EXECUTION VERSION
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CREDIT AGREEMENT
$50,000,000
Dated as of
November 17, 2005
among
DUNE ENERGY, INC.,
as Borrower,
STANDARD BANK PLC
as Administrative Agent,
STANDARD AMERICAS INC.
as Collateral Agent,
and
THE LENDERS PARTY HERETO
STANDARD AMERICAS INC.
Sole Lead Arranger and Sole Bookrunner
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TABLE OF CONTENTS
PAGE:
ARTICLE I : DEFINITIONS AND ACCOUNTING MATTERS................................ 1
Section 1.01 Certain Defined Terms.............................. 1
Section 1.02 Terms Generally; Rules of Construction.............21
Section 1.03 Accounting Terms and Determinations; GAAP..........22
ARTICLE II : THE CREDITS......................................................22
Section 2.01 Commitment.........................................22
Section 2.02 Loans and Borrowings...............................23
Section 2.03 Requests for Borrowings............................23
Section 2.04 Continuation of Revolving Borrowings...............24
Section 2.05 Funding of Borrowings..............................25
Section 2.06 Termination/Reduction of Commitments...............26
Section 2.07 Borrowing Base.....................................26
ARTICLE III : PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES...........29
Section 3.01 Repayment of Loans.................................29
Section 3.02 Prepayments........................................29
Section 3.03 Interest...........................................31
Section 3.04 Alternate Rate of Interest.........................32
Section 3.05 Fees...............................................32
ARTICLE IV : PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS................33
Section 4.01 Payments Generally; Pro Rata Treatment;
Sharing of Set-offs................................33
Section 4.02 Presumption of Payment by the Borrower.............34
Section 4.03 Certain Deductions by the Administrative Agent.....34
Section 4.04 Disposition of Proceeds............................34
ARTICLE V : INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES, ETC...............35
Section 5.01 Increased Costs....................................35
Section 5.02 Break Funding Payments.............................36
Section 5.03 Taxes..............................................36
Section 5.04 Mitigation Obligations; Replacement of Lenders.....37
Section 5.05 Illegality.........................................38
ARTICLE VI : CONDITIONS PRECEDENT.............................................38
Section 6.01 Effective Date.....................................38
Section 6.02 First Term Draw....................................42
Section 6.03 Second Term Draw...................................44
Section 6.04 Each Credit Event..................................46
ARTICLE VII : REPRESENTATIONS AND WARRANTIES..................................47
Section 7.01 Organization; Powers...............................47
Section 7.02 Authority; Enforceability..........................47
Section 7.03 Approvals; No Conflicts............................47
Section 7.04 Financial Condition; No Material Adverse Change....48
Section 7.05 Litigation.........................................48
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.06 Environmental Matters..............................48
Section 7.07 Compliance with the Laws and Agreements; No
Defaults...........................................50
Section 7.08 Investment Company Act.............................50
Section 7.09 Public Utility Holding Company Act.................50
Section 7.10 Taxes..............................................50
Section 7.11 ERISA..............................................50
Section 7.12 Disclosure; No Material Misstatements..............51
Section 7.13 Insurance..........................................52
Section 7.14 Restriction on Liens...............................52
Section 7.15 Subsidiaries.......................................53
Section 7.16 Location of Business and Offices...................53
Section 7.17 Properties; Titles, Etc............................53
Section 7.18 Maintenance of Properties..........................54
Section 7.19 Gas Imbalances, Prepayments........................54
Section 7.20 Marketing of Production............................55
Section 7.21 Swap Agreements....................................55
Section 7.22 Use of Loans.......................................55
Section 7.23 Solvency...........................................55
Section 7.24 Material Agreements................................56
Section 7.25 No Brokers.........................................56
Section 7.26 Reliance...........................................56
Section 7.27 Investments and Guaranties.........................56
Section 7.28 Acquisition........................................56
ARTICLE VIII : AFFIRMATIVE COVENANTS..........................................57
Section 8.01 Financial Statements; Other Information............57
Section 8.02 Notices of Material Events.........................60
Section 8.03 Existence; Conduct of Business.....................61
Section 8.04 Payment of Obligations.............................61
Section 8.05 Performance of Obligations under Loan Documents....61
Section 8.06 Operation and Maintenance of Properties............61
Section 8.07 Insurance..........................................62
Section 8.08 Books and Records; Inspection Rights...............62
Section 8.09 Compliance with Laws...............................62
Section 8.10 Environmental Matters..............................62
Section 8.11 Further Assurances.................................63
Section 8.12 Reserve Reports....................................64
Section 8.13 Title Information..................................65
Section 8.14 Additional Collateral; Additional Guarantors.......66
Section 8.15 ERISA Compliance...................................67
Section 8.16 Swap Agreements....................................67
Section 8.17 Marketing Activities...............................68
Section 8.18 Title Due Diligence................................68
ARTICLE IX : NEGATIVE COVENANTS...............................................69
Section 9.01 Financial Covenants................................69
Section 9.02 Debt...............................................70
Section 9.03 Liens..............................................71
Section 9.04 Restricted Payments................................71
Section 9.05 Subordinated Debt..................................71
Section 9.06 Investments, Loans and Advances....................71
Section 9.07 Nature of Business; International Operations.......72
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 9.08 Limitation on Leases...............................72
Section 9.09 Sale and Leasebacks................................72
Section 9.10 Proceeds of Loans..................................72
Section 9.11 ERISA Compliance...................................73
Section 9.12 Sale or Discount of Receivables....................74
Section 9.13 Mergers, Etc.......................................74
Section 9.14 Sale of Properties.................................74
Section 9.15 Environmental Matters..............................75
Section 9.16 Transactions with Affiliates.......................75
Section 9.17 Subsidiaries.......................................75
Section 9.18 Negative Pledge Agreements; Dividend
Restrictions.......................................75
Section 9.19 Gas Imbalances, Take-or-Pay or Other Prepayments...75
Section 9.20 Swap Agreements....................................75
Section 9.21 Limitation on Capital Expenditures.................76
Section 9.22 Acquisition Documents..............................76
ARTICLE X : EVENTS OF DEFAULT; REMEDIES.......................................76
Section 10.01 Events of Default..................................76
Section 10.02 Remedies...........................................78
ARTICLE XI : THE AGENTS.......................................................80
Section 11.01 Appointment; Powers................................80
Section 11.02 Duties and Obligations of Administrative Agent.....80
Section 11.03 Action by Administrative Agent.....................81
Section 11.04 Reliance by Administrative Agent...................81
Section 11.05 Subagents..........................................82
Section 11.06 Resignation or Removal of Administrative Agent.....82
Section 11.07 Agents as a Lender.................................82
Section 11.08 No Reliance........................................82
Section 11.09 Administrative Agent May File Proofs of Claim......83
Section 11.10 Authority of Collateral Agent to Release
Collateral and Liens...............................84
Section 11.11 The Arranger and the Collateral Agent..............84
ARTICLE XII : GENERAL.........................................................84
Section 12.01 Notices............................................84
Section 12.02 Waivers; Amendments................................85
Section 12.03 Expenses, Indemnity; Damage Waiver.................86
Section 12.04 Successors and Assigns.............................88
Section 12.05 Survival; Revival; Reinstatement...................91
Section 12.06 Counterparts; Integration; Effectiveness...........91
Section 12.07 Severability.......................................92
Section 12.08 Right of Setoff....................................92
SECTION 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE....92
Section 12.10 Headings...........................................93
Section 12.11 Confidentiality....................................93
Section 12.12 Interest Rate Limitation...........................94
SECTION 12.13 EXCULPATION PROVISIONS.............................95
Section 12.14 Collateral Matters; Swap Agreements................95
Section 12.15 No Third Party Beneficiaries.......................96
Section 12.16 USA Patriot Act Notice.............................96
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DUNE ENERGY, INC. CREDIT AGREEMENT
ANNEXES, EXHIBITS AND SCHEDULES:
Annex I Commitments
Exhibit A-1 Form of Revolving Note
Exhibit A-2 Form of Term Note
Exhibit B-1 Form of Borrowing Request
Exhibit B-2 Form of Term Loan Borrowing Request
Exhibit C Form of Continuation Request
Exhibit D Form of Compliance Certificate
Exhibit E Security Instruments
Exhibit F Form of Assignment and Assumption
Exhibit G Form of Letters-in-Lieu
Schedule 1.01(a) Xxxxxxx Shale Acquisition Properties
Schedule 1.01(b) Xxxxx Xxxx Acquisition Properties
Schedule 1.01(c) R Acquisition Properties
Schedule 7.05 Litigation
Schedule 7.06 Environmental Matters
Schedule 7.13 Insurance
Schedule 7.15 Subsidiaries
Schedule 7.18 Maintenance of Properties
Schedule 7.19 Gas Imbalances
Schedule 7.20 Marketing Contracts
Schedule 7.21 Swap Agreements
Schedule 7.24 Material Agreements
Schedule 7.25 Brokers
Schedule 9.06 Investments
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DUNE ENERGY, INC. CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of November 17, 2005, is among DUNE
ENERGY, INC., a corporation duly formed and existing under the laws of the State
of Delaware (the "Borrower"), each of the Lenders from time to time party
hereto, STANDARD BANK PLC, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Administrative
Agent") and STANDARD AMERICAS INC., as collateral agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
RECITALS
WHEREAS, the Borrower has requested that the Lenders provide certain loans
to and extensions of credit on behalf of the Borrower.
WHEREAS, The Lenders have agreed to make such loans and extensions of
credit subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and of the loans, extensions of credit and commitments
hereinafter referred to, the parties hereto agree as follows:
ARTICLE I :
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Acquisition" means the acquisition of certain oil, gas and mineral
Properties pursuant to the terms and conditions of the Acquisition Documents.
"Acquisition Documents" means (a) the Asset Purchase And Sale Agreement
between Voyager and Borrower dated as of June 13, 2005, (b) the Indemnity
Agreement and (c) all bills of sale, assignments, agreements, instruments and
documents executed and delivered in connection therewith, in each case, as
amended.
"Acquisition Properties" means all of the Oil and Gas Properties and other
properties acquired by the Borrower or any Guarantor pursuant to the Acquisition
Documents and the Xxxxx Xxxx Acquisition Documents, consisting of the Xxxxx Xxxx
Acquisition Properties, the Xxxxxxx Shale Acquisition Properties and the R
Acquisition Properties.
"Adjusted LIBO Rate" means, with respect to any Revolving Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" has the meaning set forth in the introductory
paragraph.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affected Loans" has the meaning assigned such term in Section 5.05.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, the Administrative Agent and the Collateral
Agent; and "Agent" shall mean either the Administrative Agent or the Collateral
Agent, as the context requires.
"Agreement" means this Credit Agreement, as the same may from time to time
be amended, modified, supplemented or restated.
"Applicable Margin" means, with respect to any Revolving Loan for any day,
(a) with respect to the period of time from the Effective Date until such time
in which fifty percent (50%) or more of the original principal amount of the
Term Loans is outstanding, the rate per annum equal to four percent (4%), (b)
with respect to the period of time in which less than fifty percent (50%) of the
original principal amount of the Term Loans is outstanding, the rate per annum
equal to three and one half percent (3.5%) and (c) from and after the date in
which the Term Loans have been repaid in full, the rate per annum set forth in
the Borrowing Base utilization grid below based upon the Borrowing Base
Utilization Percentage then in effect:
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BORROWING BASE UTILIZATION GRID
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Borrowing Base => 90% < 90% < 75% < 25%
Utilization Percentage: => 75% => 25%
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Revolving Loans 3.50% 3.25% 3.00% 2.75%
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Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change, provided, however, that if at any
time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a)
or Section 8.12(b), then the "Applicable Margin" means the rate per annum set
forth on the grid when the Borrowing Base Utilization Percentage is at its
highest level.
"Applicable Percentage" means, with respect to (a) any Revolving Lender,
the percentage of the total Commitments represented by such Revolving Lender's
Commitment, as such percentage is set forth on Part A of Annex I (as such Part A
of Annex I is amended by the Administrative Agent from time to time to reflect
Assignments) and (b) any Term Lender, its Term Loan Percentage.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender
and (b) with regard to Swap Agreements in respect of commodities, and subject to
the conditions set forth therein, any other Person approved by the
Administrative Agent.
"Approved Fund" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Approved Petroleum Engineers" means any independent petroleum engineer
reasonably acceptable to the Administrative Agent and the Borrower.
"Arranger" means Standard Americas Inc., in its capacities as the sole
lead arranger and sole bookrunner hereunder.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit F or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Revolving Maturity Date.
"Xxxxxxx Shale Acquisition" means that portion of the Acquisition
occurring contemporaneously with the funding of the First-Tranche Term Loans
pursuant to which the Borrower or any Guarantor acquires the Xxxxxxx Shale
Acquisition Properties.
"Xxxxxxx Shale Acquisition Properties" means the Oil and Gas Properties
and other properties acquired by Borrower or any Guarantor pursuant to the
Acquisition Documents as part of the Xxxxxxx Shale Acquisition and described on
Schedule 1.01(a).
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrower" has the meaning set forth in the introductory paragraph.
"Borrowing" means Loans made or continued on the same date and, in the
case of Revolving Loans, as to which a single Interest Period is in effect.
"Borrowing Base" means, at any time, an amount equal to the lesser of (a)
$50,000,000, less any amount outstanding under the Term Loans and (b) the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c) or Section 9.14(d).
"Borrowing Base Deficiency" occurs if at any time the total Revolving
Exposures exceeds the Borrowing Base then in effect.
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Exposures of the Revolving Lenders on such day, and the denominator of which is
the Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in Xxx Xxxx Xxxx, Xxxxxx, Xxxxxxx or Houston, Texas
are authorized or required by law to remain closed; and if such day relates to a
Borrowing or continuation of, a payment or prepayment of principal of or
interest on, or the Interest Period for, a Revolving Loan or a notice by the
Borrower with respect to any such Revolving Borrowing or continuation, payment,
prepayment, or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.
"Capital Expenditures" means, in respect of any Person, for any period,
the aggregate (determined without duplication) of all exploration and
development expenditures and costs that are capital in nature and any other
expenditures that are capitalized on the balance sheet of such Person in
accordance with GAAP.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Change in Control" means (a) any "person" or "group" (as such terms are
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than Itera, shall become, or obtain rights
(whether by means of warrants, options, or otherwise) to become a "beneficial
owner" as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, directly
or indirectly, of more that 50% of the outstanding Equity Interests of the
Borrower on a fully diluted basis, (b) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Borrower by Persons
who were neither (i) nominated by the board of directors of the Borrower nor
(ii) appointed by directors so nominated or (c) the failure of the Borrower to
own all of the issued and outstanding Equity Interests in the Guarantors, except
as otherwise permitted by this Agreement.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 5.01(b)), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Collateral Agent" has the meaning set forth in the introductory
paragraph.
"Commitment" means, with respect to each Revolving Lender, the commitment
of such Revolving Lender to make Revolving Loans hereunder in an amount not to
exceed the following: (a) the amount set forth opposite such Revolving Lender's
name on Part A of Annex I under the caption "Commitment", minus (b) the product
of (i) such Revolving Lender's Applicable Percentage and (ii) the outstanding
principal amount under the Term Loans, minus (c) the amount that such Revolving
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DUNE ENERGY, INC. CREDIT AGREEMENT
Lender's Commitment is reduced or terminated from time to time in connection
with Section 2.06(b), plus or minus (d) the amount by which such Revolving
Lender's Commitment is modified from time to time pursuant to any assignment
permitted by Section 12.04(b). The term "Commitments" means, at any time, the
total Commitments of all Revolving Lenders at such time.
"Commitment Fee Rate" means (a) with respect to the period commencing on
the Effective Date and continuing to (but not including) the first anniversary
of the Second-Tranche Term Loan Funding Date, the rate per annum equal to 0.75%
and (b) thereafter, the rate per annum equal to 0.50%.
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (d) any extraordinary non-cash gains or losses during such period
and (e) any gains or losses attributable to writeups or writedowns of assets,
including ceiling test writedowns; and provided further that if the Borrower or
any Consolidated Subsidiary shall acquire or dispose of any Property during such
period, then Consolidated Net Income shall be calculated after giving pro forma
effect to such acquisition or disposition, as if such acquisition or disposition
had occurred on the first day of such period.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
"Continuation Request" means a request by the Borrower to continue a
Borrowing in accordance with Section 2.04.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of the
Debt (howsoever such assurance shall be made) to the extent of the lesser of the
amount of such Debt and the maximum stated amount of such guarantee or assurance
against loss; (h) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (i) obligations to deliver commodities,
goods or services, including, without limitation, Hydrocarbons, in consideration
of one or more advance payments, other than gas balancing arrangements in the
ordinary course of business; (j) obligations to pay for goods or services even
if such goods or services are not actually received or utilized by such Person;
(k) any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability; (l) Disqualified Capital Stock; and (m) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment. The Debt
of any Person shall include all obligations of such Person of the character
described above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is not included as a liability
of such Person under GAAP.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Termination Date and (b) the date on which there are no Loans or
other obligations hereunder outstanding and all of the Commitments are
terminated.
"dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.
"EBITDA" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization, unrealized hedging losses and other similar non-cash
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DUNE ENERGY, INC. CREDIT AGREEMENT
charges, minus unrealized hedging gains and all non-cash income added to
Consolidated Net Income; provided that EBITDA for the four quarters ending on
March 31, 2006 shall equal EBITDA for the three month-period ending March 31,
2006 times 4.0; EBITDA for the four quarters ending on June 30, 2006 shall equal
EBITDA for the six-month period ending June 30, 2006 times 2; and EBITDA for the
four quarters ending on September 30, 2006 shall equal EBITDA for the nine-month
period ending September 30, 2006 times 1.33.
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02), which
date shall occur on or before the date set forth in Section 6.01. "Engineering
Reports" has the meaning assigned such term in Section 2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety, the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA and the term "oil and gas waste" shall have the
meaning specified in Section 91.1011 of the Texas Natural Resources Code
("Section 91.1011"); provided, however, that (a) in the event either OPA,
CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (b) to the extent the laws of the state or
other jurisdiction in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste," "disposal" or "oil and gas waste" which is broader than that specified
in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall
apply.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
7
DUNE ENERGY, INC. CREDIT AGREEMENT
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or that are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims that are
not delinquent or that are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (e) Liens arising solely by virtue of
any statutory or common law provision relating to banker's liens, rights of
set-off or similar rights and remedies and burdening only deposit accounts or
other funds maintained with a creditor depository institution, provided that no
such deposit account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth by
regulations promulgated by the Board and no such deposit account is intended by
Borrower or any of its Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, that do not secure
8
DUNE ENERGY, INC. CREDIT AGREEMENT
any monetary obligations and that in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business; (h) judgment and attachment Liens not giving rise
to an Event of Default, provided that any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceeding may be initiated
shall not have expired and no action to enforce such Lien has been commenced;
and (i) Liens in existence on the Effective Date granted by Borrower pursuant to
that certain Office Building Lease, dated September 9, 2004, between the
Borrower, CRT Post Oak Limited Partnership (formerly known as Xxxxx Post Oak
Limited Partnership); provided, further that Liens described in clauses (a)
through (e) shall remain "Excepted Liens" only for so long as no action to
enforce such Lien has been commenced and no intention to subordinate the first
priority Lien granted in favor of the Administrative Agent and the Lenders is to
be hereby implied or expressed by the permitted existence of such Excepted
Liens.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower or any Guarantor hereunder or under any other Loan
Document, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America or such other jurisdiction under the laws
of which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower or any
Guarantor is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.04(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 5.03(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts with respect to such
withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
9
DUNE ENERGY, INC. CREDIT AGREEMENT
"Fee Letter" means that certain Fee Letter dated June 20, 2005 between the
Borrower, Standard Bank Plc and Standard Americas Inc.
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"First-Tranche Term Loan" has the meaning set forth in Section 6.02.
"First-Tranche Term Loan Commitment" means, with respect to any Term
Lender, its Term Loan Percentage of $13,000,000, as set forth on Annex I.
"First-Tranche Term Loan Funding Date" means the date on which the
conditions specified in Section 6.02 are satisfied (or waived in accordance with
Section 12.02), which date shall occur on or before the date set forth in
Section 6.02.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.03.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Subsidiary, any of their Properties, any Agent
or any Lender.
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Guarantors" means Dune Operating Company, Vaquero Partners LLC, and each
other Domestic Subsidiary that guarantees the Indebtedness pursuant to Section
8.14(b).
"Guaranty Agreement" means an agreement executed by the Guarantors in a
form satisfactory to the Collateral Agent and its counsel unconditionally
guarantying, on a joint and several basis, payment of the Indebtedness, as the
same may be amended, modified or supplemented from time to time.
10
DUNE ENERGY, INC. CREDIT AGREEMENT
"Highest Lawful Rate" means, with respect to each Lender, the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any of its Subsidiaries or any Guarantor (whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising): (a) to the Administrative Agent
or any Lender under any Loan Document; (b) to any Secured Swap Provider under a
Secured Hedge Obligation; and (c) all renewals, extensions and/or rearrangements
of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity Agreement" means the Agreement to Release and Mutual Release
dated effective as of October 1, 2005, among Voyager Partners, Ltd., the
Borrower, Xxx X. Xxxxxx Company, The Xxxxxxx Family Limited Partnership, Xxxx X.
Xxxxxxxx, Xx., Xxx X. Xxxxxx, Xx., and T.R. Energy, Inc.
"Initial Reserve Reports" means the reports of Xxxxxxxx & XxXxxxxxxx,
dated as of February 8, 2005, with respect to certain of the Acquisition
Properties, the reports of Xxxxxx Company, dated as of February 22, 2005, with
respect to certain Oil and Gas Properties of the Borrower and its Subsidiaries
as of December 31, 2004, and internal engineering reports provided by the
Borrower with respect to certain other Oil and Gas Properties.
"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP; provided that Interest Expense for the
four quarters ending on March 31, 2006 shall equal Interest Expense for the
three month-period ending March 31, 2006 times 4.0; Interest Expense for the
four quarters ending on June 30, 2006 shall equal Interest Expense for the
six-month period ending June 30, 2006 times 2; and Interest Expense for the four
quarters ending on September 30, 2006 shall equal Interest Expense for the
nine-month period ending September 30, 2006 times 1.33.
11
DUNE ENERGY, INC. CREDIT AGREEMENT
"Interest Payment Date" means (a) with respect to any Revolving Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Revolving Borrowing with an Interest Period of
more than three months' duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months' duration after the
first day of such Interest Period and (b) with respect to the Term Loans, the
last day of each of March, June, September and December.
"Interest Period" means, with respect to any Revolving Borrowing (a) with
respect to the period of time commencing on the Effective Date and continuing to
(but not including) the first anniversary date thereof, the period commencing on
the date of such Revolving Borrowing and, ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Borrower may elect and (b) thereafter, the period commencing
on the date of such Revolving Borrowing and, ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Revolving Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Revolving Borrowing initially shall be the date on which
such Revolving Borrowing is made and thereafter shall be the effective date of
the most recent continuation of such Revolving Borrowing.
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) the entering into of
any guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.
12
DUNE ENERGY, INC. CREDIT AGREEMENT
"Itera" means Itera Holdings BV, a Netherlands company
"Xxxxx Xxxx Acquisition" means that portion of the Acquisition occurring
contemporaneously with the funding of the Revolving Loans pursuant to which the
Borrower or any Guarantor acquires the Xxxxx Xxxx Acquisition Properties.
"Xxxxx Xxxx Acquisition Documents" means (a) the Purchase and Sale
Agreement pursuant to which Borrower acquires the Xxxxx Xxxx Acquisition
Properties and (b) all bills of sale, assignments, agreements, instruments and
documents executed and delivered in connection therewith, in each case, as
amended.
"Xxxxx Xxxx Acquisition Properties" means the Oil and Gas Properties and
other properties acquired by Borrower or any Guarantor pursuant to the Xxxxx
Xxxx Acquisition Documents as part of the Xxxxx Xxxx Acquisition and described
on Schedule 1.01(b).
"Lease Operating Statement" or "XXX" has the meaning set forth in Section
8.01(c).
"Lenders" means the Revolving Lenders and the Term Lenders.
"Letters-in-Lieu" means letters-in-lieu substantially in the form of
Exhibit G.
"LIBO Rate" means, with respect to any Revolving Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. If rate is not available at such
time for any reason, then the "LIBO Rate" with respect to such Revolving
Borrowing for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
13
DUNE ENERGY, INC. CREDIT AGREEMENT
"Loan Documents" means this Agreement, the Notes and the Security
Instruments.
"Loans" means the Revolving Loans and the Term Loans.
"Majority Lenders" means, (a) at any time while no Loans are outstanding,
the Administrative Agent and Revolving Lenders having more than fifty percent
(50%) of the total Commitments and (b) at any time while any Loans are
outstanding, the Majority Revolving Lenders and the Majority Term Lenders.
"Majority Revolving Lenders" means (a) at any time while no Revolving
Loans are outstanding, the Administrative Agent and Revolving Lenders having
more than fifty percent (50%) of the total Commitments and (b) at any time while
any Revolving Loans are outstanding, the Administrative Agent and Revolving
Lenders holding more than fifty percent (50%) of the outstanding aggregate
principal amount of the Revolving Loans (without regard to any sale by a Lender
of a participation in any Revolving Loan under Section 12.04(c)).
"Majority Term Lenders" means at any time while the Term Loans are
outstanding, Term Lenders holding more than fifty percent (50%) of the
outstanding aggregate principal amount of the Term Loans (without regard to any
sale of a participation in any Term Loan under Section 12.04(c)).
"Material Adverse Effect" means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, liabilities (actual or
contingent), condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole, (b) the ability of the Borrower, any of its
Subsidiaries or any Guarantor to perform any of its obligations under any Loan
Document to which it is a party, (c) the validity or enforceability of any Loan
Document or (d) the rights and remedies of or benefits available to the
Administrative Agent, any other Agent or any Lender under any Loan Document.
"Material Agreements" has the meaning set forth in Section 7.24.
"Material Indebtedness" means Debt, or obligations in respect of one or
more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in
an aggregate principal amount exceeding $500,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any of its Subsidiaries in respect of any Swap Agreement at any time shall be
the Swap Termination Value.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in Section
2.07(d).
14
DUNE ENERGY, INC. CREDIT AGREEMENT
"Net Cash Proceeds" means, with respect to the sale of any Equity
Interests of the Borrower, all cash received by the Borrower or any of its
Subsidiaries from such sale after payment of, or provision for, all underwriter
fees and expenses, SEC and blue sky fees, printing costs, fees and expenses of
accountants, lawyers and other professional advisors, brokerage commissions and
other out-of-pocket fees and expenses actually incurred in connection with such
sale of Equity Interests.
"Notes" means the promissory notes of the Borrower described in Section
2.02(c) and being substantially in the form of Exhibit A-1 or Exhibit A-2, as
applicable, together with all amendments, modifications, replacements,
extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil xxxxx, gas xxxxx, injection xxxxx
or other xxxxx, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning set forth in Section 12.04(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
15
DUNE ENERGY, INC. CREDIT AGREEMENT
"Plan" means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
Section 2.07(c)(ii).
"Proposed Borrowing Base" has the meaning assigned to such term in Section
2.07(c)(i).
"Proved Developed Producing Reserves" has the meaning set forth in the SPE
Definitions, as adjusted by the Administrative Agent.
"Proved Developed Non-Producing Reserves" has the meaning set forth in the
SPE Definitions, as adjusted by the Administrative Agent.
"Proved Reserves" has the meaning set forth in the SPE Definitions, as
adjusted by the Administrative Agent.
"Proved Undeveloped Reserves" has the meaning set forth in the SPE
Definitions, as adjusted by the Administrative Agent.
"R Acquisition" means that portion of the Acquisition occurring
contemporaneously with the funding of the Second-Tranche Term Loans pursuant to
which the Borrower or any Guarantor acquires the R Acquisition Properties.
"R Acquisition Properties" means the Oil and Gas Properties and other
properties acquired by Borrower or any Guarantor pursuant to the Acquisition
Documents as part of the R Acquisition and described on Schedule 1.01(c).
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, or defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. "Redeem" has the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.
16
DUNE ENERGY, INC. CREDIT AGREEMENT
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, as of each date as set forth in
Section 8.12, as applicable, in each case setting forth the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries,
together with a projection of the rate of production and future net income,
taxes, operating expenses and capital expenditures with respect thereto as of
such date, based upon the economic assumptions consistent with the
Administrative Agent's lending requirements at the time and using pricing data
that the Administrative Agent may reasonably determine consistent with its
then-current lending practices, taking into account quality and basis
differentials related to the actual production being produced from Borrower's
and its Subsidiaries Oil and Gas Properties.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
"Revolving Borrowing" shall mean a Borrowing comprised of Revolving Loans.
"Revolving Exposure" means, with respect to any Revolving Lender at any
time, the outstanding principal amount of such Revolving Lender's Revolving
Loans.
"Revolving Lender" means a Person listed on Part A of Annex I as a Lender
and any Person that shall have become a party hereto pursuant to an Assignment
and Assumption, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Assumption.
"Revolving Loans" means the loans made by the Revolving Lenders to the
Borrower pursuant to Section 2.01.
"Revolving Maturity Date" means the earlier to occur of (a) November 17,
2008 and (b) the date that the aggregate Commitments are sooner terminated
pursuant to Section 2.06(b) or Section 10.02.
"Revolving Notes" shall mean Notes issued pursuant to Section 2.02(c)
evidencing Revolving Loans.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Scheduled Redetermination Date" means the date on which the Borrowing
Base that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"Scheduled Redetermination" has the meaning assigned such term in Section
2.07(b).
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Second-Tranche Term Loan" has the meaning set forth in Section 6.03.
"Second-Tranche Term Loan Commitment" means, with respect to any Term
Lender, its Term Loan Percentage of $16,000,000, as set forth on Annex I.
"Second-Tranche Term Loan Funding Date" means the first to occur of the
following dates (regardless of whether any Second-Tranche Term Loan is actually
funded): (a) the date on which the conditions specified in Section 6.03 are
satisfied (or waived in accordance with Section 12.02) and the Second-Tranche
Term Loan is funded and (b) January 31, 2006.
"Secured Hedge Obligations" means all obligations of the Borrower or any
Subsidiary under any Swap Agreement entered into by (a) the Borrower or any
Subsidiary and (b) any Secured Swap Provider.
"Secured Swap Provider" means any Person that (a) is a Lender or any
Affiliate of any Lender, (b) becomes a party to a Swap Agreement with the
Borrower or any of its Subsidiaries while such Person (or such Person's
Affiliate) is a Lender and (c) continues to be a Lender while such Swap
Agreement is in effect (e.g., except as provided below, a Lender or its
Affiliate, as applicable, ceases to be a Secured Swap Provider if such Lender or
Affiliate, as applicable, ceases to be a Lender under this Agreement), provided,
however, that the requirement in this part (c) shall not apply to any Lender (or
Affiliate of a Lender) that otherwise satisfies the requirements set forth in
parts (a) and (b) of this definition, and such Lender or Affiliate shall
continue to be a Secured Swap Provider, if such Lender or Affiliate, as
applicable, is no longer a Lender as a result of the purchase by Itera or its
successors or assigns of the Indebtedness created under this Agreement pursuant
to that certain letter agreement, dated as of the date hereof, among Itera, the
Administrative Agent and the Borrower, as the same may be amended, restated or
replaced from time to time.
"Security Instruments" means the Guaranty Agreement, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred to
in Exhibit E, and any and all other agreements, instruments, consents or
certificates now or hereafter executed and delivered by the Borrower or any
other Person (other than Swap Agreements with the Lenders or any Affiliate of a
Lender or participation or similar agreements between any Lender and any other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, as such agreements may be amended,
modified, supplemented or restated from time to time.
"Semi-Annual Redetermination" has the meaning assigned in Section 2.07(b).
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DUNE ENERGY, INC. CREDIT AGREEMENT
"SPE Definitions" means, with respect to any term, the definition thereof
adopted by the Board of Directors, Society for Petroleum Engineers (SPE) Inc.,
March 1997.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. Revolving
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subordinated Debt" means the loans made by Itera (or one or more of its
Affiliates) in amounts totaling at least $25,000,000 on terms satisfactory to
the Administrative Agent pursuant to the Subordinated Debt Documents.
"Subordinated Debt Documents" means that certain Term Loan Agreement,
dated as of the Effective Date, between the Borrower and Itera, the Convertible
Subordinated Note issued thereunder.
"Subsidiary" means (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or after
the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
xxxx-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.
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DUNE ENERGY, INC. CREDIT AGREEMENT
"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
"Tangible Net Worth" means, at any date, the consolidated net worth of the
Borrower and its Subsidiaries after subtracting therefrom the aggregate amount
of treasury stock, goodwill, deferred development costs, franchises, licenses,
patents, trademarks, trade names, copyrights, service marks and brand names and
all other intangible assets (other than oil and gas leases to the extent
classified as intangible assets), the impact of ceiling test write-downs, the
non-cash impact of Swap Agreement and other comprehensive income of the Borrower
and its Subsidiaries classified as such under GAAP.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" means the latest to occur of the Revolving Maturity
Date and the Term Maturity Date.
"Term Lender" means a Person listed on Part B of Annex I as a Term Lender
and any Person that shall have become a party hereto pursuant to an Assignment
and Assumption, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Assumption.
"Term Loans" means, collectively, the First-Tranche Term Loans and the
Second-Tranche Term Loans made by the Term Lenders to the Borrower pursuant to
Section 2.01.
"Term Loan Borrowing Request" means a request by the Borrower for the Term
Borrowing in accordance with Section 2.03(b).
"Term Loan Percentages" means, with respect to any Term Lender, the
percentage set forth in the column titled "Term Loan Percentage" on Part B of
Annex I for such Term Lender or in the Assignment pursuant to which such Term
Lender becomes a party hereto, as applicable.
"Term Loan Rate" means, (a) with respect to the First-Tranche Term Loan,
(i) the period commencing on the First-Tranche Term Loan Funding Date and
continuing to (but not including) the first anniversary date thereof, the rate
per annum equal to twelve percent (12%), (ii) with respect to the period
commencing on the first anniversary of the First-Tranche Term Loan Funding Date
and continuing to (but not including) the second anniversary date thereof, the
rate per annum equal to twelve and one half percent (12.5%) and (c) thereafter,
the rate per annum equal to thirteen percent (13%) and (b) with respect to the
Second-Tranche Term Loan, (i) the period commencing on the Second-Tranche Term
Loan Funding Date and continuing to (but not including) the first anniversary
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DUNE ENERGY, INC. CREDIT AGREEMENT
date thereof, the rate per annum equal to twelve percent (12%), (ii) with
respect to the period commencing on the first anniversary of the Second-Tranche
Term Loan Funding Date and continuing to (but not including) the second
anniversary date thereof, the rate per annum equal to twelve and one half
percent (12.5%) and (c) thereafter, the rate per annum equal to thirteen percent
(13%).
"Term Loan Redetermination" has the meaning set forth in Section 2.07(b).
"Term Maturity Date" shall mean the earlier to occur of (a) the date that
is two years and six months after the Effective Date or (b) the date the Term
Loans are accelerated pursuant to Section 10.02.
"Term Notes" shall mean Notes issued pursuant to Section 2.02(c)
evidencing Term Loans.
"Total Debt" means, at any date, all Debt of the Borrower and the
Consolidated Subsidiaries on a consolidated basis, excluding (a) non-cash
obligations under FAS 133 and (b) accounts payable and other accrued liabilities
(for the deferred purchase price of Property or services) from time to time
incurred in the ordinary course of business which are not greater than sixty
(60) days past the date of invoice or delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, each other Loan
Document and Acquisition Document to which it is a party, the Acquisition, the
borrowing of Loans, the use of the proceeds thereof, and the grant of Liens by
the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document and Acquisition Document to
which it is a party, the Acquisition, the guaranteeing of the Indebtedness and
the other obligations under the Guaranty Agreement by such Guarantor and such
Guarantor's grant of the security interests and provision of collateral under
the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged
Properties and other Properties pursuant to the Security Instruments.
"Tri-Annual Redetermination" has the meaning assigned in Section 2.07(b).
"Voyager" means Voyager Partners, Ltd., a Texas limited partnership.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and
one or more of the Wholly-Owned Subsidiaries.
Section 1.02 Terms Generally; Rules of Construction. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
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DUNE ENERGY, INC. CREDIT AGREEMENT
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth in the
Loan Documents), (b) any reference herein to any law shall be construed as
referring to such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, (c) any reference herein to any Person
shall be construed to include such Person's successors and assigns (subject to
the restrictions contained in the Loan Documents), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) with respect to the determination of any time period, the word
"from" means "from and including" and the word "to" means "to and including" and
(f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Annexes, Exhibits
and Schedules to, this Agreement. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any Person solely
because such Person or its legal representative drafted such provision.
Section 1.03 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II :
THE CREDITS
Section 2.01 Commitment. Subject to the terms and conditions set forth
herein:
(a) each Revolving Lender agrees to make Revolving Loans to the
Borrower during the Availability Period in an aggregate principal amount that
will not result in such Revolving Lender's Revolving Exposure exceeding an
amount equal to the lesser of such Revolving Lender's Commitment and (ii) its
Applicable Percentage of the then effective Borrowing Base. At no time shall the
total Revolving Exposure of all Revolving Lenders exceed the Commitments. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, repay and reborrow the Revolving Loans; and
(b) each Term Lender agrees to make its Term Loan Percentage of the
First-Tranche Term Loan on the First-Tranche Term Loan Funding Date; and
(c) each Term Lender agrees to make its Term Loan Percentage of the
Second-Tranche Term Loan on the Second-Tranche Term Loan Funding Date.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Revolving Loan shall be
made as part of a Revolving Borrowing consisting of Revolving Loans made by the
Revolving Lenders ratably in accordance with their respective Commitments. The
First-Tranche Term Loan and the Second-Tranche Term Loan shall be made by the
Term Lenders ratably in accordance with their Term Loan Percentages. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the First-Tranche Term
Loan Commitments, the Second-Tranche Term Loan Commitments and the Commitments
are several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Revolving Borrowing, such Revolving
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000. There shall not at any time be more than
a total of six (6) Revolving Loans outstanding. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request, or
to elect to continue, any Revolving Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Maturity Date.
(c) Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A-1,
with respect to Revolving Loans, and Exhibit A-2 with respect to Term Loans, as
applicable. Each such Note shall be dated, in the case of (i) any Lender party
hereto as of the date of this Agreement, as of the date of this Agreement, or
(ii) any Lender that becomes a party hereto pursuant to an Assignment and
Assumption, as of the effective date of the Assignment and Assumption, payable
to the order of such Lender in a principal amount equal to its Commitment, its
First-Tranche Term Loan Commitment or its Second-Tranche Term Loan Commitment,
as the case may be, as in effect on such date, and otherwise duly completed. If
any Revolving Lender's Commitment increases or decreases for any reason (whether
pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower shall
deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Revolving Lender in a
principal amount equal to its Commitment, after giving effect to such increase
or decrease, and otherwise duly completed. The date, amount, interest rate and,
if applicable, Interest Period of each Loan made by each Lender, and all
payments made on account of the principal thereof, shall be recorded by such
Lender on its books for its Note, and, prior to any transfer, may be endorsed by
such Lender on a schedule attached to such Note or any continuation thereof or
on any separate record maintained by such Lender. Failure to make any such
notation or to attach a schedule shall not affect any Lender's or the Borrower's
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Note.
Section 2.03 Requests for Borrowings.
(a) Revolving Borrowings. To request a Revolving Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone not
later than 10:00 a.m., New York City time, four Business Days before the date of
the proposed Revolving Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Borrowing Request in substantially the
form of Exhibit B-1 and signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02: (i) the aggregate amount of the requested Revolving Borrowing;
(ii) the date of such Revolving Borrowing, which shall be a Business Day; (iii)
23
DUNE ENERGY, INC. CREDIT AGREEMENT
the initial Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; (iv) the amount of
the then effective Borrowing Base, the current total Revolving Exposures
(without regard to the requested Borrowing) and the pro forma total Revolving
Exposures (giving effect to the requested Borrowing); and (v) the location and
number of the Borrower's account to which funds are to be disbursed, which shall
comply with the requirements of Section 2.05. If no Interest Period is
specified, then the Borrower shall be deemed to have selected an Interest Period
of one month's duration. Each Borrowing Request shall constitute a
representation that the amount of the requested Revolving Borrowing shall not
cause the total Revolving Exposures to exceed the lesser of the Commitments and
the then-effective Borrowing Base. Promptly following receipt of a Borrowing
Request in accordance with this Section 2.03(a), the Administrative Agent shall
advise each Revolving Lender of the details thereof and of the amount of such
Revolving Lender's Revolving Loan to be made as part of the requested Revolving
Borrowing.
(b) Term Borrowings. To request that a Term Loan be made (i) in the
case of the First-Tranche Term Loan, the Borrower shall notify the
Administrative Agent of such request by telephone not later than 10:00 a.m., New
York City time on a date that is at least four Business Days prior to December
15, 2005 and (ii) in the case of the Second-Tranche Term Loan, the Borrower
shall notify the Administrative Agent of such request by telephone not later
than 10:00 am, New York City time on a date that is at least four Business Days
prior to the date that is after December 15, 2005 but before January 31, 2006.
Such telephonic Borrowing Requests shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Term Loan Borrowing Request in substantially the form of Exhibit B-2 and signed
by the Borrower. Such telephonic and written Term Loan Borrowing Request shall
specify the following information in compliance with Section 2.02: (i) the
aggregate amount of the requested Term Borrowing; (ii) the date of such Term
Borrowing, which shall be a Business Day at least four Business Days after the
date of delivery such Term Loan Borrowing Request; and (iii) the location and
number of the Borrower's account to which funds are to be disbursed, which shall
comply with the requirements of Section 2.05. Promptly following receipt of a
Term Loan Borrowing Request in accordance with this Section 2.03(b), the
Administrative Agent shall advise each Term Lender of the details thereof and of
the amount of such Term Lender's Term Loan to be made as part of the requested
Term Borrowing.
Section 2.04 Continuation of Revolving Borrowings.
(a) In General. Each Revolving Loan shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to continue such Borrowing and may elect Interest Periods therefor, all as
provided in this Section 2.04. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Revolving Lenders holding the
Revolving Loans comprising such Revolving Borrowing, and the Revolving Loans
comprising each such portion shall be considered a separate Revolving Borrowing.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) Requests. To make an election pursuant to this Section 2.04, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03. Each
such telephonic Continuation Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Continuation Request in substantially the form of Exhibit C and signed by the
Borrower.
(c) Information in Continuation Requests. Each telephonic and
written Continuation Request shall specify the following information in
compliance with Section 2.02: (i) the Revolving Borrowing to which such
Continuation Request applies; (ii) the effective date of the election made
pursuant to such Continuation Request, which shall be a Business Day; and (iii)
the Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period". If any such
Continuation Request does not specify an Interest Period, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Notwithstanding any contrary provision hereof, if an Event of Default or a
Borrowing Base Deficiency has occurred and is continuing, then no outstanding
Borrowing may be continued as a Revolving Borrowing (and any Continuation
Request that requests the continuation of any Revolving Borrowing shall be
ineffective).
(d) Notice to Lenders by the Administrative Agent. Promptly
following receipt of a Continuation Request, the Administrative Agent shall
advise each Revolving Lender of the details thereof and of such Revolving
Lender's portion of each resulting Revolving Borrowing.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Revolving Lender and Term Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 10:00 a.m., New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained in New York, New York and
designated by the Borrower in the Borrowing Request. Nothing herein shall be
deemed to obligate any Lender to obtain the funds for its Loan in any particular
place or manner or to constitute a representation by any Lender that it has
obtained or will obtain the funds for its Loan in any particular place or
manner.
(b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to the applicable Loan. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 2.06 Termination/Reduction of Commitments.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Revolving Maturity Date. If,
at any time, the Commitments or the Borrowing Base is terminated or reduced to
zero, then the Commitments shall terminate on the effective date of such
termination or reduction.
(b) Optional Termination and Reduction of Commitments.
(i) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (A) each reduction of the
Commitments shall be in an amount that is an integral multiple of $1,000,000 and
not less than $1,000,000 and (B) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the
Revolving Loans in accordance with Section 3.02(d), the total Revolving
Exposures would exceed the lesser of the Borrowing Base then in effect and the
Commitments.
(ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under Section 2.06(b)(i) at
least four (4) Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Revolving Lenders of the contents thereof. Each notice delivered by the Borrower
pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any termination or
reduction of the Commitments shall be permanent and may not be reinstated. Each
reduction of the Commitments shall be made ratably among the Revolving Lenders
in accordance with each Revolving Lender's Applicable Percentage.
Section 2.07 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $6,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 8.13(c).
(b) Scheduled and Interim Redeterminations. The Borrowing Base shall
be redetermined (i) with respect to the first four redeterminations after the
Effective Date, at the end of each four-month period (a "Tri-Annual
Redetermination") (ii) at the time the funding of the First-Tranche Term Loan
and the Second-Tranche Term Loan (a "Term Loan Redetermination") and (iii)
thereafter, semi-annually (a "Semi-Annual Redetermination" and together with a
Tri-Annual Redetermination and a Term Loan Redetermination, a "Scheduled
Redetermination"); all in accordance with this Section 2.07. Subject to Section
2.07(d), (A) a Tri-Annual Redetermination shall become effective and applicable
to the Borrower, the Agents and the Revolving Lenders on April 1, 2006, August
1, 2006, December 1, 2006 and Xxxxx 0, 0000, (X) a Term Loan Redetermination
shall be effective as of the First-Tranche Term Loan Funding Date or
Second-Tranche Term Loan Funding Date, as applicable, and (C) a Semi-Annual
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DUNE ENERGY, INC. CREDIT AGREEMENT
Redetermination shall become effective and applicable to the Borrower, the
Administrative Agent and the Revolving Lenders on October 1st and April 1st of
each year, commencing October 1, 2007. In addition, after the first year
anniversary of the Effective Date, the Administrative Agent may, at the
direction of the Majority Revolving Lenders, by notifying the Borrower thereof,
one time during any 12 month period, elect to cause the Borrowing Base to be
redetermined between Semi-Annual Redeterminations (an "Interim Redetermination")
in accordance with this Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required to
be delivered by the Borrower to the Administrative Agent, in the case of a
Scheduled Redetermination, pursuant to Section 8.12(a), (b) and (e), and, in the
case of an Interim Redetermination, pursuant to Section 8.12(d) and (e), and (B)
such other reports, data and supplemental information, including, without
limitation, the information provided pursuant to Section 8.12(e), as may, from
time to time, be reasonably requested by the Majority Revolving Lenders (the
Reserve Report, such certificate and such other reports, data and supplemental
information being the "Engineering Reports"), the Administrative Agent shall
evaluate the information contained in the Engineering Reports and shall, in good
faith, propose a new Borrowing Base (the "Proposed Borrowing Base") based upon
such information and such other information (including, without limitation, the
status of title information with respect to the Oil and Gas Properties as
described in the Engineering Reports and the existence of any other Debt) as the
Administrative Agent deems appropriate in its sole discretion and consistent
with its normal oil and gas lending criteria as it exists at the particular
time, provided that at least 125% of the Borrowing Base value will be
represented by Proved Developed Producing Reserves on a discounted net present
value basis. In no event shall the Proposed Borrowing Base exceed the
Commitments.
(ii) The Administrative Agent shall notify the Borrower and
the Revolving Lenders of the Proposed Borrowing Base (the "Proposed Borrowing
Base Notice"):
(A) in the case of a Tri-Annual Year Redetermination,
(1) if the Administrative Agent shall have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.12(a) and (e) in
a timely and complete manner, then on or before March 15, 2006, July 15, 2006,
November 15, 2007 and March 15, 2007 or (2) if the Administrative Agent shall
not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (e) in a timely and complete manner,
then promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i);
(B) in the case of a Semi-Annual Redetermination, (1) if
the Administrative Agent shall have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(b) and (e) in a timely and
complete manner, then on or before September 15th and March 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
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DUNE ENERGY, INC. CREDIT AGREEMENT
pursuant to Section 8.12(b) and (e) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i); and
(C) in the case of a Term Loan Redetermination or an
Interim Redetermination, promptly, and in any event, within fifteen (15) days
after the Administrative Agent has received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been approved
by all of the Revolving Lenders as provided in this Section 2.07(c)(iii) and any
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect must be approved or be deemed to have been approved by the Majority
Revolving Lenders as provided in this Section 2.07(c)(iii). Upon receipt of the
Proposed Borrowing Base Notice, each Revolving Lender shall have ten (10) days
to agree with the Proposed Borrowing Base or disagree with the Proposed
Borrowing Base by proposing an alternate Borrowing Base. If at the end of such
ten (10) days, any Revolving Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such silence shall be deemed
to be an approval of the Proposed Borrowing Base. If, at the end of such 10-day
period, all of the Revolving Lenders, in the case of a Proposed Borrowing Base
that would increase the Borrowing Base then in effect, or the Majority Revolving
Lenders, in the case of a Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect, have approved or deemed to have
approved, as aforesaid, then the Proposed Borrowing Base shall become the new
Borrowing Base, effective on the date specified in Section 2.07(d). If, however,
at the end of such 10-day period, all of the Lenders or the Majority Revolving
Lenders, as applicable, have not approved or deemed to have approved, as
aforesaid, then the Administrative Agent shall poll the Revolving Lenders to
ascertain the highest Borrowing Base then acceptable to the number of Revolving
Lenders sufficient to constitute the Majority Revolving Lenders for purposes of
this Section 2.07 and, so long as such amount does not increase the Borrowing
Base then in effect, such amount shall become the new Borrowing Base, effective
on the date specified in Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Majority Revolving Lenders, as applicable, pursuant to
Section 2.07(c)(iii), the Administrative Agent shall notify the Borrower and the
Revolving Lenders of the amount of the redetermined Borrowing Base (the "New
Borrowing Base Notice"), and such amount shall become the new Borrowing Base,
effective and applicable to the Borrower, the Administrative Agent and the
Lenders:
(i) in the case of a Tri-Annual Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (e) in a timely and
complete manner, then on April 1, 2006, August 1, 2006, December 1, 2006 and
April 1, 2007, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(a) and (e) in a timely and
complete manner, then on the Business Day next succeeding delivery of such
notice;
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DUNE ENERGY, INC. CREDIT AGREEMENT
(ii) in the case of a Term Loan Redetermination, on the
First-Tranche Term Loan Funding Date or the Second-Tranche Term Loan Funding
Date, as applicable;
(iii) in the case of a Semi-Annual Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(b) and (e) in a timely and
complete manner, then on October 1st or April 1st, as applicable, following such
notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(b) and (e) in a timely and complete manner, then on the Business Day next
succeeding delivery of such notice; and
(iv) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c) or Section 9.14,
whichever occurs first. Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.
ARTICLE III :
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans.
(a) Revolving Loans. The Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each Revolving Lender the
then unpaid principal amount of each Revolving Loan on the Revolving Maturity
Date.
(b) Term Loans. The Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Term Lender the then unpaid
principal amount of the Term Loans on the Term Maturity Date.
Section 3.02 Prepayments.
(a) Optional Revolving Loan Prepayments. The Borrower shall have the
right at any time and from time to time to prepay any Revolving Loan in whole or
in part, subject to prior notice in accordance with Section 3.02(c).
(b) Optional Term Loan Prepayments. The Borrower shall not have the
right to prepay either of the Term Loans until the date that is four months
after the Second-Tranche Term Loan Funding Date. After such date, the Borrower
shall have the right to prepay such Term Loan in whole or in part, subject to
the penalties outlined below, as follows: from the period beginning on the date
that is four months after the Second-Tranche Term Loan Funding Date to (but not
including) the date that is eight months after the Second-Tranche Term Loan
Funding Date, any amount the Borrower chooses to prepay shall be 102% of the
portion of the principal amount of the Term Loan being prepaid at such time and
from the period beginning on the date that is eight months after the
Second-Tranche Term Loan Funding Date to (but not including) the date that is
twelve months after the Second-Tranche Term Loan Funding Date, any amount the
Borrower chooses to prepay shall be 101% of the portion of the principal amount
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DUNE ENERGY, INC. CREDIT AGREEMENT
of the Term Loan being prepaid at such time. At any time after the date that is
twelve months after the Second-Tranche Term Loan Funding Date, the Borrower
shall have the right at any time and from time to time to prepay such Term Loan
in whole or in part without penalty. Any prepayment under this Section 3.02(b)
shall be subject to prior notice in accordance with Section 3.02(c). Each
prepayment of a Term Loan shall be in an aggregate amount that is an integral
multiple of $1,000,000.
(c) Notice and Terms of Optional Prepayment. The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder not later than 10:00 a.m., New York City time, four
Business Days before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid and whether the Borrower is
prepaying a Revolving Borrowing or a Term Borrowing. Promptly following receipt
of any such notice relating to a Borrowing, the Administrative Agent shall
advise the applicable Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing as provided in Section 2.02. Each prepayment of a
Borrowing shall be applied ratably to the applicable Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 3.03.
(d) Mandatory Prepayments of Revolving Loans.
(i) If, at any time, the total Revolving Exposure exceeds the
lesser of the total Commitments and the then-effective Borrowing Base, then the
Borrower shall prepay the Revolving Loans in accordance with subsection (ii)
below.
(ii) If the Borrower is obligated to make a prepayment as
required pursuant to this Section 3.02(d), then (A) in the case of a change in
the Borrowing Base pursuant to Section 2.07, such prepayment and/or deposit
shall be made in no more than three (3) substantially equal monthly
installments, with the first such payment being due and payable within ten (10)
Business Days following the Borrower's receipt of the New Borrowing Base Notice
in accordance with Section 2.07(d), in the case of any adjustment to the
Borrowing Base pursuant to Section 9.14, the Borrower shall be obligated to make
such prepayment within three Business Days after the date it receives cash
proceeds as a result of such disposition and (C) with any respect to any other
prepayment required pursuant to this Section 3.02(d), such prepayment and/or
deposit shall be made on the date such excess occurs; provided that all payments
required to be made pursuant to this Section 3.02(d) must be made on or prior to
the Revolving Maturity Date.
(iii) Each prepayment of Borrowings pursuant to this Section
3.02(d) shall be applied to the Revolving Loans then outstanding, and if more
than one Revolving Loan is then outstanding, to each such Revolving Loan in
order of priority beginning with the Revolving Loan with the least number of
days remaining in the Interest Period applicable thereto and ending with the
Revolving Loan with the most number of days remaining in the Interest Period
applicable thereto.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(iv) Each prepayment of Revolving Loans pursuant to this
Section 3.02(d) shall be applied ratably to the Revolving Loans included in the
prepaid Borrowings and shall be accompanied by accrued interest to the extent
required by Section 3.03.
(e) Mandatory Prepayments of Term Loan.
(i) If, as the result of a sale or disposition by Borrower of
Oil and Gas Properties under Section 9.14(d)(iii), the Borrowing Base is reduced
to zero, then the Majority Term Lenders shall have the right, upon written
notice to the Borrower within five (5) Business Days after the Borrower's
receipt of the New Borrowing Base Notice, to require that all or any portion of
the amount by which the value of such Property (determined in accordance with
Section 9.14(d)(iii)) exceeds the amount required to be prepaid pursuant to
Section 3.02(d)(ii)(B) be used to prepay the Term Loans.
(ii) Within five (5) Business Days following the Borrower's
receipt of a New Borrowing Base Notice setting the Borrowing Base in excess of
$15,000,000, the Borrower will prepay the Term Loans by the amount of the Excess
Borrowing Base. The "Excess Borrowing Base" will be the difference between the
new Borrowing Base and the greater of the highest previous Borrowing Base and
$15,000,000.
(iii) With respect to any prepayment required under this
Section 3.02(e), the amount the Borrower shall prepay shall be as follows: (A)
from the period beginning on the Second-Tranche Term Loan Funding Date to (but
not including) the date that is eight months after the Second-Tranche Term Loan
Funding Date, 102% of the principal amount required to be prepaid, (B) from the
period beginning on the date that is eight months after the Second-Tranche Term
Loan Funding Date to (but not including) the date that is twelve months after
the Second-Tranche Term Loan Funding Date, 101% of the principal amount required
to be prepaid and (C) thereafter, no prepayment premium shall be required
hereunder. Any prepayment of the Term Loans pursuant to this Section 3.02(e)
shall be accompanied by accrued interest to the extent required by Section 3.03.
(f) No Premium or Penalty. Prepayments permitted or required under
this Section 3.02 shall be without premium or penalty, except as required under
Section 3.02(b), Section 3.02(e) and Section 5.02.
Section 3.03 Interest.
(a) In General.
(i) Revolving Loans comprising each Revolving Borrowing shall
bear interest at the Adjusted LIBO Rate for the Interest Period in effect for
such Revolving Borrowing plus the Applicable Margin, but in no event to exceed
the Highest Lawful Rate.
(ii) The Term Loans shall bear interest at the Term Loan Rate,
but in no event to exceed the Highest Lawful Rate.
(b) Post-Default Rate. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing, or if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower or any Guarantor
hereunder or under any other Loan Document is not paid when due, whether at
stated maturity, upon acceleration or otherwise, then all Loans outstanding, in
the case of an Event of Default, and such overdue amount, in the case of a
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DUNE ENERGY, INC. CREDIT AGREEMENT
failure to pay amounts when due, shall bear interest, after as well as before
judgment, at a rate per annum equal to two percent (2%) plus the rate of
interest otherwise applicable to such Loan as provided in Section 3.03(a), but
in no event to exceed the Highest Lawful Rate.
(c) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Revolving Maturity Date (with respect to Revolving Loans) and on the Term
Maturity Date (with respect to Term Loans) as applicable; provided that (i)
interest accrued pursuant to Section 3.03(b) shall be payable on demand and (ii)
in the event of any repayment or prepayment of any Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment.
(d) Interest Rate Computations. All interest computed by reference
to the Adjusted LIBO Rate or LIBO Rate shall be computed on the basis of a year
of 360 days, unless such computation would exceed the Highest Lawful Rate, in
which case interest shall be computed on the basis of a year of 365 days (or 366
days in a leap year). Interest computed by reference to the Term Loan Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year) and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day thereof). The applicable Adjusted LIBO Rate, LIBO
Rate and Term Loan Rate shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error, and shall be
binding upon the parties hereto.
Section 3.04 Alternate Rate of Interest. If, prior to the commencement of
any Interest Period for a Revolving Borrowing, (a) the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate for such Interest Period, or (b) the Administrative Agent
is advised by the Majority Revolving Lenders that the Adjusted LIBO Rate or LIBO
Rate, as applicable, for such Interest Period will not adequately and fairly
reflect the cost to the Lenders of making or maintaining their Loans included in
such Borrowing for such Interest Period; then the Administrative Agent shall
give notice thereof to the Borrower and the Revolving Lenders by telephone or
telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Revolving Lenders that the circumstances
giving rise to such notice no longer exist, any Continuation Request that
requests the continuation of any Borrowing shall be ineffective and any
Revolving Borrowing shall bear interest at the last available quoted LIBO Rate.
Section 3.05 Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Lender a commitment fee which shall
accrue at the Commitment Fee Rate on the average daily amount of the unused
amount of the Borrowing Base during the period from and including the date of
this Agreement to but excluding the Revolving Maturity Date. Accrued commitment
fees shall be payable in arrears on the last day of each calendar month and on
the Revolving Maturity Date, commencing on the first such date to occur after
the date hereof. All commitment fees shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which
case interest shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) Ticking Fee. The Borrower agrees to pay the Administrative Agent
for the account of each Term Lender a ticking fee which shall accrue at 1% on
the amount of the First-Tranche Term Loan Commitments until the earlier of the
First-Tranche Term Loan Funding Date or the date that the First-Tranche Term
Loan Commitments are terminated, and on the amount of the Second-Tranche Term
Loan Commitments until the earlier of the Second-Tranche Term Loan Funding Date
or the date that the Second-Tranche Term Loan Commitments are terminated.
Accrued ticking fees shall be payable in arrears on the last day of each
calendar month and on the First-Tranche Term Loan Funding Date and the
Second-Tranche Term Loan Funding Date, as applicable, commencing on the first
such date to occur after the date hereof. All ticking fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent, including the fees payable pursuant to the Fee Letter.
ARTICLE IV :
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees, or of
amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise)
prior to 10:00 a.m., New York City time, on the date when due, in immediately
available funds, without defense, deduction, recoupment, set-off or
counterclaim. Fees due and payable hereunder, once paid, shall be fully earned
and shall not be refundable under any circumstances. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except that
payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03
shall be made directly to the Persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under this Agreement shall be made in
dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such parties.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and in the priority established by
Section 10.02(c); provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this Section
4.01(c) shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
Section 4.03 Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.05(b) or Section 4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
Section 4.04 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Indebtedness and other obligations described
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DUNE ENERGY, INC. CREDIT AGREEMENT
therein and secured thereby. Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Lenders will instead permit such proceeds to be paid to the Borrower and its
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Subsidiaries.
ARTICLE V :
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES, ETC.
Section 5.01 Increased Costs.
(a) Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Revolving Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Revolving Lender or the London interbank
market any other condition affecting this Agreement or Revolving Loans made by
such Revolving Lender;
and the result of any of the foregoing shall be to increase the cost to such
Revolving Lender of making or maintaining any Revolving Loan (or of maintaining
its obligation to make any such Revolving Loan) or to reduce the amount of any
sum received or receivable by such Revolving Lender (whether of principal,
interest or otherwise), then the Borrower will pay to such Revolving Lender such
additional amount or amounts as will compensate such Revolving Lender for such
additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of this Agreement or the Loans made by
such Lender to a level below that which such Lender or such Lender's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered.
(c) Certificates. A certificate of a Lender setting forth the amount
or amounts necessary to compensate such Lender or its holding company, as the
case may be, as specified in Section 5.01(a) or (b) shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(d) Effect of Failure or Delay in Requesting Compensation. Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 5.01 shall not constitute a waiver of such Lender's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender notifies the Borrower of
the Change in Law giving rise to such increased costs or reductions and of such
Lender's intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Revolving Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the failure to borrow, continue or prepay any Revolving Loan on the date
specified in any notice delivered pursuant hereto, (c) the syndication of the
Revolving Loans by the Administrative Agent or its Affiliates during the
sixty-day period after the Effective Date or (d) the assignment of any Revolving
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by the Borrower pursuant to Section 5.04(b), then, in any
such event, the Borrower shall compensate each Revolving Lender for the loss,
cost and expense deemed attributable to such event. A certificate of any
Revolving Lender setting forth any amount or amounts that such Revolving Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Revolving Lender the amount shown as due on any such certificate within ten
(10) days after receipt thereof.
Section 5.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03(a)), the Administrative Agent and Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower or such Guarantor shall make such deductions and (iii) the Borrower
or such Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent and each Lender, within ten (10) days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent or such Lender, as the case may be, on or with
respect to any payment by or on account of any obligation of the Borrower
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.03) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
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DUNE ENERGY, INC. CREDIT AGREEMENT
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate of the
Administrative Agent or a Lender as to the amount of such payment or liability
under this Section 5.03 shall be delivered to the Borrower and shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) Tax Refunds. If the Administrative Agent or a Lender determines,
in its sole discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 5.03, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
5.03 with respect to the Taxes or Other Taxes giving rise to such refund), net
of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay
such refund to such Governmental Authority. This Section 5.03 shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
Section 5.04 Mitigation Obligations; Replacement of Lenders.
(a) Designation of Different Lending Office. If any Revolving Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) Replacement of Lenders. If any Revolving Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, or if any Lender defaults in its obligation
to fund Loans hereunder, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
5.01 or payments required to be made pursuant to Section 5.03, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, if it becomes unlawful for any Revolving Lender or its applicable
lending office to honor its obligation to make or maintain Revolving Loans
either generally or having a particular Interest Period hereunder, then such
Revolving Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Revolving Lender's obligation to make such Revolving Loans
shall be suspended (the "Affected Loans") until such time as such Lender may
again make and maintain such Revolving Loans.
ARTICLE VI :
CONDITIONS PRECEDENT
Section 6.01 Effective Date. This Agreement and the obligations of the
Revolving Lenders to make Revolving Loans hereunder shall not become effective
until the date on which each of the following conditions are satisfied (or
waived in accordance with Section 12.02):
(a) The Administrative Agent, the Arranger and the Lenders shall
have received all fees and other amounts due and payable on or prior to date
such fees have become due and payable, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.
(b) The Administrative Agent shall have received a certificate of
the Secretary or an Assistant Secretary of the Borrower and each Guarantor
setting forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (A) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor is a party and (B) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
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DUNE ENERGY, INC. CREDIT AGREEMENT
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws of the Borrower and such Guarantor,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received and reviewed, with
satisfactory results, detailed bimonthly cash flow projections of the Borrower
for the first year, semiannually for the second year and annually thereafter,
including production volumes, revenues, operating expenses, taxes, budgeted
capital expenditures (with sufficient detail to delineate the purpose of the
expenditures), administrative and other expenses, any interest payments,
borrowings and repayments.
(d) The Administrative Agent shall have received a certificate duly
and properly executed by a Responsible Officer and dated as of the date of the
Effective Date certifying that the Borrower has successfully completed the
placement of at least $6 million in additional equity securities and $8.5
million in subordinated debt, all on terms and with parties satisfactory to the
Administrative Agent and the Lenders.
(e) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Borrower and each Guarantor.
(f) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.
(g) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(h) The Administrative Agent shall have received duly executed Notes
payable to the order of each Revolving Lender in a principal amount equal to its
initial Commitment dated as of the date hereof.
(i) The Collateral Agent shall have received from each party thereto
duly executed counterparts (in such number as may be requested by the Collateral
Agent) of the Security Instruments, including the Guaranty Agreement and the
other Security Instruments described on Exhibit E. In connection with the
execution and delivery of the Security Instruments, the Collateral Agent shall:
(i) be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but subject
to the provisos at the end of such definition) on at least 85% of the Oil and
Gas Properties evaluated in the Initial Reserve Reports, including the Xxxxx
Xxxx Acquisition Properties, but excluding the Xxxxxxx Shale Acquisition
Properties and the R Acquisition Properties;
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DUNE ENERGY, INC. CREDIT AGREEMENT
(ii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Guarantors and each other Subsidiary
of the Borrower; and
(iii) have received Letters-in-Lieu executed in blank by the
Borrower and/or any Guarantor executing a mortgage as part of the Security
Instruments.
(j) The Administrative Agent shall have received an opinion of (i)
Xxxxx & Xxx Xxxxxx LLP, special New York counsel to the Borrower, (ii) Xxxxxxx
Xxxxxx L.L.P., local counsel in Texas, (iii) Schully Xxxxxxx Xxxxxxxx & Xxxxxx,
local counsel in Louisiana, (iv) Xxxxx & Lardner, special counsel to the holder
of the subordinated debt and (v) local counsel of any other jurisdictions
requested by the Administrative Agent, in each case in form and substance
acceptable to the Administrative Agent and its counsel.
(k) The Collateral Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(l) The Administrative Agent shall have received title information
as the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at least 90% of the
Oil and Gas Properties covered by Liens in the Security Instruments, or 85% of
the total value of the Oil and Gas Properties evaluated in the Initial Reserve
Reports, not including the Xxxxxxx Shale Acquisition Properties or the R
Acquisition Properties, whichever is less.
(m) The Administrative Agent shall be satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries as well as the Acquisition Properties and shall have received such
reports in form and substance as the Administrative Agent may requested related
thereto including a Phase I environmental report with respect to certain xxxxx.
(n) The Administrative Agent shall have completed a review of all
litigation affecting the Borrower or any of its Subsidiaries and shall be
satisfied with the status of such matters and the potential impact that such
matters may have on the Borrower and its Subsidiaries.
(o) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.
(p) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Reports
accompanied by a certificate covering the matters described in Section 8.12(e),
and shall have verified the amount of Proved Reserves set forth in such Initial
Reserve Reports.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(q) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Borrower and the Subsidiaries, including the Equity Interests of any Guarantor
and the Borrower, for each of the following jurisdictions: Delaware, Texas and
any other jurisdiction requested by the Administrative Agent (other than those
being assigned or released on or prior to the Effective Date or Liens permitted
by Section 9.03).
(r) The Administrative Agent shall have received from the Borrower
an executed and delivered copy of a Swap Agreement, in form and substance and
with respect to volumes satisfactory to the Administrative Agent, covering the
Borrower's crude oil and natural gas production in accordance with the
requirements of Section 8.16.
(s) The Xxxxx Xxxx Acquisition shall have been consummated
simultaneously with the funding of the Revolving Loans and the Administrative
Agent shall have received and be satisfied with its review of (i) a certificate
of a Responsible Officer of the Borrower certifying: (A) that the Borrower is
concurrently consummating the Xxxxx Xxxx Acquisition in accordance with the
terms of the Xxxxx Xxxx Acquisition Documents (with all of the material
conditions precedent thereto having been satisfied in all material respects by
the parties thereto) and acquiring substantially all of the Xxxxx Xxxx
Acquisition Properties contemplated by the Xxxxx Xxxx Acquisition Documents; (B)
as to the final purchase price for the Xxxxx Xxxx Acquisition Properties after
giving effect to all adjustments as of the closing date contemplated by the
Xxxxx Xxxx Acquisition Documents and specifying, by category, the amount of such
adjustment; (C) that attached thereto is a true and complete list of the Oil and
Gas Properties that have been excluded from the Xxxxx Xxxx Acquisition pursuant
to the terms of the Xxxxx Xxxx Acquisition Documents, specifying with respect
thereto the basis of exclusion as (1) title defect, (2) preferential purchase
right, (3) environmental or (4) casualty loss; (D) that attached thereto is a
true and complete list of all Xxxxx Xxxx Acquisition Properties for which the
Seller has elected to cure a title defect, (E) that attached thereto is a true
and complete list of all Xxxxx Xxxx Acquisition Properties for which the Seller
has elected to remediate an adverse environmental condition, (F) the Xxxxx Xxxx
Acquisition Properties are the Oil and Gas Properties identified as the "Xxxxx
Xxxx Acquisition Properties" evaluated in the Initial Reserve Reports and (G)
that attached thereto is a true and complete list of all Xxxxx Xxxx Acquisition
Properties that are currently pending final decision by a third party regarding
purchase of such property in accordance with any preferential right; (ii) a true
and complete executed copy of each of the Xxxxx Xxxx Acquisition Documents;
(iii) original counterparts or copies, certified as true and complete, of the
assignments, deeds and leases for all of the Xxxxx Xxxx Acquisition Properties;
and (iv) such other related documents and information as the Administrative
Agent shall have reasonably requested.
(t) The Administrative Agent shall have received a letter from Xxxxx
& Xxx Xxxxxx LLP evidencing the appointment of such law firm as authorized agent
for service of process on each of the Borrower and each Obligor (as defined in
the Guaranty Agreement) under each Loan Document to which it is a party.
(u) The Administrative Agent shall have completed and be satisfied
with its due diligence review of the Borrower and its operations, including
title, environmental, engineering, marketing, financial condition and such other
matters as the Administrative Agent may reasonably determine.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(v) The execution and delivery of a satisfactory subordination
agreement between the Lenders and the holders of any of the Borrower's or its
Subsidiaries' subordinated debt, which subordination agreement shall include,
among other things: (i) the ability to pay 50% of any interest obligation
associated with such subordinated debt in kind, rather than in cash, while any
portion of the Term Loans is outstanding; (ii) that the holders of such
subordinated debt waive all enforcement or repayment rights while any portion of
the Term Loans is outstanding; and (iii) the express subordination of any rights
or claims of the subordinated debt holders to the non-recoverable repayment in
full in cash of any amounts outstanding under this Agreement and its termination
in full.
(w) The Administrative Agent shall have received and reviewed, with
results satisfactory to the Lenders an employment agreement between the Borrower
and each of its key employees (collectively, the "Employment Agreements"), which
shall include without limitation its chief executive officer, chief operating
officer and chief financial officer, which Employment Agreements shall include
employment terms that are acceptable to the Administrative Agent.
(x) Each of the Borrower and each of its Subsidiaries shall be in
full compliance with all financial obligations under any document or agreement
enforceable against it.
(y) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Revolving Loans hereunder
shall not become effective unless each of the foregoing conditions is satisfied
(or waived pursuant to Section 12.02) at or prior to 10:00 a.m., New York City
time, on November 17, 2005 (and, in the event such conditions are not so
satisfied or waived, the Commitments and this Agreement shall terminate at such
time).
Section 6.02 First Term Draw. The obligations of the Term Lenders to make
the first Term Loans ("First-Tranche Term Loans") shall not become effective
until the date on which each of the following conditions are satisfied (or
waived in accordance with Section 12.02):
(a) The conditions set forth in Section 6.01 shall have been
satisfied (or waived in accordance with Section 12.02).
(b) The Administrative Agent shall have received a certificate duly
and properly executed by a Responsible Officer and dated as of the date of the
Effective Date certifying that the Borrower has successfully completed the
placement of at least $12.0 million in subordinated debt on terms and with
parties satisfactory to the Administrative Agent and the Lenders, which
placement shall be in addition to the placement of the $8.5 million in
subordinated debt required by Section 6.01(d).
(c) The Administrative Agent shall have received duly executed Notes
payable to the order of each Term Lender in a principal amount equal to its
First-Tranche Term Loan Commitment.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(d) The Administrative Agent shall have received a Term Loan
Borrowing Request in an amount equal to $13,000,000.
(e) The Administrative Agent shall have received a certificate duly
and properly executed by a Responsible Officer and dated as of the date of the
First-Tranche Term Loan Funding Date certifying that the Borrower has
successfully completed the placement of at least $12.0 million in subordinated
debt, all on terms and with parties satisfactory to the Administrative Agent and
the Lenders.
(f) The Collateral Agent shall be reasonably satisfied that the
Security Instruments have been amended, restated or supplemented as necessary to
grant Liens on the Xxxxxxx Shale Acquisition Properties and that as so amended,
restated or supplemented, the Security Instruments create first priority,
perfected Liens (subject only to Excepted Liens identified in clauses (a) to (d)
and (f) of the definition thereof, but subject to the provisos at the end of
such definition) on at least 85% of the Xxxxxxx Shale Acquisition Properties and
(ii) have received Letters-in-Lieu executed in blank by the Borrower and/or any
Guarantor executing a mortgage pursuant to clause (i) hereof in connection with
the Xxxxxxx Shale Acquisition.
(g) The Administrative Agent shall have received title information
as the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at least 90% of the
Xxxxxxx Shale Acquisition Properties.
(h) The Xxxxxxx Shale Acquisition shall have been consummated
simultaneously with the funding of the First-Tranche Term Loans and the
Administrative Agent shall have received and be satisfied with its review of (i)
a certificate of a Responsible Officer of the Borrower certifying: (A) that the
Borrower is concurrently consummating the Xxxxxxx Shale Acquisition in
accordance with the terms of the Acquisition Documents (with all of the material
conditions precedent thereto having been satisfied in all material respects by
the parties thereto) and acquiring substantially all of the Xxxxxxx Shale
Acquisition Properties contemplated by the Acquisition Documents; (B) as to the
final purchase price for the Xxxxxxx Shale Acquisition Properties after giving
effect to all adjustments as of the closing date contemplated by the Acquisition
Documents and specifying, by category, the amount of such adjustment; (C) that
attached thereto is a true and complete list of the Oil and Gas Properties that
have been excluded from the Xxxxxxx Shale Acquisition pursuant to the terms of
the Acquisition Documents, specifying with respect thereto the basis of
exclusion as (1) title defect, (2) preferential purchase right, (3)
environmental or (4) casualty loss; (D) that attached thereto is a true and
complete list of all Xxxxxxx Shale Acquisition Properties for which the Seller
has elected to cure a title defect, (E) that attached thereto is a true and
complete list of all Xxxxxxx Shale Acquisition Properties for which the Seller
has elected to remediate an adverse environmental condition, (F) the Xxxxxxx
Shale Acquisition Properties are the Oil and Gas Properties identified as the
"Xxxxxxx Shale Acquisition Properties" and evaluated in the Initial Reserve
Reports and (G) that attached thereto is a true and complete list of all Xxxxxxx
Shale Acquisition Properties that are currently pending final decision by a
third party regarding purchase of such property in accordance with any
preferential right; (ii) a true and complete executed copy of each of the
Acquisition Documents; (iii) original counterparts or copies, certified as true
and complete, of the assignments, deeds and leases for all of the Xxxxxxx Shale
Acquisition Properties; and (iv) such other related documents and information as
the Administrative Agent shall have reasonably requested.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(i) The Administrative Agent shall be satisfied that the Borrower
has sufficient access to drilling rigs for the timely development of its and the
Guarantors' Oil and Gas Properties.
(j) The Administrative Agent shall have received and reviewed, to
its satisfaction, (i) the Indemnity Agreement and (ii) an opinion of Xxxxxxx
Xxxxxx L.L.P. as to the enforceability of the Indemnity Agreement.
(k) The Administrative Agent shall have received an opinion of (i)
Xxxxx & Xxx Xxxxxx LLP, special New York counsel to the Borrower, (ii) Xxxxxxx
Xxxxxx L.L.P., local counsel in Texas and (iii) local counsel of any other
jurisdictions requested by the Administrative Agent, in each case in form and
substance acceptable to the Administrative Agent and its counsel.
(l) The Administrative Agent shall be satisfied that the Borrower's
and its Subsidiaries' Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves, including those acquired as part of the Xxxxxxx Shale
Acquisition, provide sufficient coverage for the issuance of the First-Tranche
Term Loan, as the Administrative Agent deems appropriate in its sole discretion
and consistent with its normal oil and gas lending criteria as it exists at the
particular time.
(m) The Administrative Agent shall have received and reviewed, with
results satisfactory to the Lenders an operating or other agreement between the
Borrower and Voyager (the "Voyager Agreement") providing, among other things,
for the operation of various properties.
The Administrative Agent shall notify the Borrower and the Lenders when the
foregoing conditions have been met, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the Lenders to make
the First-Tranche Term Loans hereunder shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 12.02) at
or prior to 10:00 a.m., New York City time, on December 15, 2005 (and, in the
event such conditions are not so satisfied or waived, the First-Tranche Term
Loan Commitments shall terminate at such time).
Section 6.03 Second Term Draw. The obligations of the Term Lenders to make
the second Term Loans ("Second-Tranche Term Loans") shall not become effective
until the date on which each of the following conditions are satisfied (or
waived in accordance with Section 12.02):
(a) The conditions set forth in Section 6.01 and Section 6.02 shall
have been satisfied (or waived in accordance with Section 12.02).
(b) The Administrative Agent shall have received a certificate duly
and properly executed by a Responsible Officer and dated as of the date of the
Second-Tranche Term Funding Date certifying that (i) the Borrower has
successfully completed the placement of at least $18.0 million in additional
equity securities on terms and with parties satisfactory to the Administrative
Agent and the Lenders, which placement shall be in addition to the placement of
$6 million in equity securities required by Section 6.01(d) and (ii) the
Borrower has successfully completed the placement of at least $4.5 million in
subordinated debt on terms and with parties satisfactory to the Administrative
Agent and the Lenders, which placement shall be in addition to the placement of
the $8.5 million in subordinated debt required by Section 6.01(d) and the $12.0
million in subordinated debt required by Section 6.02(b).
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DUNE ENERGY, INC. CREDIT AGREEMENT
(c) The Administrative Agent shall have received duly executed Notes
payable to the order of each Term Lender in a principal amount equal to its
Second-Tranche Term Loan Commitment.
(d) The Administrative Agent shall have received a Term Loan
Borrowing Request in an amount equal to $16,000,000.
(e) The Collateral Agent shall be reasonably satisfied that the
Security Instruments have been amended, restated or supplemented as necessary to
grant Liens on the R Acquisition Properties and that as so amended, restated or
supplemented, the Security Instruments create first priority, perfected Liens
(subject only to Excepted Liens identified in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition)
on at least 85% of the R Acquisition Properties and (ii) have received
Letters-in-Lieu executed in blank by the Borrower and/or any Guarantor executing
a mortgage pursuant to clause (i) hereof in connection with the R Acquisition.
(f) The Administrative Agent shall have received title information
as the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at least 90% of the R
Acquisition Properties.
(g) The R Acquisition shall have been consummated simultaneously
with the funding of the Second-Tranche Term Loans and the Administrative Agent
shall have received and be satisfied with its review of (i) a certificate of a
Responsible Officer of the Borrower certifying: (A) that the Borrower is
concurrently consummating the R Acquisition in accordance with the terms of the
Acquisition Documents (with all of the material conditions precedent thereto
having been satisfied in all material respects by the parties thereto) and
acquiring substantially all of the R Acquisition Properties contemplated by the
Acquisition Documents; (B) as to the final purchase price for the R Acquisition
Properties after giving effect to all adjustments as of the closing date
contemplated by the Acquisition Documents and specifying, by category, the
amount of such adjustment; (C) that attached thereto is a true and complete list
of the Oil and Gas Properties that have been excluded from the R Acquisition
pursuant to the terms of the Acquisition Documents, specifying with respect
thereto the basis of exclusion as (1) title defect, (2) preferential purchase
right, (3) environmental or (4) casualty loss; (D) that attached thereto is a
true and complete list of all R Acquisition Properties for which the Seller has
elected to cure a title defect, (E) that attached thereto is a true and complete
list of all R Acquisition Properties for which the Seller has elected to
remediate an adverse environmental condition, (F) the R Acquisition Properties
are the Oil and Gas Properties identified as the "R Acquisition Properties" and
evaluated in the Initial Reserve Reports and (G) that attached thereto is a true
and complete list of all R Acquisition Properties that are currently pending
final decision by a third party regarding purchase of such property in
accordance with any preferential right; (ii) original counterparts or copies,
certified as true and complete, of the assignments, deeds and leases for all of
the R Acquisition Properties; and (iii) such other related documents and
information as the Administrative Agent shall have reasonably requested.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(h) The Administrative Agent shall be satisfied that the Borrower's
and its Subsidiaries' Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves, including those acquired as part of the R Acquisition,
provide sufficient coverage for the issuance of the Second-Tranche Term Loan, as
the Administrative Agent deems appropriate in its sole discretion and consistent
with its normal oil and gas lending criteria as it exists at the particular
time.
The Administrative Agent shall notify the Borrower and the Lenders when the
foregoing conditions have been met, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the Lenders to make
the Second-Tranche Term Loans hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 10:00 a.m., New York City time, on January 31, 2006 (and, in the
event such conditions are not so satisfied or waived, the Second-Tranche Term
Loan Commitments shall terminate at such time).
Section 6.04 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding) is subject
to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing, no event, development or circumstance has occurred or shall then
exist that has resulted in, or could reasonably be expected to have, a Material
Adverse Effect.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the date of such Borrowing, except to the extent
any such representations and warranties are expressly limited to an earlier
date, in which case, on and as of the date of such Borrowing, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.
(d) The making of such Loan would not conflict with, or cause any
Lender or the Issuing Bank to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of
any Loan or the consummation of the transactions contemplated by this Agreement
or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing Request
in accordance with Section 2.03.
Each request for a Revolving Borrowing shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.04(a) through (e).
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DUNE ENERGY, INC. CREDIT AGREEMENT
ARTICLE VII :
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that each of the
following statements is true and correct on the date hereof (and after giving
effect to the Transactions), and will be true and correct on the occasion of
each Borrowing, and the delivery of each compliance certificate except to the
extent such representations and warranties are expressly limited to an earlier
date:
Section 7.01 Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action (including,
without limitation, any action required to be taken by any class of directors of
the Borrower or any other Person, whether interested or disinterested, in order
to ensure the due authorization of the Transactions). Each Loan Document and
Acquisition Document to which the Borrower and each Guarantor is a party has
been duly executed and delivered by the Borrower and such Guarantor and
constitutes a legal, valid and binding obligation of the Borrower and such
Guarantor, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person (including shareholders or
any class of directors, whether interested or disinterested, of the Borrower or
any other Person), nor is any such consent, approval, registration, filing or
other action necessary for the validity or enforceability of any Loan Document
or the consummation of the transactions contemplated thereby, except such as
have been obtained or made and are in full force and effect other than (i) the
recording and filing of the Security Instruments as required by this Agreement
and (ii) those third party approvals or consents that, if not made or obtained,
would not cause a Default hereunder, could not have a Material Adverse Effect or
do not have an adverse effect on the enforceability of the Loan Documents, (b)
will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any Subsidiary or any order of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by the Borrower or such Subsidiary and (d) will not result in
the creation or imposition of any Lien on any Property of the Borrower or any
Subsidiary (other than the Liens created by the Loan Documents).
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the fiscal year ended December 31, 2004, reported
on by Xxxxxx & Xxxxxx, PC, independent public accountants, and (ii) as of and
for the first two fiscal quarters and the portion of the fiscal year ended June
30, 2005, certified by its chief financial officer. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the unaudited
quarterly financial statements.
(b) Since December 31, 2004, (i) there has been no event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect and (ii) the business of the Borrower and its
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.
(c) Neither the Borrower nor any Subsidiary has on the date hereof
any material Debt (including Disqualified Capital Stock) or any contingent
liabilities, off-balance sheet liabilities or partnerships, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in the Financial Statements.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no actions,
suits, investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary or involving the Acquisition
(i) as to which there is a reasonable possibility of an adverse determination
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect, (ii) that involve any
Loan Document any Acquisition Document or the Transactions or (iii) that could
impair the consummation of the Acquisition on the time and in the manner
contemplated by the Acquisition Documents.
(b) Since the date of this Agreement, there has been no change in
the status of the matters disclosed in Schedule 7.05 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
Section 7.06 Environmental Matters. Except as set forth on Schedule 7.06:
(a) neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws that individually or in the
aggregate could have a Material Adverse Effect.
(b) no Property of the Borrower or any Subsidiary nor the operations
currently conducted thereon or, to the knowledge of the Borrower, by any prior
owner or operator of such Property or operation, are in violation of or subject
to any existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws other than violations that neither
individually or in the aggregate could have a Material Adverse Effect.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations, except to the extent the failure
to obtain or file such notices, permits, licenses, exemptions, approvals or
similar authorizations could not have a Material Adverse Effect.
(d) all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of the Borrower or any Subsidiary have in
the past been transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and, to the
knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.
(e) the Borrower has taken all steps reasonably necessary to
determine and has determined that no oil, hazardous substances, solid waste or
oil and gas waste, have been disposed of or otherwise released and there has
been no threatened release of any oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of the Borrower or any Subsidiary except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA, and the Borrower does not have any reason to believe that
such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement.
(g) neither the Borrower nor any Subsidiary has any known contingent
liability or Remedial Work in connection with any release or threatened release
of any oil, hazardous substance, solid waste or oil and gas waste into the
environment that could reasonably be expected to have a Material Adverse Effect.
(h) neither the Borrower's nor any Subsidiary's oil and gas
operations on its Oil and Gas Properties will be subject to any environmental
assessment requirements under the National Environmental Policy Act or any
analogous Governmental Regulation or any other environmental review or
assessment requirements in excess of environmental review and assessment
requirements required in connection with Borrower and its Subsidiaries obtaining
any permits or other required authorizations in completing recent xxxxx on their
Oil and Gas Properties.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Subsidiary is in compliance with
all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Neither the Borrower nor any Subsidiary is in default nor has
any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Subsidiary to Redeem or make any
offer to Redeem under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which the
Borrower or any Subsidiary or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
Section 7.09 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of, or subject
to regulation under, the Public Utility Holding Company Act of 1935, as amended.
Section 7.10 Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of Taxes and other governmental charges are, in the reasonable opinion
of the Borrower, adequate. No Tax Lien has been filed and, to the knowledge of
the Borrower, no claim is being asserted with respect to any such Tax or other
such governmental charge.
Section 7.11 ERISA.
(a) As of the Effective Date, neither the Borrower nor any
Subsidiaries has or has had any Plan in effect. The Borrower, the Subsidiaries
and each ERISA Affiliate have complied in all material respects with ERISA and,
where applicable, the Code regarding each Plan.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result
in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated within the past five years. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or
is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan as of the
date hereof, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.
(f) The actuarial present value of the benefit liabilities under
each Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
is required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the Plan.
Section 7.12 Disclosure; No Material Misstatements. The Borrower has
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the other reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower or any Subsidiary to
51
DUNE ENERGY, INC. CREDIT AGREEMENT
the Administrative Agent or any Lender or any of their Affiliates in connection
with the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no fact peculiar to the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect
or in the future is reasonably likely to have a Material Adverse Effect and
which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated hereby.
There are no statements or conclusions in any Reserve Report that are based upon
or include misleading information or fail to take into account material
information regarding the matters reported therein.
Section 7.13 Insurance. Schedule 7.13 attached hereto contains an accurate
and complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance that are owned or held by or on behalf
of the Borrower and its Subsidiaries. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date of the closing have been paid, and no notice of cancellation
or termination has been received with respect to any such policy. Such policies
are sufficient for compliance with all Governmental Requirements and all
agreements to which the Borrower is a party; are valid, outstanding and
enforceable policies; provide adequate insurance coverage for the assets and
operations of the Borrower and its Subsidiaries in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by companies engaged in the
same or a similar business; will remain in full force and effect through the
respective dates set forth in Schedule 7.13 without the payment of additional
premiums, except for policies for which premiums were based on estimated amounts
and are subject to periodic adjustments; and will not in any way be affected by,
or terminate or lapse by reason of, the transactions contemplated by this
Agreement and the Loan Documents. Neither the Borrower nor any Subsidiary (nor
to Borrower's knowledge any prior owner of the Oil and Gas Properties) has been
refused any insurance with respect to its assets or operations, nor has it been
limited below usual and customary policy limits, by an insurance carrier to
which it has applied for any insurance or with which it has carried insurance
during the last three years. The Collateral Agent, the Administrative Agent and
the Lenders have been or will be on or before the Effective Date named as
additional insureds in respect of such liability insurance policies and the
Collateral Agent has been named as loss payee with respect to property loss
insurance. provisions in said insurance policy or policies shall provide that
the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Collateral Agent.
Section 7.14 Restriction on Liens. Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement, or subject to
any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to the Collateral Agent and the Lenders on
or in respect of their Properties to secure the Indebtedness and the Loan
Documents.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15, the
Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries.
Section 7.16 Location of Business and Offices. The Borrower's jurisdiction
of organization is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Dune Energy, Inc.; and the
organizational identification number of the Borrower in its jurisdiction of
organization is 2969625 (or, in each case, as set forth in a notice delivered to
the Administrative Agent pursuant to Section 8.01(m) in accordance with Section
12.01). The Borrower's principal place of business and chief executive offices
are located at the address specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(m) and Section 12.01(c)). Each
Subsidiary's jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.15 (or as set forth
in a notice delivered pursuant to Section 8.01(m)).
Section 7.17 Properties; Titles, Etc.
(a) Each of the Borrower and the Subsidiaries has good and
defensible title to the Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each
case, free and clear of all Liens except Liens permitted by Section 9.03. After
giving full effect to the Excepted Liens, the Borrower or the Subsidiary
specified as the owner owns the net interests in production attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such Properties shall not in any material respect
obligate the Borrower or such Subsidiary to bear the costs and expenses relating
to the maintenance, development and operations of each such Property in an
amount in excess of the working interest of each Property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower's or such Subsidiary's net revenue
interest in such Property.
(b) All material leases and agreements necessary for the conduct of
the business of the Borrower and the Subsidiaries are valid and subsisting, in
full force and effect, and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give rise
to a default under any such lease or leases, which could reasonably be expected
to have a Material Adverse Effect.
(c) The rights and Properties presently owned, leased or licensed by
the Borrower and the Subsidiaries including, without limitation, all easements
and rights of way, include all rights and Properties necessary to permit the
Borrower and the Subsidiaries to conduct their business in all material respects
in the same manner as its business has been conducted prior to the date hereof.
(d) All of the Properties of the Borrower and the Subsidiaries that
are reasonably necessary for the operation of their businesses are in good
working condition and are maintained in accordance with prudent business
standards.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(e) The Borrower and each Subsidiary owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons.
Section 7.18 Maintenance of Properties. Except as set forth on Schedule
7.18, the Oil and Gas Properties (and Properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all Government Requirements and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties. Specifically in connection with the foregoing, (a) no
Oil and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time) and
(b) none of the xxxxx comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) is deviated from the vertical more than the
maximum permitted by Government Requirements, and such xxxxx are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of xxxxx located on Properties unitized
therewith, such unitized Properties). All pipelines, xxxxx, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Borrower or any of its Subsidiaries that are
necessary to conduct normal operations are being maintained in a state adequate
to conduct normal operations, and with respect to such of the foregoing which
are operated by the Borrower or any of its Subsidiaries, in a manner consistent
with the Borrower's or its Subsidiaries' past practices.
Section 7.19 Gas Imbalances, Prepayments. As of the date hereof, except as
set forth on Schedule 7.19, (a) on a net basis there are no gas imbalances, take
or pay or other prepayments that would require the Borrower or any of its
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor, (b)
no material gas imbalances presently exist with respect to any of the Borrower's
Oil and Gas Properties, (c) none of the Borrower's Oil and Gas Properties 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) and (d) none of the
Oil and Gas Properties of the Borrower is subject to a contractual or other
arrangement for the sale of oil or gas production for a fixed price which cannot
be canceled on 90 days (or less) notice or which contains terms which are not
customary in the industry. None of the Oil and Gas Properties of Borrower is
subject at present to any regulatory refund obligation and no facts exist which
might cause the same to be imposed
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.20 Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 7.20, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below
the subject Property's delivery capacity), no material agreements exist which
are not cancelable on 60 days notice or less without penalty or detriment for
the sale of production from the Borrower's or its Subsidiaries' Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a)
pertain to the sale of production at a fixed price and (b) have a maturity or
expiry date of longer than six (6) months from the date hereof. All proceeds
from the sale of the Borrower's interests in Hydrocarbons from its Oil and Gas
Properties will, after the Effective Date, be paid in full to the Borrower 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.
Section 7.21 Swap Agreements. Schedule 7.21, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(f), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.22 Use of Loans. The proceeds of the Loans shall be used only
(a) to provide funding in connection with the Acquisition, (b) to pay closing
costs and fees related to the Transaction, (c) to provide working capital for
development drilling and completion expenditures on Proved Undeveloped Reserves
owned by the Borrower or its Subsidiaries (including those acquired under the
Acquisition), (d) with respect to the Revolving Loan, to pay outstanding amounts
due under the Term Loans and (e) for other general corporate purposes not
prohibited by the terms of this Agreement. The Borrower and its Subsidiaries are
not engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation
T, U or X of the Board). No part of the proceeds of any Loan will be used for
any purpose which violates the provisions of Regulations T, U or X of the Board.
Section 7.23 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 7.24 Material Agreements. Set forth on Schedule 7.24 hereto is a
complete and correct list of all material agreements and other instruments of
the Borrower and its Subsidiaries setting forth each counterparty thereto (other
than the Loan Documents) relating to the purchase, transportation by pipeline,
gas processing, marketing, development, sale and supply of Hydrocarbons, farmout
arrangements, joint operating agreements, contract operating agreements or other
material contracts (excluding oil and gas leases of the Borrower) to which the
Borrower is a party on or after the Effective Date or by which its Properties is
bound on or after the Effective Date (collectively "Material Agreements") and
copies of such documents have been provided to the Administrative Agent. All
such agreements are in full force and effect and the Borrower is not in default
thereunder, nor is there any uncured default by any Affiliate predecessor in
interest to the Borrower or, to the Borrower's knowledge, by any predecessor in
interest to the Borrower (other than an Affiliate predecessor) or counterparty
thereto, nor has the Borrower altered any material item of such agreements since
the Effective Date without the prior written consent of the Lenders.
Section 7.25 No Brokers. Except as set forth on Schedule 7.25, no Person
is entitled to any brokerage fee or finders fee or similar fee or commission in
connection with arranging the Loans contemplated by this Agreement.
Section 7.26 Reliance. In connection with the negotiation of and the
entering into this Agreement, the Borrower acknowledges and represents that none
of the Lenders, the Administrative Agent or any representative of any of the
foregoing is acting as a fiduciary or financial or investment advisor for it; it
is not relying upon any representations (whether written or oral) of such
Persons; it has consulted with its own legal, regulatory, tax, business
investment, financial and accounting advisors to the extent it has deemed
necessary, and it has made its own investment, hedging, and trading decisions
based upon its own judgment and upon any advice from such advisors as it has
deemed necessary and not upon any view expressed by any Lender, the
Administrative Agent or any representative of any of the foregoing; it has not
been given by any Lender, the Administrative Agent or any representative of any
of the foregoing (directly or indirectly through any other Person) any advice,
counsel, assurance, guarantee, or representation whatsoever as to the expected
or projected success, profitability, return, performance, result, effect,
consequence, or benefit (either legal, regulatory, tax, financial, accounting,
or otherwise) of this Agreement or the transactions contemplated hereby; and it
is entering into this Agreement and the other Loan Documents with a full
understanding of all of the risks hereof and thereof (economic and otherwise),
and it is capable of assuming and willing to assume (financially and otherwise)
those risks.
Section 7.27 Investments and Guaranties. The Borrower has not made any
investments in, advances to or guaranties of the obligations of any Person,
except as reflected in the financial statements described in Section 8.01(a).
Section 7.28 Acquisition. The copies of the Acquisition Documents
delivered by the Borrower to the Administrative Agent are true, accurate and
complete and have not been amended or modified in any manner, other than
pursuant to amendments or modifications previously delivered to the
Administrative Agent. No party to any Acquisition Document is in default in
respect of any material term or obligation thereunder.
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DUNE ENERGY, INC. CREDIT AGREEMENT
ARTICLE VIII :
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full, the Borrower
covenants and agrees with the Lenders that:
Section 8.01 Financial Statements; Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 90 days after
the end of each fiscal year of the Borrower, its audited consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by Xxxxxx &
Xxxxxx, PC or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied.
(b) Quarterly Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Borrower, its consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal quarter
and the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Operating Statements. During the period commencing on the
Effective Date through the first year thereafter, the Borrower shall deliver the
following report on a bi-monthly basis; thereafter, the Borrower shall deliver
the following report within 30 days after the end of each fiscal quarter (all
such reports covering the Borrower and its Subsidiaries): internally prepared
(and on a comparative basis to the results for the prior 12 months) consolidated
balance sheet, (ii) consolidated income statement and statement of cash flows a
report setting forth in reasonable detail all Capital Expenditures and
Investments made during such period, including information indicating the
location and purpose of such expenditures, (iv) a report setting forth the
volume of crude oil and natural gas produced and saved, the volumes of crude oil
and natural gas sold, the prices at which such sales were made and the revenues
derived from such sales, gross revenues, net income, related lease operating
expenses from the Oil and Gas Properties, and setting forth the related ad
valorem, severance and production and lease operating expenses attributable to
the Oil and Gas Properties, and any production imbalances incurred during such
period (the "Lease Operating Statement" or "XXX"), (v) a report, in form and
substance satisfactory to the Administrative Agent, setting forth as of the last
Business Day of such month, a summary of the Borrower's and its Subsidiaries
hedging positions under all Swap Agreements, including the type, term, effective
date, termination date and notional principal amounts or volumes, the amount
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DUNE ENERGY, INC. CREDIT AGREEMENT
contracted in volumes and as a percentage of the Borrower's and its
Subsidiaries' total anticipated production throughout the length of such Swap
Agreements, the hedged price(s), interest rate(s) or exchange rates(s), as
applicable, and any new or amended credit support agreements relating thereto
(including any margin required or supplied), and the counterparty to each such
agreement) and (vi) such additional information with respect to any of the
Borrower's and its Subsidiaries' Oil and Gas Properties as may be reasonably
requested by the Administrative Agent. Items (i) through (iii) shall be as at
the end of such fiscal month, and for the period commencing at the end of the
immediately preceding fiscal year and ending with the end of such fiscal month,
all in reasonable detail subject to normal year-end audit adjustments and the
absence of footnotes. Items (i) through (iii) shall not be prepared in
accordance with GAAP; the principal items not prepared in accordance with GAAP
will relate to unrealized hedging gains and losses and deferred income taxes;
provided that such financial statements prepared after the end of the 12th
fiscal month of each Fiscal Year shall be in consolidated and consolidating form
and may be delivered within 30 days after the end of such month and be subject
to year-end audit adjustments.
(d) Certificate of Financial Officer -- Compliance. Concurrently
with any delivery of financial statements under Section 8.01(a), Section 8.01(b)
or Section 8.01(c), a certificate of a Financial Officer of the Borrower in
substantially the form of Exhibit D hereto (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, (ii)
setting forth reasonably detailed calculations demonstrating compliance with
Section 8.13(b) and Section 9.01 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.
(e) Certificate of Financial Officer -- Consolidating Information.
If, at any time, all of the Consolidated Subsidiaries of the Borrower are not
Consolidated Subsidiaries, then concurrently with any delivery of financial
statements under Section 8.01(a) or Section 8.01(b), a certificate of a
Financial Officer setting forth consolidating spreadsheets that show all
Consolidated Subsidiaries and the eliminating entries, in such form as would be
presentable to the auditors of the Borrower.
(f) Certificate of Financial Officer - Swap Agreements. Concurrently
with any delivery of financial statements under Section 8.01(a) and Section
8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(g) Certificate of Insurer -- Insurance Coverage. Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Collateral Agent, and,
if requested by the Collateral Agent or any Lender, all copies of the applicable
policies.
(h) Other Accounting Reports. Promptly upon receipt thereof, a copy
of each other report or letter submitted to the Borrower or any of its
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower or any such
Subsidiary, and a copy of any response by the Borrower or any such Subsidiary,
or the Board of Directors of the Borrower or any such Subsidiary, to such letter
or report.
(i) SEC and Other Filings; Reports to Shareholders. Promptly after
the same become publicly available, copies of all periodic and other material
reports, proxy statements and other materials filed by the Borrower or any
Subsidiary with the SEC, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be.
(j) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
(k) Lists of Purchasers. Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
all Persons purchasing Hydrocarbons from the Borrower or any Subsidiary.
(l) Notice of Sales of Oil and Gas Properties. If the Borrower or
any Subsidiary intends to sell, transfer, assign or otherwise dispose of any Oil
or Gas Properties or any Equity Interests in any Subsidiary in accordance with
Section 9.14, prior written notice of such disposition, the price thereof and
the anticipated date of closing and any other details thereof requested by the
Administrative Agent or any Lender.
(m) Information Regarding Borrower and Guarantors. Prompt written
notice (and in any event within ten (10) days prior thereto) of any change (i)
in the Borrower or any Guarantor's corporate name or in any trade name used to
identify such Person in the conduct of its business or in the ownership of its
Properties, (ii) in the location of the Borrower or any Guarantor's chief
executive office or principal place of business, (iii) in the Borrower or any
Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's
jurisdiction of organization or such Person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor's federal taxpayer identification number.
(n) Notices of Certain Changes. Promptly, but in any event within
five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the Employment Agreements, the Voyager Agreement,
the certificate or articles of incorporation, by-laws, any preferred stock
designation or any other organic document of the Borrower, any Guarantor or any
Subsidiary.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(o) Notices Relating to Acquisition. If, after the Effective Date:
(i) the Borrower is required or elects to purchase any of the Acquisition
Properties which had been excluded from, or return any of the Acquisition
Properties which had been included in, the Acquisition Properties in accordance
with the terms of the Acquisition Documents, (ii) the Borrower is required to
honor any preferential purchase right in respect of any Acquisition Property
which has not been waived, (iii) any matter being disputed in accordance with
the terms of the Acquisition Documents is resolved or (iv) the Borrower and the
seller(s) calculate and agree upon the "closing adjustment statement" or
"post-closing adjustment statement" as contemplated by the Acquisition
Documents, then, in each such case, the Borrower shall promptly give the
Administrative Agent notice in reasonable detail of such circumstances.
(p) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.
Section 8.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against or affecting the Borrower or any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in
liability in excess of $500,000 not fully covered by insurance, subject to
normal deductibles;
(c) the filing or commencement of any action, suit, proceeding, or
arbitration by or on behalf of the Borrower or any of its Subsidiaries claiming
or asserting damages in favor of the Borrower or its Subsidiaries valued in
excess of $500,000;
(d) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $500,000; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 8.03 Existence; Conduct of Business. The Borrower will, and will
cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 9.13.
Section 8.04 Payment of Obligations. The Borrower will, and will cause
each Subsidiary to, pay its obligations, including Tax liabilities of the
Borrower and all of its Subsidiaries before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any Property of the Borrower or any Subsidiary.
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will, and will cause each Subsidiary to, do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Loan Documents, including, without limitation, this Agreement, at the time
or times and in the manner specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower, at its
own expense, will, and will cause each Subsidiary to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements, Environmental Laws, and plugging and
abandonment obligations and all applicable laws, rules and regulations of every
other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom.
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its Oil and Gas Properties and other
material Properties, including, without limitation, all equipment, machinery and
facilities.
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties.
(e) operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements.
(f) to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.
Section 8.07 Insurance. The Borrower will, and will cause each Subsidiary
to, maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations, but in any event it will maintain at a minimum the types of
insurance in such amounts as set forth on Schedule 7.13.
Section 8.08 Books and Records; Inspection Rights. The Borrower will, and
will cause each Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
Section 8.09 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 8.10 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties or any other Property to the extent caused by the
Borrower's or any of its Subsidiaries' operations except in compliance with
applicable Environmental Laws, the disposal or release of which could reasonably
be expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
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DUNE ENERGY, INC. CREDIT AGREEMENT
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Borrower's and its Subsidiaries' obligations under this Section
8.10(a) are timely and fully satisfied, which failure to establish and implement
could reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five days
of the occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $500,000, not fully covered by insurance, subject
to normal deductibles.
(c) The Borrower will, and will cause each Subsidiary to, provide
environmental audits and tests in accordance with American Society of Testing
Materials standards upon request by the Administrative Agent and the Lenders and
no more than once per year in the absence of any Event of Default (or as
otherwise required to be obtained by the Administrative Agent or the Lenders by
any Governmental Authority), in connection with any future acquisitions of Oil
and Gas Properties or other Properties.
(d) On or before December 15, 2005, the Borrower shall deliver to
the Administrative Agent a satisfactory Phase I environmental report with
respect to the "Welder Ranch" Oil and Gas Properties owned by the Borrower or
its Subsidiaries.
Section 8.11 Further Assurances.
(a) The Borrower at its sole expense will, and will cause each
Subsidiary to, promptly execute and deliver to the Administrative Agent or the
Collateral Agent, as applicable, all such other documents, agreements and
instruments reasonably requested by the Administrative Agent or the Collateral
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for the Indebtedness, or to
correct any omissions in this Agreement or the Security Instruments, or to state
more fully the obligations secured therein, or to perfect, protect or preserve
any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Collateral Agent, in connection therewith.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) The Borrower hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Mortgaged Property without the signature of the
Borrower or any other Guarantor where permitted by law. A photographic or other
reproduction of the Security Instruments or any financing statement covering the
Mortgaged Property or any part thereof shall be sufficient as a financing
statement where permitted by law. If any Event of Default occurs and is
continuing, the Borrower hereby authorizes the Administrative Agent to complete
with all pertinent information any Letter-in-Lieu that has been given to the
Administrative Agent in connection herewith and deliver such Letter-in-Lieu to
any purchaser of production from the Borrower's or its Subsidiaries' Oil and Gas
Properties, and neither the Borrower nor any of its Subsidiaries will contest
such Letter-in-Lieu and, if notified by such purchaser, the Borrower shall
acknowledge to such purchaser that such purchaser should disburse any amounts to
the Administrative Agent that such purchaser would otherwise be obligated to
disburse to Borrower or any Subsidiary in connection with such Letter-in-Lieu.
Section 8.12 Reserve Reports.
(a) With respect to a Tri-Annual Redetermination, on or before March
1, 2006 (with an as of date of February 28, 2006), July 1, 2006 (with an as of
date of June 30, 2006), November 1, 2006 (with an as of date of October 31,
2006) and March 1, 2007 (with an as of date of February 28, 2007), the Borrower
shall furnish to the Administrative Agent and the Revolving Lenders a Reserve
Report. The Reserve Report as of February 28, 2006 shall be prepared as of
December 31, 2005 by one or more Approved Petroleum Engineers and internally
updated to February 28, 2006. The Reserve Report as of February 28, 2007 shall
be prepared as of December 31, 2006 by one or more Approved Petroleum Engineers
and internally updated for the period from January 1, 2007 through February 28,
2007 and all other Reserve Reports delivered for a Tri-Annual Redetermination
shall be prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Reports to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding provided Reserve Report prepared by the Approved Petroleum Engineers.
(b) With respect to a Term Loan Redetermination, the Borrower shall
furnish to the Administrative Agent and the Revolving Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
provided Reserve Report prepared by one or more Approved Petroleum Engineers.
The Borrower shall provide such Reserve Report with an "as of" date as required
by the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.
(c) With respect to a Semi-Annual Scheduled Redetermination, on or
before October 1 (with an as of date of June 30) and April 1 (with an as of date
of December 31) of each year, commencing October 1, 2007, the Borrower shall
furnish to the Administrative Agent and the Revolving Lenders a Reserve Report.
The Reserve Report as of February 28th of each year shall be prepared by one or
more Approved Petroleum Engineers, and the August 31st Reserve Report of each
year shall be prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding provided Reserve Report prepared by one or more Approved Petroleum
Engineers.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(d) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Revolving Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
provided Reserve Report prepared by one or more Approved Petroleum Engineers.
For any Interim Redetermination requested by the Administrative Agent pursuant
to Section 2.07(b), the Borrower shall provide such Reserve Report with an "as
of" date as required by the Administrative Agent as soon as possible, but in any
event no later than thirty (30) days following the receipt of such request.
(e) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or its
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.19 with
respect to its Oil and Gas Properties evaluated in such Reserve Report which
would require the Borrower or any Subsidiary to deliver Hydrocarbons either
generally or produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor, (iv) none of their
Oil and Gas Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on Schedule
7.20 had such agreement been in effect on the date hereof and attached thereto
is a schedule of the Oil and Gas Properties evaluated by such Reserve Report
that are Mortgaged Properties and demonstrating the percentage of the Borrowing
Base that the value of such Mortgaged Properties represent.
Section 8.13 Title Information.
(a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a) and Section 8.12(b),
the Borrower will deliver title information in form and substance acceptable to
the Administrative Agent covering enough of the Oil and Gas Properties evaluated
by such Reserve Report that were not included in the immediately preceding
Reserve Report, so that the Administrative Agent shall have received together
with title information previously delivered to the Administrative Agent,
satisfactory title information on at least 90% of the total value of the Oil and
Gas Properties evaluated by such Reserve Report.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 90% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 60-day period or
the Borrower does not comply with the requirements to provide acceptable title
information covering 90% of the value of the Oil and Gas Properties evaluated in
the most recent Reserve Report, such default shall not be a Default, but instead
the Administrative Agent shall have the right to exercise the following remedy
in its sole discretion from time to time, and any failure to so exercise this
remedy at any time shall not be a waiver as to future exercise of the remedy by
the Administrative Agent. To the extent that the Administrative Agent is not
satisfied with title to any Mortgaged Property after the 60-day period has
elapsed, such unacceptable Mortgaged Property shall not count towards the 90%
requirement, and the Administrative Agent may send a notice to the Borrower and
the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Majority Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 90%
of the value of the Oil and Gas Properties. This new Borrowing Base shall become
effective immediately after receipt of such notice.
Section 8.14 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(e)(vi)) to ascertain whether the
Mortgaged Properties represent at least 85% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. If the Mortgaged Properties do not represent at
least 85% of such total value, then the Borrower shall, and shall cause its
Subsidiaries to, grant, within thirty (30) days of delivery of the certificate
required under Section 8.12(e) to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (provided the Excepted Liens of the
type described in clauses (a) to (d) and (f) of the definition thereof may
exist, but subject to the provisos at the end of such definition) on additional
Oil and Gas Properties not already subject to a Lien of the Security Instruments
such that after giving effect thereto, the Mortgaged Properties will represent
at least 85% of such total value. All such Liens will be created and perfected
by and in accordance with the provisions of deeds of trust, security agreements
and financing statements or other Security Instruments, all in form and
substance reasonably satisfactory to the Administrative Agent and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes. In order to comply with the foregoing, if any Subsidiary
places a Lien on its Oil and Gas Properties and such Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).
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(b) The Borrower shall promptly cause each Subsidiary to guarantee
the Indebtedness pursuant to the Guaranty Agreement. In connection with any such
guaranty, the Borrower shall, or shall cause such Subsidiary to, (i) execute and
deliver the Guaranty Agreement or a supplement to the Guaranty Agreement as
required by the Administrative Agent, (ii) xxxxx x xxxx in and to all of the
Properties of such Subsidiary (including, without limitation, the Oil and Gas
Properties of such Subsidiary) pursuant to a Security Instrument and such other
deeds of trust, mortgages, agreements and instruments, in form and substance
satisfactory to the Collateral Agent, as the Collateral Agent may request, (iii)
pledge all of the Equity Interests of such Subsidiary (including, without
limitation, delivery of original stock certificates evidencing the Equity
Interests of such Subsidiary, together with an appropriate undated stock powers
for each certificate duly executed in blank by the registered owner thereof) and
(iv) execute and deliver such other additional closing documents, certificates
and legal opinions as shall reasonably be requested by the Administrative Agent
or the Collateral Agent.
(c) The Borrower will at all times cause the other material tangible
and intangible assets of the Borrower and each Subsidiary to be subject to a
Lien of the Security Instruments.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will
cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (a) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (b) immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in section 406 of ERISA
or in section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or the principal Financial
Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying
the nature thereof, what action the Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, and (c) immediately upon receipt
thereof, copies of any notice of the PBGC's intention to terminate or to have a
trustee appointed to administer any Plan. With respect to each Plan (other than
a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and
ERISA Affiliate to, (i) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and (k)
thereof) and of section 302 of ERISA (determined without regard to sections 303,
304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.
Section 8.16 Swap Agreements. The Borrower shall enter into Swap
Agreements on or before the Effective Date, the date that the initial Borrowing
Base becomes fully available and at each Scheduled Redetermination during the
first year after the Effective Date with an Approved Counterparty and with the
notional volumes for which, as of the date such Swap Agreement is executed
(together with any other Swap Agreements in effect), are 65 to 70% of the
reasonably anticipated projected production from Proved Developed Producing
Reserves for each month through the second anniversary of the Effective Date for
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each of crude oil and natural gas, calculated separately. The Swap Agreements
will be in form and substance acceptable to the Administrative Agent. The
notional volumes for each additional Swap Agreement shall be established by the
Administrative Agent at the time of such agreement. The Borrower shall neither
assign, terminate or unwind any such Swap Agreements nor sell any Swap
Agreements if the effect of such action (when taken together with any other Swap
Agreements executed contemporaneously with the taking of such action) would have
the effect of canceling its positions under such Swap Agreements required
hereby.
Section 8.17 Marketing Activities.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter
into any contracts related thereto other than (i) contracts for the sale of
Hydrocarbons scheduled or reasonably estimated to be produced from their proved
Oil and Gas Properties during the period of such contract, (ii) contracts for
the sale of Hydrocarbons scheduled or reasonably estimated to be produced from
proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) 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.
(b) All Hydrocarbons produced from the Oil and Gas Properties of
Borrower and its Subsidiaries shall be marketed on an arms length basis using
one or more Persons that are not Affiliates of the Borrower.
Section 8.18 Title Due Diligence.
(a) On or before the date that is 60 days after the Effective Date,
the Borrower shall deliver to the Administrative Agent a division order title
opinion (which includes opinions as to any Liens affecting the Property covered
in such opinion), in form and substance satisfactory to the Administrative Agent
and its counsel, covering all xxxxx located on the Mortgaged Property owned or
acquired through the Effective Date.
(b) On or before the date that is 60 days after the First-Tranche
Term Loan Funding Date, the Borrower shall deliver to the Administrative Agent a
division order title opinion (which includes opinions as to any Liens affecting
the Property covered in such opinion), in form and substance satisfactory to the
Administrative Agent and its counsel, covering all xxxxx located on the
Mortgaged Property owned or acquired from the Effective Date through the
First-Tranche Term Loan Funding Date.
(c) On or before the date that is 60 days after the Second-Tranche
Term Loan Funding Date, the Borrower shall deliver to the Administrative Agent a
division order title opinion (which includes opinions as to any Liens affecting
the Property covered in such opinion), in form and substance satisfactory to the
Administrative Agent and its counsel, covering all xxxxx located on the
Mortgaged Property owned or acquired from the First-Tranche Term Loan Funding
Date through the Second-Tranche Term Loan Funding Date.
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(d) On or before the date that is 60 days after the Borrower or any
Subsidiary completes any well located on Mortgaged Property, the Borrower shall
deliver to the Administrative Agent a division order title opinion (which
includes opinions as to any Liens affecting the Property covered in such
opinion), in form and substance satisfactory to the Administrative Agent and its
counsel, covering all such xxxxx.
(e) The Borrower and each Subsidiary will permit the Administrative
Agent and the Lenders to continue to review the title information of the
Borrower and its Subsidiaries and will provide Administrative Agent and the
Lenders with title information as the Administrative Agent and the Lenders may
reasonably request in order for the Administrative Agent and the Lenders to more
fully evaluate Borrower's and its Subsidiaries' title to the Oil and Gas
Properties.
ARTICLE IX :
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full, the Borrower covenants
and agrees with the Lenders that:
Section 9.01 Financial Covenants.
(a) Current Ratio. The Borrower will not permit, as of the last day
of any fiscal quarter commencing with quarter ending on December 31, 2005, the
Borrower's ratio of (i) consolidated current assets (excluding non-cash assets
under FAS 133) plus amounts available under the Borrowing Base to (ii)
consolidated current liabilities (excluding the current portion of the Loans and
non-cash obligations under FAS 133 and FAS 143 to the extent such liabilities
arise from Swap Agreements with Secured Swap Providers that will be satisfied
from actual future production volumes from the Borrower's Oil and Gas
Properties), to be less than 1.00:1.00.
(b) Ratio of Total Debt to EBITDA. The Borrower will not, as of the
last day of any fiscal quarter commencing with the quarter ending March 31,
2006, permit the Borrower's ratio of Total Debt (excluding Debt of the type
described in Section 9.02(b)) as of the last day of any fiscal quarter to EBITDA
for the four quarter period ending on such date to be greater than (i) 3.50:1.00
with respect to periods ending on March 31, 2006 and June 30, 2006, (ii)
3.00:1.00 with respect to the periods ending on September 30, 2006 and December
31, 2006 and (iii) 2.50:1.00 for all periods ending thereafter.
(c) Ratio of EBITDA to Interest. The Borrower will not, as of the
last day of any fiscal quarter commencing with the quarter ending March 31,
2006, permit the Borrower's ratio of EBITDA for the four quarter period ending
on such date to Interest Expense for the same period to be less than (i)
2.50:1.00 with respect to periods ending on March 31 2006 and June 30, 2006,
(ii) 3.25:1.00 with respect to the periods ending on September 30, 2006 and
December 31, 2006 and (iii) 4.00:1.00 for all periods thereafter.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(d) Minimum Tangible Net Worth.
(i) The Borrower will not permit, as of the fiscal year ending
on December 31, 2005, its Tangible Net Worth at any time to be less than the sum
of (A) $30,000,000, plus (B) 50% of the Borrower's Consolidated Net Income (but
not loss) for each fiscal quarter occurring after the Effective Date taken as a
single accounting period plus (C) 50% of the Net Cash Proceeds from the sale of
any Equity Interests of the Borrower after the Effective Date.
(ii) The Borrower will not permit, as of the last day of any
fiscal quarter commencing with quarter ending on March 31, 2006, its Tangible
Net Worth at any time to be less than the sum of (iii) $50,000,000, plus (iv)
50% of the Borrower's Consolidated Net Income (but not loss) for each fiscal
quarter occurring after the Effective Date taken as a single accounting period
plus (v) 50% of the Net Cash Proceeds from the sale of any Equity Interests of
the Borrower after the Effective Date.
Section 9.02 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.
(b) Debt of the Borrower and its Subsidiaries existing on the date
hereof that is reflected in the Financial Statements, including the Subordinated
Debt.
(c) accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business that are not greater
than sixty (60) days past the date of invoice or delinquent or that are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP.
(d) Debt under Capital Leases not to exceed $100,000.
(e) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties.
(f) intercompany Debt between the Borrower and any Subsidiary or
between Subsidiaries to the extent permitted by Section 9.06(f); provided that
such Debt is not held, assigned, transferred, negotiated or pledged to any
Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and,
provided further, that any such Debt owed by either the Borrower or a Guarantor
shall be subordinated to the Indebtedness on terms set forth in the Guaranty
Agreement.
(g) endorsements of negotiable instruments for collection in the
ordinary course of business.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(h) Debt associated with Swap Agreements permitted under Section
9.20.
Section 9.03 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except (a) Liens securing the
payment of any Indebtedness and the Secured Hedge Obligations and (b) Excepted
Liens.
Section 9.04 Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders or make any distribution of its Property to its Equity Interest
holders, except (a) the Borrower may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock), (b) Wholly-Owned Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests and (c)
the Borrower may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of the
Borrower and its Subsidiaries.
Section 9.05 Subordinated Debt. The Borrower will not, and will not permit
any of its Subsidiaries to, pay or make, directly or indirectly, any payment of
principal or interest with respect to any of the Subordinated Debt, not
permitted by the terms of the Subordinated Loan Documents. The Borrower will not
amend any provision of the Subordinated Debt Documents without the consent of
the Majority Lenders.
Section 9.06 Investments, Loans and Advances. The Borrower will not, and
will not permit any Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
(a) Investments reflected in the Financial Statements or that are
disclosed to the Lenders in Schedule 9.06.
(b) accounts receivable arising in the ordinary course of business.
(c) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof.
(d) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by Standard & Poor's Rating Group or Xxxxx'x Investors Service,
Inc., respectively.
(e) deposits in money market funds investing exclusively in
Investments described in Section 9.06(c) or Section 9.06(d).
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DUNE ENERGY, INC. CREDIT AGREEMENT
(f) Investments made by the Borrower or any Subsidiary in any of
their respective Subsidiaries, provided that the recipient Subsidiary of such
Investment becomes a Guarantor hereunder pursuant to Section 8.14(b).
(g) subject to the limits in Section 9.07, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems related thereto or related to farm-out, farm-in, joint operating, joint
venture or area of mutual interest agreements, gathering systems, pipelines or
other similar arrangements which are usual and customary in the oil and gas
exploration and production business located within the geographic boundaries of
the United States of America; provided that (i) during the first year after the
Effective date, no such Investment exceeds $1,000,000 and (ii) thereafter, the
aggregate of all such Investments made during the immediately preceding
twelve-month period does not exceed $2,500,000.
(h) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.06
owing to the Borrower or any Subsidiary as a result of a bankruptcy or other
insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its Subsidiaries;
provided that the Borrower shall give the Administrative Agent prompt written
notice in the event that the aggregate amount of all investments held at any one
time under this Section 9.06(h) exceeds $100,000.
Section 9.07 Nature of Business; International Operations. The Borrower
will not, and will not permit any Subsidiary to, allow any material change to be
made in the character of its business as an independent oil and gas exploration
and production company. From and after the date hereof, the Borrower and its
Subsidiaries will not acquire or make any other expenditure (whether such
expenditure is capital, operating or otherwise) in or related to, any Oil and
Gas Properties not located within the geographical boundaries of the United
States.
Section 9.08 Limitation on Leases. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal but excluding Capital Leases and leases of Hydrocarbon
Interests), under leases or lease agreements that would cause the aggregate
amount of all payments made by the Borrower and the Subsidiaries pursuant to all
such leases or lease agreements, including, without limitation, any residual
payments at the end of any lease, to exceed $500,000 in any period of twelve
consecutive calendar months during the life of such leases.
Section 9.09 Sale and Leasebacks. The Borrower will not enter into any
arrangement, directly or indirectly, with any Person whereby the Borrower shall
sell or transfer any of its Property, whether now owned or hereafter acquired,
and whereby the Borrower shall then or thereafter rent or lease such Property or
any part thereof or other Property that the Borrower intends to use for
substantially the same purpose or purposes as the Property sold or transferred.
Section 9.10 Proceeds of Loans. The Borrower will not permit the proceeds
of the Loans to be used for any purpose other than those permitted by Section
7.22. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
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DUNE ENERGY, INC. CREDIT AGREEMENT
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.
Section 9.11 ERISA Compliance. The Borrower will not, and will not permit
any Subsidiary to, at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to
the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV
of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
(g) acquire, or permit any ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any other
Plan that is subject to Title IV of ERISA under which the actuarial present
value of the benefit liabilities under such Plan exceeds the current value of
the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(h) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that the Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
401(a)(29) of the Code.
Section 9.12 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Subsidiary out of the ordinary course of
business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, the Borrower will not, and will not
permit any Subsidiary to, discount or sell (with or without recourse) any of its
notes receivable or accounts receivable.
Section 9.13 Mergers, Etc. The Borrower will not, and will not permit any
Subsidiary to, merge into or with or consolidate with any other Person, or sell,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its Property to any other Person (any
such transaction, a "consolidation"); provided that any Subsidiary may
participate in a consolidation with the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or any other Subsidiary and if
one of such Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person
shall be a Wholly-Owned Subsidiary.
Section 9.14 Sale of Properties. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, assign, farm-out, convey or otherwise
transfer any Property except for (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts of acreage that contain no Proved Reserves and
assignments in connection with such farmouts; the sale or transfer of equipment
that is no longer necessary for the business of the Borrower or such Subsidiary
or is replaced by equipment of at least comparable value and use; and sales or
other dispositions of Oil and Gas Properties or any interest therein or
Subsidiaries owning Oil and Gas Properties, provided that (i) 100% of the
consideration received in respect of such sale or other disposition shall be
cash, (ii) the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or Subsidiary subject of such sale or other
disposition (as reasonably determined by the board of directors of the Borrower
and, if requested by the Administrative Agent, the Borrower shall deliver a
certificate of a Responsible Officer of the Borrower certifying to that effect),
if one or more such sales or dispositions during any twelve-month period is of
Oil and Gas Properties consisting of either (A) Proved Developed Producing
Reserves having a value of $250,000 or more as determined by the Majority
Revolving Lenders or (B) Proved Reserves having a value of $500,000 or more as
determined by the Majority Revolving Lenders, in each case, then, first, the
Borrowing Base shall be reduced, effective immediately upon such sale or
disposition, by an amount equal to the value determined by the Majority Lenders,
if any, assigned such Property in the most recently delivered Reserve Report and
the Borrower shall prepay the Revolving Loans and Term Loans to the extent
required pursuant to Section 3.02(d) and Section 3.02(e), and (iv) if any such
sale or other disposition is of a Subsidiary owning Oil and Gas Properties, such
sale or other disposition shall include all the Equity Interests of such
Subsidiary.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 9.15 Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any Environmental Laws, assuming disclosure
to the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have costs associated
therewith in excess of $500,000 or result in a Material Adverse Effect.
Section 9.16 Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate (other than the Guarantors and Wholly-Owned
Subsidiaries of the Borrower) unless such transactions are otherwise permitted
under this Agreement, are in the ordinary course of business and are upon fair
and reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
Section 9.17 Subsidiaries. The Borrower will not, and will not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition
and complies with Section 8.14(b). The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in
any Subsidiary except in compliance with Section 9.14(d). Neither the Borrower
nor any Subsidiary shall have any Foreign Subsidiaries.
Section 9.18 Negative Pledge Agreements; Dividend Restrictions. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any contract, agreement or understanding (other than this
Agreement and the Security Instruments) which in any way prohibits or restricts
the granting, conveying, creation or imposition of any Lien on any of its
Property in favor of the Collateral Agent and the Lenders or restricts any
Subsidiary from paying dividends or making distributions to the Borrower or any
Guarantor, or which requires the consent of or notice to other Persons in
connection therewith.
Section 9.19 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not, and will not permit any Subsidiary to, allow gas imbalances,
take-or-pay or other prepayments with respect to the Oil and Gas Properties of
the Borrower or any Subsidiary that would require the Borrower or such
Subsidiary to deliver Hydrocarbons at some future time without then or
thereafter receiving full payment therefor to exceed 100,000 Mcf of gas (on an
Mcfe equivalent basis) in the aggregate.
Section 9.20 Swap Agreements. The Borrower will not, and will not permit
any Subsidiary to, enter into any Swap Agreements with any Person other than the
Swap Agreements required pursuant to Section 8.16 or as otherwise agreed by the
Administrative Agent. In no event shall any Swap Agreement contain any
requirement, agreement or covenant for the Borrower or any Subsidiary to post
collateral or margin to secure their obligations under such Swap Agreement or to
cover market exposures except to the extent any such Swap Agreements are secured
by the Security Instruments as permitted by the terms of this Agreement.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 9.21 Limitation on Capital Expenditures. Except as expressly
approved in writing by the Majority Lenders, (a) during the first year after the
Effective Date, the Borrower will not, and will not permit any of its
Subsidiaries to, make more than $2,000,000 in Capital Expenditures or other
costs associated with the exploration and development of Borrower's and its
Subsidiaries' Oil and Gas Properties (excluding normal lease operating expenses)
that are not directly related to the conversion of Proved Reserves to Proved
Developed Producing Reserves and (b) thereafter, the Borrower will not, and will
not permit any of its Subsidiaries to, make more than $5,000,000 in Capital
Expenditures or other costs associated with the exploration and development of
Borrower's and its Subsidiaries' Oil and Gas Properties (excluding normal lease
operating expenses) that are not directly related to the conversion of Proved
Reserves to Proved Developed Producing Reserves.
Section 9.22 Acquisition Documents. The Borrower will not, and will not
permit any of its Subsidiaries to, amend, modify or supplement any of the
Acquisition Documents if the effect thereof could reasonably be expected to have
a Material Adverse Effect (and provided that the Borrower promptly furnishes to
the Administrative Agent a copy of such amendment, modification or supplement).
ARTICLE X :
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof, by acceleration or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of two Business
Days.
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made.
(d) the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Section 8.01(m), Section 8.02,
Section 8.03, Section 8.07 or in ARTICLE IX.
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(e) the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in this Agreement (other than
those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or
any other Loan Document, and such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (i) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (ii) a Responsible Officer of the Borrower or such Subsidiary
otherwise becoming aware of such default.
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits the holder or holders of such Material Indebtedness or any trustee or
agent on its or their behalf (with or without the giving of notice, the lapse of
time or both) to cause such Material Indebtedness to become due, or to require
the Redemption thereof or any offer to Redeem to be made in respect thereof,
prior to its scheduled maturity or require the Borrower or any Subsidiary to
make an offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 30
days or an order or decree approving or ordering any of the foregoing shall be
entered.
(i) the Borrower or any Subsidiary shall voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing; or any stockholder of the Borrower shall make any request or take
any action for the purpose of calling a meeting of the stockholders of the
Borrower to consider a resolution to dissolve and wind-up the Borrower's
affairs.
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due.
(k) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $500,000 to the extent no covered by independent
third party insurance provided by insurers of the highest claims paying rating
or financial strength as to which the insurer does not dispute coverage and is
not subject to an insolvency proceeding) or (ii) any one or more non-monetary
judgments that have, or could reasonably be expected to have, individually or in
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the aggregate, a Material Adverse Effect, shall be rendered against the
Borrower, any of its Subsidiaries or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any of
its Subsidiaries to enforce any such judgment.
(l) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower or a Guarantor party thereto or shall be repudiated by any
of them, or cease to create a valid and perfected Lien of the priority required
thereby on any of the collateral purported to be covered thereby, except to the
extent permitted by the terms of this Agreement, or the Borrower or any
Subsidiary or any of their Affiliates shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding (i) $250,000 in any year
or (ii) $500,00 for all periods.
(n) Any Governmental Authority (i) revokes or fails to renew any
material license, permit or franchise of the Borrower or any Subsidiary, (ii)
the Borrower or any Subsidiary for any reason loses any material license, permit
or franchise, (iii) the Borrower or any Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection with any
proceeding (judicial or administrative) with respect to any material license,
permit or franchise; and, in each case, (A) such revocation, failure or loss
could reasonably be expected to have a Material Adverse Effect and (B) such
Default remains unremedied for a period of 30 days after the earlier of (1) the
date upon which a Responsible Officer knew or reasonably should have known of
such Default and (2) the date upon which written notice thereof is given to the
Borrower by the Administrative Agent.
(o) The Borrower or any Subsidiary fails to duly observe, perform or
comply with any agreements with any Person or any term or condition of any
instrument, if such agreement or instrument is materially significant to the
Borrower or to the Borrower and its Subsidiaries on a consolidated bases, and
such failure is not remedied within the applicable grace period (if any)
provided in such agreement or instrument.
(p) a Change in Control shall occur.
(q) Xxxx Xxxxxx shall cease to be the Chairman of the Board of
Directors of the Borrower or Xxxxx Xxxxx shall cease to be the President of the
Borrower.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate any or all of the Commitments, the First-Tranche Term Loan
Commitments and the Second-Tranche Term Loan Commitments and thereupon the
applicable commitments shall terminate immediately and (ii) declare the Notes
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DUNE ENERGY, INC. CREDIT AGREEMENT
and the Loans then outstanding to be due and payable in whole (or in part, in
which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower and the Guarantors accrued hereunder
and under the Notes and the other Loan Documents, shall become due and payable
immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), all
of the Commitments, the First-Tranche Term Loan Commitments and the
Second-Tranche Term Loan Commitments shall automatically terminate and the Notes
and the principal of all of the Loans then outstanding, together with accrued
interest thereon and all fees and the other obligations of the Borrower and the
Guarantors accrued hereunder and under the Notes and the other Loan Documents,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent, the Collateral and the Lenders will have all other rights
and remedies available at law and equity.
(c) All proceeds realized from the liquidation or other disposition
of collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied:
(i) first, to payment or reimbursement of that portion of the
Indebtedness constituting fees, expenses and indemnities payable to the
Administrative Agent and the Collateral Agent in their capacity as such;
(ii) second, pro rata to payment or reimbursement of that
portion of the Indebtedness constituting fees, expenses and indemnities payable
to the Revolving Lenders;
(iii) third, pro rata to payment or reimbursement of that
portion of the Indebtedness constituting fees, expenses and indemnities payable
to the Term Lenders
(iv) fourth, pro rata to payment of accrued interest on the
Revolving Loans;
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DUNE ENERGY, INC. CREDIT AGREEMENT
(v) fifth, pro rata to payment of principal outstanding on the
Revolving Loans and Indebtedness referred to in Clause (b) of the definition of
Indebtedness owing to a Lender or an Affiliate of a Lender;
(vi) sixth, pro rata to payment of accrued interest on the
Term Loans;
(vii) seventh, pro rata to payment of principal outstanding on
the Term Loans;
(viii) eighth, pro rata to any other Indebtedness;
(ix) ninth, any excess, after all of the Indebtedness shall
have been indefeasibly paid in full in cash, shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.
ARTICLE XI :
THE AGENTS
Section 11.01 Appointment; Powers. Each of the Lenders hereby appoints
Standard Bank Plc as the Administrative Agent. Each of the Lenders hereby
appoints Standard Americas Inc. as the Collateral Agent with respect to the
Security Instruments. Each of the Lenders hereby authorizes the Administrative
Agent and the Collateral Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent or the
Collateral Agent by the terms hereof and the other Loan Documents, together with
such actions and powers as are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall have no duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing (the use of the term "agent" herein and in the other Loan Documents
with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall have no duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in ARTICLE VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent or as to those conditions precedent
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expressly required to be to the Administrative Agent's satisfaction, (vi) the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower and its Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein. For
purposes of determining compliance with the conditions specified in ARTICLE VI,
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior
to the proposed closing date specifying its objection thereto.
Section 11.03 Action by Administrative Agent. The Administrative Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under
any other Loan Documents unless it shall (a) receive written instructions from
the Majority Lenders or the Lenders, as applicable, (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02) specifying the action to be taken and (b) be
indemnified to its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing to take
any such action. The instructions as aforesaid and any action taken or failure
to act pursuant thereto by the Administrative Agent shall be binding on all of
the Lenders. If a Default has occurred and is continuing, then the
Administrative Agent shall take such action with respect to such Default as
shall be directed by the requisite Lenders in the written instructions (with
indemnities) described in this Section 11.03, provided that, unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interests of the Lenders. In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, the Collateral Agent shall not have any obligation to perform any
act in respect thereof. The Administrative Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Majority Lenders or the Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
12.02), and otherwise the Administrative Agent shall not be liable for any
action taken or not taken by it hereunder or under any other Loan Document or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY
NEGLIGENCE, except for its own gross negligence or willful misconduct.
Section 11.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower and the Lenders hereby waives the right to dispute the Administrative
Agent's record of such statement, except in the case of gross negligence or
willful misconduct by the Administrative Agent. The Administrative Agent may
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DUNE ENERGY, INC. CREDIT AGREEMENT
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. The Administrative Agent may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof permitted hereunder shall
have been filed with the Administrative Agent.
Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 11.06 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Agent as provided in this Section
11.06, the Agent may resign at any time by notifying the Lenders and the
Borrower, and the Administrative Agent may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation or removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Section 11.07 Agents as a Lender. Each financial institution serving as an
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not an
Agent, and such financial institution and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent
hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent, any
other Agent or any other Lender and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other
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DUNE ENERGY, INC. CREDIT AGREEMENT
Loan Document, any related agreement or any document furnished hereunder or
thereunder. The Agents shall not be required to keep itself informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, no Agent nor the Arranger shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of the Administrative Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Xxxxxx & Xxxxxx L.L.P.
is acting in this transaction as special counsel to the Administrative Agent
only, except to the extent otherwise expressly stated in any legal opinion or
any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.
Section 11.09 Administrative Agent May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 12.03) allowed in such judicial proceeding;
and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 11.10 Authority of Collateral Agent to Release Collateral and
Liens. Each Lender hereby authorizes the Collateral Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents. Each Lender hereby authorizes the Collateral Agent to execute
and deliver to the Borrower, at the Borrower's sole cost and expense, any and
all releases of Liens, termination statements, assignments or other documents
reasonably requested by the Borrower in connection with any sale or other
disposition of Property to the extent such sale or other disposition is
permitted by the terms of Section 9.14 or is otherwise authorized by the terms
of the Loan Documents.
Section 11.11 The Arranger and the Collateral Agent. The Arranger and the
Collateral Agent shall have no duties, responsibilities or liabilities under
this Agreement and the other Loan Documents other than their duties,
responsibilities and liabilities in their capacity as Lenders hereunder, and
with regard to the Collateral Agent, the duties expressly set forth in the
Security Instruments, which duties the Collateral Agent shall conduct at the
direction of the Administrative Agent.
ARTICLE XII :
GENERAL
Section 12.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at Dune Energy Inc., 0000 Xxxx
Xxx Xxxx., Xxxxx 000, Xxxxxxx, XX 00000, Tel: 000-000-0000, Fax: 000-000-0000,
Attention: Xx. Xxxx Xxxxxxx;
(ii) if to the Administrative Agent, to it at Standard Bank
Plc, Xxxxxx Bridge House, 00 Xxxxxxx Xxxx, Xxxxxx XX0X 0XX, Attention of Xxxxx
Xxxxxxxxxxxx, Portfolio Management Unit, (Telecopy No. x00 (0) 00 0000 0000),
with a copy to Standard Americas Inc. at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention of Xxxxx Xxxxxxx, (Telecopy No. 212-407-5178);
(iii) if to the Collateral Agent, to it at Standard Americas
Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxxx
Xxxxxxx, (Telecopy No. 212-407-5178); and
(iv) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
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DUNE ENERGY, INC. CREDIT AGREEMENT
unless otherwise specifically provided for in this Agreement or otherwise agreed
by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege, or any abandonment or discontinuance of steps
to enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies of the Administrative Agent, any other Agent and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent or any Lender may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall (i)
increase the Commitment of any Revolving Lender without the written consent of
such Revolving Lender, (ii) increase the Borrowing Base without the written
consent of each Revolving Lender, decrease or maintain the Borrowing Base
without the consent of the Majority Revolving Lenders or modify in any manner
Section 2.07 without the consent of each Revolving Lender, (iii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
any fees payable hereunder, or reduce any other Indebtedness hereunder or under
any other Loan Document, without the written consent of each Lender affected
thereby, (iv) postpone the scheduled date of payment or prepayment of the
principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or any other Indebtedness hereunder or under any other Loan Document,
or reduce the amount of, waive or excuse any such payment, without the written
consent of each Lender, (v) postpone or extend the Term Maturity Date without
the consent of all of the Term Lenders or postpone or extend the Revolving
Maturity Date without the consent all of the Revolving Lenders (vi) change
Section 4.01(b) or Section 4.01(c) in a manner that would alter the pro rata
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DUNE ENERGY, INC. CREDIT AGREEMENT
sharing of payments required thereby, without the written consent of each
Lender, (vii) waive or amend Section 8.14 or change the definition of the terms
"Subsidiary", without the written consent of each Lender, (viii) release any
Guarantor (except as set forth in the Guaranty Agreement), release any of the
collateral (other than as provided in Section 11.10), or reduce the percentage
set forth in Section 8.14(a) without the written consent of each Lender, or
change any of the provisions of this Section 12.02(b) or the definitions of
"Majority Lenders" or any other provision hereof (other than the preceding
subsection (ix)) specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or under any other Loan Documents or
make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Collateral Agent hereunder or under any other
Loan Document without the prior written consent of the Administrative Agent or
Collateral Agent, as applicable. Notwithstanding the foregoing, any supplement
to Schedule 7.15 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, and the cost
of environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by any Agent or any Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any Security Instrument or any other document referred to
therein, (iii) all out-of-pocket expenses incurred by any Agent or any Lender,
including the fees, charges and disbursements of any counsel for any Agent or
any Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement or any other Loan Document, including its rights
under this Section 12.03, or in connection with the Loans made hereunder,
including, without limitation, all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.
(B) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER, EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING
THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED
BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS
A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE
OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT,
INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF
THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
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DUNE ENERGY, INC. CREDIT AGREEMENT
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv)
THE FAILURE TO DISCLOSE ANY MATERIAL INFORMATION WITH RESPECT TO THE BORROWER,
ANY OF ITS SUBSIDIARIES OR ANY OF THE COLLATERAL TO BE PLEDGED UNDER ANY LOAN
DOCUMENT, (v) ANY WASTE OF THE COLLATERAL PLEDGED UNDER ANY LOAN DOCUMENT, (vi)
ANY FRAUD, MISAPPROPRIATION OF FUNDS, THEFT OR OTHER ILLEGAL ACTIVITY BY THE
BORROWER, ANY OF ITS SUBSIDIARIES OR ANY RELATED PARTY OF THE FOREGOING, (vii)
ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (viii) ANY OTHER ASPECT OF THE
LOAN DOCUMENTS, (ix) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (x) ANY ASSERTION THAT THE
LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE
SECURITY INSTRUMENTS, (xi) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT,
DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID
WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (xii) THE BREACH OR
NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (xiii) THE PAST OWNERSHIP BY THE
BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF
THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD
RESULT IN PRESENT LIABILITY, (xiv) THE PRESENCE, USE, RELEASE, STORAGE,
TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR
TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES
OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF
HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR
ANY OF ITS SUBSIDIARIES, (xv) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xvi) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xvii) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
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(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to any Agent or the Arranger under Section 12.03(a) or (b),
each Lender severally agrees to pay to such Agent or the Arranger, as the case
may be, such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against such Agent or the Arranger in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or the use
of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
Section 12.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee; and
(B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment to an assignee
that is a Lender immediately prior to giving effect to such assignment.
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(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.
(iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, the Commitment of, and principal amount
of the Loans owing to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. In connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower and each Lender.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).
(c) Any Lender may, without the consent of the Borrower and the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the proviso to Section 12.02 that affects such Participant. In
addition such agreement must provide that the Participant be bound by the
provisions of Section 12.03. Subject to Section 12.04(c)(ii), the Borrower
agrees that each Participant shall be entitled to the benefits of Section 5.01,
Section 5.02 and Section 5.03 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 12.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 12.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 4.01(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 5.01 or Section 5.03 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.03 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 5.03(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including, without limitation, any pledge or assignment to
secure obligations to a Federal Reserve Bank, and this Section 12.04(d) shall
not apply to any such pledge or assignment of a security interest; provided that
no such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
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DUNE ENERGY, INC. CREDIT AGREEMENT
(e) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower and the Guarantors to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any
state.
Section 12.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent, any other Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Section 5.01, Section 5.02, Section
5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans and the Commitments or the termination of this
Agreement, any other Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds
of any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's, the Collateral Agent's and the Lenders' Liens,
security interests, rights, powers and remedies under this Agreement and each
Loan Document shall continue in full force and effect. In such event, each Loan
Document shall be automatically reinstated and the Borrower shall take such
action as may be reasonably requested by the Administrative Agent, the
Collateral Agent and the Lenders to effect such reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts) and delivered in original, facsimile
or by electronic mail, each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent (including
the Fee Letter) constitute the entire contract among the parties relating to the
subject matter hereof and thereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter hereof and
thereof. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (INCLUDING THE FEE LETTER)
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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(c) Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any Subsidiary against any of and all the obligations of the
Borrower or any Subsidiary owed to such Lender now or hereafter existing under
this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 12.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have.
SECTION 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE.
(A) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.
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(C) THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS AND HEREBY CONFERS AN IRREVOCABLE SPECIAL POWER, AMPLE AND SUFFICIENT,
TO XXXXX AND XXX XXXXXX LLP, WITH OFFICES ON THE DATE HEREOF AT 0 XXXX XXXXXX,
XXX XXXX, XXX XXXX 00000, AS ITS DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO
ANY SUCH ACTION OR PROCEEDING IN NEW YORK TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR
AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
PROCEEDING AND AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF ANY
SUCH SERVICE OF PROCESS TO THE BORROWER SHALL NOT IMPAIR OR AFFECT THE VALIDITY
OF SUCH SERVICE OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION. EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS
SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(D) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.
Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Administrative Agent, the
Collateral Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
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confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Collateral Agent or any Lender on a non-confidential basis from a source other
than the Borrower. For the purposes of this Section 12.11, "Information" means
all information received from the Borrower or any Subsidiary relating to the
Borrower or any Subsidiary and their businesses, other than any such information
that is available to the Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by the Borrower or a Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (b) in the event that the maturity of the Notes is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed
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DUNE ENERGY, INC. CREDIT AGREEMENT
by such applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12.
SECTION 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
Section 12.14 Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Subsidiaries on a pro rata basis in respect of
any obligations of the Borrower or any of its Subsidiaries which arise under any
such Swap Agreement while such Person or its Affiliate is a Lender, but only
while such Person or its Affiliate is a Lender, including any Swap Agreements
between such Persons in existence prior to the date hereof. No Lender or any
Affiliate of a Lender shall have any voting rights under any Loan Document as a
result of the existence of obligations owed to it under any such Swap
Agreements.
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DUNE ENERGY, INC. CREDIT AGREEMENT
Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans hereunder are solely
for the benefit of the Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialsman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent or any Lender for any reason whatsoever.
There are no third party beneficiaries.
Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
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The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: DUNE ENERGY, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx, President
ADMINISTRATIVE AGENT & LENDER: STANDARD BANK PLC
By: /s/ X.X. Xxxxx
-----------------------------------
Name: X.X. Xxxxx
Title: Director, PMU
By: /s/ X.X. Xxxxxxxxxxxx
-----------------------------------
Name: X.X. Xxxxxxxxxxxx
Title: Senior Manager, PMU
COLLATERAL AGENT: STANDARD AMERICAS INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Head of Energy Finance - America
By: /s/ Xxxxx Kneazeak
-----------------------------------
Name: Xxxxx Kneazeak
Title: Senior VP - Energy Finance
