
the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Majority Lenders have
expressly consented in writing to the contrary.
(b) The Borrower has performed and complied in all material respects with
all agreements and conditions contained in the Agreement and in the Loan
Documents required to be performed or complied with by it prior to or at the
time of delivery hereof or specify default and describe.
(c) Since December 31, 2004, no change has occurred, either in any case or
in the aggregate, in the condition, financial or otherwise, of the Borrower or
any Material Subsidiary which could reasonably be expected to have a Material
Adverse Effect [or specify event].
(d) There exists no Default or Event of Default [or specify Default and
describe].
(e) Attached hereto are the detailed computations necessary to determine
whether the Borrower is in compliance with Section 9.01 and Section 8.14 as of
the end of the [fiscal quarter][fiscal year] ending [ ].
EXECUTED AND DELIVERED this [ ] day of [ ].
ST. XXXX XXXX & EXPLORATION COMPANY
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
EXHIBIT C
FORM OF LEGAL OPINION
April 7, 2005
To Each of the Lenders Parties to the
Credit Agreement Hereinafter
Referred to and Wachovia Bank,
National Association, as Administrative Agent
Re: St. Xxxx Xxxx & Exploration Company/Wachovia Bank/$500,000,000
Senior Secured Revolving Credit Facility
Ladies and Gentlemen:
We have acted as counsel to St. Xxxx Xxxx & Exploration Company, a
Delaware corporation ("Borrower"), Xxxxx Petroleum Corporation, a Montana
corporation ("Xxxxx"), St. Xxxx Energy Company, a Delaware corporation
("Energy"), and NPC Inc., a Colorado corporation ("NPC") (exclusive of Borrower,
collectively "Guarantors") in connection with the execution and delivery of the
Amended and Restated Credit Agreement dated as of April 7, 2005 (the "Credit
Agreement") between Borrower, Wachovia Bank, National Association, as
Administrative Agent and the lenders signatory to the Credit Agreement
("Lenders") and the transactions contemplated thereby. This opinion is furnished
to you pursuant to Section 6.01(i) of the Credit Agreement.
Unless defined in this opinion, capitalized terms are used herein as
defined in the Credit Agreement.
In so acting, we have examined executed originals or counterparts of the
following documents, each dated the date hereof unless otherwise noted (the
"Loan Documents"):
(a) the Credit Agreement;
(b) the Notes;
(c) the Pledge - Borrower;
(d) the Pledge - Xxxxx;
(e) each Guaranty Agreement;
(f) the Deed of Trust, Mortgage, Line of Credit Mortgage Assignment,
Security Agreement, Fixture Filing and Financing Statement; and
(g) the Supplement and Amendment to Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement.
Exhibit C-1
We have also examined, and relied upon the accuracy of factual matters
contained in, originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records and certificates or comparable documents
of public officials and of officers and representatives of Borrower and
Guarantors and such agreements and documents, and have made such examinations of
law, as we have deemed necessary in connection with the opinions set forth
below.
We have assumed the legal capacity and competence of natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of documents submitted to
us as certified, conformed, photostatic, electronic or facsimile copies. We have
made no independent factual investigation other than as described above, and as
to other factual matters, we have relied exclusively on the facts stated in the
representations and warranties contained in the Loan Documents and the Schedules
to the Loan Documents (other than representations and warranties constituting
conclusions of law on matters on which we opine). We have not examined any
records of any court, administrative tribunal or other similar entity in
connection with our opinion.
When an opinion or confirmation is given to our knowledge or to the best of
our knowledge or with reference to matters of which we are aware or which are
known to us, or with another similar qualification, the relevant knowledge or
awareness is limited to the actual contemporaneous knowledge or awareness of
facts, without investigation, by the lawyer who is the current primary contact
for the Borrower or any Guarantor and the individual lawyers in this firm who
have participated in the specific transaction to which this opinion relates.
We have also assumed, without verification, (i) that the parties to the
Loan Documents and the other agreements, instruments and documents executed in
connection therewith, other than Borrower and Guarantors, have the power
(including, without limitation, corporate power where applicable) and authority
to enter into and perform the Loan Documents and such other agreements,
instruments and documents, (ii) the due authorization, execution and delivery by
such parties other than Borrower and Guarantors of each Loan Document and such
other agreements, instruments and documents, and (iii) that the Loan Documents
and such other agreements, instruments and documents constitute legal, valid and
binding obligations of each such party other than Borrower and Guarantors,
enforceable against each such other party in accordance with their respective
terms.
Based upon the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that:
1. The Borrower and the Guarantors are corporations validly existing and in
good standing under the laws of their respective jurisdictions of incorporation.
Borrower is in good standing under the laws of Alabama, Arkansas, Colorado,
Kansas, Louisiana, Minnesota, Mississippi, Montana, New Mexico, North Dakota,
Oklahoma, Texas, Utah and Wyoming. Xxxxx is in good standing under the laws of
Nebraska, Nevada, North Dakota, Colorado, New Mexico, South Dakota, Texas,
Washington and Wyoming. Energy is in good standing under the laws of Louisiana,
Mississippi, Oklahoma, Texas and Utah. NPC is in good standing under the laws of
Montana, Nevada, North Dakota, South Dakota and Wyoming.
Exhibit C-2
2. The Borrower and the Guarantors have the corporate power and authority
to enter into and perform their obligations under the Loan Documents to which
they are a party and, in the case of the Borrower, to issue the Notes. The
Borrower's and each of the Guarantor's execution, delivery and performance of
its obligations under the Loan Documents to which it is a party, and the
Borrower's issuance and delivery of the Notes, have been duly authorized by all
requisite corporate action, and the Loan Documents to which it is a party have
been duly executed and delivered by each of the Borrower and the Guarantors.
3. The execution and delivery by Borrower and each of the Guarantors of the
Loan Documents to which each is a party do not and the performance of the
obligations thereunder will not (a) violate Borrower's or any Guarantor's
Certificate or Articles of Incorporation, as appropriate, or Bylaws, (b) violate
any present statute, rule or regulation promulgated by the United States or the
State of Colorado, which in our experience, is normally applicable both to
entities that are not engaged in regulated business activities and to
transactions of the type contemplated by the Loan Documents, (c) breach or
result in a default under any agreement or instrument to which the Borrower or
any Guarantor is a party and which is set forth on the exhibit list to (i) the
Borrower's Annual Report on Form 10-K for the year ended December 31, 2004, or
(ii) any other report filed by the Borrower with the Commission under Section
13(a) of the Exchange Act after the date of such Annual Report on Form 10 K and
through the date hereof, except for such breaches or defaults that would not
have a Material Adverse Effect, or result in the creation or imposition of any
security interest in or lien or encumbrance upon, any of the assets of Borrower
or any Guarantor pursuant to any item referred to in this clause (c), except
security interests and liens created under the Loan Documents in favor of the
Administrative Agent for the benefit of Lenders.
4. Each Loan Document to which it is a party has been duly executed and
delivered on behalf of Borrower and each Guarantor and constitutes the legal,
valid and binding obligation of Borrower and each Guarantor, as appropriate,
enforceable in accordance with its respective terms.
5. No consent or approval of, or notice to or filing with, any federal or
state regulatory authority of the United States or the State of Colorado is
required by Borrower or either Guarantor in connection with the execution or
delivery by Borrower or either Guarantor of any of the Loan Documents or the
payment of Borrower's obligations under the Loan Documents.
6. The pledged securities listed in the Pledge - Borrower and Pledge -
Xxxxx have been duly authorized and validly issued, are fully paid and
non-assessable, and constitute 100% of the issued and outstanding shares of
stock of the respective issuers thereof.
7. The Borrower is not an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
8. Except as set forth on Schedule 7.05 of the Credit Agreement, there are,
to the best of our knowledge, no actions, suits or proceedings pending or
threatened against the Borrower before any court or arbitrator(s) or by or
Exhibit C-3
before any administrative agency or governmental authority, in which there is a
reasonable possibility of an adverse decision which could have a Material
Adverse Effect.
9. Neither the Borrower nor any subsidiary of the Borrower is a "holding
company," or a "subsidiary company" of a "holding company," or an affiliate of a
"holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
The foregoing opinions are subject to the following exceptions, limitations
and qualifications:
(a) Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent
transfer, marshalling or similar laws affecting creditors' rights and remedies
generally; the rights of account debtors, claims and defenses of account debtors
and the terms of agreements with account debtors; general principles of equity,
including without limitation, concepts of materiality, reasonableness, good
faith and fair dealing; and limitations on enforceability of rights to
indemnification or contribution by federal or state securities laws or
regulations or by public policy (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) We express no opinion as to the application or requirements of federal
or state securities (except with respect to the opinion in paragraphs 7 and 9),
patent, trademark, copyright, antitrust and unfair competition, pension or
employee benefit, labor, environmental, health and safety or tax laws in respect
of the transactions contemplated by or referred to in the Loan Documents.
(c) We have assumed (i) Lenders have given value pursuant to the Loan
Documents; (ii) Borrower has, or has the power to transfer, rights in the
collateral described in the Loan Documents; and (iii) the descriptions of
collateral contained in, or attached as schedules to, the Loan Documents
sufficiently describe the collateral intended to be covered by the Loan
Documents. We express no opinion as to the perfection or priority of the
security interests or mortgage liens granted under the Loan Documents.
(d) We express no opinion as to the validity or enforceability of any
provision of the Loan Documents which (i) permits Administrative Agent to
increase the rate of interest or to collect a late charge in the event of
delinquency or default to the extent deemed to be penalties or forfeitures; (ii)
purports to grant the Administrative Agent a power of attorney; (iii) purports
to entitle Administrative Agent to take possession of collateral in any manner
other than peaceably and by reason of the peaceable surrender of such possession
by Borrower or by reason of appropriate judicial proceedings; (iv) purports to
require that waivers must be in writing to the extent that an oral agreement or
implied agreement by trade practice or course of conduct modifying provisions of
the Loan Documents has been made; (v) purports to grant the Administrative Agent
the right to confess judgment for money or in ejectment; (vi) purports to be a
waiver of the right to a jury trial, a waiver of any right to object to
jurisdiction or venue, a waiver of any right to claim damages or to service of
process or a waiver of any provisions of Article 9 of the Uniform Commercial
Code as in effect in the State of Colorado that may not be waived, or a waiver
of any other rights or benefits bestowed by operation of law or the waiver of
Exhibit C-4
which is limited by applicable law; (vii) purports to be a waiver of the
obligations of good faith, fair dealing, diligence, mitigation of damages or
commercial reasonableness; (viii) purports to exculpate any party from its own
negligent acts or limit any party from certain liabilities; (ix) purports to
entitle the Administrative Agent to the appointment of a receiver as a matter of
right; (x) chooses the governing law of a state other than Colorado where such
choice of law would conflict with or violate a fundamental public policy of the
State of Colorado; (xi) purports to require the payment of attorneys' fees to
the extent such fees exceed reasonable attorneys' fees; or (xii) purports to
authorize the Administrative Agent to set off and apply any deposits at any time
held, and any other indebtedness at any time owing, by Administrative Agent to
or for the account of Borrower or Guarantors or which purports to provide that
any purchaser of a participation from the Administrative Agent may exercise
setoff or similar rights with respect to such participation.
(e) We express no opinion as to the enforceability of forum selection
clauses upon the courts in the forum selected.
We express no opinion as to the law of any jurisdiction other than the
federal law of the United States, the law of the State of Colorado, the General
Corporation Law of the State of Delaware, and solely with regard to the opinion
expressed in paragraph 1, the Montana Business Corporation Act. The Loan
Documents provide they are governed by the laws of the State of Texas; however,
our opinion is given as if the laws of the State of Colorado, without regard to
its conflict of laws provisions, governed the Loan Documents.
A copy of this opinion may be delivered by you to each financial
institution that may become a Lender under the Credit Agreement, and such
persons may rely on this opinion as if it were addressed to them and had been
delivered to them on the date hereof. This opinion may be relied upon by you and
such persons to whom you may deliver copies as provided in the preceding
sentence only in connection with the consummation of the transactions described
herein and may not be used or relied upon by you or any other person for any
other purpose, without in each instance our prior written consent.
This opinion is limited to the matters expressly stated herein. No implied
opinion may be inferred to extend this opinion beyond the matters expressly
stated herein. We do not undertake to advise you or anyone else of any changes
in the opinions expressed herein resulting from changes in law, changes in facts
or any other matters that hereafter might occur or be brought to our attention.
Very truly yours,
Exhibit C-5
EXHIBIT D-1
SECURITY INSTRUMENTS
1. Amended and Restated Guaranty Agreement dated as of April 7, 2005,
executed by each Material Subsidiary in favor of the Administrative Agent.
2. Amended and Restated Pledge and Security Agreement dated as of April 7,
2005, executed by the Borrower in favor of the Administrative Agent, covering
the stock of the Material Subsidiaries.
3. Financing Statements in respect of item 2, by the Borrower (filed in
connection with January 2003 closing).
4. Stock Powers delivered in respect of item 2.
5. Amended and Restated Pledge and Security Agreement dated as of April 7,
2005, executed by Xxxxx Petroleum Corporation in favor of the Administrative
Agent, covering the stock of NPC Inc.
6. Financing Statements in respect of item 5, by the Borrower (filed in
connection with January 2003 closing).
7. Stock Powers delivered in respect of item 5.
8. Supplement and Amendment to Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement
dated as of April 7, 2005, from the Borrower and the Guarantors, adding
additional properties.
9. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement dated as of April 7, 2005,
from the Borrower and the Guarantors, adding additional properties.
10. Financing Statements in respect of items 8 and 9 by each Mortgagor
(filed in connection with January 2003 closing).
Exhibit D-1-1
EXHIBIT D-2
FORM OF
AMENDED AND RESTATED GUARANTY AGREEMENT
by
---------------------------------------------
in favor of
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
April 7, 2005
Exhibit D-2-1
TABLE OF CONTENTS
Page
ARTICLE 1 General Terms 2
Section 1.1 Terms Defined Above 2
Section 1.2 Certain Definitions 2
Section 1.3 Credit Agreement Definitions 3
ARTICLE 2 The Guaranty 3
Section 2.1 Liabilities Guaranteed 3
Section 2.2 Nature of Guaranty 4
Section 2.3 Administrative Agent's Rights 4
Section 2.4 Guarantor's Waivers. 4
Section 2.5 Maturity of Liabilities; Payment 5
Section 2.6 Administrative Agent's Expenses 5
Section 2.7 Liability 5
Section 2.8 Events and Circumstances Not Reducing or
Discharging Guarantor's Obligations 5
Section 2.9 Right of Subrogation and Contribution 7
ARTICLE 3 Representations and Warranties 8
Section 3.1 By Guarantor 8
Section 3.2 No Representation by Lenders 8
ARTICLE 4 Subordination of Indebtedness 9
Section 4.1 Subordination of All Guarantor Claims 9
Section 4.2 Claims in Bankruptcy 9
Section 4.3 Payments Held in Trust 9
Section 4.4 Liens Subordinate 9
Section 4.5 Notation of Records 10
ARTICLE 5 Miscellaneous 10
Section 5.1 Successors and Assigns 10
Section 5.2 Notices 10
Section 5.3 Business and Financial Information 10
Section 5.4 Choice of Law 10
Section 5.5 Invalidity 10
Section 5.6 Entire Agreement 10
Exhibit D-2-2
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this "Guaranty Agreement")
-------------------
made by the undersigned guarantor (hereinafter called "Guarantor"), is in favor
of Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent") for the lenders (the "Lenders") signatory to the Credit
--------------------- -------
Agreement defined below.
R E C I T A L S:
A. Pursuant to that certain Credit Agreement dated as of January 27, 2003,
among St. Xxxx Xxxx & Exploration Company, a Delaware corporation
(hereinafter called the "Borrower"), the Administrative Agent, and the lenders
--------
party thereto (the "Existing Lenders") (such Credit Agreement, as amended and
-----------------
supplemented, the "Existing Credit Agreement"), the Borrower received certain
--------------------------
loans and extensions of credit under a revolving credit facility made available
to the Borrower under the Existing Credit Agreement, up to the aggregate
principal amount of $300,000,000.
B. The Existing Lenders conditioned their obligations under the Existing
Credit Agreement upon the execution and delivery by Guarantor of that certain
Guaranty Agreement dated as of January 27, 2003 (the "Existing Guaranty
------------------
Agreement").
---------
C. The Borrower, the Administrative Agent, and the Lenders have amended and
restated the Existing Credit Agreement by entering into that certain Amended and
Restated Credit Agreement dated of even date herewith (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), whereby,
-----------------
pursuant to which, the Lenders have agreed to make certain loans to and extend
certain credit for the account of the Borrower subject to the limitations set
forth in the Credit Agreement. The initial loans under the Credit Agreement have
been used by the Borrower to renew, rearrange, modify and extend all amounts
outstanding under the Existing Credit Agreement.
D. The Administrative Agent and the Lenders have conditioned their
obligations under the Credit Agreement upon the execution and delivery by
Guarantor of this Amended and Restated Guaranty Agreement, and Guarantor has
agreed to execute and deliver this Amended and Restated Guaranty Agreement.
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lenders, at any time or from time to time,
to loan monies and extend credit, with or without security, to or for the
account of Borrower in accordance with the terms of the Credit Agreement, (iii)
at the special insistence and request of the Lenders, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor and the Administrative Agent hereby agree that the
Existing Guaranty Agreement is hereby amended and restated in its entirety to
read as follows:
Exhibit D-2-3
ARTICLE 1
---------
General Terms
-------------
Section 1.1 Terms Defined Above. As used in this Amended and Restated
---------------------
Guaranty Agreement, the terms "Administrative Agent", "Borrower", "Credit
Agreement", "Guarantor" and "Lenders" shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Amended and Restated
--------------------
Guaranty Agreement, the following terms shall have the following meanings,
unless the context otherwise requires (terms defined in the singular shall have
the same meanings when used in the plural and vice versa):
"Contribution Obligation" shall mean an amount equal, at any time and from
------------------------
time to time and for each respective Subsidiary Guarantor, to the product of (i)
its Contribution Percentage times (ii) the sum of all payments made previous to
or at the time of calculation by all Subsidiary Guarantors in respect of the
Liabilities, as a Subsidiary Guarantor (less the amount of any such payments
previously returned to any Subsidiary Guarantor by operation of law or
otherwise, but not including payments received by any Subsidiary Guarantor by
way of its rights of subrogation and contribution under Section 2.9 of any other
Guaranty Agreements); provided, however, such Contribution Obligation for any
Subsidiary Guarantor shall in no event exceed such Subsidiary Guarantor's
Maximum Guaranteed Amount, as defined in the respective Guaranty Agreement of
such Subsidiary Guarantor.
"Contribution Percentage" shall mean for any Subsidiary Guarantor for any
------------------------
applicable date as of which such percentage is being determined, an amount equal
to the quotient of (i) the Net Worth of such Subsidiary Guarantor as of such
date, divided by (ii) the sum of the Net Worth of all the Subsidiary Guarantors
as of such date.
"Guarantor Claims" shall have the meaning indicated in Section 4.1 hereof.
----------------
"Guaranty Agreement" shall mean this Amended and Restated Guaranty
--------------------
Agreement, and where the context indicates, the "Guaranty Agreement" (as defined
in the Credit Agreement) of any other Subsidiary Guarantor, as the same may from
time to time be amended, modified or supplemented.
"Liabilities" shall mean (a) any and all Indebtedness, obligations and
-----------
liabilities of the Borrower pursuant to the Credit Agreement and any other Loan
Document, including without limitation, the unpaid principal of and interest on
the Notes, including without limitation, interest accruing subsequent to the
filing of a petition or other action concerning bankruptcy or other similar
proceeding; (b) any additional loans made by the Lenders to the Borrower; (c)
payment of and performance of any and all present or future obligations of the
Borrower to any Lender or any Affiliate of such Lender under any Swap Agreement
between the Borrower and any Lender or any Affiliate of such Lender; (d) any and
all other indebtedness, obligations and liabilities of any kind of the Borrower
to the Lenders, now or hereafter existing, arising directly between the Borrower
and the Lenders or acquired outright, as a participation, conditionally or as
collateral security from another by the Lenders, absolute or contingent, joint
and/or several, secured or unsecured, due or not due, arising by operation of
law or otherwise, or direct or indirect, including indebtedness, obligations and
liabilities to the Lenders of the Borrower as a member of any partnership,
Exhibit D-2-4
syndicate, association or other group, and whether incurred by the Borrower as
principal, surety, endorser, guarantor, accommodation party or otherwise; and
(e) all renewals, rearrangements, increases, extensions for any period,
replacements, amendments or supplements in whole or in part of the Notes or any
documents evidencing the above
"Maximum Guaranteed Amount" shall mean, for the Guarantor, the greater of
--------------------------
(i) the "reasonably equivalent value" or "fair consideration" (or equivalent
concept) received by the Guarantor in exchange for the obligation incurred
hereunder, within the meaning of any applicable state or federal fraudulent
conveyance or transfer laws; or (ii) the lesser of (A) the maximum amount that
will not render the Guarantor insolvent, or (B) the maximum amount that will not
leave the Guarantor with any property deemed an unreasonably small capital.
Clauses (A) and (B) are and shall be determined pursuant to and as of the
appropriate date mandated by such applicable state or federal fraudulent
conveyance or transfer laws and to the extent allowed by law take into account
the rights to contribution and subrogation under Section 2.9 in each Guaranty
Agreement so as to provide for the largest Maximum Guaranteed Amount possible.
"Net Payments" shall mean an amount equal, at any time and from time to
-------------
time and for each respective Subsidiary Guarantor, to the difference of (i) the
sum of all payments made previous to or at the time of calculation by such
Subsidiary Guarantor in respect of the Liabilities, as a Subsidiary Guarantor,
and in respect of its obligations contained in this Guaranty Agreement, less
(ii) the sum of all such payments previously returned to such Subsidiary
Guarantor by operation of law or otherwise and including payments received by
such Subsidiary Guarantor by way of its rights of subrogation and contribution
under Section 2.9 of any other Guaranty Agreements.
"Net Worth" shall mean for any Subsidiary Guarantor, determined in
----------
accordance with GAAP and calculated on and as of any applicable date on which
such amount is being determined, the difference between (i) the sum of all such
Subsidiary Guarantor's property, at a fair valuation and as of such date, minus
(ii) the sum of all such Subsidiary Guarantor's debts, at a fair valuation and
as of such date, excluding the Liabilities.
"Subsidiary Guarantors" shall mean the Subsidiaries or other Persons party
----------------------
to a Guaranty Agreement, including the Guarantor.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined herein,
----------------------------
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein.
ARTICLE 2
---------
The Guaranty
------------
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
-----------------------
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise; provided, however, that, notwithstanding
anything herein or in any other Loan Document to the contrary, the maximum
liability of Guarantor hereunder shall in no event exceed the Maximum Guaranteed
Amount.
Exhibit D-2-5
Section 2.2 Nature of Guaranty. This Guaranty Agreement is an absolute,
-------------------
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantor.
This Guaranty Agreement may not be revoked by Guarantor and shall continue to be
effective with respect to debt under the Liabilities arising or created after
any attempted revocation by Guarantor and shall remain in full force and effect
until the Liabilities are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto no Liabilities may be
outstanding. Borrower and the Lenders may modify, alter, rearrange, extend for
any period and/or renew from time to time, the Liabilities, and the Lenders may
waive any Default or Events of Default without notice to the Guarantor and in
such event Guarantor will remain fully bound hereunder on the Liabilities. This
Guaranty Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the Liabilities is rescinded or must
otherwise be returned by any of the Lenders upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had not been
made. This Guaranty Agreement may be enforced by the Administrative Agent and
any subsequent holder of any of the Liabilities and shall not be discharged by
the assignment or negotiation of all or part of the Liabilities. Guarantor
hereby expressly waives presentment, demand, notice of non-payment, protest and
notice of protest and dishonor, notice of Default or Event of Default, notice of
intent to accelerate the maturity and notice of acceleration of the maturity and
any other notice in connection with the Liabilities, and also notice of
acceptance of this Guaranty Agreement, acceptance on the part of the Lenders
being conclusively presumed by the Lenders' request for this Guaranty Agreement
and delivery of the same to the Administrative Agent.
Section 2.3 Administrative Agent's Rights. Guarantor authorizes the
-------------------------------
Administrative Agent, without notice or demand and without affecting Guarantor's
liability hereunder, to obtain a guaranty of the Liabilities from any one or
more Persons and at any time or times to enforce, waive, rearrange, modify,
limit or release any of such other Persons from their obligations under such
guaranties.
Section 2.4 Guarantor's Waivers.
-------------------
(a) General. Guarantor waives any right to require any of the
-------
Lenders to (i) proceed against Borrower or any other person liable on the
Liabilities, (ii) enforce any of their rights against any other guarantor of the
Liabilities including but not limited to the Subsidiary Guarantors (iii) proceed
or enforce any of their rights against or exhaust any security given to secure
the Liabilities (iv) have Borrower joined with Guarantor in any suit arising out
of this Guaranty Agreement and/or the Liabilities, or (v) pursue any other
remedy in the Lenders' powers whatsoever. The Lenders shall not be required to
mitigate damages or take any action to reduce, collect or enforce the
Liabilities. Guarantor waives any defense arising by reason of any disability,
lack of corporate authority or power, or other defense of Borrower or any other
guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for any
reason. Whether and when to exercise any of the remedies of the Lenders under
any of the Loan Documents shall be in the sole and absolute discretion of the
Administrative Agent, and no delay by the Administrative Agent in enforcing any
remedy, including delay in conducting a foreclosure sale, shall be a defense to
the Guarantor's liability under this Guaranty Agreement. To the extent allowed
by applicable law, the Guarantor hereby waives any good faith duty on the part
Exhibit D-2-6
of the Administrative Agent in exercising any remedies provided in the Loan
Documents.
(b) Subrogation. Until the Liabilities have been paid in full, the
-----------
Guarantor waives all rights of subrogation or reimbursement against the
Borrower, whether arising by contract or operation of law (including, without
limitation, any such right arising under any federal or state bankruptcy or
insolvency laws) and waives any right to enforce any remedy which the Lenders
now have or may hereafter have against the Borrower, and waives any benefit or
any right to participate in any security now or hereafter held by the
Administrative Agent or any Lender.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if the
---------------------------------
maturity of any of the Liabilities is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Administrative Agent, pay to the Administrative Agent the amount
due and unpaid by Borrower and guaranteed hereby. The failure of the
Administrative Agent to give this notice shall not in any way release Guarantor
hereunder.
Section 2.6 Administrative Agent's Expenses. If Guarantor fails to pay the
--------------------------------
Liabilities after notice from the Administrative Agent of Borrower's failure to
pay any Liabilities when due, and if the Administrative Agent obtains the
services of an attorney for collection of amounts owing by Guarantor hereunder,
or obtaining advice of counsel in respect of any aspect of this Guaranty
Agreement, or if suit is filed to enforce this Guaranty Agreement, or if
proceedings are had in any bankruptcy, probate, receivership or other judicial
proceedings for the establishment or collection of any amount owing by Guarantor
hereunder, or if any amount owing by Guarantor hereunder is collected through
such proceedings, Guarantor agrees to pay to the Administrative Agent the
Administrative Agent's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability of the
---------
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
---------------------------------------------------------------
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
------------------------
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications, etc. Any renewal, extension, modification,
--------------------
increase, decrease, alteration or rearrangement of all or any part of the
Liabilities, or of the Notes, any Loan Document or the Credit Agreement or any
instrument executed in connection therewith, or any contract or understanding
between Borrower and any of the Lenders, or any other Person, pertaining to the
Liabilities.
Exhibit D-2-7
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
----------------
compromise that might be granted or given by any of the Lenders to Borrower or
Guarantor or any Person liable on the Liabilities.
(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy
----------------------------------
arrangement, adjustment, composition, liquidation, disability, dissolution,
death or lack of power of Borrower or Guarantor or any other Person at any time
liable for the payment of all or part of the Liabilities; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners,
or members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor.
(d) Invalidity of Liabilities. The invalidity, illegality or
---------------------------
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever, including without limitation the fact that the Liabilities, or any
part thereof, exceed the amount permitted by law, the act of creating the
Liabilities or any part thereof is ultra xxxxx, the officers or representatives
executing the documents or otherwise creating the Liabilities acted in excess of
their authority, the Liabilities violate applicable usury laws, the Borrower has
valid defenses, claims or offsets (whether at law, in equity or by agreement)
which render the Liabilities wholly or partially uncollectible from Borrower,
the creation, performance or repayment of the Liabilities (or the execution,
delivery and performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given to secure
the repayment of the Liabilities) is illegal, uncollectible, legally impossible
or unenforceable, or the Credit Agreement or other documents or instruments
pertaining to the Liabilities have been forged or otherwise are irregular or not
genuine or authentic.
(e) Release of Obligors. Any full or partial release of the
---------------------
liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Liabilities or any part thereof, it being
recognized, acknowledged and agreed by Guarantor that Guarantor may be required
to pay the Liabilities in full without assistance or support of any other
Person, and Guarantor has not been induced to enter into this Guaranty Agreement
on the basis of a contemplation, belief, understanding or agreement that other
parties other than the Borrower will be liable to perform the Liabilities, or
the Lenders will look to other parties to perform the Liabilities.
(f) Other Security. The taking or accepting of any other security,
--------------
collateral or guaranty, or other assurance of payment, for all or any part of
the Liabilities.
(g) Release of Collateral, etc. Any release, surrender, exchange,
--------------------------
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Liabilities.
(h) Care and Diligence. The failure of the Lenders or any other
-------------------
Person to exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
Exhibit D-2-8
collateral, property or security; provided, however, that Lenders shall act in a
"commercially reasonable" manner as required by applicable provisions of Article
9 of the Uniform Commercial Code as presently in effect in the State of Texas
when exercising their rights under that certain Pledge and Security Agreement by
and between Borrower and Administrative Agent of even date herewith.
(i) Status of Liens. The fact that any collateral, security,
----------------
security interest or lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall not be properly
perfected or created, or shall prove to be unenforceable or subordinate to any
other security interest or lien, it being recognized and agreed by Guarantor
that Guarantor is not entering into this Guaranty Agreement in reliance on, or
in contemplation of the benefits of, the validity, enforceability,
collectability or value of any of the collateral for the Liabilities.
(j) Payments Rescinded. Any payment by Borrower to the Lenders is
------------------
held to constitute a preference under the bankruptcy laws, or for any reason the
Lenders are required to refund such payment or pay such amount to Borrower or
someone else.
(k) Other Actions Taken or Omitted. Any other action taken or
--------------------------------
omitted to be taken with respect to the Credit Agreement, the Liabilities, or
the security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the Liabilities pursuant to the terms hereof; it being the unambiguous
and unequivocal intention of Guarantor that Guarantor shall be obligated to pay
the Liabilities when due, notwithstanding any occurrence, circumstance, event,
action, or omission whatsoever, whether contemplated or uncontemplated, and
whether or not otherwise or particularly described herein, except for the full
and final payment and satisfaction of the Liabilities.
Section 2.9 Right of Subrogation and Contribution. If Guarantor makes a
---------------------------------------
payment in respect of the Liabilities, it shall be subrogated to the rights of
the Lenders against the Borrower with respect to such payment and shall have the
rights of contribution against the other Subsidiary Guarantors set forth in
Section 2.9 of any other Guaranty Agreements; provided that Guarantor shall not
enforce its rights to any payment by way of subrogation or by exercising its
rights of contribution or reimbursement or the right to participate in any
security now or hereafter held by or for the benefit of the Lenders until all of
the Liabilities have been paid in full. The Guarantor agrees that after all the
Liabilities have been paid in full if its then current Net Payments are less
than the amount of its then current Contribution Obligation, Guarantor shall pay
to any other Subsidiary Guarantors an amount (together with any payments
required of the other Subsidiary Guarantors by Section 2.9 of each other
Guaranty Agreement) such that the Net Payments made by all Subsidiary Guarantors
in respect of the Liabilities shall be shared among all of the Subsidiary
Guarantors in a proportion equal to their respective Contribution Percentage;
provided, however, Guarantor need not make any such payment if at the time such
payment is to be made Guarantor is illiquid and not making such payment will not
render any other Subsidiary Guarantor insolvent.
Exhibit D-2-9
ARTICLE 3
---------
Representations and Warranties
------------------------------
Section 3.1 By Guarantor. In order to induce the Lenders to accept this
-------------
Guaranty Agreement, Guarantor represents and warrants to the Lenders (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this
--------------------
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.
(b) Existence. Guarantor is a corporation duly organized, validly
---------
existing and in good standing under the laws of the State of Montana.
(c) Power and Authorization. Guarantor is duly authorized and
------------------------
empowered to execute, deliver and perform this Guaranty Agreement and all
necessary action on Guarantor's part requisite for the due execution, delivery
and performance of this Guaranty Agreement has been duly and effectively taken.
(d) Binding Obligations. This Guaranty Agreement constitutes valid
-------------------
and binding obligations of Guarantor, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principals of equity, regardless of whether considered in a proceeding in equity
or at law.
(e) Governmental Approvals; No Conflicts. This Guaranty Agreement
------------------------------------
(a) does not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Guarantor or any order of any Governmental Authority, (c) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon the Guarantor or its assets, or give rise to a right
thereunder to require any payment to be made by the Guarantor, and (d) will not
result in the creation or imposition of any Lien on any asset of the Guarantor.
(f) Solvency. The Guarantor hereby represents that (i) it is not
--------
insolvent as of the date hereof and will not be rendered insolvent as a result
of this Guaranty Agreement, (ii) it is not engaged in a business or a
transaction, or about to engage in a business or a transaction, for which any
property or assets remaining with such Guarantor thereafter is unreasonably
small capital, and (iii) it does not intend to incur, or believe it will incur,
debts that will be beyond its ability to pay as such debts mature.
Section 3.2 No Representation by Lenders. Neither the Lenders nor any other
----------------------------
Person has made any representation, warranty or statement to the Guarantor in
order to induce the Guarantor to execute this Guaranty Agreement.
Exhibit D-2-10
ARTICLE 4
---------
Subordination of Indebtedness
-----------------------------
Section 4.1 Subordination of All Guarantor Claims. As used herein, the term
-------------------------------------
"Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower arising as a result of
subrogation or otherwise as a result of Guarantor's payment of all or a portion
of the Liabilities. During the continuance of any Event of Default, Guarantor
shall not receive or collect, directly or indirectly, from Borrower or any other
party any amount upon the Guarantor Claims.
Section 4.2 Claims in Bankruptcy. In the event of receivership, bankruptcy,
--------------------
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Borrower as debtor, the Lenders shall have the right to prove their
claim in any proceeding, so as to establish their rights hereunder and receive
directly from the receiver, trustee or other court custodian, dividends and
payments which would otherwise be payable upon Guarantor Claims. In such event,
Guarantor hereby assigns such dividends and payments to the Lenders. Should the
Administrative Agent or any Lender receive, for application upon the
Liabilities, any such dividend or payment which is otherwise payable to
Guarantor, and which, as between Borrower and Guarantor, shall constitute a
credit upon the Guarantor Claims, then upon payment in full of the Liabilities,
Guarantor shall become subrogated to the rights of the Lenders to the extent
that such payments to the Lenders on the Guarantor Claims have contributed
toward the liquidation of the Liabilities, and such subrogation shall be with
respect to that portion of the Liabilities which would have been unpaid if the
Administrative Agent or a Lender had not received dividends or payments upon the
Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that notwithstanding
-----------------------
Sections 4.1 and 4.2 above, Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, Guarantor agrees to hold
in trust for the Lenders an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions except
to pay them promptly to the Administrative Agent, and Guarantor covenants
promptly to pay the same to the Administrative Agent.
Section 4.4 Liens Subordinate. Guarantor agrees that any liens, security
------------------
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Liabilities,
regardless of whether such encumbrances in favor of Guarantor, the
Administrative Agent or the Lenders presently exist or are hereafter created or
attach. Without the prior written consent of the Lenders, Guarantor shall not
(a) exercise or enforce any creditor's right it may have against the Borrower,
or (b) foreclose, repossess, sequester or otherwise take steps or institute any
Exhibit D-2-11
action or proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any lien, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of Borrower held by Guarantor.
Section 4.5 Notation of Records. All promissory notes, or other instruments
-------------------
evidencing the Guarantor Claims accepted by or held by Guarantor (if any) shall
contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
ARTICLE 5
---------
Miscellaneous
-------------
Section 5.1 Successors and Assigns. This Guaranty Agreement is and shall be
----------------------
in every particular available to the successors and assigns of the Lenders and
is and shall always be fully binding upon the legal representatives, heirs,
successors and assigns of Guarantor, notwithstanding that some or all of the
monies, the repayment of which this Guaranty Agreement applies, may be actually
advanced after any bankruptcy, receivership, reorganization, death, disability
or other event affecting Guarantor.
Section 5.2 Notices. Any notice or demand to Guarantor under or in
-------
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
12.02 of the Credit Agreement, addressed to Guarantor at the address on the
signature page hereof or at such other address provided to the Administrative
Agent in writing.
Section 5.3 Business and Financial Information. The Guarantor will promptly
----------------------------------
furnish to the Administrative Agent and the Lenders from time to time upon
request such information regarding the business and affairs and financial
condition of the Guarantor and its subsidiaries as the Administrative Agent and
the Lenders may reasonably request.
Section 5.4 Choice of Law. This Guaranty Agreement (including, but not
-------------
limited to, the validity and enforceability hereof) shall be governed by, and
construed in accordance with, the laws of the State of Texas.
Section 5.5 Invalidity. In the event that any one or more of the provisions
----------
contained in this Guaranty Agreement shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Guaranty
Agreement.
Section 5.6 ENTIRE AGREEMENT. THS WRITTEN GUARANTY AGREEMENT EMBODIES THE
----------------
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDERS AND THE GUARANTOR AND
SUPERCEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
Exhibit D-2-12
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN ON NEXT PAGE]
Exhibit D-2-13
WITNESS THE EXECUTION HEREOF, effective as of the 7th day of April, 2005.
GUARANTOR: _____________________________________________
---------
By: _______________________________________
Xxxxx X. Xxxxxxxxxx
Vice President - Finance
Address: _______________________
_______________________
with copy to:
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
ADMINISTRATIVE AGENT: WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent
By: _______________________________________
Name: Xxxxxx X. Xxxxxxx
Title:Vice President
Exhibit D-2-14
EXHIBIT D-3
--------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
Between
ST. XXXX XXXX & EXPLORATION COMPANY,
as Pledgor
and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent,
as Secured Party
Effective as of April 7, 2005
--------------------------------------------------------------------------------
Exhibit D-3-1
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
--------------------------------------------------
THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT is made effective
as of April 7, 2005, by ST. XXXX XXXX & EXPLORATION COMPANY, a Delaware
corporation with principal offices at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000 ("Pledgor"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association with offices at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, as Administrative Agent (in such capacity, the
"Secured Party") for the benefit of the several lenders now or hereafter parties
to the hereinafter defined Credit Agreement (individually, a "Lender" and
collectively, the "Lenders").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of January 27, 2003,
among Pledgor, Secured Party and the lenders party thereto (the "Existing
Lenders") (such Credit Agreement, as amended and supplemented, the "Existing
Credit Agreement"), Pledgor received certain loans and extensions of credit
under a revolving credit facility made available to Pledgor under the Existing
Credit Agreement, up to the aggregate principal amount of $300,000,000.
B. The Existing Lenders conditioned their obligations under the Existing
Credit Agreement upon the execution and delivery by Pledgor of that certain
Pledge and Security Agreement dated as of January 27, 2003 (the "Existing Pledge
and Security Agreement").
C. Pledgor, Secured Party and the Lenders have amended and restated the
Existing Credit Agreement by entering into that certain Amended and Restated
Credit Agreement dated of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), whereby, pursuant
to which, the Lenders have agreed to make certain loans to and extend certain
credit for the account of Pledgor subject to the limitations set forth in the
Credit Agreement. The initial loans under the Credit Agreement have been used by
Pledgor to renew, rearrange, modify and extend all amounts outstanding under the
Existing Credit Agreement.
D. The Secured Party and the Lenders have conditioned their obligations
under the Credit Agreement upon the execution and delivery by Pledgor of this
Amended and Restated Pledge and Security Agreement, and Pledgor has agreed to
execute and deliver this Amended and Restated Pledge and Security Agreement.
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lenders, at any time or from time to time,
to loan monies and extend credit, with or without security, to or for the
account of Pledgor in accordance with the terms of the Credit Agreement, (iii)
at the special insistence and request of the Lenders, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Pledgor and Secured Party hereby agree that the Existing Pledge
and Security Agreement is hereby amended and restated in its entirety to read as
follows:
ARTICLE 1
SECURITY INTEREST
-----------------
Exhibit D-3-2
Section 1.01 Pledge. Pledgor hereby pledges, assigns and grants to Secured
------
Party a security interest in and right of set-off against the assets referred to
in Section 1.02 (the "Collateral") to secure the prompt payment and performance
of the "Obligations" (as defined in Section 2.02) and the performance by Pledgor
of this Amended and Restated Pledge and Security Agreement.
Section 1.02 Collateral. The Collateral consists of the following types or
----------
items of property which are owned by Pledgor:
(a) The securities described or referred to in Exhibit A attached
hereto and made a part hereof.
(b) (i) The certificates or instruments, if any, representing such
membership interests and such units, (ii) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and
all other rights and property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
membership interests or such units, (iii) all replacements and
substitutions for any of the property referred to in this Section 1.02,
including, without limitation, claims against third parties, and (iv) the
proceeds, interest, profits and other income of or on any of the property
referred to in this Section 1.02.
It is expressly contemplated that additional securities or other property may
from time to time be pledged, assigned or granted to Secured Party as additional
security for the Obligations, and the term "Collateral" as used herein shall be
deemed for all purposes hereof to include all such additional membership
interests, units and property, together with all other property of the types
described above related thereto.
Section 1.03 Transfer of Collateral. All certificates or instruments
-----------------------
representing or evidencing the Pledged Securities shall be delivered to and held
pursuant hereto by Secured Party or a Person designated by Secured Party and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, or (in the case of
either certificated or uncertificated securities) Secured Party shall have been
provided with evidence that the Pledged Securities have been otherwise delivered
to Secured Party in accordance with Section 8.301 of the Code, all in form and
substance satisfactory to Secured Party. Notwithstanding the preceding sentence,
at Secured Party's discretion, all Pledged Securities must be delivered or
transferred in such manner as to permit Secured Party to meet the requirements
of Section 8.303(a)(3) of the Code to the extent of its security interest.
Secured Party shall have the right, at any time in its discretion and without
notice to Pledgor, to transfer to or to register in the name of Secured Party or
any of its nominees any or all of the Pledged Securities, subject only to the
revocable rights specified in Section 4.02. In addition, Secured Party shall
have the right at any time to exchange certificates or instruments representing
or evidencing Pledged Securities for certificates or instruments of smaller or
larger denominations.
Exhibit D-3-3
ARTICLE 2
DEFINITIONS
-----------
Section 2.01 Terms Defined Above. As used in this Amended and Restated
---------------------
Pledge and Security Agreement, the terms defined above shall have the meanings
respectively assigned to them.
Section 2.01 Certain Definitions. As used in this Amended and Restated
--------------------
Pledge and Security Agreement, the following terms shall have the following
meanings, unless the context otherwise requires:
"Agreement" means this Amended and Restated Pledge and Security Agreement,
---------
as the same may from time to time be amended, supplemented or otherwise
modified.
"Code" means the Uniform Commercial Code as presently in effect in the
----
State of Texas, Articles 1 through 9. Unless otherwise indicated by the context
herein, all uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Articles 8 and 9 of the Code.
"Event of Default" means any event specified in Section 6.01.
----------------
"Obligations" means the collective reference to (a) all indebtedness,
-----------
obligations and liabilities of Pledgor under or in connection with the Loan
Documents, including, without limitation, the unpaid principal of and interest
on the Loans and the LC Exposure and all other obligations and liabilities of
Pledgor (including, without limitation, interest accruing at the then applicable
rate provided in the Credit Agreement after the maturity of the Loans and the LC
Exposure and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
Pledgor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to Secured Party or any Lender (or, in the case of
any Swap Agreement referred to below, any Affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the other Loan Documents or any Swap Agreement
entered into by Pledgor with any Lender (or any Affiliate of any Lender), or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to Secured Party or to the Lenders
that are required to be paid by Pledgor pursuant to the terms of any of the
foregoing agreements), and (b) all obligations of Pledgor which may arise under
or in connection with this Agreement or any other Loan Document to which Pledgor
is a party.
The term "Obligations" shall mean all indebtedness, obligations and
-----------
liabilities described, referred to or mentioned in the immediately preceding
paragraph of this definition, and all renewals, rearrangements, increases,
substitutions, replacements and extensions for any period thereof and
amendments, supplements or modifications thereto, in whole or in part.
Exhibit D-3-4
"Obligor" means any Person, other than Pledgor, liable (whether directly or
-------
indirectly, primarily or secondarily) for the payment or performance of any of
the Obligations whether as maker, co-maker, endorser, guarantor, accommodation
party, general partner or otherwise.
"Pledged Securities" means all of the securities and other property
-------------------
(whether or not the same constitutes a "security" under the Code) referred to in
Section 1.02(a) or 1.02(b) and all additional securities, if any, constituting
Collateral under this Agreement.
Section 2.03 Credit Agreement Terms. Unless otherwise defined herein, all
----------------------
terms beginning with a capital letter which are defined in the Credit Agreement
shall have the same meanings herein as therein.
Section 2.04 Section References. Unless otherwise provided for herein, all
------------------
references herein to Sections are to Sections of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Except as otherwise
---------------------------------------
permitted by the Credit Agreement, Pledgor is the record and beneficial owner of
the Collateral free and clear of any Lien except for the security interest
created by this Agreement, and Pledgor has full right, power and authority to
pledge, assign and grant a security interest in the Collateral to Secured Party.
Section 3.02 No Required Consent. No authorization, consent, approval or
-------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements in favor of
Secured Party) is required for (i) the due execution, delivery and performance
by Pledgor of this Agreement, (ii) the grant by Pledgor of the security interest
granted by this Agreement or (iii) the perfection of such security interest.
Section 3.03 Pledged Securities. The Pledged Securities have been duly
-------------------
authorized and validly issued, and are fully paid and non-assessable.
Section 3.04 First Priority Security Interest. The pledge of Pledged
-----------------------------------
Securities pursuant to this Agreement, the delivery to Secured Party of the
certificates representing the Pledged Securities accompanied by stock powers
duly executed in blank and the filing of appropriate financing statements in the
relevant locations create a valid and perfected first priority security interest
in the Collateral, enforceable against Pledgor and all third parties and
securing payment of the Obligations.
Exhibit D-3-5
ARTICLE 4
COVENANTS AND AGREEMENTS
------------------------
Pledgor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations (other than any indemnity which is not yet due and payable) are
outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as
--------------------------------------------------
otherwise not prohibited by the Credit Agreement or this Agreement, Pledgor will
not in any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any Person other than
Secured Party.
Section 4.02 Voting Rights; Dividends or Distributions. Until both (i) an
------------------------------------------
Event of Default shall have occurred and be continuing and (ii) either (a) the
Loans have become due and payable at their stated maturity and have not been
paid, (b) the Loans have been declared due and payable pursuant to Article X of
the Credit Agreement, or (c) Secured Party has given notice to Pledgor of
Secured Party's intent to exercise its rights under Section 6.02:
(a) Pledgor shall be entitled to exercise any and all voting,
management and/or other consensual rights and powers inuring to an owner of the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement and the other Loan Documents.
(b) Pledgor shall be entitled to receive and retain (free and clear of
and no longer subject to this Agreement or the Lien created pursuant to this
Agreement) any and all dividends, distributions and interest paid in respect of
the Collateral, provided, however, that any and all
(i) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for
(including, without limitation, any certificate, share or interest
purchased or exchanged in connection with a tender offer or merger
agreement), any Collateral,
(ii) dividends and other distributions paid or payable in
cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution, or reclassification, and
(iii) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Collateral,
shall be, and shall be promptly delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be promptly delivered to Secured Party as Collateral in the same
Exhibit D-3-6
form as so received (with any necessary endorsement) ), provided further,
however, in no event shall the foregoing proviso be applicable to, or prevent
the Pledgor from receiving and retaining any securities that are not pledged or
intended or required to be pledged to the Secured Party pursuant to any Security
Instrument, including this Agreement.
Section 4.03 Records and Information. Pledgor shall keep accurate and
------------------------
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Pledgor will promptly provide written notice to Secured
Party of all information which in any way affects the filing of any financing
statement or other public notices or recordings pertaining to the perfection of
a security interest in the Collateral, or the delivery and possession of items
of Collateral for the purpose of perfecting a security interest in the
Collateral.
Section 4.04 Certain Liabilities. Pledgor hereby assumes all liability for
-------------------
the Collateral, the security interest created hereunder and any use, possession,
maintenance, management, enforcement or collection of any or all of the
Collateral.
Section 4.05 Further Assurances. Upon the request of Secured Party, Pledgor
------------------
shall (at Pledgor's expense) execute and deliver all such assignments,
certificates, instruments, securities, financing statements, notifications to
financial intermediaries, clearing corporations, issuers of securities or other
third parties or other documents and give further assurances and do all other
acts and things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or to protect, enforce or otherwise effect
Secured Party's rights and remedies hereunder.
Section 4.06 Rights to Sell. If Secured Party shall determine to exercise
--------------
its rights to sell all or any of the Collateral pursuant to its rights
hereunder, Pledgor agrees that, upon request of Secured Party, Pledgor will, at
its own expense:
(a) execute and deliver, and use all reasonable efforts to cause each
issuer of the Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
reasonable opinion of Secured Party, advisable to register such Collateral under
the provisions of the Securities Act of 1933, as from time to time amended (the
"Securities Act"), if such registration is, in the reasonable opinion of Secured
Party, necessary or advisable to effect a public distribution of the Collateral,
and to cause the registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the related
prospectus which, in the reasonable opinion of Secured Party, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;
(b) use all reasonable efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by Secured Party;
Exhibit D-3-7
(c) use all reasonable efforts to cause each such issuer to make
available to its security holders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the Securities Act; and
(d) use all reasonable efforts to do or cause to be done all such
others acts and things as may be necessary to make such sale of the Collateral
or any part thereof valid and binding and in compliance with applicable law.
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by Secured Party by reason of the failure by
Pledgor to perform any of the covenants contained in this Section 4.06 and
consequently agrees that if Pledgor shall fail to perform any of such covenants,
it shall pay (to the extent permitted by law), as liquidated damages, and not as
penalty, an amount (in no event to exceed the amount of Obligations then
outstanding) equal to the value of the Collateral affected by Pledgor's failure
to perform any of the covenants contained in this Section 4.06 on the date the
Secured Party shall demand compliance with this Section 4.06.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
------------------------------------------
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Discharge Encumbrances. Secured Party may, at its option,
-----------------------
three (3) Business Days after receipt by Pledgor of prior written notice from
Secured Party of its intent to do so, discharge any Liens at any time levied or
placed on the Collateral that are prohibited by the Credit Agreement and that
are not being contested in good faith by appropriate proceedings. Pledgor agrees
to reimburse Secured Party within five (5) days after demand for any payment so
made, plus interest thereon from the date of Secured Party's demand at the rate
per annum equal to 2% plus the rate applicable to ABR Loans as provided in
Section 3.02(a) of the Credit Agreement.
Section 5.02 Transfer of Collateral. Subject to the terms of the Credit
-----------------------
Agreement, Secured Party may transfer any or all of the Obligations, and upon
any such transfer Secured Party may transfer its interest in any or all of the
Collateral and shall be fully discharged thereafter from all liability therefor.
Any transferee of the Collateral shall be vested with all rights, powers, duties
and remedies of Secured Party hereunder.
Section 5.03 Cumulative and Other Rights. The rights, powers and remedies
---------------------------
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off.
Section 5.04 Disclaimer of Certain Duties. The powers conferred upon
------------------------------
Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Pledgor hereby agrees that Secured Party shall not be liable for, nor shall the
Exhibit D-3-8
indebtedness evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take possession of or
otherwise obtain value for the Collateral.
Section 5.05 Custody and Preservation of the Collateral. Secured Party
---------------------------------------------
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
ARTICLE 6
EVENTS OF DEFAULT
-----------------
Section 6.01 Events. An "Event of Default" (as defined in the Credit
------
Agreement) which has occurred and is continuing shall constitute an Event of
Default under this Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
--------
any Event of Default, Secured Party may take any or all of the following actions
without notice or demand to Pledgor (except that Secured Party will not take any
action in the case of paragraphs (b) and (f) below until five (5) Business Days
after receipt by Pledgor of written notice from Secured Party of its intent to
do so):
(a) Subject to applicable provisions contained in the Credit
Agreement, declare all or part of the indebtedness pursuant to the Obligations
immediately due and payable and enforce payment of the same by Pledgor or any
Obligor.
(b) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in any commercially reasonable
manner as Secured Party may elect, in a public or private transaction, at any
location as deemed reasonable by Secured Party either for cash or credit or for
future delivery at such price as Secured Party may reasonably deem fair, and
(unless prohibited by the Uniform Commercial Code, as adopted in any applicable
jurisdiction) Secured Party may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Obligations secured
hereby. Any such sale or transfer by Secured Party either to itself or to any
other Person shall be absolutely free from any claim of right by Pledgor,
including any equity or right of redemption, stay or appraisal which Pledgor has
or may have under any rule of law, regulation or statute now existing or
hereafter adopted. Upon any such sale or transfer, Secured Party shall have the
right to deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. If Secured Party reasonably deems it
advisable to do so, it may restrict the bidders or purchasers of any such sale
or transfer to Persons or entities who will represent and agree that they are
purchasing the Collateral for their own account and not with the view to the
distribution or resale of any of the Collateral. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as
Exhibit D-3-9
Secured Party may fix in the notice of such sale. Secured Party shall not be
obligated to make any sale pursuant to any such notice. Secured Party may,
without notice or publication, adjourn any public or private sale by
announcement at any time and place fixed for such sale, and such sale may be
made at any time or place to which the same may be so adjourned. In the event
any sale or transfer hereunder is not completed or is defective in the opinion
of Secured Party, such sale or transfer shall not exhaust the rights of Secured
Party hereunder, and Secured Party shall have the right to cause one or more
subsequent sales or transfers to be made hereunder. If only part of the
Collateral is sold or transferred such that the Obligations remain outstanding
(in whole or in part), Secured Party's rights and remedies hereunder shall not
be exhausted, waived or modified, and Secured Party is specifically empowered to
make one or more successive sales or transfers until all the Collateral shall be
sold or transferred and all the Obligations are paid. In the event that Secured
Party elects not to sell the Collateral, Secured Party retains its rights to
dispose of or utilize the Collateral or any part or parts thereof in any manner
authorized or permitted by law or in equity, and to apply the proceeds of the
same towards payment of the Obligations.
(c) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the Code or
otherwise permitted by law or in equity. Such application may include, without
limitation, the reasonable attorneys' fees and legal expenses incurred by
Secured Party.
(d) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
(e) Receive, change the address for delivery, open and dispose of mail
addressed to Pledgor, and to execute, assign and endorse negotiable and other
instruments for the payment of money, documents of title or other evidences of
payment, shipment or storage for any form of Collateral on behalf of and in the
name of Pledgor.
(f) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured
----------------
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in Secured
Party's discretion upon the occurrence and during the continuance of an Event of
Default, but at Pledgor's cost and expense, three (3) Business Days after
receipt by Pledgor of written notice from Secured Party of its intent to do so,
to take any action and to execute any assignment, certificate, financing
statement, stock power, notification, document or instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or other disposition of
------------------------
Collateral by Secured Party in compliance with the Loan Documents and applicable
law or any other action of Secured Party hereunder in compliance with the Loan
Documents and applicable law results in reduction of the Obligations, such
action will not release Pledgor from its liability to Secured Party for any
Exhibit D-3-10
unpaid Obligations, including (to the extent permitted by law) costs, charges
and expenses incurred in the liquidation of Collateral, together with interest
thereon until paid at the rate per annum equal to 2% plus the rate applicable to
ABR Loans as provided in Section 3.02(a) of the Credit Agreement, and the same
shall be immediately due and payable to Secured Party at Secured Party's address
set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
------------------
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
Section 6.06 Pledged Securities. Upon both (i) the occurrence and during
-------------------
the continuance of an Event of Default and (ii) either (a) the Loans becoming
due and payable at their stated maturity and not paid, (b) the Loans being
declared due and payable pursuant to Article X of the Credit Agreement, or (c)
Secured Party giving prior written notice to Pledgor of Secured Party's intent
to exercise its rights under Section 6.02:
(a) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 4.02 shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Collateral such dividends and interest payments, but Secured Party shall have no
duty to receive and hold such dividends and interest payments and shall not be
responsible for any failure to do so or delay in so doing.
(b) All dividends and interest payments which are received by Pledgor
contrary to the provisions of this Section 6.06 shall be received in trust for
the benefit of Secured Party, shall be segregated from other funds of Pledgor
and shall be promptly paid over to Secured Party as Collateral in the same form
as so received (with any necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its discretion, any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of such Pledged Securities
or upon the exercise by any such issuer or Secured Party of any right, privilege
or option pertaining to any of the Pledged Securities and in connection
therewith, to deposit and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
Section 6.07 Non-judicial Enforcement. To the extent permitted by law,
-------------------------
Secured Party may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law Pledgor expressly waives
any and all legal rights which might otherwise require Secured Party to enforce
its rights by judicial process.
Exhibit D-3-11
ARTICLE 7
MISCELLANEOUS PROVISIONS
------------------------
Section 7.01 Notices. Any notice required or permitted to be given under or
-------
in connection with this Agreement shall be in writing and shall be mailed by
first class or express mail, postage prepaid, or sent by telex, telegram,
telecopy or other similar form of rapid written transmission or personally
delivered to the receiving party. All such communications shall be mailed, sent
or delivered at the address respectively indicated in the opening paragraph
hereof or at such other address as either party may have furnished the other
party in writing. Any communication so addressed and mailed shall be deemed to
be given upon receipt, any notice so sent by rapid written transmission shall be
deemed to be given when receipt of such transmission is acknowledged by the
receiving operator or equipment, and any communication so delivered in person
shall be deemed to be given when receipted for or actually received by Pledgor
or Secured Party, as the case may be.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
----------------------
or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Pledgor or any Obligor, or of any right, power or remedy of
Secured Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Pledgor hereby agrees that if Secured Party
agrees to a waiver of any provision hereunder, or an exchange of or release of
the Collateral, or the addition or release of any Obligor or other Person, any
such action shall not constitute a waiver of any of Secured Party's other rights
or of Pledgor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Pledgor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other reproduction
---------------------------
of this Agreement may be delivered by Pledgor or Secured Party to any financial
intermediary or other third party for the purpose of transferring or perfecting
any or all of the Pledged Securities to Secured Party or its designee or
assignee.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
--------------------------
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
--------------------------
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not have any
liability for any interest, cost or expense in connection with any delay in
delivering such proceeds to Pledgor.
Exhibit D-3-12
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
----------------------------
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
-----------------------------
(a) Except as otherwise provided by applicable law (including, without
limitation, Section 9.620 of the Code), no action taken or omission to act by
Secured Party hereunder, including, without limitation, any exercise of voting
or consensual rights pursuant to Section 6.06 or any other action taken or
inaction pursuant to Section 6.02, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect, until Secured Party shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of
the 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 Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.08.
Section 7.08 Termination. The grant of a security interest hereunder and
-----------
all of Secured Party's rights, powers and remedies in connection therewith shall
remain in full force and effect until Secured Party has (i) retransferred and
delivered all Collateral in its possession to Pledgor, and (ii) executed a
written release or termination statement and reassigned to Pledgor without
recourse or warranty any remaining Collateral and all rights conveyed hereby.
Upon (i) the complete payment of the Obligations (other than any indemnity which
is not yet due and payable), (ii) the expiration of all outstanding Letters of
Credit, and (iii) the termination of the Commitments, Secured Party, at the
written request and expense of Pledgor, will release, reassign and transfer the
Collateral to Pledgor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, Section 4.04 and the provisions of
subsection 7.07(b) shall survive the termination of this Agreement.
Section 7.09 Counterparts; Effectiveness. This Agreement may be executed in
---------------------------
two or more counterparts. Each counterpart is deemed an original, but all such
counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Pledgor and delivery of
the same to Secured Party, and it is not necessary for Secured Party to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.
Section 7.10 Limitation by Law. All rights, remedies and powers provided in
-----------------
this Agreement may be exercised only to the extent that the exercise thereof
Exhibit D-3-13
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
Section 7.11 Interest. It is the intention of the parties hereto to conform
--------
strictly to usury laws applicable to Secured Party or any Lender. Accordingly,
if the transactions contemplated hereby would be usurious under applicable state
or federal law, then, notwithstanding anything to the contrary in this Agreement
or in any other Loan Document, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to Secured Party
or any Lender that is contracted for, taken, reserved, charged or received under
the Obligations, this Agreement or under any other Loan Document or otherwise in
connection with the Obligations shall under no circumstances exceed the maximum
amount allowed by such applicable law, (ii) in the event that the maturity of
the Obligations is accelerated for any reason, or in the event of any required
or permitted prepayment, then such consideration that constitutes interest under
law applicable to Secured Party or any Lender may never include more than such
maximum amount, and (iii) excess interest, if any, provided for in this
Agreement, any other Loan Document or otherwise shall be cancelled automatically
and, if theretofore paid, shall be credited by Secured Party on the principal
amount of the Obligations (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by
Secured Party to Pledgor). The right to accelerate the maturity of the
Obligations does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and neither Secured Party
nor any Lender intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Secured Party or any Lender
for the use, forbearance or detention of sums included in the initial
Obligations shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest on account of the initial
Obligations does not exceed the applicable usury ceiling, if any.
[Signatures begin on next page]
Exhibit D-3-14
PLEDGOR: ST. XXXX XXXX & EXPLORATION COMPANY
-------
By: _______________________________________
Xxxxx X. Xxxxxxxxxx
Vice President - Finance, Secretary and Treasurer
SECURED PARTY: WACHOVIA BANK, NATIONAL ASSOCIATION, as
------------- Administrative Agent
By: _______________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Exhibit D-3-15
EXHIBIT A
PLEDGED SECURITIES
------------------
1. St. Xxxx Energy Company, a Delaware corporation ("SMEC") -- 100 shares of
the common stock of SMEC, registered in the name of St. Xxxx Xxxx &
Exploration Company ("Pledgor") on the books of SMEC, as represented by
Certificate No. 001.
2. Xxxxx Petroleum Corporation, a Montana corporation ("Xxxxx") -
a. 20,000 shares of the common stock of Xxxxx, registered in the name of
Pledgor on the books of Xxxxx, as represented by Certificate No. 034.
b. 5,000 shares of the common stock of Xxxxx, registered in the name of
Pledgor on the books of Xxxxx, as represented by Certificate No. 015.
Exhibit X-0-00
XXXXXXX X-0
--------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
Between
XXXXX PETROLEUM CORPORATION,
as Pledgor
and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent,
as Secured Party
Effective as of April 7, 2005
--------------------------------------------------------------------------------
Exhibit D-4-1
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
--------------------------------------------------
THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT is made effective
as of April 7, 2005, by XXXXX PETROLEUM CORPORATION, a Montana corporation with
principal offices at 000 X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000-0000
("Pledgor"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
-------
association with offices at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, as Administrative Agent (in such capacity, the "Secured Party") for the
-------------
benefit of the several lenders now or hereafter parties to the hereinafter
defined Credit Agreement (individually, a "Lender" and collectively, the
------
"Lenders").
-------
RECITALS
A. Pursuant to that certain Credit Agreement dated as of January 27, 2003,
among St. Xxxx Xxxx & Exploration Company, a Delaware corporation (the
"Borrower"), Secured Party and the lenders party thereto (the "Existing
-------- --------
Lenders") (such Credit Agreement, as amended and supplemented, the "Existing
------- --------
Credit Agreement"), Pledgor received certain loans and extensions of credit
-----------------
under a revolving credit facility made available to Pledgor under the Existing
Credit Agreement, up to the aggregate principal amount of $300,000,000.
B. The Existing Lenders conditioned their obligations under the Existing
Credit Agreement upon the execution and delivery by Pledgor of that certain
Pledge and Security Agreement dated as of January 27, 2003 (the "Existing Pledge
---------------
and Security Agreement").
----------------------
C. The Borrower, Secured Party and the Lenders have amended and restated
the Existing Credit Agreement by entering into that certain Amended and Restated
Credit Agreement dated of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement") "), whereby,
-----------------
pursuant to which, the Lenders have agreed to make certain loans to and extend
certain credit for the account of the Borrower subject to the limitations set
forth in the Credit Agreement. The initial loans under the Credit Agreement have
been used by the Borrower to renew, rearrange, modify and extend all amounts
outstanding under the Existing Credit Agreement.
D. Pursuant to that certain Amended and Restated Guaranty Agreement dated
of even date herewith, from Pledgor in favor of Secured Party (as amended,
supplemented or other modified from time to time, the "Guaranty Agreement"),
-------------------
Pledgor has unconditionally guaranteed the prompt payment and performance of all
indebtedness, obligations and liabilities of the Borrower to the Lenders and
secured Party under or in connection with the Credit Agreement.
E. The Secured Party and the Lenders have conditioned their obligations
under the Credit Agreement upon the execution and delivery by Pledgor of this
Amended and Restated Pledge and Security Agreement, and Pledgor has agreed to
execute and deliver this Amended and Restated Pledge and Security Agreement.
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lenders, at any time or from time to time,
to loan monies and extend credit, with or without security, to or for the
account of Borrower in accordance with the terms of the Credit Agreement, (iii)
Exhibit D-4-2
at the special insistence and request of the Lenders, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Pledgor and Secured Party hereby agree that the Existing Pledge
and Security Agreement is hereby amended and restated in its entirety to read as
follows:
ARTICLE 1
SECURITY INTEREST
-----------------
Section 1.01 Pledge. Pledgor hereby pledges, assigns and grants to Secured
------
Party a security interest in and right of set-off against the assets referred to
in Section 1.02 (the "Collateral") to secure the prompt payment and performance
----------
of the "Obligations" (as defined in Section 2.02) and the performance by Pledgor
-----------
of this Amended and Restated Pledge and Security Agreement.
Section 1.02 Collateral. The Collateral consists of the following types or
----------
items of property which are owned by Pledgor:
(a) The securities described or referred to in Exhibit A attached
hereto and made a part hereof.
(b) (i) The certificates or instruments, if any, representing such
membership interests and such units, (ii) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such membership
interests or such units, (iii) all replacements and substitutions for any of the
property referred to in this Section 1.02, including, without limitation, claims
against third parties, and (iv) the proceeds, interest, profits and other income
of or on any of the property referred to in this Section 1.02.
It is expressly contemplated that additional securities or other property may
from time to time be pledged, assigned or granted to Secured Party as additional
security for the Obligations, and the term "Collateral" as used herein shall be
deemed for all purposes hereof to include all such additional membership
interests, units and property, together with all other property of the types
described above related thereto.
Section 1.03 Transfer of Collateral. All certificates or instruments
-----------------------
representing or evidencing the Pledged Securities shall be delivered to and held
pursuant hereto by Secured Party or a Person designated by Secured Party and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, or (in the case of
either certificated or uncertificated securities) Secured Party shall have been
provided with evidence that the Pledged Securities have been otherwise delivered
to Secured Party in accordance with Section 8.301 of the Code, all in form and
substance satisfactory to Secured Party. Notwithstanding the preceding sentence,
at Secured Party's discretion, all Pledged Securities must be delivered or
transferred in such manner as to permit Secured Party to meet the requirements
of Section 8.303(a)(3) of the Code to the extent of its security interest.
Secured Party shall have the right, at any time in its discretion and without
notice to Pledgor, to transfer to or to register in the name of Secured Party or
any of its nominees any or all of the Pledged Securities, subject only to the
Exhibit D-4-3
revocable rights specified in Section 4.02. In addition, Secured Party shall
have the right at any time to exchange certificates or instruments representing
or evidencing Pledged Securities for certificates or instruments of smaller or
larger denominations.
ARTICLE 2
DEFINITIONS
-----------
Section 2.01 Terms Defined Above. As used in this Amended and Restated
---------------------
Pledge and Security Agreement, the terms defined above shall have the meanings
respectively assigned to them.
Section 2.02 Certain Definitions. As used in this Amended and Restated
--------------------
Pledge and Security Agreement, the following terms shall have the following
meanings, unless the context otherwise requires:
"Agreement" means this Amended and Restated Pledge and Security Agreement,
---------
as the same may from time to time be amended, supplemented or otherwise
modified.
"Code" means the Uniform Commercial Code as presently in effect in the
----
State of Texas, Articles 1 through 9. Unless otherwise indicated by the context
herein, all uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Articles 8 and 9 of the Code.
"Event of Default" means any event specified in Section 6.01.
----------------
"Obligations" means the collective reference to (a) all indebtedness,
-----------
obligations and liabilities of the Borrower under or in connection with the Loan
Documents, including, without limitation, the unpaid principal of and interest
on the Loans and the LC Exposure and all other obligations and liabilities of
the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and the LC Exposure and interest accruing at the then applicable rate provided
in the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to Secured Party or any Lender (or, in the case
of any Swap Agreement referred to below, any Affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the other Loan Documents or any Swap Agreement
entered into by the Borrower with any Lender (or any Affiliate of any Lender),
or any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to Secured Party or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements), (b) all indebtedness, obligations and liabilities of
Pledgor under or in connection with the Guaranty Agreement and (c) all
obligations of Pledgor which may arise under or in connection with this
Agreement or any other Loan Document to which Pledgor is a party.
Exhibit D-4-4
The term "Obligations" shall mean all indebtedness, obligations and
-----------
liabilities described, referred to or mentioned in the immediately preceding
paragraph of this definition, and all renewals, rearrangements, increases,
substitutions, replacements and extensions for any period thereof and
amendments, supplements or modifications thereto, in whole or in part.
"Obligor" means any Person, other than Pledgor, liable (whether directly or
-------
indirectly, primarily or secondarily) for the payment or performance of any of
the Obligations whether as maker, co-maker, endorser, guarantor, accommodation
party, general partner or otherwise.
"Pledged Securities" means all of the securities and other property
-------------------
(whether or not the same constitutes a "security" under the Code) referred to in
Section 1.02(a) or 1.02(b) and all additional securities, if any, constituting
Collateral under this Agreement.
Section 2.03 Credit Agreement Terms. Unless otherwise defined herein, terms
----------------------
beginning with a capital letter which are defined in the Credit Agreement shall
have the same meanings herein as therein.
Section 2.04 Section References. Unless otherwise provided for herein, all
------------------
references herein to Sections are to Sections of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Except as otherwise
---------------------------------------
permitted by the Credit Agreement, Pledgor is the record and beneficial owner of
the Collateral free and clear of any Lien except for the security interest
created by this Agreement, and Pledgor has full right, power and authority to
pledge, assign and grant a security interest in the Collateral to Secured Party.
Section 3.02 No Required Consent. No authorization, consent, approval or
-------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements in favor of
Secured Party) is required for (i) the due execution, delivery and performance
by Pledgor of this Agreement, (ii) the grant by Pledgor of the security interest
granted by this Agreement or (iii) the perfection of such security interest.
Section 3.03 Pledged Securities. The Pledged Securities have been duly
-------------------
authorized and validly issued, and are fully paid and non-assessable.
Section 3.04 First Priority Security Interest. The pledge of Pledged
-----------------------------------
Securities pursuant to this Agreement, the delivery to Secured Party of the
certificates representing the Pledged Securities accompanied by stock powers
duly executed in blank and the filing of appropriate financing statements in the
relevant locations create a valid and perfected first priority security interest
Exhibit D-4-5
in the Collateral, enforceable against Pledgor and all third parties and
securing payment of the Obligations.
ARTICLE 4
COVENANTS AND AGREEMENTS
------------------------
Pledgor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations (other than any indemnity which is not yet due and payable) are
outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as
--------------------------------------------------
otherwise not prohibited by the Credit Agreement or this Agreement, Pledgor will
not in any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any Person other than
Secured Party.
Section 4.02 Voting Rights; Dividends or Distributions. Until both (i) an
------------------------------------------
Event of Default shall have occurred and be continuing and (ii) either (a) the
Loans have become due and payable at their stated maturity and have not been
paid, (b) the Loans have been declared due and payable pursuant to Article X of
the Credit Agreement, or (c) Secured Party has given notice to Pledgor of
Secured Party's intent to exercise its rights under Section 6.02:
(a) Pledgor shall be entitled to exercise any and all voting,
management and/or other consensual rights and powers inuring to an owner of the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement and the other Loan Documents.
(b) Pledgor shall be entitled to receive and retain (free and clear of
and no longer subject to this Agreement or the Lien created pursuant to this
Agreement) any and all dividends, distributions and interest paid in respect of
the Collateral, provided, however, that any and all
(i) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for
(including, without limitation, any certificate, share or interest
purchased or exchanged in connection with a tender offer or merger
agreement), any Collateral,
(ii) dividends and other distributions paid or payable in
cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution, or reclassification, and
(iii) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Collateral,
shall be, and shall be promptly delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Exhibit D-4-6
Pledgor, and be promptly delivered to Secured Party as Collateral in the same
form as so received (with any necessary endorsement) ), provided further,
however, in no event shall the foregoing proviso be applicable to, or prevent
the Pledgor from receiving and retaining any securities that are not pledged or
intended or required to be pledged to the Secured Party pursuant to any Security
Instrument, including this Agreement.
Section 4.03 Records and Information. Pledgor shall keep accurate and
------------------------
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Pledgor will promptly provide written notice to Secured
Party of all information which in any way affects the filing of any financing
statement or other public notices or recordings pertaining to the perfection of
a security interest in the Collateral, or the delivery and possession of items
of Collateral for the purpose of perfecting a security interest in the
Collateral.
Section 4.04 Certain Liabilities. Pledgor hereby assumes all liability for
-------------------
the Collateral, the security interest created hereunder and any use, possession,
maintenance, management, enforcement or collection of any or all of the
Collateral.
Section 4.05 Further Assurances. Upon the request of Secured Party, Pledgor
------------------
shall (at Pledgor's expense) execute and deliver all such assignments,
certificates, instruments, securities, financing statements, notifications to
financial intermediaries, clearing corporations, issuers of securities or other
third parties or other documents and give further assurances and do all other
acts and things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or to protect, enforce or otherwise effect
Secured Party's rights and remedies hereunder.
Section 4.06 Rights to Sell. If Secured Party shall determine to exercise
--------------
its rights to sell all or any of the Collateral pursuant to its rights
hereunder, Pledgor agrees that, upon request of Secured Party, Pledgor will, at
its own expense:
(a) execute and deliver, and use all reasonable efforts to cause each
issuer of the Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
reasonable opinion of Secured Party, advisable to register such Collateral under
the provisions of the Securities Act of 1933, as from time to time amended (the
"Securities Act"), if such registration is, in the reasonable opinion of Secured
Party, necessary or advisable to effect a public distribution of the Collateral,
and to cause the registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the related
prospectus which, in the reasonable opinion of Secured Party, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;
(b) use all reasonable efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by Secured Party;
Exhibit D-4-7
(c) use all reasonable efforts to cause each such issuer to make
available to its security holders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the Securities Act; and
(d) use all reasonable efforts to do or cause to be done all such
others acts and things as may be necessary to make such sale of the Collateral
or any part thereof valid and binding and in compliance with applicable law.
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by Secured Party by reason of the failure by
Pledgor to perform any of the covenants contained in this Section 4.06 and
consequently agrees that if Pledgor shall fail to perform any of such covenants,
it shall pay (to the extent permitted by law), as liquidated damages, and not as
penalty, an amount (in no event to exceed the amount of Obligations then
outstanding) equal to the value of the Collateral affected by Pledgor's failure
to perform any of the covenants contained in this Section 4.06 on the date the
Secured Party shall demand compliance with this Section 4.06.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
------------------------------------------
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Discharge Encumbrances. Secured Party may, at its option,
-----------------------
three (3) Business Days after receipt by Pledgor of prior written notice from
Secured Party of its intent to do so, discharge any Liens at any time levied or
placed on the Collateral that are prohibited by the Credit Agreement and that
are not being contested in good faith by appropriate proceedings. Pledgor agrees
to reimburse Secured Party within five (5) days after demand for any payment so
made, plus interest thereon from the date of Secured Party's demand at the rate
per annum equal to 2% plus the rate applicable to ABR Loans as provided in
Section 3.02(a) of the Credit Agreement.
Section 5.02 Transfer of Collateral. Subject to the terms of the Credit
-----------------------
Agreement, Secured Party may transfer any or all of the Obligations, and upon
any such transfer Secured Party may transfer its interest in any or all of the
Collateral and shall be fully discharged thereafter from all liability therefor.
Any transferee of the Collateral shall be vested with all rights, powers, duties
and remedies of Secured Party hereunder.
Section 5.03 Cumulative and Other Rights. The rights, powers and remedies
---------------------------
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off.
Section 5.04 Disclaimer of Certain Duties. The powers conferred upon
------------------------------
Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Pledgor hereby agrees that Secured Party shall not be liable for, nor shall the
Exhibit D-4-8
indebtedness evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take possession of or
otherwise obtain value for the Collateral.
Section 5.05 Custody and Preservation of the Collateral. Secured Party
---------------------------------------------
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
ARTICLE 6
EVENTS OF DEFAULT
-----------------
Section 6.01 Events. An "Event of Default" (as defined in the Credit
------
Agreement) which has occurred and is continuing shall constitute an Event of
Default under this Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
--------
any Event of Default, Secured Party may take any or all of the following actions
without notice or demand to Pledgor (except that Secured Party will not take any
action in the case of paragraphs (b) and (f) below until five (5) Business Days
after receipt by Pledgor of written notice from Secured Party of its intent to
do so):
(a) Subject to applicable provisions contained in the Credit
Agreement, declare all or part of the indebtedness pursuant to the Obligations
immediately due and payable and enforce payment of the same by Pledgor or any
Obligor.
(b) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in any commercially reasonable
manner as Secured Party may elect, in a public or private transaction, at any
location as deemed reasonable by Secured Party either for cash or credit or for
future delivery at such price as Secured Party may reasonably deem fair, and
(unless prohibited by the Uniform Commercial Code, as adopted in any applicable
jurisdiction) Secured Party may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Obligations secured
hereby. Any such sale or transfer by Secured Party either to itself or to any
other Person shall be absolutely free from any claim of right by Pledgor,
including any equity or right of redemption, stay or appraisal which Pledgor has
or may have under any rule of law, regulation or statute now existing or
hereafter adopted. Upon any such sale or transfer, Secured Party shall have the
right to deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. If Secured Party reasonably deems it
advisable to do so, it may restrict the bidders or purchasers of any such sale
or transfer to Persons or entities who will represent and agree that they are
purchasing the Collateral for their own account and not with the view to the
distribution or resale of any of the Collateral. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as
Exhibit D-4-9
Secured Party may fix in the notice of such sale. Secured Party shall not be
obligated to make any sale pursuant to any such notice. Secured Party may,
without notice or publication, adjourn any public or private sale by
announcement at any time and place fixed for such sale, and such sale may be
made at any time or place to which the same may be so adjourned. In the event
any sale or transfer hereunder is not completed or is defective in the opinion
of Secured Party, such sale or transfer shall not exhaust the rights of Secured
Party hereunder, and Secured Party shall have the right to cause one or more
subsequent sales or transfers to be made hereunder. If only part of the
Collateral is sold or transferred such that the Obligations remain outstanding
(in whole or in part), Secured Party's rights and remedies hereunder shall not
be exhausted, waived or modified, and Secured Party is specifically empowered to
make one or more successive sales or transfers until all the Collateral shall be
sold or transferred and all the Obligations are paid. In the event that Secured
Party elects not to sell the Collateral, Secured Party retains its rights to
dispose of or utilize the Collateral or any part or parts thereof in any manner
authorized or permitted by law or in equity, and to apply the proceeds of the
same towards payment of the Obligations.
(c) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the Code or
otherwise permitted by law or in equity. Such application may include, without
limitation, the reasonable attorneys' fees and legal expenses incurred by
Secured Party.
(d) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
(e) Receive, change the address for delivery, open and dispose of mail
addressed to Pledgor, and to execute, assign and endorse negotiable and other
instruments for the payment of money, documents of title or other evidences of
payment, shipment or storage for any form of Collateral on behalf of and in the
name of Pledgor.
(f) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured
----------------
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in Secured
Party's discretion upon the occurrence and during the continuance of an Event of
Default, but at Pledgor's cost and expense, three (3) Business Days after
receipt by Pledgor of written notice from Secured Party of its intent to do so,
to take any action and to execute any assignment, certificate, financing
statement, stock power, notification, document or instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or other disposition of
------------------------
Collateral by Secured Party in compliance with the Loan Documents and applicable
law or any other action of Secured Party hereunder in compliance with the Loan
Documents and applicable law results in reduction of the Obligations, such
action will not release Pledgor from its liability to Secured Party for any
Exhibit D-4-10
unpaid Obligations, including (to the extent permitted by law) costs, charges
and expenses incurred in the liquidation of Collateral, together with interest
thereon until paid at the rate per annum equal to 2% plus the rate applicable to
ABR Loans as provided in Section 3.02(a) of the Credit Agreement, and the same
shall be immediately due and payable to Secured Party at Secured Party's address
set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
------------------
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
Section 6.06 Pledged Securities. Upon both (i) the occurrence and during
-------------------
the continuance of an Event of Default and (ii) either (a) the Loans becoming
due and payable at their stated maturity and not paid, (b) the Loans being
declared due and payable pursuant to Article X of the Credit Agreement, or (c)
Secured Party giving prior written notice to Pledgor of Secured Party's intent
to exercise its rights under Section 6.02:
(a) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 4.02 shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Collateral such dividends and interest payments, but Secured Party shall have no
duty to receive and hold such dividends and interest payments and shall not be
responsible for any failure to do so or delay in so doing.
(b) All dividends and interest payments which are received by Pledgor
contrary to the provisions of this Section 6.06 shall be received in trust for
the benefit of Secured Party, shall be segregated from other funds of Pledgor
and shall be promptly paid over to Secured Party as Collateral in the same form
as so received (with any necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its discretion, any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of such Pledged Securities
or upon the exercise by any such issuer or Secured Party of any right, privilege
or option pertaining to any of the Pledged Securities and in connection
therewith, to deposit and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
Section 6.07 Non-judicial Enforcement. To the extent permitted by law,
-------------------------
Secured Party may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law Pledgor expressly waives
any and all legal rights which might otherwise require Secured Party to enforce
its rights by judicial process.
Exhibit D-4-11
ARTICLE 7
MISCELLANEOUS PROVISIONS
------------------------
Section 7.01 Notices. Any notice required or permitted to be given under or
-------
in connection with this Agreement shall be in writing and shall be mailed by
first class or express mail, postage prepaid, or sent by telex, telegram,
telecopy or other similar form of rapid written transmission or personally
delivered to the receiving party. All such communications shall be mailed, sent
or delivered at the address respectively indicated in the opening paragraph
hereof or at such other address as either party may have furnished the other
party in writing. Any communication so addressed and mailed shall be deemed to
be given upon receipt, any notice so sent by rapid written transmission shall be
deemed to be given when receipt of such transmission is acknowledged by the
receiving operator or equipment, and any communication so delivered in person
shall be deemed to be given when receipted for or actually received by Pledgor
or Secured Party, as the case may be.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
----------------------
or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Pledgor or any Obligor, or of any right, power or remedy of
Secured Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Pledgor hereby agrees that if Secured Party
agrees to a waiver of any provision hereunder, or an exchange of or release of
the Collateral, or the addition or release of any Obligor or other Person, any
such action shall not constitute a waiver of any of Secured Party's other rights
or of Pledgor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Pledgor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other reproduction
---------------------------
of this Agreement may be delivered by Pledgor or Secured Party to any financial
intermediary or other third party for the purpose of transferring or perfecting
any or all of the Pledged Securities to Secured Party or its designee or
assignee.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
--------------------------
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
--------------------------
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not have any
liability for any interest, cost or expense in connection with any delay in
delivering such proceeds to Pledgor.
Exhibit D-4-12
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
----------------------------
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
-----------------------------
(a) Except as otherwise provided by applicable law (including, without
limitation, Section 9.620 of the Code), no action taken or omission to act by
Secured Party hereunder, including, without limitation, any exercise of voting
or consensual rights pursuant to Section 6.06 or any other action taken or
inaction pursuant to Section 6.02, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect, until Secured Party shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of
the 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 Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.08.
Section 7.08 Termination. The grant of a security interest hereunder and
-----------
all of Secured Party's rights, powers and remedies in connection therewith shall
remain in full force and effect until Secured Party has (i) retransferred and
delivered all Collateral in its possession to Pledgor, and (ii) executed a
written release or termination statement and reassigned to Pledgor without
recourse or warranty any remaining Collateral and all rights conveyed hereby.
Upon (i) the complete payment of the Obligations (other than any indemnity which
is not yet due and payable), (ii) the expiration of all outstanding Letters of
Credit, and (iii) the termination of the Commitments, Secured Party, at the
written request and expense of Pledgor, will release, reassign and transfer the
Collateral to Pledgor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, Section 4.04 and the provisions of
subsection 7.07(b) shall survive the termination of this Agreement.
Section 7.09 Counterparts; Effectiveness. This Agreement may be executed in
---------------------------
two or more counterparts. Each counterpart is deemed an original, but all such
counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Pledgor and delivery of
the same to Secured Party, and it is not necessary for Secured Party to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.
Section 7.10 Limitation by Law. All rights, remedies and powers provided in
-----------------
this Agreement may be exercised only to the extent that the exercise thereof
Exhibit D-4-13
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
Section 7.11 Interest. It is the intention of the parties hereto to conform
--------
strictly to usury laws applicable to Secured Party or any Lender. Accordingly,
if the transactions contemplated hereby would be usurious under applicable state
or federal law, then, notwithstanding anything to the contrary in this Agreement
or in any other Loan Document, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to Secured Party
or any Lender that is contracted for, taken, reserved, charged or received under
the Obligations, this Agreement or under any other Loan Document or otherwise in
connection with the Obligations shall under no circumstances exceed the maximum
amount allowed by such applicable law, (ii) in the event that the mat urity of
the Obligations is accelerated for any reason, or in the event of any required
or permitted prepayment, then such consideration that constitutes interest under
law applicable to Secured Party or any Lender may never include more than such
maximum amount, and (iii) excess interest, if any, provided for in this
Agreement, any other Loan Document or otherwise shall be cancelled automatically
and, if theretofore paid, shall be credited by Secured Party on the principal
amount of the Obligations (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by
Secured Party to Pledgor, or to the Company, as appropriate). The right to
accelerate the maturity of the Obligations does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and neither Secured Party nor any Lender intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Secured Party or any Lender for the use, forbearance or detention of
sums included in the initial Obligations shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Obligations until payment in full so that the rate or amount of
interest on account of the initial Obligations does not exceed the applicable
usury ceiling, if any.
[Signatures begin on next page]
Exhibit D-4-14
PLEDGOR: XXXXX PETROLEUM CORPORATION
By: _______________________________________
Xxxxx X. Xxxxxxxxxx
Vice President - Finance
SECURED PARTY: WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent
By: _______________________________________
Name: Xxxxxx X. Xxxxxxx
Title:Vice President
Exhibit D-4-16
EXHIBIT A
PLEDGED SECURITIES
------------------
1. NPC Inc., a Colorado corporation -- 100 shares of the common stock of NPC
Inc., registered in the name of Xxxxx Petroleum Corporation on the books of
NPC Inc., as represented by Certificate No. 001.
Exhibit D-4-16
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION
Reference is made to the Amended and Restated Credit Agreement dated as of
April 7, 2005 (as amended and in effect on the date hereof, the "Credit
------
Agreement"), among St. Xxxx Xxxx & Exploration Company, the Lenders named
---------
therein and Wachovia Bank, National Association, as Administrative Agent for the
Lenders. Terms defined in the Credit Agreement are used herein with the same
meanings.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
-------------------
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Assumption is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 5.03(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The Assignor shall pay the fee payable to the Administrative
Agent pursuant to Section 12.04(b) of the Credit Agreement.
This Assignment and Assumption shall be governed by and construed in
accordance with the laws of the State of Texas.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
---------------
Exhibit E-1
======================================= =============================== ===================================
Percentage Assigned of
Facility/Commitment (set forth,
to at least 8 decimals, as a
percentage of the Facility and
the aggregate Commitments of all
Facility Principal Amount Assigned Lenders thereunder)
-------- ----------
--------------------------------------- ------------------------------- -----------------------------------
Commitment Assigned: $ %
--------------------------------------- ------------------------------- -----------------------------------
Loans:
--------------------------------------- ------------------------------- -----------------------------------
======================================= =============================== ===================================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor], as Assignor
----------------
By:____________________________________
Name:
Title:
[Name of Assignee], as Assignee
----------------
By: ___________________________________
Name:
Title:
Exhibit E-2
The undersigned hereby consent to the within assignment:1
St. Xxxx Xxxx & Exploration Company Wachovia Bank, National
Association, as Administrative
Agent,
By: ______________________ By: __________________________
Name: Name:
Title: Title:]
________________________
1 Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement
Exhibit E-3
EXHIBIT F-1
FORM OF COMMITMENT INCREASE CERTIFICATE
[ ], 200[ ]
To: Wachovia Bank, National Association,
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into an Amended and Restated Credit Agreement,
dated as of April 7, 2005, as amended from time to time (the "Credit
------
Agreement"). Capitalized terms not otherwise defined herein shall have the
---------
meaning given to such terms in the Credit Agreement.
This Commitment Increase Certificate is being delivered pursuant to Section
2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed to increase its
Commitment under the Credit Agreement effective [ ], 200[ ] from $[ ] to $[ ]
and (b) that it shall continue to be a party in all respect to the Credit
Agreement and the other Loan Documents.
The [Borrower/Lender] shall pay the fee payable to the Administrative Agent
pursuant to Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[ ]
By: ______________________________
Name: __________________________
Title: _________________________
Exhibit F-1-1
Accepted and Agreed:
Wachovia Bank, National Association,
as Administrative Agent
By: _____________________________
Name: _________________________
Title: ________________________
Accepted and Agreed:
St. Xxxx Xxxx & Exploration Company
By: _____________________________
Name: _________________________
Title: ________________________
Exhibit F-1-2
EXHIBIT F-2
FORM OF ADDITIONAL LENDER CERTIFICATE
[ ], 200[ ]
To: Wachovia Bank, National Association
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into an Amended and Restated Credit Agreement,
dated as of April 7, 2005, as amended from time to time (the "Credit
------
Agreement"). Capitalized terms not otherwise defined herein shall have the
---------
meaning given to such terms in the Credit Agreement.
This Additional Lender Certificate is being delivered pursuant to Section
2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed (a) to become a Lender
under the Credit Agreement effective [ ], 200[ ] with a Commitment of $[ ] and
(b) that it shall be a party in all respect to the Credit Agreement and the
other Loan Documents.
This Additional Lender Certificate is being delivered to the Administrative
Agent together with (i) if the Additional Lender is a Foreign Lender, any
documentation required to be delivered by such Additional Lender pursuant to
Section 5.03(e) of the Credit Agreement, duly completed and executed by the
Additional Lender, and (ii) an Administrative Questionnaire in the form supplied
by the Administrative Agent, duly completed by the Additional Lender. The
[Borrower/Additional Lender] shall pay the fee payable to the Administrative
Agent pursuant to Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[ ]
By: ______________________________
Name: __________________________
Title: _________________________
Exhibit F-2-1
Accepted and Agreed:
Wachovia Bank, National Association,
as Administrative Agent
By: _____________________________
Name: _________________________
Title: ________________________
Accepted and Agreed:
St. Xxxx Xxxx & Exploration Company
By: _____________________________
Name: _________________________
Title: ________________________
Exhibit F-2-2
SCHEDULE 7.05
LITIGATION
NONE
Schedule 7.05-1
SCHEDULE 7.15
SUBSIDIARIES AND PARTNERSHIPS; NON-MATERIAL SUBSIDIARIES
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Principal Place
---------------
Jurisdiction Organizational of Business
------------ -------------- -----------
of Identification and Chief Percentage
-- -------------- --------- ----------
Material Subsidiaries Organization Number Executive Office Owner Owned
--------------------- ------------ ------ ---------------- ----- -----
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Xxxxx Petroleum Corporation ("Xxxxx") Montana Borrower 100%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
St. Xxxx Energy Company Delaware Borrower 100%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
NPC Inc.2 Colorado Xxxxx 100%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Non-Material Subsidiaries
-------------------------
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Hilltop Investment Partners Colorado Borrower 50%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
St. Xxxx Xxxx Texas LP Texas SMT Texas LLC 99%
Borrower
1%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Four Winds Marketing LLC Colorado Borrower 100%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Box Church Gas Gathering LLC Colorado Borrower 58.6754%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Trinity River Services LLC Texas Borrower 25%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
Sycamore Gas System Oklahoma Borrower 3.11%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
SMT Texas LLC Texas Borrower 100%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
SMEC Texas LLC Texas St. Xxxx Energy 100%
Company
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
SMEC LP Texas SMEC Texas LLC 99%
St. Xxxx Energy
Company 1%
-------------------------------------- -------------- ---------------- ------------------ ------------------ -------------
________________________
2 Will be merged into Xxxxx by the end of June 2005.
Schedule 7.15-1
SCHEDULE 7.19
GAS IMBALANCES
NONE
Schedule 7.19-1
SCHEDULE 7.20
MARKETING CONTRACTS
NONE
Schedule 7.20-1
SCHEDULE 7.21
SWAP AGREEMENTS
Schedule 7.21-1
GAS SWAPS
Remaining Estimtd
Contract Contract Contract Monthly Yearly % of Fixed Market MtM Value
CounterParty Date Contract # Price Index Purpose Area Start End Volumes Volumes Xxxxxx Price Price at 4/5/2005
------------ ---- ---------- ----------- ------- ---- ----- --- ------- ------- ------ ----- ----- -----------
JPMorgan 04/05/04 04NG25418 ANR General MidCon 04/01/05 05/31/05 22,000 44,000 $5.65 $6.78 (49,908)
JPMorgan 10/01/04 742662 Reliant Nemours Arklatex 04/01/05 12/31/05 114,444 1,030,000 $6.16 $7.48 (1,354,779)
N/S Acq.
JPMorgan 10/20/04 794404 ANR General MidCon 04/01/05 12/31/05 40,000 360,000 $6.55 $7.30 (272,089)
JPMorgan 03/07/05 917381 ANR General MidCon 05/01/05 12/31/05 50,000 400,000 $6.63 $7.39 (304,329)
JPMorgan 03/14/05 921825 ANR General MidCon 06/01/05 12/31/05 50,000 350,000 $6.96 $7.46 (172,751)
JPMorgan 03/31/05 1010116 ANR General MidCon 06/01/05 12/31/05 50,000 350,000 $7.48 $7.46 5,145
------------------
326,444 2,534,000 34.14%
------------------
BNP Paribas 04/01/04 64502 ANR General MidCon 04/01/05 05/31/05 22,000 44,000 $5.64 $6.78 (50,347)
BNP Paribas 10/01/04 71816 IF PEPL Agate MidCon 04/01/05 12/31/05 103,333 930,000 $5.96 $7.29 (1,237,483)
Acq.
BNP Paribas 10/08/04 72148 IF Reliant Nemours Arklatex 04/01/05 12/31/05 20,000 180,000 $6.52 $7.49 (174,065)
N/S Acq.
BNP Paribas 10/22/04 72840 IF ANR OK General MidCon 04/01/05 12/31/05 40,000 360,000 $6.80 $7.31 (183,110)
BNP Paribas 03/18/05 79250 IF ANR OK General MidCon 06/01/05 12/31/05 50,000 350,000 $7.17 $7.46 (100,671)
------------------
235,333 1,864,000 25.12%
------------------
J Xxxx & Co 03/15/04 WNP0CPC ANR General MicCon 04/01/05 04/30/05 22,000 22,000 $5.57 $6.60 (22,768)
J Xxxx & Co 03/11/04 WNP0CC8 ANR General MicCon 04/01/05 04/30/05 20,800 20,800 $5.50 $6.60 (22,878)
J Xxxx & Co 03/31/04 WNP0EYH ANR General MicCon 04/01/05 05/31/05 22,000 44,000 $5.60 $6.78 (52,105)
J Xxxx & Co 05/11/04 WNP0LNT ANR General MicCon 04/01/05 05/31/05 22,000 44,000 $6.00 $6.78 (34,528)
J Xxxx & Co 04/07/04 WNP0FZY ANR General MicCon 04/01/05 05/31/05 22,000 44,000 $5.61 $6.78 (51,665)
J Xxxx & Co 06/24/04 WNP0SV0 ANR General MicCon 04/01/05 07/31/05 25,000 100,000 $6.12 $6.99 (87,295)
J Xxxx & Co 10/07/04 WNP1BYO ANR General MicCon 04/01/05 12/31/05 40,000 360,000 $6.33 $7.30 (348,818)
J Xxxx & Co 10/21/04 WNP1EPD ANR General MicCon 04/01/05 12/31/05 40,000 360,000 $6.69 $7.30 (222,668)
J Xxxx & Co 03/02/05 WNP1Y1H ANR General MicCon 05/01/05 12/31/05 50,000 400,000 $6.51 $7.39 (354,164)
------------------
263,800 1,394,800 18.79%
------------------
Calyon 03/12/04 NY1987 ANR General MidCon 04/01/05 04/30/05 20,800 20,800 $5.49 $6.60 (23,086)
Calyon 04/28/04 NY2212 ANR General MidCon 04/01/05 05/31/05 22,000 44,000 $5.70 $6.78 (47,711)
Calyon 04/08/04 NY2110 ANR General MidCon 04/01/05 05/31/05 22,000 44,000 $5.68 $6.78 (48,590)
Calyon 10/13/04 2851 ANR General MidCon 04/01/05 12/31/05 40,000 360,000 $6.34 $7.30 (344,557)
Calyon 10/26/04 2901 ANR General MidCon 04/01/05 12/31/05 50,000 450,000 $6.78 $7.30 (234,627)
Calyon 03/08/05 NY3376 ANR General MidCon 06/01/05 12/31/05 50,000 350,000 $6.83 $7.45 (220,384)
------------------
204,800 1,268,800 17.10%
------------------
Wachovia 10/19/04 1005663 ANR General MidCon 04/01/05 12/31/05 40,000 360,000 4.85% $6.38 $7.30 (330,226)
------------------------------------------------------------------------------------------------------------------------- -----------
Total GAS SWAPS - 2005 1,070,378 7,421,600 $6.48 $7.34 (6,340,457)
========================================================================================================================= ===========
JPMorgan 10/01/04 742662 Reliant Nemours Arklatex 01/01/06 10/31/06 105,000 1,050,000 $5.91 $7.37 (1,534,249)
N/S Acq.
JPMorgan 03/07/05 917381 ANR General MidCon 01/01/06 04/30/06 50,000 200,000 $7.07 $7.82 (150,729)
JPMorgan 03/14/05 921825 ANR General MidCon 01/01/06 04/30/06 50,000 200,000 $7.35 $7.83 (97,537)
JPMorgan 03/31/05 1010116 ANR General MidCon 01/01/06 05/31/06 50,000 250,000 $7.60 $7.64 (8,478)
------------------
255,000 1,700,000 46.70%
------------------
BNP Paribas 10/01/04 71816 IF PEPL Agate MidCon 01/01/06 10/31/06 110,000 1,100,000 $5.64 $7.14 (1,651,258)
Acq.
BNP Paribas 10/08/04 72148 IF Reliant Nemours Arklatex 01/01/06 12/31/06 20,000 240,000 $6.10 $7.37 (305,080)
N/S Acq.
BNP Paribas 03/18/05 79250 IF ANR OK General MicCon 01/01/06 04/30/06 50,000 200,000 $7.44 $7.84 (78,905)
------------------
180,000 1,540,000 42.31%
------------------
Calyon 03/08/05 NY3376 ANR General MidCon 01/01/06 04/30/06 50,000 200,000 $7.293 $7.83 (107,674)
------------------
50,000 200,000 5.49%
------------------
J Xxxx & Co 03/02/05 WNP1Y1H ANR General MicCon 01/01/06 04/30/06 50,000 200,000 $6.948 $7.82 (174,468)
------------------
50,000 200,000 5.49%
------------------
------------------------------------------------------------------------------------------------------------------------- -----------
Total GAS SWAPS - 2006 535,000 3,640,000 $6.32 $7.44 (4,108,378)
========================================================================================================================= ===========
GAS COLLARS
XX Xxxxxx 06/25/04 4NG26442 ANR General MidCon 04/01/05 07/31/05 25,000 100,000 $5.500 $5.493 000
-00(XXXXX
XX Xxxxxx 06/25/04 4NG26442 ANR General MidCon 04/01/05 07/31/05 (25,000) (100,000) $6.810 $6.406 (40,373)
-43(CAP)
XX Xxxxxx 06/02/04 4NG26257 ANR General MidCon 04/01/05 06/30/05 25,000 75,000 $5.750 $5.741 000
-00(XXXXX)
XX Xxxxxx 06/02/04 4NG26257 ANR General MidCon 04/01/05 06/30/05 (25,000) (75,000) $6.890 $6.627 (19,759)
-58(CAP)
XX Xxxxxx 09/29/04 39518 ANR General MidCon 04/01/05 12/31/05 40,000 360,000 $5.750 $5.692 21,016
(FLOOR)
XX Xxxxxx 09/29/04 39518 ANR General MidCon 04/01/05 12/31/05 (40,000) (360,000) $7.300 $6.733 (204,237)
(CAP)
XX Xxxxxx 10/06/04 51671 ANR General MidCon 04/01/05 12/31/05 40,000 360,000 $5.611 $5.557 19,648
(FLOOR)
XX Xxxxxx 10/06/04 51671 ANR General MidCon 04/01/05 12/31/05 (40,000) (360,000) $7.067 $6.407 (237,597)
(CAP)
J Xxxx & Co 10/28/04 PP16T ANR General MidCon 04/01/05 12/31/05 50,000 450,000 $6.111 $5.996 51,957
(FLOOR)
J Xxxx & Co 10/28/04 PP16T ANR General MidCon 04/01/05 12/31/05 (50,000) (450,000) $7.839 $7.455 (172,552)
(CAP)
------------------------------------------------------------------------------------------------------------------------ ------------
Total GAS COLLARS - 2005 (580,561)
======================================================================================================================== ============
Schedule 7.21-1
SCHEDULE 7.24
MATERIAL AGREEMENTS
1. Indenture Agreement dated as of March 13, 2002 between St. Xxxx Xxxx &
Exploration Company and Xxxxx Fargo Bank West, N.A. for the Company's 5.75%
Senior Convertible Notes due 2022.
2. And the agreements set forth on the exhibit list to the Company's Annual
Report on Form 10-K for the year ended December 31, 2004, as material
contracts included as exhibits 10.1 through 10.48.
Schedule 7.24-1
SCHEDULE 9.05(a)
INVESTMENTS
NONE
Schedule 9.05(a)-1
SCHEDULE 9.05(h)
EXISTING INVESTMENTS (NON-OIL AND GAS)
1. 50% general partnership interest in Hilltop Investments holding
approximately 41 acres of undeveloped land in Jefferson County at C-470 and
Quincy.
2. Residual net profits interest in land located in Grand Junction, Colorado
if reclaimed by gravel operator and sold as lots in Mid-America Business
Park, a rail served industrial park.
Schedule 9.05(h)-1
