Page
EXHIBIT
10.1
EXECUTION
COPY
dated
as
of
July
21,
2005,
among
CARRIZO
OIL & GAS, INC.,
CCBM,
INC.,
THE
LENDERS PARTY HERETO
and
CREDIT
SUISSE,
as
Administrative Agent and Collateral Agent
CREDIT
SUISSE
as
Sole
Bookrunner and Sole Lead Arranger
TABLE
OF CONTENTS
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Page
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ARTICLE
I
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DEFINITIONS
AND ACCOUNTING TERMS
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SECTION
1.01.
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1
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SECTION
1.02.
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18
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SECTION
1.03.
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18
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SECTION
1.04.
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18
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ARTICLE
II
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THE
CREDITS
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SECTION
2.01.
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18
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SECTION
2.02.
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18
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SECTION
2.03.
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19
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SECTION
2.04.
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20
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SECTION
2.05.
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21
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SECTION
2.06.
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21
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SECTION
2.07.
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21
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SECTION
2.08.
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21
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SECTION
2.09.
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22
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SECTION
2.10.
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22
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SECTION
2.11.
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23
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SECTION
2.12.
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24
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SECTION
2.13.
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25
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SECTION
2.14.
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26
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SECTION
2.15.
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27
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SECTION
2.16.
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27
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SECTION
2.17.
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27
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SECTION
2.18.
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28
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SECTION
2.19.
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28
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SECTION
2.20.
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30
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ARTICLE
III
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CONDITIONS
PRECEDENT
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SECTION
3.01.
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31
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i
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES
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SECTION
4.01.
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34
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SECTION
4.02.
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35
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SECTION
4.03.
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35
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SECTION
4.04.
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36
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SECTION
4.05.
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36
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SECTION
4.06.
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36
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SECTION
4.07.
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37
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SECTION
4.08.
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37
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SECTION
4.09.
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37
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SECTION
4.10.
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37
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SECTION
4.11.
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37
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SECTION
4.12.
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37
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SECTION
4.13.
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37
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SECTION
4.14.
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37
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SECTION
4.15.
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38
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SECTION
4.16.
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38
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SECTION
4.17.
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40
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SECTION
4.18.
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40
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SECTION
4.19.
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40
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SECTION
4.20.
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41
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SECTION
4.21.
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41
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SECTION
4.22.
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41
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SECTION
4.23.
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41
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ARTICLE
V
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AFFIRMATIVE
COVENANTS
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SECTION
5.01.
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42
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SECTION
5.02.
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44
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SECTION
5.03.
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44
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SECTION
5.04.
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45
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SECTION
5.05.
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45
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SECTION
5.06.
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46
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SECTION
5.07.
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46
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SECTION
5.08.
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47
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SECTION
5.09.
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47
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SECTION
5.10.
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48
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SECTION
5.11.
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48
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SECTION
5.12.
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48
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SECTION
5.13.
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48
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SECTION
5.14.
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49
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SECTION
5.15.
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49
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ARTICLE
VI
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NEGATIVE
COVENANTS
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SECTION
6.01.
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49
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SECTION
6.02.
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49
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SECTION
6.03.
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50
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SECTION
6.04.
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51
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SECTION
6.05.
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53
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SECTION
6.06.
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54
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SECTION
6.07.
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56
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SECTION
6.08.
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56
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SECTION
6.09.
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57
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SECTION
6.10.
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57
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SECTION
6.11.
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57
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SECTION
6.12.
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57
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ARTICLE
VII
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EVENTS
OF DEFAULT
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SECTION
7.01.
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57
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SECTION
7.02.
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60
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SECTION
7.03.
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60
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ARTICLE
VIII
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THE
ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
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ARTICLE
IX
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MISCELLANEOUS
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SECTION
9.01.
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63
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SECTION
9.02.
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63
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SECTION
9.03.
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64
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SECTION
9.04.
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64
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SECTION
9.05.
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68
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SECTION
9.06.
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69
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SECTION
9.07.
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69
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SECTION
9.08.
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70
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SECTION
9.09.
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70
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SECTION
9.10.
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71
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SECTION
9.11.
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71
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SECTION
9.12.
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71
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SECTION
9.13.
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71
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SECTION
9.14.
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72
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SECTION
9.15.
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72
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SECTION
9.16.
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72
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SECTION
9.17.
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73
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SECTION
9.18.
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73
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SCHEDULES
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Schedule
2.01
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Lenders
and Commitments
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Schedule
4.01
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No
Violation
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Schedule
4.03
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Exceptions
to Title
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Schedule
4.04
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Litigation
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Schedule
6.04
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Encumbrances
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Schedule
6.05
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Existing
Debt
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Schedule
6.08
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Transactions
with Affiliates
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EXHIBITS
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Exhibit
A
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Form
of Administrative Questionnaire
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Exhibit
B
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Form
of Assignment and Acceptance
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Exhibit
C
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Form
of Borrowing Request
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Exhibit
D
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Form
of Intercreditor Agreement
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Exhibit
E
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Form
of Mortgages
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Exhibit
F
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Form
of Revolving Credit Agreement Amendment
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Exhibit
G
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Form
of Compliance Certificate
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Exhibit
H
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Form
of Perfection Certificate
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SECOND
LIEN CREDIT AGREEMENT dated as of July 21, 2005, among CARRIZO OIL
&
GAS, INC., a Texas corporation (the “Borrower”),
CCBM,
INC., a Delaware corporation (“CCBM”),
the
Lenders (as defined in Article I),
and
CREDIT SUISSE, as administrative agent (in such capacity, the “Administrative
Agent”)
and as
collateral agent (in such capacity, the “Collateral
Agent”)
for
the Lenders.
The
Borrower has requested the Lenders to extend credit in the form of term loans
on
the Closing Date (such term and each other capitalized term used but not
defined
in this introductory statement having the meaning given it in Article I),
in an
aggregate principal amount not in excess of $150,000,000. The proceeds of
such
term loans are to be used (a) to repay all amounts outstanding under
the
Revolving Credit Agreement, (b) to redeem and repay all amounts outstanding
or due under the Existing Notes, (c) to pay fees and expenses incurred
in
connection with the Transactions, including prepayment premiums in connection
with the prepayment of the Senior Subordinated Notes, in an aggregate amount
not
to exceed $6,000,000 and (d) for general corporate purposes, including
acquisitions permitted hereunder.
The
Lenders are willing to extend such credit to the Borrower on the terms and
subject to the conditions set forth herein. Accordingly, the parties hereto
agree as follows:
ARTICLE
I
Definitions
and Accounting Terms
SECTION
1.01. Defined
Terms.
As used
in this Agreement, and unless the context requires a different meaning, the
following terms have the meanings indicated:
“ABR”,
when
used in reference to any Loan or Borrowing, refers to whether such Loan,
or the
Loans comprising such Borrowing, are bearing interest at a rate determined
by
reference to the Alternate Base Rate.
“Adjusted
LIBO Rate”
shall
mean, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum equal to the product of (a) the LIBO Rate
in effect
for such Interest Period and (b) Statutory Reserves.
“Administrative
Agent”
shall
have the meaning assigned to such term in the preamble hereto.
“Administrative
Questionnaire”
shall
mean an Administrative Questionnaire in the form of Exhibit
A,
or such
other form as may be supplied from time to time by the Administrative
Agent.
“Agreement”
shall
mean this Second Lien Credit Agreement, as the same may from time to time
be
amended, modified, supplemented, or restated and in effect from time to
time.
“Alternate
Base Rate”
shall
mean, for any day, a rate per annum equal to the greater of (a) the
Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate
in
effect on such day plus 1/2 of 1%. If the Administrative Agent shall
have
determined (which determination shall be conclusive absent manifest error)
that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b)
of the
preceding sentence until the circumstances giving rise to such inability
no
longer exist. Any change in the Alternate Base Rate due to a change in the
Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
as
the case may be.
“Applicable
Percentage”
shall
mean, for any day, (a) with respect to any Eurodollar Loan, 6.00%,
or
(b) with respect to any ABR Loan, 5.00%.
“Assignment
and Acceptance”
shall
mean an assignment and acceptance entered into by a Lender and an assignee,
and
accepted by the Administrative Agent, in the form of Exhibit B
or such
other form as shall be approved by the Administrative Agent.
“Board”
shall
mean the Board of Governors of the Federal Reserve System of the United States
of America.
“Borrower”
shall
mean Carrizo Oil & Gas, Inc., a Texas corporation, together with its
successors and assigns.
“Borrowing”
shall
mean Loans of the same Type made, converted or continued on the same date
and,
in the case of Eurodollar Loans, as to which a single Interest Period is
in
effect.
“Borrowing
Request”
shall
mean a request by the Borrower in accordance with the terms of Section 2.03
and
substantially in the form of Exhibit C,
or such
other form as shall be approved by the Administrative Agent.
“Business
Day”
shall
mean any day other than a Saturday, Sunday or day on which banks in New York
City are authorized or required by law to close; provided,
however,
that
when used in connection with a Eurodollar Loan, the term “Business Day” shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
“Capital
Lease Obligations”
shall
mean any Debt represented by obligations under a lease that is required to
be
capitalized for financial reporting purposes
2
in
accordance with GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with
GAAP.
“CCBM”
shall
mean CCBM, INC., a Delaware corporation and a Subsidiary of the Borrower,
together with its successors and assigns.
A
“Change
in Control”
shall
be deemed to have occurred if (a) any “person” or “group” (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in
effect
on the date hereof) other than the Permitted Investors shall own, directly
or
indirectly, beneficially or of record, shares representing more than 50%
of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower, (b) a majority of the seats (other
than
vacant seats) on the board of directors of the Borrower shall at any time
be
occupied by persons who were neither (i) nominated by the board of
directors of the Borrower nor (ii) appointed by directors so nominated,
or
(c) any change in control (or similar event, however denominated)
with
respect to the Borrower or any Subsidiary shall occur under (and not be waived
in accordance with) and as defined in the Revolving Credit Agreement or any
material indenture or other loan or credit agreement or any other material
debt
instrument to which the Borrower or any Subsidiary is a party.
“Change
in Law”
shall
mean (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 2.13,
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.
“Closing
Date”
shall
mean July 21, 2005.
“Collateral”
shall
mean the Mortgaged Properties and any interest in any kind of property or
assets
pledged, mortgaged or otherwise subject to an Encumbrance in favor of the
Secured Parties pursuant to the Collateral Documents.
“Collateral
Agent”
shall
have the meaning assigned to such term in the preamble hereto.
“Collateral
Documents”
shall
collectively refer to the Mortgages, the Security Agreement, the Guarantee,
the
Intercreditor Agreement and any and all other documents now existing or
hereafter entered into in which an Encumbrance is created on any property
of the
Borrower or of any other Person to secure all Obligations of the Borrower
and
each Guarantor under this Agreement, the Guarantee and any Hedging Agreement
entered into with Credit Suisse in its capacity as Arranger hereunder, the
Administrative Agent, a Lender or any affiliate of any of the
foregoing.
“Commitment”
shall
mean, with respect to each Lender, the commitment of such Lender to make
Loans
hereunder as set forth on Schedule 2.01,
or in
the Assignment and Acceptance pursuant to which such Lender assumed its
Commitment, as
3
applicable,
as the same may be reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
“Competitor”
shall
mean (a) any Person who is actively engaged in the Subject Business
and
(b) any affiliate of a Person identified in clause (a) above
(it being
agreed that an investment firm shall not be deemed to control a Person described
in clause (a) above merely as a result of owning a minority interest
in
such Person if it does not otherwise control such Person).
“Consolidated
Current Assets”
shall
mean the total of the Borrower’s consolidated current assets (excluding assets
of Unrestricted Subsidiaries), including the amounts available for borrowing
under the Revolving Credit Agreement, determined in accordance with GAAP.
Current assets will not include non-cash assets, if any, arising from the
marking to market of Hedging Agreements pursuant to SFAS No. 133 and
related pronouncements.
“Consolidated
Current Liabilities”
shall
mean the total of the Borrower’s consolidated current liabilities (excluding
liabilities of Unrestricted Subsidiaries), excluding outstanding principal
amounts due under the Revolving Credit Agreement, determined in accordance
with
GAAP. Current liabilities will not include (a) non-cash obligations,
if
any, arising from the marking to market of Hedging Agreements pursuant to
SFAS
No. 133 and related pronouncements or (b) the non-cash effects,
if
any, of the non-cash stock option re-pricing accrual.
“Core
Operating Regions”
shall
mean, collectively, Texas and Louisiana (in each case, other than offshore
areas).
“Current
Ratio”
shall
mean the ratio of Consolidated Current Assets to Consolidated Current
Liabilities.
“Debt”
shall
mean without duplication: (a) indebtedness for borrowed money; (b) the
face amounts of all outstanding standby and commercial letters of credit
and
bankers acceptances, matured or unmatured, issued on behalf of Borrower;
(c) guarantees of the Debt of any other Person, whether direct or
indirect,
whether by agreement to purchase the indebtedness of any other Person or
by
agreement for the furnishing of funds to any other Person through the purchase
or lease of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) in each case for the purpose of paying or
discharging the Debt of any other Person; and (d) the present value
of all
obligations for the payment of rent or hire of property of any kind (real
or
personal) under leases or lease agreements required to be capitalized under
GAAP.
“Default”
shall
mean an event which with the giving of notice or the lapse of time (or both)
would constitute an Event of Default hereunder.
“Defensible
Title”
shall
mean, with respect to the assets of the Borrower (a) the title of
the
Borrower to such assets is free and clear of all Encumbrances of any kind
whatsoever (except to the extent permitted by the Loan Documents), and
(b) as to
4
those
xxxxx for which a “working interest” and a “net revenue interest” are set forth
on Schedule 4.03
(except
to the extent disposed of or abandoned in accordance with the Loan Documents),
the Borrower is entitled to receive the percentage of all Hydrocarbons
produced,
saved and marketed from such xxxxx in an amount not less than the net revenue
interest set forth therein, without reduction, suspension or termination
throughout the duration of the productive life of such xxxxx, and the Borrower
is obligated to bear the percentage of costs and expenses related to the
maintenance, development and operation of such xxxxx in an amount not greater
than the working interest set forth on such Schedule, without increase
throughout the productive life of such xxxxx, except increases that also
result
in a proportionate increase in net revenue interest and as set forth on
such
Schedule.
“Designated
Title Exceptions”
has the
meaning given to such term in Section 4.03.
“Dispose”
and
“Disposition”
shall
have the meanings assigned to such terms in Section 6.02(a).
“Dollars”
and
“$”
shall
mean lawful money of the United States of America.
“EBITDA”
shall
mean the Borrower’s consolidated earnings determined in accordance with GAAP
(excluding earnings of Unrestricted Subsidiaries) before interest expense,
income taxes, depreciation, amortization, depletion, oil and gas asset
impairment write downs, lease impairment expense, gains and losses from the
sale
of capital assets, and other non-cash charges. EBITDA shall not include non-cash
effects of (i) the early extinguishment of long-term debt, (ii) CCBM’s
equity investment in Pinnacle and (iii) stock option re-pricing
expense.
“Encumbrances”
shall
mean 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
common law, statute or contract. The term “Encumbrance” shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting property. For the purpose of the Agreement, the Borrower shall
be
deemed to be the owner of any property which it has acquired or holds subject
to
a conditional sale agreement or other arrangements pursuant to which title
to
the property has been retained by or vested in some other Person for security
purposes; provided,
however,
that
the term “Encumbrance” shall not include a trust or similar arrangement
established for the purpose of defeasing any indebtedness pursuant to the
terms
evidencing or providing for the issuance of such indebtedness but only to
the
extent that such defeasance is permitted under this Agreement.
“Environmental
Laws”
shall
mean any federal, state, local or tribal statute, law, rule, regulation,
ordinance, code, permit, consent, approval, license, written policy or rule
of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial
or
administrative
5
order,
injunction, consent decree or judgment, or other authorization or requirement
whenever promulgated, issued or modified, including the requirement to
register
underground storage tanks, well plugging and abandonment requirements,
and oil
and gas waste disposal requirements relating to:
(i)
emissions, discharges, spills, migration, movement, Releases or threatened
Releases of pollutants, contaminants, Hazardous Materials, or hazardous or
toxic
materials or wastes into or onto soil, land, ambient air, surface water,
ground
water, watercourses, publicly owned treatment works, drains, sewer systems,
wetlands or septic systems;
(ii)
the
use, treatment, storage, disposal, handling, manufacturing, transportation,
or
shipment of Hazardous Materials or hazardous and/or toxic wastes, material,
products or by-products containing Hazardous Materials (or of equipment or
apparatus containing Hazardous Materials); or
(iii)
otherwise relating to pollution or the protection of human health or the
environment, including the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. §§ 9601 et
seq.,
as
amended, the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et
seq.,
as
amended, the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801
et
seq.,
as
amended, the Clean Water Act, 33 U.S.C. §§ 1251 et
seq.,
as
amended, the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq.,
as
amended, the Clean Air Act, 42 U.S.C. §§ 7401 et
seq.,
as
amended, the federal Water Pollution Control Act, 33 U.S.C. §§ 1251
et
seq.,
as
amended, the Safe Drinking Water Act, 42 U.S.C. §§ 300f et
seq.,
as
amended, the Atomic Energy Act, 42 U.S.C. §§ 2011 et
seq.,
as
amended, the Natural Gas Pipeline Safety Act of 1968, 49 U.S.C. §§ 1671
et
seq.,
as
amended, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
§§ 136 et
seq.,
as
amended, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651
et
seq.,
as
amended, and all comparable statutes of the States of Louisiana and Texas,
and
all comparable local Governmental Requirements in such states, and other
environmental, conservation or protection laws in effect in any jurisdiction
where any of the Mortgaged Properties of the Borrower are located.
“Environmental
Liabilities”
shall
mean with respect to any Person, any and all liabilities, responsibilities,
losses, sums paid in settlement of claims, obligations, charges, actions
(formal
or informal), claims (including claims for personal injury or for property
damage), liens, administrative proceedings, damages (including loss or damage
resulting from the occurrence of an Event of Default), punitive damages,
consequential damages, treble damages, penalties, fines, monetary sanctions,
interest, court costs, response and remediation costs, stabilization costs,
encapsulation costs, treatment, storage, or disposal costs, groundwater
monitoring or environmental sampling costs, other causes of action and any
other
costs and expenses (including reasonable attorneys’, experts’, and consultants’
fees, costs of investigation and feasibility studies and disbursements in
connection with any investigative, administrative or judicial proceeding),
whether direct or indirect, known or unknown, absolute or contingent, past,
6
present
or future arising under, pursuant to or in connection with any Environmental
Law, or any other binding obligation of such Person requiring abatement
of
pollution or protection of human health and the environment.
“Environmental
Lien”
shall
mean an Encumbrance in favor of any Governmental Authority for (a) any
liability under Environmental Laws or (b) damages arising from, or
costs
incurred by such Governmental Authority in response to, a Release or threatened
Release of a Hazardous Materials into the environment.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended from
time
to time.
“Eurodollar”,
when
used in reference to any Loan or Borrowing, refers to whether such Loan,
or the
Loans comprising such Borrowing, are bearing interest at a rate determined
by
reference to the Adjusted LIBO Rate.
“Event
of Default”
shall
mean individually, collectively and interchangeably any of the Events of
Default
set forth below in Article VII.
“Excluded
Taxes”
shall
mean, 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 hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the 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 described in
clause (a)
above
and (c) in the case of a Foreign Lender (other than an assignee pursuant
to
a request by the Borrower under Section 2.20(a)),
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 2.19(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 from the Borrower with respect to such withholding tax
pursuant to Section 2.19(a).
“Existing
Notes”
shall
mean the Senior Subordinated Notes and the Senior Subordinated Secured
Notes.
“Federal
Funds Effective Rate”
shall
mean, for any day, the weighted average of the rates on overnight Federal
funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for
any day
that is a Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
“Fee
Letter”
shall
mean the Fee Letter dated June 27, 2005, between the Borrower and
the
Administrative Agent.
“Foreign
Lender”
shall
mean any Lender that is organized under the laws of a jurisdiction other
than
that in which the Borrower is located. For purposes of this definition, the
United States of America, each State thereof and the District of Columbia
shall
be deemed to constitute a single jurisdiction.
“GAAP”
shall
mean, at any time, accounting principles generally accepted in the United
States
as then in effect.
“Governmental
Authority”
shall
mean any nation or government, any state or other political subdivision thereof,
or entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“Governmental
Requirement”
shall
mean any applicable state, federal or local law, statute, ordinance, code,
rule,
regulation, order or decree.
“Granting
Lender”
shall
have the meaning assigned to such term in Section 9.04(i).
“Guarantee”
shall
mean individually and collectively that certain Second Lien Commercial Guarantee
of even date with this Agreement by CCBM in favor of the Administrative Agent
for the ratable benefit of the Lenders, as amended and/or restated from time
to
time and in effect, and any Commercial Guarantee executed after the date
of this
Agreement by a Subsidiary in favor of the Administrative Agent for the ratable
benefit of the Lenders, as amended and/or restated from time to time and
in
effect.
“Guarantor”
shall
mean individually and collectively, CCBM, and its successors and assigns,
and
any Subsidiary (excluding Unrestricted Subsidiaries) of the Borrower that
executes a Guarantee.
“Hazardous
Materials”
shall
mean (a) hazardous materials, hazardous wastes, and hazardous substances
including, but not limited to, those substances, materials and wastes listed
in
the United States Department of Transportation Hazardous Materials Table,
49
C.F.R. § 172.101, as amended, or listed by the federal Environmental
Protection Agency as hazardous substances under or pursuant to 40 C.F.R.
Part 302, as amended, or substances, materials, contaminants or wastes
which are or become regulated under any Environmental Law, including those
substances, materials, contaminants or wastes as defined in the following
statutes and their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. §§ 1801 et
seq.,
as
amended, the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et
seq.,
as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §§ 9601 et
seq.,
as
amended, the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq.,
as
amended, the Clean Air Act, 42 U.S.C. §§ 7401 et
seq.,
as
amended, the federal Water Pollution Control Act, 33 U.S.C. §§ 1251
et
seq.,
as
amended, the Occupational Safety and Health Act, 2 U.S.C. §§ 651
et
seq.,
as
amended, the Safe Drinking Water Act, 42 U.S.C. §§ 300f et
seq.,
as
amended and the Natural Gas Pipeline
8
Safety
Act of 1968, 49 U.S.C. §§ 1671 et
seq.,
as
amended, (b) all substances, materials, contaminants or wastes listed
in
all comparable statutes of the States of Louisiana and Texas and in comparable
local Requirements of Law in such states, (c) acid gas, sour water
streams
or sour water vapor streams containing hydrogen sulfide or other forms
of
sulphur, sodium hydrosulfide and ammonia, (d) Hydrocarbons,
(e) natural gas, synthetic gas, and any mixtures thereof, (f) asbestos
and/or any material which contains 1% or more, by weight, of any hydrated
mineral silicate, including but not limited to chrysotile, amosite, crocidolite,
tremolite, anthophylite and/or actinolite, whether friable or non-friable,
(g) PCB’s, or PCB containing materials or fluids, (h) radon,
(i) naturally occurring radioactive material, radioactive substances
or
waste, (j) salt water and other oil and gas wastes and (k) any
other
hazardous or noxious substance, material, pollutant, emission, or solid,
liquid
or gaseous waste.
“Hedging
Agreement”
shall
mean (a) any interest rate or currency swap, rate cap, rate floor,
rate
collar, forward agreement, or other exchange or rate protection agreement
or any
option with respect to any such transaction and (b) any swap agreement,
cap, floor, collar, exchange transaction, forward agreement, or other exchange
or protection agreement relating to Hydrocarbons or any option with respect
to
any such transaction.
“Hydrocarbons”
shall
mean oil, gas, casing head gas, condensate, distillate, liquid hydrocarbons,
gaseous hydrocarbons and all products separated, settled and dehydrated
therefrom and all products refined therefrom, including kerosene, liquefied
petroleum gas, refined lubricating oils, diesel fuel, drip gasoline, natural
gasoline, helium, sulphur and all other materials derived
therefrom.
“Indebtedness”
shall
mean, at any time, (a) all obligations, indebtedness, and liabilities,
whether now existing or arising in the future, of the Borrower and/or any
Guarantor to the Lenders or any of them (or in the case of a Hedging Agreement
or Rate Management Transaction, any affiliate thereof) pursuant to a Hedging
Agreement or other commodity or price management transaction,
(b) obligations of the Borrower under Rate Management Transactions
(including all renewals, extensions, modifications, and substitution thereof
and
therefor) and all cancellations, buy backs, reversals, terminations, or
assignments of Rate Management Transactions, and (c) the indebtedness
of
the Borrower under this Agreement, including principal, interest, costs,
expenses and reasonable attorneys’ fees and all other fees, charges, costs and
expenses for which the Borrower and/or any Guarantor is responsible under
this
Agreement or under any of the Related Documents.
“Indemnified
Taxes”
shall
mean Taxes other than Excluded Taxes.
“Initial
Reserve Reports”
shall
mean the reserve reports of Xxxxx Xxxxx Company L.P., Xxxxxxxxx & Xxxxx,
Inc. and XxXxxxxx and XxxXxxxxxxx, in each case setting forth, among other
things, (a) the oil and gas properties owned directly by the Borrower and
CCBM
(other than immaterial properties excluded consistent with past practice)
as of
December 31, 2004, (b) the proved reserves attributable to
such oil
and gas
9
properties
and (c) a projection of the rate of production and net income of such proved
reserves as of December 31, 2004.
“Intercreditor
Agreement”
shall
mean the Intercreditor Agreement, dated of even date herewith, substantially
in
the form of Exhibit D,
among
the Borrower, the First Lien Collateral Agent (as defined therein) and the
Collateral Agent, as the same may from time to time be amended, restated,
supplemented or otherwise modified.
“Interest
Expense”
shall
mean, for any period, total interest expense (including that portion
attributable to Capital Lease Obligations and capitalized interest), net
of
interest income, of the Borrower and its Subsidiaries (other than Unrestricted
Subsidiaries) on a consolidated basis with respect to all outstanding
Obligations of the Borrower and its Subsidiaries (other than Non-Recourse
Debt
and Obligations of Unrestricted Subsidiaries) to the extent the promissory
notes, leases or other instruments or agreements evidencing such Obligations
require the payment of such interest in cash during such period.
“Interest
Payment Date”
shall
mean (a) with respect to any ABR Loan, the last Business Day of each
March,
June, September and December, and (b) with respect to any Eurodollar
Loan,
the last day of the Interest Period applicable to the Borrowing of which
such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months’ duration
been applicable to such Borrowing.
“Interest
Period”
shall
mean, with respect to any Eurodollar Borrowing, the period commencing
on
the date of such Borrowing and ending on the numerically corresponding day
(or,
if there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may
elect;
provided,
however,
that 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. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period. For purposes hereof, the
date of
a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
“Leases”
shall
mean all present and future oil, gas and mineral leases or interests therein
now
owned or hereafter acquired by the Borrower that form part of the Mortgaged
Properties.
“Lenders”
shall
mean (a) the Persons listed on Schedule 2.01
(other
than any such Person that has ceased to be a party hereto pursuant to an
Assignment and Acceptance) and (b) any Person that has become a party
hereto pursuant to an Assignment and Acceptance.
“Liabilities”
shall
mean, as to any Person, all indebtedness, liabilities and obligations of
such
Person, whether matured or unmatured, liquidated or unliquidated, primary
or
secondary, direct or indirect, absolute, fixed or contingent, and whether
or not
required to be considered pursuant to GAAP.
“LIBO
Rate”
shall
mean, with respect to any Eurodollar Borrowing for any Interest Period, the
rate
per annum determined by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior
to the
commencement of such Interest Period by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth
by
any service selected by the Administrative Agent that has been nominated
by the
British Bankers’ Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period;
provided
that, to
the extent that an interest rate is not ascertainable pursuant to the foregoing
provisions of this definition, the “LIBO Rate” shall be the interest rate per
annum determined by the Administrative Agent to be the average of the rates
per
annum at which deposits in Dollars are offered for such relevant Interest
Period
to major banks in the London interbank market in London, England by the
Administrative Agent at approximately 11:00 a.m. (London time) on
the date
that is two Business Days prior to the beginning of such Interest
Period.
“Loan
Documents”
shall
mean this Agreement, the Guarantee, the Collateral Documents, the promissory
notes, if any, executed and delivered pursuant to Section 2.04(e)
and any
other Related Documents.
“Loans”
shall
mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01.
“Material
Adverse Effect”
shall
mean, with respect to the Borrower and/or any Guarantor, as the case may
be, an
event which causes a material adverse effect on the business, assets, operations
or condition (financial or otherwise) of such Person.
“Maturity
Date”
shall
mean July 21, 2010.
“Mortgaged
Properties”
shall
mean the property and interests of the Borrower and/or any Guarantor that
are
encumbered by the Mortgages.
“Mortgages”
shall
mean the mortgages, deeds of trust, leasehold mortgages, assignments of leases
and rents and other security documents encumbering the properties referred
to in
the last sentence of Section 4.03
and
delivered pursuant to Section 3.01(a),
each
substantially in the form of Exhibit E,
and any
and all mortgages, deeds of trust, leasehold mortgages, assignments of leases
and rents and other security documents executed after the date of this Agreement
by Borrower and/or any Guarantor as security for the Indebtedness, in each
case,
as the same may be amended, supplemented and/or restated from time to time
and
in effect.
“Non-Recourse
Debt”
shall
mean Obligations owed by CCBM to Rocky Mountain Gas, Inc., and Obligations
of
the Borrower and/or any Guarantor for which the
11
Borrower
and/or any Guarantor, as the case may be, are not personally liable for
payment
of the Obligations.
“Obligations”
of any
Person shall mean Liabilities in any of the following categories:
(a) Liabilities for borrowed money, (b) Liabilities constituting
an
obligation to pay the deferred purchase price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar instrument,
(d) Liabilities which (i) would under GAAP be shown on such
Person’s
balance sheet as a liability, and (ii) are payable more than one year
from
the date of creation thereof (other than reserves for taxes and reserves
for
contingent obligations), (e) Liabilities arising under Hedging Agreements,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP, (g) Liabilities arising under conditional sales
or
other title retention agreements, (h) Liabilities owing under direct
to
indirect guarantees of Obligations of any other Person or otherwise constituting
obligations to purchase or acquire or to otherwise protect or insure a creditor
against loss in respect of Obligations of any other Person (such as obligations
under working capital maintenance agreements, agreements to keep-well, or
agreements to purchase Obligations, assets, goods, securities or services),
but
excluding endorsements in the ordinary course of business of negotiable
instruments in the course of collection, (i) Liabilities (for example,
repurchase agreements and sale/leaseback agreements) consisting of an obligation
to purchase or lease securities or other property, if such Liabilities arises
out of or in connection with the sale of the same or similar securities or
property, (j) Liabilities with respect to letters of credit or applications
or reimbursement agreements therefor, (k) Liabilities with respect
to
payments received in consideration of oil, gas or other minerals yet to be
acquired or produced at the time of payment (including obligations under
“take-or-pay” contracts to deliver gas in return for payments already received
and the undischarged balance of any production payment created by such Person
or
for the creation of which such Person directly or indirectly received payment),
or (l) Liabilities with respect to other obligations to deliver goods
or
services in consideration of advance payments therefor; provided,
however,
that
the “Obligations” of any Person shall not include Liabilities that were incurred
by such Person on ordinary trade terms to vendors, suppliers, or other Persons
providing goods and services for use by such Person in the ordinary course
of
its business, unless and until such Liabilities are outstanding more than
120 days past original invoice or billing date therefor.
“Other
Taxes”
shall
mean any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement
of,
or otherwise with respect to, any Loan Document.
“Perfection
Certificate”
shall
mean the Perfection Certificate substantially in the form of Exhibit
H.
“Permitted
Disposition”
shall
mean any Disposition (a) of equipment which is worthless or obsolete,
(b) of inventory (including oil and gas sold as produced and seismic
data)
which is sold in the ordinary course of business, (c) of interests
in oil
and gas leases, or portions thereof (if released or abandoned but not otherwise
sold or transferred), so long as no well situated on any such lease, or located
on any unit
12
containing
all or any part thereof, is capable (or is subject to being made capable
through
commercially feasible operations) of producing oil, gas or other hydrocarbons
or
minerals in commercial quantities, (d) of cash and cash equivalents
otherwise permitted under this Agreement, (e) constituting dividends
and
distributions permitted by Section
6.03,
(f) constituting Permitted Encumbrances, and (g) constituting
investments, loans and advances permitted by Section
6.06.
“Permitted
Encumbrances”
shall
have the meaning ascribed to such term in Section 6.04.
“Permitted
Investors”
shall
mean the directors, officers and other management employees of the Borrower
that
are shareholders of the Borrower on the Closing Date and their respective
affiliates.
“Person”
shall
mean an individual or a corporation, partnership, trust, joint venture,
incorporated or unincorporated association, joint stock company, government,
or
an agency or political subdivision thereof, or other entity of any
kind.
“Pinnacle”
shall
mean Pinnacle Gas Resources, Inc., a Delaware corporation.
“Prime
Rate”
shall
mean the rate of interest per annum determined from time to time by Credit
Suisse as its prime rate in effect at its principal office in New York City
and
notified to the Borrower.
“Proved
Reserves”
shall
have the meaning assigned to such term in Section 6.02(a).
“Purchase
Money Debt”
shall
mean Debt incurred to finance the acquisition, construction or improvement
of
any fixed or capital assets, including Debt assumed in connection with the
acquisition of any such assets or secured by an Encumbrance on any such assets
prior to the acquisition thereof, and any extension, renewal or replacement
of
any such Debt.
“PV-10
Value”
shall
mean, as of any date of determination, the present value of estimated future
revenues to be generated from the production of proved reserves on the
Borrower’s and the Guarantors’ oil and gas properties as set forth in the most
recent Reserve Reports delivered pursuant hereto, calculated in accordance
with
the Securities and Exchange Commission guidelines and using the previous
90-day
average of the Three-Year Strip Price for crude oil (WTI Xxxxxxx) and natural
gas (Xxxxx Hub), quoted on the New York Mercantile Exchange (or its successor),
net of estimated production and future development costs, using prices and
costs
as of the date of estimation without future escalation, without giving effect
to
non-property related expenses such as general and administrative expenses,
debt
service, future income tax expense and depreciation, depletion and amortization,
and discounted using an annual discount rate of 10%. PV-10 Value shall be
adjusted to give effect to the Hedging Agreements of the Borrower and the
Guarantors then in effect.
“Rate
Management Transaction”
shall
mean any transaction (including an agreement with respect thereto) now existing
or hereafter entered into between the Borrower and any Lender or affiliate
thereof which is (a) an interest rate protection agreement, foreign
currency exchange agreement or other interest or interest rate hedging agreement
entered into in the ordinary course and not for speculative purposes or
(b) a commodity price hedging agreement or arrangement entered into
in the
ordinary course and not for speculative purposes.
“Register”
shall
have the meaning assigned to such term in Section 9.04(d).
“Related
Documents”
shall
mean and include individually, collectively, interchangeably and without
limitation all promissory notes, credit agreements, loan agreements, guarantees,
security agreements, mortgages, collateral mortgages, deeds of trust, and
all
other instruments and documents, whether now existing or hereafter entered
into,
executed in connection with the Indebtedness.
“Related
Parties”
shall
mean, with respect to any specified Person, such Person’s affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s affiliates.
“Release”
shall
mean any release, spill, emission, leak, injection, deposit, disposal,
discharge, dispersal, leaching or migration of any Hazardous Materials into
the
environment or into or out of any real property of the Borrower, including
the
movement of Hazardous Materials through or in the air, soil, surface water,
groundwater and/or land which could reasonably be expected to form the basis
of
an Environmental Liability against the Borrower.
“Remedial
Action”
shall
mean any action to (a) clean up, remove, treat or in any other way
address
Hazardous Materials in the environment, (b) prevent the Release or
threat
of Release or minimize the further Release of Hazardous Materials so they
mitigate or do not endanger or threaten to endanger public health or welfare
or
the environment or (c) perform pre-remedial studies and investigations
and
post-remedial monitoring and care.
“Repayment
Date”
shall
have the meaning assigned to such term in Section 2.11.
“Required
Lenders”
shall
mean, at any time, Lenders having Loans and Commitments representing more
than
50% of the sum of all Loans outstanding and Commitments at such
time.
“Reserve
Reports”
shall
mean the reports delivered to the Administrative Agent pursuant to Sections 5.01(e)
and
(g).
Until
the Reserve Report dated as of June 30, 2005 is delivered to the
Administrative Agent pursuant to Section
5.01(g),
“Reserve Reports” shall mean the Initial Reserve Reports.
“Restricted
Person”
shall
mean the Borrower and each Subsidiary, excluding Unrestricted
Subsidiaries.
“Revolving
Credit Agreement”
shall
mean the Second Amended and Restated Credit Agreement dated as of
September 30, 2004, by and among the Borrower, CCBM, Hibernia National
Bank, as administrative agent, Union Bank of California, N.A., as co-agent
and
Hibernia National Bank and Union Bank of California, N.A., as lenders, as
amended by the First Amendment thereto dated as of October 29, 2004,
and by
the Second Amendment thereto dated as of April 27, 2005, and as further
amended on the date hereof, as the same may be further amended, supplemented,
refinanced, replaced or otherwise modified from time to time in accordance
with
this Agreement and the Intercreditor Agreement.
“Secured
Parties”
shall
have the meaning assigned to such term in the Collateral Documents.
“Security
Agreement”
shall
mean that certain Second Lien Stock Pledge and Security Agreement executed
by
the Borrower in favor of the Collateral Agent for the ratable benefit of
the
Secured Parties, of even date with this Agreement, affecting 100% of the
outstanding stock of CCBM, as the same may be amended, supplemented, and/or
restated from time to time and in effect.
“Senior
Subordinated Notes”
shall
mean the Debt represented by that certain Amended and Restated Note
dated
June 7, 2004, in the original principal amount of $27,702,426.55,
executed
by the Borrower in favor of Steelhead Investments Ltd. pursuant to the
Securities Purchase Agreement dated as of December 15, 1999, as amended by
the
First Amendment thereto dated as of June 7, 2004 and by the Second
Amendment thereto dated as of October 29, 2004.
“Senior
Subordinated Secured Notes”
shall
mean the Debt represented by those certain Notes dated May 31, 2005 in the
original aggregate principal amount of $22,000,000, executed by the Borrower
in
favor of Steelhead Investments Ltd. pursuant to the Note Purchase Agreement
dated as of October 29, 2004, as modified by the Assignment Agreement
dated
as of May 31, 2005.
“Solvent”
shall
mean, when used with respect to any Person on a particular day, that on such
date (a) the fair value of the property of such Person is greater
than the
total amount of liabilities, including contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is
not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such
Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the ordinary
course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts and liabilities beyond such Person’s ability
to pay as such debts and liabilities mature, and (e) such Person is
not
engaged in business or a transaction, and is not about to engage in business
or
a transaction, for which such Person’s property would constitute unreasonably
small capital after giving due consideration to the prevailing
15
practice
in the industry in which such person is engaged. In computing the amount
of
contingent liabilities at any time, it is intended that such liabilities
will be
computed at the amount which, in light of all of the facts and circumstances
existing at such time, represents the amount that can be reasonably expected
to
become an actual or matured liability.
“SPC”
shall
have the meaning assigned to such term in Section 9.04(i).
“Statutory
Reserves”
shall
mean 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 and
any
other banking authority, domestic or foreign, to which the Administrative
Agent
or any Lender (including any branch, affiliate, or other fronting office
making
or holding a Loan) is subject for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities (as defined in Regulation D of the Board)
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. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
“Subject
Business”
shall
mean the exploration, development, exploitation and production of natural
gas
and crude oil.
“Subsidiaries”
shall
mean at any date with respect to any Person all the corporations of which
such
Person at such date, directly or indirectly, owns more than 50% of the
outstanding capital stock (excluding directors’ qualifying shares), and
“Subsidiary” means any one of the Subsidiaries. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.
“Tangible
Net Worth”
shall
mean, with respect to any Person, the total assets of such Person (other
than
with respect to the Borrower, its Unrestricted Subsidiaries), on a consolidated
basis, exclusive of (a) those assets classified as intangible, including
goodwill, patents, trademarks, trade names, copyrights, franchises and deferred
charges, (b) treasury stock and minority interests in any Person,
(c) cash set apart and held in sinking or other analogous funds established
for the purpose of redemption or other retirement of capital stock, (d) to
the extent not already deducted from total assets, allowances for depreciation,
depletion, obsolescence and/or amortization of properties, uncollectible
accounts, and contingent but probable liabilities as to which an amount can
be
established, (e) deferred taxes and (f) all assets arising
from
advances to officers, former officers or sales representatives of such Person
or
any of its Subsidiaries (other than with respect to the Borrower, its
Unrestricted Subsidiaries) made outside the ordinary course of business;
less
total liabilities of such Person and its Subsidiaries (other than with respect
to the Borrower, its Unrestricted Subsidiaries), on a consolidated basis,
all of
the above being determined in accordance with GAAP and, with
16
respect
to the Borrower, excluding the effect of any cumulative after-tax amounts
of
ceiling test write-downs pursuant to Rule 4.10 of Regulation S-X
promulgated by the Securities and Exchange Commission and any balance sheet
impact arising from the early extinguishment of long-term
debt.
“Taxes”
shall
mean any and all present or future taxes, levies, imposts, duties, deductions,
charges, liabilities or withholdings imposed by any Governmental
Authority.
“Three-Year
Strip Price”
shall
mean, as of any date of determination, (a) for the 36-month period
commencing with the month immediately following the month in which the date
of
determination occurs, the monthly futures contract prices for crude oil and
natural gas for the 36 succeeding months as quoted on the New York Mercantile
Exchange (or its successor) and (b) for periods after such 36-month
period,
the average of such quoted prices for the period from and including the 25th
month in such 36-month period though the 36th month in such period.
“Total
Net Debt”
shall
have the meaning assigned to such term in Section 5.07(b).
“Transactions”
shall
mean, collectively, (a) the execution, delivery and performance by
the
Borrower and each Guarantor of the Loan Documents to which they are a party
and
the making of the Borrowings hereunder, (b) the repayment of all amounts
outstanding under the Revolving Credit Agreement, (c) the redemption
and
repayment of all amounts due or outstanding under the Existing Notes,
(d) the amendment of the Revolving Credit Agreement pursuant to an
amendment in substantially the form of Exhibit F
and
(e) the payment of related fees and expenses, including prepayment
premiums
in connection with the prepayment of the Senior Subordinated Notes.
“Type”,
when
used in respect of any Loan or Borrowing, shall refer to the Rate by reference
to which interest on such Loan or on the Loans comprising such Borrowing
is
determined. For purposes hereof, the term “Rate”
shall
mean the Adjusted LIBO Rate and the Alternate Base Rate.
“Unrestricted
Subsidiary”
shall
mean (a) any Subsidiary designated as an Unrestricted Subsidiary by
the Borrower’s Board of Directors in compliance with the following
sentence, and (b) any Subsidiary of an Unrestricted Subsidiary. The
Board
of Directors of the Borrower may at any time and from time to time designate
any
Subsidiary (other than CCBM or any other Guarantor) as an Unrestricted
Subsidiary; provided
that
(i) no Default or Event of Default has occurred or is continuing at
the
time of such designation and after giving effect to such designation,
(ii) immediately after such designation, no Restricted Person has
any
Liability to pay any Obligations of such Subsidiary, has in any way guaranteed
any Obligations of such Subsidiary, or has any assets or properties (excluding
a
pledge of the equity interest in such Subsidiary) which are subject to any
Encumbrance securing any Obligations of such Subsidiary, and (iii) notice
of any such designation is promptly given to the Administrative Agent in
writing.
“USA
Patriot Act”
shall
mean The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Title III
of Pub.
L. No. 107-56 (signed into law October 26, 2001)).
SECTION
1.02. Accounting
Terms.
All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with GAAP.
SECTION
1.03. Terms
Generally.
The
definitions in Section 1.01
shall
apply equally to both 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”; and the words “asset” and “property” shall be construed as having
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.
All references herein to Articles, Sections, Exhibits and Schedules shall
be
deemed references to Articles and Sections of, and Exhibits and Schedules
to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, any reference in this Agreement to any Loan Document
shall mean such document as amended, restated, supplemented or otherwise
modified from time to time.
SECTION
1.04. Classification
of Loans and Borrowings.
For
purposes of this Agreement, Loans and Borrowings may be classified and referred
to by Type (e.g.,
a
“Eurocurrency Loan” or a “Eurocurrency Borrowing”).
ARTICLE
II
The
Credits
SECTION
2.01. Commitments.
Subject
to the terms and conditions and relying upon the representations and warranties
herein set forth, each Lender agrees, severally and not jointly, to make
a Loan
to the Borrower on the Closing Date in a principal amount not to exceed its
Commitment. Amounts paid or prepaid in respect of Loans may not be
reborrowed.
SECTION
2.02. Loans. (a)
Each
Loan
shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their applicable Commitments; provided,
however,
that
the failure of any Lender to make any Loan shall not in itself relieve any
other
Lender of its obligation to lend hereunder (it being understood, however,
that
no Lender shall be responsible for the failure of any other Lender to make
any
Loan required to be made by such other Lender). The Loans comprising any
Borrowing shall be in an aggregate principal amount that is an integral multiple
of $1,000,000 and not less than $4,000,000.
(b)
Subject
to Sections
2.08
and
2.14,
each
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans
as the
Borrower may request pursuant to
18
Section
2.03.
Each
Lender may at its option make any Eurodollar Loan by causing any domestic
or
foreign branch or affiliate of such Lender to make such Loan; provided
that any
exercise of such option shall not affect the obligation of the Borrower
to repay
such Loan in accordance with the terms of this Agreement. Borrowings
of more
than one Type may be outstanding at the same time; provided,
however,
that
the Borrower shall not be entitled to request any Borrowing that, if
made, would
result in more than six Eurodollar Borrowings outstanding hereunder at
any time.
For purposes of the foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
(c)
Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in
New
York City as the Administrative Agent may designate not later than 1:00 p.m.,
New York City time, and the Administrative Agent shall promptly credit the
amounts so received to an account designated by the Borrower in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date because
any
condition precedent herein specified shall not have been met, return the
amounts
so received to the respective Lenders.
(d)
Unless
the Administrative Agent shall have received notice from a Lender prior to
the
date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s portion of such Borrowing, the Administrative
Agent may assume that such Lender has made such portion available to the
Administrative Agent on the date of such Borrowing in accordance with
paragraph (c)
above
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If the
Administrative Agent shall have so made funds available, then, to the extent
that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay
to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower to but excluding the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, a rate per
annum
equal to the interest rate applicable at the time to the Loans comprising
such
Borrowing and (ii) in the case of such Lender, a rate determined by
the
Administrative Agent to represent its cost of overnight or short term funds
(which determination shall be conclusive absent manifest error). If such
Lender
shall repay to the Administrative Agent such corresponding amount, such amount
shall constitute such Lender’s Loan as part of such Borrowing for purposes of
this Agreement.
SECTION
2.03. Borrowing
Procedure.
In order
to request the Borrowing to be made on the Closing Date, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in
the
case of a Eurodollar Borrowing, not later than 1:00 p.m., New York
City
time, three Business Days before such proposed Borrowing, and (b) in the
case of
an ABR Borrowing, not later than 1:00 p.m., New York City time, one
Business Day before such proposed Borrowing. Such telephonic Borrowing Request
shall be irrevocable, and shall be confirmed promptly by hand delivery or
fax to
the Administrative Agent of a written Borrowing Request and shall specify
the
following
19
information:
(i) whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day); (iii)
the
number and location of the account to which funds are to be disbursed;
(iv) the
amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar
Borrowing, the Interest Period with respect thereto; provided,
however,
that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set forth in Section
2.02.
If no
election as to the Type of Borrowing is specified in any such notice, then
the
requested Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurodollar Borrowing is specified in any such notice, then
the
Borrower shall be deemed to have selected an Interest Period of one month’s
duration. The Administrative Agent shall promptly advise the applicable
Lenders
of any notice given pursuant to this Section
2.03
(and the
contents thereof), and of each Lender’s portion of the requested
Borrowing.
SECTION
2.04. Evidence
of Debt; Repayment of Loans. (a)
The
Borrower hereby unconditionally promises to pay to the Administrative Agent
for
the account of each Lender the principal amount of each Loan of such Lender
as
provided in Section 2.11.
(b)
Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts
of
principal and interest payable and paid to such Lender from time to time
under
this Agreement.
(c)
The
Administrative Agent shall maintain accounts in which it will record (i)
the
amount of each Loan made hereunder, the Type thereof and, if applicable,
the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative
Agent
hereunder from the Borrower or any Guarantor and each Lender’s share
thereof.
(d)
The
entries made in the accounts maintained pursuant to paragraphs
(b)
and
(c)
above
shall be prima
facie
evidence
of the existence and amounts of the obligations therein recorded; provided,
however,
that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with their terms.
(e)
Any
Lender may request that Loans made by it hereunder be evidenced by a promissory
note. In such event, the Borrower shall execute and deliver to such Lender
a
promissory note payable to such Lender and its registered assigns and in
a form
and substance reasonably acceptable to the Administrative Agent and the
Borrower. Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive such a promissory note, the interests
represented by such note shall at all times (including after any assignment
of
all or part of such interests pursuant to
20
Section
9.04)
be
represented by one or more promissory notes payable to the payee named
therein
or its registered assigns.
SECTION
2.05. Fees.
The
Borrower agrees to pay to the Administrative Agent, for its own account,
the
non-refundable administrative fees set forth in the Fee Letter at the times
and
in the amounts specified therein.
SECTION
2.06. Interest
on Loans. (a)
Subject
to the provisions of Section
2.07,
the
Loans comprising each ABR Borrowing shall bear interest (computed on the
basis
of the actual number of days elapsed over a year of 365 or 366 days, as the
case
may be, when the Alternate Base Rate is determined by reference to the Prime
Rate and over a year of 360 days at all other times and calculated from and
including the date of such Borrowing to but excluding the date of repayment
thereof) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Percentage.
(b)
Subject
to the provisions of Section
2.07,
the
Loans comprising each Eurodollar Borrowing shall bear interest (computed
on the
basis of the actual number of days elapsed over a year of 360 days) at a
rate
per annum equal to the Adjusted LIBO Rate for the Interest Period in effect
for
such Borrowing plus the Applicable Percentage.
(c)
Interest
on each Loan shall be payable on the Interest Payment Dates applicable to
such
Loan except as otherwise provided in this Agreement. The applicable Alternate
Base Rate or Adjusted LIBO Rate for each Interest Period or day within an
Interest Period, as the case may be, shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest
error.
SECTION
2.07. Default
Interest.
If the
Borrower shall default in the payment of any principal of or interest on
any
Loan or any other amount due hereunder, by acceleration or otherwise, or
under
any other Loan Document, then, until such defaulted amount shall have been
paid
in full, to the extent permitted by law, all amounts outstanding under this
Agreement and the other Loan Documents shall bear interest (after as well
as
before judgment), payable on demand, (a) in the case of principal, at the
rate
otherwise applicable to such Loan pursuant to Section
2.06
plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be, when determined by reference to the Prime Rate
and
over a year of 360 days at all other times) equal to the rate that would
be
applicable to an ABR Loan plus 2.00% per annum.
SECTION
2.08. Alternate
Rate of Interest.
In the
event, and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Borrowing the
Administrative Agent shall have determined that dollar deposits in the principal
amounts of the Loans comprising such Borrowing are not generally available
in
the London interbank market, or that the rates at which such dollar deposits
are
being offered will not adequately and fairly reflect the cost to any Lender
of
making or maintaining its Eurodollar Loan during such Interest Period, or
that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written
or
fax notice of such determination to
21
the
Borrower and the Lenders. In the event of any such determination, until
the
Administrative Agent shall have advised the Borrower and the Lenders that
the
circumstances giving rise to such notice no longer exist, any request by
the
Borrower for a Eurodollar Borrowing pursuant to Section
2.03
or
2.10
shall be
deemed to be a request for an ABR Borrowing. Each determination by the
Administrative Agent under this Section
2.08
shall be
conclusive absent manifest error.
SECTION
2.09. Termination
of Commitments.
The
Commitments shall automatically terminate upon the earlier to occur of
(i) the making of the Loans on the Closing Date and (ii) 5:00
p.m.,
New York City time, on July 31, 2005.
SECTION
2.10. Conversion
and Continuation of Borrowings.
The
Borrower shall have the right at any time upon prior irrevocable written
notice
(delivered by hand or by fax) (or telephone notice promptly confirmed by
written
notice (delivered by hand or by fax)) to the Administrative Agent (a) not
later
than 1:00 p.m., New York City time, one Business Day prior to conversion,
to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later
than
1:00 p.m., New York City time, three Business Days prior to conversion
or
continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or
to
continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional
Interest Period, and (c) not later than 1:00 p.m., New York City time,
three Business Days prior to conversion, to convert the Interest Period with
respect to any Eurodollar Borrowing to another permissible Interest Period,
subject in each case to the following:
(i)
each
conversion or continuation shall be made pro rata among the Lenders in
accordance with the respective principal amounts of the Loans comprising
the
converted or continued Borrowing;
(ii)
if
less
than all the outstanding principal amount of any Borrowing shall be converted
or
continued, then each resulting Borrowing shall satisfy the limitations specified
in Sections
2.02(a)
and
2.02(b)
regarding the principal amount and maximum number of Borrowings of the relevant
Type;
(iii)
each
conversion shall be effected by each Lender and the Administrative Agent
by
recording for the account of such Lender the new Loan of such Lender resulting
from such conversion and reducing the Loan (or portion thereof) of such Lender
being converted by an equivalent principal amount; accrued interest on any
Eurodollar Loan (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;
(iv)
if
any
Eurodollar Borrowing is converted at a time other than the end of the Interest
Period applicable thereto, the Borrower shall pay, upon demand, any amounts
due
to the Lenders pursuant to Section
2.15;
(v)
any
portion of a Borrowing maturing or required to be repaid in less than one
month
may not be converted into or continued as a Eurodollar Borrowing;
(vi)
any
portion of a Eurodollar Borrowing that cannot be converted into or continued
as
a Eurodollar Borrowing by reason of the immediately preceding clause shall
be
automatically converted at the end of the Interest Period in effect for such
Borrowing into an ABR Borrowing;
(vii)
no
Interest Period may be selected for any Eurodollar Borrowing that would end
later than a Repayment Date occurring on or after the first day of such Interest
Period if, after giving effect to such selection, the aggregate outstanding
amount of (A) the Eurodollar Borrowings with Interest Periods ending on or
prior
to such Repayment Date and (B) the ABR Borrowings would not be at least equal
to
the principal amount of Borrowings to be paid on such Repayment Date;
and
(viii)
upon
notice to the Borrower from the Administrative Agent given at the request
of the
Required Lenders, after the occurrence and during the continuance of a Default
or Event of Default, no outstanding Loan may be converted into, or continued
as,
a Eurodollar Loan.
Each
notice pursuant to this Section
2.10
shall be
irrevocable and shall refer to this Agreement and specify (i) the identity
and
amount of the Borrowing that the Borrower requests be converted or continued,
(ii) whether such Borrowing is to be converted to or continued as a Eurodollar
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion,
the
date of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurodollar Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified
in any
such notice with respect to any conversion to or continuation as a Eurodollar
Borrowing, the Borrower shall be deemed to have selected an Interest Period
of
one month’s duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section
2.10
and of
each Lender’s portion of any converted or continued Borrowing. If the Borrower
shall not have given notice in accordance with this Section
2.10
to
continue any Eurodollar Borrowing into a subsequent Interest Period (and
shall
not otherwise have given notice in accordance with this Section
2.10
to
convert such Eurodollar Borrowing), such Eurodollar Borrowing shall, at the
end
of the Interest Period applicable thereto (unless repaid pursuant to the
terms
hereof), automatically be continued into an ABR Borrowing.
SECTION
2.11. Repayment
of Borrowings. (a)
The
Borrower shall pay to the Administrative Agent, for the account of the Lenders,
on the dates set forth below, or if any such date is not a Business Day,
on the
next preceding Business Day (each such date being called a “Repayment
Date”),
a
principal amount of the Loans (as adjusted from time to time pursuant to
Sections
2.11(b)
and
2.12)
equal to
the amount set forth below for such date, together in each case with accrued
and
unpaid interest on the principal amount to be paid to but excluding the date
of
such payment:
|
Repayment
Date
|
Amount
|
|
September
30, 2005
|
$375,000
|
|
December
31, 2005
|
$375,000
|
|
Repayment
Date
|
Amount
|
|
March
31, 2006
|
$375,000
|
|
June
30, 2006
|
$375,000
|
|
September
30, 2006
|
$375,000
|
|
December
31, 2006
|
$375,000
|
|
March
31, 2007
|
$375,000
|
|
June
30, 2007
|
$375,000
|
|
September
30, 2007
|
$375,000
|
|
December
31, 2007
|
$375,000
|
|
March
31, 2008
|
$375,000
|
|
June
30, 2008
|
$375,000
|
|
September
30, 2008
|
$375,000
|
|
December
31, 2008
|
$375,000
|
|
March
31, 2009
|
$375,000
|
|
June
30, 2009
|
$375,000
|
|
September
30, 2009
|
$375,000
|
|
December
31, 2009
|
$375,000
|
|
March
31, 2010
|
$375,000
|
|
June
30, 2010
|
$375,000
|
|
Maturity
Date
|
$142,500,000
|
(b)
In
the
event and on each occasion that the Commitments shall be reduced or shall
expire
or terminate other than as a result of the making of a Loan, the installments
payable on each Repayment Date shall be reduced pro rata by an aggregate
amount
equal to the amount of such reduction, expiration or termination.
(c)
To
the
extent not previously paid, all Loans shall be due and payable on the Maturity
Date together with accrued and unpaid interest on the principal amount to
be
paid to but excluding the date of payment.
(d)
All
repayments pursuant to this Section
2.11
shall be
subject to Section 2.15,
but
shall otherwise be without premium or penalty.
SECTION
2.12. Optional
Prepayment. (a)
The
Borrower shall have the right at any time and from time to time to prepay
any
Borrowing, in whole or in part, upon at least three Business Days’ prior written
or fax notice (or telephone notice promptly confirmed by written or fax notice)
in the case of Eurodollar Loans, or written or fax notice (or telephone notice
promptly confirmed by written or fax notice) at least one Business Day prior
to
the date of prepayment in the case of ABR Loans, to the Administrative Agent
before 1:00 p.m., New York City time; provided,
however,
that
each partial prepayment shall be in an amount that is an integral multiple
of
$1,000,000 and not less than $4,000,000.
(b)
Optional
prepayments of Loans shall be applied pro rata against the remaining scheduled
installments of principal due in respect of the Loans under this Section 2.11.
(c)
Optional
prepayments of Loans at any time during the applicable periods set forth
in this
Section
2.12(c)
shall be
accompanied by a payment of a prepayment fee in an amount (expressed as a
percentage of the principal amount of the Loans to be repaid) equal to
(i) 2.00%, if such prepayment occurs on or prior to the date that
is one
year after the Closing Date or (ii) 1.00%, if such prepayment occurs
after
the date that is one year after the Closing Date, but on or prior to the
date
that is two years after the Closing Date.
(d)
Each
notice of prepayment shall specify the prepayment date and the principal
amount
of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable
and
shall commit the Borrower to prepay such Borrowing by the amount stated therein
on the date stated therein. All prepayments under this Section
2.12
shall be
subject to Section
2.15
but
otherwise without premium or penalty, except as provided in Section
2.12(c).
All
prepayments under this Section
2.12
shall be
accompanied by accrued and unpaid interest on the principal amount to be
prepaid
to but excluding the date of payment. Notwithstanding anything to the contrary
contained in this Agreement, the Borrower may rescind any notice of prepayment
under this Section 2.12
if such
prepayment would have resulted from a refinancing of the Loans, which
refinancing shall not be consummated or shall otherwise be delayed.
SECTION
2.13. Reserve
Requirements; Change in Circumstances. (a)
Notwithstanding
any other provision of this Agreement, if any Change in Law shall impose,
modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any
Lender
(except any such reserve requirement which is reflected in the Adjusted LIBO
Rate) or shall impose on such Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender,
and
the result of any of the foregoing shall be to increase the cost to such
Lender
of making or maintaining any Eurodollar Loan or to reduce the amount of any
sum
received or receivable by such Lender hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Lender to be material, then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered.
(b)
If
any
Lender shall have determined that any Change in Law regarding capital adequacy
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 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) by an amount
deemed by such Lender to be material, then from time to time the Borrower
shall
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)
If
any
Lender claims compensation under this Section 2.13, such Lender shall
simultaneously furnish to the Borrower a certificate of such Lender setting
25
forth
(i) the amount or amounts necessary to compensate such Lender or
its
holding company, as applicable, as specified in paragraph
(a)
or
(b)
above
and (ii) in reasonable detail the basis for, and the calculation
of, such
additional amount or amounts, which certificate shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as
due on
any such certificate delivered to the Borrower within 15 days after its
receipt
of the same.
(d)
Failure
or delay on the part of any Lender to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return
on
capital shall not constitute a waiver of such Lender’s right to demand such
compensation; provided
that the
Borrower shall not be under any obligation to compensate any Lender under
paragraph (a)
or
(b)
above
with respect to increased costs or reductions with respect to any period
prior
to the date that is 120 days prior to such request; provided further
that the
foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
120-day period.
SECTION
2.14. Change
in Legality. (a)
Notwithstanding
any other provision of this Agreement, if any Change in Law shall make it
unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, by written notice to the Borrower and to the Administrative
Agent:
(i)
such
Lender may declare that Eurodollar Loans will not thereafter (for the duration
of such unlawfulness) be made by such Lender hereunder (or be continued for
additional Interest Periods and ABR Loans will not thereafter (for such
duration) be converted into Eurodollar Loans), whereupon any request for
a
Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing
or to continue a Eurodollar Borrowing for an additional Interest Period)
shall,
as to such Lender only, be deemed a request for an ABR Loan (or a request
to
continue an ABR Loan as such for an additional Interest Period or to convert
a
Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration
shall be subsequently withdrawn; and
(ii)
such
Lender may require that all outstanding Eurodollar Loans made by it be converted
to ABR Loans, in which event all such Eurodollar Loans shall be automatically
converted to ABR Loans as of the effective date of such notice as provided
in
paragraph
(b)
below.
In
the
event any Lender shall exercise its rights under (i) or (ii) above, all payments
and prepayments of principal that would otherwise have been applied to repay
the
Eurodollar Loans that would have been made by such Lender or the converted
Eurodollar Loans of such Lender shall instead be applied to repay the ABR
Loans
made by such Lender in lieu of, or resulting from the conversion of, such
Eurodollar Loans.
(b)
For
purposes of this Section
2.14,
a
notice to the Borrower by any Lender shall be effective as to each Eurodollar
Loan made by such Lender, if lawful, on
26
the
last
day of the Interest Period then applicable to such Eurodollar Loan; in
all other
cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION
2.15. Indemnity.
The
Borrower shall indemnify each Lender against any loss or expense that such
Lender may sustain or incur as a consequence of (a) any event, other
than a
default by such Lender in the performance of its obligations hereunder, which
results in (i) such Lender receiving or being deemed to receive any
amount
on account of the principal of any Eurodollar Loan prior to the end of the
Interest Period in effect therefor, (ii) the conversion of any Eurodollar
Loan to an ABR Loan, or the conversion of the Interest Period with respect
to
any Eurodollar Loan, in each case other than on the last day of the Interest
Period in effect therefor, or (iii) any Eurodollar Loan to be made
by such
Lender (including any Eurodollar Loan to be made pursuant to a conversion
or
continuation under Section 2.10)
not
being made after notice of such Loan shall have been given by the Borrower
hereunder (any of the events referred to in this clause (a)
being
called a “Breakage
Event”)
or
(b) any default in the making of any payment or prepayment required
to be
made hereunder. In the case of any Breakage Event, such loss shall include
an
amount equal to the excess, as reasonably determined by such Lender, of (i)
its
cost of obtaining funds for the Eurodollar Loan that is the subject of such
Breakage Event for the period from the date of such Breakage Event to the
last
day of the Interest Period in effect (or that would have been in effect)
for
such Loan over (ii) the amount of interest likely to be realized by such
Lender
in redeploying the funds released or not utilized by reason of such Breakage
Event for such period. A certificate of any Lender setting forth any amount
or
amounts which such Lender is entitled to receive pursuant to this Section
2.15
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
delivered to the Borrower within 15 days after its receipt of the
same.
SECTION
2.16. Pro
Rata Treatment.
Except
as required under Section 2.14,
each
Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each reduction of the Commitments and each
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired
or been
terminated, in accordance with the respective principal amounts of their
outstanding Loans). Each Lender agrees that in computing such Lender’s portion
of any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender’s percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION
2.17. Sharing
of Setoffs.
Each
Lender agrees that if it shall, through the exercise of a right of banker’s
lien, setoff or counterclaim against the Borrower or any Guarantor, or pursuant
to a secured claim under Section 506 of Title 11 of the United
States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency
or
other similar law or otherwise, or by any other means, obtain payment (voluntary
or involuntary) in respect of any Loan or Loans as a result of which the
unpaid
principal portion of its Loans shall be proportionately less than the unpaid
principal portion of the Loans of any other Lender, it shall be deemed
simultaneously to have purchased from
27
such
other Lender at face value, and shall promptly pay to such other Lender
the
purchase price for, a participation in the Loans of such other Lender,
so that
the aggregate unpaid principal amount of the Loans and participations in
Loans
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount
of its
Loans prior to such exercise of banker’s lien, setoff or counterclaim or other
event was to the principal amount of all Loans outstanding prior to such
exercise of banker’s lien, setoff or counterclaim or other event; provided,
however,
that if
any such purchase or purchases or adjustments shall be made pursuant to
this
Section
2.17
and the
payment giving rise thereto shall thereafter be recovered, such purchase
or
purchases or adjustments shall be rescinded to the extent of such recovery
and
the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that
any
Lender holding a participation in a Loan deemed to have been so purchased
may
exercise any and all rights of banker’s lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower
in
the amount of such participation.
SECTION
2.18. Payments. (a)
The
Borrower shall make each payment (including principal of or interest on any
Borrowing or any fees or other amounts) hereunder and under any other Loan
Document not later than 1:00 p.m., New York City time, on the date
when due
in immediately available Dollars, without setoff, defense or counterclaim.
Each
such payment shall be made to the Administrative Agent at its offices at
Eleven
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000. The Administrative Agent shall
promptly
distribute to each Lender any payments received by the Administrative Agent
on
behalf of such Lender.
(b)
Except
as
otherwise expressly provided herein, whenever any payment (including principal
of or interest on any Borrowing or any fees or other amounts) hereunder or
under
any other Loan Document shall become due, or otherwise would occur, on a
day
that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
the
computation of interest or fees, if applicable.
SECTION
2.19. Taxes. (a)
Any
and
all payments by or on account of any obligation of the Borrower or any Guarantor
hereunder or under any other 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) the
Administrative Agent or Lender (as the case may be) receives an amount equal
to
the sum it would have received had no such deductions been made, (ii) the
Borrower or such Guarantor shall make such deductions and (iii) the
Borrower or such Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b)
In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
(c)
The
Borrower shall indemnify the Administrative Agent and each Lender within
10 days
after written demand therefor, for the full amount of any Indemnified Taxes
or
Other Taxes paid by the Administrative Agent and such Lender, as the case
may
be, on or with respect to any payment by or on account of any obligation
of the
Borrower or any Guarantor hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of
such
payment or liability delivered to the Borrower by a Lender, or by the
Administrative Agent on behalf of itself or a Lender, shall be conclusive
absent
manifest error.
(d)
As
soon
as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower or any 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)
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 shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate.
(f)
If
the
Administrative Agent or a Lender determines that it has received a refund
of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section
2.19,
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
2.19
with
respect to the Indemnified Taxes or Other Taxes giving rise to such refund),
net
of all out-of-pocket expenses of the Administrative Agent or such Lender
and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided,
that
the Borrower, 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 2.19
shall
not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other
29
information
relating to its taxes which it deems confidential) to the Borrower or any
other
Person.
SECTION
2.20. Assignment
of Commitments Under Certain Circumstances; Duty to Mitigate. (a)
In
the
event (i) any Lender delivers a certificate requesting compensation pursuant
to
Section
2.13,
(ii)
any Lender delivers a notice described in Section
2.14,
(iii)
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender pursuant to Section 2.19
or (iv)
any Lender refuses to consent to any amendment, waiver or other modification
of
any Loan Document requested by the Borrower that requires the consent of
a
greater percentage of the Lenders than the Required Lenders and such amendment,
waiver or other modification is consented to by the Required Lenders, the
Borrower may, at its sole expense and effort (including with respect to the
processing and recordation fee referred to in Section
9.04(b)),
upon
notice to such Lender and the Administrative Agent, require such Lender to
transfer and assign, without recourse (in accordance with and subject to
the
restrictions contained in Section 9.04),
all of
its interests, rights and obligations under this Agreement to an assignee
that
shall assume such assigned obligations (which assignee may be another Lender,
if
a Lender accepts such assignment); provided
that
(x) such assignment shall not conflict with any law, rule or regulation
or
order of any court or other Governmental Authority having jurisdiction,
(y) the Borrower shall have received the prior written consent of
the
Administrative Agent, which consent shall not unreasonably be withheld or
delayed, and (z) the Borrower or such assignee shall have paid to
the
affected Lender in immediately available funds an amount equal to the sum
of the
principal of and interest accrued to the date of such payment on the outstanding
Loans of such Lender plus all other amounts accrued for the account of such
Lender hereunder with respect thereto (including any amounts under Sections 2.13
and
2.15);
provided further
that, if
prior to any such transfer and assignment the circumstances or event that
resulted in such Lender’s claim for compensation under Section 2.13,
notice
under Section 2.14
or the
amounts paid pursuant to Section 2.19,
as the
case may be, cease to cause such Lender to suffer increased costs or reductions
in amounts received or receivable or reduction in return on capital, or cease
to
have the consequences specified in Section 2.14,
or
cease to result in amounts being payable under Section 2.19,
as the
case may be (including as a result of any action taken by such Lender pursuant
to paragraph (b)
below),
or if such Lender shall waive its right to claim further compensation under
Section 2.13
in
respect of such circumstances or event or shall withdraw its notice under
Section 2.14
or shall
waive its right to further payments under Section 2.19
in
respect of such circumstances or event or shall consent to the proposed
amendment, waiver, consent or other modification, as the case may be, then
such
Lender shall not thereafter be required to make any such transfer and assignment
hereunder. Each Lender hereby grants to the Administrative Agent an irrevocable
power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any Assignment and Acceptance
necessary to effectuate any assignment of such Lender’s interests hereunder in
the circumstances contemplated by this Section 2.20(a).
(b)
If
(i) any Lender shall request compensation under Section 2.13,
(ii) any Lender delivers a notice described in Section 2.14
or
(iii) the Borrower is
30
required
to pay any additional amount to any Lender or any Governmental Authority
on
account of any Lender, pursuant to Section 2.19,
then
such Lender shall use reasonable efforts (which shall not require such
Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise
take any
action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably
requested
in writing by the Borrower or (y) to assign its rights and delegate
and
transfer its obligations hereunder to another of its offices, branches
or
affiliates, if such filing or assignment would reduce its claims for
compensation under Section 2.13
or
enable it to withdraw its notice pursuant to Section 2.14
or would
reduce amounts payable pursuant to Section 2.19,
as the
case may be, in the future. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such filing
or
assignment, delegation and transfer.
ARTICLE
III
Conditions
Precedent
SECTION
3.01. Conditions
Precedent to Making of Loans.
The
obligation of the Lenders to make Loans hereunder shall be subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:
(a)
The
Borrower and each Guarantor that is to be a party thereto shall have executed
and delivered to the Administrative Agent this Agreement, the Mortgages,
the
Security Agreement and all other documents required by this Agreement (including
a promissory note that complies with the requirements of Section 2.04(e)
in favor
of each Lender that has requested a promissory note), all in form and substance
and in such number of counterparts as may be required by the Administrative
Agent;
(b)
CCBM
shall have executed and delivered to the Administrative Agent this Agreement,
the Guarantee, and all other documents required by this Agreement, all in
form
and substance and in such number of counterparts as may be required by the
Administrative Agent;
(c)
The
representations, warranties, and covenants of the Borrower as set forth in
this
Agreement, or in any Related Document furnished to the Administrative Agent
and/or any Lender in connection herewith, shall be and remain true and correct
as of such date (except to the extent specifically limited to a specified
date);
(d)
The
Administrative Agent shall have received favorable legal opinions of
(i) counsel to the Borrower and CCBM covering the transactions contemplated
by this Agreement and (ii) special Louisiana counsel to the Administrative
Agent and Collateral Agent covering the enforceability and recordability
of the
Mortgage relating to properties in Louisiana, in each case, in form, scope
and
substance satisfactory to the Administrative Agent;
(e)
The
Administrative Agent shall have received certified resolutions of the Borrower
and CCBM authorizing the execution of all documents and instruments contemplated
by this Agreement;
(f)
The
Administrative Agent shall have received all fees, charges and expenses which
are due and payable as specified in this Agreement and any Related Documents
to
be entered into on or prior to the Closing Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required
to be
reimbursed or paid by the Borrower hereunder, under any Related Document
to be
entered into on or prior to the Closing Date or under any engagement or fee
letter between the Borrower and the Administrative Agent relating to the
credit
facilities contemplated hereby;
(g)
No
Default or Event of Default shall exist or shall result from the making of
a
Loan;
(h)
The
Administrative Agent shall have received the articles of incorporation and
bylaws, as amended, of each of the Borrower and CCBM ((x) in the case
of
such articles of incorporation, certified as of a recent date by the Secretary
of State of the state of its organization and together with a certificate
as to
the good standing of each of the Borrower and CCBM as of a recent date, from
such Secretary of State and (y) in the case of such bylaws, certified
by
the Secretary or Assistant Secretary of the Borrower and CCBM and together
with
such incumbency certificates as the Administrative Agent shall reasonably
request), and the Administrative Agent’s counsel shall have reviewed the
foregoing documents and shall be satisfied with the validity, due authorization
and enforceability thereof and of all Related Documents and with all other
legal
matters incident to this Agreement, the Borrowings and extensions of credit
hereunder and the Related Documents;
(i)
The
Administrative Agent shall have received evidence acceptable to it and its
counsel that the security interests created pursuant to the Collateral Documents
shall have a first priority position, subject only to Permitted Encumbrances
and
the Intercreditor Agreement;
(j)
The
Borrower shall have complied with the procedures set forth in this Agreement
for
the making of Loans, including delivery to the Administrative Agent of a
notice
of Borrowing as required by Section 2.03;
(k)
There
shall have occurred no Material Adverse Effect since December 31,
2004;
(l)
The
Lenders shall be reasonably satisfied with their review prior to the date
hereof
of all environmental matters related to the Borrower and the Mortgaged
Properties;
(m)
The
Borrower shall have delivered to the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent that the Borrower is carrying insurance
as required by Section 4.06;
(n)
To
the
extent requested by Administrative Agent and required by the Loan Documents,
the
Borrower shall have executed and delivered to the Administrative Agent blank
form letters in lieu of division orders, in form and substance satisfactory
to
the Administrative Agent;
(o)
The
Administrative Agent shall have received a copy of the Initial Reserve Reports,
and the substance of such reports shall be satisfactory to the
Lenders;
(p)
The
Administrative Agent shall have received title opinions from counsel to the
Borrower (or other title information reasonably acceptable to the Administrative
Agent), dated as of a date reasonably acceptable to the Administrative Agent
and
covering the oil and gas properties of the Borrower and CCBM for which title
opinions or other title information has been provided pursuant to the Revolving
Credit Agreement, which opinions (or other title information reasonably
acceptable to the Administrative Agent) must satisfy (in the Administrative
Agent’s reasonable discretion) the first sentence of Section 4.03;
(q)
The
Administrative Agent shall have received evidence acceptable to it and its
counsel that all principal, premium, if any, interest, fees and other amounts
due or outstanding under the Existing Notes shall have been paid in full
and all
guarantees and security, if any, in support thereof discharged and released.
Immediately after giving effect to the Transactions and the other transactions
contemplated hereby, the Borrower and its Subsidiaries shall have outstanding
no
Debt or preferred stock other than (i) Indebtedness outstanding under
this
Agreement, (ii) Debt outstanding under the Revolving Credit Agreement
(it
being acknowledged and agreed that the Borrower intends to repay all amounts
outstanding under the Revolving Credit Agreement on or about the Closing
Date)
and (iii) Debt set forth on Schedule 6.05;
(r)
The
Administrative Agent shall have received evidence acceptable to the
Administrative Agent and its counsel that the Revolving Credit Agreement
has
been amended pursuant to an amendment in substantially the form of Exhibit F;
(s)
The
Administrative Agent shall have received a certificate, dated the date hereof
and signed by the chief financial officer of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (c)
and
(g)
of this
Section 3.01;
(t)
The
Lenders shall have received, to the extent requested, all documentation and
other information required by regulatory authorities under
33
applicable
“know your customer” and anti-money laundering rules and regulations, including
the USA Patriot Act;
(u)
The
Intercreditor Agreement shall have been duly executed by each of the parties
thereto, and shall be in full force and effect; and
(v)
The
Collateral Agent shall have received a Perfection Certificate with respect
to
the Borrower and the Guarantors dated the Closing Date and duly executed
by the
chief financial officer of the Borrower, and shall have received the results
of
a search of the Uniform Commercial Code filings (or equivalent filings) made
with respect to the Borrower and the Guarantors in the states (or other
jurisdictions) of formation of such Persons, in which the chief executive
office
of each such Person is located and in the other jurisdictions in which such
persons maintain Mortgaged Properties, in each case as indicated on such
Perfection Certificate, together with copies of the financing statements
(or
similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Collateral Agent that the Encumbrances indicated in any
such
financing statement (or similar document) would be permitted under Section 6.04
or have
been or will be contemporaneously released or terminated.
The
Administrative Agent and the Lenders reserve the right, in their sole
discretion, to waive any one or more of the foregoing conditions
precedent.
ARTICLE
IV
Representations
and Warranties
The
Borrower represents and warrants as of the Closing Date to the Administrative
Agent and the Lenders as follows:
SECTION
4.01. Corporate
Authority of the Borrower.
The
Borrower is a corporation duly created, validly existing, and in good standing
under the laws of the state its incorporation, and is duly qualified and
in good
standing as foreign corporation in Louisiana and all other jurisdictions
where
the failure to qualify would have an adverse effect upon its ability to perform
its obligations under this Agreement and all Related Documents to which it
is a
party. The Borrower has the corporate power to enter into this Agreement,
execute the Mortgages, the Security Agreement, the Intercreditor Agreement
and
each other Loan Document to which it is a party and to grant the liens and
security interests in the Collateral in the manner and for the purpose
contemplated by the Collateral Documents. The Borrower has the corporate
power
to perform its obligations hereunder and under the Loan Documents and Related
Documents. The execution, delivery, and performance by the Borrower of the
Loan
Documents and Related Documents have all been duly authorized by all necessary
corporate or company action, and do not and will not result in any violation
by
the Borrower of any provision of any law, rule, regulation, order, writ,
judgment, decree, determination or award presently in effect having
applicability to the Borrower, or the articles of incorporation and bylaws
of
the Borrower. Except as set forth in Schedule 4.01
attached
hereto, the making and
34
performance
by the Borrower of the Loan Documents and Related Documents do not and
will not
result in a breach of or constitute a default under the Revolving Credit
Agreement or any material indenture or other loan or credit agreement or
any
other material agreement or instrument to which the Borrower is a party
or by
which it may be bound or affected, or result in, or require, the creation
or
imposition of any mortgage, deed of trust, pledge, lien, security interest
or
other charge or encumbrance of any nature (other than as contemplated by
the
Related Documents) upon or with respect to any of the properties now owned
or
hereafter acquired by the Borrower. Each of the Loan Documents and Related
Documents to which the Borrower is a party constitutes a legal, valid and
binding obligation of the Borrower, 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
4.02. Financial
Statements.
The
balance sheet of the Borrower at December 31, 2004 and the related
statements of income and retained earnings for the year then ended, copies
of
which have been delivered to the Administrative Agent, fairly present in
all
material respects the financial condition of the Borrower at the date and
for
the period thereof. Such financial statements were audited by and accompanied
by
the unqualified opinion of Xxxxxxx Xxxx Xxxxxxx of Texas, P.C., independent
public accountants. Such financial statements were prepared in conformity
with
GAAP and, except as otherwise disclosed to the Administrative Agent in writing
prior to the date hereof, applied on a basis consistent with the preceding
year.
No Material Adverse Effect with respect to the Borrower and its Subsidiaries,
taken as a whole, has occurred since December 31, 2004.
SECTION
4.03. Title
to Mortgaged Properties.
Except
as set forth on Schedule 4.03
attached
hereto, the Borrower has Defensible Title to each Mortgaged Property having
a
book cost in excess of $200,000 (except to the extent that (a) such
assets
have thereafter been disposed of in compliance with this Agreement or
(b) leases for such property have expired pursuant to their terms),
in each
case free and clear of all Encumbrances (other than Permitted Encumbrances),
except (i) Encumbrances for taxes not yet due and payable or, if payable,
that are being contested in good faith in the ordinary course of business,
(ii) statutory Encumbrances (including materialmen’s, mechanic’s,
repairmen’s, landlord’s and other similar encumbrances) arising in the ordinary
course of business to secure payments not yet due and payable or, if payable,
that are being contested in good faith in the ordinary course of business,
(iii) easements, restrictions, reservations or other encumbrances,
as well
as such imperfections or irregularities of title, if any, as are not material,
(iv) obligations or duties to any municipality or public authority
with
respect to any franchise, grant, license or permit and all applicable laws,
rules, regulations and orders of any Governmental Authority, (v) all
lessors’ royalties, overriding royalties, net profits interests, production
payments, carried interests, reversionary interests and other burdens on
or
deductions from the proceeds of production, (vi) the terms and conditions
of joint operating agreements and other oil and gas contracts, (vii) all
rights to consent by, required notices to, and filings with or other actions
by
governmental or tribal entities, if any, in connection with the change of
ownership or control of an interest in federal, state, tribal or other domestic
governmental
35
oil
and
gas leases, if the same are customarily obtained subsequent to such change
of
ownership or control, but only insofar as such consents, notices, filings
and
other actions relate to the transactions contemplated by this Agreement,
(viii) any preferential purchase rights, (ix) required third
party
consents to assignment, (x) conventional rights of reassignment
prior to
abandonment and (xi) the terms and provisions of oil and gas leases,
unit
agreements, pooling agreements, and other documents creating interests
comprising the oil and gas properties; provided,
however,
the
exceptions described in clauses (iv)
through
(xi)
inclusive above are qualified to include only those exceptions in each
case
which do not operate to (A) reduce the net revenue interest of the
Borrower
below that set forth on Schedule 4.03,
(B) increase the proportionate share of costs and expenses of leasehold
operations attributable to or to be borne by the working interest of the
Borrower above that set forth on Schedule 4.03
without
a proportionate increase in the net revenue interest of the Borrower or
(C) increase the working interest of the Borrower above that set
forth on
Schedule 4.03
without
a proportionate increase in the net revenue interest of the Borrower, and,
provided further
that the
foregoing defects, limitations, liens and encumbrances, whether individually
material or not, do not in the aggregate create a Material Adverse Effect
upon
the Borrower (the categories of exceptions in clauses (iv)
through
(xi),
as so
qualified and as any such exceptions may exist from time to time, being
referred
to as the “Designated
Title Exceptions”).
The
Mortgages constitute legal, valid and perfected first Encumbrances on the
property interests covered thereby, subject only to Designated Title Exceptions,
Permitted Encumbrances, the Intercreditor Agreement, and matters disclosed
on
Schedule 4.03.
Further, as of the Closing Date, all oil and gas properties subject to
mortgages
pursuant to the Revolving Credit Agreement are Mortgaged
Properties.
SECTION
4.04. Litigation.
Other
than as set forth in Schedule 4.04,
there
are no legal actions, suits or proceedings pending or, to the best knowledge
of
the Borrower, threatened against or affecting the Borrower, or any of its
properties before any court or administrative agency (federal, state or local),
which could reasonably be expected to constitute a Material Adverse Effect,
and
there are no judgments or decrees affecting the Borrower, or its property
(including the Collateral) which are or could reasonably be expected to become
an Encumbrance against such property (other than a Designated Title Exception
or
a Permitted Encumbrance); provided
that no
breach of this Section
4.04
shall
occur if the same is discharged within 30 days after the date of entry thereof
or an appeal or appropriate proceeding for review thereof is taken within
such
period and a stay of execution pending such appeal is obtained.
SECTION
4.05. Approvals.
No
authorization, consent, approval or formal exemption of, nor any filing or
registration with, any governmental body or regulatory authority (federal,
state
or local), and no vote, consent or approval of the shareholders of the Borrower
is or will be required in connection with the execution and delivery by the
Borrower of the Related Documents or the performance by the Borrower of its
obligations hereunder and under the other Related Documents, except to the
extent obtained.
SECTION
4.06. Required
Insurance.
The
Borrower maintains insurance with insurance companies in such amounts and
against such risks as is usually carried by
36
owners
of
similar businesses and properties in the same general areas in which the
Borrower operates.
SECTION
4.07. Licenses.
The
Borrower possesses adequate franchises, licenses and permits to own its
properties and to carry on its business as presently conducted, except where
the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
SECTION
4.08. Adverse
Agreements.
The
Borrower is not a party to any agreement or instrument, nor subject to any
charter or other restriction, materially and adversely affecting the business,
properties, assets, or operations of the Borrower or its condition (financial
or
otherwise), and the Borrower is not in default in the performance, observance
or
fulfillment of any of the obligations, covenants or conditions contained
in any
agreement or instrument to which it is a party, which default would constitute
a
Material Adverse Effect.
SECTION
4.09. Default
or Event of Default.
No
Default or Event of Default hereunder has occurred and is continuing or will
occur as a result of the giving effect hereto.
SECTION
4.10. Employee
Benefit Plans.
Each
employee benefit plan as to which the Borrower may have any liability complies
in all material respects with all applicable requirements of law and
regulations, and (a) no Reportable Event (as defined in ERISA) has occurred
and
is continuing with respect to any such plan, (b) the Borrower has not withdrawn
from any such plan or initiated steps to do so, and (c) no steps have been
taken
to terminate any such plan.
SECTION
4.11. Investment
Company Act.
The
Borrower is not an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.
SECTION
4.12. Public
Utility Holding Company Act.
The
Borrower is not a “holding company,” or a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION
4.13. Regulations
X, T and U.
The
Borrower is not engaged principally, or as one of its important activities,
in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations X, T and U of the
Board of
Governors of the Federal Reserve System), and none of the proceeds of the
Loans
will be used for the purpose of purchasing or carrying such margin
stock.
SECTION
4.14. Location
of Offices and Records.
As of
the date hereof, the chief place of business of the Borrower, and the office
where the Borrower keeps all of its records concerning the Collateral, is
0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
SECTION
4.15. Information.
All
written information heretofore or contemporaneously herewith furnished by
the
Borrower to the Administrative Agent and/or the Lenders for the purposes
of or
in connection with this Agreement or any transaction contemplated hereby
(excluding projections, estimates, and engineering reports) is, and all such
information hereafter furnished by or on behalf of the Borrower to the
Administrative Agent and/or the Lenders will be, true and accurate in every
material respect on the date as of which such information is dated or certified;
and none of such information is or will be incomplete by omitting to state
any
material fact necessary to make such information not misleading as of such
date,
in light of the circumstances under which the statements contained in such
information were made, taken as a whole. To the best knowledge of the Borrower,
the engineering reports delivered to the Administrative Agent and/or the
Lenders
in connection with this Agreement do not contain any material inaccuracies
and/or omissions. The said engineering reports, however, are based upon
professional opinions, estimates and projections and the Borrower does not
warrant that such opinions, estimates and projections will ultimately prove
to
have been accurate. All other projections and estimates by the Borrower
delivered hereunder or in connection herewith were prepared in good faith
on the
basis of the assumptions believed by the Borrower in good faith to be reasonable
in light of the then current and foreseeable business conditions of the Borrower
and its Subsidiaries at the time of preparation thereof, it being understood
by
the Administrative Agent and the Lenders that actual results may vary from
projected results.
SECTION
4.16. Environmental
Matters.
Except
as previously disclosed to the Administrative Agent in writing or as could
not
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect:
(a)
To
the
best of the Borrower’s knowledge and belief after due inquiry, the Borrower is
in compliance with all applicable Environmental Laws and is not subject to
any
Environmental Liabilities;
(b)
To
the
best of the Borrower’s knowledge and belief after due inquiry, the Borrower has
obtained all consents and permits required under all applicable Environmental
Laws to operate its business as presently conducted or as proposed to be
conducted and all such consents and permits are in full force and effect
and the
Borrower is in compliance with all terms and conditions of such consents
and
permits;
(c)
Neither
the Borrower nor any of the present property or operations of the Borrower
is
subject to any order from or agreement with any Governmental Authority or
private party respecting (i) failure to comply with any Environmental Law,
(ii)
any Remedial Action or (iii) any Environmental Liabilities except those orders
and agreements with which the Borrower has complied;
(d)
None
of
the operations of the Borrower is subject to any judicial or administrative
proceeding alleging a violation of, or liability under, any Environmental
Law;
(e)
None
of
the operations of the Borrower, to the best of its knowledge after due inquiry,
is the subject of any investigation by any Governmental Authority evaluating
whether any Remedial Action is needed to respond to a Release or threatened
Release;
(f)
The
Borrower has not been required to file any notice under any Environmental
Law
indicating past or present treatment, storage or disposal of a hazardous
waste
as defined by 40 C.F.R. Part 261 or any state or local equivalent;
(g)
The
Borrower has not been required to file any notice under any applicable
Environmental Law reporting a Release;
(h)
There
is
not now, nor, to the best knowledge of the Borrower, has there ever been,
on or
in any property of the Borrower:
(i)
any
unauthorized generation, treatment, recycling, storage or disposal of any
hazardous waste as defined by 40 C.F.R. Part 261 or any state
or local
equivalent,
(ii)
any
underground storage tanks or surface impoundments without proper
permits,
(iii)
any
asbestos - containing material, or
(iv)
any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers
or other equipment.
(i)
There
have been no written commitments or agreements involving the Borrower from
or
with any Governmental Authority or any private entity (including the owner
of
the Mortgaged Properties or any portion thereof) relating to the generation,
storage, treatment, presence, Release, or threatened Release on or into any
of
the properties of the Borrower or the environment (including off-site disposal
of Hazardous Materials) or any Remedial Action with respect
thereto;
(j)
The
Borrower has not received any written notice or claim to the effect that
it is
or may be liable to any Person as a result of the Release or threatened Release
of Hazardous Materials;
(k)
To
the
best of the Borrower’s knowledge and belief after due inquiry, the Borrower has
no liability in connection with any Release or threatened Release of Hazardous
Materials;
(l)
No
Environmental Lien has attached (and continues to attach) to any properties
of
the Borrower; and
(m)
There
have been no environmental investigations, studies, audits, tests, reviews
or
other analyses conducted by or which are in the possession of the
39
Borrower
in relation to any violation of Environmental Laws or Environmental Liabilities
in relation to any properties or facility now or previously owned or leased
by
the Borrower which have not been made available to the Administrative
Agent.
SECTION
4.17. Solvency
of the Borrower.
The
Borrower is and after consummation of the Transactions and the other
transactions contemplated by this Agreement (including the making of the
Loans),
and after giving effect to all obligations incurred by the Borrower in
connection herewith, will be, Solvent.
SECTION
4.18. Governmental
Requirements.
The
Collateral is in compliance with all current Governmental Requirements affecting
the said property, except where failure to so comply could not reasonably
be
expected to have a Material Adverse Effect.
SECTION
4.19. Corporate
Authority of the Guarantors.
Each
Guarantor is a corporation duly created, validly existing, and in good standing
under the laws of the state of its incorporation, and is duly qualified and
in
good standing as foreign corporation in all other jurisdictions where the
failure to qualify would have an adverse effect upon its ability to perform
its
obligations under this Agreement and all Related Documents to which it is
a
party. Each Guarantor has the corporate power to enter into this Agreement
and
the Guarantee. Each Guarantor has the power to perform its obligations hereunder
and under the Loan Documents and Related Documents to which it is a party.
The
making and performance by each Guarantor of the Loan Documents and Related
Documents to which it is a party have all been duly authorized by all necessary
corporate or company action, and do not and will not violate any provision
of
any law, rule, regulation, order, writ, judgment, decree, determination or
award
presently in effect having applicability to any Guarantor, or the articles
of
incorporation and bylaws of any Guarantor. The making and performance by
each
Guarantor of the Loan Documents and Related Documents to which it is a party
do
not and will not result in a breach of or constitute a default under the
Revolving Credit Agreement or any material indenture or loan or credit agreement
or any other material agreement or instrument to which any Guarantor is a
party
or by which it may be bound or affected, or result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest
or
other charge or encumbrance of any nature (other than as contemplated by
the
Related Documents) upon or with respect to any of the properties now owned
or
hereafter acquired by any Guarantor, and no Guarantor is in default under
or in
violation of any such order, writ, judgment, decree, determination, award,
indenture, agreement or instrument to the extent any such default or violation
could reasonably be expected to have a Material Adverse Effect. Each of the
Loan
Documents and Related Documents to which any Guarantor is a party constitutes
a
legal, valid and binding obligation of such Guarantor, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. The Guarantee ranks pari passu
to the
guarantee of the Guarantors provided pursuant to the Revolving Credit Agreement.
As of Closing Date, CCBM is the only Subsidiary.
SECTION
4.20. Security
Agreement.
The
Security Agreement creates a second priority security interest in one hundred
percent (100%) of the issued and outstanding stock of each Guarantor. There
are
no other Encumbrances affecting the said stock except for a first priority
Encumbrance granted by the Borrower as security to the First Lien Secured
Parties (as defined in the Intercreditor Agreement) to secure the First Lien
Obligations (as defined in the Intercreditor Agreement).
SECTION
4.21. Tax
Returns.
Each of
the Borrower and its Subsidiaries has filed or caused to be filed all federal
and all state, local and foreign tax returns or materials required to have
been
filed by it and has paid or caused to be paid all taxes due and payable by
it
and all assessments received by it, except taxes that are being contested
in
good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, shall have set aside on its books adequate reserves
and except to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.
SECTION
4.22. Labor
Matters.
As of
the Closing Date, there are no strikes, lockouts or slowdowns against the
Borrower or any of its Subsidiaries pending or, to the knowledge of the
Borrower, threatened. Except for those matters that could not reasonably
be
expected to have a Material Adverse Effect, (a) the hours worked by
and
payments made to employees of the Borrower and its Subsidiaries have not
been in
violation in any material respect of the Fair Labor Standards Act or any
other
applicable federal or material applicable state, local or foreign law dealing
with such matters, and (b) all payments due from the Borrower or any
of its
Subsidiaries, or for which any claim may be made against the Borrower or
any of
its Subsidiaries, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books
of the
Borrower or such Subsidiary.
SECTION
4.23. Survival
of Representations and Warranties.
The
Borrower understands and agrees that the Administrative Agent and the Lenders
are relying upon the above representations and warranties in making the Loans
to
the Borrower. The Borrower further agrees that the foregoing representations
and
warranties shall be true and correct in all material respects as of the date(s)
made or deemed made and shall remain in full force and effect until such
time as
the Indebtedness included in clause (c) of the definition thereof shall be
paid
in full, or until this Agreement shall be terminated, whichever is the last
to
occur.
ARTICLE
V
Affirmative
Covenants
In
addition to the covenants contained in the Collateral Documents, which covenants
are hereby ratified and confirmed by the Borrower, the Borrower covenants
and
agrees as follows:
SECTION
5.01. Financial
Statements; Other Reporting Requirements.
The
Borrower shall furnish or cause to be furnished to the Administrative Agent
who
will deliver to each Lender:
(a)
as
soon
as available and in any event within 120 days following the close
of fiscal
year of the Borrower, audited consolidated financial statements of the Borrower
consisting of a balance sheet as at the end of such fiscal year and statements
of income, and statement of cash flow for such fiscal year, setting forth
in
each case in comparative form the corresponding figures for the preceding
fiscal
year, certified by independent certified public accountants of recognized
standing acceptable to the Administrative Agent (such acceptance not to be
unreasonably withheld),
(b)
as
soon
as available and in any event within 45 days following the close of
each
calendar quarter, interim consolidated financial statements of the Borrower,
consisting of a balance sheet as of the end of such quarter and statements
of
income and cash flow, certified as true and correct by the Borrower’s chief
financial officer as having been prepared in accordance with GAAP consistently
applied,
(c)
upon
each
submission of the financial statements required by clauses
(a)
and
(b)
above, a
compliance certificate signed by the chief financial officer of the Borrower
in
the form of Exhibit
G,
certifying (i) that he has reviewed this Agreement and to the best
of his
knowledge no Default or Event of Default has occurred, or if such Default
or
Event of Default has occurred, specifying the nature and extent thereof and
the
corrective action (if any) taken or proposed to be taken with respect thereto,
(ii) that all financial covenants in this Agreement have been met,
and
providing a computation of all financial covenants contained herein, and
(iii) (x) (A) the fair market value of any Proved Reserves
Disposed of
pursuant to Section
6.02(a)
and
(B) the fair market value of any Proved Reserves acquired as contemplated
by clause (ii)(3)
of
Section 6.02(a),
in each
case during the immediately preceding fiscal quarter, and that all such Proved
Reserves acquired during the immediately preceding fiscal quarter were acquired
within the time period permitted by such clause (ii)(3)
and
(y) (A) the fair market value of all assets disposed of pursuant
to
Section
6.02(b)
and
(B) the fair market value of all assets acquired as contemplated by
clause (ii)(2)
of
Section 6.02(b),
in each
case during the immediately preceding fiscal quarter, and that all such assets
acquired during the immediately preceding fiscal quarter were acquired within
the time period permitted by such clause
(ii)(2),
and
said certificate shall include a
42
schedule
of all Hedging Agreements to which the Borrower or any Guarantor is a
party,
(d)
as
soon
as available and in any event within 30 days after filing, a copy
of the
Borrower’s federal tax returns,
(e)
by
March 31st of each year, a third party engineering report (prepared
at the
Borrower’s expense) from one or more independent petroleum engineering firms of
recognized standing reasonably acceptable to the Administrative Agent (which
shall be deemed to include the firms issuing the Initial Reserve Reports)
dated
as of the preceding December 31 covering the proved oil and gas properties
owned by the Borrower and the Guarantors (other than immaterial properties
excluded consistent with past practice), in form reasonably satisfactory
to the
Administrative Agent and containing pricing assumptions consistent with the
definition of the term “PV-10 Value”,
(f)
as
soon
as available and in any event within 45 days after the end of each
quarter,
the following reports and data: reports of production (attributable to the
proved oil and gas properties owned by the Borrower and the Guarantors (other
than immaterial properties excluded consistent with past practice)), commodity
prices, sales revenues, operating expenses for the Leases, and production
taxes,
in form reasonably acceptable to the Administrative Agent and containing
pricing
assumptions consistent with the definition of the term “PV-10
Value”,
(g)
as
soon
as available and in any event within 70 days after the end of each
of the
first three quarters of each year, an internally prepared engineering report
covering the proved oil and gas properties owned by the Borrower and the
Guarantors (other than immaterial properties excluded consistent with past
practice), and dated as of no earlier than 30 days prior to the end
of such
quarter, in form reasonably satisfactory to the Administrative Agent and
containing pricing assumptions consistent with the definition of the term
“PV-10
Value”,
(h)
promptly
after the furnishing thereof, copies of any financial statement, report or
notice of default or material event furnished to or by any Person pursuant
to
the terms of any preferred stock designation, indenture, loan or credit or
other
similar agreement (including the Revolving Credit Agreement and all documents
relating thereto), other than this Agreement, and not otherwise required
to be
furnished to the Administrative Agent pursuant to any other provision of
this
Section 5.01,
(i)
subject
to Section
5.11,
such
other financial information or other information concerning the Borrower
as the
Administrative Agent and/or the Lenders may reasonably request from time
to
time, and
(j)
promptly
after the request by any Lender, all documentation and other information
that
such Lender reasonably requests in order to comply with its
43
ongoing
obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the USA Patriot Act.
SECTION
5.02. Notice
of Default; Litigation; ERISA Matters.
The
Borrower shall give written notice to the Administrative Agent as soon as
reasonably possible and in no event more than five Business Days of (a) the
occurrence of any Default or Event of Default hereunder of which it has
knowledge, specifying the nature and extent thereof and the corrective action
(if any) taken or proposed to be taken with respect thereto, (b) the
filing
of any actions, suits or proceedings against the Borrower or any Subsidiary
in
any court or before any governmental authority or tribunal of which it has
knowledge, which could reasonably be expected to cause a Material Adverse
Effect
with respect to the Borrower, (c) the occurrence of a reportable event
under, or the institution of steps by the Borrower to withdraw from, or the
institution of any steps to terminate, any employee benefit plan as to which
the
Borrower may have liability, or (d) the occurrence of any other action,
event or condition of any nature of which it has knowledge which could
reasonably be expected to cause, or lead to, or result in, any Material Adverse
Effect with respect to the Borrower.
SECTION
5.03. Maintenance
of Existence, Properties and Liens. (a)
The
Borrower shall (i) continue to engage in the Subject Business and
other
business activities reasonably related thereto, (ii) maintain its
existence
and good standing in each jurisdiction in which it is required to be qualified,
(iii) keep and maintain all franchises, licenses and properties necessary
in the conduct of its business in good order and condition, except to the
extent
the failure to do so could not reasonably be expected to cause a Material
Adverse Effect, (iv) duly observe and conform to all material requirements
of any governmental authorities relative to the conduct of its business or
the
operation of its properties or assets, except to the extent the failure to
do so
could not reasonably be expected to cause a Material Adverse Effect, and
(v) maintain in favor of the Collateral Agent for the ratable benefit
of
the Secured Parties a perfected lien and security interest in the Collateral,
subject only to Permitted Encumbrances and Designated Title
Exceptions.
(b)
Within
90
days after the Closing Date (or such longer period of time as may be agreed
by
the Administrative Agent in its reasonable discretion), the Borrower shall
furnish to the Administrative Agent title opinions and/or title information
as
of a date not earlier than the Closing Date, which title opinions and/or
title
information shall cover not less than 80% of the net present value of the
proved
oil and gas reserves owned by the Borrower and each Guarantor, taken as a
whole,
as set forth in the Initial Reserve Reports.
(c)
Within
90
days after the making a request therefor by the Administrative Agent (or
such
longer period of time as may be agreed by the Administrative Agent in its
reasonable discretion), the Borrower shall furnish the Administrative Agent
with
(i) title opinions and/or title information reasonably satisfactory
to the
Administrative Agent covering not less than 80% of the net present value
of the
proved oil and gas reserves owned by the Borrower and each Guarantor, taken
as a
whole, as set forth in the most recent Reserve Report delivered pursuant
to
44
Section 5.01(e)
or
(g)
or
(ii) a certificate of the chief financial officer of the Borrower
confirming that there has been no change in such information since the
prior
request.
SECTION
5.04. Taxes.
The
Borrower shall pay or cause to be paid when due, all taxes, local and special
assessments, and governmental charges of every type and description, that
may
from time to time be imposed, assessed and levied against its properties.
The
Borrower further agrees to furnish the Administrative Agent with evidence
that
such taxes, assessments, and governmental and other charges due by the Borrower
have been paid in full and in a timely manner, if such data is requested
by the
Administrative Agent. Notwithstanding the foregoing, the Borrower may withhold
any such payment or elect to contest any lien if the Borrower is in good
faith
conducting an appropriate proceeding to contest the obligation to pay and
so
long as the Collateral Agent’s interest in the Collateral is not
jeopardized.
SECTION
5.05. Compliance
with Environmental Laws.
The
Borrower shall comply with all Environmental Laws and shall use reasonable
commercial efforts to cause all of its employees, agents, invitees or sublessees
(while such Persons are acting within the scope of their relationship with
the
Borrower) to (a) comply with all Environmental Laws with respect to
the
disposal of Hazardous Materials, (b) pay immediately when due the
cost of
removal of any such Hazardous Materials, and (c) keep the Borrower’s
properties free of any lien imposed pursuant to any Environmental Laws;
provided
that no
breach of this Section 5.05
shall
occur if (i) such breach is cured within 30 days after the
Borrower is
notified of non-compliance or an appeal or appropriate proceedings for review
thereof is taken within such period and the Borrower is not obligated to
comply
pending such appeal or other appropriate proceedings or (ii) such
breach
could not reasonably be expected to have a Material Adverse Effect.
The
Borrower shall give notice to the Administrative Agent as soon as reasonably
possible and in no event more than five days after it receives any compliance
orders, environmental citations, or other notices from any Governmental
Authority relating to any Environmental Liabilities relating to its properties
or elsewhere which may reasonably be expected to result in a Default or Event
of
Default; the Borrower agrees to take any and all reasonable steps, and to
perform any and all reasonable actions necessary or appropriate to promptly
respond to and comply with any such compliance orders, citations or notices,
and, upon the Administrative Agent’s request, to provide the Administrative
Agent with satisfactory evidence of such compliance that requires expenditures
in excess of $500,000; provided,
however,
that
nothing contained herein shall preclude the Borrower from contesting any
such
compliance orders, citations or notices if such contest is made in good faith,
appropriate reserves are established for the payment for the cost of compliance
therewith, and the Collateral Agent’s security interest in any such property
affected thereby (or the priority thereof) is not jeopardized.
Regardless
of whether any Event of Default hereunder shall have occurred and be continuing,
the Borrower (A) releases and waives any present or future claims against
the
Administrative Agent, the Collateral Agent, each Lender and each Related
Party
of any of the foregoing Persons for indemnity or contribution in the event
the
Borrower becomes liable for any Environmental Lien and/or Remedial Action
and/or
45
other
Environmental
Liability, and (B) agrees to defend, indemnify and hold harmless
the
Administrative Agent, the Collateral Agent, each Lender and each Related
Party
of any of the foregoing Persons from any and all Environmental Liabilities,
including all liabilities (including strict liability), actions, demands,
penalties, losses, costs or expenses (including reasonable attorneys fees
and
remedial costs), suits, administrative orders, agency demand letters, costs
of
any settlement or judgment and claims of any and every kind whatsoever
which may
now or in the future (whether before or after the termination of this Agreement)
be paid, incurred, or suffered by, or asserted against the Lenders by any
person
or entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, or Release from or onto the property of
the
Borrower of any Hazardous Materials, regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or resulting from,
the
environmental condition of such property or the applicability of any
Environmental Laws relating to hazardous materials (including Comprehensive
Environmental Response, Compensation and Liability Act or any so called
federal,
state or local “super fund” or “super lien” laws, statute, ordinance, code,
rule, regulation, order or decree) regardless of whether or not caused
by or
within the control of the Lender. THE COVENANTS AND INDEMNITIES CONTAINED
IN
THIS SECTION 5.05
SHALL
SURVIVE THE TERMINATION OF THIS AGREEMENT, PROVIDED
THAT
SUCH INDEMNITIES SHALL NOT, AS TO ANY INDEMNIFIED PARTY, BE AVAILABLE TO
THE
EXTENT THAT SUCH INDEMNITY MATTERS ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM
THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT ON THE PART OF SUCH INDEMNIFIED PARTY;
AND,
PROVIDED,
HOWEVER,
NO
RELEASE, WAIVER, DEFENSE OR INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION
5.05
IN
RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS
OF
THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT AND/OR THE LENDERS OR THEIR
AGENTS OR REPRESENTATIVES DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS
SUCCESSORS OR ASSIGNS, OR ITS AGENTS OR REPRESENTATIVES, SHALL HAVE OBTAINED
OWNERSHIP, OPERATION OR POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE
OR
DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR
OTHERWISE).
SECTION
5.06. Further
Assurances.
The
Borrower shall, at any time and from time to time, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Administrative Agent, in order to cure any defects in the execution
and
delivery of, or to comply with or accomplish the covenants and agreements
contained in this Agreement or the Collateral Documents.
SECTION
5.07. Financial
Covenants.
The
Borrower shall comply with the following covenants and ratios:
(a)
Minimum
Current Ratio.
The
Borrower shall at all times maintain a minimum Current Ratio of 1.00 to
1.00.
(b)
Maximum
Leverage Ratio.
The
Borrower shall maintain as of the last day of each fiscal quarter a ratio
of
Total Net Debt to EBITDA of not more than (i) 3.50 to 1.00 in the
case of
periods ending on June 30, 2005 through and including June 30,
2006
and (ii) 3.25 to 1.0 in the case of any period thereafter, calculated
on a
rolling four quarters basis. For the purposes of this covenant, EBITDA shall
not
include the net revenue attributable to assets pledged to secure Non-Recourse
Debt. The term “Total
Net Debt”
shall
mean, on any date of determination, the Borrower’s consolidated Debt excluding
Non-Recourse Debt and Debt of any Unrestricted Subsidiary on such date, less
the
amount of unrestricted cash and cash equivalents on hand at the Borrower
and the
Guarantors.
(c)
Minimum
Proved Reserve Coverage Ratio.
The
Borrower shall maintain as of the last day of each fiscal quarter a ratio
of
(x) PV-10 Value as of a date not earlier than 30 days prior to the
end of
such fiscal quarter to (y) Total Net Debt on the last day of such
fiscal
quarter of not less than (i) 1.50 to 1.00 in the case of the last
day of
any fiscal quarter (commencing with the fiscal quarter ending on June 30,
2005) ending on or before September 30, 2006 and (ii) 2.00
to 1.00 in
the case of the last day of any fiscal quarter thereafter.
(d)
Interest
Coverage Ratio.
The
Borrower shall maintain as of the last day of each fiscal quarter (commencing
with the fiscal quarter ending on June 30, 2005) a ratio of EBITDA
for the
four fiscal quarter period ending on such day to Interest Expense for such
period of at least (i) 2.75 to 1.00 in the case of any fiscal quarter
ending on or before June 30, 2006 and (ii) 3.00 to 1.00
in the
case of any fiscal quarter thereafter.
SECTION
5.08. Operations.
The
Borrower shall conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including compliance with all minimum funding
standards and other requirements of ERISA, and other laws applicable to any
employee benefit plans which they may have, except to the extent the failure
to
do so could not reasonably be expected to cause a Material Adverse
Effect.
SECTION
5.09. Change
of Location. (a)
The
Borrower shall, within ten (10) Business Days prior to any such change, notify
the Administrative Agent in writing of any proposed change in the location
of
its chief executive office.
(b)
The
Borrower shall, each year, at the time of delivery of the annual financial
statements with respect to the preceding fiscal year pursuant to Section 5.01(a),
deliver
to the Administrative Agent a certificate of the chief financial officer
of the
Borrower setting forth the information required pursuant to Section 2
of
the Perfection Certificate or confirming that there has been no change in
such
information since the date of the Perfection Certificate delivered on the
Closing Date or the date of the most recent certificate delivered pursuant
to
this Section 5.09(b).
SECTION
5.10. Employee
Benefit Plans.
The
Borrower shall maintain each employee benefit plan as to which it may have
any
liability, in material compliance with all applicable requirements of law
and
regulations.
SECTION
5.11. Field
Audits; Other Information.
Upon
reasonable prior notice, the Borrower shall allow the Administrative Agent’s
employees and agents access to its books and records and properties during
normal business hours to perform field audits from time to time (provided,
that so
long as no Event of Default has occurred and is continuing, there may be
no more
than two such field audits in any calendar year). The Borrower shall pay
all
reasonable costs and expenses associated with such field audits. The Borrower
shall provide the Administrative Agent with such other information as the
Administrative Agent may reasonably request from time to time, subject in
all
cases to any confidentiality restrictions that may be applicable to the Borrower
and its Subsidiaries and to any confidentiality restrictions that the Borrower
reasonably imposes on the Persons receiving such information; provided,
however,
that
neither the Borrower nor any of its Subsidiaries shall be required to disclose
to the Administrative Agent or any agents or representatives thereof any
information which is the subject of attorney-client privilege or attorney’s work
product privilege properly asserted by the applicable Person to prevent the
loss
of such privilege in connection with such information; and provided,
further,
that
the Borrower will use commercially reasonable efforts to furnish such
information (excluding information covered by confidentiality restrictions
in
agreements relating to seismic, geologic or geophysical data or similar
technical and business matters relating to the exploration for oil and gas),
which requirement shall be satisfied if the Administrative Agent is offered
the
opportunity to review such confidential information by executing or otherwise
becoming a party to the confidentiality restrictions on substantially the
same
terms (including any standstill provisions) as are applicable to the
Borrower.
SECTION
5.12. Insurance.
The
Borrower shall maintain in effect all insurance required by this Agreement
and
the Collateral Documents, and the Borrower agrees to comply with the
requirements of Section
4.06
above.
The Borrower agrees to provide the Administrative Agent with certificates
or
binders evidencing such insurance coverage on an annual basis, and, if requested
by the Administrative Agent, the Borrower further agrees to promptly furnish
the
Administrative Agent with copies of all renewal notices and copies of receipts
for paid premiums. The Borrower shall provide the Administrative Agent with
certificates or binders evidencing insurance coverage pursuant to all renewal
or
replacement policies of insurance no later than the seventh day before any
such
existing policy or policies should expire (or, in the event such certificates
or
binders are unavailable to the Borrower on such day, within one Business
Day of
receipt of such certificates or binders by the Borrower).
SECTION
5.13. Subsidiaries.
The
Borrower agrees that any Subsidiary (excluding Unrestricted Subsidiaries,
if
any) of the Borrower formed by or on behalf of, or acquired by, the Borrower
after the date of this Agreement shall, promptly upon such formation or
acquisition, execute a Guarantee of the Indebtedness (in a form substantially
similar to the Guarantee).
SECTION
5.14. Additional
Mortgaged Properties. (a)
Within
60 days after the Closing Date (or such longer period of time as may
be
agreed by the Administrative Agent in its reasonable discretion), the Borrower
agrees to execute and deliver such documents (and the Borrower agrees to
execute
and deliver such additional documents from time to time thereafter as are
reasonably requested by the Administrative Agent) to provide that at least
the
greater of (i) 90% and (ii) the percentage threshold established
in
the Revolving Credit Agreement, of the net present value of the proved oil
and
gas reserves owned by the Borrower and each Guarantor, taken as a whole,
are
Mortgaged Properties.
(b)
In
the
event the Tangible Net Worth of any Guarantor (calculated with respect to
CCBM
without including the capital stock of Pinnacle so long as Pinnacle is not
a
Subsidiary) exceeds 3% or more of the Tangible Net Worth of the Borrower
and its
Subsidiaries, on a consolidated basis, the Borrower shall cause such Guarantor
to execute and deliver to the Administrative Agent, for the ratable benefit
of
the Secured Parties, Mortgages in form and substance reasonably acceptable
to
the Administrative Agent together with such other assignments, conveyances,
amendments, agreements and other writings (each duly authorized and executed)
as
the Administrative Agent shall reasonably deem necessary or appropriate to
grant, evidence and perfect the Encumbrances in the assets and properties
of
such Guarantor (provided in no event shall the capital stock of Pinnacle
be
pledged so long as Pinnacle is not a Subsidiary).
SECTION
5.15. Maintenance
of Hedging Agreements.
The
Borrower shall maintain in effect Hedging Agreements with one or more
counterparties reasonably acceptable to the Administrative Agent that establish
minimum fixed prices reasonably acceptable to the Administrative Agent on
a
volume of Hydrocarbons production equal to not less than 40% of the total
volume
of such production projected from proved producing reserves for the succeeding
twelve calendar months on a rolling twelve calendar month basis, to come
from
the Borrower’s proved developed producing reserves during such
period.
ARTICLE
VI
Negative
Covenants
In
addition to the negative covenants contained in the Collateral Documents,
which
covenants are hereby ratified and confirmed by the Borrower, the Borrower
covenants and agrees as follows:
SECTION
6.01. Limitations
on Fundamental Changes.
The
Borrower shall not form any Subsidiary (excluding Unrestricted Subsidiaries)
that does not execute a guaranty of the Indebtedness, nor shall the Borrower
consummate any transaction of merger or consolidation unless the Borrower
is the
surviving entity, or liquidate or dissolve itself (or suffer any liquidation
or
dissolution).
SECTION
6.02. Disposition
of Assets. (a)
The
Borrower shall not, and shall not permit any Guarantor to, convey, sell,
lease,
assign, transfer or otherwise
49
dispose
of (any of the foregoing, to “Dispose”,
with
Disposition having a correlative meaning) any of its property or assets
constituting proved oil and gas reserves on the Borrower’s and the Guarantors’
oil and gas properties (“Proved
Reserves”)
(other
than assignments of customary overrides, royalties, working interests in
exchange for a commitment of the transferee to bear a disproportionate
share of
the costs attributable to the oil and gas properties to which such interests
relate, and similar ordinary course transactions and Dispositions or series
of
related Dispositions of Proved Reserves with a fair market value not in
excess
of $1,000,000), unless (i) the fair market value of the consideration for
any
such Disposition is at least equal to the fair market value of the property
or
assets Disposed of (as conclusively determined by the Borrower in good
faith)
and (ii) the fair market value of all such Proved Reserves Disposed of
pursuant
to this Section
6.02(a),
net of
(1) the fair market value of all Proved Reserves (which, in the case of
a
Disposition of Proved Reserves located in a Core Operating Region, are
located
in one or more Core Operating Regions) constituting consideration to the
Borrower for any such Disposition, (2) any Disposition the proceeds of
which
(net of costs and expenses associated therewith) are used to repay loans
under
the Revolving Credit Agreement to the extent required by Section
13.2
thereof,
and (3) the fair market value of any Proved Reserves located in Core Operating
Regions acquired by the Borrower or any Guarantor within 365 days of such
Disposition, does not exceed (x) $15,000,000 in any fiscal year or (y)
$60,000,000 in the aggregate.
(b)
The
Borrower shall not, and shall not permit any Guarantor to, Dispose of any
of its
property or assets (other than Proved Reserves) (other than (I) assignments
of
customary overrides, royalties, working interests in exchange for a commitment
of the transferee to bear a disproportionate share of the costs attributable
to
the oil and gas properties to which such interests relate and similar ordinary
course transactions and Dispositions or series of related Dispositions of
property and assets with a fair market value not in excess of $1,000,000
and
(II) Permitted Dispositions) unless (i) such consideration is at least equal
to
the fair market value of the assets Disposed of (as conclusively determined
by
the Borrower in good faith) and (ii) the fair market value of all property
or
assets Disposed of pursuant to this Section
6.02(b),
net of
(1) the fair market value of all properties constituting consideration to
the
Borrower for any such Disposition, and (2) the fair market value of all assets
useful to the business of the Borrower acquired by the Borrower or any Guarantor
within 365 days of such Disposition, does not exceed (x) $12,000,000 in any
fiscal year or (y) $40,000,000 in the aggregate.
SECTION
6.03. Repurchase
of Stock; Restricted Payments.
The
Borrower shall not (a) repurchase or redeem for cash any of its common
stock or (b) pay any dividends or distributions, without the prior
written
consent of the Required Lenders; provided,
however,
that
(i) the Borrower may declare and pay dividends consisting entirely
of
capital stock of the Borrower, (ii) the Borrower may make cash payments
in
lieu of fractional shares in an aggregate amount not exceeding $200,000,
and
(iii) the Borrower may declare and pay distributions effecting “poison
pill” rights plans provided that any securities or rights so distributed have
a
nominal fair market value at the time of declaration.
SECTION
6.04. Encumbrances;
Negative Pledge.
The
Borrower shall not create, incur, assume or permit to exist any Encumbrances
on
any of its property now owned or hereafter acquired, except for the following
(hereinafter referred to as the “Permitted
Encumbrances”):
(a)
Encumbrances
for taxes, assessments, or other governmental charges not yet due or which
are
being contested in good faith by appropriate action promptly initiated
and
diligently conducted, if such reserves as shall be required by GAAP shall
have
been made therefor;
(b)
Encumbrances
of landlords, vendors, carriers, warehousemen, mechanics, laborers, materialmen
and other Encumbrances arising by law in the ordinary course of business
for
sums either not yet due or being contested in good faith by appropriate
action
promptly initiated and diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefor;
(c)
inchoate
liens arising under ERISA to secure the contingent liabilities, if any,
permitted by this Agreement;
(d)
Encumbrances
created by the Collateral Documents and any other Encumbrances in favor
of the
Collateral Agent and/or the Secured Parties to secure the
Indebtedness;
(e)
Encumbrances
granted prior to the date of this Agreement to secure Non-Recourse Debt,
and/or
Encumbrances granted after the date of this Agreement to secure Non-Recourse
Debt;
(f)
Encumbrances
existing on the date hereof and set forth in Schedule
6.04;
provided
that
such Encumbrances shall secure only those obligations which they secure
on the
date hereof;
(g)
pledges
and deposits made in the ordinary course of business in compliance with
workmen’s compensation, unemployment insurance and other social security laws or
regulations;
(h)
deposits
to secure the performance of bids, trade contracts (other than for
Indebtedness), leases (other than capital lease obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of
a like nature incurred in the ordinary course of business;
(i)
zoning
restrictions, easements, licenses, covenants, conditions, rights-of-way,
restrictions on use of real property and other similar encumbrances incurred
in
the ordinary course of business and minor irregularities of title that,
in the
aggregate, are not substantial in amount and do not materially detract
from the
value of the property subject thereto or interfere with the ordinary conduct
of
the business of the Borrower or any Subsidiary;
(j)
deposits,
encumbrances or pledges to secure payments of workmen’s compensation and other
payments, public liability, unemployment and other insurance, old-age pensions
or other social security obligations, or the performance of bids, tenders,
leases, contracts (other than contracts for the payment of money), public
or
statutory obligations, surety, stay or appeal bonds, or other similar
obligations arising in the ordinary course of business;
(k)
any
Designated Title Exceptions which are incurred in the ordinary course of
business and would not materially adversely affect the operations of the
Borrower or otherwise in the aggregate have a Material Adverse
Effect;
(l)
any
Encumbrance securing Purchase Money Debt; provided
that
(i) such security interest is incurred, and the Debt secured thereby
is
created, within 180 days after the acquisition (or completion of construction)
of the property or assets subject thereto, (ii) the Debt secured thereby
does
not include any other Debt that is not from the same financing source,
(iii) such security interest do not apply to any other property
or assets
of the Borrower or any Subsidiary except any such property or assets which
are
the subject of any Encumbrance securing Debt from such financing source,
and
(iv) such Encumbrance does not affect any of the Mortgaged
Properties;
(m)
any
Encumbrance existing on any property or asset (together with any receivables,
intangibles and proceeds related thereto) prior to the acquisition thereof
by
the Borrower or any Subsidiary; provided
that
(i) such Encumbrance is not created in contemplation of or in connection
with such acquisition and (ii) such Encumbrance does not apply to
any other
property or assets of the Borrower or any Subsidiary; and provided further,
that
(x) such Encumbrances do not secure any Debt or other obligation
not
permitted under this Agreement, and (y) such Encumbrances do not
affect any
of the Mortgaged Properties;
(n)
Encumbrances
securing Purchase Money Debt and Capital Lease Obligations in real property,
improvements thereto or equipment hereafter acquired (or, in the case of
improvements, constructed) by the Borrower or any Subsidiary (together
with any
receivables, intangibles and proceeds related thereto); provided
that
(i) such security interests secure Debt permitted by Section 6.05(k)(i),
(ii) such security interests are incurred, and the Debt secured
thereby is
created, within 180 days after such acquisition (or completion of
construction), (iii) such security interests do not apply to any
other
property or assets of the Borrower or any Subsidiary, and (iv) such
security interests do not affect any of the Mortgaged Properties;
(o)
Encumbrances
arising out of judgments or awards in respect of which the Borrower shall
in
good faith be prosecuting an appeal or proceedings for review and in respect
of
which it shall have secured a subsisting stay of execution pending such
appeal
or proceedings for review; provided
that the
Borrower shall have set aside on its books adequate reserves, in accordance
with
GAAP, with respect to such judgment or award;
(p)
Encumbrances
on the property or assets of any Person existing at the time such Person
becomes
a Subsidiary and not incurred as a result of (or in connection with or
in
anticipation of) such Person’s becoming a Subsidiary; provided
that
such Encumbrances do not extend to or cover any property or assets of the
Borrower or any Subsidiary other than the property or assets encumbered
at the
time such Person becomes a Subsidiary; and provided further,
that
(i) such Encumbrances do not secure any Debt or other obligation not permitted
under this Agreement, and (ii) such Encumbrances do not affect any
of the
Mortgaged Properties;
(q)
Encumbrances
securing Debt permitted to be incurred under Section 6.05(i);
(r)
Encumbrances
securing (x) Debt that is permitted to be incurred under Section 6.05(e)
and (y)
all other First Lien Obligations (as defined in the Intercreditor Agreement);
provided
that,
(i) such Encumbrances shall not encumber any property that is not
subject
to an Encumbrance of the appropriate priority in favor of, or for the benefit
of, the Secured Parties to secure the Indebtedness, and (ii) Encumbrances
securing (x) Debt that is permitted to be incurred under Section 6.05(e)
and (y)
all other First Lien Obligations (as defined in the Intercreditor Agreement)
may
be contractually senior to the Encumbrances created pursuant to the Collateral
Documents on the terms set forth in the Intercreditor Agreement or on terms
otherwise reasonably satisfactory to the Administrative Agent, but all
such
Encumbrances shall be pari passu
with
each other; and
(s)
Encumbrances
affecting the Borrower’s equity interest in an Unrestricted
Subsidiary.
(a)
the
Indebtedness;
(b)
trade
payables or operating and facility leases from time to time incurred in the
ordinary course of business;
(c)
Non-Recourse
Debt not to exceed $25,000,000 at any time outstanding; provided
that for
any Non-Recourse Debt incurred by the Borrower subsequent to the execution
of
this Agreement, the Borrower must obtain the Required Lenders’ prior written
consent to the relevant documentation establishing/evidencing the non-recourse
nature and amount of such Non-Recourse Debt, which consent will not be
unreasonably withheld;
(d)
Taxes,
assessments or other government charges which are not yet due or are being
contested in good faith by appropriate action promptly initiated and
53
diligently
conducted, if such reserve as shall be required by generally accepted accounting
principles shall have been made therefor;
(e)
Debt
incurred under the Revolving Credit Agreement in an aggregate principal amount
not to exceed the amount permitted under the Intercreditor Agreement at any
time
outstanding;
(f)
Debt
(excluding Non-Recourse Debt) existing as of the date of this Agreement as
set
forth in Schedule 6.05,
together with extensions or refinancings;
(g)
Indebtedness
arising under any performance bond, or letter of credit obtained for similar
purposes, or any reimbursement obligations in respect thereof, entered into
in
the ordinary course of business;
(h)
Debt
of
the Borrower to any wholly owned Subsidiary and Debt of any wholly owned
Subsidiary to the Borrower or any other wholly owned Subsidiary;
(i)
Debt
represented by Hedging Agreements permitted by this Agreement;
(j)
guarantees
by the Borrower of Debt of any Subsidiary and by any Subsidiary of Debt of
the
Borrower or any other Subsidiary; and
(k)
subject
to a maximum aggregate principal amount at any time outstanding not in excess
of
$5,000,000, the following: (i) Purchase Money Debt and Capital Lease
Obligations; (ii) additional unsecured Debt; and (iii) Debt
of any
Person that becomes a Subsidiary after the date hereof; provided
that
such Debt exists at the time such Person becomes a Subsidiary and is not
created
in contemplation of or in connection with such Person becoming a
Subsidiary.
SECTION
6.06. Investments,
Loans and Advances.
The
Borrower shall not make or permit to remain outstanding any loans or advances
to
or make investments or acquire an equity interest in any Person, except
for:
(a)
Direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the
date of acquisition thereof;
(b)
Investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, one of the two highest credit
rating obtainable from Standard & Poor’s Ratings Service or from Xxxxx’x
Investors Service, Inc.;
(c)
Investments
in certificates of deposit, banker’s acceptances, repurchase agreements and time
deposits maturing within one year from the date
54
of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of
not
less than $250,000,000;
(d)
Shares
of
funds registered under the Investment Company Act of 1940, as amended, that
have
assets of at least $100,000,000 and invest only in obligations described
in
clauses (a)
through (c)
above to
the extent that such shares are rated by Xxxxx’x Investors Service, Inc. or
Standard & Poor’s Ratings Service in one of the two highest rating
categories assigned by such agency for shares of such nature;
(e)
Loans
by
the Borrower to the Guarantors and any other Subsidiary of the Borrower that
is
a guarantor of the Indebtedness or capital contributions or investments by
the
Borrower in any Guarantor and any other Subsidiary of Borrower that is a
guarantor of the Indebtedness; provided,
however,
the
following loans, investments or capital contributions are excluded from this
part (e): loans, investments or capital contributions by the Borrower
to
any Guarantor or any other Subsidiary of Borrower that is a guarantor of
the
Indebtedness, if such Guarantor or other said Subsidiary uses the proceeds
of
such loan, contribution or investment to invest in Pinnacle Gas Resources,
Inc.
or any other entity in which the Borrower, such Guarantor or other said
Subsidiary owns an equity interest;
(f)
Loans
or
advances to employees in the ordinary course of business in an aggregate
amount
for all employees of the Borrower and the Subsidiaries not in excess of $750,000
at any one time outstanding;
(g)
Trade
credits and accounts arising in the ordinary course of business;
(h)
Investments
made as a result of the receipt of non-cash consideration from a Disposition
that was made pursuant to and in compliance with this Agreement;
(i)
Investments
made in any debtor of the Borrower as a result of the receipt of stock,
obligations or securities in settlement of debts created in the ordinary
course
of business and owing to the Borrower or any Subsidiary;
(j)
Investments
made pursuant to the requirements of farm-out, farm-in, joint operating,
joint
venture or area of mutual interest agreements, gathering systems, pipelines
or
other similar or customary arrangements entered into in the ordinary course
of
business (including advances to operators under operating agreements entered
into by the Borrower in the ordinary course of business); provided
that any
such single investment in excess of $1,000,000 shall be approved by the Board
of
Directors of the Borrower;
(k)
Investments
made in connection with the purchase, lease, or other acquisition of tangible
assets of any Person and investments made in connection with the purchase,
lease
or other acquisition of all or substantially all of the business, of any
Person,
or all of the capital stock or other equity interests of any Person, or any
division, line of business or business unit of any Person (including (i) by
the merger or consolidation of such Person into the Borrower or any Subsidiary
or by the merger of a Subsidiary into such Person and (ii) the purchase
of
proved reserves); provided
that any
newly acquired Subsidiary shall promptly comply with the requirements of
Section
5.13;
and
(l)
Any
other
investments in any Person having an aggregate fair market value (measured
on the
date each such investment was made and without giving effect to subsequent
changes in value), when taken together with all other investments made pursuant
to this clause (l)
not to
exceed the greater of (i) $2,000,000 and (ii) the basket from
time to
time set forth in the Revolving Credit Agreement for such
investments.
SECTION
6.07. Other
Agreements.
Except
as set forth in Schedule 4.01,
the
Borrower shall not enter into any agreement containing any provision which
would
be violated or breached by the performance of its obligations hereunder or
under
any instrument or document delivered or to be delivered by it hereunder or
in
connection herewith; provided
that the
Borrower may agree to the redemption or repurchase of its securities upon
a
change of control or dissolution, winding-up or liquidation of, or the merger
or
sale of substantially all the assets of, the Borrower (provided further
that
nothing in this Section 6.07
shall
permit any action otherwise prohibited by Sections 6.01
and
6.02).
SECTION
6.08. Transactions
with Affiliates.
Except
as set forth on Schedule 6.08
attached
hereto, the Borrower shall not sell or transfer any property or assets to,
or
purchase or acquire any property or assets from, or otherwise engage in any
other transactions with, any of its affiliates unless such transaction is
on
terms that are no less favorable to the Borrower or such Subsidiary, as the
case
may be, than those that could be obtained at the time of such transaction
on an
arm’s-length basis from a Person who is not an affiliate and if such transaction
involves an amount in excess of $500,000, such transaction has been approved
by
a majority of the members of the Board of Directors of the Borrower having
no
personal stake in such transaction; provided,
however,
that
this Section 6.08
(i) shall not apply to transactions between a Subsidiary and the Borrower
or any other Subsidiary, or between Pinnacle and the Borrower or a Subsidiary,
(ii) shall not prohibit any person serving as an officer, director,
employee or consultant of the Borrower or any Subsidiary from (A) receiving
reasonable compensation, benefits or indemnification in connection with his
or
her services in such capacity, provided
that any
such compensation, benefits or indemnification are approved by a majority
of the
disinterested members of the Board of Directors of the Borrower or by the
Compensation Committee of the Borrower, (B) receiving advances for
travel
or other business expenses made in the ordinary course of business or
(C) participating in any benefit or compensation plan; and (iii) shall
not restrict the Borrower from repaying
56
to
any
director or its affiliates when due on its scheduled maturity dates any
indebtedness for borrowed money permitted to be incurred in accordance
with this
Agreement.
SECTION
6.09. Use
of
Loan Proceeds.
The
Borrower shall not use any Loan proceeds to finance investments in marketable
securities.
SECTION
6.10. Commodity
Transactions.
The
Borrower shall not enter into any speculative commodity transactions of any
type
or Hedging Agreement relating to the sale of aggregate Hydrocarbons production
in excess of 85% of the total volume of such production projected in the
most
recent Reserve Report delivered to the Administrative Agent pursuant to
Section 5.01(e)
or
Section 5.01(g),
as
applicable, to come from the Borrower’s proved developed reserves during the
term of such Hedging Agreement (it being understood and agreed that for purposes
of determining compliance with such 85% cap, the Borrower may in good faith
take
into account the pro forma effect on such projected production of new xxxxx
that
are not included in the most recent Reserve Report and may enter into Hedging
Agreements affecting such new xxxxx subject to compliance with such 85% cap).
Notwithstanding
the foregoing, the maximum duration of any permitted Hedging Agreement shall
not
exceed 48 months;
provided
that,
with respect to any Hedging Agreement with a duration in excess of 24 months,
no
more than 50% of the amount of the projected production to come from proved
developed producing reserves may be subject to hedging arrangements pursuant
to
such Hedging Agreement during the period from and including the twenty-fifth
month of such Hedging Agreement to and including the forty-eighth month of
such
Hedging Agreement.
SECTION
6.11. Other
Debt and Agreements.
The
Borrower shall not permit any waiver, supplement, modification or amendment
of
any of the terms of the Revolving Credit Agreement or any document relating
thereto that is not permitted under the Intercreditor Agreement.
SECTION
6.12. Business
of the Borrower and Subsidiaries.
The
Borrower shall not, and shall not permit any Subsidiary to, engage at any
time
in any business or business activity other than the Subject Business and
other
business activities reasonably related thereto.
ARTICLE
VII
Events
of Default
SECTION
7.01. Events
of Default.
The
occurrence of any one or more of the following shall constitute an Event
of
Default:
(a)
Default
Under the Indebtedness.
Should
the Borrower default in the payment of principal under the Indebtedness included
in clause (c) of the definition thereof of the Borrower to the Lenders, or
should the Borrower default in the payment of interest under the Indebtedness
of
the Borrower to the Lenders within 10 days after any such interest payment
is
due.
(b)
Default
Under This Agreement.
Should
the Borrower violate or fail to comply fully with any of the terms and
conditions of, or default under, this Agreement, and such default not be
cured
within 30 days of the occurrence thereof; provided,
however,
that
the cure period available for a default in the obligation to maintain insurance
coverages required hereby shall be 10 days.
(c)
Default
Under Other Agreements.
Should
any event of default occur or exist under any of the Related Documents or
should
the Borrower and/or any Guarantor violate, or fail to comply fully with,
any
terms and conditions of any of the Collateral Documents or Related Documents,
and such default not be cured within 20 days of the occurrence
thereof.
(d)
Default
in Favor of Third Parties.
Should
the Borrower or any Guarantor (i) fail to pay Debt having a principal
amount in excess of $1,500,000 in the aggregate (other than the amounts referred
to in Section 7.01(a)),
or any
interest or premium thereon, when due (or, if permitted by the terms of the
relevant document, within any applicable grace period), whether such Debt
shall
become due by scheduled maturity, by required prepayment, by acceleration,
by
demand or otherwise; or (ii) fail to perform any term, covenant or
condition on its part to be performed under any agreement or instrument
evidencing, securing or relating to Debt having a principal amount in excess
of
$1,500,000 in the aggregate, when required to be performed, and such failure
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such failure is to accelerate,
or to
permit the holder or holders of such Debt to accelerate, the maturity of
such
Debt.
(e)
Insolvency.
The
following occurrences, in addition to the failure or suspension of the Borrower,
shall constitute an Event of Default hereunder:
(i)
Filing
by
the Borrower and/or any Guarantor of a voluntary petition or any answer seeking
reorganization, arrangement, readjustment of its debts or for any other relief
under any applicable bankruptcy act or law, or under any other insolvency
act or
law, now or hereafter existing, or any action by the Borrower and/or any
Guarantor consenting to, approving of, or acquiescing in, any such petition
or
proceeding; the application by the Borrower and/or any Guarantor for, or
the
appointment by consent or acquiescence of, a receiver or trustee of the Borrower
and/or any Guarantor for all or a substantial part of the property of the
Borrower and/or any Guarantor; the making by the Borrower and/or any Guarantor,
of an assignment for the benefit of creditors; the inability of the Borrower
and/or any Guarantor or the admission by the Borrower and/or any Guarantor
in
writing, of its inability to pay its debts as they mature (the term
“acquiescence” means the failure to file a petition or motion in opposition to
such petition or proceeding or to vacate or discharge any order, judgment
or
decree providing for such appointment within 60 days after the appointment
of a
receiver or trustee); or
(ii)
Filing
of
an involuntary petition against the Borrower and/or any Guarantor in bankruptcy
or seeking reorganization, arrangement, readjustment of its debts or for
any
other relief under any applicable bankruptcy act or law, or under any other
insolvency act or law, now or hereafter existing and such petition remains
undismissed or unanswered for a period of 60 days from such filing; or the
insolvency appointment of a receiver or trustee of the Borrower and/or any
Guarantor for all or a substantial part of the property of the Borrower and/or
any Guarantor and such appointment remains unvacated or unopposed for a period
of 60 days from such appointment, execution or similar process against any
substantial part of the property of the Borrower and/or any Guarantor and
such
warrant remains unbonded or undismissed for a period of 60 days from notice
to
the Borrower or any Guarantor of its issuance.
(f)
Dissolution
Proceedings.
Should
proceedings for the dissolution or appointment of a liquidator of the Borrower
and/or any Guarantor be commenced.
(g)
False
Statements.
Should
any representation or warranty of the Borrower made by the Borrower to the
Administrative Agent and/or the Lenders in this Agreement or any other Loan
Document or in any certificate or statement furnished thereunder prove to
be
incorrect or misleading in any material respect when made or
reaffirmed.
(h)
Change
in Control.
Should a
Change in Control occur.
Notwithstanding
the foregoing, the occurrence of an “Event of Default” by the Borrower or any
Subsidiary under the Revolving Credit Agreement or any indenture, loan or
credit
agreement or similar document governing Debt permitted to be incurred under
Section
6.05(e)
shall
not constitute an Event of Default hereunder until the earlier of (i) 45
days of the occurrence of the event resulting in such “Event of Default” under
the Revolving Credit Agreement or such other instrument, so long as such
Event
of Default shall not have been cured or waived during such 45-day period,
and
(ii) acceleration of any portion of the Debt under the Revolving Credit
Agreement or such other instrument.
Upon
the
occurrence of an Event of Default, at the Lenders’ option, all Indebtedness
included in clause (c) of the definition thereof of the Borrower will become
immediately due and payable, except that in the case of an Event of
Default
of the type described in the “Insolvency” subsection above, such acceleration
shall be automatic and not optional. For any other Event of Default, the
Administrative Agent, upon request of the Required Lenders, shall by notice
to
the Borrower declare the principal of, and all interest then accrued on,
the
Loans any other liabilities hereunder to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
notice
of any kind, all of which the Borrower and each Guarantor hereby expressly
waive, anything contained herein or in any other Loan Document to the contrary
notwithstanding. Upon the occurrence of an Event of Default and upon the
request
of the
59
Required
Lenders, the Administrative Agent shall exercise any and all rights and
remedies
under the Loan Documents, or any of them, granted to the Administrative
Agent
hereunder or granted to the Administrative Agent at law or in equity, including
foreclosure of the Collateral. Nothing contained in this Article VII
shall be
construed to limit or amend in any way the Events of Default enumerated
in any
Loan Document, or any other document executed in connection with the transaction
contemplated herein.
Upon
the
occurrence and during the continuance of any Event of Default, the Lenders
are
hereby authorized at any time and from time to time, without notice to the
Borrower or the Guarantors (any such notice being expressly waived by the
Borrower and the Guarantors), to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by any of the Lenders to or for the credit
or the
account of the Borrower against any and all of the indebtedness of the Borrower
under the Loan Documents, including this Agreement, irrespective of whether
or
not the Lenders shall have made any demand under the Loan Documents, including
this Agreement and although such indebtedness may be unmatured. Any amount
set
off by the Lenders shall be applied against the indebtedness owed the Lenders
by
the Borrower pursuant to this Agreement. The Lenders agree promptly to notify
the Borrower after any such setoff and application; provided
that the
failure to give such notice shall not affect the validity of such set-off
and
application. The rights of the Lenders under this Section
7.01
are in
addition to other rights and remedies (including other rights of set-off)
which
the Lenders may have.
SECTION
7.02. Waivers.
Except
as otherwise provided for in this Agreement and by applicable law, the Borrower
and each Guarantor waive to the extent permitted by applicable law (i)
presentment, demand and protest and notice of presentment, dishonor, notice
of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or
all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and Guarantees at any time held by the Administrative Agent for the
benefit of the Lenders on which the Borrower and the Guarantors may in any
way
be liable and hereby ratify and confirm whatever the Administrative Agent
and/or
the Lenders may do in this regard, (ii) all rights to notice and a hearing
prior
to the Administrative Agent’s taking possession or control of, or to the
Administrative Agent’s replevy, attachment or levy upon, the Collateral or any
bond or security which might be required by any court prior to allowing the
Administrative Agent to exercise any of its remedies, and (iii) the
benefit
of all valuation, appraisal and exemption laws. The Borrower and each Guarantor
acknowledge that they have been advised by counsel of their choice with respect
to this Agreement, the other Collateral Documents, and the transactions
evidenced by this Agreement and other Collateral Documents.
SECTION
7.03. Notice
to Delta Farms Lessors.
The
Borrower and each Guarantor hereby authorize and direct the Administrative
Agent
to provide the lessors of the oil, gas and mineral leases granted by Delta
Farms
to the Borrower (the “Delta
Farms Lessors”)
with a
copy of any notice of the occurrence of any Event of Default which the
Administrative Agent may choose or be required to send to the Borrower and/or
each Guarantor under this Agreement. The Borrower and each Guarantor hereby
release the
60
Administrative
Agent and the Lenders and hold the Administrative Agent and the Lenders
harmless
from any liability occasioned by the giving of or the failure to give any
such
notice, it being understood that the Administrative Agent shall use its
best
efforts to provide such notice to the Delta Farms Lessors, but shall have
no
obligation or liability to Delta Farms Lessors for its failure to do so.
Under
no circumstances shall Delta Farms Lessors be considered as a third party
beneficiary of this Agreement.
ARTICLE
VIII
The
Administrative Agent and the Collateral Agent
Each
of
the Lenders hereby irrevocably appoints the Administrative Agent and the
Collateral Agent (for purposes of this Article
VIII,
the
Administrative Agent and the Collateral Agent are referred to collectively
as
the “Agents”)
its
agent and authorizes the Agents to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto. Without limiting the generality of the foregoing, the Agents are
hereby
expressly authorized to execute any and all documents (including releases)
with
respect to the Collateral and the rights of the Secured Parties with respect
thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents.
The
Person serving as the Administrative Agent and/or the Collateral 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
Person
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.
Neither
Agent shall have any duties or obligations except those expressly set forth
in
the Loan Documents. Without limiting the generality of the foregoing, (a)
neither Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) neither
Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that such Agent is instructed in writing to exercise
by the
Required Lenders (or such other number or percentage of the Lenders as shall
be
necessary under the circumstances as provided in Section
9.08),
and
(c) except as expressly set forth in the Loan Documents, neither Agent shall
have any duty to disclose, nor shall it be liable for the failure to disclose,
any information relating to the Borrower or any Subsidiary that is communicated
to or obtained by the bank serving as Administrative Agent and/or Collateral
Agent or any of its affiliates in any capacity. Neither Agent shall be liable
for any action taken or not taken by it with the consent or at the request
of
the Required Lenders (or such other number or percentage of the Lenders as
shall
be necessary under the circumstances as provided in Section
9.08)
or in
the absence of its own gross negligence or willful misconduct. Neither Agent
shall be deemed to have knowledge of any Default unless and until written
notice
thereof is given to such Agent by the Borrower or a Lender, and
61
neither
Agent shall be responsible for or have any duty to ascertain or inquire
into (i)
any statement, warranty or representation made in or in connection with
any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance
or
observance of any of the covenants, agreements or other terms or conditions
set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or
genuineness of any Loan Document or any other agreement, instrument or
document,
or (v) the satisfaction of any condition set forth in Article
III
or
elsewhere in any Loan Document, other than to confirm receipt of items
expressly
required to be delivered to such Agent.
Each
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. Each Agent may also rely upon any statement
made
to it orally or by telephone and believed by it to have been made by the
proper
person, and shall not incur any liability for relying thereon. Each Agent
may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for
any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
Each
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 it. Each Agent and any
such
sub-agent may perform any and all its duties and exercise its rights and
powers
by or through their respective Related Parties. The exculpatory provisions
of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each 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 Agent.
Subject
to the appointment and acceptance of a successor Agent as provided below,
either
Agent may resign at any time by notifying the Lenders and the Borrower. Upon
any
such resignation, the Required Lenders shall have the right, in consultation
with the Borrower, to appoint a successor. If no successor shall have been
so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation,
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 an Agent’s resignation hereunder, the provisions of this
Article
VIII
and
Section 9.05
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 acting as Agent.
Each
Lender acknowledges that it has, independently and without reliance upon
the
Agents 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. Each Lender also acknowledges that it will, independently and
without
reliance upon the Agents 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
or any other Loan Document, any related agreement or any document furnished
hereunder or thereunder.
ARTICLE
IX
Miscellaneous
SECTION
9.01. Notices.
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 fax, as follows:
(a)
if
to the
Borrower or any Guarantor, to it at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, XX 00000, Attention of Xxxx X. Xxxxxx (Fax No. (000)
000-0000);
(b)
if
to the
Administrative Agent, to Credit Suisse, Eleven Xxxxxxx Xxxxxx, Xxx Xxxx,
XX
00000, Attention of Agency Group (Fax No. (000) 000-0000); and
(c)
if
to a
Lender, to it at its address (or fax number) set forth on Schedule
2.01
or in
the Assignment and Acceptance pursuant to which such Lender shall have become
a
party hereto.
Any
party
hereto may change its address or fax 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
if
delivered by hand or overnight courier service or sent by fax or on the date
five Business Days after dispatch by certified or registered mail if mailed,
in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 9.01
or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01.
As may
be agreed to among the Borrower, each Guarantor, the Administrative Agent
and
the applicable Lenders from time to time, notices and other communications
may
also be delivered by e-mail to the e-mail address of a representative of
the
applicable person provided from time to time by such person.
SECTION
9.02. Survival
of Agreement.
All
covenants, agreements, representations and warranties made by the Borrower
and
the Guarantors herein and in the certificates or other instruments prepared
or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and
shall
survive the making by the Lenders of the Loans, regardless
63
of
any
investigation made by the Lenders or on their behalf, 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 or any other
Loan
Document is outstanding and unpaid and so long as the Commitments have
not been
terminated. The provisions of Sections
2.13,
2.15,
2.19
and
9.05
shall
remain operative and in full force and effect regardless of the expiration
of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the invalidity or unenforceability of any term or provision of this Agreement
or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent or any Lender.
SECTION
9.03. Binding
Effect.
This
Agreement shall become effective when it shall have been executed by the
Borrower, each Guarantor, and 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.
SECTION
9.04. Successors
and Assigns. (a)
Whenever
in this Agreement any of the parties hereto is referred to, such reference
shall
be deemed to include the permitted successors and assigns of such party;
and all
covenants, promises and agreements by or on behalf of the Borrower, each
Guarantor, the Administrative Agent, the Collateral Agent or the Lenders
that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b)
Each
Lender may assign to one or more assignees (other than any Competitor) all
or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it),
with
notice to the Borrower (unless such assignment is made in connection with
the
primary syndication of the Loans to Persons previously identified to the
Borrower or is made to an existing Lender or an affiliate thereof) and with
the
prior written consent of the Administrative Agent (not to be unreasonably
withheld or delayed); provided,
however,
that
(i) the amount of the Commitment or Loans of the assigning Lender
subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent
and
determined on an aggregate basis in the event of concurrent assignments to
Related Funds (as defined below)) shall not be less than $1,000,000 (or,
if
less, the entire remaining amount of such Lender’s Commitment or Loans),
(ii) the parties to each such assignment shall (A) electronically
execute and deliver to the Administrative Agent an Assignment and Acceptance
via
an electronic settlement system acceptable to the Administrative Agent (which
initially shall be ClearPar, LLC) or (B) manually execute and deliver
to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 (which, for the avoidance of doubt,
shall not be for the account of the Borrower, other than in respect of an
assignment initiated by the Borrower pursuant to Section 2.20),
and
(iii) the assignee, if it shall not be a Lender, shall deliver to
the
Administrative Agent an Administrative Questionnaire and all applicable tax
forms. Upon acceptance and recording pursuant to paragraph (e)
of this
Section 9.04,
from
and after the effective date specified in each Assignment and Acceptance,
(A)
the assignee
64
thereunder
shall be a party hereto and, to the extent of the interest assigned by
such
Assignment and Acceptance, have the rights and obligations of a Lender
under
this Agreement and (B) the assigning Lender thereunder shall, to
the extent
of the interest assigned by such Assignment and Acceptance, be released
from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.15,
2.19
and
9.05,
as well
as to any fees accrued for its account prior to the effective date specified
in
such Assignment and Acceptance and not yet paid). The term “Related
Funds”
shall
mean with respect to any Lender that is a fund or combined investment vehicle
that invests in bank loans, any other fund that invests in bank loans and
is
managed or advised by the same investment advisor as such Lender or by
an
affiliate of such investment advisor.
(c)
By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and
agree
with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it
is the legal
and beneficial owner of the interest being assigned thereby free and clear
of
any adverse claim and that its Commitment, and the outstanding balances of
its
Loans, in each case without giving effect to assignments thereof which have
not
become effective, are as set forth in such Assignment and Acceptance,
(ii) except as set forth in (i) above, such assigning Lender
makes no
representation or warranty and assumes no responsibility with respect to
any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition
of
the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other
Loan
Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance and that it is not a Competitor;
(iv) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred to
in
Section 4.02
or
delivered pursuant to Section 5.01,
the
Intercreditor Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into
such Assignment and Acceptance; (v) such assignee will independently
and
without reliance upon the Administrative Agent, the Collateral Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent and the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent and the
Collateral Agent, respectively, by the terms hereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees
that
it will perform in accordance with their terms all the obligations which
by the
terms of this Agreement are required to be performed by it as a Lender and
will
be bound by and will take no actions contrary to the provisions of the
Intercreditor Agreement. The Administrative Agent shall be entitled
65
to
rely,
without any independent investigation, on the representations and warranties
and
other statements deemed to be made by the assigning Lender and the assignee
pursuant to this Section 9.04(c)
and
shall not incur any liability for relying thereon.
(d)
The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall
maintain at one of its offices in The City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the
names
and addresses of the Lenders, and 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, each Guarantor,
the Administrative Agent, the Collateral 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,
each Guarantor, the Collateral Agent and any Lender, at any reasonable time
and
from time to time upon reasonable prior notice.
(e)
Upon
its
receipt of, and consent to, a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be
a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b)
above,
if applicable, and the written consent of the Administrative Agent and, if
required, the Borrower to such assignment and any applicable tax forms, the
Administrative Agent shall (i) accept such Assignment and Acceptance
and
(ii) record the information contained therein in the Register. No
assignment shall be effective unless it has been recorded in the Register
as
provided in this paragraph (e).
(f)
Each
Lender may without the consent of the Borrower or the Administrative Agent
sell
participations to one or more banks or other Persons (other than Competitors)
in
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided,
however,
that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating
banks or other persons shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.13,
2.15
and
2.19
to the
same extent as if they were Lenders (but, with respect to any particular
participant, to no greater extent than the Lender that sold the participation
to
such participant) and (iv) the Borrower, the Administrative Agent
and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans and to approve any amendment, modification
or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable to such participating bank or person
hereunder or the amount of principal of or the rate at which interest is
payable
on the Loans in which such participating bank or person has an interest,
extending any scheduled principal payment date or date fixed for the payment
of
interest on the Loans in which such participating bank or person has an
interest, increasing or
66
extending
the Commitments in which such participating bank or person has an interest
or
releasing any Guarantor or all or substantially all of the
Collateral).
(g)
Any
Lender or participant may, in connection with any assignment or participation
or
proposed assignment or participation pursuant to this Section 9.04,
disclose to the assignee or participant or proposed assignee or participant
any
information relating to the Borrower furnished to such Lender by or on behalf
of
the Borrower; provided
that,
prior to any such disclosure of information designated by the Borrower as
confidential, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality
of
such confidential information on terms no less restrictive than those applicable
to the Lenders pursuant to Section 9.16.
(h)
Any
Lender may at any time assign all or any portion of its rights under this
Agreement to secure extensions of credit to such Lender or in support of
obligations owed by such Lender; provided
that no
such assignment shall release a Lender from any of its obligations hereunder
or
substitute any such assignee for such Lender as a party hereto.
(i)
Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting
Lender”)
may
grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing from time to time by the Granting Lender to
the
Administrative Agent and the Borrower, the option to provide to the Borrower
all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower on the Closing Date pursuant to this Agreement;
provided
that (i) nothing herein shall constitute a commitment by any
SPC to
make any Loan and (ii) if an SPC elects not to exercise such option
or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making
of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if, such Loan were made by such Granting Lender.
Each
party hereto hereby agrees that no SPC shall be liable for any indemnity
or
similar payment obligation under this Agreement (all liability for which
shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States
or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section
9.04,
any SPC
may (i) with notice to, but without the prior written consent of,
the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for
the
account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information relating
to its Loans to any rating agency, commercial paper dealer or provider of
any
surety, guarantee or credit or liquidity enhancement to such SPC.
(j)
Neither
the Borrower nor any Guarantor shall assign or delegate any of its rights
or
duties hereunder without the prior written consent of the Administrative
Agent
and each Lender, and any attempted assignment without such consent shall
be null
and void.
SECTION
9.05. Expenses;
Indemnity. (a)
The
Borrower agrees to pay all reasonable out-of-pocket expenses incurred by
the
Administrative Agent and the Collateral Agent, including the reasonable fees,
charges and disbursements of Cravath, Swaine & Xxxxx LLP, in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents
or
in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent,
the
Collateral Agent or any Lender, including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agent, the Collateral
Agent
or any Lender, in connection with the enforcement or protection of its rights
in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made.
(b)
The
Borrower and each Guarantor agree, jointly and severally, to indemnify the
Administrative Agent, the Collateral Agent, each Lender and each Related
Party
of any of the foregoing persons (each such person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected 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 thereby, the performance by the parties
thereto (and
regardless of whether such matter is instituted by a third party or by the
Borrower or any Guarantor or any of their respective affiliates)
of their
respective obligations thereunder or the consummation of the Transactions
and
the other transactions contemplated thereby, (ii) the use of the proceeds
of the Loans or (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto; 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 wilful misconduct of such Indemnitee
(including, in the case of any matter initiated by the Borrower or any of
its
affiliates against any Indemnitee, any judgment so rendered against such
Indemnitee, or any legal fees and expenses related to such matter). No
Indemnitee may settle any claim to be indemnified without the consent of
the
Borrower and each Guarantor (collectively, the “Indemnitors”),
such
consent not to be unreasonably withheld; provided
that no
Indemnitor may withhold consent to any settlement that an Indemnitee proposes
if
such Indemnitor does not have the financial ability to pay all its obligations
outstanding and asserted against such Indemnitor at that time, including
the
maximum potential claims pending or, to the knowledge of such Indemnitee,
threatened against such Indemnitee to be indemnified pursuant to this
Section 9.05.
(c)
To
the
extent that the Borrower or any Guarantor fail to pay any amount required
to be
paid by them to the Administrative Agent or the Collateral Agent under
paragraph
(a)
or
(b)
of this
Section 9.05,
each
Lender severally agrees to pay to the Administrative Agent or the Collateral
Agent, as the case may be, such Lender’s pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought)
of
such unpaid amount; provided
that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Collateral Agent in its capacity as such. For
purposes hereof, a Lender’s “pro rata share” shall be determined at any time
based upon its share of the sum of the outstanding Loans and unused Commitments
at such time.
(d)
To
the
extent permitted by applicable law, neither the Borrower nor any Guarantor
shall
assert, and each 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 or any agreement or instrument contemplated hereby,
the Transactions or any Loan or the use of the proceeds thereof.
(e)
The
provisions of this Section 9.05
shall
remain operative and in full force and effect regardless of the expiration
of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the invalidity or unenforceability of any term or provision of this Agreement
or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent or any Lender. All amounts due
under
this Section 9.05
shall be
payable on written demand therefor.
SECTION
9.06. Right
of Setoff.
As
security for the prompt and punctual payment of the Indebtedness, the Borrower
collaterally pledges and assigns to each Lender any rights which the Borrower
may have to funds which the Borrower maintains on deposit with such Lender,
and
each Lender is hereby authorized at any time and from time to time, if an
Event
of Default shall have occurred and be continuing, except to the extent
prohibited by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower or any Guarantor against any of and all the obligations
of the Borrower or any Guarantor now or hereafter existing under this Agreement
and other Loan Documents held by such Lender, irrespective of whether or
not
such Lender shall have made any demand under this Agreement or such other
Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06
are in
addition to other rights and remedies (including other rights of setoff)
which
such Lender may have.
SECTION
9.07. Applicable
Law.
THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH
IN
OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE
LAWS OF THE STATE OF NEW YORK.
SECTION
9.08. Waivers;
Amendment. (a)
No
failure or delay of the Administrative Agent, the Collateral Agent or any
Lender
in exercising any power or right hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise
of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral 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
or any Guarantor therefrom shall in any event be effective unless the same
shall
be permitted by paragraph (b)
below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower
or any
Guarantor in any case shall entitle the Borrower or any Guarantor to any
other
or further notice or demand in similar or other circumstances.
(b)
Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by
the
Borrower, each Guarantor and the Required Lenders; provided,
however,
that no
such agreement shall (i) decrease the principal amount of,
or extend
the maturity of or any scheduled principal payment date or date for the payment
of any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior
written
consent of each Lender directly adversely affected
thereby, (ii) increase or extend the Commitment or decrease
or extend
the date for payment of any fees of any Lender without the prior written
consent
of such Lender, (iii) amend or modify the pro rata requirements
of
Section 2.16,
the
provisions of Section
9.04(j)
or the
provisions of this Section 9.08
or
release any Guarantor or all or substantially all of the Collateral, without
the
prior written consent of each Lender, (iv) modify the protections
afforded
to an SPC pursuant to the provisions of Section 9.04(i)
without
the written consent of such SPC or (v) reduce the percentage contained
in
the definition of the term “Required Lenders” or reduce the percentage contained
in Section 5.14(a)
without
the prior written consent of each Lender (it being understood that with the
consent of the Required Lenders, additional extensions of credit pursuant
to
this Agreement may be included in the determination of the Required Lenders
on
substantially the same basis as the Commitments on the date hereof);
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
the Collateral Agent, as applicable.
SECTION
9.09. Interest
Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the interest
rate applicable to any Loan, together with all fees, charges and other amounts
which are treated as interest on such Loan under applicable law (collectively
the “Charges”),
shall
exceed the maximum lawful rate (the “Maximum
Rate”)
which
may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan or participation in accordance with applicable law, the
rate
of interest payable in respect of such Loan or participation hereunder, together
with all
70
Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to
the
extent lawful, the interest and Charges that would have been payable in
respect
of such Loan or participation but were not payable as a result of the operation
of this Section 9.09
shall be
cumulated and the interest and Charges payable to such Lender in respect
of
other Loans or participations or periods shall be increased (but not above
the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall
have
been received by such Lender.
SECTION
9.10. Entire
Agreement.
This
Agreement, the Fee Letter and the other Loan Documents constitute the entire
contract between the parties relative to the subject matter hereof. Any other
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the other Loan Documents. Nothing in
this
Agreement or in the other Loan Documents, expressed or implied, is intended
to
confer upon any person (other than the parties hereto and thereto, their
respective successors and assigns permitted hereunder and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations
or liabilities under or by reason of this Agreement or the other Loan
Documents.
SECTION
9.11. WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY
OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT
NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11.
SECTION
9.12. Severability.
In the
event any one or more of the provisions contained in this Agreement or in
any
other Loan Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision
in a
particular jurisdiction shall not in and of itself affect the validity of
such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with
valid provisions the economic effect of which comes as close as possible
to that
of the invalid, illegal or unenforceable provisions.
SECTION
9.13. Counterparts.
This
Agreement may be executed in counterparts (and by different parties hereto
on
different counterparts), each of which
71
shall
constitute an original but all of which when taken together shall constitute
a
single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION
9.14. 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 are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION
9.15. Jurisdiction;
Consent to Service of Process. (a)
Each
of
the Borrower and each Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America
sitting in New York City, and any appellate court from any thereof,
in any
action or proceeding arising out of or relating to this Agreement or the
other
Loan Documents, or for recognition or enforcement of any judgment, and each
of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims
in respect of any such action or proceeding may be heard and determined in
such
New York State or, to the extent permitted by law, in such federal
court.
Each of the parties hereto agrees that a final judgment in any such action
or
proceeding shall be conclusive and may be enforced in other jurisdictions
by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Collateral
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower,
any
Guarantor or their respective properties in the courts of any
jurisdiction.
(b)
Each
of
the Borrower and each Guarantor hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection
which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law,
the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c)
Each
party to this Agreement irrevocably consents to service of process in the
manner
provided for notices in Section 9.01.
Nothing
in this Agreement will affect the right of any party to this Agreement to
serve
process in any other manner permitted by law.
SECTION
9.16. 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’ officers,
directors, employees and agents, including accountants, legal counsel and
other
advisors (it being understood that the persons to whom such disclosure is
made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested
by any
regulatory authority or
72
quasi-regulatory
authority (such as the National Association of Insurance Commissioners),
(c) to the extent required by applicable laws or regulations or
by any
subpoena or similar legal process, (d) in connection with the exercise
of any
remedies hereunder or under the other Loan Documents or any suit, action
or
proceeding relating to the enforcement of its rights hereunder or thereunder,
(e) subject to an agreement containing provisions substantially
the same as
those of this Section 9.16,
to
(i) any actual or prospective assignee of or participant in any
of its
rights or obligations under this Agreement and the other Loan Documents
or
(ii) any actual or prospective counterparty (or its advisors) to
any swap
or derivative transaction relating to the Borrower or any Subsidiary or
any of
their respective obligations, (f) with the consent of the Borrower
or
(g) to the extent such Information becomes publicly available other
than as
a result of a breach of this Section 9.16.
For the
purposes of this Section 9.16,
“Information”
shall
mean all information received from the Borrower or any Guarantor and related
to
the Borrower or any Guarantor or their business, other than any such information
that was available to the Administrative Agent, the Collateral Agent or
any
Lender on a nonconfidential basis prior to its disclosure by the Borrower
or any
Guarantor. Any person required to maintain the confidentiality of Information
as
provided in this Section 9.16
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 its own confidential
information.
SECTION
9.17. USA
Patriot Act Notice.
Each
Lender and the Administrative Agent (for itself and not on behalf of any
Lender)
hereby notifies the Borrower and each Guarantor that pursuant to the
requirements of the USA Patriot Act, it is required to obtain, verify and
record
information that identifies the Borrower and each Guarantor, which information
includes the name and address of the Borrower and each Guarantor and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower and each Guarantor in accordance with
the
USA Patriot Act.
SECTION
9.18. Intercreditor
Agreement.
Each
Lender hereunder (a) acknowledges that it has received a copy of the
Intercreditor Agreement, (b) consents to the subordination of Encumbrances
provided for in the Intercreditor Agreement, (c) agrees that it will
be
bound by and will take no actions contrary to the provisions of the
Intercreditor Agreement and (d) authorizes and instructs the Collateral
Agent to enter into the Intercreditor Agreement as agent for and representative
of such Lender. The foregoing provisions are intended as an inducement to
the
lenders under the Revolving Credit Agreement to extend credit to the Borrower
and such lenders are intended third-party beneficiaries of such
provisions.
IN
WITNESS
WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and
year first above written.
| CARRIZO OIL & GAS, INC., | ||
| |
|
|
| by: |
/s/
Xxxx X. Xxxxxx
|
|
| Title: Chief Financial Officer | ||
|
CCBM,
Inc.,
|
||
| |
|
|
| by: |
/s/
Xxxx X. Xxxxxx
|
|
|
Name: Xxxx X. Xxxxxx |
||
|
Title: Chief Financial Officer |
||
|
CREDIT
SUISSE, CAYMAN
ISLANDS BRANCH,
individually
and as Administrative Agent and Collateral Agent
|
||
| |
|
|
| by: |
/s/
Xxxxx Xxxxxx
|
|
|
Title: Managing Director |
||
| by: |
/s/
Xxxxxx X. Xxxxxxx
|
|
|
Title: Associate |
||
74
