EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
FEBRUARY 4, 2004
AMONG
XXXX XXXXXXX CORPORATION
AS BORROWER,
JPMORGAN CHASE BANK,
AS ADMINISTRATIVE AGENT,
FLEET NATIONAL BANK,
AND
U.S. BANK NATIONAL ASSOCIATION,
AS CO-SYNDICATION AGENTS,
XXXXXX XXXXXXX FINANCING, INC.,
ROYAL BANK OF CANADA,
AND
BANK ONE, NA,
AS CO-DOCUMENTATION AGENTS,
AND
THE LENDERS PARTY HERETO
SOLE LEAD ARRANGER AND SOLE BOOKRUNNER
X.X. XXXXXX SECURITIES INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01 TERMS DEFINED ABOVE....................................................................1
SECTION 1.02 CERTAIN DEFINED TERMS..................................................................1
SECTION 1.03 TYPES OF LOANS AND BORROWINGS.........................................................21
SECTION 1.04 TERMS GENERALLY; RULES OF CONSTRUCTION................................................22
SECTION 1.05 ACCOUNTING TERMS AND DETERMINATIONS; GAAP.............................................22
ARTICLE II
THE CREDITS
SECTION 2.01 COMMITMENTS...........................................................................22
SECTION 2.02 LOANS AND BORROWINGS..................................................................23
SECTION 2.03 REQUESTS FOR BORROWINGS...............................................................24
SECTION 2.04 INTEREST ELECTIONS....................................................................25
SECTION 2.05 FUNDING OF BORROWINGS.................................................................26
SECTION 2.06 TERMINATION, REDUCTION AND INCREASE OF AGGREGATE MAXIMUM CREDIT AMOUNTS...............27
SECTION 2.07 BORROWING BASE; COMPONENTS; PV........................................................29
SECTION 2.08 LETTERS OF CREDIT.....................................................................32
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
SECTION 3.01 REPAYMENT OF LOANS....................................................................37
SECTION 3.02 INTEREST..............................................................................37
SECTION 3.03 ALTERNATE RATE OF INTEREST............................................................38
SECTION 3.04 PREPAYMENTS...........................................................................38
SECTION 3.05 FEES..................................................................................40
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
SECTION 4.01 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...........................41
SECTION 4.02 PRESUMPTION OF PAYMENT BY THE BORROWER................................................42
SECTION 4.03 CERTAIN DEDUCTIONS BY THE ADMINISTRATIVE AGENT........................................42
SECTION 4.04 DISPOSITION OF PROCEEDS...............................................................42
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
SECTION 5.01 INCREASED COSTS.......................................................................43
SECTION 5.02 BREAK FUNDING PAYMENTS................................................................44
SECTION 5.03 TAXES.................................................................................44
SECTION 5.04 MITIGATION OBLIGATIONS................................................................46
SECTION 5.05 ILLEGALITY............................................................................46
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01 EFFECTIVE DATE........................................................................47
SECTION 6.02 EACH CREDIT EVENT.....................................................................49
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01 ORGANIZATION; POWERS..................................................................50
SECTION 7.02 AUTHORITY; ENFORCEABILITY.............................................................50
SECTION 7.03 APPROVALS; NO CONFLICTS...............................................................50
SECTION 7.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.......................................50
SECTION 7.05 LITIGATION............................................................................51
SECTION 7.06 ENVIRONMENTAL MATTERS.................................................................51
SECTION 7.07 COMPLIANCE WITH THE LAWS AND AGREEMENTS; NO DEFAULTS..................................52
SECTION 7.08 INVESTMENT COMPANY ACT................................................................53
SECTION 7.09 PUBLIC UTILITY HOLDING COMPANY ACT....................................................53
SECTION 7.10 TAXES.................................................................................53
SECTION 7.11 ERISA.................................................................................53
SECTION 7.12 DISCLOSURE; NO MATERIAL MISSTATEMENTS.................................................54
SECTION 7.13 INSURANCE.............................................................................55
SECTION 7.14 RESTRICTION ON LIENS..................................................................55
SECTION 7.15 SUBSIDIARIES..........................................................................55
SECTION 7.16 LOCATION OF BUSINESS AND OFFICES......................................................55
SECTION 7.17 PROPERTIES; TITLES, ETC...............................................................55
SECTION 7.18 MAINTENANCE OF PROPERTIES.............................................................56
SECTION 7.19 GAS IMBALANCES, PREPAYMENTS...........................................................57
SECTION 7.20 MARKETING OF PRODUCTION...............................................................57
SECTION 7.21 SWAP AGREEMENTS.......................................................................57
SECTION 7.22 USE OF LOANS AND LETTERS OF CREDIT....................................................57
SECTION 7.23 SOLVENCY..............................................................................58
ARTICLE VIII
AFFIRMATIVE COVENANTS
SECTION 8.01 FINANCIAL STATEMENTS; RATINGS CHANGE; OTHER INFORMATION...............................58
SECTION 8.02 NOTICES OF MATERIAL EVENTS............................................................61
SECTION 8.03 EXISTENCE; CONDUCT OF BUSINESS........................................................61
SECTION 8.04 PAYMENT OF OBLIGATIONS................................................................61
SECTION 8.05 PERFORMANCE OF OBLIGATIONS UNDER LOAN DOCUMENTS.......................................62
SECTION 8.06 OPERATION AND MAINTENANCE OF PROPERTIES...............................................62
SECTION 8.07 INSURANCE.............................................................................63
SECTION 8.08 BOOKS AND RECORDS; INSPECTION RIGHTS..................................................63
SECTION 8.09 COMPLIANCE WITH LAWS..................................................................63
SECTION 8.10 ENVIRONMENTAL MATTERS.................................................................63
SECTION 8.11 FURTHER ASSURANCES....................................................................64
SECTION 8.12 RESERVE REPORTS.......................................................................65
SECTION 8.13 TITLE INFORMATION.....................................................................65
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SECTION 8.14 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS..........................................66
SECTION 8.15 ERISA COMPLIANCE......................................................................67
ARTICLE IX
NEGATIVE COVENANTS
SECTION 9.01 FINANCIAL COVENANTS...................................................................68
SECTION 9.02 DEBT..................................................................................69
SECTION 9.03 LIENS.................................................................................70
SECTION 9.04 RESTRICTED PAYMENTS; REDEMPTION OF SUBORDINATED DEBT..................................70
SECTION 9.05 INVESTMENTS, LOANS AND ADVANCES.......................................................71
SECTION 9.06 NATURE OF BUSINESS; INTERNATIONAL OPERATIONS; FOREIGN SUBSIDIARIES....................73
SECTION 9.07 LIMITATION ON LEASES..................................................................73
SECTION 9.08 PROCEEDS OF NOTES.....................................................................73
SECTION 9.09 ERISA COMPLIANCE......................................................................73
SECTION 9.10 SALE OR DISCOUNT OF RECEIVABLES.......................................................74
SECTION 9.11 MERGERS, ETC..........................................................................75
SECTION 9.12 SALE OF PROPERTIES....................................................................75
SECTION 9.13 ENVIRONMENTAL MATTERS.................................................................76
SECTION 9.14 TRANSACTIONS WITH AFFILIATES..........................................................76
SECTION 9.15 SUBSIDIARIES..........................................................................76
SECTION 9.16 NEGATIVE PLEDGE AGREEMENTS; DIVIDEND RESTRICTIONS.....................................76
SECTION 9.17 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS......................................76
SECTION 9.18 SWAP AGREEMENTS.......................................................................77
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
SECTION 10.01 EVENTS OF DEFAULT.....................................................................77
SECTION 10.02 REMEDIES..............................................................................79
ARTICLE XI
THE AGENTS
SECTION 11.01 APPOINTMENT; POWERS...................................................................80
SECTION 11.02 DUTIES AND OBLIGATIONS OF ADMINISTRATIVE AGENT........................................80
SECTION 11.03 ACTION BY ADMINISTRATIVE AGENT........................................................81
SECTION 11.04 RELIANCE BY ADMINISTRATIVE AGENT......................................................81
SECTION 11.05 SUBAGENTS.............................................................................82
SECTION 11.06 RESIGNATION OR REMOVAL OF AGENTS......................................................82
SECTION 11.07 AGENTS AS LENDERS.....................................................................82
SECTION 11.08 NO RELIANCE...........................................................................82
SECTION 11.09 AUTHORITY OF ADMINISTRATIVE AGENT TO RELEASE COLLATERAL AND LIENS.....................83
SECTION 11.10 THE ARRANGER, THE SYNDICATION AGENTS AND THE DOCUMENTATION AGENT......................83
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01 NOTICES...............................................................................83
SECTION 12.02 WAIVERS; AMENDMENTS...................................................................84
SECTION 12.03 EXPENSES, INDEMNITY; DAMAGE WAIVER....................................................85
SECTION 12.04 SUCCESSORS AND ASSIGNS................................................................88
SECTION 12.05 SURVIVAL; REVIVAL; REINSTATEMENT......................................................91
SECTION 12.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS..............................................91
SECTION 12.07 SEVERABILITY..........................................................................92
SECTION 12.08 RIGHT OF SETOFF.......................................................................92
SECTION 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................92
SECTION 12.10 HEADINGS..............................................................................94
SECTION 12.11 CONFIDENTIALITY.......................................................................94
SECTION 12.12 INTEREST RATE LIMITATION..............................................................94
SECTION 12.13 EXCULPATION PROVISIONS................................................................95
SECTION 12.14 NO THIRD PARTY BENEFICIARIES..........................................................96
SECTION 12.15 USA PATRIOT ACT NOTICE................................................................96
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I List of Maximum Credit Amounts
Exhibit A Form of Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Interest Election Request
Exhibit D Form of Compliance Certificate
Exhibit E Form of Legal Opinion of Xxxxxx Xxxxx LLP, special counsel
to the Borrower
Exhibit F-1 Security Instruments
Exhibit F-2 Form of Guaranty and Collateral Agreement
Exhibit G Form of Assignment and Assumption
Exhibit H-1 Form of Maximum Credit Amount Increase Certificate
Exhibit H-2 Form of Additional Lender Certificate
Schedule 1.02 Approved Counterparties
Schedule 7.05 Litigation
Schedule 7.15 Subsidiaries and Partnerships
Schedule 7.17 Properties
Schedule 7.19 Gas Imbalances
Schedule 7.20 Marketing Contracts
Schedule 7.21 Swap Agreements
Schedule 9.05 Investments
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THIS AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of February 4,
2004, is among: XXXX XXXXXXX CORPORATION, a corporation duly formed and existing
under the laws of the State of Delaware (the "Borrower"); each of the Lenders
from time to time party hereto; JPMORGAN CHASE BANK (in its individual capacity,
"JPMorgan"), as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Administrative Agent"); Fleet
National Bank and U.S. Bank National Association, as co-syndication agents for
the Lenders (each, in such capacity, together with its successors in such
capacity, the "Syndication Agent"); XXXXXX xxxxxxx financing, inc., royal bank
of Canada and bank one, as co-documentation agents for the Lenders (each, in
such capacity, together with its successors in such capacity, the "Documentation
Agent").
RECITALS
A. The Borrower, Administrative Agent and other financial institutions
named and defined therein as lenders and agents, are parties to that certain
Credit Agreement dated as of December 16, 2002, as amended by First Amendment
dated May 23, 2003, pursuant to which such lenders and agents provided certain
loans and extensions of credit to the Borrower (as renewed, extended, amended or
restated from time to time, the "Existing
Credit Agreement").
B. The Borrower has requested the Lenders, and the Lenders have agreed,
to amend and restate the Existing
Credit Agreement subject to the terms and
conditions of this Agreement.
C. Now, therefore, in consideration of the mutual covenants and
agreements herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Additional Lender" has the meaning assigned to such term in Section
2.06(c)(i).
"Additional Lender Certificate" has the meaning assigned to such term
in Section 2.06(c)(ii)(F).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"Affected Loans" has the meaning assigned to such term in Section 5.05.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, the Administrative Agent, each
Syndication Agent and the Documentation Agent; and "Agent" shall mean any of the
Administrative Agent, a Syndication Agent or the Documentation Agent, as the
context requires.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of
the Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06.
"Agreement" means this Amended and Restated
Credit Agreement, as the
same may from time to time be amended, modified, supplemented or restated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day,
(a) with respect to any ABR or Eurodollar Loan constituting a Tranche A
Loan, the rate per annum set forth below based upon the Tranche A Borrowing Base
Utilization Percentage then in effect; and
Borrowing Base > > >
Utilization Percentage <40% or = 40% <70% or = 70% <85% or = 85%
-------------------------------- ------------------ ------------------- ----------------- ----------------
ABR Loans 0.000% 0.000% 0.250% 0.500%
Eurodollar Loans 1.250% 1.500% 1.750% 2.000%
(b) with respect to any ABR or Eurodollar Loan constituting a Tranche B
Loan, the rate per annum set forth below based upon the Tranche B Borrowing Base
Utilization Percentage then in effect:
2
Borrowing Base > > >
Utilization Percentage <25% or = 25% <50% or = 50% <75% or = 75%
-------------------------------- ------------------ ------------------- ----------------- ----------------
ABR Loans 1.500% 1.750% 2.000% 2.250%
Eurodollar Loans 3.000% 3.250% 3.500% 3.750%
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change; provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the applicable grid when the applicable Borrowing Base
Utilization Percentage is at its highest level; provided further that the
Applicable Margin shall revert to the previous Applicable Margin upon the
Borrower's delivery of such Reserve Report.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the Aggregate Maximum Credit Amounts represented by such Lender's
Maximum Credit Amount as such percentage is set forth on Annex I or as may be
adjusted from time to time in accordance with the terms hereof.
"Approved Counterparty" means (a) any Lender or any Affiliate of a
Lender, (b) any other Person whose long term senior unsecured debt rating at the
time of entry into the applicable Swap Agreement is A-/A3 by S&P or Xxxxx'x (or
their equivalent) or higher, or (c) with regard to Swap Agreements in respect of
commodities, and subject to the conditions set forth therein, any other Person
listed on Schedule 1.02.
"Approved Fund" means (a) a CLO and (b) with respect to any Lender that
is a fund which invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Approved Petroleum Engineers" means (a) Xxxxx Xxxxx Company Petroleum
Consultants, L.P., (b) Netherland Xxxxxx & Associates, Inc., (c) Xxxxxxx
Associates Inc., (d) Xxxxxx, Xxxxxxxxx & Associates, Inc., (e) Xxxxxx and Xxxxx,
Ltd. and (f) any other independent petroleum engineers reasonably acceptable to
the Administrative Agent.
"Arranger" means X.X. Xxxxxx Securities Inc., in its capacities as the
sole lead arranger and sole bookrunner hereunder.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States of America; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be reasonably determined by the Administrative Agent
to be representative of the cost of such insurance to the Lenders.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section
3
12.04(b)), and accepted by the Administrative Agent, in the form of Exhibit G or
any other form reasonably approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c), Section 9.02(i) or Section 9.12(d) and
shall represent the sum of the Tranche A Portion and the Tranche B Portion.
"Borrowing Base Utilization Percentage" means the Tranche A Borrowing
Base Utilization Percentage or the Tranche B Borrowing Base Utilization
Percentage, as applicable.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in
New York,
New York, are authorized or required
by law to remain closed; and if such day relates to a Borrowing or continuation
of, a payment or prepayment of principal of or interest on, or a conversion of
or into, or the Interest Period for, a Eurodollar Loan or a notice by the
Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank market.
"Capital Leases" means, in respect of any Person, all leases which
shall have been, or should have been, in accordance with GAAP, recorded as
capital leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any loss, casualty or other insured damage to,
or any nationalization, taking under power of eminent domain or by condemnation
or similar proceeding of, any Property of the Borrower or any of its
Subsidiaries having a fair market value in excess of $1,500,000.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) other than the Permitted Holders, of
Equity Interests representing more than 40% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the
Borrower, (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Borrower by Persons who were neither (i) nominated
by the board of directors of the Borrower or in accordance with the
Stockholders' Agreement nor (ii) appointed by directors so nominated
4
or (c) the acquisition of direct or indirect Control of the Borrower by any
Person or group other than the Permitted Holders.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or any Issuing
Bank (or, for purposes of Section 5.01(b)), by any lending office of such Lender
or by such Lender's or such Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b); and "Commitments" means the aggregate amount of the Commitments of all
the Lenders. The amount representing each Lender's Commitment shall at any time
be the lesser of (i) such Lender's Maximum Credit Amount, (ii) such Lender's
Applicable Percentage of the Facility Amount and (iii) such Lender's Applicable
Percentage of the then effective Tranche A Portion and Tranche B Portion, as the
case may be, of the Borrowing Base.
"Commitment Fee Rate" means, for any day,
(a) with respect to the Tranche A Portion of the Commitment, the rate
per annum set forth below based upon the Tranche A Borrowing Base Utilization
Percentage then in effect:
Borrowing Base
Utilization >
Percentage <50% or = 50%
-------------- ------- --------
0.375% 0.500%
and
(b) with respect to the Tranche B Portion of the Commitment, 0.500% per
annum.
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the
5
Consolidated Subsidiaries after allowances for taxes for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following: (a) the net income of any Person in which the Borrower or any
Consolidated Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Consolidated Subsidiaries in accordance with GAAP), except to
the extent of the amount of dividends or distributions actually paid in cash
during such period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (b) the net income (but not loss) during such
period of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (d) any extraordinary gains or
losses during such period; (e) the cumulative effect of a change in accounting
principles and any gains or losses attributable to writeups or writedowns of
assets and (f) any writedowns of non-current assets, provided, however, that any
ceiling limitation writedowns under SEC guidelines shall be treated as
capitalized costs, as if such writedowns had not occurred; and provided further
that if the Borrower or any Consolidated Subsidiary shall acquire or dispose of
any Property during such period, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition or disposition, as
if such acquisition or disposition had occurred on the first day of such period.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 20% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.
"Convertible Promissory Note" means that certain Convertible Promissory
Note, in the principal amount of $1,900,000, dated March 27, 2002, by the
Borrower, as maker, to Hennie L.J.M. Gieskes, as the holder, the terms of which
are in effect on the date hereof.
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under
6
Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as
defined in the other clauses of this definition) of others secured by a Lien on
any Property of such Person, whether or not such Debt is assumed by such Person;
(g) all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to
pay for goods or services whether or not such goods or services are actually
received or utilized by such Person; (k) any Debt of a partnership for which
such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment. The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disqualified Capital Stock" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable for any consideration other than other Equity Interests
(which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of
America.
"Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.
"EBITDAX" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization, exploration and abandonment expenses and other similar
noncash charges and expenses (including stock based compensation and non-cash
impairments of goodwill), minus all noncash income added to Consolidated Net
Income, in each case, and without duplication, calculated after giving pro forma
effect to acquisitions or dispositions in accordance with the last proviso in
the definition of Consolidated Net Income.
7
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety, the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA and the term "oil and gas waste" shall have the
meaning specified in Section 91.1011 of the Texas Natural Resources Code
("Section 91.1011"); provided, however, that (a) in the event either OPA,
CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (b) to the extent the laws of the state or
other jurisdiction in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste," "disposal" or "oil and gas waste" which is broader than that specified
in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall
apply.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statutes, and all regulations and guidances
promulgated thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043
of ERISA, other than a Reportable Event as to which the provisions of 30 days
notice to the PBGC is expressly waived under applicable regulations, (b) the
withdrawal of the Borrower, a Subsidiary or any ERISA Affiliate from a Plan
during a plan year in which it was a "substantial employer"
8
as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent
to terminate a Plan or the treatment of a Plan amendment as a termination under
section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by
the PBGC, (e) receipt of a notice of withdrawal liability pursuant to Section
4202 of ERISA or (f) any other event or condition which might constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (e) Liens arising solely by virtue of
any statutory or common law provision relating to banker's liens, rights of
set-off or similar rights and remedies and burdening only deposit accounts or
other funds maintained with a creditor depository institution, provided that no
such deposit account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth by
regulations promulgated by the Board and no such deposit account is intended by
Borrower or any of its Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission
9
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (g) Liens on cash or
securities pledged to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory obligations, regulatory obligations and other
obligations of a like nature incurred in the ordinary course of business; (h)
judgment and attachment Liens not giving rise to an Event of Default, provided
that any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the period
within which such proceeding may be initiated shall not have expired and no
action to enforce such Lien has been commenced; and (i) Liens arising from
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Borrower and the Subsidiaries in the ordinary course of
business covering only the Property under lease; provided, further that (1)
Liens described in clauses (a) through (e) shall remain "Excepted Liens" only
for so long as no action to enforce such Lien has been commenced and (2) no
intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of any Excepted Lien.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America or such other jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section
5.04(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 5.03(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts with respect
to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
"Facility Amount" means $200,000,000.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of
New York,
New York or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
10
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
"Financial Statements" means the financial statement or statements of
the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time subject to the terms and
conditions set forth in Section 1.05.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Subsidiary, any of their Properties, any
Agent, any Issuing Bank or any Lender.
"Governmental Requirement" means any applicable law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement, whether now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"Guarantors" means:
(a) Xxxx Xxxxxxx Properties Inc., a Delaware corporation,
(b) Xxxx Xxxxxxx Production Company, a Delaware corporation, and
(c) each other Domestic Subsidiary that guarantees the Indebtedness
pursuant to Section 8.14(b).
"Guaranty Agreement" means an agreement executed by the Guarantors in
substantially the form of Exhibit F-2 unconditionally guarantying on a joint and
several basis, payment of the Indebtedness, as the same may be amended, modified
or supplemented from time to time.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws, which
11
may hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any Subsidiary or any Guarantor: (a) to the Administrative Agent, any
Issuing Bank or any Lender under any Loan Document; (b) to any Lender or any
Affiliate of a Lender under any Swap Agreement between the Borrower or any
Subsidiary and such Lender or Affiliate of a Lender while such Person (or in the
case of its Affiliate, the Person affiliated therewith) is a Lender hereunder
and (c) all renewals, extensions and/or rearrangements of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Reserve Report" means the report of the Borrower, dated as of
December 31, 2003, with respect to certain Oil and Gas Properties of the
Borrower and its Subsidiaries as of January 1, 2004 as posted by the Arranger to
the Xxxx Xxxxxxx Corporation Intralinks website on January 14, 2004.
"Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.04.
"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including all dividend payments in
respect of preferred stock of the Borrower, and including to the extent included
in interest expense under GAAP: (a) amortization of debt discount, (b)
capitalized interest and (c) the portion of any payments or accruals under
Capital Leases allocable to interest expense, plus the portion of any payments
or accruals under Synthetic Leases allocable to interest expense whether or not
the same constitutes interest expense under GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last 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 prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in
12
the calendar month that is one, two, three or six months thereafter, as the
Borrower may elect; provided, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Investment" means, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of Equity Interests of any
other Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold by such Person in the ordinary course of
business) or (c) the entering into of any guarantee of, or other contingent
obligation (including the deposit of any Equity Interests to be sold) with
respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"Issuing Bank" means JPMorgan and each Lender that agrees to act as an
issuer of Letters of Credit hereunder at the request of the Borrower, in each
case, in its capacity as the issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.08(i). Any Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of such Issuing Bank, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
"LC Commitment" at any time means Fifteen Million dollars
($15,000,000).
"LC Disbursement" means a payment made by any Issuing Bank pursuant to
a Letter of Credit issued by such Issuing Bank.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC
13
Exposure of any Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.
"Lenders" means the Persons listed on Annex I, any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto as an
Additional Lender pursuant to Section 2.06(c).
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Letter of
Credit Agreements" means all letter of credit applications
and other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (a)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.
"Loan Documents" means this Agreement, the Notes, the Letter of
Credit
Agreements, the Letters of Credit and the Security Instruments.
14
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having greater than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding greater than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans or participation interests in Letters of
Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, Property, condition (financial or otherwise) or prospects
of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower, any Subsidiary or any Guarantor to perform any of its obligations
under any Loan Document, (c) the validity or enforceability of any Loan Document
or (d) the rights and remedies of or benefits available to the Administrative
Agent, any other Agent, any Issuing Bank or any Lender under any Loan Document.
"Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $5,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.
"Maturity Date" means February 4, 2007.
"Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b), (b) increased from time to time pursuant to
Section 2.06(c) or (c) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).
"Maximum Credit Amount Increase Certificate" has the meaning assigned
to such term in Section 2.06(c)(ii)(E).
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in
Section 2.07(d).
15
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil xxxxx, gas xxxxx, injection xxxxx
or other xxxxx, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning set forth in Section 12.04(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Holders" means, collectively, JPMorgan, JPMP Capital Corp.,
JPMorgan Partners (BHCA) L.P., Xxxxxxx Sachs Direct Investment Fund 2000, L.P.,
GS Capital Partners 2000, L.P., GSCP 2000 Offshore BBOG Holding, L.P., GSCP 2000
GMBH Holding, L.P., GS Capital Partners 2000 Employee Fund, L.P., GS Advisors
2000, L.L.C., Warburg Pincus Private Equity VIII, L.P., State Farm Mutual
Automobile Insurance Company, Colorado Public Employee Retirement Association,
Xxxxxxxx Xxxxxxxx XX, Xxxxx Xxxxxx Xxxx 0000, L.P., Stone Street BBOG Holding,
and the Doshay Family Trust of 1999, X.X. Xxxxxx Partners Global Investors,
L.P., X.X. Xxxxxx Partners Global Investors (Cayman), L.P., X.X. Xxxxxx Partners
16
Global Investors (Cayman) II, L.P., JPMP Global Fund/Xxxx Xxxxxxx, L.P., JPMP
Global Fund/Xxxx Xxxxxxx A, L.P., and any of the foregoing Person's Affiliates
and any fund managed or administered by any such Person or any of their
Affiliates.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan, as defined in section
3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Present Value" means, as of any date of determination, the present
value of future net income, taxes, operating expenses and capital expenditures
of the Oil and Gas Properties evaluated in the most recently delivered Reserve
Report, as adjusted to reflect any Swap Agreements then in effect, discounted at
a rate of 9%, and utilizing pricing and other assumptions provided by the
Administrative Agent, which pricing and other assumptions shall be those which
are usual and customary for oil and gas loans then in effect, provided that the
value of the Oil and Gas Properties evaluated in such Reserve Report that are
not classified as "proved, developed, producing" shall be disregarded to the
extent such value exceeds 30% of the aggregate value. The amount of the Present
Value then in effect may also be subject to adjustments for title deficiencies
pursuant to Section 8.13 or asset dispositions pursuant to Section 9.12.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan as its prime rate in effect at its principal
office in
New York,
New York; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective. Such rate is set by the Administrative Agent as a general reference
rate of interest, taking into account such factors as the Administrative Agent
may deem appropriate; it being understood that many of the Administrative
Agent's commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that the Administrative Agent may make various commercial or other loans at
rates of interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in
Section 2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term
in Section 2.07(c)(ii).
"Redemption" means with respect to any Debt, the repurchase,
redemption, prepayment, repayment or defeasance (or the segregation of funds
with respect to any of the foregoing) of such Debt. "Redeem" has the correlative
meaning thereto.
17
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least seventy-five percent (75%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding at least seventy-five percent (75%) of the
outstanding aggregate principal amount of the Loans or participation interests
in such Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).
"Reserve Report" means the Initial Reserve Report and a report, in form
and substance reasonably satisfactory to the Administrative Agent, setting
forth, as of each January 1st or July 1st (or such other date in the event of an
Interim Redetermination) the oil and gas reserves attributable to the Oil and
Gas Properties of the Borrower and the Subsidiaries, together with a projection
of the rate of production and future net income, taxes, operating expenses and
capital expenditures with respect thereto as of such date, consistent with SEC
reporting requirements at the time, together with a supplement indicating future
net income based upon the Administrative Agent's usual and customary pricing
assumptions for oil and gas loans then in effect, in each case reflecting Swap
Agreements in place with respect to such production.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the Chief Operating Officer, the President, any Financial Officer or
any Vice President of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other Property) with respect to any Equity Interests in
the Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of its Tranche A Revolving Credit Exposure and Tranche B Loans at
such time.
"Scheduled Redetermination" has the meaning assigned such term in
Section 2.07(b).
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"Scheduled Redetermination Date" means the date on which a Borrowing
Base that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"SEC" means the U.S. Securities and Exchange Commission or any
successor Governmental Authority.
"Security Instruments" means the Guaranty Agreement, mortgages, deeds
of trust and other agreements, instruments or certificates described or referred
to in Exhibit F-1, and any and all other agreements, instruments or certificates
now or hereafter executed and delivered by the Borrower or any other Person
(other than Swap Agreements with the Lenders or any Affiliate of a Lender or
participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Stockholders' Agreement" means the Stockholders' Agreement dated March
28, 2002, among the Borrower and its stockholders, as such agreement exists on
the date hereof.
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Super-Majority Lenders" means, at any time while no Loans or LC
Exposure is outstanding, Lenders having at least sixty-six and two-thirds
percent (66-2/3%) of the Aggregate
19
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding at least sixty-six and two-thirds percent (66-2/3%)
of the outstanding aggregate principal amount of the Loans or participation
interests in Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Synthetic Leases" means, in respect of any Person, all leases which
shall have been, or should have been, in accordance with GAAP, treated as
operating leases on the financial statements of the Person liable (whether
contingently or otherwise) for the payment of rent thereunder and which were
properly treated as indebtedness for borrowed money for purposes of U.S. federal
income taxes, if the lessee in respect thereof is obligated to either purchase
for an amount in excess of, or pay upon early termination an amount in excess
of, 80% of the residual value of the Property subject to such operating lease
upon expiration or early termination of such lease.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" means the earlier of the Maturity Date and the date
of termination of the Commitments.
"Total Debt" means, at any date, all Debt of the Borrower and the
Consolidated Subsidiaries on a consolidated basis other than Debt described in
clause (c) of the definition of "Debt".
"Tranche A Loans" means, at any time, all Loans outstanding at such
time to the extent the aggregate principal amount of such Loans is equal to or
less than an amount equal to the Tranche A Portion then in effect minus the LC
Exposure then in effect.
"Tranche A Borrowing Base Utilization Percentage" means, as of any day,
the fraction expressed as a percentage, the numerator of which is the sum of the
Tranche A Revolving Credit Exposures of the Lenders on such day, and the
denominator of which is the Tranche A Portion in effect on such day.
"Tranche A Portion" means that portion of the Borrowing Base designated
as such pursuant to Section 2.07 being in an amount equal to the then effective
Borrowing Base minus the Tranche B Portion then in effect.
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"Tranche A Revolving Credit Exposure" means, with respect to any Lender
at any time, the sum of the outstanding principal amount of such Lender's
Tranche A Loans and its LC Exposure at such time.
"Tranche B Borrowing Base Utilization Percentage" means, as of any day,
the fraction expressed as a percentage, the numerator of which is the sum of the
Tranche B Loans on such day, and the denominator of which is the Tranche B
Portion in effect on such day.
"Tranche B Loans" means, at any time, all Loans outstanding at such
time to the extent the aggregate principal amount of such Loans is greater than
an amount equal to the Tranche A Portion then in effect.
"Tranche B Portion" means that portion of the Borrowing Base equal to,
prior to Tranche B Termination Date, $50,000,000 less (i) any optional
reductions to such amount under Section 2.07(e) and (ii) any reductions
resulting from the conversion or reclassification of existing Oil and Gas
Properties owned by the Borrower or any Subsidiary to "proved, developed
producing" with a corresponding increase in the Tranche A Portion; and, from and
after the Tranche B Termination Date, $0.
"Tranche B Termination Date" means the earlier to occur of (i) the date
on which the Borrower permanently terminates all of the Tranche B Portion
pursuant to Section 2.07(e) and pays in full all outstanding Tranche B Loans and
(ii) March 31, 2005.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties pursuant to the Security Instruments and
(b) each Guarantor, the execution, delivery and performance by such Guarantor of
each Loan Document to which it is a party, the guaranteeing of the Indebtedness
and the other obligations under the Guaranty Agreement by such Guarantor and
such Guarantor's grant of the security interests and provision of collateral
thereunder, and the grant of Liens by such Guarantor on Mortgaged Properties
pursuant to the Security Instruments.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted
LIBO Rate.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or
more of the Wholly-Owned Subsidiaries.
Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing"). Loans and
Borrowings may also be classified and referred to by reference to that portion
of the Borrowing Base against which they have been allocated, such as "Tranche A
Borrowing" or "Tranche A Loan".
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Section 1.04 Terms Generally; Rules of Construction. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person's successors and assigns (subject to the restrictions
contained herein), (d) the words "herein", "hereof" and "hereunder", and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word "from" means "from and including" and
the word "to" means "to and including" and (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement. No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which Borrower's
independent certified public accountants concur and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Banks shall otherwise agree in writing, no
such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.
ARTICLE II
THE CREDITS
Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment, (b) the
total Revolving Credit Exposures exceeding the total Commitments, and (c) either
the aggregate Tranche A Revolving Credit Exposures exceeding the Tranche A
Portion or the aggregate Tranche B Loans exceeding the Tranche B Portion. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, repay and reborrow the Loans.
22
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made
as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith; provided that Loans shall first be allocated to
the Tranche A Portion until it is fully utilized; thereafter, Loans shall be
allocated to the Tranche B Portion. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten (10) Eurodollar
Borrowings outstanding. Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date or, with respect to any Tranche B Eurodollar
Loan, the Tranche B Termination Date.
(d) Notes. The Loans made by each Lender shall be evidenced by
a single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the Assignment and Assumption, or (iii) any Lender that becomes a party
hereto in connection with an increase in the Aggregate Maximum Credit Amounts
pursuant to Section 2.06(c), as of the effective date of such increase, payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount as in effect on such date, and otherwise duly completed. In the event
that any Lender's Maximum Credit Amount increases or decreases for any reason
(whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower
shall deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed, and such Lender agrees to promptly
thereafter return the previously issued Note held by such Lender marked canceled
or otherwise similarly defaced. The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such Lender on
its books for its Note, and,
23
prior to any transfer, may be endorsed by such Lender on a schedule attached to
such Note or any continuation thereof or on any separate record maintained by
such Lender. Failure to make any such notation or to attach a schedule shall not
affect any Lender's or the Borrower's rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.
(e) Loans and Borrowings under the Existing
Credit Agreement.
On the Effective Date (or as soon as practicable with respect to (iv)):
(i) the Borrower shall pay all accrued and unpaid
commitment fees, break funding fees under Section 5.02 and all other fees that
are outstanding under the Existing
Credit Agreement for the account of each
"Lender" under the Existing Credit Agreement;
(ii) each "ABR Loan" and "Eurodollar Loan"
outstanding under the Existing Credit Agreement shall be deemed to be repaid
with the proceeds of a new ABR Loan or Eurodollar Loan, as applicable, under
this Agreement;
(iii) the Administrative Agent shall use reasonable
efforts to cause such "Lender" under the Existing Credit Agreement to deliver to
the Borrower as soon as practicable after the Effective Date the Note issued by
the Borrower to it under the Existing Credit Agreement, marked "canceled" or
otherwise similarly defaced; and
(iv) the Existing Credit Agreement and the
commitments thereunder shall be superceded by this Agreement and such
commitments shall terminate.
It is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement or evidence repayment of any such obligations and
liabilities and that this Agreement amend and restate in its entirety the
Existing Credit Agreement and re-evidence the obligations of the Borrower
outstanding thereunder.
Section 2.03 Requests for Borrowings. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone or
by written Borrowing Request in substantially the form of Exhibit B and signed
by the Borrower (a "written Borrowing Request"): (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon,
New York,
New York time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 12:00 noon,
New York,
New York time, on the Business
Day of the proposed Borrowing; provided that no such notice shall be required
for any deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e). Each telephonic and written
Borrowing Request shall be irrevocable and each telephonic Borrowing Request
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
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(iii) whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
(v) the amount of the then effective Borrowing Base,
Tranche A Portion and Tranche B Portion, the current total Tranche A Revolving
Credit Exposures and outstanding principal balance of the Tranche B Loans
(without regard to the requested Borrowing) and the pro forma total Tranche A
Revolving Credit Exposures and Tranche B Loans (giving effect to the requested
Borrowing); and
(vi) the location and number of the Borrower's
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
After the Tranche B Termination Date, information regarding the Tranche
B Portion and the principal balance of the Tranche B Loans may be omitted from
subsequent Borrowing Requests.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Each Borrowing Request shall constitute a representation that the amount of the
requested Borrowing shall not cause (i) the total Revolving Credit Exposures to
exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit
Amounts and the then effective Borrowing Base), (ii) the total Tranche A
Revolving Credit Exposures to exceed the Tranche A Portion and (iii) the total
Tranche B Loans to exceed the Tranche B Portion.
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04 Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) Interest Election Requests. To make an election pursuant
to this Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone or by a written Interest Election Request in substantially
the form of Exhibit C and signed by the
25
Borrower (a "written Interest Election Request") by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each telephonic and written Interest Election Request
shall be irrevocable and each telephonic Interest Election Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent.
(c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified pursuant to
Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant
to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Notice to Lenders by the Administrative Agent. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election
Request and Events of Default on Interest Election. If the Borrower fails to
deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is
continuing: (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing (and any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00
26
p.m., New York, New York time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York, New York and designated by
the Borrower in the applicable Borrowing Request; provided that ABR Loans made
to finance the reimbursement of an LC Disbursement as provided in Section
2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank that
made such LC Disbursement.
(b) Presumption of Funding by the Lenders. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
Section 2.06 Termination, Reduction and Increase of Aggregate Maximum
Credit Amounts.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
(b) Optional Termination and Reduction of Aggregate Credit
Amounts.
(i) The Borrower may at any time terminate, or from
time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A)
each reduction of the Aggregate Maximum Credit Amounts shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B)
the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 3.04(c), the total Revolving Credit Exposures would exceed the
total Commitments.
(ii) The Borrower shall notify the Administrative
Agent of any election to terminate or reduce the Aggregate Maximum Credit
Amounts under Section 2.06(b)(i) at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of
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any notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrower pursuant to this Section
2.06(b)(ii) shall be irrevocable. Any termination or reduction of the Aggregate
Maximum Credit Amounts shall be permanent and may not be reinstated except
pursuant to Section 2.06(c). Each reduction of the Aggregate Maximum Credit
Amounts shall be made ratably among the Lenders in accordance with each Lender's
Applicable Percentage.
(c) Optional Increase in Aggregate Maximum Credit Amounts.
(i) Subject to the conditions set forth in Section
2.06(c)(ii), the Borrower may increase the Aggregate Maximum Credit Amounts then
in effect with the prior written consent of the Administrative Agent by
increasing the Maximum Credit Amount of a Lender or by causing a Person that at
such time is not a Lender to become a Lender (an "Additional Lender").
(ii) Any increase in the Aggregate Maximum Credit
Amounts shall be subject to the following additional conditions:
(A) such increase shall not be less than
$20,000,000 unless the Administrative Agent otherwise consents, and no such
increase shall be permitted if after giving effect thereto the Aggregate Maximum
Credit Amounts would exceed $250,000,000;
(B) no Default shall have occurred and be
continuing at the effective date of such increase;
(C) on the effective date of such increase,
no Eurodollar Borrowings shall be outstanding or if any Eurodollar Borrowings
are outstanding, then the effective date of such increase shall be the last day
of the Interest Period in respect of such Eurodollar Borrowings unless the
Borrower pays compensation required by Section 5.02;
(D) no Lender's Maximum Credit Amount may be
increased without the consent of such Lender;
(E) if the Borrower elects to increase the
Aggregate Maximum Credit Amounts by increasing the Maximum Credit Amount of a
Lender, the Borrower and such Lender shall execute and deliver to the
Administrative Agent a certificate substantially in the form of Exhibit H-1 (a
"Maximum Credit Amount Increase Certificate"), together with a processing and
recordation fee of $3,500, and the Borrower shall deliver a new Note payable to
the order of such Lender in a principal amount equal to its Maximum Credit
Amount after giving effect to such increase, and otherwise duly completed, and
such Lender agrees to promptly thereafter return the previously issued Note held
by such Lender marked canceled or otherwise similarly defaced; and
(F) If the Borrower elects to increase the
Aggregate Maximum Credit Amounts by causing an Additional Lender to become a
party to this Agreement, then the Borrower and such Additional Lender shall
execute and deliver to the Administrative Agent a certificate substantially in
the form of Exhibit H-2 (an "Additional Lender Certificate"), together with an
Administrative Questionnaire and a processing and recordation fee of $3,500, and
the
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Borrower shall deliver a Note payable to the order of such Additional Lender in
a principal amount equal to its Maximum Credit Amount, and otherwise duly
completed.
(iii) Subject to acceptance and recording thereof
pursuant to Section 2.06(c)(iv), from and after the effective date specified in
the Maximum Credit Amount Increase Certificate or the Additional Lender
Certificate (or if any Eurodollar Borrowings are outstanding, then the last day
of the Interest Period in respect of such Eurodollar Borrowings, unless the
Borrower has paid compensation required by Section 5.02): (A) the amount of the
Aggregate Maximum Credit Amounts shall be increased as set forth therein, and
(B) in the case of an Additional Lender Certificate, any Additional Lender party
thereto shall be a party to this Agreement and the other Loan Documents and have
the rights and obligations of a Lender under this Agreement and the other Loan
Documents. In addition, the Lender or the Additional Lender, as applicable,
shall purchase a pro rata portion of the outstanding Loans (and participation
interests in Letters of Credit) of each of the other Lenders (and such Lenders
hereby agree to sell and to take all such further action to effectuate such
sale) such that each Lender (including any Additional Lender, if applicable)
shall hold its Applicable Percentage of the outstanding Loans (and participation
interests) after giving effect to the increase in the Aggregate Maximum Credit
Amounts.
(iv) Upon its receipt of a duly completed Maximum
Credit Amount Increase Certificate or an Additional Lender Certificate, executed
by the Borrower and the Lender or the Borrower and the Additional Lender party
thereto, as applicable, the processing and recording fee referred to in Section
2.06(c)(ii), the Administrative Questionnaire referred to in Section
2.06(c)(ii), if applicable, and the written consent of the Administrative Agent
to such increase required by Section 2.06(c)(i), the Administrative Agent shall
accept such Maximum Credit Amount Increase Certificate or Additional Lender
Certificate and record the information contained therein in the Register
required to be maintained by the Administrative Agent pursuant to Section
12.04(b)(iv). No increase in the Aggregate Maximum Credit Amounts shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 2.06(c)(iv).
Section 2.07 Borrowing Base; Components; PV.
(a) Initial Borrowing Base; Components; PV. For the period
from and including the Effective Date to but excluding the first Redetermination
Date, the amount of the Borrowing Base shall be $150,000,000 and the initial
Present Value for purposes of Section 9.01(d) shall be $227,000,000. At each
Redetermination Date prior to the Tranche B Termination Date, the Borrowing Base
shall consist of two portions: Tranche A Portion and Tranche B Portion. The
initial amount of the Tranche A Portion shall be $100,000,000 and the initial
amount of the Tranche B Portion shall be $50,000,000. Notwithstanding the
foregoing, the Present Value, the Borrowing Base and the Tranche A Portion may
be subject to further adjustments from time to time pursuant to Section 8.13(c),
Section 9.02(i) or Section 9.12.
(b) Scheduled and Interim Redeterminations. The Borrowing Base
and each portion of the Borrowing Base, shall be redetermined semi-annually in
accordance with this Section 2.07 (a "Scheduled Redetermination"), and, subject
to Section 2.07(d), such redetermined amount shall become effective and
applicable to the Borrower, the Agents, each
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Issuing Bank and the Lenders on April 1st and October 1st of each year,
commencing October 1, 2004. In addition, the Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the direction
of the Required Lenders, by notifying the Borrower thereof, one time during each
six month period, elect any of the foregoing amounts to be redetermined between
Scheduled Redeterminations (an "Interim Redetermination") in accordance with
this Section 2.07; provided that prior to the Tranche B Termination Date, the
Borrower and the Administrative Agent may each elect two Interim
Redeterminations. From and after the Tranche B Termination Date, the
Administrative Agent and the Lenders may disregard the mechanics in this Section
2.07 related to segregating the Borrowing Base into Tranche A and Tranche B.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required to
be delivered by the Borrower to the Administrative Agent, in the case of a
Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case
of an Interim Redetermination, pursuant to Section 8.12(b) and (c), and (B) such
other reports, data and supplemental information, including, without limitation,
the information provided pursuant to Section 8.12(c), as may, from time to time,
be reasonably requested by the Super-Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, propose a new
Borrowing Base, which prior to the Tranche B Termination Date shall further
specify a new Tranche A Portion and a new Tranche B Portion (all such amounts
being the "Proposed Borrowing Base") based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Debt) as the Administrative Agent deems
appropriate and consistent with its normal oil and gas lending criteria as it
exists at the particular time.
(ii) The Administrative Agent shall notify the
Borrower and the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing
Base Notice"):
(A) in the case of a Scheduled
Redetermination (1) if the Administrative Agent shall have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(a) and (c) in a timely and complete manner, then on or before the March
15th and September 15th of such year following the date of delivery or (2) if
the Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in
a timely and complete manner, then promptly after the Administrative Agent has
received complete Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with Section
2.07(c)(i); and
(B) in the case of an Interim
Redetermination, promptly, and in any event, within fifteen (15) days after the
Administrative Agent has received the required Engineering Reports.
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(iii) Any Proposed Borrowing Base that would increase
the Borrowing Base (and prior to the Tranche B Termination Date, the Tranche A
Portion) then in effect must be approved or deemed to have been approved by the
Required Lenders as provided in this Section 2.07(c)(iii); and any Proposed
Borrowing Base that would decrease or maintain the Borrowing Base (and prior to
the Tranche B Termination Date, the Tranche A Portion) then in effect must be
approved or be deemed to have been approved by the Super-Majority Lenders as
provided in this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing
Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base (which proposal must prior to the Tranche B Termination
Date also propose a Tranche A Portion and Tranche B Portion). If at the end of
such fifteen (15) days, any Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such silence shall be deemed
to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day
period, the Required Lenders, in the case of a Proposed Borrowing Base that
would increase the Borrowing Base (and prior to the Tranche B Termination Date,
the Tranche A Portion) then in effect, or the Super-Majority Lenders, in the
case of a Proposed Borrowing Base that would decrease or maintain the Borrowing
Base (and prior to the Tranche B Termination Date, the Tranche A Portion) then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base (and prior to the Tranche B Termination Date, the
Tranche A Portion and Tranche B Portion specified therein) shall become the new
Borrowing Base (and Tranche A Portion and Tranche B Portion), effective on the
date specified in Section 2.07(d). If, however, at the end of such 15-day
period, the Required Lenders or the Super-Majority Lenders, as applicable, have
not approved or deemed to have approved, as aforesaid, then the Administrative
Agent shall poll the Lenders to ascertain the highest amount (which proposal
must, prior to the Tranche B Termination Date, also propose a Tranche A Portion)
then acceptable to a number of Lenders sufficient to constitute the Required
Lenders or the Super-Majority Lenders, in the case of an amount that would
decrease or maintain the Borrowing Base (and prior to the Tranche B Termination
Date, the Tranche A Portion), then in effect, for purposes of this Section 2.07
and such amount shall become the new Borrowing Base (and, prior to the Tranche B
Termination Date, the Tranche A Portion), effective on the date specified in
Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base (and prior to the Tranche B Termination Date, the
Tranche A Portion and Tranche B Portion) is approved or is deemed to have been
approved by the Required Lenders or the Super-Majority Lenders, as applicable,
pursuant to Section 2.07(c)(iii), the Administrative Agent shall notify the
Borrower and the Lenders (the "New Borrowing Base Notice"), and such amount (or
amounts, as applicable) shall become the new Borrowing Base (and prior to the
Tranche B Termination Date, the new Tranche A Portion and new Tranche B
Portion), effective and applicable to the Borrower, the Agents, each Issuing
Bank and the Lenders:
(i) in the case of a Scheduled Redetermination, (A)
if the Administrative Agent shall have received the Engineering Reports required
to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely
and complete manner, then on the April 1st or October 1st, as applicable,
following such notice, or (B) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the
Business Day next succeeding delivery of such notice; and
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(ii) in the case of an Interim Redetermination, on
the Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base (and prior to the Tranche B
Termination Date, the Tranche A Portion and Tranche B Portion) until the next
Scheduled Redetermination Date, the next Interim Redetermination Date or the
next adjustment, to the extent applicable, under Section 8.13(c), Section
9.02(i) or Section 9.12, whichever occurs first. Notwithstanding the foregoing,
no Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrower.
(e) Reductions in Tranche B Portion. The Borrower may at any
time terminate, or from time to time reduce, the Tranche B Portion; provided
that (i) each reduction shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Tranche B Portion if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 3.04(c), the total
Tranche B Loans would exceed the Tranche B Portion. Any optional reduction of
the Tranche B Portion shall be permanent. Any reduction in the Tranche B Portion
shall be effected utilizing the procedures set forth in Section 2.06(b)(ii) for
reductions in the Maximum Credit Amounts.
Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth
herein, the Borrower may request any Issuing Bank to issue Letters of Credit for
its own account or for the account of any of its Subsidiaries, in a form
reasonably acceptable to the Administrative Agent and such Issuing Bank, at any
time and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, an Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to any Issuing
Bank and the Administrative Agent (not less than three (3) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:
(i) requesting the issuance of a Letter of Credit or
identifying the outstanding Letter of Credit issued by such Issuing Bank to be
amended, renewed or extended;
(ii) specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of
Credit is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
32
(v) specifying the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective
Borrowing Base and if applicable, the then effective Tranche A Portion, the
current total Tranche A Revolving Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma total Tranche A Revolving
Credit Exposures (giving effect to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of Credit.
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
If requested by any Issuing Bank, the Borrower also shall submit a letter of
credit application on such Issuing Bank's standard form in connection with any
request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal,
which renewal may be provided for in the initial Letter of Credit, or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or
an amendment to an existing Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Bank that issues such
Letter of Credit or the Lenders, each Issuing Bank that issues a Letter of
Credit hereunder hereby grants to each Lender, and each Lender hereby acquires
from such Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of any Issuing Bank that issues a
Letter of Credit hereunder, such Lender's Applicable Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
(e) Reimbursement. If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit issued by such Issuing Bank, the
Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement
33
not later than 12:00 noon, New York, New York time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York, New York time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York, New York time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York, New York time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt;
provided that if such LC Disbursement is not less than $1,000,000, the Borrower
shall, subject to the conditions to Borrowing set forth herein, be deemed to
have requested, and the Borrower does hereby request under such circumstances,
that such payment be financed with an ABR Borrowing in an equivalent amount and,
to the extent so financed, the Borrower's obligation to make such payment shall
be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails
to make such payment when due, the Administrative Agent shall notify each Lender
of the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank that issued such Letter of Credit the amounts so received by it
from the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this Section 2.08(e), the Administrative
Agent shall distribute such payment to the Issuing Bank that issued such Letter
of Credit or, to the extent that Lenders have made payments pursuant to this
Section 2.08(e) to reimburse such Issuing Bank, then to such Lenders and such
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this Section 2.08(e) to reimburse any Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, any Letter of Credit Agreement or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
any Issuing Bank under a Letter of Credit issued by such Issuing Bank against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.08(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower's
obligations hereunder. Neither the Administrative Agent, the Lenders nor any
Issuing Bank, nor any of their Related Parties shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit
34
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of any Issuing Bank; provided that the foregoing shall not be
construed to excuse any Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
(g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by such Issuing Bank. Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.
(h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of such Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of an Issuing Bank. Any Issuing Bank may be
replaced or resign at any time by written agreement among the Borrower, the
Administrative Agent, such resigning or replaced Issuing Bank and, in the case
of a replacement, the successor Issuing Bank. The Administrative Agent shall
notify the Lenders of any such resignation or replacement of an Issuing Bank. At
the time any such resignation or replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the resigning or
replaced Issuing Bank pursuant to Section 3.05(b). In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be
35
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After
the resignation or replacement of an Issuing Bank hereunder, the resigning or
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such resignation or replacement, but
shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Subsidiary described in
Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the
Administrative Agent, for the benefit of each Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(j) shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, any Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and the Guarantor's obligations under this Agreement and the
other Loan Documents in a "securities account" (within the meaning of Article 8
of the Uniform Commercial Code in effect from time to time in the State of New
York, the "UCC") over which the Administrative Agent shall have "control"
(within the meaning of the UCC). Notwithstanding the foregoing, the Borrower may
direct the Administrative Agent and the "securities intermediary" (within the
meaning of the UCC) to invest amounts credited to the securities account, at the
Borrower's risk and expense, in Investments described in Section 9.05(c) through
(f). Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse, on a pro rata basis, each Issuing Bank for LC Disbursements for which
it has not been reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time
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or, if the maturity of the Loans has been accelerated, be applied to satisfy
other obligations of the Borrower and the Guarantors under this Agreement or the
other Loan Documents. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, and
the Borrower is not otherwise required to pay to the Administrative Agent the
excess attributable to an LC Exposure in connection with any prepayment pursuant
to Section 3.04(c), then such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date; provided that
the Borrower shall pay all outstanding Tranche B Loans on the Tranche B
Termination Date.
Section 3.02 Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), or if no rate is then applicable to such amount, at
a rate per annum equal to two percent (2%) plus the highest rate then applicable
to ABR Loans as provided in Section 3.02(a), but in no event to exceed the
Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan
shall be payable in arrears on each Interest Payment Date for such Loan and on
the Termination Date; provided that (i) interest accrued pursuant to Section
3.02(c) shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than an optional prepayment of an ABR Loan prior
to the Termination Date), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment, and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(e) Interest Rate Computations. All interest hereunder shall
be computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap
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year), except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error, and be binding upon the
parties hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such
Interest Period; or
(b) the Administrative Agent is advised by the Majority
Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
of making or maintaining their Loans included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.04 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with Section 3.04(b).
(b) Notice and Terms of Optional Prepayment. The Borrower
shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 12:00 noon, New York, New York time, three Business
Days before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 noon, New York, New York time, on the Business
Day of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.
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(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section 2.08(j).
(ii) Upon any redetermination of or adjustment to the amount
of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c) at any
time, if the total Tranche A Revolving Credit Exposures exceeds the redetermined
or adjusted Tranche A Portion, then the Borrower shall (A) prepay the Tranche A
Borrowings in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Tranche A Borrowings as a result of an
LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in Section
2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit
of cash collateral within sixty (60) days following its receipt of the New
Borrowing Base Notice in accordance with Section 2.07(d) or the date the
adjustment occurs; provided that all payments required to be made pursuant to
this Section 3.04(c)(ii) must be made on or prior to the Termination Date.
(iii) Upon any adjustments to the Tranche A Portion pursuant
to Section 9.02(i) or Section 9.12, if the total Tranche A Revolving Credit
Exposures exceeds the Tranche A Portion as adjusted, then the Borrower shall (A)
prepay the Tranche A Borrowings in an aggregate principal amount equal to such
excess, and (B) if any excess remains after prepaying all of the Tranche A
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on
behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(j). The Borrower shall be obligated to
make such prepayment and/or deposit of cash collateral on the date it receives
cash proceeds as a result of such disposition or such incurrence of Debt;
provided that all payments required to be made pursuant to this Section
3.04(c)(iii) must be made on or prior to the Termination Date.
(iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
(v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.
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(d) No Premium or Penalty. Prepayments permitted or required
under this Section 3.04 shall be without premium or penalty, except as required
under Section 5.02.
Section 3.05 Fees.
(a) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused amount of each Lender's Applicable Percentage of the Tranche A
Portion and the Tranche B Portion during the period from and including the date
of this Agreement to but excluding the Termination Date. Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the Termination Date, commencing on the first such
date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to
the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin for Tranche A Loans used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lender's LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement
to but excluding the later of the date on which such Lender's Commitment
terminates and the date on which such Lender ceases to have any LC Exposure,
(ii) to each Issuing Bank, for its own account, a fronting fee, which shall
accrue at the rate of 0.125% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement
to but excluding the later of the date of termination of the Commitments and the
date on which there ceases to be any LC Exposure, provided that in no event
shall such fee be less than $500 during any quarter, and (iii) to each Issuing
Bank, for its own account, its standard and customary fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit issued by such
Issuing Bank or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
date of this Agreement; provided that all such fees shall be payable on the
Termination Date and any such fees accruing after the Termination Date shall be
payable on demand. Any other fees payable to an Issuing Bank pursuant to this
Section 3.05(b) shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days,
unless such computation would exceed the Highest Lawful Rate, in which case
interest shall be computed on the basis of a year of 365 days (or 366 days in a
leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) Administrative Agent Fees. The Borrower agrees to pay to
the Administrative Agent, for its own account, fees payable in the amounts and
at the times separately agreed upon between the Borrower and the Administrative
Agent.
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(d) Borrowing Base Increase Fees. The Borrower agrees to pay
to the Administrative Agent, for the account of each Lender then party to this
Agreement, ratably in accordance with its Applicable Percentage, a Borrowing
Base increase fee to be agreed by the Lenders and the Borrower on the amount of
any increase of the Borrowing Base over the highest Borrowing Base previously in
effect, payable on the effective date of any such increase to the Borrowing
Base.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Payments by the Borrower. The Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section
5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York,
New York time, on the date when due, in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall
not be refundable under any circumstances absent manifest error (e.g., as a
result of a clerical mistake). Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices specified in Section 12.01, except payments to be made directly to
an Issuing Bank as expressly provided herein and except that payments pursuant
to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
(c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent
41
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this Section
4.01(c) shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section 4.01(c) shall
apply). The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
Section 4.03 Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
Section 4.04 Disposition of Proceeds. The Security Instruments contain
an assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Indebtedness and other obligations described
therein and secured thereby. Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
42
Lenders will instead permit such proceeds to be paid to the Borrower and its
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Subsidiaries.
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or any Issuing Bank
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or such Issuing
Bank's capital or on the capital of such Lender's or such Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company for
any such reduction suffered.
(c) Certificates. A certificate of a Lender or any Issuing
Bank setting forth the amount or amounts necessary to compensate such Lender or
such Issuing Bank or its holding company, as the case may be, as specified in
Section 5.01(a) or (b) and reasonably detailed calculations therefor shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Effect of Failure or Delay in Requesting Compensation.
Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section 5.01 shall not constitute a waiver of such
Lender's or such Issuing Bank's right to demand such
43
compensation; provided that the Borrower shall not be required to compensate a
Lender or an Issuing Bank pursuant to this Section 5.01 for any increased costs
or reductions incurred more than 180 days prior to the date that such Lender or
such Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
such Issuing Bank's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 and reasonably detailed
calculations therefor shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
Section 5.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of the Borrower or any Guarantor under any Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Guarantor
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 5.03(a)), the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower 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.
44
(b) Payment of Other Taxes by the Borrower. The Borrower shall
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Indemnification by the Borrower. The Borrower shall
indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Administrative Agent, such Lender or such Issuing
Bank, as the case may be, on or with respect to any payment by or on account of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.03) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate of the Administrative Agent, a Lender or
an Issuing Bank as to the amount of such payment or liability under this Section
5.03 and reasonably detailed calculations therefor shall be delivered to the
Borrower and shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) Tax Refunds. If the Administrative Agent or a Lender
receives a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 5.03, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 5.03 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section 5.03 shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.
45
Section 5.04 Mitigation Obligations.
(a) Designation of Different Lending Office. If any Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) Replacement of Lenders. If (i) any Lender requests
compensation under Section 5.01, (ii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, (iii) any Lender defaults in its obligation
to fund Loans hereunder, or (iv) any Lender has not approved (or is not deemed
to have approved) an increase in the Borrowing Base proposed by the
Administrative Agent pursuant to Section 2.07(c)(iii), then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 12.04(b)),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (A) the Borrower shall have
received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld, (B) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (C) in the case of any such assignment resulting
from a claim for compensation under Section 5.01 or payments required to be made
pursuant to Section 5.03, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its ABR Loans.
46
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Effective Date. The obligations of the Lenders to amend
and restate the Existing Credit Agreement, to make Loans and of any Issuing Bank
to issue Letters of Credit hereunder shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 12.02):
(a) The Administrative Agent, the Arranger and the Lenders
shall have received all fees and other amounts due and payable on or prior to
the Effective Date, including, to the extent invoiced, reimbursement or payment
of all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
(b) The Administrative Agent shall have received a certificate
of the Secretary or an Assistant Secretary of the Borrower and each Guarantor
setting forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws of the Borrower and such Guarantor,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received certificates
of the appropriate State agencies with respect to the existence, qualification
and good standing of the Borrower and each Guarantor.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.
(e) The Administrative Agent shall have received from each
party hereto counterparts (in such number as may be requested by the
Administrative Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed
Notes payable to the order of each Lender in a principal amount equal to its
Maximum Credit Amount dated as of the date hereof.
(g) The Administrative Agent shall have received from each
party thereto duly executed counterparts (in such number as may be requested by
the Administrative Agent) of
47
the Security Instruments, including the Guaranty Agreement and the other
Security Instruments described on Exhibit F-1. In connection with the execution
and delivery of the Security Instruments, the Administrative Agent shall:
(i) be reasonably satisfied that the Security
Instruments create first priority, perfected Liens (subject only to Excepted
Liens identified in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on at least 85% of the
total value of the Oil and Gas Properties evaluated in the Initial Reserve
Report; and
(ii) have received certificates, together with
undated, blank stock powers for each such certificate, representing all of the
issued and outstanding Equity Interests of each of the Guarantors.
(h) The Administrative Agent shall have received an opinion of
Xxxxxx Xxxxx LLP, special counsel to the Borrower, substantially in the form of
Exhibit E hereto.
(i) The Administrative Agent shall have received a certificate
of insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(j) The Administrative Agent shall have received title
information as the Administrative Agent may reasonably require satisfactory to
the Administrative Agent setting forth the status of title to at least 85% of
the total value of the Oil and Gas Properties evaluated in the Initial Reserve
Report.
(k) The Administrative Agent shall have received a certificate
of a Responsible Officer of the Borrower certifying that the Borrower has (i)
received all consents and approvals required by Section 7.03, (ii) has no other
Debt in respect of borrowed money (other than the Convertible Note), and (iii)
attached thereto is a true and complete copy of the Convertible Note.
(l) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).
(m) The Administrative Agent shall have received appropriate
UCC search certificates reflecting no prior Liens encumbering the Properties of
the Borrower and the Subsidiaries for each of the following jurisdictions:
Delaware, Montana, North Dakota, Utah, Wyoming and any other jurisdiction
requested by the Administrative Agent; other than those being assigned or
released on or prior to the Effective Date or Liens permitted by Section 9.03.
(n) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of each Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or
48
waived pursuant to Section 12.02) at or prior to 2:00 p.m., New York, New York
time, on February 15, 2004 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).
Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct as of such specified earlier date.
(d) The making of such Loan or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, would not conflict
with, or cause any Lender or any Issuing Bank to violate or exceed, any
applicable Governmental Requirement, and no Change in Law shall have occurred,
and no litigation shall be pending or threatened, which does or, with respect to
any threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing
Request in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.
Each Borrowing and each issuance, amendment, renewal or extension of
any Letter of Credit shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in Section
6.02(a) through (e).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
49
Section 7.01 Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action (including,
without limitation, any action required to be taken by any class of directors of
the Borrower, whether interested or disinterested, in order to ensure the due
authorization of the Transactions). Each Loan Document to which the Borrower and
each Guarantor is a party has been duly executed and delivered by the Borrower
and such Guarantor and constitutes a legal, valid and binding obligation of the
Borrower and such Guarantor, as applicable, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
Section 7.03 Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other third Person (including
shareholders or any class of directors, whether interested or disinterested, of
the Borrower or any other Person), nor is any such consent, approval,
registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by the Borrower or such Subsidiary and (d) will not result in
the creation or imposition of any Lien on any Property of the Borrower or any
Subsidiary (other than the Liens created by the Loan Documents).
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of operations, stockholders' equity,
comprehensive loss and cash flows (i) as of and for the fiscal year ended
December 31, 2002, certified by its independent public accountants and (ii) as
of September 30, 2003, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial position and
results
50
of operations and cash flows of the Borrower and its Consolidated Subsidiaries
as of such dates and for such periods in accordance with GAAP, subject to
year-end audit adjustments and the absence of footnotes in the case of the
unaudited quarterly financial statements.
(b) Since December 31, 2002, (i) there has been no event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect and (ii) the business of the Borrower and its
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.
(c) Neither the Borrower nor any Subsidiary has on the date
hereof any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve any Loan Document or
the Transactions.
(b) Since the date of this Agreement, there has been no change
in the status of the matters disclosed in Schedule 7.05 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
Section 7.06 Environmental Matters. Except as could not be reasonably
expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected
to have a Material Adverse Effect):
(a) neither any Property of the Borrower or any Subsidiary nor
the operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws.
(b) no Property of the Borrower or any Subsidiary nor the
operations currently conducted thereon or, to the knowledge of the Borrower, by
any prior owner or operator of such Property or operation, are in violation of
or subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or
similar authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of the Borrower and each
Subsidiary, including, without limitation, past or present treatment, storage,
disposal or release of a hazardous substance, oil and gas waste or solid waste
into the environment, have been duly obtained or filed, and the Borrower and
each
51
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations.
(d) all hazardous substances, solid waste and oil and gas
waste, if any, generated at any and all Property of the Borrower or any
Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.
(e) the Borrower has taken all steps reasonably necessary to
determine and has determined that no oil, hazardous substances, solid waste or
oil and gas waste, have been disposed of or otherwise released and there has
been no threatened release of any oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of the Borrower or any Subsidiary except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Borrower and
each Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA, and the Borrower does not have any reason to
believe that such Property, to the extent subject to the OPA, will not be able
to maintain compliance with the OPA requirements during the term of this
Agreement.
(g) neither the Borrower nor any Subsidiary has any known
contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Subsidiary is in compliance
with all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Neither the Borrower nor any Subsidiary is in default nor
has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Subsidiary to Redeem or make any
offer to Redeem under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which the
Borrower or any Subsidiary or any of their Properties is bound.
(c) No Default has occurred and is continuing.
52
Section 7.08 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
Section 7.09 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of, or
subject to regulation under, the Public Utility Holding Company Act of 1935, as
amended.
Section 7.10 Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate.
No Tax Lien has been filed and, to the knowledge of the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.
Section 7.11 ERISA.
(a) The Borrower, the Subsidiaries and each ERISA Affiliate
have complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has
been or is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which
the Borrower, the Subsidiaries or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as contributions to such Plan
as of the date hereof, and no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, exists
with respect to any Plan.
53
(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of the end of
the Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) Neither the Borrower, the Subsidiaries nor any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare benefit
plan, as defined in section 3(1) of ERISA, including, without limitation, any
such plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate
in its sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries nor any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in the
six-year period preceding the date hereof sponsored, maintained or contributed
to, any Multiemployer Plan.
(i) Neither the Borrower, the Subsidiaries nor any ERISA
Affiliate is required to provide security under section 401(a)(29) of the Code
due to a Plan amendment that results in an increase in current liability for the
Plan.
Section 7.12 Disclosure; No Material Misstatements. The Borrower has
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the other reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower or any Subsidiary to
the Administrative Agent or any Lender or any of their Affiliates in connection
with the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no fact peculiar to the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect
or in the future is reasonably likely to have a Material Adverse Effect and
which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated hereby.
There are no statements or conclusions in any Reserve Report which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates contained in each Reserve Report are necessarily
based upon professional opinions, estimates and projections and that the
Borrower and the Subsidiaries do not warrant that such opinions, estimates and
projections will ultimately prove to have been accurate.
54
Section 7.13 Insurance. The Borrower has, and has caused all its
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Subsidiaries. The
Administrative Agent and the Lenders have been named as additional insureds in
respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to Property loss insurance.
Section 7.14 Restriction on Liens. Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
Capital Leases creating Liens permitted by Section 9.03(c), but then only on the
Property subject of such Capital Lease), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent and the Lenders on or in respect of their
Properties to secure the Indebtedness and the Loan Documents, other than the
Stockholders' Agreement, under which all necessary and appropriate
authorizations and consents have been obtained.
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower
has no Subsidiaries, each Subsidiary is a Wholly-Owned Subsidiary and the
Borrower has no Foreign Subsidiaries. Neither the Borrower nor any Subsidiary
has any Foreign Subsidiaries other than Foreign Subsidiaries permitted by
Section 9.15.
Section 7.16 Location of Business and Offices. The Borrower's
jurisdiction of organization is Delaware; the name of the Borrower as listed in
the public records of Delaware is Xxxx Xxxxxxx Corporation; and the
organizational identification number of the Borrower in Delaware is 3519555 (or,
in each case, as set forth in a notice delivered to the Administrative Agent
pursuant to Section 8.01(l) in accordance with Section 12.01). The Borrower's
principal place of business and chief executive offices are located at the
address specified in Section 12.01 (or as set forth in a notice delivered
pursuant to Section 8.01(l) and Section 12.01(c)). Each Subsidiary's
jurisdiction of organization, name as listed in the public records of its
jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.15 (or as set forth
in a notice delivered pursuant to Section 8.01(l)).
Section 7.17 Properties; Titles, Etc.
(a) Except as disclosed in Schedule 7.17, each of the Borrower
and the Subsidiaries has good and defensible title to the Oil and Gas Properties
evaluated in the most recently delivered Reserve Report and good title to all
its personal Properties, in each case, free and clear of all Liens except Liens
permitted by Section 9.03. After giving full effect to the Excepted Liens, the
Borrower or the Subsidiary specified as the owner owns the net interests in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties shall
not in any material respect obligate
55
the Borrower or such Subsidiary to bear the costs and expenses relating to the
maintenance, development and operations of each such Property in an amount in
excess of the working interest of each Property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in the Borrower's or such Subsidiary's net revenue interest in such
Property.
(b) All material leases and agreements necessary for the
conduct of the business of the Borrower and the Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to result in a Material Adverse Effect.
(c) The rights and Properties presently owned, leased or
licensed by the Borrower and the Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and the Subsidiaries to conduct their business in all
material respects in the same manner as its business has been conducted prior to
the date hereof.
(d) All of the Properties of the Borrower and the Subsidiaries
which are reasonably necessary for the operation of their businesses are in good
working condition and are maintained in accordance with prudent business
standards.
(e) The Borrower and each Subsidiary owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.
Section 7.18 Maintenance of Properties. Except for such acts or
failures to act as could not be reasonably expected to have a Material Adverse
Effect, the Oil and Gas Properties (and Properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all Government Requirements and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties. Specifically in connection with the foregoing, except
for those as could not be reasonably expected to have a Material Adverse Effect,
(i) no Oil and Gas Property is subject to having allowable production reduced
below the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) and (ii) none of the xxxxx comprising a part of the Oil
and Gas Properties (or Properties unitized therewith) is deviated from the
vertical more than the maximum permitted
56
by Government Requirements, and such xxxxx are, in fact, bottomed under and are
producing from, and the well bores are wholly within, the Oil and Gas Properties
(or in the case of xxxxx located on Properties unitized therewith, such unitized
Properties). All pipelines, xxxxx, gas processing plants, platforms and other
material improvements, fixtures and equipment owned in whole or in part by the
Borrower or any of its Subsidiaries that are necessary to conduct normal
operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by the
Borrower or any of its Subsidiaries, in a manner consistent with the Borrower's
or its Subsidiaries' past practices (other than those the failure of which to
maintain in accordance with this Section 7.18 could not reasonably be expect to
have a Material Adverse Effect).
Section 7.19 Gas Imbalances, Prepayments. As of the date hereof, except
as set forth on Schedule 7.19 or on the most recent certificate delivered
pursuant to Section 8.12(c), on a net basis there are no gas imbalances, take or
pay or other prepayments which would require the Borrower or any of its
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding one (1.0) bcf of gas (on an mcf equivalent basis) in the aggregate.
Section 7.20 Marketing of Production. Except for contracts listed and
in effect on the date hereof on Schedule 7.20, and thereafter either disclosed
in writing to the Administrative Agent or included in the most recently
delivered Reserve Report (with respect to all of which contracts the Borrower
represents that it or its Subsidiaries are receiving a price for all production
sold thereunder which is computed substantially in accordance with the terms of
the relevant contract and are not having deliveries curtailed substantially
below the subject Property's delivery capacity except as disclosed in Schedule
7.20 or the most recently delivered Reserve Report), no material agreements
exist which are not cancelable on 60 days notice or less without penalty or
detriment for the sale of production from the Borrower's or its Subsidiaries'
Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised)
that (a) pertain to the sale of production at a fixed price and (b) have a
maturity or expiry date of longer than six (6) months from the date hereof.
Section 7.21 Swap Agreements. Schedule 7.21, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(d), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.22 Use of Loans and Letters of Credit. The proceeds of the
Tranche A Loans and the Letters of Credit shall be used to provide working
capital for exploration and production operations, to refinance existing Debt of
the Borrower, to provide funding for general corporate purposes of the Borrower
and its Subsidiaries, including the acquisition of exploration and production
properties. The proceeds of the Tranche B Loans shall be used for exploration
and development activities related to existing Oil and Gas Properties that are
not classified as proved developed producing. The Borrower and its Subsidiaries
are not engaged principally, or as one of its or their important activities, in
the business of extending credit for the purpose, whether
57
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board). No part of the proceeds of
any Loan or Letter of Credit will be used for any purpose which violates the
provisions of Regulations T, U or X of the Board.
Section 7.23 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents shall have been paid in full and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
Section 8.01 Financial Statements; Ratings Change; Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available, but in
any event in accordance with then applicable law and not later than 120 days
after the end of each fiscal year of the Borrower, its audited consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Deloitte & Touche LLP or other independent public accountants of recognized
national standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied.
(b) Quarterly Financial Statements. As soon as available, but
in any event in accordance with then applicable law and not later than 60 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, its consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in
58
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Certificate of Financial Officer -- Compliance.
Concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer in substantially the form
of Exhibit D hereto (i) certifying as to whether a Default has occurred and, if
a Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 8.13(b) and Section
9.01 and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
Section 7.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate.
(d) Certificate of Financial Officer - Swap Agreements.
Concurrently with the delivery of each Reserve Report hereunder, a certificate
of a Financial Officer, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth as of a recent date, a true and complete
list of all Swap Agreements of the Borrower and each Subsidiary, the material
terms thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net xxxx-to-market value therefor, any new
credit support agreements relating thereto not listed on Schedule 7.20, any
margin required or supplied under any credit support document, and the
counterparty to each such agreement.
(e) Certificate of Insurer -- Insurance Coverage. Concurrently
with any delivery of financial statements under Section 8.01(a), a certificate
of insurance coverage from each insurer with respect to the insurance required
by Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.
(f) Other Accounting Reports. Promptly upon receipt thereof, a
copy of each other report or letter (except standard and customary
correspondence) submitted to the Borrower or any of its Subsidiaries by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any such Subsidiary, and a copy of
any response by the Borrower or any such Subsidiary, or the board of directors
of the Borrower or any such Subsidiary, to such letter or report.
(g) SEC and Other Filings; Reports to Shareholders. Promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any
Subsidiary with the SEC, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be.
(h) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation (other than capital call notices and
59
communications related thereto), indenture, loan or credit or other similar
agreement, other than this Agreement and not otherwise required to be furnished
to the Lenders pursuant to any other provision of this Section 8.01.
(i) Lists of Purchasers. Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
Persons purchasing Hydrocarbons from the Borrower or any Subsidiary accounting
for at least 85% of the revenues resulting from the sale of all Hydrocarbons in
the one-year period prior to the "as of" date of such Reserve Report.
(j) Notice of Sales of Oil and Gas Properties. In the event
the Borrower or any Subsidiary intends to sell, transfer, assign or otherwise
dispose of any Oil or Gas Properties or any Equity Interests in any Subsidiary
in accordance with Section 9.12, prior written notice of such disposition, the
price thereof and the anticipated date of closing.
(k) Notice of Casualty Events. Prompt written notice, and in
any event within three Business Days, of the occurrence of any Casualty Event or
the commencement of any action or proceeding that could reasonably be expected
to result in a Casualty Event.
(l) Information Regarding Borrower and Guarantors. Prompt
written notice (and in any event within ten (10) Business Days prior thereto) of
any change (i) in the Borrower or any Guarantor's corporate name or in any trade
name used to identify such Person in the conduct of its business or in the
ownership of its Properties, (ii) in the location of the Borrower or any
Guarantor's chief executive office or principal place of business, (iii) in the
Borrower or any Guarantor's identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) in the
Borrower or any Guarantor's jurisdiction of organization or such Person's
organizational identification number in such jurisdiction of organization, and
(v) in the Borrower or any Guarantor's federal taxpayer identification number.
(m) Production Report and Lease Operating Statements. Within
60 days after the end of each fiscal quarter, a report setting forth, for each
calendar month during the then current fiscal year to date, the volume of
production and sales attributable to production (and the prices at which such
sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties, and setting forth the related ad valorem,
severance and production taxes and lease operating expenses attributable thereto
and incurred for each such calendar month.
(n) Notices of Certain Changes. Promptly, but in any event
within five (5) Business Days after the execution thereof, copies of any
amendment, modification or supplement to the certificate or articles of
incorporation, by-laws, any preferred stock designation or any other organic
document of the Borrower or any Subsidiary.
(o) Other Requested Information. Promptly following any
request therefor, such other information regarding the operations, business
affairs and financial condition of the Borrower or any Subsidiary (including,
without limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA), or compliance with the terms
60
of this Agreement or any other Loan Document, as the Administrative Agent or any
Lender may reasonably request.
(p) Present Value Certificate. Concurrently with the delivery
of any Reserve Report to the Administrative Agent prior to the Tranche B
Termination Date and thereafter for so long as any Tranche B Loans remain
outstanding, deliver a certificate calculating the Present Value in accordance
with the definition thereof. On the day the certificate is delivered, but in any
event within three (3) Business Days after the delivery, the Present Value set
forth in the certificate shall become the Present Value, subject to adjustment,
for that period until a new certificate is delivered, unless the Administrative
Agent objects to such Present Value, in which case the Administrative Agent and
the Borrower shall negotiate in good faith to agree upon an amount that shall be
the Present Value.
Section 8.02 Notices of Material Events. The Borrower will furnish to
the Administrative Agent prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the threat in writing
of, any action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against the Borrower or any Affiliate
thereof not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, if adversely determined,
could reasonably be expected to result in liability in excess of $1,500,000;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $500,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 8.03 Existence; Conduct of Business. The Borrower will, and
will cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.11.
Section 8.04 Payment of Obligations. The Borrower will, and will cause
each Subsidiary to, pay its obligations, including Tax liabilities of the
Borrower and all of its Subsidiaries before the same shall become delinquent or
in default, except where (a) the validity
61
or amount thereof is being contested in good faith by appropriate proceedings,
(b) the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any material Property of the
Borrower or any Subsidiary.
Section 8.05 Performance of Obligations under Loan Documents. The
Borrower will pay the Notes according to the reading, tenor and effect thereof,
and the Borrower will, and will cause each Subsidiary to, do and perform every
act and discharge all of the obligations to be performed and discharged by them
under the Loan Documents, including, without limitation, this Agreement, at the
time or times and in the manner specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower, at
its own expense, will, and will cause each Subsidiary to:
(a) operate its Oil and Gas Properties and other material
Properties or cause such Oil and Gas Properties and other material Properties to
be operated in a careful and efficient manner in accordance with the practices
of the industry and in compliance with all applicable contracts and agreements
and in compliance with all Governmental Requirements, including, without
limitation, applicable pro ration requirements and Environmental Laws, and all
applicable laws, rules and regulations of every other Governmental Authority
from time to time constituted to regulate the development and operation of its
Oil and Gas Properties and the production and sale of Hydrocarbons and other
minerals therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted preserve, maintain and keep in good repair, working order and
efficiency (ordinary wear and tear excepted) all of its material Oil and Gas
Properties and other material Properties, including, without limitation, all
equipment, machinery and facilities.
(c) promptly pay and discharge, or make reasonable and
customary efforts to cause to be paid and discharged, all delay rentals,
royalties, expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas Properties and will do all
other things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
(d) promptly perform or make reasonable and customary efforts
to cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties.
(e) operate its Oil and Gas Properties and other material
Properties or cause or make reasonable and customary efforts to cause such Oil
and Gas Properties and other material Properties to be operated in accordance
with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements.
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(f) to the extent the Borrower is not the operator of any
Property, the Borrower shall use reasonable efforts to cause the operator to
comply with this Section 8.06.
Section 8.07 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as "additional insureds" and provide that the insurer will endeavor
to give at least 30 days prior notice of any cancellation to the Administrative
Agent.
Section 8.08 Books and Records; Inspection Rights. The Borrower will,
and will cause each Subsidiary to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each Subsidiary to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times during normal business hours and as
often as reasonably requested on an individual and aggregate basis.
Section 8.09 Compliance with Laws. The Borrower will, and will cause
each Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 8.10 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and
shall cause its Properties and operations and each Subsidiary and each
Subsidiary's Properties and operations to comply, with all applicable
Environmental Laws, the breach of which could be reasonably expected to have a
Material Adverse Effect; (ii) not dispose of or otherwise release, and shall
cause each Subsidiary not to dispose of or otherwise release, any oil, oil and
gas waste, hazardous substance, or solid waste on, under, about or from any of
the Borrower's or its Subsidiaries' Properties or any other Property to the
extent caused by the Borrower's or any of its Subsidiaries' operations except in
compliance with applicable Environmental Laws, the disposal or release of which
could reasonably be expected to have a Material Adverse Effect; (iii) timely
obtain or file, and shall cause each Subsidiary to timely obtain or file, all
notices, permits, licenses, exemptions, approvals, registrations or other
authorizations, if any, required under applicable Environmental Laws to be
obtained or filed in connection with the operation or use of the Borrower's or
its Subsidiaries' Properties, which failure to obtain or file could reasonably
be expected to have a Material Adverse Effect; (iv) promptly commence and
diligently prosecute to completion, and shall cause each Subsidiary to promptly
commence and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations
63
(collectively, the "Remedial Work") in the event any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future disposal or
other release of any oil, oil and gas waste, hazardous substance or solid waste
on, under, about or from any of the Borrower's or its Subsidiaries' Properties,
which failure to commence and diligently prosecute to completion could
reasonably be expected to have a Material Adverse Effect; and (v) establish and
implement, and shall cause each Subsidiary to establish and implement, such
procedures as may be necessary to continuously determine and assure that the
Borrower's and its Subsidiaries' obligations under this Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than
five Business Days of the occurrence of a triggering event, notify the
Administrative Agent in writing of any threatened action, investigation or
inquiry by any Governmental Authority or any threatened demand or lawsuit by any
landowner or other third party against the Borrower or its Subsidiaries or their
Properties of which the Borrower has knowledge in connection with any applicable
Environmental Laws (excluding routine testing and corrective action) if the
Borrower reasonably anticipates that such action will result in liability
(whether individually or in the aggregate) in excess of $2,000,000, not fully
covered by insurance, subject to normal deductibles.
(c) The Borrower will, and will cause each Subsidiary to,
undertake reasonable environmental audits and tests in accordance with
reasonable industry standards upon the request of the Administrative Agent no
more than once per year in the absence of any Event of Default (or as otherwise
required to be obtained by the Administrative Agent or the Lenders by any
Governmental Authority).
Section 8.11 Further Assurances.
(a) The Borrower at its expense will, and will cause each
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower or any
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the reasonable discretion of the Administrative
Agent, in connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
the Borrower or any other Guarantor where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law.
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Section 8.12 Reserve Reports.
(a) On or before March 1st and September 1st of each year,
commencing September 1, 2004, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report. The Reserve Report as of January 1 of
each year shall be prepared by one or more Approved Petroleum Engineers or by or
under the supervision of the chief engineer of the Borrower and audited or
reviewed by one or more Approved Petroleum Engineers, and all other Reserve
Reports shall be prepared by or under the supervision of the chief engineer of
the Borrower and otherwise in a manner consistent with the preceding January 1st
Reserve Report. Each Reserve Report prepared by or under the supervision of the
chief engineer of the Borrower shall be certified by the chief engineer to be
true and accurate in all material respects and to have been prepared in
accordance with the procedures used in the immediately preceding January 1
Reserve Report.
(b) In the event of an Interim Redetermination, the Borrower
shall furnish to the Administrative Agent and the Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate in all material
respects and to have been prepared in accordance with the procedures used in the
immediately preceding January 1 Reserve Report. For any Interim Redetermination
requested by the Administrative Agent or the Borrower pursuant to Section
2.07(b), the Borrower shall provide such Reserve Report with an "as of" date as
required by the Administrative Agent as soon as possible, but in any event no
later than forty-five (45) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower
shall provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or its
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.19 with
respect to its Oil and Gas Properties evaluated in such Reserve Report which
would require the Borrower or any Subsidiary to deliver Hydrocarbons either
generally or produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor, (iv) none of their
Oil and Gas Properties having a value in excess of $1,000,000 have been sold
since the date of the last Borrowing Base determination except as set forth on
an exhibit to the certificate, which certificate shall list all of its Oil and
Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which the Borrower could reasonably be
expected to have been obligated to list on Schedule 7.20 had such agreement been
in effect on the date hereof and (vi) attached thereto is a schedule of the Oil
and Gas Properties evaluated by such Reserve Report that are Mortgaged
Properties and demonstrating the percentage of the Borrowing Base that the value
of such Mortgaged Properties represent.
Section 8.13 Title Information.
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(a) On or before the delivery to the Administrative Agent and
the Lenders of each Reserve Report required by Section 8.12(a), the Borrower
will deliver title information in form and substance reasonably acceptable to
the Administrative Agent covering enough of the Oil and Gas Properties evaluated
by such Reserve Report that were not included in the immediately preceding
Reserve Report, so that the Administrative Agent shall have received together
with title information previously delivered to the Administrative Agent,
reasonably satisfactory title information on at least 85% of the total value of
the Oil and Gas Properties evaluated by such Reserve Report.
(b) If the Borrower has provided title information for
additional Properties under Section 8.13(a), the Borrower shall, within 60 days
of notice from the Administrative Agent that title defects or exceptions exist
with respect to such additional Properties, either (i) cure any such title
defects or exceptions (including defects or exceptions as to priority) which are
not permitted by Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h)
of such definition) having an equivalent value or (iii) deliver title
information in form and substance reasonably acceptable to the Administrative
Agent so that the Administrative Agent shall have received, together with title
information previously delivered to the Administrative Agent, reasonably
satisfactory title information on at least 85% of the value of the Oil and Gas
Properties evaluated by such Reserve Report.
(c) If the Borrower is unable to cure any title defect
requested by the Administrative Agent or the Lenders to be cured within the
60-day period or the Borrower does not comply with the requirements to provide
acceptable title information covering 85% of the value of the Oil and Gas
Properties evaluated in the most recent Reserve Report, such default shall not
be a Default, but instead the Administrative Agent and/or the Super-Majority
Lenders shall have the right to exercise the following remedy in their sole
discretion from time to time, and any failure to so exercise this remedy at any
time shall not be a waiver as to future exercise of the remedy by the
Administrative Agent or the Lenders. To the extent that the Administrative Agent
or the Super-Majority Lenders are not satisfied with title to any Mortgaged
Property after the 60-day period has elapsed, such unacceptable Mortgaged
Property shall not count towards the 85% requirement, and the Administrative
Agent may send a notice to the Borrower and the Lenders that the then
outstanding Borrowing Base shall be reduced by an amount as determined by the
Super-Majority Lenders to cause the Borrower to be in compliance with the
requirement to provide acceptable title information on 85% of the value of the
Oil and Gas Properties. This new Borrowing Base shall become effective
immediately after receipt of such notice.
Section 8.14 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing
Base, the Borrower shall review the Reserve Report and the list of current
Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain whether
the Mortgaged Properties represent at least 85% of the total value of the Oil
and Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 85% of such total value or in the event that any Tranche B
Loans remain outstanding and unpaid after the Tranche B Termination Date, then
the Borrower shall, and shall cause its Subsidiaries
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to, grant to the Administrative Agent as security for the Indebtedness a
first-priority Lien interest (subject only to Excepted Liens of the type
described in clauses (a) to (d) and (f) of the definition thereof, but subject
to the provisos at the end of such definition) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
85% of such total value. In the event that the Tranche B Loans have been paid in
full, then the Borrower shall, and shall cause its Subsidiaries to, grant to the
Administrative Agent as security for the Indebtedness a first-priority Lien
interest (subject only to Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof, but subject to the provisos at the end of
such definition) on additional Oil and Gas Properties not already subject to a
Lien of the Security Instruments such that after giving effect thereto, the
Mortgaged Properties will represent at least 85% of the total value of the Oil
and Gas Properties included in the then effective Borrowing Base. All such Liens
will be created and perfected by and in accordance with the provisions of deeds
of trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Subsidiary places a Lien on its Oil and Gas
Properties and such Subsidiary is not a Guarantor, then it shall become a
Guarantor and comply with Section 8.14(b).
(b) The Borrower shall promptly cause each Domestic Subsidiary
(other than any Subsidiary classified as such based on the Borrower or any
Subsidiary being a general partner thereof, unless such Subsidiary is a
Wholly-Owned Subsidiary) to guarantee the Indebtedness pursuant to the Guaranty
Agreement. In connection with any such guaranty, the Borrower shall, or shall
cause such Domestic Subsidiary to, (A) execute and deliver a supplement to the
Guaranty Agreement executed by such Domestic Subsidiary, (B) pledge all of the
Equity Interests of such Domestic Subsidiary (including, without limitation,
delivery of original stock certificates evidencing the Equity Interests of such
Domestic Subsidiary, together with an appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof) and (C)
execute and deliver such other additional closing documents, certificates and
legal opinions as shall reasonably be requested by the Administrative Agent.
(c) In the event that the Borrower or any Domestic Subsidiary
becomes the owner of a Foreign Subsidiary, then the Borrower shall, or shall
cause such Domestic Subsidiary to, (i) execute and deliver a supplement to the
Guaranty Agreement executed by the Borrower or such Domestic Subsidiary, (ii)
pledge 65% of all the Equity Interests of such Foreign Subsidiary (including,
without limitation, delivery of original stock certificates evidencing such
Equity Interests of such Foreign Subsidiary, together with appropriate stock
powers for each certificate duly executed in blank by the registered owner
thereof) and (iii) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the
Administrative Agent.
(d) The Borrower will at all times cause the other material
tangible and intangible assets of the Borrower and each Subsidiary to be subject
to a Lien of the Security Instruments.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish and
will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i)
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promptly after the filing thereof with the United States Secretary of Labor, the
Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) promptly upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by the President or the principal Financial Officer, the
Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature
thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, and (iii) promptly upon receipt thereof, copies
of any notice of the PBGC's intention to terminate or to have a trustee
appointed to administer any Plan. With respect to each Plan (other than a
Multiemployer Plan), the Borrower will, and will cause each Subsidiary and ERISA
Affiliate to, (i) satisfy in full and in a timely manner, without incurring any
late payment or underpayment charge or penalty and without giving rise to any
lien, all of the contribution and funding requirements of section 412 of the
Code (determined without regard to subsections (d), (e), (f) and (k) thereof)
and of section 302 of ERISA (determined without regard to sections 303, 304 and
306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely
manner, without incurring any late payment or underpayment charge or penalty,
all premiums required pursuant to sections 4006 and 4007 of ERISA.
ARTICLE IX
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 9.01 Financial Covenants.
(a) Interest Coverage Ratio. The Borrower will not, as of the
last day of any fiscal quarter, permit its ratio of EBITDAX for the period of
four fiscal quarters then ending to Interest Expense for such period to be less
than 2.5 to 1.0.
(b) Ratio of Total Debt to EBITDAX. The Borrower will not, as
of any date of determination, permit its ratio of Total Debt as of such day to
EBITDAX for the four fiscal quarters ending on the last day of the fiscal
quarter immediately preceding such date of determination for which financial
statements are available to be greater than (i) prior to March 31, 2005, 4.0 to
1.0, and (ii) thereafter, 3.5 to 1.0.
(c) Current Ratio. The Borrower will not permit, as of the
last day of any fiscal quarter, its ratio of (i) consolidated current assets
(including the unused amount of the total Commitments, but excluding non-cash
assets under FAS 133) to (ii) consolidated current liabilities (excluding
non-cash obligations under FAS 133) to be less than 1.0 to 1.0.
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(d) Ratio of Present Value to Total Debt. Until the Tranche B
Termination Date and thereafter for so long as any Tranche B Loans remain
outstanding, the Borrower will not, as of any date of determination, permit its
ratio of Present Value most recently calculated pursuant to Section 2.07, as
adjusted for Section 8.13(c) and Section 9.12, to Total Debt as of such date of
determination to be less than 1.5 to 1.0.
Section 9.02 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan
Documents or any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents.
(b) Debt of the Borrower and its Subsidiaries existing on the
date hereof that is reflected in the Financial Statements.
(c) accounts payable and accrued expenses, liabilities or
other obligations to pay the deferred purchase price of Property or services,
from time to time incurred in the ordinary course of business which are not
greater than one hundred twenty (120) days past the date of invoice or
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP.
(d) Debt under Capital Leases not to exceed $5,000,000.
(e) Debt associated with worker's compensation claims,
performance, bid, surety or similar bonds or surety obligations required by
Governmental Requirements or third parties in connection with the operation of
the Oil and Gas Properties.
(f) intercompany Debt between the Borrower and any Subsidiary
or between Subsidiaries to the extent permitted by Section 9.05(g); provided
that such Debt is not held, assigned, transferred, negotiated or pledged to any
Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and,
provided further, that any such Debt owed by either the Borrower or a Guarantor
shall be subordinated to the Indebtedness on terms set forth in the Guaranty
Agreement.
(g) endorsements of negotiable instruments for collection in
the ordinary course of business.
(h) Debt under the Convertible Promissory Note.
(i) Debt subordinated to the Indebtedness and any guarantees
thereof, provided that (i) the Borrower shall have furnished to the
Administrative Agent and the Lenders, not less than ten Business Days prior
written notice of its intent to incur such Debt, the amount thereof, and the
anticipated closing date, together with copies of drafts of the material
definitive documents therefor and, when completed, copies of the final versions
of such material definitive documents, (ii) at the time of incurring such Debt
(A) no Default has occurred and is then continuing and (B) no Default would
result from the incurrence of such Debt after giving effect to the incurrence of
such Debt (and any concurrent repayment of Debt with the proceeds of such
69
incurrence), (iii) the incurrence of such Debt (and any concurrent repayment of
Debt with the proceeds of such incurrence) would not result in the total
Revolving Credit Exposure exceeding the Borrowing Base then in effect, (iv) such
Debt does not have any scheduled amortization prior to four years after the
Maturity Date, (v) such Debt does not mature sooner than four years after the
Maturity Date, (vi) such Debt and any guarantees thereof are subordinated on
terms satisfactory to the Administrative Agent and the Super-Majority Lenders,
and (vii) prior to the incurrence of such Debt, the Super-Majority Lenders shall
have the right to adjust the amount of the Borrowing Base to reflect the
incurrence of such Debt utilizing the most recently delivered Reserve Reports,
and in no event shall the Borrower incur such Debt until the Borrowing Base has
been so adjusted or the Borrower has received a written notice from the
Administrative Agent notifying the Borrower that the Super-Majority Lenders have
elected not to adjust the Borrowing Base.
(j) other Debt not to exceed $5,000,000 in the aggregate at
any one time outstanding.
Section 9.03 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens securing Capital Leases permitted by Section 9.02(d)
but only on the Property under lease.
(d) Liens on Letters of Credit issued hereunder pledged to
secure obligations under any Swap Agreement permitted by Section 9.18 in an
aggregate amount at any time not to exceed $10,000,000.
(e) Liens on Property not constituting collateral for the
Indebtedness and not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this Section 9.03(e) shall not exceed $500,000 at any time.
Section 9.04 Restricted Payments; Redemption of Subordinated Debt.
(a) Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders or make any distribution of its Property to its Equity Interest
holders, except (i) the Borrower may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock), (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests and (iii) so long as no
Event of Default has occurred and is continuing, the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries.
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(b) Redemption of Subordinated Debt. The Borrower will not,
and will not permit any Subsidiary to, prior to the date that is one year after
the Maturity Date: (i) call, make or offer to make any optional or voluntary
Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or
in part) the Convertible Note or any subordinated Debt permitted to be incurred
hereunder, provided that the Borrower may Redeem the Convertible Note by
conversion into Equity Interests of the Borrower (other than Disqualified
Capital Stock); (ii) amend, modify, waive or otherwise change, consent or agree
to any amendment, modification, waiver or other change to, any of the terms of
the Convertible Note or any notes evidencing any subordinated Debt permitted
hereunder or any indenture, agreement, instrument, certificate or other document
relating to the Convertible Note or any subordinated Debt permitted hereunder;
or (iii) designate any Debt (other than obligations of the Borrower and the
Subsidiaries pursuant to the Loan Documents) as "Specified Senior Indebtedness"
or "Specified Guarantor Senior Indebtedness" or give any such other Debt any
other similar designation for the purposes of any indentures or other documents
relating to any subordinated Debt permitted hereunder.
Section 9.05 Investments, Loans and Advances. The Borrower will not,
and will not permit any Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
(a) Investments reflected in the Financial Statements or which
are disclosed to the Lenders in Schedule 9.05.
(b) accounts receivable arising in the ordinary course of
business.
(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof,
in each case maturing within one year from the date of creation thereof. (d)
commercial paper maturing within one year from the date of creation thereof
rated no lower than A2 or P2 by S&P or Xxxxx'x, respectively.
(e) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any Lender
or any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000 (as of
the date of such bank or trust company's most recent financial reports) and has
a short term deposit rating of no lower than A2 or P2, as such rating is set
forth from time to time, by S&P or Xxxxx'x, respectively or, in the case of any
Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign
Subsidiary conducts operations having assets in excess of $500,000,000 (or its
equivalent in another currency).
(f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
(g) Investments (i) made by the Borrower in or to the
Guarantors, (ii) made by any Subsidiary in or to the Borrower or any Guarantor;
(iii) made by the Borrower or any Subsidiary in or to any Domestic Subsidiary
that is not a Guarantor plus amounts invested under Section 9.05(i) in an
aggregate amount at any one time outstanding not to exceed $5,000,000,
71
and (iv) made by the Borrower or any Subsidiary in or to any Foreign Subsidiary
in an aggregate amount at any one time outstanding not to exceed $500,000.
(h) subject to the limits in Section 9.06, Investments
(including, without limitation, capital contributions), other than Investments
described in Section 9.05(i), in general or limited partnerships or other types
of entities or joint ventures (each a "Venture") entered into by the Borrower or
a Subsidiary with others for the purpose of constructing and operating gathering
and pipeline systems, treatment facilities, compression facilities and other
related facilities for the treatment, transportation or storage of Hydrocarbons
on the Borrower's Oil and Gas Properties; provided that such Venture interests
acquired and capital contributions made (valued as of the date such interest was
acquired or the contribution made) do not exceed, in the aggregate at any time
outstanding, an amount equal to $10,000,000.
(i) subject to the limits in Section 9.06, Investments
(including, without limitation, capital contributions), other than Investments
described in Section 9.05(h), in Ventures entered into by the Borrower or a
Subsidiary with others in the ordinary course of business; provided that (i) any
such Venture is engaged exclusively in oil and gas exploration, development,
production, processing and related activities, including transportation, (ii)
the interest in such Venture is acquired in the ordinary course of business and
on fair and reasonable terms and (iii) such Venture interests acquired and
capital contributions made (valued as of the date such interest was acquired or
the contribution made) do not exceed, in the aggregate at any time outstanding
an amount equal to $5,000,000.
(j) subject to the limits in Section 9.06, Investments in
direct ownership interests in additional Oil and Gas Properties and gas
gathering systems related thereto or related to farm-out, farm-in, joint
operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar arrangements which are usual and customary
in the oil and gas exploration and production business located within the
geographic boundaries of the United States of America.
(k) entry into operating agreements, working interests,
royalty interests, mineral leases, processing agreements, farm-out agreements,
contracts for the sale, transportation or exchange of oil and natural gas,
unitization agreements, pooling arrangements, area of mutual interest
agreements, production sharing agreements or other similar or customary
agreements, transactions, properties, interests or arrangements, and Investments
and expenditures in connection therewith or pursuant thereto, in each case made
or entered into in the ordinary course of the oil and gas business, excluding,
however, Investments in other Persons; provided, however, that none of the
foregoing shall involve the incurrence of any Debt not permitted by Section
9.02.
(l) loans and advances to directors, officers and employees
permitted by applicable law not to exceed $1,000,000 in the aggregate at any
time.
(m) Investments in stock, obligations or securities received
in settlement of debts arising from Investments permitted under this Section
9.05 owing to the Borrower or any Subsidiary as a result of a bankruptcy or
other insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its
72
Subsidiaries; provided that the Borrower shall give the Administrative Agent
prompt written notice in the event that the aggregate amount of all investments
held at any one time under this Section 9.05(m) exceeds $5,000,000.
(n) other Investments not to exceed $5,000,000 in the
aggregate at any time.
Section 9.06 Nature of Business; International Operations; Foreign
Subsidiaries. Neither the Borrower nor any Subsidiary will allow any material
change to be made in the character of its business as an independent oil and gas
exploration and production company. From and after the date hereof, the Borrower
and its Subsidiaries will not acquire or make any other expenditure (whether
such expenditure is capital, operating or otherwise) in or related to, any Oil
and Gas Properties not located within the geographical boundaries of the United
States and Canada.
Section 9.07 Limitation on Leases. Neither the Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal but
excluding Capital Leases and leases of Hydrocarbon Interests), under leases or
lease agreements which would cause the aggregate amount of all payments made by
the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $5,000,000 in any period of twelve consecutive calendar
months during the life of such leases.
Section 9.08 Proceeds of Notes. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.22. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. If requested by the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.
Section 9.09 ERISA Compliance. The Borrower and the Subsidiaries will
not at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code, if either of which would have a Material Adverse
Effect.
(b) terminate, or permit any ERISA Affiliate to terminate, any
Plan in a manner, or take any other action with respect to any Plan, which could
reasonably be expected to result in any liability of the Borrower, a Subsidiary
or any ERISA Affiliate to the PBGC.
73
(c) fail to make, or permit any ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary
or any ERISA Affiliate is required to pay as contributions thereto if such
failure could reasonably be expected to have a Material Adverse Effect.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan which exceeds $2,000,000.
(e) permit, or allow any ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained by
the Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title
IV of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
(g) acquire, or permit any ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate with
respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate
of the Borrower or a Subsidiary if such Person sponsors, maintains or
contributes to, or at any time in the six-year period preceding such acquisition
has sponsored, maintained, or contributed to, (1) any Multiemployer Plan, or (2)
any other Plan that is subject to Title IV of ERISA under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities by any
amount in excess of $2,000,000.
(h) incur, or permit any ERISA Affiliate to incur, a liability
to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in a material increase in current liability such that the Borrower, a
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Subsidiary out of the ordinary course of
business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with
74
any financing transaction, neither the Borrower nor any Subsidiary will discount
or sell (with or without recourse) to any other Person that is not the Borrower
or a Guarantor any of its notes receivable or accounts receivable.
Section 9.11 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property to any other Person (any such
transaction, a "consolidation"); provided that:
(a) any Subsidiary may participate in a consolidation with the
Borrower (provided that the Borrower shall be the continuing or surviving
Person) or any other Subsidiary that is a Domestic Subsidiary (provided that if
one of such parties to the consolidation is a Foreign Subsidiary, such Domestic
Subsidiary shall be the continuing or surviving Person) or with any Guarantor
(provided that the surviving Person is a Guarantor or becomes a Guarantor under
Section 8.14(b)), and if one of such Subsidiaries is a Wholly-Owned Subsidiary,
then the surviving Person shall be a Wholly-Owned Subsidiary; and
(b) any Foreign Subsidiary of the Borrower may participate in
a consolidation with any one or more Foreign Subsidiaries; provided that if one
of such Foreign Subsidiaries is a Wholly-Owned Subsidiary, the survivor shall be
a Wholly-Owned Subsidiary.
Section 9.12 Sale of Properties. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer
any Property except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in connection with
such farmouts; (c) the sale or transfer of equipment that is no longer necessary
for the business of the Borrower or such Subsidiary or is replaced by equipment
of at least comparable value and use; (d) the sale or other disposition
(including Casualty Events) of any Oil and Gas Property or any interest therein
or any Subsidiary owning Oil and Gas Properties; provided that (i) 100% of the
consideration received in respect of such sale or other disposition shall be
cash, (ii) the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or Subsidiary subject of such sale or other
disposition (as reasonably determined by the board of directors of the Borrower
and, if requested by the Administrative Agent, the Borrower shall deliver a
certificate of a Responsible Officer of the Borrower certifying to that effect),
(iii) if such sale or other disposition of Oil and Gas Property or Subsidiary
owning Oil and Gas Properties included in the most recently delivered Reserve
Report during any period between two successive Scheduled Redetermination Dates
has a fair market value prior to the Tranche B Termination Date in excess of
$5,000,000, or after the Tranche B Termination Date in excess of $10,000,000 (in
each case, as reasonably determined by the Super-Majority Lenders), individually
or in the aggregate, the Borrowing Base (and prior to the Tranche B Termination
Date, the Tranche A Portion and the Present Value)shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if
any, assigned such Property in the most recently delivered Reserve Report and
(iv) if any such sale or other disposition is of a Subsidiary owning Oil and Gas
Properties, such sale or other disposition shall include all the Equity
Interests of such Subsidiary; and (e) sales and other dispositions of Properties
not regulated by Section 9.12(a) to (e) having a fair market value not to exceed
$2,000,000 during any 6-month period.
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Section 9.13 Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any applicable Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.
Section 9.14 Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate (other than the Guarantors and
Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.15 Subsidiaries. The Borrower shall not, and shall not permit
any Subsidiary to, create or acquire any additional Subsidiary unless the
Borrower gives written notice to the Administrative Agent of such creation or
acquisition and complies with Section 8.14(b) and Section 8.14(c). The Borrower
shall not, and shall not permit any Subsidiary to, sell, assign or otherwise
dispose of any Equity Interests in any Subsidiary except in compliance with
Section 9.12(d) or (e). Neither the Borrower nor any Subsidiary shall have any
Foreign Subsidiaries other than Subsidiaries formed under the laws of Canada.
Section 9.16 Negative Pledge Agreements; Dividend Restrictions. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any contract, agreement or understanding which in any way
prohibits or restricts the granting, conveying, creation or imposition of any
Lien on any of its Property in favor of the Administrative Agent and the Lenders
or restricts any Subsidiary from paying dividends or making distributions to the
Borrower or any Guarantor, or which requires the consent of or notice to other
Persons in connection therewith; provided, however, that the preceding
restrictions will not apply to encumbrances or restrictions arising under or by
reason of (a) this Agreement or the Security Instruments, (b) any leases or
licenses or similar contracts as they affect any Property or Lien subject to a
lease or license, (c) any contract, agreement or understanding creating Liens on
Capital Leases permitted by Section 9.03(c) (but only to the extent related to
the Property on which such Liens were created), (d) any restriction with respect
to a Subsidiary imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the equity or Property
of such Subsidiary (or the Property that is subject to such restriction) pending
the closing of such sale or disposition, or (e) customary provisions with
respect to the distribution of Property in joint venture agreements.
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not allow gas imbalances, take-or-pay or other prepayments with
respect to the Oil and Gas Properties of the Borrower or any Subsidiary that
would require the Borrower or such Subsidiary to deliver Hydrocarbons at some
future time without then or thereafter receiving full payment therefor to exceed
one (1.0) bcf of gas (on an mcf equivalent basis) in the aggregate.
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Section 9.18 Swap Agreements. The Borrower will not, and will not
permit any Subsidiary to, enter into any Swap Agreements with any Person other
than (a) Swap Agreements in respect of commodities (i) with an Approved
Counterparty and (ii) the notional volumes for which (when aggregated with other
commodity Swap Agreements then in effect other than basis differential swaps on
volumes already hedged pursuant to other Swap Agreements) do not exceed, as of
the date such Swap Agreement is executed, 85% of the reasonably anticipated
projected production from proved, developed, producing Oil and Gas Properties
(such projections to be adjusted as follows: (A) Oil and Gas Properties
evaluated in the most recently delivered Reserve Report shall reflect the actual
historical decline profile of such Oil and Gas Properties and (B) Oil and Gas
Properties not evaluated in the most recently delivered Reserve Report shall
reflect a reasonable decline profile based upon actual historical decline
profiles of similar or analogous Oil and Gas Properties) for each month during
the period during which such Swap Agreement is in effect for each of crude oil
and natural gas, calculated separately and (b) Swap Agreements in respect of
interest rates with an Approved Counterparty, as follows: (i) Swap Agreements
effectively converting interest rates from fixed to floating, the notional
amounts of which (when aggregated with all other Swap Agreements of the Borrower
and its Subsidiaries then in effect effectively converting interest rates from
fixed to floating) do not exceed 50% of the then outstanding principal amount of
the Borrower's Debt for borrowed money which bears interest at a fixed rate and
(ii) Swap Agreements effectively converting interest rates from floating to
fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed 75% of the then
outstanding principal amount of the Borrower's Debt for borrowed money which
bears interest at a floating rate. In no event shall any Swap Agreement contain
any requirement, agreement or covenant for the Borrower or any Subsidiary to
post collateral or margin to secure their obligations under such Swap Agreement
or to cover market exposures except to the extent permitted by Section 9.03(d).
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following events
shall constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for payment or prepayment thereof or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in Section
10.01(a)) payable under any Loan Document, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of three
Business Days.
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any
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Loan Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect when made or deemed made.
(d) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.01(h),
Section 8.01(l), Section 8.02, Section 8.03, Section 8.12, Section 8.15 or in
ARTICLE IX.
(e) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after the earlier to occur of (A) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary
otherwise becoming aware of such default. (f) the Borrower or any Subsidiary
shall fail to make any payment (whether of principal or interest and regardless
of amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Subsidiary to make an
offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 30 days or an order or decree approving or ordering any of the
foregoing shall be entered.
(i) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary or for a substantial part
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing.
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(j) the Borrower or any Subsidiary shall become unable, admit
in writing its inability, or fail generally to pay its debts as they become due.
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $2,000,000 (to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) shall be rendered
against the Borrower, any Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment.
(l) the Loan Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto or shall be repudiated,
or cease to create a valid and perfected Lien of the priority required thereby
on any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower or any Subsidiary or
any of their Affiliates shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of
the Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding (i) $1,000,000 in any year
or (ii) $2,000,000 for all periods.
(n) a Change in Control shall occur.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one
described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time
thereafter during the continuance of such Event of Default, the Administrative
Agent may, and at the request of the Majority Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Notes and the Loans then outstanding
to be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower and the Guarantors accrued hereunder and under the
Notes and the other Loan Documents (including, without limitation, the payment
of cash collateral to secure the LC Exposure as provided in Section 2.08(j)),
shall become due and payable immediately, without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby waived by the Borrower and each Guarantor; and in
case of an Event of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and the Notes
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and the other obligations of the Borrower and the
Guarantors accrued hereunder and under the Notes and the
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other Loan Documents (including, without limitation, the payment of cash
collateral to secure the LC Exposure as provided in Section 2.08(j)), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
(c) All proceeds realized from the liquidation or other
disposition of collateral or otherwise received after maturity of the Notes,
whether by acceleration or otherwise, shall be applied: first, to reimbursement
of expenses and indemnities provided for in this Agreement and the Security
Instruments; second, to accrued interest on the Notes; third, to fees; fourth,
pro rata to principal outstanding on the Notes and Indebtedness referred to in
Clause (b) of the definition of Indebtedness owing to a Lender or an Affiliate
of a Lender; fifth, to any other Indebtedness; sixth, to serve as cash
collateral to be held by the Administrative Agent to secure the LC Exposure; and
any excess shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.
ARTICLE XI
THE AGENTS
Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing
Bank hereby irrevocably (subject to Section 11.06) appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof and the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
receipt of items expressly
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required to be delivered to the Administrative Agent or as to those conditions
precedent specifically required to be to the Administrative Agent's
satisfaction, (vi) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower and its
Subsidiaries or any other obligor or guarantor, or (vii) any failure by the
Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein.
Section 11.03 Action by Administrative Agent. The Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) and in all cases the Administrative Agent shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, then the Administrative Agent shall take
such action with respect to such Default as shall be directed by the requisite
Lenders in the written instructions (with indemnities) described in this Section
11.03, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Lenders.
In no event, however, shall the Administrative Agent be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. If a Default
has occurred and is continuing, neither the Syndication Agents nor the
Documentation Agent shall have any obligation to perform any act in respect
thereof. No Agent shall be liable for any action taken or not taken by it with
the consent or at the request of the Majority Lenders or the Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise no Agent shall be
liable for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.
Section 11.04 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon and each of
the Borrower, the Lenders and each Issuing Bank hereby waives the right to
dispute the Administrative Agent's record of such statement, except in the case
of gross negligence or willful misconduct by the
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Administrative Agent. The Administrative Agent may consult with legal counsel
(who may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts. The
Agents may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Administrative Agent.
Section 11.05 Subagents. The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent in good faith after due
inquiry. The Administrative Agent and any such sub-agent may perform any and all
its duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of the preceding Sections of this ARTICLE XI
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Section 11.06 Resignation or Removal of Agents. Subject to the
appointment and acceptance of a successor Agent as provided in this Section
11.06, any Agent may resign at any time by notifying the Lenders, each Issuing
Bank and the Borrower, and any Agent may be removed at any time with or without
cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right, in consultation with and upon the
approval of the Borrower (so long as no Event of Default has occurred and is
continuing), which approval shall not be unreasonably withheld, to appoint a
successor. If no successor shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation or removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders and each Issuing Bank, appoint a
successor Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Section 11.07 Agents as Lenders. Each bank serving as an Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis
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and decision to enter into this Agreement and each other Loan Document to which
it is a party. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent, any other Agent or any other
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related
agreement or any document furnished hereunder or thereunder. The Agents shall
not be required to keep themselves informed as to the performance or observance
by the Borrower or any of its Subsidiaries of this Agreement, the Loan Documents
or any other document referred to or provided for herein or to inspect the
Properties or books of the Borrower or its Subsidiaries. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent hereunder, no Agent or the Arranger
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of such
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Xxxxxx & Xxxxxx L.L.P. is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection
with the Loan Documents and the matters contemplated therein.
Section 11.09 Authority of Administrative Agent to Release Collateral
and Liens. Each Lender and each Issuing Bank hereby authorizes the
Administrative Agent to release any collateral that is permitted to be sold or
released pursuant to the terms of the Loan Documents. Each Lender and each
Issuing Bank hereby authorizes the Administrative Agent to execute and deliver
to the Borrower, at the Borrower's sole cost and expense, any and all releases
of Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.12 or is otherwise authorized by the terms of the Loan Documents.
Section 11.10 The Arranger, the Syndication Agents and the
Documentation Agent. The Arranger, the Syndication Agents and the Documentation
Agent shall have no duties, responsibilities or liabilities under this Agreement
and the other Loan Documents other than their duties, responsibilities and
liabilities in their capacity as Lenders hereunder.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices.
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to Section 12.01(b)),
all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at 0000 00xx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention of Xxxxxx X. Xxxxx, Xx., Chief
Financial Officer (Telecopy No. (303)
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291-0420), with a copy to the attention of Xxxxxxx Xxxxxx, Senior Vice
President-General Counsel (Telecopy No. (000) 000-0000) and to Xxxxxx Xxxxx LLP,
0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention of Xxxx
Xxxxxxxxx, Esq. (Telecopy No. (000) 000-0000);
(ii) if to the Administrative Agent, to it at One
Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Loan
and Agency Services, Xxxxxxx Xxxxxxx (Telecopy No. (000) 000-0000), with a copy
to 000 Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention of June Brand
(Telecopy No. (000) 000-0000, and for all other correspondence other than
borrowings, continuation, conversion and Letter of Credit requests 000 Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention of Xxxxxx X. Xxxxxxxxxxx (Telecopy
No. (000) 000-0000); and
(iii) if to any other Lender, in its capacity as
such, or any other Lender in its capacity as an Issuing Bank, to it at its
address (or telecopy number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder
may be delivered or furnished by electronic communications pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and
ARTICLE V unless otherwise agreed by the Administrative Agent and the applicable
Lender. The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number
for notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any
Issuing Bank or any Lender to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Administrative
Agent, each Issuing Bank and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section
12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the
84
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any
Security Instrument nor any provision thereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Borrower and the Majority Lenders or by the Borrower and the Administrative
Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Maximum Credit Amount of any Lender without the written
consent of such Lender, (ii) increase the Borrowing Base and the Tranche A
Portion of the Borrowing Base without the written consent of the Required
Lenders, decrease or maintain the Borrowing Base and the Tranche A Portion of
the Borrowing Base without the consent of the Super-Majority Lenders, or modify
Section 2.07 without the consent of each Lender, (iii) increase the Tranche B
Portion of the Borrowing Base in excess of $50,000,000 without the written
consent of each Lender, (iv) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby, (v)
postpone the scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or any
other Indebtedness hereunder or under any other Loan Document, or reduce the
amount of, waive or excuse any such payment, or postpone or extend the
Termination Date or the Tranche B Termination Date without the written consent
of each Lender affected thereby, (vi) change Section 4.01(b) or Section 4.01(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vii) waive or amend Section 8.14 or
change the definition of the terms "Domestic Subsidiary", "Foreign Subsidiary"
or "Subsidiary", without the written consent of each Lender, (viii) release any
Guarantor (except as set forth in the Guaranty Agreement), release any of the
collateral (other than as provided in Section 11.09), or reduce the percentage
set forth in Section 8.14(a) to less than 85%, without the written consent of
each Lender, or (ix) change any of the provisions of this Section 12.02(b) or
the definitions of "Required Lenders", "Super-Majority Lenders" or "Majority
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any
other Loan Documents or make any determination or grant any consent hereunder or
any other Loan Documents, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, any other Agent or any Issuing
Bank hereunder or under any other Loan Document without the prior written
consent of the Administrative Agent, such other Agent or such Issuing Bank, as
the case may be. Notwithstanding the foregoing, any supplement to Schedule 7.15
(Subsidiaries) shall be effective simply by delivering to the Administrative
Agent a supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of counsel
and other outside consultants for the Administrative Agent, the reasonable
travel, photocopy, mailing, courier, telephone and other similar expenses, and
the cost of environmental audits and surveys and appraisals, in connection with
the
85
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by any Agent or any Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any Security Instrument or any other document referred to
therein, (iii) all reasonable out-of-pocket expenses incurred by each Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit issued by such Issuing Bank or any demand for payment
thereunder, (iv) all out-of-pocket expenses incurred by any Agent, any Issuing
Bank or any Lender, including the fees, charges and disbursements of any counsel
for any Agent, any Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY EACH AGENT, EACH ISSUING BANK
AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH
SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE
HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY
INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE
TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY
WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE
LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY ANY
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT ISSUED BY
SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO
NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT
OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN
CONNECTION
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THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF
THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS
SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE
THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR
PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE,
RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL
OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY
SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF
THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY,
(xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION,
THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR
DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR
AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR
ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS
SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH
INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR
AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to any Agent or any Issuing Bank under Section
12.03(a) or (b), each Lender severally agrees to pay to such Agent or such
Issuing Bank, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
87
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against such Agent or such Issuing Bank in
its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
(f) Notwithstanding any other provisions of this Section
12.03, no transfer or assignment of the interests or obligations of any Lender
or any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower and the Guarantors to file a
registration statement with the SEC or to qualify the Loans under the "Blue Sky"
laws of any state.
Section 12.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of any Issuing Bank that
issues any Letter of Credit), except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 12.04. Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in Section 12.04(c)) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
each Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section
12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent
of the Borrower shall be required for an assignment to a Lender, an Affiliate of
a Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee; and
(B) the Administrative Agent, provided that
no consent of the Administrative Agent shall be required for an assignment to an
assignee that is a Lender immediately prior to giving effect to such assignment.
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(ii) Assignments shall be subject to the following
additional conditions:
(A) any assignment of Loans and Commitments
while any Tranche B Loans are outstanding must be ratable among Tranche A Loans
and Tranche B Loans and the Tranche A Portion and the Tranche B Portion;
(B) except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000, and the Commitments of
any assigning Lender remaining a party hereto after giving effect to the
assignment shall be at least $5,000,000, unless, in each case, each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
(C) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
(D) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500;
(E) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and shall deliver notice of the Assignment and Assumption to the
Borrower; and
(F) in the case of an assignment to a CLO,
the assigning Lender shall retain the sole right to approve any amendment,
modification or waiver of any provision of this Agreement, provided that the
Assignment and Assumption between such Lender and such CLO may provide that such
Lender will not, without the consent of such CLO, agree to any amendment,
modification or waiver described in the first proviso to Section 12.02 that
affects such CLO.
(iii) Subject to Section 12.04(b)(iv) and the
acceptance and recording thereof, from and after the effective date specified in
each Assignment and Assumption the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 12.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 12.04(c).
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(iv) The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Maximum Credit
Amount of, and principal amount of the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, each Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, any
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice. In connection with any changes to the Register, if
necessary, the Administrative Agent will reflect the revisions on Annex I and
forward a copy of such revised Annex I to the Borrower, each Issuing Bank and
each Lender.
(v) Upon its receipt of a duly completed Assignment
and Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower,
the Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, each Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to Section
12.02 that affects such Participant. In addition such agreement must provide
that the Participant be bound by the provisions of Section 12.03. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.
(ii) A Participant shall not be entitled to receive
any greater payment under Section 5.01 or Section 5.03 than the applicable
Lender would have been entitled to
90
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 5.03 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as
though it were a Lender.
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
Section 12.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties
made by the Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any other Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or
proceeds of any collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Indebtedness so satisfied shall
be revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
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indemnify such persons against all expenses, judgments fines and penalties
incurred in connection with the defense or settlement of any actions brought
against them by reason of the fact that they were directors or officers of
Mobility or assumed certain responsibilities at the direction of Mobility.
Commission Position on Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, Mobility has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Mobility of expenses incurred or paid by
a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(a) This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.
(b) This Agreement, the other Loan Documents and any separate
letter agreements with respect to fees payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof. This Agreement and the other Loan Documents represent the final
agreement among the parties hereto and thereto and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
(c) Except as provided in Section 6.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
Section 12.07 Severability. Any provision of this Agreement or any
other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
Section 12.08 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations (of
whatsoever kind, including, without limitations obligations under Swap
Agreements) at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower or any Subsidiary against any of and all the
obligations of the Borrower or any Subsidiary owed to such Lender now or
hereafter existing under this Agreement or any other Loan Document, irrespective
of whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE
EXTENT THAT UNITED STATES FEDERAL LAW PERMITS
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ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE
RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS
SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.
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Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Administrative Agent, each
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations (including rules and
regulations of self-regulatory bodies) or by any subpoena or similar legal
process, (d) to any other party to this Agreement or any other Loan Document,
(e) in connection with the exercise of any remedies hereunder or under any other
Loan Document or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 12.11, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any Swap Agreement relating to the Borrower and its obligations,
(g) with the consent of the Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
12.11 or (ii) becomes available to the Administrative Agent, any Issuing Bank or
any Lender on a nonconfidential basis from a source other than the Borrower. For
the purposes of this Section 12.11, "Information" means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
and their businesses, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or a Subsidiary; provided that, in the case
of information received from the Borrower or any Subsidiary after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section 12.11 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the
parties hereto that each Lender shall conform strictly to usury laws applicable
to it. Accordingly, if the transactions contemplated hereby would be usurious as
to any Lender under laws applicable to it (including the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by such Lender on the principal amount
of the Indebtedness (or, to the extent that the principal
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amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower); and (ii) in the event that the
maturity of the Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Lender may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12. To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in effect.
Chapter 346 of the Texas Finance Code does not apply to the Borrower's
obligations hereunder.
Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT
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AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR
KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."
Section 12.14 No Third Party Beneficiaries. This Agreement, the other
Loan Documents, and the agreement of the Lenders to make Loans and each Issuing
Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for
the benefit of the Borrower, and no other Person (including, without limitation,
any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier
or materialman) shall have any rights, claims, remedies or privileges hereunder
or under any other Loan Document against the Administrative Agent, any other
Agent, any Issuing Bank or any Lender for any reason whatsoever. There are no
third party beneficiaries.
Section 12.15 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
[SIGNATURES BEGIN NEXT PAGE]
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The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: XXXX XXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chief Financial Officer
[Signature Page- Credit Agreement]
1
ADMINISTRATIVE AGENT: JPMORGAN CHASE BANK,
as a Lender and as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxxxx, Managing Director
[Signature Page- Credit Agreement]
2
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
AGGREGATE MAXIMUM CREDIT AMOUNTS
NAME OF LENDER APPLICABLE PERCENTAGE MAXIMUM CREDIT AMOUNT
-------------- --------------------- ---------------------
JPMorgan Chase Bank 12% $ 24,000,000.00
Fleet National Bank 12% $ 24,000,000.00
U.S. Bank National Association 12% $ 24,000,000.00
Xxxxxx Xxxxxxx Financing, Inc. 12% $ 24,000,000.00
Royal Bank of Canada 12% $ 24,000,000.00
Bank One, NA 10.75% $ 21,500,000.00
Wachovia Bank, National Association 10.75% $ 21,500,000.00
Comerica Bank 9.25% $ 18,500,000.00
Deutsche Bank Trust Company Americas 9.25% $ 18,500,000.00
TOTAL 100.00% $200,000,000.00
Annex I-1
