EXECUTION VERSION
CREDIT AGREEMENT
by and among
DUNE ENERGY, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE IDENTIFIED ON THE SIGNATURE PAGES HERETO
AS BORROWERS
as Borrowers,
EACH OF ITS SUBSIDIARIES THAT ARE IDENTIFIED ON THE SIGNATURE PAGES HERETO
AS GUARANTORS
as Guarantors,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
XXXXX FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of May 15, 2007
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as of May
15, 2007, by and among the lenders identified on the signature pages hereof
(such lenders, together with their respective successors and permitted assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), XXXXX FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "Agent"), Dune Energy, Inc., a
Delaware corporation ("Parent"), and each of Parent's Subsidiaries identified on
the signature pages hereof as a Borrower (such Subsidiaries, together with
Parent, are referred to hereinafter each individually as a "Borrower", and
individually and collectively, jointly and severally, as the "Borrowers"), and
each of Parent's Subsidiaries identified on the signature pages hereof as a
Guarantor (such Subsidiaries are referred to hereinafter each individually as a
"Guarantor", and individually and collectively, jointly and severally, as the
"Guarantors")
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.
1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.
1.3. Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.
1.4. Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or, in the case of Letters of Credit
or Bank Products, the cash collateralization or support by a standby letter of
credit in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank
Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the
provisions of this Agreement to be repaid or cash collateralized. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
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1.5. Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage at such time, and (ii) the
Borrowing Base at such time less the Letter of Credit Usage at such time.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to (x) establish reserves against the Borrowing Base
or (y) reduce one or more of the percentages set forth in the Borrowing Base
with respect to the stated categories of oil and gas reserves (in either case,
without declaring an Event of Default) in such amounts, and with respect to such
matters, as Agent determines in its Permitted Discretion (in each case, an
"Agent Reserve", and collectively, the "Agent Reserves"). Without limiting the
generality of the foregoing, Agent Reserves may include (but are not limited to)
reserves with respect to (i) sums that Borrowers or their Subsidiaries are
required to pay under any Section of this Agreement or any other Loan Document
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and have failed to
pay, and (ii) amounts owing by Borrowers or their Subsidiaries to any Person to
the extent secured by a Lien on, or trust over, any of the Collateral (including
proceeds thereof or collections from the sale of Hydrocarbons which may from
time to time come into the possession of any of the Lenders or their agent(s)
(other than a Permitted Lien), which Lien or trust, in the Permitted Discretion
of Agent likely would have a priority superior to the Agent's Liens (such as
Liens or trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise,
sales, or other taxes where given priority under applicable law) in and to such
item of the Collateral.
(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.
2.2. Intentionally Omitted.
2.3. Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent. Unless
Swing Lender is not obligated to make a Swing Loan pursuant to Section 2.3(b)
below, such notice must be received by Agent no later than 1:00 p.m. (Georgia
time) on the Business Day that is the requested Funding Date specifying (i) the
amount of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day; provided, however, that if Swing Lender is not obligated to make a
Swing Loan as to a requested Borrowing, such notice must be received by Agent no
later than 1:00 p.m. (Georgia time) on the Business Day prior to the date that
is the requested Funding Date. At Agent's election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
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notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.
(b) Making of Swing Loans. In the case of a request for an Advance
and so long as either (i) the aggregate amount of Swing Loans made since the
last Settlement Date, minus the amount of Collections or payments applied to
Swing Loans since the last Settlement Date, plus the amount of the requested
Advance does not exceed $10,000,000, or (ii) Swing Lender, in its sole
discretion, shall agree to make a Swing Loan notwithstanding the foregoing
limitation, Swing Lender shall make an Advance in the amount of such Borrowing
(any such Advance made solely by Swing Lender pursuant to this Section 2.3(b)
being referred to as a "Swing Loan" and such Advances being referred to
collectively as "Swing Loans") available to Borrowers on the Funding Date
applicable thereto by transferring immediately available funds to Borrowers'
Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that all payments on any Swing Loan shall be payable to Swing
Lender solely for its own account. Subject to the provisions of Section
2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any
Swing Loan if Swing Lender has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date. Swing Lender shall
not otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate
Loans.
(c) Making of Loans.
(i) In the event that Swing Lender is not obligated to make a
Swing Loan, then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 4:00 p.m.
(Georgia time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 1:00 p.m.
(Georgia time) on the Funding Date applicable thereto. After Agent's receipt of
the proceeds of such Advances, Agent shall make the proceeds thereof available
to Administrative Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Administrative Borrower's Designated Account; provided, however, that, subject
to the provisions of Section 2.3(d)(ii), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if Agent
shall have actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been waived, or (2)
the requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender prior to 12:00
noon (Georgia time) on the date of a Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the account of Borrowers
the amount of that Lender's Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
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such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Loan Parties to Agent for the Defaulting Lender's
benefit, and, in the absence of such transfer to the Defaulting Lender, Agent
shall transfer any such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender had made
Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by Loan Parties of their duties and obligations hereunder to Agent or to the
Lenders other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement and shall entitle Administrative Borrower at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be acceptable to
Agent. In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (other than Bank Product
Obligations, but including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided however, that any such assumption of the Commitment of such Defaulting
Lender shall not be deemed to constitute a waiver of any of the Lender Groups'
or Borrowers' rights or remedies against any such Defaulting Lender arising out
of or in relation to such failure to fund.
(d) Protective Advances and Optional Overadvances.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (A) after the occurrence and
during the continuance of a Default or an Event of Default, or (B) at any time
that any of the other applicable conditions precedent set forth in Section 3 are
not satisfied, to make Advances to Borrowers on behalf of the Lenders that
Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve
or protect the Collateral, or any portion thereof, (2) to enhance the likelihood
of repayment of the Obligations (other than the Bank Product Obligations), or
(3) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 9 (any of the Advances described in this Section
2.3(d)(i) shall be referred to as "Protective Advances").
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(ii) Any contrary provision of this Agreement notwithstanding,
the Lenders hereby authorize Agent or Swing Lender, as applicable, and either
Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly
and intentionally, continue to make Advances (including Swing Loans) to
Borrowers notwithstanding that an Overadvance exists or thereby would be
created, so long as (A) after giving effect to such Advances, the outstanding
Revolver Usage does not exceed the Borrowing Base by more than $3,000,000, and
(B) after giving effect to such Advances, the outstanding Revolver Usage (except
for and excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the event
Agent obtains actual knowledge that the Revolver Usage exceeds the amounts
permitted by the immediately foregoing provisions, regardless of the amount of,
or reason for, such excess, Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount
of the Advances to Borrowers to an amount permitted by the preceding sentence.
In such circumstances, if any Lender with a Revolver Commitment objects to the
proposed terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders. Each Lender with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section 2.3(e) for the
amount of such Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(d)(ii), and any Overadvances resulting from the charging
to the Loan Account of interest, fees, or Lender Group Expenses.
(iii) Each Protective Advance and each Overadvance shall be
deemed to be an Advance hereunder, except that no Protective Advance or
Overadvance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement
therefor, all payments on the Protective Advances shall be payable to Agent
solely for its own account. The Protective Advances and Overadvances shall be
repayable on demand, secured by the Agent's Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans. The provisions of this Section 2.3(d) are for
the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit any Borrower in any way.
(e) Settlement. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of any Borrower) that in order to facilitate the administration
of this Agreement and the other Loan Documents, settlement among the Lenders as
to the Advances, the Swing Loans, and the Protective Advances shall take place
on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by Agent
(1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2)
for itself, with respect to the outstanding Protective Advances, and (3) with
respect to Loan Parties' or their Subsidiaries' Collections or payments
received, as to each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later than 5:00
p.m. (Georgia time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Protective
Advances for the period since the prior Settlement Date. Subject to the terms
and conditions contained herein (including Section 2.3(c)(iii)): (y) if a
Lender's balance of the Advances (including Swing Loans and Protective Advances)
exceeds such Lender's Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than
3:00 p.m. (Georgia time) on the Settlement Date, transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a Lender's balance
of the Advances (including Swing Loans and Protective Advances) is less than
such Lender's Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, such Lender shall no later than
3:00 p.m. (Georgia time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such Lender
shall, upon transfer of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances (including Swing Loans and Protective Advances). Such
amounts made available to Agent under clause (z) of the immediately preceding
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sentence shall be applied against the amounts of the applicable Swing Loans or
Protective Advances and, together with the portion of such Swing Loans or
Protective Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Protective Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Protective Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, fees
payable by Loan Parties and allocable to the Lenders hereunder, and proceeds of
Collateral. To the extent that a net amount is owed to any such Lender after
such application, such net amount shall be distributed by Agent to that Lender
as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent
Protective Advances or Swing Loans are outstanding, may pay over to Agent or
Swing Lender, as applicable, any Collections or payments received by Agent, that
in accordance with the terms of this Agreement would be applied to the reduction
of the Advances, for application to the Protective Advances or Swing Loans.
Between Settlement Dates, Agent, to the extent no Protective Advances or Swing
Loans are outstanding, may pay over to Swing Lender any payments received by
Agent, that in accordance with the terms of this Agreement would be applied to
the reduction of the Advances, for application to Swing Lender's Pro Rata Share
of the Advances. If, as of any Settlement Date, Collections of Borrowers or
their Subsidiaries received since the then immediately preceding Settlement Date
have been applied to Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to
Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be
applied to the outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such Settlement Date, its
Pro Rata Share of the Advances. During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with respect to Protective
Advances, and each Lender (subject to the effect of agreements between Agent and
individual Lenders) with respect to the Advances other than Swing Loans and
Protective Advances, shall be entitled to interest at the applicable rate or
rates payable under this Agreement on the daily amount of funds employed by
Swing Lender, Agent, or the Lenders, as applicable.
(f) Notation. Agent shall record on its books the principal amount
of the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Protective Advances owing to Agent, and the interests therein of
each Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate.
(g) Lenders' Failure to Perform. All Advances (other than Swing
Loans and Protective Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
2.4. Payments.
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(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Loan Parties shall be made to Agent's Account for the account of the
Lender Group and shall be made in immediately available funds, no later than
2:00 p.m. (Georgia time) on the date specified herein. Any payment received by
Agent later than 2:00 a.m. (Georgia time), shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that Borrowers will
not make such payment in full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent Borrowers
do not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application.
(i) So long as no Application Event has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
(other than fees or expenses that are for Agent's separate account) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
Commitment or Obligation to which a particular fee or expense relates. Except as
otherwise specifically provided in Section 2.4(b)(iv) hereof or in Section
2.4(d) hereof, all payments to be made hereunder by Loan Parties shall be
remitted to Agent and all (subject to Section 2.4(b)(iv) hereof) such payments,
and all proceeds of Collateral received by Agent, shall be applied, so long as
no Application Event has occurred and is continuing, to reduce the balance of
the Advances outstanding and, thereafter, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.
(ii) At any time that an Application Event has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:
(A) first, to pay any Lender Group Expenses (including
cost or expense reimbursements) or indemnities then due to Agent under the Loan
Documents, until paid in full,
(B) second, to pay any fees or premiums then due to
Agent under the Loan Documents until paid in full,
(C) third, to pay interest due in respect of all
Protective Advances until paid in full,
(D) fourth, to pay the principal of all Protective
Advances until paid in full,
(E) fifth, ratably to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,
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(F) sixth, ratably to pay any fees or premiums then due
to any of the Lenders under the Loan Documents until paid in full,
(G) seventh, ratably to pay interest due in respect of
the Advances (other than Protective Advances), and the Swing Loans until paid in
full,
(H) eighth, ratably (i) to pay the principal of all
Swing Loans until paid in full, (ii) to pay the principal of all Advances until
paid in full, (iii) to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the Letter of Credit Usage, and (iv) to
Agent, to be held by Agent, for the benefit of the Bank Product Providers, as
cash collateral in an amount up to the amount of the Bank Product Reserve
established prior to the occurrence of, and not in contemplation of, the subject
Application Event,
(I) ninth, to pay any other Obligations (including the
provision of amounts to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount determined
by Agent in its Permitted Discretion as the amount necessary to secure
Borrowers' and their Subsidiaries' obligations in respect of Bank Products), and
(J) tenth, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(iii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(e).
(iv) In each instance, so long as no Application Event has
occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment
made by any Loan Party to Agent and specified by such Loan Party to be for the
payment of specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(v) For purposes of foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the priority
provisions of this Section 2.4 and any other provision contained in any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4 shall
control and govern.
(c) Mandatory Prepayments.
(i) If at any time the sum of the aggregate principal amount
of the outstanding Advances and the outstanding Letter of Credit Usage exceeds
the lesser of (x) the Borrowing Base and (y) the Maximum Revolver Amount,
Borrowers shall prepay the Obligations in an amount equal to such excess which
prepayments shall be applied in the manner set forth in Section 2.4(d).
(d) Application of Payments.
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(i) Each prepayment pursuant to Section 2.4(c) shall, (A) so
long as no Application Event shall have occurred and be continuing, be applied,
first, to the outstanding principal amount of the Advances until paid in full,
and second, to cash collateralize Letters of Credit in an amount equal to 105%
of the then extent Letter of Credit Usage, and (B) if an Application Event shall
have occurred and be continuing, be applied in the manner set forth in Section
2.4(b)(ii).
2.5. Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or
Section 2.12 is greater than any of the limitations set forth in Section 2.1 or
Section 2.12, as applicable (an "Overadvance"), Borrowers immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). Borrowers promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or,
if earlier, on the date on which the Obligations are declared due and payable
pursuant to the terms of this Agreement.
2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in Section 2.6(c), all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the Applicable Margin, (ii) if the relevant
Obligation is an Advance that is a Base Rate Loan, at a per annum rate equal to
the Base Rate plus the Applicable Margin, and (iii) otherwise, at a per annum
rate equal to the Base Rate plus the Applicable Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any agreements
between Agent and individual Lenders), a Letter of Credit fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.12(e)) which
shall accrue at a rate equal to the Applicable Margin in respect of LIBOR Rate
Loans times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) whether or not charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
(ii) the Letter of Credit fee provided for in Section 2.6(b)
shall be increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to the Bank Product Providers in respect of Bank Products up to the
amount of the Bank Product Reserve) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances that are Base Rate Loans. Any interest not paid
when due shall be compounded by being charged to the Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans.
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(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7. Cash Management.
(a) Loan Parties shall and shall cause each of their Subsidiaries to
(i) establish and maintain cash management services of a type and on terms
satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a)
(each a "Cash Management Bank"), and shall request in writing and otherwise take
such reasonable steps to ensure that all of their and their Subsidiaries'
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly all of
their Collections (including those sent directly by their Account Debtors to
Loan Parties or their Subsidiaries) into a bank account in a Loan Party's name
(a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Loan Parties. Each such Cash Management
Agreement shall provide, among other things, that (i) the Cash Management Bank
will comply with any instructions originated by Agent (an "Activation
Instruction") directing the disposition of the funds in such Cash Management
Account without further consent by Loan Parties or their Subsidiaries, as
applicable, and Agent agrees not to issue an Activation Instruction with respect
to the Cash Management Accounts unless an Application Event has occurred and is
continuing at the time such Activation Instruction is issued, (ii) the Cash
Management Bank has no rights of setoff or recoupment or any other claim against
the applicable Cash Management Account, other than for payment of its service
fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii)
upon the issuance of an Activation Instruction, it will forward by daily sweep
all amounts in the applicable Cash Management Account to the Agent's Account.
Agent agrees not to issue an Activation Instruction with respect to the Cash
Management Accounts unless an Application Event has occurred and is continuing
at the time such Activation Instruction is issued. Agent agrees to use
commercially reasonable efforts to rescind an Activation Instruction (the
"Rescission") if: (x) the Event of Default upon which such Activation
Instruction was issued has been waived in writing in accordance with the terms
of this Agreement, (y) no additional Event of Default has occurred and is
continuing prior to the date of the Rescission or is reasonably expected to
occur on or immediately after the date of the Rescission.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be reasonably satisfactory to Agent,
and (ii) prior to the time of the opening of such Cash Management Account, a
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Loan Party (or its Subsidiary, as applicable) and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Loan Parties (or their Subsidiaries, as applicable) shall close any
of their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) Each Cash Management Account shall be a cash collateral account
subject to a Control Agreement.
2.8. Crediting Payments. The receipt of any payment item by Agent (whether
from transfers to Agent by the Cash Management Banks pursuant to the Cash
Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Agent's Account or unless and until such payment item is
honored when presented for payment. Should any payment item not be honored when
presented for payment, then Loan Parties shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 2:00 p.m. (Georgia time). If any payment item is received into the
Agent's Account on a non-Business Day or after 2:00 p.m. (Georgia time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9. Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Protective Advance, or Swing Loan requested by Borrowers and made
by Agent or the Lenders hereunder shall be made to the Designated Account.
2.10. Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances (including Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash Management Bank. Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, and fees, and including an itemization of all
charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11. Fees. Borrowers shall pay to Agent, as and when due and payable
under the terms of the Fee Letter, the fees set forth in the Fee Letter.
2.12. Letters of Credit.
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(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $20,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the outstanding amount of Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m., Georgia time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such
L/C Disbursement prior to 1:00 p.m., Georgia time, on such date, or, if such
notice has not been received by Administrative Borrower prior to such time on
such date, then not later than 2:00 p.m., Georgia time, on the Business Day that
Administrative Borrower receives such notice, if such notice is received prior
to 1:00 p.m., Georgia time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, initially, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrowers' obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrowers pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(b) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. 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 Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
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with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in Section 2.12(a),
or of any reimbursement payment required to be refunded to Borrowers for any
reason. Each Lender with a Revolver Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share of each L/C Disbursement made by the
Issuing Lender pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3. If any such Lender fails to make available to
Agent the amount of such Lender's Pro Rata Share of each L/C Disbursement made
by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group. Each Borrower agrees
to be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the Lender Group nor the
Issuing Lender shall be responsible for delays, errors, or omissions resulting
from the malfunction of equipment in connection with any Letter of Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the undrawn amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
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(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit or
any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13. LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged (whether at the time when made (unless otherwise provided herein), upon
conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a
LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the
last day of the Interest Period applicable thereto, (ii) the date on which all
or any portion of the Obligations are accelerated pursuant to the terms hereof,
or (iii) the date on which this Agreement is terminated pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
continuing, Borrowers no longer shall have the option to request that Advances
bear interest at a rate based upon the LIBOR Rate and Agent shall have the right
to convert the interest rate on all outstanding LIBOR Rate Loans to the rate
then applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 2:00 p.m. (Georgia time)
at least 3 Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR Deadline"). Notice of Administrative Borrower's election of
the LIBOR Option for a permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice received by
Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (Georgia time) on the same day).
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the affected Lenders.
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(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate 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 LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
"Funding Losses"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender to be the excess,
if any, of (1) the amount of interest that would have accrued on the principal
amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, 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 therefor), minus (2) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section 2.13 shall be conclusive absent
manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR
Rate Loans of at least $1,000,000.
(c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are converted or prepaid on any date that is not the last day of the Interest
Period applicable thereto, including as a result of any automatic prepayment
through the required application by Agent of proceeds of Loan Parties' and their
Subsidiaries' Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders
and their Participants harmless against any and all Funding Losses in accordance
with Section 2.13 (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at the LIBOR
Rate. In any such event, the affected Lender shall give Administrative Borrower
and Agent notice of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the notice
from the affected Lender, Administrative Borrower may, by notice to such
affected Lender (y) require such Lender to furnish to Administrative Borrower a
statement setting forth the basis for adjusting such LIBOR Rate and the method
for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under Section 2.13(b)(ii)).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
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Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14. Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15. Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this Section 2.15), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.
(c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The Obligations of each Borrower under the provisions of this
Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
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(e) Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of any Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
Section 2.15 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders that
such Borrower is currently informed of the financial condition of Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers' financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
(g) The provisions of this Section 2.15 are made for the benefit of
Agent, Lenders and their respective successors and assigns, and may be enforced
by it or them from time to time against any or all Borrowers as often as
occasion therefor may arise and without requirement on the part of Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.15 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.
(h) Each Borrower hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Borrower with respect to
any liability incurred by it hereunder or under any of the other Loan Documents,
any payments made by it to Agent or Lenders with respect to any of the
Obligations or any collateral security therefor until such time as all of the
Obligations have been paid in full in cash. Any claim which any Borrower may
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have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Loan Party, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Loan Party therefor.
(i) Each of the Loan Parties hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any Loan
Party to any other Loan Party is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Loan Party hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Loan Party will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Loan Party owing to such Loan Party until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Loan Party shall collect, enforce or receive any
amounts in respect of such indebtedness, such amounts shall be collected,
enforced and received by such Borrower as trustee for Agent, and such Loan Party
shall deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1. Conditions Precedent to the Initial Extension of Credit. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Agent and each
Lender of each of the conditions precedent set forth on Schedule 3.1 (the making
of such initial extension of credit by a Lender being conclusively deemed to be
its satisfaction or waiver of the conditions precedent).
3.2. Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:
(a) the representations and warranties of Loan Parties or its
Subsidiaries contained in this Agreement or in the other Loan Documents shall be
true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) on and as
of the date of such extension of credit, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Loan Party, Agent, or any Lender; and
(d) no Material Adverse Change shall have occurred since December
31, 2006.
3.3. Term. This Agreement shall continue in full force and effect for a
term ending on the earlier of (a) May 15, 2010, and (b) the date that is 90 days
prior to the earliest date on which any principal amount of the Second Secured
Notes is scheduled to become due and payable or is required to be prepaid or
redeemed, in each case in accordance with their terms of the terms of the Second
Secured Note Indenture (such earlier date, the "Maturity Date"). The foregoing
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notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.4. Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including the requirement that Borrowers provide (a) Letter of Credit
Collateralization and (b) Bank Product Collateralization). No termination of
this Agreement, however, shall relieve or discharge Loan Parties or their
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Document and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole
expense, without recourse, representation or warranty, execute and deliver any
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.5. Early Termination by Borrowers. Borrowers have the option, at any
time upon 30 days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder by paying to Agent, in cash, the Obligations
(including (a) providing Letter of Credit Collateralization with respect to the
then existing Letter of Credit Usage and (b) providing Bank Product
Collateralization with respect to the then existing Bank Products), in full. If
Borrowers have sent a notice of termination pursuant to the provisions of this
Section, then the Commitments shall terminate and Borrowers shall be obligated
to repay the Obligations (including (a) providing Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage and
(b) providing Bank Product Collateralization with respect to the then existing
Bank Products), in full, on the date set forth as the date of termination of
this Agreement in such notice.
3.6. Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances hereunder (or to extend any other credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by the applicable Loan Party to so
perform or cause to be performed constituting an Event of Default):
(a) Within 30 days after the Closing Date, Loan Parties shall have
used commercially reasonable efforts to deliver to Agent Collateral Access
Agreements with respect to the Loan Parties' chief executive office located at
0000 Xxxx Xxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxx 00000 and the Loan Parties'
office located at Two Shell Plaza, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000;
(b) Within 30 days after the Closing Date, Loan Parties shall
deliver to Agent duly executed Cash Management Agreements and Control
Agreements, for Loan Parties' accounts set forth on Schedule 4.17, in each case
in form and substance satisfactory to Agent; and
(c) Within 60 days after the Closing Date, a takeover audit, which
will include, among other things, a verification that all of Borrowers'
production taxes and royalty payments are current, verification of Borrowers'
cash balances (including the sources of such cash), a calculation of the
Borrowing Base after updating the two-year NYMEX Strip Price and rolling forward
production volumes of Borrowers, shall have been completed, the results of which
shall be satisfactory to Agent.
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4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
each Loan Party makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
4.1. No Encumbrances. After giving effect to the Transactions, each Loan
Party and its Subsidiaries has good and indefeasible title to their personal
property assets and good and marketable title to its Real Property (other than
Oil and Gas Properties constituting Real Property) and good and defensible title
to Oil and Gas Properties constituting Real Property, in each case, free and
clear of Liens except for Permitted Liens.
4.2. Intentionally Omitted.
4.3. Intentionally Omitted.
4.4. Intentionally Omitted.
4.5. Intentionally Omitted.
4.6. Intentionally Omitted.
4.7. Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.
(a) The name of (within the meaning of Section 9-503 of the Code)
and jurisdiction of organization of each Loan Party and each of its Subsidiaries
is set forth on Schedule 4.7(a) (as such Schedule may be updated from time to
time to reflect changes permitted to be made under Section 6.5 and new
Subsidiaries formed in accordance with Section 5.16).
(b) After giving effect to the Transactions, the chief executive
office of each Loan Party and each of its Subsidiaries is located at the address
indicated on Schedule 4.7(b) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 5.9 and new Subsidiaries
formed in accordance with Section 5.16).
(c) After giving effect to the Transactions, each Loan Party's and
each of its Subsidiaries' tax identification numbers and organizational
identification numbers, if any, are identified on Schedule 4.7(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be
made under Section 6.5 and new Subsidiaries formed in accordance with Section
5.16).
(d) After giving effect to the Transactions, as of the Closing Date,
Loan Parties and their Subsidiaries do not hold any commercial tort claims,
except as set forth on Schedule 4.7(d).
4.8. Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly incorporated or organized, as the case
may be, and existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.
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(b) After giving effect to the Transactions, set forth on Schedule
4.8(b) (as such Schedule may be updated from time to time to reflect changes
permitted to be made under Section 5.16), is a complete and accurate description
of the authorized capital Stock of Parent, by class, and, as of the Closing
Date, a description of the number of shares of each such class that are issued
and outstanding. Other than as described on Schedule 4.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Parent's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. The Parent is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) After giving effect to the Transactions, set forth on Schedule
4.8(c) (as such Schedule may be updated from time to time to reflect changes
permitted to be made under Section 5.16), is a complete and accurate list of
Parent's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Subsidiary. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) After giving effect to the Transactions, except as set forth on
Schedule 4.8(c), there are no subscriptions, options, warrants, or calls
relating to any shares of Parent's Subsidiaries' capital Stock, including any
right of conversion or exchange under any outstanding security or other
instrument. No Loan Party or any of its respective Subsidiaries is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of any Loan Party's Subsidiaries' capital Stock or any
security convertible into or exchangeable for any such capital Stock.
4.9. Due Authorization; No Conflict.
(a) As to each Loan Party, the execution, delivery, and performance
by such Loan Party of this Agreement and the Loan Documents and the agreements,
documents and instruments related to the Transactions to which it is a party
have been duly authorized by all necessary action on the part of such Loan
Party.
(b) As to each Loan Party, the execution, delivery, and performance
by such Loan Party of this Agreement and the other Loan Documents and the
agreements, documents and instruments related to the Transactions to which it is
a party do not and will not (i) violate any provision of federal, state, or
local law or regulation applicable to any Borrower, the Governing Documents of
any Loan Party, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Loan Party, (ii) conflict with, result in
a breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of any Loan Party, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of any Loan Party, other than Liens in favor of Agent for the benefit
of Lenders, or (iv) require any approval of any Loan Party's interestholders or
any approval or consent of any Person under any Material Contract of any Loan
Party, other than consents or approvals that have been obtained and that are
still in force and effect.
(c) Other than the filing of financing statements, the recordation
of the Mortgages, and other filings or actions necessary to perfect Liens
granted to Agent in the Collateral, the execution, delivery, and performance by
each Loan Party of this Agreement and the other Loan Documents to which such
Loan Party is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
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(d) As to each Loan Party, this Agreement and the other Loan
Documents and the agreements, documents and instruments related to the
Transactions to which such Loan Party is a party, and all other documents
contemplated hereby and thereby, and the agreements, documents and instruments
related to the Transactions, when executed and delivered by such Loan Party will
be the legally valid and binding obligations of such Loan Party, enforceable
against such Loan Party in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected (other than (i)
in respect of motor vehicles and (ii) any Deposit Accounts and Securities
Accounts not subject to a Control Agreement as permitted by Section 6.12, and
subject only to the filing of financing statements and the recordation of the
Mortgages), and first priority Liens, subject only to Permitted Liens.
4.10. Litigation. Other than those matters disclosed on Schedule 4.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of each Loan Party, threatened
against any Loan Party or any of its Subsidiaries. There are no actions, suits
or proceedings, pending, or to the best knowledge of each Loan Party,
threatened, that relate to this Agreement or any other Loan Document, the
Goldking Acquisition Documents or any transaction contemplated hereby or
thereby.
4.11. No Material Adverse Change. All financial statements relating to
Parent and its Subsidiaries that have been delivered by Parent or any of its
Subsidiaries to the Lender Group have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in
all material respects, Parent's and its Subsidiaries' financial condition as of
the date thereof and results of operations for the period then ended. There has
not been a Material Adverse Change with respect to Parent and its Subsidiaries
since December 31, 2006.
4.12. Fraudulent Transfer.
(a) After giving effect to the Transactions and the financing
transactions contemplated by this Agreement, each Loan Party and each Subsidiary
of a Loan Party is Solvent.
(b) No transfer of property is being made by any Loan Party or any
Subsidiary of a Loan Party and no obligation is being incurred by any Borrower
or any Subsidiary of a Loan Party in connection with the Transactions or the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of Loan
Parties or their Subsidiaries.
4.13. Employee Benefits. None of Loan Parties, any of their Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
4.14. Environmental Condition. Except as set forth on Schedule 4.14, (a)
to Loan Parties' knowledge, none of Loan Parties' or their Subsidiaries'
properties or assets has ever been used by Loan Parties, their Subsidiaries, or
by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release, or transport, any Hazardous Materials, where such use,
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of any applicable Environmental Law, (b) to Loan
Parties'' knowledge, none of Loan Parties' nor their Subsidiaries' properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
none of Loan Parties nor any of their Subsidiaries have received notice that a
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Lien arising under any Environmental Law has attached to any revenues or to any
Real Property owned or operated by Loan Parties or their Subsidiaries, and (d)
none of Loan Parties nor any of their Subsidiaries have received a summons,
citation, notice, or directive from the United States Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by any Loan Party or any Subsidiary of a Loan Party resulting in the
releasing or disposing of Hazardous Materials into the environment.
4.15. Intellectual Property. Each Loan Party and each Subsidiary of a Loan
Party owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted, and attached hereto as Schedule 4.15 (as
updated from time to time) is a true, correct, and complete listing of all
material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive licensee; provided, however,
that Loan Parties may amend Schedule 4.15 to add additional property so long as
such amendment occurs by written notice to Agent not less than 10 days before
the date on which a Loan Party or any Subsidiary of a Loan Party acquires any
such property after the Closing Date.
4.16. Leases. Loan Parties and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating and all of such material
leases are valid and subsisting and no material default by Loan Parties or their
Subsidiaries exists under any of them. There are no leases, subleases, contracts
or other operating agreements that allocate operating expenses to any Loan Party
in excess of its working interest of record in the particular Oil and Gas
Property subject to such lease, the sublease, contract or other operating
agreement.
4.17. Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17
is a listing of all of Loan Parties' and their Subsidiaries' Deposit Accounts
and Securities Accounts, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b) the account
numbers of the Deposit Accounts or Securities Accounts maintained with such
Person.
4.18. Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Loan Parties or their Subsidiaries in writing to
Agent or any Lender (including all information contained in the Schedules hereto
or in the other Loan Documents) for purposes of or in connection with any of the
Transactions or this Agreement, the other Loan Documents, or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Loan Parties or their
Subsidiaries in writing to Agent or any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided. On
the Closing Date, the Closing Date Projections represent, and as of the date on
which any other Projections are delivered to Agent, such additional Projections
represent Loan Parties' good faith estimate of their and their Subsidiaries'
future performance for the periods covered thereby based upon assumptions
believed by Loan Parties to be reasonable at the time of the delivery thereof to
Agent (it being understood that such projections and forecasts are subject to
uncertainties and contingencies, many of which are beyond the control of Loan
Parties and their Subsidiaries and no assurances can be given that such
projections or forecasts will be realized).
4.19. Indebtedness. After giving effect to the Transactions, set forth on
Schedule 4.19 is a true and complete list of all Indebtedness of each Loan Party
and each Subsidiary of a Loan Party outstanding immediately prior to the Closing
Date that is to remain outstanding after the Closing Date and such Schedule
accurately sets forth the aggregate principal amount of such Indebtedness and
the principal terms thereof.
4.20. Margin Stock. None of the Loan Parties is nor will be engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
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4.21. Permits, Etc.. Before and after giving effect to the Transactions,
each Loan Party has, and is in compliance with, all permits, licenses,
authorizations, approvals, entitlements and accreditations required for such
Person lawfully to own, lease, manage or operate, or to acquire, each business
and the Real Property currently owned, leased, managed or operated, or to be
acquired, by such Person, except for such permits, licenses, authorizations,
approvals, entitlements and accreditations the absence of which could not
reasonably be expected to result in a Material Adverse Change. No condition
exists or event has occurred which, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such permit, license, authorization, approval,
entitlement or accreditation, and to each Loan Party's knowledge, there is no
claim that any thereof is not in full force and effect.
4.22. Material Contracts. Set forth on Schedule 4.22 is a description of
all Material Contracts of Parent and its Subsidiaries, showing the parties and
principal subject matter thereof and amendments and modifications thereto;
provided, however, that Loan Parties may amend Schedule 4.22 to add additional
Material Contracts so long as such amendment occurs by written notice to Agent
not less than 5 days after the date on which Parent or its Subsidiary enters
into such Material Contract after the Closing Date. Except for matters which,
either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Change, each Material Contract (other than those
that have expired at the end of their normal terms) (a) is in full force and
effect and is binding upon and enforceable against Parent or its Subsidiary and,
to the best of Loan Parties' knowledge, each other Person that is a party
thereto in accordance with its terms, (b) has not been otherwise amended or
modified (other than amendments or modifications permitted by Section 6.7(d)),
and (c) is not in default due to the action or inaction of Parent or any of its
Subsidiaries.
4.23. Employee and Labor Matters. Except as set forth on Schedule 4.23,
there is (a) no unfair labor practice complaint pending or, to any Loan Party's
knowledge, threatened against any Loan Party before any Governmental Authority
and no grievance or arbitration proceeding pending or threatened against any
Loan Party which arises out of or under any collective bargaining agreement, (b)
no strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the best knowledge of each Loan Party, threatened against any
Loan Party and (c) no union representation question existing with respect to the
employees of any Loan Party and no union organizing activity taking place with
respect to any of the employees of any of them. Neither any Loan Party, nor any
ERISA Affiliate of any Loan Party has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act ("WARN") or similar state
law, which remains unpaid or unsatisfied. The hours worked and payments made to
employees of each Loan Party have not been in violation of the Fair Labor
Standards Act or any other applicable legal requirements. All material payments
due from any Loan Party on account of workers compensation, wages and employee
health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party.
4.24. Customers and Suppliers. There exists no actual or threatened
termination, cancellation or limitation of, or modification to or change in, the
business relationship between (i) any Loan Party, on the one hand, and any
customer or any group thereof, on the other hand, whose agreements with any Loan
Party are individually or in the aggregate material to the business or
operations of such Loan Party, or (ii) any Loan Party, on the one hand, and any
material supplier thereof, on the other hand; and there exists no present state
of facts or circumstances that could give rise to or result in any such
termination, cancellation, limitation, modification or change.
4.25. Taxes. Each Loan Party, and each Person which has tax liabilities
for which any Loan Party is liable (each, a "Tax Party") have filed, or caused
to be filed, and will continue to file in a timely manner all foreign, federal,
state and other material tax returns and reports required to be filed, and have
paid, and will continue to pay, all foreign, federal, state and other material
taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable. All
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information in such tax returns, reports and declarations is complete and
accurate in all material respects. Each Tax Party has paid or caused to be paid
all taxes due and payable or claimed due and payable in any assessment received
by it, and has collected, deposited and remitted in accordance with all
applicable laws, all sales, use and similar taxes applicable to the conduct of
its business, except, in each case, to the extent that the validity of such
assessment or tax is the subject of a Permitted Protest. There are no Liens on
any properties or assets of any Loan Party imposed or arising as a result of the
delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge.
4.26. Insurance. Each Loan Party and each of its Subsidiaries keeps its
property adequately insured and maintains (a) insurance to such extent and
against such risks, including fire, as is customary with companies in the same
or similar businesses, (b) workers' compensation insurance in the amount
required by applicable law, (c) public liability insurance, which shall include
product liability insurance, in the amount customary with companies in the same
or similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (d) such other insurance as may be
required by law or as may be reasonably required by Agent (including, without
limitation, against larceny, embezzlement or other criminal misappropriation).
Schedule 4.26 sets forth a list of all insurance maintained by each Loan Party
on the Closing Date.
4.27. Investment Company Act. None of the Loan Parties is an "investment
company" or an "affiliated person" or "promoter" of, or "principal underwriter"
of or for, an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
4.28. Brokerage Fees. Parent and its Subsidiaries have not utilized the
services of any broker or finder in connection with obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Parent or its Subsidiaries in connection herewith.
4.29. Second Secured Debt Documents. As of the Closing Date, the
outstanding principal balance of the Second Secured Notes is $300,000,000, and
all agreements, instruments and documents executed or delivered pursuant to or
in connection with the Second Secured Notes are described on Schedule 4.29
hereto. All Obligations are and will be incurred in full compliance with the
Second Secured Indenture. This Agreement and the other Loan Documents are the
"Credit Agreement" as defined in the Second Secured Indenture. All Obligations,
up to the full amount of the Total Commitments, are incurred pursuant to Section
4.12(a) of the Second Secured Note Indenture. All Liens securing the Second
Secured Debt are subordinate and junior in priority to all Liens in favor of
Agent, for the benefit of the Lenders, securing the Obligations under the
Intercreditor Agreement. No Liens securing the Second Secured Debt exist on any
Collateral of the Loan Parties or any of their Subsidiaries on which Agent does
not have an enforceable, perfected Lien under the Loan Documents securing the
Obligations. No event of default or event or condition which would become an
event of default with notice or lapse of time or both, exists under the Second
Secured Documents and each of the Second Secured Debt Documents is in full force
and effect.
4.30. Compliance with the Law. After giving effect to the
Transactions, no Loan Party has violated any laws or failed to obtain any
material license, permit, franchise or other authorization from any Governmental
Authority necessary for the ownership of any of its Oil and Gas Properties or
the conduct of its business. The Oil and Gas Properties of each Loan Party (and
assets and properties utilized therewith) have been maintained, operated and
developed in a good and workmanlike manner and in substantial conformity with
all applicable laws and all rules, regulations and orders of all Governmental
Authorities having jurisdiction and in substantial 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 such
Oil and Gas Properties; specifically in this connection, (i) after the Closing
Date and after giving effect to the Transactions, no Oil and Gas Property of any
Loan Party is subject to having allowable production reduced below the full and
regular allowable production (including the maximum permissible tolerance)
because of any overproduction (whether or not the same was permissible at the
time) prior to the Closing Date and (ii) none of the xxxxx comprising a part of
such Oil and Gas Properties (or assets and properties utilized therewith) is
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deviated from the vertical by more than the maximum permitted by applicable
laws, regulations, rules and orders of any Governmental Authority, and such
xxxxx are, in fact, bottomed under and are producing from, and the well bores
are wholly within, such Oil and Gas Properties (or in the case of xxxxx located
on Real Property utilized therewith, such utilized Real Property) covered by the
leases.
4.31. Oil and Gas Imbalances. Except as set forth on Schedule 4.31,
on a net basis there are no gas imbalances, take-or-pay oil and gas or other
prepayments with respect to any Loan Party's Oil and Gas Properties which would
require such Person either to make cash settlements for such production or
deliver Hydrocarbons produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payments therefor exceeding two
percent (2%) of the current monthly production of oil and gas from the Oil and
Gas Properties of the Loan Parties in the aggregate.
4.32. Hedge Agreements. Schedule 4.32 sets forth, as of the Closing
Date, a true and complete list of all Hedge Agreements (including any commodity
price swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of Hydrocarbons or other
commodities) of the Loan Parties, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or volumes),
all credit support agreements relating thereto (including any margin required or
supplied), and the counterparty to each such agreement.
4.33. Location of Real Property and Leased Premises.
(a) Before and after giving effect to the Transactions,
Schedule 4.33 lists completely and correctly as of the Closing Date all Oil and
Gas Properties that are Real Property whether leased or owned by any Loan Party
and the respective addresses (if any), counties and states thereof.
(b) Each Loan Party has good and defensible title to all of
its Oil and Gas Properties set forth on Schedule 4.33 which constitute Real
Property and good and indefeasible title to all of its Oil and Gas Properties
which constitute personal property, except for (i) such imperfections of title
which do not in the aggregate materially detract from the value thereof to, or
the use thereof in, the business of such Loan Party and (ii) Permitted Liens.
The quantum and nature of the interest of such Loan Party in and to the Oil and
Gas Properties as set forth in the Initial Reserve Report or the most recent
Reserve Report, as the case may be, includes the entire interest of such Loan
Party in such Oil and Gas Properties as of the date of the Initial Reserve
Report or such applicable Reserve Report delivered by Borrowers to Agent
pursuant to Section 5.2, as the case may be, and are complete and accurate in
all material respects as of the date of the Initial Reserve Report or such
applicable Reserve Report, as the case may be; and there are no "back-in" or
"reversionary" interests held by third parties which could materially reduce the
interest of such Loan Party in such Oil and Gas Properties except as expressly
set forth in the Initial Reserve Report or the most recent Reserve Report, as
the case may be. The ownership of the Oil and Gas Properties by each Loan Party
shall not in any material respect obligate any such Loan Party to bear the costs
and expenses relating to the maintenance, development or operations of each such
Oil and Gas Property in an amount in excess of the working interest of record of
such Loan Party in each Oil and Gas Property set forth in the Initial Reserve
Report or the most recent Reserve Report, as the case may be.
(c) Each Loan Party's marketing, gathering, transportation,
processing and treating facilities and equipment, together with any marketing,
gathering, transportation, processing and treating contracts in effect between
and/or among such Loan Party and any other Person, are sufficient to gather,
transport, process and/or treat, reasonably anticipated volumes of production of
Hydrocarbons from the Oil and Gas Properties of the Loan Party.
4.34. Bonds and Insurance. Schedule 4.34 attached hereto contains an
accurate and complete description of all performance bonds related to operations
on or pertaining to the Oil and Gas Properties of the Loan Parties, and all
material policies of insurance owned or held by each Loan Party. Except as set
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forth on Schedule 4.34, all such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. Such bonds and policies are
sufficient for compliance with all requirements of law and of all agreements to
which any Loan Party is a party; are valid, outstanding and enforceable
policies; provide adequate coverage in at least such amounts and against at
least such risks (but including in any event public liability) as are required
by Governmental Authorities and/or usually insured or bonded against in the same
general area by companies engaged in the same or a similar business for the
assets and operations of the Loan Parties; will remain in full force and effect
through the respective dates set forth in Schedule 4.34 without the payment of
additional premiums except as set forth on Schedule 4.34; and will not in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. No Loan Party has been refused any bonds or
insurance with respect to its assets or operations, nor has its coverage been
limited below usual and customary bond or policy limits, by any bonding company
or insurance carrier to which it has applied for any such bond or insurance or
with which it has carried insurance during the last three years.
4.35. Royalties. Except as set forth on Schedule 4.35, all
royalties, overriding royalties, compensatory royalties and other payments due
from or in respect of Hydrocarbon production from or allocable to the Oil and
Gas Properties have been properly paid or provided for in all material respects
in accordance with the terms of the applicable Material Contracts and applicable
law.
4.36. Goldking Acquisition. The Goldking Acquisition has been
effected in accordance with the terms of the Goldking Acquisition Documents and
all applicable law. At the time of consummation of the Goldking Acquisition, (a)
all consents and approvals of, and filings and registrations with, and all other
actions in respect of, all Governmental Authorities required in order to
consummate the Goldking Acquisition (including Xxxx Xxxxx Xxxxxx) have been
obtained, given, filed or taken and are in full force and effect and (b) there
does not exist any judgment, order or injunction prohibiting or imposing any
material adverse condition upon the consummation thereof.
4.37. Goldking Acquisition Documents. (a) The Parent has delivered
to Agent a true, complete and correct copy, as of the Closing Date, of each
Goldking Acquisition Document, including all schedules and exhibits thereto and
all agreements, instruments or other documents evidencing or governing any Stock
issued in connection with any Goldking Acquisition Document; (b) each Goldking
Acquisition Document sets forth the entire agreement and understanding of the
parties thereto relating to the subject matter thereof, and there are no other
agreements, arrangements or understandings, written or oral, relating to the
matters covered thereby; (c) the execution, delivery and performance of each
Goldking Acquisition Document has been duly authorized by all necessary action
(including, without limitation, the obtaining of any consent of stockholders or
other holders of Stock required by law or by any applicable corporate or other
organizational documents) on the part of each Loan Party that is a party thereto
and, to the best knowledge of the Loan Parties, each other Person that is a
party thereto; (d) no authorization or approval or other action by, and no
notice to filing with or license from, any Governmental Authority or any other
Person is required for such execution, delivery and performance, other than such
as have been obtained on or prior to the Closing Date (including Xxxx Xxxxx
Xxxxxx); (e) each Goldking Acquisition Document is the legal, valid and binding
obligation of each Loan Party that is a party thereto and, to the best knowledge
of the Loan Parties, each other Person that is a party thereto, enforceable
against each Loan Party that is a party thereto and, to the best knowledge of
the Loan Parties, each other Person that is a party thereto, in each case in
accordance with its terms except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws; (f) none of the
Loan Parties is in default of any of its obligations under any Goldking
Acquisition Document to which it is a party, and, to the best knowledge of the
Loan Parties, no Goldking Seller or any other party to any Goldking Acquisition
Document is in default thereunder; (g) all representations and warranties made
by each Loan Party in the Goldking Acquisition Documents and in the certificates
delivered in connection therewith are true and correct in all material respects
as of the date hereof and, to the best knowledge of the Loan Parties, all
representations and warranties made in the Goldking Acquisition Documents by or
on behalf of the Goldking Seller, or any other party thereto other than a Loan
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Party, are true and correct in all material respects as of the date hereof; (h)
all information with respect to each Loan Party and the Goldking Acquisition,
and, to the best knowledge of the Loan Parties, the business and the Goldking
Acquisition Stock acquired in connection with the Goldking Acquisition,
furnished to Agent by, or on behalf of each Loan Party was, at the time the same
was so furnished, complete and correct in all material respects, or has been
subsequently supplemented by other written information, to the extent necessary
to give Agent a true and accurate knowledge of the subject matter thereof in
relation to each Loan Party, the Goldking Acquisition, and the business and the
Goldking Acquisition Stock acquired in connection with the Goldking Acquisition;
(i) no representation, warranty or statement made by any Loan Party or, to the
best knowledge of the Loan Parties, the Goldking Seller or any other party
thereto other than each Loan Party, at the time it was made in any Goldking
Acquisition Document, or any agreement, certificate, statement or document
required to be delivered pursuant to any Goldking Acquisition Document contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained in the Goldking Acquisition
Documents (taken as a whole) not misleading in any material respect at such time
in light of the circumstances in which they were made; and (j) in connection
with the Goldking Acquisition, the Parent has acquired the Goldking Acquisition
Stock and, on the Closing Date, prior to the extension of credit on the Closing
Date, by the Xxxxxxx Acquisition Agreement and by the other Goldking Acquisition
Documents, will have good title to all of the Goldking Acquisition Stock, free
and clear of all Liens.
4.38. Nature of Business. After giving effect to the Transactions,
no Loan Party is engaged in any business other than the Oil and Gas Business
within the continental United States.
4.39. Seismic Licenses. To the extent not prohibited by the terms
thereof, or any confidentiality agreement, Schedule 4.39 identifies all of the
license agreements relating to the performance of seismic exploration on the Oil
and Gas Properties ("Seismic Licenses") to which Parent or its Subsidiaries is a
party. With respect to the Seismic Licenses: (i) all Seismic Licenses are in
effect and have not expired or terminated; (ii) neither Loan Parties nor their
Subsidiaries are in material breach or material default, and there has occurred
no event, fact, or circumstance, that, with the lapse of time or the giving of
notice, or both, would constitute such a material breach or material default by
Loan Parties or their Subsidiaries, with respect to the terms of any Seismic
License; and (iv) neither Loan Parties nor their Subsidiaries nor, to the
knowledge of Loan Parties, any other party to any Seismic License has given
written notice of any action to terminate, cancel, rescind, or procure a
judicial reformation of any Seismic License or any provision thereof. To the
extent not prohibited by the terms of the Seismic Licenses or any confidential
agreement, all of the transfer fees or similar amounts payable by Loan Parties
under the terms of the Seismic Licenses upon the consummation of the
transactions contemplated herein, or the method of calculating same, are set
forth in Schedule 4.39.
4.40. Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 4.40, and thereafter either disclosed in
writing to Agent or included in the most recently delivered Reserve Report and
approved by Agent (with respect to all of which contracts Loan Parties represent
that they or their 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 Oil and Gas Property's delivery capacity), no material agreements
exist that are not cancelable on 60 days notice or less without payment or
detriment for the sale of production from of Loan Parties' or their
Subsidiaries' Hydrocarbons (including, without limitation, currently being
exercised) that (a) pertains to the sale of production from any calls on or
other rights to purchase, production at a fixed price and (b) have a maturity or
expiry date of longer than six (6) months from the date hereof. All proceeds
from the sale of Loan Parties' or their Subsidiaries' Hydrocarbon Interests from
their Oil and Gas Properties will be paid in full to the applicable party by the
purchaser thereof on a timely basis, and none of such proceeds are currently
being held in suspense by such purchaser or any other Person. Except as set
forth in Schedule 4.40, none of the Oil and Gas Properties of Loan Parties or
their Subsidiaries are subject to any contractual or other arrangement whereby
payment for production therefrom is to be deferred for a substantial period of
time after the month in which such production is delivered (i.e., in the case of
oil, not in excess of 60 days, and in the case of gas, not in excess of 90
days).
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5. AFFIRMATIVE COVENANTS.
Each Loan Party covenants and agrees that, until termination of all
of the Commitments and payment in full of the Obligations, Loan Parties shall
and shall cause each of their respective Subsidiaries to do all of the
following:
5.1. Accounting System. Maintain a system of accounting that enables
Parent and its Subsidiaries to produce financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by Agent. Loan Parties also
shall keep a reporting system that shows all additions, sales, claims, returns,
and allowances with respect to their and their Subsidiaries' sales. Loan Parties
shall also maintain their billing systems/practices as approved by Agent prior
to the Closing Date and shall only make material modifications thereto with
notice to, and consent of, Agent.
5.2. Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with each of the reports set forth on Schedule 5.2
at the times specified therein.
5.3. Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, or other items
set forth on Schedule 5.3 at the times specified therein. In addition, Parent
agrees that no Subsidiary of Parent will have a fiscal year different from that
of Parent.
5.4. Intentionally Omitted.
5.5. Inspection. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower.
5.6. Maintenance of Properties. (a) Maintain and preserve all of their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, so as to prevent any loss or
forfeiture thereof or thereunder.
(b) Cause to be done all things necessary to preserve and keep in
good repair, working order and efficiency all the Oil and Gas Properties of each
Loan Party and other material assets including, without limitation, all
equipment, machinery, facilities, and marketing, gathering, transportation and
processing assets and, from time to time, will make all the reasonably necessary
repairs, renewals and replacements so that at all times the state and conditions
of such Oil and Gas Properties and other material assets will be fully preserved
and maintained, except to the extent a portion of such assets is no longer
capable of producing Hydrocarbons in economically reasonable amounts.
(c) Promptly: (i) pay and/or discharge or cause to be paid
and/or discharged, all rentals, royalties, expenses, taxes and Indebtedness
accruing under the lease or other agreements affecting or pertaining to the Oil
and Gas Properties of each Loan Party and do all other things necessary to keep
unimpaired its rights with respect thereto and prevent forfeiture thereof or
default thereunder, (ii) perform, observe and comply or make reasonable and
customary efforts to cause to be performed, observed and complied with, in
accordance with usual and customary industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in such Oil and Gas Properties and the
accompanying elements therefrom and other material properties so long as such
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properties are capable of producing Hydrocarbons and the accompanying elements
in quantities and at prices providing for continued efficient and profitable
operations of business and (iii) do all other things necessary to keep
unimpaired, except for Permitted Liens, its rights with respect thereto and
prevent any forfeiture thereof or a default thereunder, except to the extent a
portion of such properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts.
(d) 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 on a continuous
basis for the production of Hydrocarbons and in a careful and efficient manner
in accordance with the usual and customary practices of the industry and in
substantial compliance with all applicable contracts and agreements and in
compliance in all material respects with all material laws.
(e) Prudently operate and produce with respect to the Oil and
Gas Properties of the Loan Parties in accordance with good engineering
practices.
5.7. Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Loan
Parties, their Subsidiaries, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Loan Parties will and will cause their
Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of them by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.
5.8. Insurance.
(a) At Loan Parties' expense, maintain insurance respecting Loan
Parties' and their Subsidiaries' assets wherever located, covering loss or
damage by fire, theft, explosion, and all other hazards and risks as ordinarily
are insured against by other Persons engaged in the same or similar businesses,
provided that, the Loan Parties shall not be required to maintain business
interruption insurance. Loan Parties also shall, and shall cause each of their
Subsidiaries to, maintain public liability and product liability insurance. All
such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Loan Parties shall deliver
copies of all such policies to Agent with an endorsement naming Agent as the
sole loss payee (under a satisfactory lender's loss payable endorsement) or
additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever. During the period of the drilling of xxxxx and the
construction of any other improvements comprising a part of the Oil and Gas
Properties of any Loan Party, Borrowers shall, or, as applicable, shall cause
their and their Subsidiaries' contractors or subcontractors to, obtain and
maintain well control insurance (including coverage for costs and redrilling)
and builder's risk insurance, as applicable, in such form and amounts as is
customary in the industry and worker's compensation insurance covering all
Persons employed by any Loan Party or its agents or subcontractors of any tier
in connection with any construction affecting such Oil and Gas Properties,
including, without limitation, all agents and employees of any Loan Party and
such Loan Party's subcontractors with respect to whom death or bodily injury
claims could be asserted against any Loan Party.
(b) Administrative Borrower shall give Agent prompt notice of any
loss exceeding $1,000,000 covered by such insurance. So long as no Event of
Default has occurred and is continuing, Loan Parties shall have the exclusive
right to adjust any losses payable under any such insurance policies which are
less than $1,000,000. Following the occurrence and during the continuation of an
Event of Default, or in the case of any losses payable under such insurance
exceeding $1,000,000, Agent shall have the exclusive right to adjust any losses
payable under any such insurance policies, without any liability to Borrowers
whatsoever in respect of such adjustments. Any monies received as payment for
any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be subject to the provisions of Section
2.4(c).
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(c) Loan Parties will not, and will not suffer or permit its
Subsidiaries to, take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 5.8,
unless Agent is included thereon as an additional insured or loss payee under a
lender's loss payable endorsement. Administrative Borrower shall notify Agent
promptly whenever such separate insurance is taken out, specifying the insurer
and the type and amount of insurance provided thereunder as to the policies
evidencing the same, and copies of such policies shall be provided to Agent
promptly after receipt by Loan Parties thereof.
5.9. Intentionally Omitted.
5.10. Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
5.11. Leases. Pay when due all rents and other amounts payable under any
material leases to which any Loan Party or any Subsidiary of a Borrower is a
party or by which any Loan Party's or any of its Subsidiaries' properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
5.12. Existence. At all times preserve and keep in full force and effect
each Loan Party's and each of its Subsidiaries', (i) valid existence and good
standing in the jurisdiction of its organization (to the extent such concept
applies to such entity), (ii) valid existence and good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of business makes such qualification necessary (to the
extent such concept applies to such entity), except to the extent that the
failure to be so qualified could not reasonably be expected to result in a
Material Adverse Change, and (iii) except as could not reasonably be expected to
result in a Material Adverse Change, any rights, franchises, permits, licenses,
accreditations, authorizations, or other approvals material to their businesses.
5.13. Environmental.
(a) Keep any property either owned or operated by any Loan Party or
any Subsidiary of a Loan Party free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Borrower or any Subsidiary of a Loan Party and take any Remedial
Actions required to xxxxx said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly, but in any event within 5 days
of its receipt thereof, provide Agent with written notice of any of the
following: (i) notice that an Environmental Lien has been filed against any of
the real or personal property of any Loan Party or any Subsidiary of a Loan
Party, (ii) commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Loan Party or any Subsidiary of a
Loan Party, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
5.14. Disclosure Updates. Promptly and in no event later than 10 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
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cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.
5.15. Control Agreements. Take all reasonable steps in order for Agent to
obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107
of the Code with respect to (subject to the proviso contained in Section 6.12)
all of its Securities Accounts, Deposit Accounts, electronic chattel paper,
investment property, and letter-of-credit rights.
5.16. Formation of Subsidiaries. At the time that any Borrower or any
Guarantor forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Closing Date, such Loan Party shall (a) cause such
new Subsidiary to provide to Agent a joinder to the Guaranty and the Security
Agreement, together with such other security documents (including Mortgages with
respect to any Real Property of such new Subsidiary), as well as appropriate
financing statements (and with respect to all property subject to a Mortgage,
fixture filings), all in form and substance satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary), (b)
provide to Agent a pledge agreement and appropriate certificates and powers or
financing statements, hypothecating all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory to Agent,
and (c) provide to Agent all other documentation, including one or more opinions
of counsel satisfactory to Agent, which in its opinion is appropriate with
respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance or other documentation with
respect to all property subject to a Mortgage). Any document, agreement, or
instrument executed or issued pursuant to this Section 5.16 shall be a Loan
Document.
5.17. Further Assurances. At any time upon the request of Agent, Borrowers
shall execute or deliver to Agent, and shall cause their Subsidiaries to execute
or deliver to Agent, any and all financing statements, fixture filings, security
agreements, pledges, assignments, endorsements of certificates of title,
mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the "Additional Documents") that Agent may reasonably request in
form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect the Agent's Liens in all of the
properties and assets of Loan Parties and their Subsidiaries (whether now owned
or hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by Loan
Parties or their Subsidiaries after the Closing Date, to create and perfect
Liens in favor of Agent in any properties and assets pledged by Loan Parties or
their Subsidiaries under the Second Secured Debt Documents after the Closing
Date, and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, Borrowers authorize Agent to execute any such Additional
Documents in Loan Parties' or their Subsidiaries' names, as applicable, and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office.
5.18. Organizational ID Number; Commercial Tort Claims. As promptly as
practicable, but in any event within 5 days, (i) upon obtaining an
organizational identification number (to the extent that any Loan Party has not
been issued such number on or prior to the Closing Date), notify Agent in
writing and deliver an updated Schedule 4.7(c), and (ii) upon obtaining any
commercial tort claim that would have been required to be disclosed to Agent
under this Agreement and the other Loan Documents if it existed as of the
Closing Date, deliver an updated Schedule 4.7(d) and the other documents
required under the Security Agreement.
5.19. Material Contracts. Contemporaneously with the delivery of each
Compliance Certificate pursuant hereto, provide Agent with copies of (a) each
Material Contract entered into since the delivery of the previous Compliance
Certificate and (b) each amendment or modification of any Material Contract
entered into since the delivery of the previous Compliance Certificate.
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5.20. Obtaining Permits, Etc. Obtain, maintain and preserve and take all
necessary action to timely renew, all permits, licenses, authorizations,
approvals, entitlements and accreditations that if not obtained, maintained or
preserved could reasonably be expected to result in a Material Adverse Change.
5.21. After Acquired Properties. With respect to any Oil and Gas Property
of any Loan Party acquired after the Closing Date by any Loan Party or any
discovery and/or confirmation of the existence of Hydrocarbons in any property
owned or leased by any Loan Party, promptly (and in any event within 30 days
after the acquisition thereof): (a) execute and deliver to Agent such amendments
to the Mortgages or such other documents as Agent shall deem necessary or
advisable to grant to Agent, for the benefit of the Lenders, a perfected first
priority Lien on such Oil and Gas Property; and (b) take all actions necessary
or advisable to cause such Lien to be duly perfected in accordance with all
applicable law, including, without limitation, the filing of Mortgages, or UCC
financing statements in such jurisdictions as may be requested by Agent.
5.22. Hedging Agreements. Maintain in effect one or more Acceptable
Commodity Hedging Agreements with respect to its Hydrocarbon production, with
the aggregate notional volumes of Hydrocarbons covered by such Acceptable
Commodities Hedging Agreements constituting not less than 50% and not more than
80% of the aggregate amount of Borrowers' estimated Hydrocarbon production
volumes on an mcf equivalent basis (where one barrel of oil is equal to six mcf
of gas) for the succeeding six calendar months on a rolling six month basis for
such period from Oil and Gas Properties classified as Proved Developed Producing
Reserves in the most recent Reserve Report delivered pursuant to Section 5.2
plus the estimated production from anticipated drilling by Loan Parties or their
Subsidiaries during such succeeding six months. The Loan Parties shall use such
Acceptable Commodity Hedging Agreements solely as a part of their normal
business operations as a risk management strategy and/or hedge against changes
resulting from market conditions related to their oil and gas operations and not
as a means to speculate for investment purposes on trends and shifts in
financial or commodities markets.
6. NEGATIVE COVENANTS.
Each Loan Party covenants and agrees that, until termination of all
of the Commitments and payment in full of the Obligations, Loan Parties will not
and will not permit any of their respective Subsidiaries to do any of the
following:
6.1. Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,
(c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,
(d) endorsement of instruments or other payment items for deposit,
(e) Indebtedness composing Permitted Investments.
(f) unsecured Indebtedness of Loan Parties that is incurred on the
date of the consummation of a Permitted Non-Cash Acquisition solely for the
purpose of consummating such Permitted Non-Cash Acquisition so long as (i) no
Event of Default has occurred and is continuing or would result therefrom, (ii)
such unsecured Indebtedness is not incurred for working capital purposes, (iii)
such unsecured Indebtedness does not mature prior to the date that is 12 months
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after the Maturity Date, (iv) such Indebtedness is subordinated in right of
payment to the Obligations on terms and conditions reasonably satisfactory to
Agent, and (v) the only interest that accrues with respect to such Indebtedness
is payable in kind;
(g) Indebtedness consisting of unsecured intercompany loans and
advances among Loan Parties, subject to the terms and provisions of the
Intercompany Subordination Agreement,
(h) Subordinated Indebtedness,
(i) the Second Secured Debt in an aggregate principal amount not to
exceed $300,000,000 owing by Parent and any Refinancing Indebtedness in respect
of such Indebtedness,
(j) Indebtedness in respect of obligations under non-speculative
Hedge Agreements entered into in the ordinary course of business in accordance
with this Agreement and solely for hedging purposes;
(k) Indebtedness associated with plugging and abandonment,
performance, bid and surety bonds required by applicable law in connection with
the operation of Parent's and its Subsidiaries' Oil and Gas Properties;
(l) Indebtedness solely represented by premium financing or similar
payment obligations incurred with respect to insurance policies purchased in the
ordinary course of business and consistent with past practices; and
(m) unsecured Indebtedness of any Loan Party in addition to the
Indebtedness set forth in clauses (a) through (l) above in an aggregate
principal amount not to exceed $3,500,000 at any time outstanding.
6.2. Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
6.3. Restrictions on Fundamental Changes.
(a) Other than a Permitted Merger or in order to consummate a
Permitted Acquisition, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock,
(b) Other than as a result of a Permitted Merger, liquidate, wind
up, or dissolve itself (or suffer any liquidation or dissolution),
(c) Other than as a result of a Permitted Merger, suspend or go out
of a substantial portion of its or their business.
6.4. Disposal of Assets. Other than Permitted Dispositions and Permitted
Mergers, convey, sell, lease, license, assign, transfer, or otherwise dispose of
(or enter into an agreement to convey, sell, lease, license, assign, transfer,
or otherwise dispose of) any of the assets of any Loan Party or any Subsidiary
of a Loan Party.
6.5. Change Name. Change any Loan Party's or any of its Subsidiaries'
name, organizational identification number, state of organization or
organizational identity; provided, however, that (i) a Loan Party (other than
Goldking Energy Corporation and Goldking Operating Company) or a Subsidiary of a
Loan Party may change its name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
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such written notification, such Loan Party or such Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent's
Liens, and (ii) Goldking Energy Corporation and Goldking Operating Company may
change their name upon prior written notice by Administrative Borrower to Agent
of such change and so long as, (x) at the time of such written notification,
such Loan Parties provide any financing statements necessary to perfect and
continue perfected the Agent's Liens and (y) promptly, and in any event within 3
Business Days, after the effective date of such name change, such Loan Parties
deliver to Agent a certificate of name change, certified by the appropriate
officer of the jurisdiction of organization and/or foreign qualification of such
Loan Party.
6.6. Nature of Business. Make any change in the nature of their business
as described in Schedule 6.6 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities.
6.7. Prepayments and Amendments. Except in connection with Refinancing
Indebtedness permitted by Section 6.1,
(a) Except in connection with Refinancing Indebtedness permitted by
Section 6.1, optionally or mandatorily prepay, redeem, defease, purchase
(including, without limitation, any offer to repurchase or other payment based
on excess cash flow or any similar terms, whether optional or mandatory, it
being acknowledged and agreed that any such payment based on excess cash flow or
any similar terms that is mandatory may be prohibited by the terms of this
Agreement), or otherwise acquire any Subordinated Indebtedness, Second Secured
Debt or other Indebtedness of any Loan Party or any Subsidiary of a Loan Party,
other than (i) the Obligations in accordance with this Agreement, (ii) any
optional payment, redemption or defeasance or open-market purchase of any
Subordinated Indebtedness, Second Secured Debt or other Indebtedness solely with
the proceeds of common stock of Parent or with Subordinated Indebtedness of Loan
Parties, and (iii) so long as (A) the average amount of Qualified Cash and
Availability for the 30 day period prior to any such optional payment,
redemption or defeasance or open market purchase and the amount of Qualified
Cash and Availability immediately after giving effect to any such optional
payment, redemption or defeasance or open market purchase is not less than
$10,000,000, and (B) immediately before and after the making of such purchase,
redemption or defeasance, no Default or Event of Default shall have occurred and
be continuing, any optional payment, redemption or defeasance or open market
purchase of the Second Secured Notes.
(b) Except in connection with Refinancing Indebtedness permitted by
Section 6.1, make any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the Obligations if such
payment is not permitted at such time under the applicable subordination terms
and conditions,
(c) Except in connection with Refinancing Indebtedness permitted by
Section 6.1, directly or indirectly, amend, modify, alter, increase, or change
(other than Permitted Changes) any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 6.1(b), (c), (f), (g), (h), (i), or (m), or
(d) (i) Amend, modify or otherwise change its Governing Documents,
including, without limitation, by the filing or modification of any certificate
of designation, or (ii) amend, modify or otherwise change any Material Contract,
except that such amendment, modification, alteration, increase, or change
pursuant to this paragraph (d) could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change.
6.8. Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
6.9. Intentionally Omitted.
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6.10. Distributions. Other than Permitted Distributions, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire any of any Loan
Party's Stock, of any class, whether now or hereafter outstanding.
6.11. Accounting Methods. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP).
6.12. Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Administrative Borrower and its Subsidiaries shall not have
Permitted Investments (other than in the Cash Management Accounts) in Deposit
Accounts or Securities Accounts in an aggregate amount in excess of $50,000 at
any one time unless Administrative Borrower or its Subsidiary, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements governing such Permitted Investments in order to perfect (and further
establish) the Agent's Liens in such Permitted Investments. Subject to the
foregoing proviso, Loan Parties shall not and shall not permit their
Subsidiaries to establish or maintain any Deposit Account or Securities Account
unless Agent shall have received a Control Agreement in respect of such Deposit
Account or Securities Account.
6.13. Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Loan Party or any
Subsidiary of a Loan Party except for:
(a) transactions (other the payment of management, consulting,
monitoring, or advisory fees) between Loan Parties or their Subsidiaries, on the
one hand, and any Affiliate of Loan Parties or their Subsidiaries, on the other
hand, so long as such transactions (i) are upon fair and reasonable terms, (ii)
are fully disclosed to Agent if they involve one or more payments by any
Borrower or any Subsidiary of a Loan Party in excess of $1,000,000 for any
single transaction or series of transactions, and (iii) are no less favorable to
Loan Parties or their Subsidiaries, as applicable, than would be obtained in an
arm's length transaction with a non-Affiliate; and
(b) the payment of reasonable fees, compensation, or employee
benefit arrangements to, and any indemnity provided for the benefit of, outside
directors of Parent in the ordinary course of business and consistent with
industry practice.
6.14. Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for working capital, Capital
Expenditures, general corporate needs of Borrowers and for other lawful and
permitted purposes.
6.15. Intentionally Omitted.
6.16. Financial Covenants.
(a) Minimum EBITDA. To the extent the sum of (x) Qualified Cash and
(y) Excess Availability is less than $10,000,000 at anytime during a quarter,
fail to achieve EBITDA for such quarter of at least the required amount set
forth in the following table for the applicable period set forth opposite
thereto:
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$21,000,000 For the 3 month period
ending September 30, 2007
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
$37,500,000 For the 6 month period
ending December 31, 2007
--------------------------------------------------------------------------------
$50,500,000 For the 9 month period
ending March 31, 2008
--------------------------------------------------------------------------------
$71,500,000 For the 12 month period
ending June 30, 2008
--------------------------------------------------------------------------------
$78,000,000 For the 12 month period
ending September 30, 2008
--------------------------------------------------------------------------------
$93,500,000 For the 12 month period
ending December 31, 2008 and each quarter thereafter
--------------------------------------------------------------------------------
6.17. Forward Sales. Except in accordance with the ordinary course of the
Oil and Gas Business, enter into or permit to exist any advance payment
agreement or other arrangement pursuant to which any Loan Party, having received
full or substantial payment of the purchase price for a specified quantity of
Hydrocarbons upon entering such agreement or arrangement, is required to
deliver, in one or more installments subsequent to the date of such agreement or
arrangement, such quantity of Hydrocarbons pursuant to and during the terms of
such agreement or arrangement.
6.18. Oil and Gas Imbalances. Enter into any contracts or agreements which
warrant production of Hydrocarbons (other than Hedge Agreements otherwise
permitted hereunder) and shall not hereafter allow gas imbalances, take-or-pay
or other prepayment with respect to its Oil and Gas Properties which would
require any Loan Party to deliver Hydrocarbons produced on Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor to exceed, during any monthly period, two percent (2%) of the current
aggregate monthly gas production for such monthly period from the Oil and Gas
Properties of any Loan Party.
6.19. Environmental. Permit the use, handling, generation, storage,
treatment, Release or disposal of Hazardous Materials at any Real Property
owned, operated or leased by any Loan Party, except in compliance with all
material Environmental Laws.
6.20. Marketing Activities.
(a) Loan Parties will not, and will not permit any of its
Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter
into any contracts related thereto other than (i) contracts for the sale of
Hydrocarbons scheduled or reasonably estimated to be produced from their proved
Oil and Gas Properties during the period of such contract, (ii) contracts for
the sale of Hydrocarbons scheduled or reasonable estimated to be produced from
proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of Loan Parties and their
Subsidiaries that Loan Parties or one of their Subsidiaries have the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) that have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
"position" is taken and (B) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.
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(b) All Hydrocarbon produced from the Oil and Gas Properties of Loan
Parties and their Subsidiaries shall be marketed on an arms length basis using
one or more Persons that are not Affiliates of Loan Parties.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
7.1 If Borrowers fail to pay when due and payable, or when declared due
and payable, (a) all or any portion of the Obligations consisting of interest,
fees, or charges due the Lender Group, reimbursement of Lender Group Expenses,
or other amounts (other than any portion thereof constituting principal)
constituting Obligations and such failure continues for a period of 3 Business
Days, or (b) all or any portion of the principal of the Obligations (in each
case, including any portion thereof that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding);
7.2 If any Loan Party or any Subsidiary of any Loan Party
(a) fails to perform or observe any term, provision, condition,
covenant or other agreement contained in any of Sections 2.7, 5.2, 5.3, 5.5,
5.8, 5.12, 5.14, 5.16, 5.17, 5.21, 5.22, and 6.1 through 6.16 of this Agreement
or Section 6 of the Security Agreement;
(b) fails to perform or observe any covenant or other agreement
contained in any of Sections 5.6, 5.7, 5.10, 5.11, 5.15, 5.18, 5.19 and 5.20, of
this Agreement and such failure continues for a period of 15 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Loan Party or (ii) written notice thereof is given to
Administrative Borrower by Agent; or
(c) fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents, in each
case, other than any such covenant or agreement that is the subject of another
provision of this Section 7 (in which event such other provision of this Section
7 shall govern), and such failure continues for a period of 30 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Loan Party or (ii) written notice thereof is given to
Administrative Borrower by Agent;
7.3 If any material portion of any Loan Party's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by any Loan Party or any
Subsidiary of a Loan Party;
7.5 If an Insolvency Proceeding is commenced against any Loan Party or any
Subsidiary of a Loan Party, and any of the following events occur: (a) the
applicable Borrower or Subsidiary consents to the institution of such Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof, (d)
an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, any Loan Party or any Subsidiary of a Loan Party, or
(e) an order for relief shall have been issued or entered therein;
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7.6 If any Loan Party or any Subsidiary of a Loan Party is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
7.7 If one or more judgments, orders, or awards involving an aggregate
amount of $5,000,000, or more (except to the extent fully covered by insurance
pursuant to which the insurer has accepted liability therefor in writing) shall
be entered or filed against any Loan Party or any Subsidiary of any Loan Party
or with respect to any of their respective assets, and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
days after the date it first arises or 5 days prior to the date on which such
asset is subject to being forfeited by the applicable Loan Party or the
applicable Subsidiary;
7.8 If there is a default in one or more agreements to which any Loan
Party or any Subsidiary of a Loan Party is a party with one or more third
Persons relative to Indebtedness of any Loan Party or any Subsidiary of any Loan
Party involving an aggregate amount of $5,000,000 or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s), irrespective of whether exercised, to accelerate
the maturity of the applicable Loan Party's or Subsidiary's obligations
thereunder;
7.9 If any warranty, representation, statement, or Record made herein or
in any other Loan Document or delivered to Agent or any Lender in connection
with this Agreement or any other Loan Document proves to be untrue in any
material respect (except that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor;
7.11 If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;
7.12 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Loan Party or any Subsidiary of a Loan Party, or a
proceeding shall be commenced by any Loan Party or any Subsidiary of a Loan
Party, or by any Governmental Authority having jurisdiction over any Loan Party
or any Subsidiary of a Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party or any Subsidiary of a Loan Party
shall deny that it has any liability or obligation purported to be created under
any Loan Document;
7.13 The loss, suspension or revocation of, or failure to renew, any
license or permit now held or hereafter acquired by any Loan Party, if such
loss, suspension, revocation or failure to renew could reasonably be expected to
result in a Material Adverse Change; or
7.14 The indictment of any Loan Party or any of its Subsidiaries under any
criminal statute, or commencement of criminal or civil proceedings against any
Loan Party or any of its Subsidiaries, pursuant to which statute or proceedings
the penalties or remedies sought or available include forfeiture to any
Governmental Authority of any portion of the property of such Person which would
result in a Material Adverse Change.
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1. Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Loan
Parties:
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(a) Declare all or any portion of the Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
(c) Agent, on behalf of the Lender Group, may foreclose any or all
of the Mortgages and sell the Real Property Collateral or Oil and Gas Properties
or cause the Real Property Collateral or Oil and Gas Properties to be sold in
accordance with the provisions of the Mortgages and applicable law, and exercise
any and all other rights or remedies available to Agent, on behalf of the Lender
Group, under the Mortgages, any of the other Loan Documents, at law or in equity
with respect to the Collateral encumbered by the Mortgages;
(d) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations; and
(e) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 7.4 or Section 7.5, in addition to the remedies
set forth above, without any notice to any Loan Party or any other Person or any
act by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by each Loan Party.
8.2. Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Loan Party, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves
against the Borrowing Base or the Maximum Revolver Amount as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with Section 5.8 hereof, obtain and
maintain insurance policies of the type described in Section 5.8 and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
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10. WAIVERS; INDEMNIFICATION.
10.1. Demand; Protest; etc. Each Loan Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Loan Party may in any way be liable.
10.2. The Lender Group's Liability for Collateral. Each Loan Party hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Loan Parties.
10.3. Indemnification. Each Loan Party shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Loan Parties' and their
Subsidiaries' compliance with the terms of the Loan Documents, (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto, and (c) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
Parent or any of its Subsidiaries or any Environmental Actions, Environmental
Liabilities and Costs or Remedial Actions related in any way to any such assets
or properties of Parent or any of its Subsidiaries (each and all of the
foregoing, the "Indemnified Liabilities"). The foregoing to the contrary
notwithstanding, Loan Parties shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Loan
Parties were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Loan Parties with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Loan Parties or Agent to the other relating to this Agreement or any other
Loan Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
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email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Loan
Parties in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
If to Administrative Borrower: Dune Energy, Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Fax No.: 000-000-0000
with copies to: Xxxxx & Xxx Xxxxxx LLP
0 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax No.: 000-000-0000
with copies to: Xxxxxxx Xxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Business Finance Manager
Fax No.: 000-000-0000
with copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
Agent and Loan Parties may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 11,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Loan Party acknowledges and agrees that notices sent
by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
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(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP
WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).
(c) EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH LOAN
APRTY AND EACH MEMBER OF THE LENDER GROUP REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1. Assignments and Participations.
(a) Any Lender may assign and delegate to one or more assignees
(each an "Assignee") that are Eligible Transferees all or any portion, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount (unless waived
by the Agent) of $5,000,000 (except such minimum amount shall not apply to (x)
an assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each
other or a fund or account managed by any such new Lender or an Affiliate of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in
accordance with Section 13.1(b), and (iii) unless waived by the Agent, the
assigning Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $3,500. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.
(b) From and after the date that Agent notifies the assigning Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
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rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to Section 10.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation among Loan Parties, the assigning Lender, and the Assignee; provided,
however, that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender's obligations under Section 15 and Section 18.9(a) of this
Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of Loan
Parties or the performance or observance by Loan Parties of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (vi) such Assignee agrees that it will perform all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing fee,
if applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a "Participant") participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a "Lender" for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Loan Parties,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
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guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Loan Parties hereunder shall be
determined as if such Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Loan Parties, the Collections of Loan Parties or their
Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. The provisions of this Section
13.1(e) are solely for the benefit of the Lender Group and Loan Parties shall
not have any rights as third party beneficiaries of any such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 18.9, disclose all documents and information which it now or hereafter
may have relating to Loan Parties and their Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
13.2. Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Loan Parties may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Loan Party from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 13.1 hereof and, except as expressly required
pursuant to Section 13.1 hereof, no consent or approval by any Loan Party is
required in connection with any such assignment.
14. AMENDMENTS; WAIVERS.
14.1. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by Loan Parties
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then
any such waiver or consent shall be effective, but only in the specific instance
and for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders directly affected thereby and Administrative Borrower (on behalf of all
Loan Parties), do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
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(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the Pro Rata Share that is required to take any action
hereunder,
(e) amend or modify this Section or any provision of this Agreement
providing for consent or other action by all Lenders,
(f) other than as permitted by Section 15.11, release Agent's Lien
in and to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) other than in connection with a merger, liquidation, dissolution
or sale of such Person expressly permitted by the terms hereof or the other Loan
Documents, release any Loan Party from any obligation for the payment of money,
(j) amend any of the provisions of Section 2.4(b)(i) or (ii),
(k) change the definition of Borrowing Base or the definitions of
Base Differential, Maximum Revolver Amount, NYMEX Strip Price, PV-10, Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves, and
Proved Reserves, or change Section 2.1(b), or
(l) amend any of the provisions of Section 15.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Loan Parties, shall not require consent by or the agreement of Loan Parties.
14.2. Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall
have no right to refuse to be replaced hereunder. Such notice to replace the
Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
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made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
14.3. No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Loan Parties of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
15. AGENT; THE LENDER GROUP.
15.1. Appointment and Authorization of Agent. Each Lender hereby
designates and appoints WFF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 15.
The provisions of this Section 15 are solely for the benefit of Agent, and the
Lenders, and Loan Parties and their Subsidiaries shall have no rights as a third
party beneficiary of any of the provisions contained herein. Any provision to
the contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word "Agent" is for
convenience only, that WFF is merely the representative of the Lenders, and only
has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections of Loan Parties and their
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Loan Parties and their Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Loan Parties and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Loan Parties, the Obligations, the Collateral, the Collections of Loan
Parties and their Subsidiaries, or otherwise related to any of same as provided
in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
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15.2. Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
15.3. Liability of Agent. None of the Agent Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or its
Subsidiaries or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of Loan
Parties or their Subsidiaries.
15.4. Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Loan Parties or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
15.5. Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
15.6. Credit Decision. Each Lender acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Loan Parties
and their Subsidiaries or Affiliates, shall be deemed to constitute any
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representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties or any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Loan Parties. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties or any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Loan Parties or any other Person party to a
Loan Document that may come into the possession of any of the Agent Related
Persons.
15.7. Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Loan Parties are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of Loan Parties and their Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses by Loan Parties or their Subsidiaries, each Lender
hereby agrees that it is and shall be obligated to pay to Agent such Lender's
Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Loan Parties and without
limiting the obligation of Loan Parties to do so), according to their Pro Rata
Shares, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's Pro Rata Share of any costs
or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Loan Parties. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
15.8. Agent in Individual Capacity. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Loan Parties and their
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Loan Parties or their Affiliates or
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Loan Parties or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
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obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
15.9. Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders (unless such notice is waived by the Required Lenders). If Agent
resigns under this Agreement, the Required Lenders shall appoint a successor
Agent for the Lenders. If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 15 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
15.10. Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with Loan
Parties and their Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Loan Parties or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.
15.11. Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Loan
Parties of all Obligations, (ii) constituting property being sold or disposed of
if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 6.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower or its Subsidiaries owned any
interest at the time the Agent's Lien was granted nor at any time thereafter, or
(iv) constituting property leased to a Loan Party or its Subsidiaries under a
lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 15.11; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Loan Parties in respect
of) all interests retained by Loan Parties, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
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(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Loan Parties or their
Subsidiaries or is cared for, protected, or insured or has been encumbered, or
that the Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
15.12. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to any Loan Party or its
Subsidiaries or any deposit accounts of any Loan Party or its Subsidiaries now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against Loan Parties or to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share
of all such distributions by Agent, such Lender promptly shall (A) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that to the extent that such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
15.13. Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
15.14. Payments by Agent to the Lenders. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer of immediately available
funds pursuant to such wire transfer instructions as each party may designate
for itself by written notice to Agent. Concurrently with each such payment,
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.
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15.15. Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
15.16. Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report respecting Borrowers or their Subsidiaries (each a "Report" and
collectively, "Reports") prepared by or at the request of Agent, and Agent shall
so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Loan
Parties or their Subsidiaries and will rely significantly upon Loan Parties and
their Subsidiaries' books and records, as well as on representations of Loan
Parties' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Loan Parties and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 18.9, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or fail to take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Loan Parties, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Loan Parties; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Loan Parties or their Subsidiaries to Agent that has not
been contemporaneously provided by Loan Parties or their Subsidiaries to such
Lender, and, upon receipt of such request, Agent promptly shall provide a copy
of same to such Lender, (y) to the extent that Agent is entitled, under any
provision of the Loan Documents, to request additional reports or information
from Loan Parties or their Subsidiaries, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
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15.17. Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Loan Party or any other Person for any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
16. WITHHOLDING TAXES.
(a) All payments made by any Loan Party hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or other
defense. In addition, all such payments will be made free and clear of, and
without deduction or withholding for, any present or future Taxes, and in the
event any deduction or withholding of Taxes is required, each Loan Party shall
comply with the penultimate sentence of this Section 16(a). "Taxes" shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of any Lender) and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed, each
Loan Party agrees to pay the full amount of such Taxes and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Loan Parties shall not be required to increase any such amounts if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction). Each Loan Party will furnish to Agent as promptly as
possible after the date the payment of any Tax is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by any Loan Party.
(b) If a Lender claims an exemption from United States withholding
tax, Lender agrees with and in favor of Agent and any Loan Party, to deliver to
Agent:
(i) if such Lender claims an exemption from United States
withholding tax pursuant to its portfolio interest exception, (A) a statement of
the Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Loan
Party (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a
controlled foreign corporation related to any Loan Party within the meaning of
Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form
W-8BEN, before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or any Loan Party;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before receiving its first payment under this Agreement
and at any other time reasonably requested by Agent or any Loan Party;
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(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or any Loan Party; or
(iv) such other form or forms, including IRS Form W-9, as may
be required under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding or backup withholding
tax before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or any Loan Party.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with and in favor of
Agent and Loan Parties, to deliver to Agent any such form or forms, as may be
required under the laws of such jurisdiction as a condition to exemption from,
or reduction of, foreign withholding or backup withholding tax before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of,
withholding tax and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Loan Parties to such
Lender, such Lender agrees to notify Agent and Administrative Borrower of the
percentage amount in which it is no longer the beneficial owner of Obligations
of Loan Parties to such Lender. To the extent of such percentage amount, Agent
and Loan Parties will treat such Lender's documentation provided pursuant to
Sections 16(b) or 16(c) as no longer valid. With respect to such percentage
amount, Lender may provide new documentation, pursuant to Sections 16(b) or
16(c), if applicable.
(e) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (b)
or (c) of this Section 16 are not delivered to Agent, then Agent may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender due to a
failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section 16, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
17. GUARANTY
17.1. Guarantied Obligations. Each Guarantor hereby irrevocably and
unconditionally guaranties to Agent, for the benefit of the Lender Group, as and
for its own debt, until final payment in full thereof has been made, (a) the
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prompt payment of the Guarantied Obligations, when and as the same shall become
due and payable, whether at maturity, pursuant to a mandatory prepayment
requirement, by acceleration, or otherwise; it being the intent of each
Guarantor that the guaranty set forth herein shall be a guaranty of payment and
not a guaranty of collection; and (b) the punctual and faithful performance,
keeping, observance, and fulfillment by Borrowers of all of the agreements,
conditions, covenants, and obligations of Borrowers contained in this Agreement
and under each of the other Loan Documents.
17.2. Continuing Guaranty. This Guaranty includes Guarantied Obligations
arising under successive transactions, in accordance with this Agreement and the
Loan Documents, continuing, compromising, extending, increasing, modifying,
releasing, or renewing the Guarantied Obligations, changing the interest rate,
payment terms, or other terms and conditions thereof, or creating new or
additional Guarantied Obligations after prior Guarantied Obligations have been
satisfied in whole or in part. To the maximum extent permitted by law, each
Guarantor hereby waives any right to revoke this Guaranty as to future
Guaranteed Obligations. If such a revocation is effective notwithstanding the
foregoing waiver, each Guarantor acknowledges and agrees that (a) no such
revocation shall be effective until written notice thereof has been received by
Agent, (b) no such revocation shall apply to any Guarantied Obligations in
existence on such date (including any subsequent continuation, extension, or
renewal thereof, or change in the interest rate, payment terms, or other terms
and conditions thereof in accordance with this Agreement and the other Loan
Documents), (c) no such revocation shall apply to any Guarantied Obligations
made or created after such date to the extent made or created pursuant to a
legally binding commitment of a Lender in existence on the date of such
revocation, (d) no payment by any Guarantor, any Borrower, or from any other
source, prior to the date of such revocation shall reduce the maximum obligation
of Guarantors hereunder, and (e) any payment by Borrowers or from any source
other than a Guarantor subsequent to the date of such revocation shall first be
applied to that portion of the Guarantied Obligations as to which the revocation
is effective and which are not, therefore, guarantied hereunder, and to the
extent so applied shall not reduce the maximum obligation of Guarantors
hereunder.
17.3. Performance Under this Guaranty. In the event that Borrowers fail to
make any payment of any Guarantied Obligations, on or prior to the due date
thereof, or if Borrowers shall fail to perform, keep, observe, or fulfill any
other obligation referred to in clause (b) of Section 17.1 of this Guaranty in
the manner provided in this Agreement or any other Loan Document, each Guarantor
immediately shall cause, as applicable, such payment to be made or such
obligation to be performed, kept, observed, or fulfilled.
17.4. Primary Obligations. This Guaranty is a primary and original
obligation of each Guarantor, is not merely the creation of a surety
relationship, and is an absolute, unconditional, and continuing guaranty of
payment and performance which shall remain in full force and effect without
respect to future changes in conditions. Each Guarantor hereby agrees that it is
directly, jointly and severally with each other Guarantor and any other
guarantor of the Guarantied Obligations, liable to Agent, for the benefit of the
Lender Group, that the obligations of such Guarantor hereunder are independent
of the obligations of Borrowers or any other guarantor, and that a separate
action may be brought against each Guarantor, whether such action is brought
against Borrowers or any other Guarantor or whether Borrowers or any other
Guarantor is joined in such action. Each Guarantor hereby agrees that its
liability hereunder shall be immediate and shall not be contingent upon the
exercise or enforcement by any member of the Lender Group of whatever remedies
they may have against Borrowers or any other Guarantor, or the enforcement of
any Lien or realization upon any security by any member of the Lender Group.
Each Guarantor hereby agrees that any release which may be given by Agent to
Borrowers or any other Guarantor shall not release such Guarantor. Each
Guarantor consents and agrees that no member of the Lender Group shall be under
any obligation to marshal any property or assets of Borrowers or any other
Guarantor in favor of such Guarantor, or against or in payment of any or all of
the Guarantied Obligations.
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17.5. Waivers.
(a) To the fullest extent permitted by applicable law, each
Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any
loans or other financial accommodations made or extended under this Agreement,
or the creation or existence of any Guarantied Obligations; (iii) notice of the
amount of the Guarantied Obligations, subject, however, to such Guarantor's
right to make inquiry of Agent to ascertain the amount of the Guarantied
Obligations at any reasonable time; (iv) notice of any adverse change in the
financial condition Borrowers or of any other fact that might increase such
Guarantor's risk hereunder; (v) notice of presentment for payment, demand,
protest, and notice thereof as to any instrument among the Loan Documents; (vi)
notice of any Default or Event of Default under this Agreement or any other Loan
Document; and (vii) all other notices (except if such notice is specifically
required to be given to such Guarantor under this Guaranty or any other Loan
Documents to which such Guarantor is a party) and demands to which such
Guarantor might otherwise be entitled.
(b) To the fullest extent permitted by applicable law, each
Guarantor hereby waives the right by statute or otherwise to require any member
of the Lender Group, to institute suit against any Borrower or to exhaust any
rights and remedies which any member of the Lender Group, has or may have
against any Borrower. In this regard, each Guarantor agrees that it is bound to
the payment of each and all Guarantied Obligations, whether now existing or
hereafter arising, as fully as if the Guarantied Obligations were directly owing
to Agent or the Lender Group, as applicable, by such Guarantor. Each Guarantor
further waives any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been
performed and paid in the manner provided for in the applicable Loan Documents,
to the extent of any such payment) of Borrowers or by reason of the cessation
from any cause whatsoever of the liability of Borrowers in respect thereof.
(c) To the fullest extent permitted by applicable law, each
Guarantor hereby waives: (i) any right to assert against any member of the
Lender Group, any defense (legal or equitable), set-off, counterclaim, or claim
which such Guarantor may now or at any time hereafter have against any Borrower
or any other party liable to any member of the Lender Group; (ii) any defense,
set-off, counterclaim, or claim, of any kind or nature, arising directly or
indirectly from the present or future lack of perfection, sufficiency, validity,
or enforceability of the Guarantied Obligations or any security therefor; (iii)
any right or defense arising by reason of any claim or defense based upon an
election of remedies by any member of the Lender Group; (iv) the benefit of any
statute of limitations affecting such Guarantor's liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of any
statute of limitations applicable to the Guarantied Obligations shall similarly
operate to defer or delay the operation of such statute of limitations
applicable to such Guarantor's liability hereunder.
(d) Until such time as all of the Guarantied Obligations have been
finally paid in full, each Guarantor hereby waives and postpones (i) any right
of subrogation such Guarantor has or may have as against Borrowers with respect
to the Guarantied Obligations; (ii) any right to proceed against Borrowers or
any other Person, now or hereafter, for contribution, indemnity, reimbursement,
or any other suretyship rights and claims (irrespective of whether direct or
indirect, liquidated or contingent), with respect to the Guarantied Obligations;
and (iii) any right to proceed or to seek recourse against or with respect to
any property or asset of Borrowers.
17.6. Releases. Each Guarantor consents and agrees that, without notice to
or by such Guarantor and without affecting or impairing the obligations of such
Guarantor hereunder, any member of the Lender Group may, by action or inaction,
compromise or settle, extend the period of duration or the time for the payment,
or discharge the performance of, or may refuse to, or otherwise not enforce, or
may, by action or inaction, release all or any one or more parties to, any one
or more of the terms and provisions of this Agreement or any other Loan Document
or may grant other indulgences to Borrowers in respect thereof, or may amend or
modify in any manner and at any time (or from time to time) any one or more of
the Loan Documents, or may, by action or inaction, release or substitute any
other guarantor, if any, of the Guarantied Obligations, or may enforce,
exchange, release, or waive, by action or inaction, any security for the
Guarantied Obligations or any other guaranty of the Guarantied Obligations, or
any portion thereof.
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17.7. No Election. The Lender Group shall have the right to seek recourse
against each Guarantor to the fullest extent provided for herein and no election
by any member of the Lender Group to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of the Lender Group's right to proceed in any other form of action or
proceeding or against other parties unless Agent, on behalf of the Lender Group,
has expressly waived such right in writing. Specifically, but without limiting
the generality of the foregoing, no action or proceeding by the Lender Group
under any document or instrument evidencing the Guarantied Obligations shall
serve to diminish the liability of any Guarantor under this Guaranty except to
the extent that the Lender Group finally and unconditionally shall have realized
payment in full of the Guarantied Obligations by such action or proceeding.
17.8. Financial Condition of Borrowers. Each Guarantor represents and
warrants to the Lender Group that it is currently informed of the financial
condition of Borrowers and of all other circumstances which a reasonably
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor further represents and warrants to the
Lender Group that it has read and understands the terms and conditions of this
Agreement and each other Loan Document. Each Guarantor hereby covenants that it
will continue to keep itself informed of Borrowers' financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Guarantied
Obligations.
17.9. Payments; Application. All payments to be made hereunder by each
Guarantor shall be made in Dollars, in immediately available funds, and without
deduction (whether for taxes or otherwise) or offset and shall be applied to the
Guarantied Obligations in accordance with the terms of this Agreement.
17.10. Attorneys Fees and Costs. Each Guarantor agrees to pay, on demand,
all reasonable attorneys fees and all other costs and expenses which may be
incurred by Agent or any other member of the Lender Group in connection with the
enforcement of this Guaranty or in any way arising out of, or consequential to,
the protection, assertion, or enforcement of the Guarantied Obligations (or any
security therefor), irrespective of whether suit is brought.
18. GENERAL PROVISIONS.
18.1. Effectiveness. This Agreement shall be binding and deemed effective
when executed by Loan Parties, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
18.2. Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
18.3. Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Loan Parties,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
18.4. Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
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18.5. Bank Product Providers. Each Bank Product Provider shall be deemed a
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
18.6. Lender-Creditor Relationship. The relationship between the Lenders
and Agent, on the one hand, and Loan Parties, on the other hand, is solely that
of creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to Loan Parties arising out of or in
connection with, and there is no agency or joint venture relationship between
the members of the Lender Group, on the one hand, and Loan Parties on the other
hand, by virtue of any Loan Document or any transaction contemplated therein.
18.7. Counterparts; Electronic Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
18.8. Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations or the Guarantied Obligations by any Loan Party or
the transfer to the Lender Group of any property should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (each, a "Voidable
Transfer"), and if the Lender Group is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Lender Group is required or elects to repay or restore, and as
to all reasonable costs, expenses, and attorneys fees of the Lender Group
related thereto, the liability of Loan Parties automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
18.9. Confidentiality.
(a) Agent and Lenders each individually (and not jointly or jointly
and severally) agree that material, non-public information regarding Loan
Parties and their Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this Section 18.9, (iii) as may be required by statute, decision,
or judicial or administrative order, rule, or regulation, (iv) as may be agreed
to in advance by Administrative Borrower or its Subsidiaries or as requested or
required by any Governmental Authority pursuant to any subpoena or other legal
process, (v) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the
Lenders), (vi) in connection with any assignment, prospective assignment, sale,
prospective sale, participation, prospective participation or pledge or
prospective pledge of any Lender's interest under this Agreement, provided that
any such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledge or prospective pledgee shall have
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agreed in writing to receive such information hereunder subject to the terms of
this Section, and (vii) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section
18.9(a) shall survive for 2 years after the payment in full of the Obligations.
(b) Anything in this Agreement to the contrary notwithstanding,
Agent may provide information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services.
18.10. Lender Group Expenses. Loan Parties agree to pay any and all Lender
Group Expenses promptly after demand therefor by Agent and agrees that their
obligations contained in this Section 18.10 shall survive payment or
satisfaction in full of all other Obligations.
18.11. USA PATRIOT Act. Each Lender that is subject to the requirements of
the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26,
2001)) (the "Act") hereby notifies Borrowers that pursuant to the requirements
of the Act, it is required to obtain, verify and record information that
identifies Loan Parties, which information includes the name and address of Loan
Parties and other information that will allow such Lender to identify Loan
Parties in accordance with the Act.
18.12. Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
18.13. Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 18.13 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
[Signature pages to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
BORROWERS:
DUNE ENERGY, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx, Xx.
----------------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Senior Vice President and CFO
GOLDKING OPERATING COMPANY,
a Texas corporation
By: /s/ Xxxxx X. Xxxxx, Xx.
----------------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Secretary and Treasurer
VAQUERO PARTNERS LLC,
a Texas limited liability company
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Name: Xxxxx Xxxxx
Title: President
GUARANTORS:
DUNE OPERATING COMPANY,
a Texas corporation
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Name: Xxxxx Xxxxx
Title: President
GOLDKING ENERGY CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx, Xx.
----------------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Secretary and Treasurer
AGENT AND LENDER:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender
By: /s/ Xxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
Schedule 1.1
As used in the Agreement, the following terms shall have the following
definitions:
"Acceptable Commodity Hedging Agreement" means a Commodity Hedging
Agreement (i) with a (x) Bank Product Provider or (y) a counterparty rated A3 or
better by Moody's and A- or better by Standard & Poor's, or the equivalent by a
rating agency acceptable to Agent, (ii) pursuant to an agreement the terms of
which are acceptable to Agent and (iii) which are otherwise reasonably
acceptable to Agent.
"Account" means an account (as that term is defined in the Code).
"Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a general intangible.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Administrative Borrower or its Subsidiaries.
"Act" has the meaning specified therefor in Section 18.11.
"Activation Instruction" has the meaning specified therefor in
Section 2.7(b).
"Additional Documents" has the meaning specified therefor in Section
5.17.
"Administrative Borrower" has the meaning specified therefor in
Section 18.13.
"Advances" has the meaning specified therefor in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who
controls, is controlled by, or is under common control with, such Person. For
purposes of this definition, "control" means the possession, directly or
indirectly through one or more intermediaries, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of Section 6.13 of
the Agreement: (a) any Person which owns directly or indirectly 10% or more of
the Stock having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person.
"Agent" has the meaning specified therefor in the preamble to the
Agreement.
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent identified on
Schedule A-1.
"Agent's Liens" means the Liens granted by Loan Parties or their
Subsidiaries to Agent under the Loan Documents.
"Agent Reserve" has the meaning set froth in Section 2.1(b).
"Agreement" means the Credit Agreement to which this Schedule 1.1 is
attached.
"Applicable Margin" means, as of any date of determination,
(a) For the period from and including the Closing Date to but
excluding the effective date of any determination of the Applicable Margin
pursuant to clause (b) below, the applicable rate per annum set forth opposite
Level I below (the "Initial Applicable Margin").
(b) For each quarter thereafter, the relevant Applicable Margin set
forth in the table below that corresponds to the applicable Utilization
Percentage for the immediately preceding quarter set forth opposite thereto (as
determined in accordance with clauses (c) and (d) below).
-----------------------------------------------------------------------------------------------------------
Level Utilization Applicable Margin in Applicable Margin in Applicable Margin
Percentage respect of Base Rate respect of LIBOR Rate in respect of
Loans Loans Letters of Credit
-----------------------------------------------------------------------------------------------------------
I Less than or equal to 0.00% 1.50% 1.50%
50%
-----------------------------------------------------------------------------------------------------------
II Greater than 50% but 0.25% 1.75% 1.75%
less than or equal to
75%
-----------------------------------------------------------------------------------------------------------
III Greater than 75% 0.50% 2.00% 2.00%
-----------------------------------------------------------------------------------------------------------
(c) The Applicable Margin shall be determined from time to time
pursuant to clause (b) above on the first day of each quarter based upon the
Utilization Percentage for the immediately preceding quarter.
(d) Notwithstanding the foregoing, upon the occurrence and during
the continuance of an Event of Default, the Applicable Margin shall be set at
Level III set forth in the table above.
"Application Event" means the occurrence of (a) a failure by Loan
Parties to repay all of the Obligations on the Maturity Date, or (b) an Event of
Default and the election by the Required Lenders to declare all or any portion
of the Obligations to be due and payable, to terminate the Revolver Commitment,
or to exercise remedies against the Collateral.
"Asset Acquisition" means the purchase or other acquisition by a
Person or its Subsidiaries of all or substantially all of the assets of any
other Person.
"Assignee" has the meaning specified therefor in Section 13.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any one of the individuals identified on
Schedule A-2.
"Availability" means, as of any date of determination, the amount
that Borrowers are entitled to borrow as Advances under Section 2.1 of the
Agreement (after giving effect to all then outstanding Obligations (other than
Bank Product Obligations) and all sublimits and reserves then applicable
hereunder).
"Bank Product" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to the Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into from
time to time by Administrative Borrower or its Subsidiaries with a Bank Product
Provider in connection with the obtaining of any of the Bank Products.
"Bank Product Collateralization" means providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent) to be held by Agent
for the benefit of the Bank Product Providers in an amount determined by Agent
as sufficient to satisfy the reasonably estimated credit exposure with respect
to the then existing Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to any Bank Product Provider pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that Administrative Borrower or its Subsidiaries are obligated to reimburse to
Agent or any member of the Lender Group as a result of Agent or such member of
the Lender Group purchasing participations from, or executing indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Administrative Borrower or
its Subsidiaries.
"Bank Product Provider" means Xxxxx Fargo or any of its Affiliates.
"Bank Product Reserve" means, as of any date of determination, the
amount of reserves that Agent has established (based upon the Bank Product
Providers' reasonable determination of the credit exposure of Administrative
Borrower and its Subsidiaries in respect of Bank Products) in respect of Bank
Products then provided or outstanding.
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Basis Differential" means, in the case of any Oil and Gas Property,
the difference between the NYMEX futures contract prices and the sales prices at
the delivery point where the oil or gas, as the case may be, produced by such
Oil and Gas Property, is sold.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate, to be the rate at which Dollar
deposits (for delivery on the first day of the requested Interest Period) are
offered to major banks in the London interbank market 2 Business Days prior to
the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Administrative Borrower in accordance with the Agreement, which determination
shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced, from time to
time, within Xxxxx Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Xxxxx Fargo may designate.
"Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Loan Party or any Subsidiary or ERISA Affiliate of
any Loan Party has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).
"Borrower" and "Borrowers" have the respective meanings specified
therefor in the preamble to the Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender
in the case of a Swing Loan, or by Agent in the case of a Protective Advance, in
each case, to Administrative Borrower.
"Borrowing Base" means, as of any date of determination, the result
of:
(a) 65% of the PV-10 of the Proved Developed Producing Reserves of
Borrowers (i) that are subject to a Mortgage and UCC financing statements that
in each case creates a first priority perfected Lien in such Oil and Gas
Properties in favor of Agent for the benefit of Lenders, (ii) for which Agent
shall have received land records/and or title searches and abstracts of Oil and
Gas Properties of such Oil and Gas Properties, the form and substance of which
shall be satisfactory to Agent and (iii) for which Agent has received title
opinions or updated title opinions (together with reliance letters with respect
to previously issued title opinions) of such Oil and Gas Properties with respect
to the Hydrocarbon Interests therein, the form and substance of which shall be
satisfactory to Agent, plus
(b) 45% of the PV-10 of the Proved Developed Non-Producing Reserves
of Borrowers (i) that are subject to a Mortgage and UCC financing statements
that in each case creates a first priority perfected Lien in such Oil and Gas
Properties in favor of Agent for the benefit of Lenders, (ii) for which Agent
shall have received land records/and or title searches and abstracts of Oil and
Gas Properties of such Oil and Gas Properties, the form and substance of which
shall be satisfactory to Agent and (iii) for which Agent has received title
opinions or updated title opinions (together with reliance letters with respect
to previously issued title opinions) of such Oil and Gas Properties with respect
to the Hydrocarbon Interests therein, the form and substance of which shall be
satisfactory to Agent, minus
(c) the sum of (i) the Bank Product Reserve, and (ii) the aggregate
amount of reserves, if any, established by Agent under Section 2.1(b).
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of New
York or Georgia, except that, if a determination of a Business Day shall relate
to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day on
which banks are closed for dealings in Dollar deposits in the London interbank
market.
"Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning specified therefor in
Section 2.7(a).
"Cash Management Agreements" means those certain cash management
agreements, in form and substance satisfactory to Agent, each of which is among
Administrative Borrower or one of its Subsidiaries, Agent, and one of the Cash
Management Banks.
"Cash Management Bank" has the meaning specified therefor in Section
2.7(a).
"Change of Control" means (a) that Permitted Holders fail to own and
control directly or indirectly, 51%, or more, of the Stock of Parent having the
right to vote for the election of members of the Board of Directors, (b) that
any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the
Exchange Act), other than Permitted Holders, becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20%,
or more, of the Stock of Parent having the right to vote for the election of
members of the Board of Directors, (c) that a majority of the members of the
Board of Directors do not constitute Continuing Directors, (d) that Parent
ceases to own and control, directly or indirectly, 100% of the outstanding Stock
of each other Loan Party, or (e) any "Change of Control" or similar term, as
defined in the Second Secured Debt Documents.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Administrative Borrower or its
Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Administrative Borrower's or its Subsidiaries' books and
records, Equipment, or Inventory, in each case, in form and substance
satisfactory to Agent.
"Collateral Assignment of Rights" means the Collateral Assignment of
Stock Purchase Agreement executed and delivered by Parent in favor of Agent, in
form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commitment" means, with respect to each Lender, its Revolver
Commitment or its Total Commitment, as the context requires, and, with respect
to all Lenders, their Revolver Commitments or their Total Commitments, as the
context requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.
"Commodity Hedging Agreement" means a commodity hedging or purchase
agreement or similar arrangement entered into with the intent of protecting
against fluctuations in commodity prices or the exchange of notional commodity
obligations, either generally or under specific contingencies.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Contribution Agreement" means the Contribution Agreement dated as
of the Closing Date, among Loan Parties, in form and substance satisfactory to
Agent.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the Administrative Borrower or
one of its Subsidiaries, Agent, and the applicable securities intermediary (with
respect to a Securities Account) or bank (with respect to a Deposit Account).
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from and
after the date the relevant payment is due, the Base Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning specified therefor in
Schedule D-1.
"Development Plan" shall mean Borrowers' Plan of Development for the
Oil and Gas Properties and the related Hydrocarbon Interests, as the same may be
amended from time to time in accordance with the terms of this Agreement.
"Disbursement Letter" means an instructional letter executed and
delivered by Loan Parties to Agent and Lenders regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net income (or loss), plus (i) interest expense,
depreciation, depletion and amortization of assets (including goodwill and other
intangible assets); federal, state, local and foreign taxes; costs and expenses
for seismic, geological, and geophysical services performed in the course of oil
and gas exploration; accretion of asset retirement expenses, proved property
impairment, share based compensation, oil and gas exploration expenses; gain on
sale of oil and gas properties, other non-cash items and extraordinary or
non-recurring items; restructuring costs (including employee relocation costs)
and integration expenses and charges that are identified at the time of closing
of any acquisition as resulting from such acquisition (including, without
limitation, cash severance payments and facility closures); any non-cash gains,
losses or charges on any hedging agreement resulting from the requirements of
SFAS 133; minus (ii) extraordinary gains, any income tax benefit, other income
and interest income. For the purposes of calculating EBITDA for any period of
four consecutive fiscal quarters (each, a "Reference Period"), if at any time
during such Reference Period (and after the Closing Date) Parent or any of its
Subsidiaries shall have made a Permitted Acquisition, EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto in accordance
with Regulation S-X promulgated under the Exchange Act or in such other manner
acceptable to the Agent as if the Permitted Acquisition occurred on the first
day of such Reference Period.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution, or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Administrative Borrower (which approval of Administrative
Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f)
during the continuation of an Event of Default, any other Person approved by
Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Loan Party, any Subsidiary of a Loan Party, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Loan Party, any Subsidiary of a Loan Party, or any of their predecessors in
interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Loan Party or any Subsidiary of a Loan Party, relating to the environment, the
effect of the environment on employee health, or Hazardous Materials, in each
case as amended from time to time.
"Environmental Liabilities" means all liabilities, monetary
obligations, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities.
"Equipment" means equipment (as that term is defined in the Code).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party or a Subsidiary of a Loan Party under IRC Section 414(b), (b) any
trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of a Loan Party or a Subsidiary of a Loan
Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a member
of an affiliated service group of which a Loan Party or a Subsidiary of a Loan
Party is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA
that is a party to an arrangement with a Loan Party or a Subsidiary of a Loan
Party and whose employees are aggregated with the employees of a Loan Party or a
Subsidiary of a Loan Party under IRC Section 414(o).
"Event of Default" has the meaning specified therefor in Section 7.
"Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Loan Parties and their Subsidiaries aged in excess of their
historical levels with respect thereto and all book overdrafts of Loan Parties
and their Subsidiaries in excess of their historical practices with respect
thereto, in each case as determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Credit Agreements" means collectively (i) the Amended and
Restated Credit Agreement, dated as of April 13, 2007, by and among the Parent,
the lenders party thereto and Jefferies Funding LLC, as agent for the lenders
party thereto, as amended, supplemented or otherwise modified from time to time,
and (ii) the Amended and Restated Term Loan Agreement, dated as of September 26,
2006, between the Parent and Itera Holdings BV.
"Existing Lenders" means the lenders party to the Existing Credit
Agreements.
"Fee Letter" means that certain fee letter between Borrowers and
Agent, in form and substance satisfactory to Agent.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning specified therefor in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"Goldking" means Goldking Energy Corporation, a Delaware
corporation.
"Goldking Acquisition" means the purchase of the issued and
outstanding Stock of Goldking by Parent pursuant to the terms of the Goldking
Acquisition Documents.
"Goldking Acquisition Agreement" means the Stock Purchase and Sale
Agreement, dated as of April 13, 2007, among the Parent, Goldking and the
Goldking Seller.
"Goldking Acquisition Stock" means the Stock of Goldking to be
purchased by Parent upon the consummation of the Goldking Acquisition Agreement
and the other Goldking Acquisition Documents.
"Goldking Acquisition Documents" means each of the Goldking
Acquisition Agreement and all other agreements, instruments and other documents
executed or delivered pursuant to or in connection with the Goldking Acquisition
Agreement or the Goldking Acquisition.
"Goldking Seller" means Goldking Energy Holdings, L.P., a Texas
limited partnership.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Guarantied Obligations" means (a) the due and punctual payment of
the principal of, and interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued) on, any and all
premium on, and any and all fees, costs, indemnities, and expenses incurred in
connection with, the Indebtedness owed by Borrowers to any member of the Lender
Group pursuant to the terms of the Agreement or any other Loan Document and (b)
the due and punctual payment of all other present or future Indebtedness owing
by Borrowers to any member of the Lender Group in connection with any Loan
Document.
"Guarantors" means each Person that guarantees pursuant to Section
17, Section 5.16 or otherwise, all or any part of the Obligations, and
"Guarantor" means any one of them.
"Guaranty" means (i) the guaranty of each Guarantor party to the
Agreement contained in Section 17 and (ii) each guaranty (if any) executed and
delivered by each Guarantor in favor of Agent, for the benefit of the Lender
Group and the Bank Product Providers, in form and substance satisfactory to
Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) Hydrocarbons, including, without limitation, oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of 50 parts per million.
"Hedge Agreement" means any and all agreements, or documents now
existing or hereafter entered into by Administrative Borrower or any of its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or any of its Subsidiaries' exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security, or currency
valuations or commodity prices, including without limitation, any Commodity
Hedging Agreement.
"Holdout Lender" has the meaning specified therefor in Section
14.2(a).
"Hydrocarbon Interests" means all rights, titles, interests and
estates now owned or hereafter acquired in and to oil and gas leases, oil, gas
and mineral leases, oil, gas and casinghead gas leases, or other liquid or
gaseous hydrocarbon leases, mineral fee or lease interests, farm-outs,
overriding royalty and royalty interests, net profit interests, oil payments,
production payment interests and similar mineral interests, including any
reserved or residual interest of whatever nature.
"Hydrocarbons" means, collectively, oil, gas, coal seam gas,
casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons, all products and byproducts refined, separated, settled and
dehydrated therefrom and all products and byproducts refined therefrom,
including, without limitation, kerosene, liquefied petroleum gas, refined
lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur,
geothermal steam, water, carbon dioxide, and all other minerals.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, xxxxxx, derivatives or other financial
products, (c) all obligations as a lessee under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset of a Person
or its Subsidiaries, irrespective of whether such obligation or liability is
assumed, (e) all obligations to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning specified therefor in
Section 10.3.
"Indemnified Person" has the meaning specified therefor in Section
10.3.
"Initial Reserve Report" means, collectively, the following: (a) the
report of the XxXxxxxx and XxxXxxxxxxx dated December 31, 2006 with respect to
the Oil and Gas Properties of Loan Parties (prior to giving effect to the
Goldking Acquisition) and (b) the report of Xxxxxx, Xxxxxxxxx & Associates, Inc.
dated December 31, 2006 with respect to the Oil and Gas Properties of Loan
Parties purchased from the Goldking Seller pursuant to the Goldking Acquisition
Documents.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Loan Parties, each of Loan Parties'
Subsidiaries, and Agent, the form and substance of which is satisfactory to
Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.
"Intercreditor Agreement" means the Intercreditor Agreement among
Loan Parties, Agent and the trustee for the holders of the Second Secured Debt,
dated as of the date hereof, as amended, supplemented or otherwise modified from
time to time in accordance with this Agreement.
"Inventory" means all of each Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory (as that term is
defined in the Code), including extracted Hydrocarbons, and other goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by any Borrower as lessor, goods that are furnished by any Borrower under
a contract of service, and raw materials, work in process, or materials used or
consumed in any Borrower's business.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means WFF or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent, agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning specified therefor in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning specified therefor in Section
2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to the Agreement, and shall include any other Person made a party to
the Agreement in accordance with the provisions of Section 13.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Loan Party or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Loan Parties or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in the Agreement, the
Fee Letter or the other Loan Documents), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Agent in the disbursement of funds to Loan Parties or other members
of the Lender Group (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses
(including travel, meals and lodging) of Agent related to any inspections or
audits to the extent of the fees and charges (and up to the amount of any
limitation) contained in the Agreement or the Fee Letter, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Loan Party or any Subsidiary of a Loan Party, (h) Agent's
and each Lender's reasonable costs and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering (including
travel, meals and lodging), syndicating, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Loan Party or any
Subsidiary of a Loan Party or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, officers, directors, employees,
attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Collateralization" means either (a) providing cash
collateral (pursuant to documentation reasonably satisfactory to Agent,
including provisions that specify that the Letter of Credit fee set forth in the
Agreement will continue to accrue while the Letters of Credit are outstanding)
to be held by Agent for the benefit of those Lenders with a Revolver Commitment
in an amount equal to 105% of the then existing Letter of Credit Usage, (ii)
causing the Underlying Letters of Credit to be returned to the Issuing Lender,
or (iii) providing Agent with a standby letter of credit, in form and substance
reasonably satisfactory to Agent, from a commercial bank acceptable to the Agent
(in its sole discretion) in an equal to 105% of the then existing Letter of
Credit Usage (it being understood that the Letter of Credit fee set forth in the
Agreement will continue to accrue while the Letters of Credit are outstanding
and that any such fee that accrues must be an amount that can be drawn under any
such standby letter of credit).
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning specified therefor in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning specified therefor in Section
2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent by dividing (a) the Base LIBOR Rate
for such Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory
or other), security interest, or other security arrangement and any other
preference, priority, or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic or
other financing lease having substantially the same economic effect as any of
the foregoing.
"Loan Account" has the meaning specified therefor in Section 2.10.
"Loan Documents" means the Agreement, the Bank Product Agreements,
any Borrowing Base Certificate, the Cash Management Agreements, the Collateral
Assignment of Rights, the Control Agreements, the Contribution Agreement, the
Disbursement Letter, the Fee Letter, any Guaranty, the Intercompany
Subordination Agreement, the Letters of Credit, the Mortgages, the Security
Agreement, any note or notes executed by a Loan Party in connection with the
Agreement and payable to a member of the Lender Group, and any other agreement
entered into, now or in the future, by any Loan Party or any of their
Subsidiaries, and the Lender Group in connection with the Agreement.
"Loan Parties" means Borrowers and Guarantors, and "Loan Party"
means any one of them.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Loan Parties, taken as a whole, (b) a
material impairment of a Loan Party's ability to perform their obligations under
the Loan Documents to which it is a party or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Loan Party.
"Material Contract" means, with respect to any Person, (i) the
Second Secured Debt Documents, (ii) each contract or agreement listed on
Schedule M-1, (iii) each contract or agreement to which such Person or any of
its Subsidiaries is a party involving aggregate consideration payable to or by
such Person or such Subsidiary of $5,000,000 or more (other than purchase orders
in the ordinary course of the business of such Person or such Subsidiary and
other than contracts that by their terms may be terminated by such Person or
Subsidiary in the ordinary course of its business upon less than 60 days' notice
without penalty or premium) and (iv) all other contracts or agreements material
to the business, operations, condition (financial or otherwise), performance,
prospects or properties of such Person or such Subsidiary.
"Maturity Date" has the meaning specified therefor in Section 3.3.
"Maximum Revolver Amount" means $20,000,000; provided, that (a) upon
the written request of the Parent in the form of Exhibit R-1 attached hereto,
which request may be made upon delivery to the Agent, at such time as is
permitted by the terms of the Intercreditor Agreement, of one or more
certificates, each substantially in the form of Exhibit A attached to the
Intercreditor Agreement, completed and certified by the chief financial officer
of the Parent, so long as no Default or Event of Default exists or would exist
either at the time of giving such written request and such certificate and both
before and after giving effect to such requested increase, the amount set forth
in the certificate most recently received by the Agent, as such amount may be
permanently reduced from time to time pursuant to the terms of this Agreement,
and (b) notwithstanding anything to the contrary, at no time shall the Maximum
Revolver Amount exceed $40,000,000.
"Xxxxx'x" has the meaning specified therefor in the definition of
Cash Equivalents.
"Mortgage Policy" has the meaning specified therefor in Schedule
3.1(v).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower or a Subsidiary of a Loan Party in favor of Agent, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral.
"NYMEX" means the New York Mercantile Exchange or its successor
entity.
"NYMEX Strip Price" means as of any date of determination (A) for
the 24 month period commencing with the month in which the date of determination
occurs, the average of the 24 succeeding monthly futures contract prices,
commencing with the month during which the determination date occurs, for each
of the appropriate crude oil and natural gas categories included in the most
recent Reserve Report provided by Borrowers to Agent pursuant to Section 5.2, as
quoted on the NYMEX, and (B) for period after such 24 month period, the average
of the quoted prices for the period from and including the 13th month in such 24
month period through the 24th month in such period; provided, that if the NYMEX
no longer provides futures contract price quotes or has ceased to operate, the
future contract prices used shall be the comparable futures contract prices
quoted on such other nationally recognized commodities exchange as Agent shall
designate.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant to the
Agreement), obligations (including indemnification obligations), fees (including
the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), lease payments, guaranties,
covenants, and duties of any kind and description owing by Loan Parties to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all other expenses or other amounts
that Loan Parties are required to pay or reimburse by the Loan Documents or by
law or otherwise in connection with the Loan Documents, and (b) all Bank Product
Obligations. Any reference in the Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Parent, together with the Loan Parties'
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in Oil and Gas
Properties and Hydrocarbons, (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such interests or
properties, including, without limitation, the marketing of Hydrocarbons
obtained from unrelated Persons, (c) any business relating to or arising from
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products produced
in association therewith, (d) any business relating to oilfield sales and
service, and (e) any activity that is ancillary or necessary or desirable to
facilitate the activities described in clauses (a) through (d) of this
definition.
"Oil and Gas Liens" means (i) Liens on any specific property or any
interest therein, construction thereon or improvement thereto to secure all or
any part of the costs incurred for surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration, repair or
improvement of, in, under or on such property and the plugging and abandonment
of xxxxx located thereon (it being understood that, in the case of oil and gas
producing properties, or any interest therein, costs incurred for "development"
shall include costs incurred for facilities relating to such properties or to
projects, ventures or other arrangements of which such properties form a part or
which relate to such properties or interests); (ii) Liens on an oil or gas
producing property to secure obligations incurred or guarantees of obligations
incurred in connection with or necessarily incidental to commitments for the
purchase or sale of, or the transportation or distribution of, the products
derived from such property; (iii) Liens arising under partnership agreements,
oil and gas leases, overriding royalty agreements, net profits agreements,
production payment agreements, royalty trust agreements, incentive compensation
programs for geologists, geophysicists and other providers of technical services
to the Loan Parties or their Subsidiaries, master limited partnership
agreements, farm-out agreements, farm-in agreements, division orders, contracts
for the sale, purchase, exchange, transportation, gathering or processing of
oil, gas or other hydrocarbons, utilizations and pooling designations,
declarations, orders and agreements, development agreements, operating
agreements, production sales contracts, area of mutual interest agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or
geophysical permits or agreements, and other agreements which are customary in
the Oil and Gas Business; provided, however, in all instances that such Liens
are limited to the assets that are the subject of the relevant agreement,
program, order or contract; and (iv) Liens on pipelines or pipeline facilities
that arise by operation of law.
"Oil and Gas Properties" means all Hydrocarbon Interests; personal
property and/or real property now or hereafter pooled or unitized with
Hydrocarbon Interests; 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 having jurisdiction) which may affect all or
any portion of the Hydrocarbon Interests; pipelines, gathering lines,
compression facilities, tanks and processing plants; oil xxxxx, gas xxxxx, water
xxxxx, injection xxxxx, platforms, spars or other offshore facilities, casings,
rods, tubing, pumping units and engines, Christmas trees, derricks, separators,
gun barrels, flow lines, gas systems (for gathering, treating and compression),
and water systems (for treating, disposal and injection); interests held in
royalty trusts whether presently existing or hereafter created; Hydrocarbons in
and under and which may be produced, saved, processed or attributable to the
Hydrocarbon Interests, the lands covered thereby and all Hydrocarbons in
pipelines, gathering lines, tanks and processing plants and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; tenements, hereditaments, appurtenances and personal
property and/or real property in any way appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, and all rights, titles, interests and
estates described or referred to above, including any and all real property, now
owned or hereafter acquired, used or held for use in connection with the
operating, working or development of any of such Hydrocarbon Interests or
personal property and/or Real Property and including any and all surface leases,
rights-of-way, easements and servitudes together with all additions,
substitutions, replacements, accessions and attachments to any and all of the
foregoing; oil, gas and mineral leasehold, fee and term interests, overriding
royalty interests, mineral interests, royalty interests, net profits interests,
net revenue interests, oil payments, production payments, carried interests,
leases, subleases, farmouts and any and all other interests in Hydrocarbons; in
each case whether now owned or hereafter acquired directly or indirectly.
"Originating Lender" has the meaning specified therefor in Section
13.1(e).
"Overadvance" has the meaning specified therefor in Section 2.5.
"Parent" has the meaning specified therefor in the preamble to the
Agreement.
"Participant" has the meaning specified therefor in Section 13.1(e).
"Permitted Acquisition" means (a) a Permitted Cash Acquisition, or
(b) a Permitted Non-Cash Acquisition, as the context requires.
"Permitted Cash Acquisition" means any Acquisition as to which each
of the following is applicable;
(a) such Acquisition qualifies as a Permitted Non-Cash Acquisition
except that the consideration payable in respect of the proposed Acquisition
includes some form of consideration other than solely the consideration
specified in clause (b) of the definition of Permitted Non-Cash Acquisition;
(b) Parent has provided Agent with forecasted balance sheets, profit
and loss statements, and cash flow statements of the Person to be acquired, all
prepared on a basis consistent with such Person's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions for the 3 year period following the date of the proposed
Acquisition (on a year by year basis, and for the 1 year period following the
date of the proposed Acquisition, on a month by month basis), in form and
substance (including as to scope and underlying assumptions) reasonably
satisfactory to Agent;
(c) Parent shall have Availability plus Qualified Cash in an amount
equal to $10,000,000 immediately after giving effect to the consummation of the
proposed Acquisition,
(d) the assets being acquired (other than a de minimis amount of
assets in relation to the assets being acquired) are located within the United
States or the Person whose Stock is being acquired is organized in a
jurisdiction located within the United States,
(e) the purchase consideration payable in respect of all Permitted
Cash Acquisitions, in the aggregate (including the proposed Acquisition and
including deferred payment obligations) shall not exceed $50,000,000 in the
aggregate; provided, however, that the Purchase Price of any single Permitted
Cash Acquisition or series of related Permitted Cash Acquisitions shall not
exceed $10,000,000 in the aggregate,
(f) in the case of an Asset Acquisition (and notwithstanding any
contrary provisions of Section 5.16 or any other contrary provision of the
Agreement), the applicable Loan Party shall have executed and delivered any and
all documentation reasonably requested by Agent in order to provide Agent with a
first priority perfected security interest, subject to Permitted Liens, in such
assets, and
(g) in the case of a Stock Acquisition (and notwithstanding any
contrary provisions of Section 5.16 or any other contrary provision of the
Agreement), (i) the Person whose Stock is being acquired shall have executed and
delivered any and all documentation reasonably requested by Agent in order to
become a Guarantor, (ii) the Person whose Stock is being acquired shall have
executed and delivered any and all documentation reasonably requested by Agent
in order to provide Agent with a first priority perfected security interest,
subject to Permitted Liens, in the assets of such Person, and (iii) the owner of
the Stock subject to such Stock Acquisition shall have executed and delivered
any and all documentation reasonably requested by Agent in order to provide
Agent with a first priority perfected security interest in such Stock.
"Permitted Changes" means amendments, modifications, refinancings,
renewals, or extensions of Indebtedness so long as: (a) the terms and conditions
of such amendments, modifications, refinancings, renewals, or extensions do not
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair Borrowers' creditworthiness, (b) such amendments,
modifications, refinancings, renewals, or extensions do not result in an
increase in the principal amount of the Indebtedness so amended, modified,
refinanced, renewed, or extended (other than increases not exceeding the unused
amounts permitted under Section 6.1(m), (c) such amendments, modifications,
refinancings, renewals, or extensions do not result in an increase in the
interest rate in excess of market rate of interests for the Loan Parties with
respect to the Indebtedness so amended, modified, refinanced, renewed, or
extended, (d) (i) in the case of the Second Secured Debt, such amendments,
modifications, refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so amended,
modified, refinanced, renewed, or extended, nor (ii) in the case of all
Indebtedness, are such amendments, modifications, refinancings, renewals, or
extensions on terms or conditions that, taken as a whole, are materially more
burdensome or restrictive to Borrowers, (e) if the Indebtedness that is amended,
modified, refinanced, renewed, or extended was subordinated in right of payment
to the Obligations, then the terms and conditions of the amendment,
modification, refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the amended, modified, refinanced, renewed, or extended
Indebtedness, and (f) the Indebtedness that is amended, modified, refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was amended, modified, refinanced, renewed, or extended.
"Permitted Discretion" means a determination made in the exercise of
reasonable (from the perspective of a secured lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory, including Hydrocarbons, to buyers in
the ordinary course of business, (c) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents, (d) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business, (e) sales or other dispositions of the Investments
set forth on Schedule P-3, and (f) sales, leases, licenses, assignments,
farm-outs, conveyances or other transfers of any Oil and Gas Property or any
interest in any Oil and Gas Property in the ordinary course of business.
"Permitted Distributions" means (a) such dividends, payments or
other distributions to the extent payable solely in shares of Stock of Parent,
(b) the repurchase, redemption or other acquisition or retirement for value of
any Stock of Parent held by any employee, director or consultant of Parent upon
termination of employment or services of such employee, director or consultant,
provided that (i) the aggregate consideration (excluding consideration paid in
other Stock of Parent) paid for such repurchased, redeemed, acquired or retired
Stock after the Closing Date shall not exceed $5,000,000, (ii) no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction, and (iii) the average amount of Qualified Cash and Availability for
the 30 day period prior to any such repurchase, redemption or acquisition and
the amount of Qualified Cash and Availability immediately after giving effect to
any such repurchase, redemption or acquisition is not less than $10,000,000, and
(c) dividends and distributions by a Loan Party to another Loan Party.
"Permitted Holder" means the Person identified on Schedule P-1.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to a
Loan Party or any Subsidiary of a Loan Party effected in the ordinary course of
business or owing to a Loan Party or any Subsidiary of a Loan Party as a result
of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of a Loan Party or any Subsidiary of a Loan
Party, (e) Investments made in the ordinary course of, and of a nature that is
customary in, the Oil and Gas Business as a means of actively exploiting,
exploring for, acquiring, developing, processing, gathering, marketing or
transporting oil and gas through agreements, transactions, interests or
arrangements which permit one to share risks or costs, comply with regulatory
requirements regarding local ownership or satisfy other objectives customarily
achieved through the conduct of the Oil and Gas Business jointly with third
parties, including, without limitation, the entry into operating agreements,
working interests, royalty interests, mineral leases, processing agreements,
farm-out and farm-in agreements, division orders, contracts for the sale,
transportation or exchange of oil or natural gas, unitization and pooling
declarations and agreements and area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests, and investments and expenditures in connection therewith;
provided that for purposes of this clause (e), an investment in capital Stock,
partnership interests, joint venture interests, limited liability company
interests or other similar equity interests in a Person shall not constitute a
Permitted Investment, (f) Permitted Acquisitions and (g) Investments set forth
on Schedule P-3.
"Permitted Liens" means (a) Liens held by Agent to secure the
Obligations, (b) Liens for unpaid taxes, assessments, or other governmental
charges or levies that either (i) are not yet delinquent, or (ii) do not have
priority over the Agent's Liens and the underlying taxes, assessments, or
charges or levies are the subject of Permitted Protests, (c) judgment Liens that
do not constitute an Event of Default under Section 7.7 of the Agreement, (d)
Liens set forth on Schedule P-2, provided that any such Lien only secures the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof, (e) the interests of lessors under operating
leases, (f) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as (i) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on
amounts deposited in connection with obtaining worker's compensation or other
unemployment insurance, (i) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (k) with respect to any Real
Property, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof, (l) Liens
securing the Second Secured Debt, provided, that such Liens are subject to the
Intercreditor Agreement, (m) Liens that are replacements of Permitted Liens to
the extent the original Indebtedness is refinanced, renewed, or extended
pursuant to Refinancing Indebtedness and so long as the replacement Liens only
encumber those assets that secured the Refinancing Indebtedness, and (n) Oil and
Gas Liens which are not incurred in connection with the borrowing of money.
"Permitted Merger" means the merger of (i) any Borrower with and
into any other Borrower, (ii) any Guarantor with and into any other Guarantor,
or (ii) any Subsidiary that is not a Loan Party with and into any other
Subsidiary that is not a Loan Party, in each case, so long as no Default or
Event of Default has occurred and is continuing or would result from such
merger.
"Permitted Non-Cash Acquisition" means any Acquisition so long as:
(a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition and
the proposed Acquisition is consensual,
(b) the consideration payable in respect of the proposed Acquisition
shall be composed solely of (i) common Stock of Parent, or (ii) proceeds of
Indebtedness incurred pursuant to clause (f) of Section 6.1;
(c) no Indebtedness will be incurred, assumed, or would exist with
respect to Parent or its Subsidiaries as a result of such Acquisition, other
than Indebtedness permitted under clauses (c) or (f) of Section 6.1 and no Liens
will be incurred, assumed, or would exist with respect to the assets of Parent
or its Subsidiaries as a result or such Acquisition other than Liens permitted
under clause (f) of the definition of Permitted Liens;
(d) Parent has provided Agent with written confirmation, supported
by reasonably detailed calculations, that on a pro forma basis, created by
adding the historical combined financial statements of Parent (including the
combined financial statements of any other Person or assets that were the
subject of a prior Permitted Acquisition during the relevant period) to the
historical consolidated financial statements of the Person to be acquired (or
the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition (adjusted to eliminate expense items that
would not have been incurred and to include income items that would have been
recognized, in each case, if the combination had been accomplished at the
beginning of the relevant period; such eliminations and inclusions to be
mutually and reasonably agreed upon by Parent and Agent), Parent and its
Subsidiaries (i) would have been in compliance with the financial covenants in
Section 6.16 for the 12 month period ended immediately prior to the proposed
date of consummation of such proposed Acquisition, and (ii) are projected to be
in compliance with the financial covenants in Section 6.16 for the 12 month
period ended one year after the proposed date of consummation of such proposed
Acquisition, together with copies of all such historical financial statements of
the Person or assets being acquired,
(e) Parent has provided Agent with written notice of the proposed
Acquisition at least 30 Business Days prior to the anticipated closing date of
the proposed Acquisition and, not later than 5 Business Days prior to the
anticipated closing date of the proposed Acquisition, copies of the acquisition
agreement and other material documents relative to the proposed Acquisition,
which agreement and documents must be reasonably acceptable to Agent,
(f) the assets being acquired (other than a de minimis amount of
assets in relation to Parent and its Subsidiaries' total assets), or the Person
whose Stock is being acquired, are useful in or engaged in, as applicable, the
business of Parent and its Subsidiaries or a business reasonably related
thereto, and
(g) the subject assets or Stock, as applicable, are being acquired
directly by Borrowers or one of their Subsidiaries that is a Guarantor, and (i)
in the case of an Asset Acquisition, the applicable Loan Party shall have
executed and delivered or authorized, as applicable, any and all documentation
reasonably requested by the Agent in order to include the newly acquired assets
within the collateral hypothecated under the Loan Documents, and (ii) in the
case of a Stock Acquisition, the applicable Loan Party shall have complied with
Section 5.16 of the Agreement.
"Permitted Protest" means the right of Administrative Borrower or
any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States federal tax lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on a Borrower's or any of
its Subsidiaries' books and records in such amount as is required under GAAP,
(b) any such protest is instituted promptly and prosecuted diligently by
Administrative Borrower or any of its Subsidiaries, as applicable, in good
faith, and (c) Agent is satisfied that, while any such protest is pending, there
will be no impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$10,000,000.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Petroleum Engineers" means such petroleum engineers of recognized
national standing as may be selected by Loan Parties with the prior consent of
Agent.
"Preferred Stock" means the Series A Preferred Stock of Parent.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis using a successful efforts methodology, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and right
to receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the outstanding
principal amount of such Lender's Advances by (z) the outstanding principal
amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and right to receive payments of
fees with respect thereto, (i) prior to the Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments have
been terminated or reduced to zero, the percentage obtained by dividing (y) the
outstanding principal amount of such Lender's Advances by (z) the outstanding
principal amount of all Advances, and
(c) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 15.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate amount of Revolver Commitments of all Lenders; provided, however,
that in the event the Revolver Commitments have been terminated or reduced to
zero, Pro Rata Share under this clause shall be the percentage obtained by
dividing (A) the outstanding principal amount of such Lender's Advances plus
such Lender's ratable portion of the Risk Participation Liability with respect
to outstanding Letters of Credit, by (B) the outstanding principal amount of all
Advances plus the aggregate amount of the Risk Participation Liability with
respect to outstanding Letters of Credit.
"Protective Advances" has the meaning specified therefor in Section
2.3(d)(i).
"Proved Developed Non-Producing Reserves" means those Oil and Gas
Properties designated as "proved developed non-producing" (in accordance with
the Definitions for Oil and Gas Reserves approved by the Board of Directors of
the Society for Petroleum Engineers, Inc. from time to time) in the Reserve
Report and used in establishing the Borrowing Base.
"Proved Developed Producing Reserves" means those Oil and Gas
Properties designated as "proved developed producing" (in accordance with the
Definitions for Oil and Gas Reserves approved by the Board of Directors of the
Society for Petroleum Engineers, Inc. from time to time) in the Reserve Report
and used in establishing the Borrowing Base.
"Proved Reserves" means those Oil and Gas Properties designated as
"proved" (in accordance with the Definitions for Oil and Gas Reserves approved
by the Board of Directors of the Society for Petroleum Engineers, Inc. from time
to time) in the Reserve Report and used in establishing the Borrowing Base.
"PV-10" means, as of any date of determination, the sum of the
present values of the amounts of net revenues before income taxes expected to be
received by any Borrower in each of the months following the date of
determination on the basis of estimated production from Proved Reserves during
such months determined as follows:
(i) each such monthly net revenue amount shall be calculated
(x) on the basis of the applicable NYMEX Strip Price for the appropriate
category of oil or gas as of such date of determination, adjusting such
price to reflect (A) the appropriate Basis Differential with respect to
Hydrocarbons produced from specific Oil and Gas Properties of Borrowers as
set forth on Exhibit PV-10, as such Exhibit may from time to time be
amended at the request of Borrowers with the written consent of Agent, (B)
the prices for fixed price contracts for such month and (C) Btu content,
(y) assuming that production costs remain constant throughout the periods
of the calculation of such monthly net revenues, and (z) otherwise
applying the financial accounting and reporting standards prescribed by
the SEC for application of the successful efforts method of accounting for
such revenues under Rule 4-10 of Regulation S-X as promulgated by the SEC
from time to time; and
(ii) the present value of each such monthly net revenue amount
shall be determined by discounting each such monthly net revenue amount
from the month in which it is expected to be received, on a monthly basis,
to such date of determination at a rate of 10% per annum.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Loan Parties and their Subsidiaries
that is in Deposit Accounts or in Securities Accounts, or any combination
thereof, and which such Deposit Account or Securities Account is the subject of
a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Loan Party or a Subsidiary of any Loan Party
and the improvements thereto.
"Real Property Collateral" means the Real Property identified on
Schedule R-1 and any Real Property hereafter acquired by a Borrower or any
Subsidiary of a Borrower.
"Record" means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Refinancing Indebtedness" means refinancings, renewals, or
extensions of Indebtedness so long as the only amendments, modifications or
other changes to such Indebtedness are Permitted Changes.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through or in the ambient air,
soil, surface or ground water, or property.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.
"Replacement Lender" has the meaning specified therefor in Section
14.2(a).
"Report" has the meaning specified therefor in Section 15.16.
"Required Availability" means that the sum of (a) Excess
Availability, plus (b) Qualified Cash exceeds $10,000,000.
"Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares)
exceed 50%; provided, that, if at any date of determination, there are less than
three unaffiliated Lenders, the "Required Lenders" shall mean all of the
Lenders.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Reserve Report" means a report of the Petroleum Engineers (or in
the case of the report dated June 30, of the chief engineer of Borrowers) in the
form of the Initial Reserve Report, setting forth, as of June 30 or December 31
of any calendar year (i) the volumetric quantity and the PV-10 (and solely with
respect to the Reserve Report dated December 31, shall also include the SEC
Value), of the oil and gas reserves attributable to the Oil and Gas Properties
of Borrowers included in the calculation of the Borrowing Base, 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, and (ii)
such other information as Agent may reasonably request, all in form and
substance satisfactory to Agent.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the amount of outstanding Advances, plus (b) the amount of the Letter of
Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"SEC Value" means the future net revenues before income taxes from
Proved Reserves, estimated utilizing the actual price for the appropriate
category of oil or gas as of the date of determination and assuming that oil and
natural gas prices and production costs thereafter remain constant, then
discounted at the rate of 10% per year to obtain the present value, and
otherwise applying the financial accounting and reporting standards prescribed
by the SEC for application of the successful efforts method of accounting under
Rule 4-10 and Regulation S-X as promulgated by the SEC from time to time.
"Second Secured Debt" means all current and future Indebtedness and
other liabilities owing pursuant to the Second Secured Notes or any other Second
Secured Debt Documents and any Refinancing Indebtedness in respect of such
Indebtedness.
"Second Secured Debt Documents" means the Second Secured Note
Indenture, the Second Secured Notes and all agreements and documents executed in
connection therewith at any time, including without limitation those agreements
and documents listed on Schedule 4.29 hereto.
"Second Secured Notes" means the 10 1/2% Senior Secured Notes issued
by the Parent in the original principal amount of $300,000,000 due June 1, 2012
issued pursuant to the Second Secured Note Indenture and any other securities
issued pursuant to the Second Secured Note Indenture at any time.
"Second Secured Note Indenture" means the Senior Secured Indenture
between the Parent, the Subsidiary guarantors named therein and The Bank of New
York, as trustee, dated as of the date hereof, as amended, supplemented or
otherwise modified from time to time in accordance with Section 6.7 of this
Agreement.
"Securities Account" means a securities account (as that term is
defined in the Code).
"Security Agreement" means a security agreement, in form and
substance satisfactory to Agent, executed and delivered by Loan Parties to
Agent.
"Seismic Licenses" has the meaning specified therefor in Section
4.39.
"Settlement" has the meaning specified therefor in Section
2.3(e)(i).
"Settlement Date" has the meaning specified therefor in Section
2.3(e)(i).
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"S&P" has the meaning specified therefor in the definition of Cash
Equivalents.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subordinated Indebtedness" means Indebtedness of any Loan Party the
terms of which are reasonably satisfactory to the Required Lenders and which has
been expressly subordinated in right of payment to all Indebtedness of such Loan
Party under the Loan Documents (i) by the execution and delivery of a
subordination agreement, in form and substance reasonably satisfactory to the
Required Lenders, or (ii) otherwise on terms and conditions (including, without
limitation, subordination provisions, payment terms, interest rates, covenants,
remedies, defaults and other material terms) reasonably satisfactory to the
Required Lenders.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means WFF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender under Section 2.3(b).
"Swing Loan" has the meaning specified therefor in Section 2.3(b).
"Taxes" has the meaning specified therefor in Section 16(a).
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.
"Transactions" means collectively, the Goldking Acquisition, the
Second Secured Debt and the Preferred Stock.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"United States" means the United States of America.
"Utilization Percentage" means, as of any period, the average
outstanding principal amount of the Advances plus the Letter of Credit Usage for
such period, as a percentage of the lesser of (x) the average Borrowing Base for
such period and (y) the average Maximum Revolver Amount for such period.
"Voidable Transfer" has the meaning specified therefor in Section
18.8.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
"WFF" means Xxxxx Fargo Foothill, Inc., a California corporation.
