AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
ENERGY CORPORATION OF AMERICA,
A WEST VIRGINIA CORPORATION
AS BORROWER,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JUNE 10, 2004
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION . . . . . . . 1
2. LOAN AND TERMS OF PAYMENT. . . . . . . . . 27
3. CONDITIONS; TERMS OF AGREEMENT . . . . . . 49
4. INTENTIONALLY DELETED. . . . . . . . . . . 53
5. REPRESENTATIONS AND WARRANTIES . . . . . . 54
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . 60
7. NEGATIVE COVENANTS . . . . . . . . . . . . 70
8. EVENTS OF DEFAULT. . . . . . . . . . . . . 75
9. THE LENDER GROUP'S RIGHTS AND REMEDIES . . 77
10. TAXES AND EXPENSES . . . . . . . . . . . . 78
11. WAIVERS; INDEMNIFICATION . . . . . . . . . 78
12. NOTICES. . . . . . . . . . . . . . . . . . 79
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 80
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS 81
15. AMENDMENTS; WAIVERS. . . . . . . . . . . . 83
16. AGENT; THE LENDER GROUP. . . . . . . . . . 85
17 GENERAL PROVISIONS . . . . . . . . . . . . 93
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EXHIBITS AND SCHEDULES
Exhibit A-1 . . . . . . . . Form of Assignment and Acceptance
Exhibit C-1 . . . . . . . . Form of Compliance Certificate
Exhibit I-1 . . . . . . . . Form of Indenture Compliance Certificate
Exhibit L-1 . . . . . . . . Form of LIBOR Notice
Schedule C-1. . . . . . . . Commitments
Schedule D-1. . . . . . . . Designated Account
Schedule L-1. . . . . . . . Agent's Account
Schedule P-1. . . . . . . . Partnerships
Schedule 2.7(a) . . . . . . Cash Management Banks
Schedule 5.1(a) . . . . . . Borrowing Base Properties
Schedule 5.1(b) . . . . . . Material Contracts
Schedule 5.7. . . . . . . . Chief Executive Office; FEIN
Schedule 5.8(b) . . . . . . Capitalization of Borrower
Schedule 5.8(c) . . . . . . Capitalization of Borrower's Subsidiaries
Schedule 5.10 . . . . . . . Litigation
Schedule 5.14 . . . . . . . Environmental Matters
Schedule 5.16 . . . . . . . Intellectual Property
Schedule 5.18 . . . . . . . Demand Deposit Accounts
Schedule 5.20 . . . . . . . Permitted Indebtedness
Schedule 5.22 . . . . . . . Taxes
Schedule 5.23 . . . . . . . Insurance
Schedule 5.25 . . . . . . . Claims and Liabilities
Schedule 5.26(b). . . . . . Cumulative Imbalances in Gas Production
and "Take or Pay" Payments
Schedule 5.27 . . . . . . . Non-Pledging Subsidiary Operators
Schedule 5.28 . . . . . . . Hedging Agreements
Schedule 5.32 . . . . . . . Defaulted Indenture Documents
Schedule 6.2(c) . . . . . . Total Value of Total Proved Developed
Producing Preserves
Schedule 7.2. . . . . . . . Liens
Schedule 7.13 . . . . . . . Existing Investments
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AMENDED AND RESTATED CREDIT AGREEMENT
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THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT"), is entered
into as of June 10, 2004, between and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "LENDER" and collectively as the "LENDERS"), XXXXX FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
("AGENT"), and, on the other hand, ENERGY CORPORATION OF AMERICA, a West
Virginia corporation ("BORROWER").
RECITALS
A. Borrower and Agent (formerly known as Foothill Capital Corporation) and
certain lenders identified therein are party to that certain Credit
Agreement dated as of July 10, 2002 (as the same has been amended, modified
or supplemented, the "PRIOR CREDIT AGREEMENT") pursuant to which Agent and
Lenders extended Borrower a revolving credit facility of up to
$50,000,000.00.
B. Borrower has requested that the revolving credit facility for
$50,000,000.00 be extended and that the Lender Group extend Borrower
additional credit in the form of a single advance term loan in the
principal amount of $50,000,000.00 thereby increasing the Total Commitment
of the Lender Group from $50,000,000 to $100,000,000.
C. As a result of the foregoing, and in consideration of the premises herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree to amend and restate the Prior Credit Agreement
to read in its entirety as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
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the following definitions:
"A&W" means Allegheny & Western Energy Corporation, a West Virginia
corporation.
"ACCOUNT DEBTOR" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.
"ACCOUNTS" means all currently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower or any of
its Subsidiaries, arising from its partnership interests or other interests in
the Partnerships or from its membership interests or other interests in the LLC
or out of the sale or lease of goods, Hydrocarbons, or Oil and Gas Properties or
the rendition of services by Borrower or any of its Subsidiaries, irrespective
of whether earned by performance, and any and all credit insurance, guaranties
or security therefor.
"ACH TRANSACTIONS" means any cash management or related services (including
the Automated Clearing House processing of electronic funds transfers through
the direct Federal Reserve Fedline system) provided by Xxxxx Fargo or its
Affiliates for the account of Borrower or its Subsidiaries.
"ADVANCES" has the meaning set forth in SECTION 2.1(a).
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"AFFILIATE" means, as applied to any Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event, (a) any Person which owns directly or
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indirectly 11.5% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or
11.5% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed to control such
Person; (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person; and (c) each partnership or joint venture in
which a Person is a partner or joint venturer shall be deemed to be an Affiliate
of such Person.
"AGENT" means Foothill, solely in its capacity as agent for the Lenders
hereunder, and any successor thereto.
"AGENT'S ACCOUNT" means an account at a bank designated by Agent from time
to time as the account into which Borrower shall make all payments to Agent for
the benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Borrower and the Lender Group to the contrary, Agent's
Account shall be that certain deposit account bearing account number 323-266193
and maintained by Agent with The Chase Manhattan Bank, 4 New York Plaza, 15th
Floor, New York, New York 10004, ABA #000000000.
"AGENT ADVANCES" has the meaning set forth in SECTION 2.3(e)(i).
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"AGENT'S LIENS" means the Liens granted by Borrower and its Subsidiaries to
Agent for the benefit of the Lender Group under the Loan Documents.
"AGENT-RELATED PERSONS" means Agent together with its Affiliates, officers,
directors, employees, and agents.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"APPLICABLE MARGIN" means, on any day, and with respect to any Obligation,
the applicable per annum percentage set forth in the table shown below, based on
the average monthly Total Usage for the immediately preceding month:
Average Monthly
Total Usage. . . . . . . . . . . Base Rate Loans LIBOR Rate Loans
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0 to $50,000,000.00 . . . . . . 0.25% 2.25%
50,000,000.01 to $85,000,000.00 0.50% 2.50%
Greater than $85,000,000.00. . . 0.75% 2.75%
It is understood and agreed that for the period from and after the date of
the first Advance and the initial Term Loan until the date of the initial
calculation of average monthly Total Usage, the Applicable Margin shall be (a)
..50%, with respect to Base Rate Loans, and (b) 2.50% with respect to LIBOR Rate
Loans.
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"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of determination, an
amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to and including July 10, 2004, 2%
times the Maximum Loan Amount, (b) during the period of time from and including
July 11, 2004 up to and including July 10, 2005, 2% times the Maximum Loan
Amount, (c) during the period of time from and including July 11, 2005 up to and
including July 10, 2006, 1.5% times the Maximum Loan Amount, (d) during the
period of time from and including July 11, 2006 up to and including July 10,
2007, 1% times the Maximum Loan Amount, and (e) during the period of time from
and including July 11, 2007 up to and including July 10, 2008, 0.5% times the
Maximum Loan Amount.
"APPROVED ENGINEER" means Xxxxx Xxxxx Company Petroleum Consultants or any
other independent petroleum engineer satisfactory to Lender. "ASSIGNEE" has the
meaning set forth in SECTION 14.1(a).
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"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance Agreement
substantially in the form of EXHIBIT A-1.
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"AUTHORIZED PERSON" means any officer or other employee of Borrower.
"AVAILABILITY" means, as of any date of determination, if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrower is entitled to borrow as Advances under SECTION 2.1 (after
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giving effect to all then outstanding Obligations (other than Bank Products
Obligations) and all sublimits and reserves applicable hereunder).
"BANK PRODUCT" means any financial accommodation extended to Borrower or
its Subsidiaries by a Bank Product Provider (other than pursuant to this
Agreement) including: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) transactions
under Hedge Agreements.
"BANK PRODUCT AGREEMENTS" means the Hedging Agreements and cash management
service agreements entered into from time to time by Borrower, its Subsidiaries,
the Partnerships, and the LLC with a Bank Product Provider in connection with
the obtaining of any of the Bank Products.
"BANK PRODUCT OBLIGATIONS" means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Borrower, its
Subsidiaries, the Partnerships, and the LLC to any Bank Product Provider
pursuant to or evidenced by the Bank Product Agreements and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all such amounts that Borrower or any Subsidiary is obligated to
reimburse to Agent or any member of the Lender Group as a result of Agent or
such member of the Lender Group purchasing participations from, or executing
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to Borrower
or its Subsidiaries pursuant to the Bank Product Agreements.
"BANK PRODUCT PROVIDER" means Xxxxx Fargo or any of its Affiliates.
"BANK PRODUCT RESERVES" means, as of any date of determination, the amount
of reserves that Agent has established (based upon the Bank Product Provider's
reasonable determination of the credit exposure of Borrower and its Subsidiaries
in respect of then extant Bank Products) in respect of Bank Products then
provided or outstanding.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as in effect
from time to time.
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"BASE LIBOR RATE" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"BASE RATE" means, the rate of interest announced within Xxxxx Fargo at its
principal office in San Francisco as its "prime rate", with the understanding
that the "prime rate" is one of Xxxxx Fargo's base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Xxxxx Fargo may designate.
"BASE RATE LOAN" means the portion of the Advances or the Term Loan that
bears interest at a rate determined by reference to the Base Rate. "BASIS
DIFFERENTIAL" means, in the case of any Borrowing Base Properties, the
difference between the NYMEX futures contract prices and the sales prices at the
delivery point where the oil and gas, as the case may be, produced by such
Borrowing Base Property is sold.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in SECTION 3(35) of
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ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has
been an "employer" (as defined in SECTION 3(5) of ERISA) within the past six
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years.
"BOARD OF DIRECTORS" means the board of directors (or comparable managers)
of Borrower or any committee thereof duly authorized to act on behalf of the
board of directors (or comparable managers).
"BOOK NET WORTH" means, as of any date of determination, all amounts which,
in conformity with GAAP, would be included as shareholder equity on a
consolidated balance sheet of Borrower and its Subsidiaries.
"BOOKS" means all of Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower's and its Subsidiaries' Records relating to its or
their business operations or financial condition, and all of its and their goods
or general intangibles related to such information).
"BORROWER" has the meaning set forth in the preamble to this Agreement.
"BORROWER'S SECURITY AGREEMENT" means the Amended and Restated Security
Agreement executed by Borrower assigning to Agent, and granting Agent a security
interest in, the Intercompany Notes, in form, scope, and substance acceptable to
Agent.
"BORROWING" means a borrowing hereunder consisting of Advances (or term
loans, in the case of the Term Loan) made on the same day by the Lenders (or
Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by
Agent in the case of an Agent Advance.
"BORROWING BASE" has the meaning set forth in SECTION 2.1(a).
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"BORROWING BASE PROPERTIES" means the Mortgaged Properties and the Oil and
Gas Properties of the Partnerships and the LLC, including, without limitation,
the Oil and Gas Properties set forth on SCHEDULE 5.1(a).
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"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other day
on which national banks are authorized or required to close in the state of
Georgia, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" means, with respect to any Person for any period,
the aggregate of all expenditures by such Person and its Subsidiaries during
such period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed.
"CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means that portion of the obligations under
a Capital Lease that is required to be capitalized in accordance with GAAP.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("MOODY'S"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, and (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
either (i) issued by any bank organized under the laws of the United States or
any state thereof having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i)
any bank that satisfies the criteria described in CLAUSE (D) above, or (ii) any
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other bank organized under the laws of the United States or any state thereof so
long as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 2.7(a).
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"CASH MANAGEMENT AGREEMENTS" means the Cash Management Agreement executed
and delivered to Agent in connection with the Prior Credit Agreement.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION 2.7(a).
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"CERCLA" means the Comprehensive Environmental Response Corporation, and
Liability Act of 1980, 42 U.S.C. Section 9601, et. seq., as amended from time to
time.
"CHANGE OF CONTROL" means (a) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
10%, or more, of the Stock of Borrower having the right to vote for the election
of members of the Board of Directors, or (b) a majority of the members of the
Board of Directors do not constitute Continuing Directors, or (c) Borrower
ceases to own and control, directly or indirectly, 100% of the outstanding
capital Stock of each of the Pledging Subsidiaries.
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"CLOSING DATE" means the date of the making of the initial Advance or Term
Loan (or other extension of credit) hereunder or the date on which Agent sends
Borrower a written notice that each of the conditions precedent set forth in
SECTION 3.1 either have been satisfied or have been waived.
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"CLOSING DATE BUSINESS PLAN" means the set of Projections of Borrower and
its Subsidiaries for the last fiscal quarter of fiscal year 2004, and for the
fiscal year end of 2005, in form and substance (including as to scope and
underlying assumptions) satisfactory to Lender.
"CODE" means the Georgia Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory
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provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent's Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of Georgia, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.
"COLLATERAL" means all assets and interests in assets and proceeds thereof,
now owned or hereafter acquired by Borrower or its Subsidiaries in or upon which
a Lien is granted under any of the Loan Documents.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Borrower's or its Subsidiaries' Books, Equipment or Inventory, in each case,
in form and substance satisfactory to Agent.
"COLLECTIONS" means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrower and each of its Subsidiaries including,
its rights to distributions from the LLC and the Partnerships.
"COMMITMENT" means, with respect to each Lender, its Revolver Commitment,
its Term Loan Commitment, or its Total Commitment, as the context requires, and,
with respect to all Lenders, their Revolver Commitments, their Term Loan
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on SCHEDULE C-1 or on the signature page of the Assignment
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and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of SECTION 14.1.
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"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
EXHIBIT C-1 delivered by the president or chief financial officer of Borrower to
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Agent.
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors who
was a director (or comparable manager) of Borrower on the Closing Date, and (b)
any individual who becomes a member of the Board of Directors after the Closing
Date if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and
whose initial assumption of office resulted from such contest or the settlement
thereof.
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"CONTRIBUTION AGREEMENT" means the Amended and Restated Contribution and
Indemnification Agreement among Borrower and the Pledging Subsidiaries.
"CONTROL AGREEMENT" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the Borrower or any of its
Subsidiaries, Agent, and the applicable securities intermediary with respect to
a Securities Account or a bank with respect to a DDA.
"DAILY BALANCE" means, as of any date of determination and with respect to
any Obligation, the amount of such Obligation owed at the end of such day. "DDA"
means any checking or other demand deposit account maintained by Borrower or any
Subsidiary.
"DEFAULT" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any Advance or Term
Loan (or other extension of credit) that it is required to make hereunder on the
date that it is required to do so hereunder.
"DEFAULTING LENDER RATE" means (a) for the first 3 days from and after the
date the relevant payment is due, the Base Rate, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
"DESIGNATED ACCOUNT" means that certain DDA of Borrower identified on
SCHEDULE D-1.
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"DESIGNATED ACCOUNT BANK" means Xxxxxx Bank.
"DISBURSEMENT LETTER" means an instructional letter executed and delivered
by Borrower to Agent regarding the extensions of credit to be made on the
Closing Date, the form and substance of which is satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"EASTERN AMERICAN" means Eastern American Energy Corporation, a West
Virginia corporation.
"EBITDAX" means, with respect to any fiscal period, Borrower's and its
Subsidiaries' consolidated net earnings (or loss), as determined in accordance
with GAAP, minus extraordinary gains, plus extraordinary losses, minus gain on
sale of Permitted Dispositions, plus loss on sale of Permitted Dispositions,
plus interest expense, income taxes, depletion, depreciation and amortization,
exploration and impairment expense, and valuation losses that recognize changes
in the value of derivatives minus valuation gains that recognize changes in the
value of derivatives to the extent that such changes in the value of derivatives
were included in consolidated net earnings (or loss) plus cash received from
Permitted Dispositions to the extent that such cash is paid to Agent for
application to the Obligations.
"ELIGIBLE PROVED DEVELOPED PRODUCING RESERVES" means the Eligible Proved
Developed Producing Reserves of the Partnerships and the LLC and the Eligible
Proved Developed Producing Reserves of the Pledging Subsidiaries, the
Hydrocarbons from which are directly deliverable from the Xxxxx to the Gathering
System or to a transporter or buyer which is a non-Affiliate of Borrower or its
Subsidiaries.
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"ELIGIBLE PROVED DEVELOPED PRODUCING RESERVES OF THE PARTNERSHIPS AND THE
LLC" means the Proved Developed Producing Reserves of the Partnerships and the
LLC that (a) are identified on SCHEDULE 5.1(a), AND (b) comply in all material
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respects with each and all of the representations and warranties made by
Borrower to Agent in the Loan Documents. An item of Proved Developed Producing
Reserves of the Partnerships and the LLC shall not be included in Eligible
Proved Developed Producing Reserves of the Partnerships and the LLC if:
(i) the LLC or the applicable Partnership is not Solvent or subject to an
Insolvency Proceeding;
(ii) it is not owned by the LLC or the applicable Partnership, or the LLC or the
applicable Partnership does not have good, valid, and indefeasible title
thereto, or the title information relating thereto is not satisfactory;
(iii) Borrower and its Subsidiaries have not assigned to Agent and granted Agent
a first priority perfected security interest in and to their interests in
the LLC and the applicable Partnership and their share of monies,
distributions, profits and revenues from the LLC and the Partnership;
(iv) any consents or approvals required for Borrower or any of its Subsidiaries
to assign or grant a security interest in accordance with (iii) above have
not been obtained and delivered to Agent; or
(v) it is subject to a Lien in favor of a Person (other than Agent) or any
order, judgment, writ, or decree which either restricts or purports to
restrict the ability of the LLC or the applicable Partnership to grant
Liens to Persons on or in respect of its assets and properties; other than
Permitted Liens.
"ELIGIBLE PROVED DEVELOPED PRODUCING RESERVES OF THE PLEDGING SUBSIDIARIES"
means the Proved Developed Producing Reserves of the Pledging Subsidiaries that
(a) are subject to a duly executed and recorded Mortgage that creates a valid
and enforceable first priority perfected lien on and security interest in the
Oil and Gas Properties attributable thereto; (b) are identified on SCHEDULE
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5.1(a); and (c) comply in all material respects with each and all of the
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representations and warranties made by the Pledging Subsidiaries to Agent in the
Loan Documents. An item of Proved Developed Producing Reserves of the Pledging
Subsidiaries shall not be included in Eligible Proved Developed Producing
Reserves of the Pledging Subsidiaries if:
(i) the Pledging Subsidiary is not Solvent or subject to an Insolvency
Proceeding;
(ii) it is not owned by a Pledging Subsidiary or a Pledging Subsidiary does not
have good, valid, and indefeasible title thereto, or the title information
relating thereto is not satisfactory to Agent;
(iii) it is not subject to a valid, enforceable and perfected first priority
Lien and security interest in favor of Agent created by a duly executed and
recorded Mortgage;
(iv) any consents or approvals required for its valid transfer, assignment,
pledge or mortgage have not been obtained and delivered to Agent; or
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(v) it is subject to a Lien in favor of any third Person or any order,
judgment, writ, or decree which either restricts or purports to restrict
the ability of Borrower or a Pledging Subsidiary to grant Liens to other
Persons on or in respect of its respective assets or properties, other than
Permitted Liens.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrower, and
(f) during the continuation of an Event of Default, any other Person approved by
Agent.
"ENERGY BUSINESS" means (a) the acquisition, exploration, exploitation,
development, operation and disposition of interests in Oil and Gas Properties;
(b) the gathering, marketing, treating, processing, storage, selling and
transporting of any production from such interests or properties including,
without limitation, the marketing of Hydrocarbons obtained from third Persons;
(c) any business relating to or arising from exploration for or development,
production, treatment, processing, storage, transportation or marketing of
Hydrocarbons, including without limitation (i) the production of electricity or
other sources of power using oil, gas or other hydrocarbon products, and (ii)
providing services in support of or incidental to any such business or activity;
and (d) any activity that is ancillary or necessary or desirable to facilitate
the activities described in clauses (a) through (c) of this definition.
"ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials (a) from any assets, properties, or businesses
of Borrower or its Subsidiaries, or any predecessor in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by Borrower or its Subsidiaries, or any
predecessor in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 USC
9601 et seq.; the Resource Conservation and Recovery Act, 42 USC 6901 et seq.;
the Federal Water Pollution Control Act, 33 USC 1251 et seq.; the Toxic
Substances Control Act, 15 USC 2601 et seq.; the Clean Air Act, 42 USC 7401 et
seq.; the Safe Drinking Water Act, 42 USC 3803 et seq.; the Oil Pollution Act
of 1990, 33 USC 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC 1801 et seq.; and the Occupational Safety and Health
Act, 29 USC 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
-9-
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.
"EQUIPMENT" means equipment (as that term is defined in the Code) and
includes all of Borrower's and each Subsidiary's now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, and goods (other than consumer goods, farm products, or
Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or any of its Subsidiaries under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
----------
"EXCESS AVAILABILITY" means the amount, as of the date any determination
thereof is to be made, equal to Availability minus the aggregate amount, if any,
of all trade payables of Borrower and each of its Subsidiaries aged in excess of
60 days past invoice date unless disputed in good faith by appropriate
proceedings diligently conducted and for which reserves adequate under GAAP have
been established and all book overdrafts in excess of their historical practices
with respect thereto, in each case as determined by Agent in its Permitted
Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in effect from
time to time.
"FEE LETTER" means that certain fee letter, dated as of even date herewith,
between Borrower and Agent, in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"FILING AUTHORIZATION LETTER" means a letter duly executed by Borrower and
each Pledging Subsidiary authorizing Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests to be created by the Loan
Documents.
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"FOOTHILL" means Xxxxx Fargo Foothill, Inc., a California corporation.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"GATHERING SYSTEMS" means all right, title and interest of Borrower and
each of its Subsidiaries and Affiliates in and to all (i) Hydrocarbon pipelines
through which any Hydrocarbons produced from any of the Xxxxx flows to, or has
flowed at any time during the preceding twelve (12) month period immediately
preceding the date of this Agreement, to a master/sales meter from which such
Hydrocarbons can be sold to, or delivered for further transport to, a
non-Affiliate of Borrower or any of its Subsidiaries ("SUBJECT PIPELINES"); (ii)
meters, compressors, drips, stripping or other treatment plants or facilities,
drips and other facilities located on or used in connection with or related to
the Subject Pipelines; (iii) easements, rights of way, permits, licenses, road
boring agreements and similar contracts and grants pursuant to which the Subject
Pipelines were constructed or exist (whether such rights are contained in a
separate instrument or in an oil and gas lease or other instrument); and (iv)
all accounts, contract rights and general intangibles related to the
Hydrocarbons produced from the Xxxxx.
"GOVERNING DOCUMENTS" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
"GOVERNMENTAL APPROVAL" means (a) any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, waiver, exemption, filing,
variance, claim, order, judgment or decree of or with, (b) any required notice
to, (c) any declaration of or with, or (d) any registration by or with, any
Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"GOVERNMENTAL RULE" means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, requirement of, or other governmental restriction or any
similar binding form of decision of or determination by, or any binding
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.
"HAZARDOUS MATERIALS" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
" HEDGING AGREEMENT" means (a) any hedging contract, forward contract, swap
agreement, futures contract or other hydrocarbon pricing protection agreement or
option with respect to any such transaction, designed to hedge against
fluctuations in Hydrocarbon prices, (b) any rate swap, rate cap, rate floor,
rate collar, forward rate agreement or other rate protection agreement or option
with respect to any such transaction, designed to hedge against fluctuations in
interest rates, and (c) any other derivative agreement or other similar
agreement or arrangement, in each case evidenced by an ISDA Agreement with
appropriate schedule and confirmation.
-11-
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities
(including but not limited to obligations and liabilities arising in connection
with or as a result of early or premature termination of a Hedging Agreement,
whether or not occurring as a result of a default thereunder) of such Person
under a Hedging Agreement whether direct or by a guaranty.
"HIGHEST LAWFUL RATE" means on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Georgia
law permits the higher interest rate, stated as a rate per annum.
"HYDROCARBON INTERESTS" means all rights, titles and interests in and to
oil and gas leases, oil, gas and mineral leases, other Hydrocarbon leases,
mineral interests, mineral servitudes, overriding royalty interests, royalty
interests, net profits interests, production payment interests, and other
similar interests.
"HYDROCARBON INTERESTS HEDGING AGREEMENT RESERVES" means as of any date of
determination, reserves in an amount, if positive, equal to (a) the aggregate
Hedging Obligations of Borrower, its Subsidiaries and Affiliates to Bank Product
Providers relating to commodities or commodity prices, minus (b) (i) 60%
-----
multiplied by the PV-10 Value of the Total Proved Developed Producing Reserves
----------
as set forth in the Reserve Report most recently delivered to Agent, calculated
in a manner consistent with the determination of the Borrowing Base, minus (ii)
-----
the Maximum Loan Amount.
"HYDROCARBONS" means, collectively, oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons and related minerals and all products therefrom, in each
case whether in a natural or a processed state.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
Property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of Property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
Property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all guarantees by such Person of
Indebtedness of others, (h) all Capitalized Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, (k)
all obligations of such Person with respect to any arrangement, directly or
indirectly, whereby such Person shall sell or transfer any material asset, and
whereby such Person shall then or immediately thereafter rent or lease as lessee
such asset or any part thereof, (l) all recourse and support obligations of such
Person with respect to the sale or discount of any of its accounts receivable,
(m) all obligations of such Person with respect to any arrangement for the
purchase of materials, supplies, other Property or services if such arrangement
by its express terms requires that payment be made by such Person regardless of
whether such materials, supplies, other Property or services are delivered or
furnished to it, (n) all obligations of such Person with respect to Production
Payments, (o) net liabilities of such Person under all Hedging Obligations, (p)
all obligations of such Person under any prepayment for oil and gas production
or other similar agreement, and (q) all obligations of such Person under
operating leases which require such Person to make payments over the term of
such lease based on the purchase price or appraised value of the Property
subject to such lease plus a marginal interest rate, and used primarily as a
financing vehicle for, or to monetize, such Property. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
-12-
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 11.3.
-------------
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
-------------
"INDENTURE" means that certain Indenture dated May 23, 1997, between Energy
Corporation of America and Bank of New York, as trustee.
"INDENTURE COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of EXHIBIT I-1 delivered by the president or chief financial officer of
------------
Borrower to Agent.
"INDENTURE DOCUMENTS" means the Indenture, the Subordinated Notes, and all
other documents and agreements executed in connection with the Indenture.
"INITIAL RESERVE REPORT" means the report delivered to Agent dated as of
January 1, 2004, prepared by Xxxxx Xxxxx Company Petroleum Consultants with
respect to the Oil and Gas Properties of Borrower, its Subsidiaries, the LLC and
the Partnerships, a true and correct copy of which has been delivered to Agent
and the Lenders.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.
"INTANGIBLE ASSETS" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"INTEREST EXPENSE" means, for any period, the aggregate of the interest
expense of Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"INTEREST PERIOD" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 3, 6 or 12 months thereafter; provided, however,
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that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 3, 6 or 12 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.
-13-
"INTERCOMPANY NOTES" has the meaning assigned that term in SECTION 7.13.
------------
"INVENTORY" means all Borrower's and each Subsidiaries' now owned or
hereafter acquired right, title, and interest with respect to inventory,
including goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by Borrower or any of its Subsidiaries as lessor,
goods that are furnished by Borrower or any of its Subsidiaries under a contract
of service, and raw materials, work in process, or materials used or consumed in
Borrower's or any Subsidiaries' business.
"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness, Stock, or all or substantially
all of the assets of such other Person (or of any division or business line of
such other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.
"ISSUING LENDER" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to SECTION 2.12.
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"L/C" has the meaning set forth in SECTION 2.12(a).
----------------
"L/C DISBURSEMENT" means a payment made by the issuing Lender pursuant to a
Letter of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(a).
----------------
"LENDER" and "LENDERS" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of SECTION 14.1.
-------------
"LENDER GROUP" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by Borrower or any of its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Borrower or any of its
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the account of Borrower or other members of the
Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by
Agent resulting from the dishonor
-14-
of checks, (e) reasonable costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Agent related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by the Lender Group in enforcing or defending the
Loan Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with Borrower or any of its
Subsidiaries, (h) Agent's and each Lender's reasonable costs and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses') incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower or its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"LENDER-RELATED PERSON" means, with respect to any Lender, such Lender
together with such Lender's Affiliates, and the officers, directors, employees,
attorneys, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the context
requires.
"LETTER OF CREDIT USAGE" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"LIBOR DEADLINE" has the meaning set forth in SECTION 2.13(b)(i).
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"LIBOR NOTICE" means a written notice in the form of EXHIBIT L-1.
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"LIBOR OPTION" has the meaning set forth in SECTION 2.13(a).
----------------
"LIBOR RATE" means, for each Interest Period for each LIBOR Rate Loan, the
rate per annum determined by Agent (rounded upwards, if necessary, to the next
1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b)
100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.
"LIBOR RATE LOAN" means each portion of an Advance or the Term Loan that
bears interest at a rate determined by reference to the LIBOR Rate.
"LIEN" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, irrespective of whether
(a) such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
-15-
"LLC" means A&W LLC, a West Virginia limited liability company.
"LLC PLEDGE AGREEMENT" means the Amended and Restated Pledge and Security
Agreement dated as of the Closing Date, executed by A&W in favor of the Agent or
otherwise delivered pursuant to the Loan Documents, in form, scope, and
substance acceptable to the Agent.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
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"LOAN DOCUMENTS" means this Agreement, the Bank Product Agreements, the
Cash Management Agreements, the Control Agreements, the Disbursement Letter, the
Fee Letter, the Intercompany Notes, the Letters of Credit, the Mortgages, the
Officers' Certificate, the Security Documents, the Subordination Agreements, any
note or notes executed by Borrower in connection with this Agreement and payable
to a member of the Lender Group, and any other agreement entered into, now or in
the future, by Borrower and the Lender Group in connection with this Agreement.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole, (b) a material impairment of Borrower's or any of its Subsidiaries'
ability to perform its obligations under the Loan Documents to which it is a
party or of the Lender Group's ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent's Liens with respect to the Collateral as a result of an
action or failure to act on the part of Borrower or any of its Subsidiaries.
"MATERIAL CONTRACTS" means any supply, purchase, service, employment, tax,
indemnity, gas marketing, farm-in agreement, farm-out agreement, gas imbalance,
operating, unitization, communitization, partnership, joint venture, or other
agreement of Borrower, its Subsidiaries, the LLC or any Partnership or by which
Borrower, its Subsidiaries, the LLC or any Partnership or any of their
respective properties are otherwise bound, if such agreement (i) requires the
expenditure of over $5,000,000.00 by the Borrower or any of its Subsidiaries
during any calendar year, or (ii) involves the sale of more than $5,000,000.00
in Hydrocarbons by the Borrower, any of its Subsidiaries, the LLC, or any
Partnership, or (iii) involves a liability of Borrower, any of its Subsidiaries,
the LLC, or any Partnership, in excess of $5,000,000.00, or (iv) is otherwise
determined by Agent, in its reasonable judgment, to be material to the business,
operations, or properties of Borrower or any of its Subsidiaries, as the same
shall be amended, modified and supplemented and in effect from time to time.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
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"MAXIMUM LOAN AMOUNT" means the lesser of (a) the amount permitted by the
terms of the Indenture or (b) $100,000,000.
"MAXIMUM REVOLVER AMOUNT" means $50,000,000.00, as such amount may be
reduced from time to time in accordance with SECTION 6.23.
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"MORTGAGE" means a Mortgage, Deed of Trust, Assignment, Security Agreement,
Financing Statement and Fixture Filing, dated as of the Closing Date or
otherwise delivered pursuant to the Loan Documents, in form, scope and substance
acceptable to the Agent, executed and delivered by a Pledging Subsidiary or any
other Subsidiary of Borrower, as amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms of this Agreement and
the other Loan Documents. The term "MORTGAGE" shall include each Mortgage
Supplement after execution and delivery of such Mortgage Supplement. The term
"MORTGAGES" shall include each and every Mortgage executed and delivered by any
of the Pledging Subsidiaries hereunder.
-16
"MORTGAGE SUPPLEMENT" means a supplement to any Mortgage, in form and
substance satisfactory to the Agent, pursuant to which any Pledging Subsidiary
will xxxxx x xxxx on additional Property subject to the terms of such Mortgage,
as amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of this Agreement and the other Loan Documents.
"MORTGAGED PROPERTIES" means all of the Oil and Gas Properties and other
collateral purported to be subject to the Lien of the Mortgages.
"NET OPERATING INCOME" means the projected revenue attributable to (a) the
general partner interests of the Pledging Subsidiaries in the Partnerships'
interests in the Eligible Proved Developed Producing Reserves of the
Partnerships, (b) the membership interests of the Pledging Subsidiaries in the
LLC's interest in the Eligible Proved Developed Producing Reserves of the LLC,
and (c) the interests of the Pledging Subsidiaries in the Eligible Proved
Developed Producing Reserves of the Pledging Subsidiaries, which the
Partnerships, the LLC and the Pledging Subsidiaries can reasonably expect to
receive from the sale of Hydrocarbons therefrom, as shown on the most current
Reserve Report net of royalties, minus production and severance taxes
(including, without limitation, any "windfall profits" or similar tax but
excluding income taxes), and production expenses, and minus the amount of all
production revenue therefrom from the dates of such reports to the determination
date.
"NON-PLEDGED PROPERTIES" means Property of Borrower, its Subsidiaries, the
Partnerships, and the LLC which does not constitute Borrowing Base Properties,
the Gathering Systems, or assets or interests subject to the Liens of the
Partnership Pledge Agreements, the LLC Pledge Agreement, or the Mortgages.
"NON-PREPAYMENT PREMIUM EVENT" means either (a) that a material dispute exists
between Agent and Borrower as to the Availability due to (i) a redetermination
of the Borrowing Base by the Agent or (ii) the establishment of a reserve by
Agent under SECTION 2.1(b) (other than due to an event described in SECTION
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2.1(b), CLAUSES (i) THROUGH (vi) inclusive, except that a material dispute as to
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the amount of a reserve established under SECTION 2.1(b) clauses (i) through
--------------
(vi) inclusive shall be resolved by binding arbitration under SECTION 17.13) and
-------------
(x) at the time of such dispute there exists no Default, Event of Default or
Material Adverse Change and (y) the Obligations are prepaid within 60 days from
the date Borrower notifies Agent in writing of such dispute, or (b) Borrower
requests and fails to receive within 30 days the consent of the Agent and/or
Lenders, as applicable, to a waiver of the prohibition of SECTION 7.1 to allow
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Borrower to incur additional Indebtedness which as of the date of this Agreement
could be incurred by Borrower without a breach of the prohibition or the
incurrence of additional Indebtedness under the Indenture, except a credit
extension of a type described in the definition of "Credit Facilities" as
drafted in the Indenture as of the date of the Agreement; provided, however,
that such Indebtedness to be incurred or utilized to prepay the Obligations must
be funded within 60 days of the Borrower's receipt of written notice of the
Agent's and/or Lenders', as appropriate, nonconsent to the incurrence of such
Indebtedness.
"NON-RECOURSE DEBT" means Indebtedness as to which (a) neither Borrower nor
any Subsidiary (other than an Unrestricted Subsidiary) is directly or indirectly
liable pursuant to the terms of such Indebtedness, and (b) no default with
respect to such Indebtedness would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of Borrower or any Subsidiary to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"NYMEX" means the New York Mercantile Exchange or its successor.
-17-
"NYMEX PRICE" means, as of the date of the determination thereof, the average of
the 24 succeeding monthly futures contract prices, commencing with the month
during which the determination is to be made, for the category of Proved
Developed Producing Reserves included in the most recent Reserve Report provided
by Borrower to Agent pursuant to SECTION 6.2 as quoted on the NYMEX, or, if the
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NYMEX no longer provides futures contract price quotes for 24 month periods, the
longest period of quotes of less than 24 months shall be used, and, if the NYMEX
no longer provides such futures contract quotes or has ceased to operate, the
Agent shall designate another nationally recognized commodities exchange to
replace the NYMEX.
"OBLIGATIONS" means (a) all loans (including the Term Loan), Advances, debts,
principal, interest (including any interest that, but for the commencement of an
Insolvency Proceeding, would have accrued), contingent reimbursement obligations
with respect to outstanding Letters of Credit, premiums, liabilities (including
all amounts charged to Borrower's Loan Account pursuant hereto), obligations,
fees (including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the commencement of
an Insolvency Proceeding, would have accrued), lease payments, guaranties,
covenants, and duties of any kind and description owing by Borrower or any of
the Subsidiaries to the Lender Group pursuant to or evidenced by the Loan
Documents (including, without limitation, all claims for indemnity under the
Loan Documents including claims under SECTION 11.3 of this Agreement) and
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irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrower or any of its Subsidiaries are required to pay or reimburse by the Loan
Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals,
alterations, replacements, substitutions, and supplements, thereto and thereof,
as applicable, both prior and subsequent to any Insolvency Proceeding.
"OFFICERS' CERTIFICATE" means the representations and warranties of
officers form submitted by Agent to Borrower, together with Borrower's completed
responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Agent.
"OIL AND GAS PROPERTIES" means the Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; 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 having
jurisdiction) which may affect all or any portion of the Hydrocarbon Interests;
all operating agreements, joint venture agreements, contracts and other
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; all Hydrocarbons in and under and which may be
produced and saved or attributable to the Hydrocarbon Interests, the lands
covered thereby and all oil in tanks and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; all tenements, profits a prendre, hereditaments, appurtenances and
Properties in anywise appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests, 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 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, water 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.
-18-
"ORIGINATING LENDER" has the meaning set forth in SECTION 14.1(e).
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"OVERADVANCE" has the meaning set forth in SECTION 2.5.
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"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
----------------
"PARTNERSHIP PLEDGE AGREEMENTS" means the Amended and Restated Partnership
Pledge and Security Agreements dated as of the Closing Date or otherwise
delivered pursuant to the Loan Documents, in form, scope, and substance
acceptable to the Agent, executed by the Pledging Subsidiaries in favor of the
Agent.
"PARTNERSHIPS" means those partnerships and joint ventures listed on
SCHEDULE P-1.
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"PERMITTED DISCRETION" means a determination made in good faith and in the
exercise of reasonable business judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions by Borrower
or its Subsidiaries of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of business, (b) sales by Borrower or its
Subsidiaries of Inventory and Hydrocarbons to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents by Borrower or
its Subsidiaries in a manner that is not prohibited by the terms of this
Agreement or the other Loan Documents, (d) the licensing by Borrower or its
Subsidiaries, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business, (e) sales
of Non-Pledged Properties of the Pledging Subsidiaries having an aggregate value
not exceeding $2,000,000.00 in any fiscal year of Borrower provided (i) the
Non-Pledged Property subject to disposition was acquired by a Pledging
Subsidiary after the Closing Date and (ii) the disposition does not expose a
Bank Product Provider to increased risk under any Hedging Obligation, (f) the
abandonment, farm-out, lease, or sublease of undeveloped Oil and Gas Properties
of Borrower or any of its Subsidiaries in the ordinary course of business, (g)
the trade or exchange by Borrower or any of its Subsidiaries of any of its Oil
and Gas Properties (other than the Borrowing Base Properties, Non-Pledged
Properties, and the Gathering Systems) for Oil and Gas Properties owned by
another Person which the Board of Directors of Borrower determines in good faith
to be of approximately equivalent value; and (h) sales of Non-Pledged Properties
by Borrower or a Subsidiary (other than a Pledging Subsidiary, the Partnerships
or the LLC) provided prior written notice of such sale or other disposition is
delivered to Agent setting forth the property sold or otherwise disposed of, its
value, and such other information as Agent may reasonably request.
"PERMITTED INVESTMENTS" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of and other disputes with, customers and suppliers arising in the
ordinary course of business, (e) investments made as a result of non-cash
consideration of an asset sale that was made pursuant to a Permitted
Disposition, (f) acceptance by Borrower of notes payable from employees,
officers, or directors of Borrower or any of its Subsidiaries as payment for the
purchase of common or Class A stock by such employees; provided that (i) the
aggregate principal amount owing to Borrower under such notes shall not exceed
$1,600,000.00 at any one time outstanding, and (ii) any such note shall be
secured by a pledge of the shares of stock purchased therewith, and (g) loans by
Borrower to officers, directors and employees in connection with Borrower's
annual drilling programs consistent with past practices up to but not exceeding
$2,000,000.00 in the aggregate at any one time outstanding.
-19-
"PERMITTED LIENS" means (a) Liens held by Agent, (b) Liens for unpaid taxes
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) the interests
of lessors under operating leases, (d) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of Borrower or any of its
Subsidiaries and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests, (e) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (f) Liens or deposits to
secure performance of bids, tenders, or leases incurred in the ordinary course
of business of Borrower or any of its Subsidiaries and not in connection with
the borrowing of money, (g) Liens granted as security for surety or appeal bonds
in connection with obtaining such bonds in the ordinary course of business of
Borrower or any of its Subsidiaries, (h) with respect to any Property (other
than the Borrowing Base Properties) from which Hydrocarbons may be severed or
extracted in commercial quantities, Liens for farmout, farmin, joint operating,
and area of mutual interest agreements and/or similar arrangements that Borrower
determines in good faith to be necessary for the economic development of such
Property (other than the Borrowing Base Properties) and are customary and usual
for the area in which such Property (other than the Borrowing Base Properties)
is located, (i) with respect to any Borrowing Base Properties from which
Hydrocarbons may be severed or extracted in commercial quantities, Liens for
farm-out, farm-in, operating, joint operating, and area of mutual interest
agreements and/or similar arrangements that the Borrower determines in good
faith to be necessary for the economic development of such Borrowing Base
Properties and are customary and usual for the area in which such Borrowing Base
Properties are located; provided, however, that such Liens held by Borrower or
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any of its Subsidiaries or Affiliates shall be expressly made subordinate to the
Liens created by the Security Documents pursuant to terms of a Subordination
Agreement, (j) Liens associated with Production Payments now existing or
hereafter created on oil, gas or mineral leases or interests (other than
Borrowing Base Properties) now owned or hereafter acquired by the Borrower or
any Subsidiary; provided (i) such Liens are limited to the interest in the
Properties subject to the Production Payment and do not apply to any other
Property or assets of Borrower or any Subsidiary and (ii) such Liens only secure
the Indebtedness incurred pursuant to the Production Payments, and (k)
royalties, overriding royalties, revenue interests, net revenue interest and
other similar burdens now existing or hereafter acquired on oil, gas or mineral
leases or interests now owned or hereafter acquired by Borrower or any
Subsidiary and, with respect to any Borrowing Base Properties, are reflected in
the most recent Reserve Report.
"PERMITTED PROTEST" means the right of Borrower or any of its Subsidiaries,
as applicable, to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or any of its Subsidiaries, as applicable, in good faith,
and (c) Agent is satisfied that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"PERSON" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
-20-
"PERSONAL PROPERTY COLLATERAL" means all Collateral other than Hydrocarbon
Interests and Real Property.
"PLEDGING SUBSIDIARIES" means Eastern American, A&W and any other
Subsidiary of Borrower that executes a Mortgage, LLC Pledge Agreement and/or a
Partnership Pledge Agreement.
"PROJECTIONS" means Borrower's forecasted (a) balance sheets, (b) profit
and loss statements, and (c) cash flow statements, all prepared on a consistent
basis with Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
"PRODUCTION PAYMENTS" means a production payment (whether volumetric or
dollar denominated) or similar royalty, overriding royalty, net profits interest
or other similar interest in Oil and Gas Properties, or the right to receive all
or a portion of the production or the proceeds from the sale of production
attributable to such Oil and Gas Properties where the holder of such interest
has recourse solely to such interest and the grantor or transferor thereof has
an express contractual obligation to produce and sell Hydrocarbons from such Oil
and Gas Properties, or to cause such Oil and Gas Properties to be so operated
and maintained, in each case in a reasonably prudent manner.
"PROPERTY" means any interest in any kind of Property or asset, whether
real, personal or mixed, or tangible or intangible.
"PRO RATA SHARE" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and receive payments
of principal, interest, fees, costs, and expenses with respect thereto, (i)
prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender's Revolver Commitment, by
(z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender's Advances by (z) the aggregate
outstanding principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters of Credit,
to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's
Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan and receive
payments of interest, fees, and principal with respect thereto, (i) prior
to the making of the Term Loan, the percentage obtained by dividing (y)
such Lender's Term Loan Commitment, by (z) the aggregate amount of all
Lenders' Term Loan Commitments, and (ii) from and after the making of the
Term Loan, the percentage obtained by dividing (y) the principal amount of
such Lender's portion of the Term Loan by (z) the principal amount of the
Term Loan, and
-21-
(d) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under SECTION 16.7), the percentage
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obtained by dividing (i) such Lender's Revolver Commitment plus the outstanding
principal amount of such Lender's portion of the Term Loan, by (ii) the
aggregate amount of Total Commitments of all Lenders plus the outstanding
principal amount of the Term Loan; provided, however, that, in the event the
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Revolver Commitments have been terminated or reduced to zero, the Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the Risk Participation Liability with respect to outstanding
Letters of Credit plus the outstanding principal amount of such Lender's portion
of the Term Loan, by (B) the outstanding principal amount of all Advances plus
the aggregate amount of the Risk Participation Liability with respect to the
outstanding Letters of Credit plus the principal amount of the Term Loan.
"PROVED DEVELOPED NON-PRODUCING RESERVES" means those Oil and Gas
Properties of the Borrower, the Pledging Subsidiaries, the LLC and the
Partnerships designated as "proved developed non-producing" (in accordance with
the Definitions for Oil and Gas Reserves approved by the Board of Directors of
the Society for Petroleum Engineers, Inc. from time to time) in the Reserve
Report.
"PROVED DEVELOPED PRODUCING RESERVES" means those Oil and Gas Properties
designated as "proved developed producing" (in accordance with the Definitions
for Oil and Gas Reserves approved by the Board of Directors of the Society for
Petroleum Engineers, Inc.), from time to time in the Reserve Report. "PROVED
DEVELOPED PRODUCING RESERVES OF THE PARTNERSHIPS AND THE LLC" means those Oil
and Gas Properties of the Partnerships and the LLC designated as "proved
developed producing" (in accordance with the Definitions for Oil and Gas
Reserves approved by the Board of Directors of the Society for Petroleum
Engineers, Inc. from time to time) in the Reserve Report and used in
establishing the Borrowing Base.
"PROVED DEVELOPED PRODUCING RESERVES OF THE PLEDGING SUBSIDIARIES" means
those Oil and Gas Properties of the Pledging Subsidiaries designated as "proved
developed producing" (in accordance with the Definitions for Oil and Gas
Reserves approved by the Board of Directors of the Society for Petroleum
Engineers, Inc., from time to time) in the Reserve Report and used in
establishing the Borrowing Base.
"PROVED UNDEVELOPED RESERVES" means those Oil and Gas Properties of the
Pledging Subsidiaries, the LLC and the Partnerships designated as "proved
undeveloped" (in accordance with the Definitions for Oil and Gas Reserves
approved by the Board of Directors of the Society for Petroleum Engineers, Inc.
from time to time) in the Reserve Report.
"PV-10 VALUE" means, as of the date of determination, the sum of the
present values of the Net Operating Income expected to be received in each of
the months following the date of determination, determined as follows:
(a) the Net Operating Income shall be determined on the lesser amount of (i) a
ceiling value of MmBTU $4.50 - and Bbl - $$25.00 of Proved Developed
Producing Reserves as of such date of determination, adjusting such price
to reflect the appropriate Basis Differential with respect to Hydrocarbons
produced from the Eligible Proved Producing Reserves of the Pledging
Subsidiaries and the Eligible Proved Developed Producing Reserves of the
Partnerships and the LLC, as determined by the Approved Engineer and
approved by Agent or (ii) (x) on the basis of the contract price to the
extent contracts exist or (y) in the event that contracts do not exist, on
the basis of the applicable NYMEX Price for the category of Proved
Developed Producing Reserves as of such date of determination, adjusting
such price to reflect the appropriate Basis Differential with respect to
Hydrocarbons produced from the Eligible Proved Producing Reserves of the
Pledging Subsidiaries and the Eligible Proved Developed Producing Reserves
of the Partnerships and the LLC, as determined by the Approved Engineer and
approved by Agent; and
-22-
(b) the present value of each such Net Operating Income amount shall be
determined by discounting such Monthly Net Operating Income from the month
in which it is expected to be received, on a monthly basis, to such date of
determination at a rate of 10% per annum.
"REAL PROPERTY" means any estates or interests in real property now owned
or hereafter acquired by Borrower or any of its Subsidiaries and the
improvements thereto.
"RECORD" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"RELEASE" means a "release", as such term is defined in CERCLA.
"REMEDIAL ACTION" means any action under Environmental Laws required to (a)
clean up, remove, remediate, contain, treat, monitor, assess, evaluate, dispose
of, xxxxx, or in any other way address pollutants (including Hazardous
Materials) in the indoor or outdoor environment, (b) prevent the Release or
threat of a Release or minimize the further Release of pollutants, or (c)
investigate and determine if a remedial response is needed and to design such a
response and any post-remedial investigation, monitoring, operation, and
maintenance and care.
"REPLACEMENT LENDER" has the meaning set forth in SECTION 15.2(a).
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"REPORT" has the meaning set forth in SECTION 16.17.
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"REQUIRED AVAILABILITY" means Excess Availability in an amount of not less
than $10,000,000.00.
"REQUIRED LENDERS" means, at any time, (a) Agent, and (b) Lenders whose
aggregate Pro Rata Shares (calculated under clause (d) of the definition of Pro
Rata Shares) equal or exceed 66.67%.
"RESERVE PERCENTAGE" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"RESERVE REPORT" means the Initial Reserve Report and any other report
delivered pursuant to SECTION 6.2, in form and substance satisfactory to the
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Agent, prepared at the sole cost and expense of the Borrower by the Approved
Engineer, which shall evaluate the oil and gas reserves attributable to the
Hydrocarbon Interests owned directly by Borrower, its Subsidiaries, the LLC and
the Partnerships, as of the immediately preceding January 1 or July 1. Each
Reserve Report shall set forth volumes, projections of the future rate of
production, Hydrocarbon prices, escalation rates, discount rate assumptions, and
net proceeds of production, present value of the net proceeds of production,
estimated costs of Remedial Action, operating expenses and capital expenditures,
in each case based upon updated economic assumptions reasonably acceptable to
the Agent.
"REVOLVER COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 or on the signature page of the
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Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of SECTION 14.1.
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-23-
"REVOLVER USAGE" means, as of any date of determination, the sum of (a) the
then extant amount of outstanding Advances, plus (b) the then extant amount of
the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term is defined
in the Code.
"SECURITY DOCUMENTS" means the Mortgages, the Partnership Pledge
Agreements, the Borrower's Security Agreement, the LLC Pledge Agreement and all
other security documents hereafter delivered to Agent granting a Lien on any
asset of any Person to secure the Obligations.
"SETTLEMENT AGREEMENT" means that certain Settlement Agreement dated as of
February 24, 2004 by and among Borrower, MacKay Xxxxxxx LLC, a Delaware limited
liability company, Debt Strategies Fund, Inc., a Maryland corporation, Xxxxxxx
Xxxxx High Current Income Fund, a series of Xxxxxxx Xxxxx Variable Series Funds,
Inc., a New Jersey corporation, High Income Portfolio, a series of Xxxxxxx Xxxxx
Xxxx Fund, Inc., a Maryland corporation, Senior High Income Portfolio, Inc., a
Maryland corporation, High Yield Portfolio, a series of Merrill Lunch Series
Fund, Inc., a New Jersey corporation, Income Strategies Portfolio, a series of
Merrill Lunch Global Investment Series, a Luxembourg entity, and U.S. High Yield
Fund, a series of Xxxxxxx Xxxxx International Investments Funds, a Luxembourg
entity (collectively, the "NOTEHOLDERS").
"SOLVENT" means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"STOCK" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"SUBSIDIARY" of a Person means a corporation, limited liability company, or
other entity (other than Partnerships) in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, limited liability company, or other entity.
"SUBORDINATED NOTES" means the 9.50% Senior Subordinated Notes due 2007
issued by Energy Corporation of America in the amount of $200,000,000.
"SUBORDINATION AGREEMENT" means an agreement executed by a Person holding
or having the right to a Lien on any Collateral subordinating such Lien to the
Agent's Liens, all in form, scope, and substance satisfactory to Agent.
-24-
"SWING LENDER" means Foothill or any other Lender that, at the request of
Borrower and with the consent of Agent agrees, in such Lender's sole discretion,
to become the Swing Lender under SECTION 2.3(d).
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"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
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"TAXES" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"TERM LOAN" has the meaning set forth in SECTION 2.2.
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"TERM LOAN AMOUNT" means $50,000,000.
"TERM LOAN COMMITMENT" means, with respect to each Lender, its Term Loan
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 or in the Assignment and Acceptance
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pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of SECTION 14.1.
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"TOTAL COMMITMENT" means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender's name under the applicable
heading on SCHEDULE C-1 attached hereto or on the signature page of the
-------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignment made in accordance with the provisions of SECTION 14.1.
------------
"TOTAL PROVED DEVELOPED PRODUCING RESERVES" means the Proved Developed
Producing Reserves of the Partnerships and the LLC and the Proved Developed
Producing Reserves of the Pledging Subsidiaries.
"TOTAL USAGE" means, as of any date of determination, the sum of (a) the
then extant amount of outstanding Advances, plus (b) the then extant amount of
the Letter of Credit Usage, plus (c) the then extant amount of the Term Loan.
"TOTAL VALUE" means an amount equal to the sum of (a) with respect to the
LLC and each Partnership, the PV-10 Value of the Eligible Proved Developed
Producing Reserves of the Partnerships and the LLC multiplied (i) in the case of
the Partnerships, by the general partnership interest of the applicable Pledging
Subsidiary in such Partnership, and (ii) in the case of the LLC by the
membership interest of A&W in the LLC plus (b) with respect to the Pledging
Subsidiaries, the PV-10 Value of the Eligible Proved Developed Producing
Reserves of the Pledging Subsidiaries.
"UNDERLYING ISSUER" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of Lender for
the benefit of Borrower.
"UNDERLYING LETTER OF CREDIT" means a letter of credit that has been issued
by an Underlying Issuer.
"UNITED STATES" means the United States of America.
-25-
"UNRESTRICTED SUBSIDIARY" has the meaning assigned that term in the
Indenture as in effect on the date of this Agreement.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
-------------
"XXXXX" means any existing oil or gas well which is producing Hydrocarbons
from the Mortgaged Properties.
"XXXXX FARGO" means Xxxxx Fargo Bank, National Association, a national
banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
-----------------
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
----
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
------------
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations and other than
any Bank Product Obligations that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding and are not required to be repaid or
cash collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
------------------------
this Agreement shall be deemed incorporated herein by reference.
-26-
2. LOAN AND TERMS OF PAYMENT
2.1 REVOLVER ADVANCES.
------------------
(a) Subject to the terms and conditions of this Agreement, and during the
term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("ADVANCES")
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver
Amount less the Letter of Credit Usage, or (ii) the Borrowing Base then in
effect less the Letter of Credit Usage. For purposes of this Agreement and
subject to the provisions of SECTION 2.16of this Agreement, "Borrowing Base," as
------------
of any date of determination, shall mean the result of:
(w) an amount equal to 60% of the PV-10 Value of the Eligible Proved Developed
Producing Reserves of the Pledging Subsidiaries directly owned by the
Pledging Subsidiaries, as reflected in the most recent report delivered in
accordance with SECTION 6.2, plus
------------
(x) an amount with respect to each Partnership equal to 60% of the PV-10 Value
of the Eligible Proved Developed Producing Reserves directly owned by such
Partnership multiplied by the general partnership interest of the Pledging
Subsidiary in such partnership, plus
(y) an amount with respect to the LLC equal to 60% of the PV-10 Value of the
Eligible Proved Developed Producing Reserves directly owned by the LLC
multiplied by the membership interest of A&W in the LLC, minus
(z) the sum of (i) the Bank Products Reserves, and (ii) the aggregate amount of
reserves, if any, established by Lender under SECTION 2.1(b).
---------------
(b) Anything to the contrary in this SECTION 2.1 notwithstanding, the Agent
-----------
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Agent, in its Permitted Discretion, shall deem necessary or
appropriate against the Borrowing Base including, but not limited to, reserves
based upon (i) past due or accrued taxes or other governmental charges including
ad valorem, personal property, production, severance, and other taxes which may
have priority over the Liens or security interests of Agent in the Collateral;
(ii) Liens relating to the Collateral in favor of third Persons; (iii) deposits
which are due or scheduled to become due during the immediately following 180
day period under deposit, escrow or other arrangements concerning costs,
expenses and liabilities relating to the plugging and abandonment of the
Borrowing Base Properties; (iv) estimates of present or future operating costs
and expenses, royalty and overriding payments and other costs and expenses
associated with the maintenance and operation of the Borrowing Base Properties;
(v) estimates of present and future costs, expenses, deposits and liabilities
related to the plugging and abandonment of the Borrowing Base Properties (net of
the amount thereof which has been taken into account in the most recent Reserve
Report), (vi) without duplication of the foregoing, amounts owing by Borrower,
any of its Subsidiaries, the LLC or the Partnerships to any Person to the extent
secured by a Lien on, or trust (constructive or otherwise) over, any of the
Collateral (including proceeds thereof or collections from the sale of
Hydrocarbons or Hydrocarbon Interests which may from time to time come into the
possession of Agent or the Lender Group or its agents), which Lien or trust, in
the determination of Agent, has a reasonable possibility of having a priority
superior to the Agent's Liens (such as landlord liens, ad valorem taxes,
production taxes, severance taxes, sales taxes, collections attributable to the
sale of Hydrocarbons or Hydrocarbon Interests of Persons other than Borrower or
any of its Subsidiaries) in and to such item of Collateral, proceeds or
collection, and (vii) Hydrocarbon Interest Hedging Agreement Reserves.
-27-
(c) The Lenders with Revolver Commitments shall have no obligation to make
additional Advances hereunder to the extent such additional Advances would cause
the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement, on
----------
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "TERM
LOAN") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The Term Loan shall be repaid on the following dates and in
the following amounts:
Date. . . Installment Amount
------------- -------------------
July 10, 2005 $ 1,000,000
------------- -------------------
July 10, 2006 $ 1,000,000
------------- -------------------
July 10, 2007 $ 1,000,000
------------- -------------------
THE OUTSTANDING UNPAID PRINCIPAL BALANCE AND ALL ACCRUED AND UNPAID INTEREST
UNDER THE TERM LOAN SHALL BE DUE AND PAYABLE ON THE DATE OF TERMINATION OF THIS
AGREEMENT, WHETHER BY ITS TERMS, BY PREPAYMENT, OR BY ACCELERATION. ALL AMOUNTS
OUTSTANDING UNDER THE TERM LOAN SHALL CONSTITUTE OBLIGATIONS.
2.3 BORROWING PROCEDURES.
---------------------
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an irrevocable
-----------------------
written request by an Authorized Person delivered to Agent. Such notice
must be received by Agent no later than 10:00 a.m. (California time) on the
Business Day prior to the date that is the requested Funding Date specifying (i)
the amount of such Borrowing, and (ii) the requested Funding Date, which shall
be a Business Day; provided, however, that in the case of a request for a Swing
-------- -------
Loan in an amount of $5,000,000.00, or less, such notice will be timely received
if it is received by Agent no later than 10:00 a.m. (California time) on the
Business Day that is the requested Funding Date) specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day. At Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such request
by the required time. In such circumstances, Borrower agrees that any such
telephonic notice will be confirmed in writing within 24 hours of the giving of
such telephonic notice, but the failure to provide such written confirmation
shall not affect the validity of the request.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a Borrowing
-----------------
pursuant to SECTION 2.3(a), Agent shall elect, in its discretion, (i) to have
---------------
the terms of SECTION 2.3(c) apply to such requested Borrowing, or (ii) if the
--------------
Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of SECTION 2.3(d) in the amount of the requested
---------------
Borrowing; provided, however, that if Swing Lender declines in its sole
-------- -------
discretion to make a Swing Loan pursuant to SECTION 2.3(d), Agent shall elect to
--------------
have the terms of SECTION 2.3(c) apply to such requested Borrowing.
---------------
(c) MAKING OF LOANS.
-----------------
(i) In the event that Agent shall elect to have the terms of this SECTION
-------
2.3(c) apply to a requested Borrowing as described in SECTION 2.3(b), then
---- --------------
promptly after receipt of a request for a Borrowing pursuant to SECTION 2.3(a),
--- --------------
Agent shall notify the Lenders, not later than 1:00 p.m. (California time) on
the Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds,
to Agent's Account, not later than 10:00 a.m. (California time) on the Funding
Date applicable thereto. After Agent's receipt of the proceeds of such Advances
(or the Term Loan, as applicable), upon satisfaction of the conditions precedent
set forth in SECTION 3 hereof, Agent shall make the proceeds thereof available
---------
to Borrower on the applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to Borrower's Designated Account;
provided, however, that, subject to the provisions of SECTION 2.3(i), Agent
-------- ------- --------------
shall not request any Lender to make, and no Lender shall have the obligation to
make, any Advance (or its portion of the Term Loan) if Agent shall have actual
knowledge that (1) one or more of the applicable conditions precedent set forth
in SECTION 3 will not be satisfied on the requested Funding Date for the
----------
applicable Borrowing unless such condition has been waived, or (2) the requested
Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, at least 1 Business
Day prior to the date of such Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the account of
Borrower the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent any Lender shall not
have made its full amount available to Agent in immediately available funds and
Agent in such circumstances has made available to Borrower such amount, that
Lender shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate for
each day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to Agent
shall constitute such Lender's Advance (or portion of the Term Loan, as
applicable) on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Borrower of such failure to fund and, upon
demand by Agent, Borrower shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Advances (or portion of the Term Loan, as applicable) composing such
Borrowing. The failure of any Lender to make any Advance (or portion of the
Term Loan, as applicable) on any Funding Date shall not relieve any other Lender
of any obligation hereunder to make an Advance (or portion of the Term Loan, as
applicable) on such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Advance (or portion of the Term Loan, as
applicable) to be made by such other Lender on any Funding Date.
-29-
(iii) Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by Borrower to Agent for the Defaulting Lender's benefit, and, in
the absence of such transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the Lender Group)
or, if so directed by Borrower and if no Default or Event of Default has
occurred and is continuing (and to the extent such Defaulting Lender's Advance
was not funded by the Lender Group), retain same to be re-advanced to Borrower
as if such Defaulting Lender had made Advances to Borrower. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower
for the account of such Defaulting Lender the amount of all such payments
received and retained by Agent for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters with respect to the
Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, Agent, and Borrower shall have waived
such Defaulting Lender's default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing
by Defaulting Lender in respect thereof. The operation of this Section shall
not be construed to increase or otherwise affect the Commitment of any Lender,
to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to Agent or to
the Lenders other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement and shall entitle Borrower at its option, upon written notice
to Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance Agreement in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (other than Bank Product
Obligation, but including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided further, however, that any such assumption of the Commitment of such
-------- ------- -------
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Group's or Borrower's rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
-30-
(d) MAKING OF SWING LOANS.
------------------------
(i) In the event Agent shall elect, with the consent of Swing Lender, as a
Lender, to have the terms of this SECTION 2.3(d) apply to a requested Borrowing
--------------
as described in SECTION 2.3(b), Swing Lender as a Lender shall make such Advance
--------------
in the amount of such Borrowing (any such Advance made solely by Swing
Lender as a Lender pursuant to this SECTION 2.3(d) being referred to as a "SWING
--------------
LOAN" and such Advances being referred to collectively as "SWING LOANS")
available to Borrower on the Funding Date applicable thereto by transferring
immediately available funds to Borrower's Designated Account. Each Swing Loan
shall be deemed to be an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Swing Loan
shall be eligible to be a LIBOR Rate Loan and all payments on any Swing Loan
shall be payable to Swing Lender as a Lender solely for its own account (and for
the account of the holder of any participation interest with respect to such
Swing Loan). Subject to the provisions of SECTION 2.3(i), Agent shall not
--------------
request Swing Lender as a Lender to make, and Swing Lender as a Lender shall not
make, any Swing Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be satisfied on
---------
the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (ii) the requested Borrowing would exceed the Availability
on such Funding Date. Swing Lender as a Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in SECTION 3
---------
have been satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, constitute
Obligations hereunder, and bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
---------------
(i) Agent hereby is authorized by Borrower and the Lenders, from time to
time in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in SECTION 3 have not been
---------
satisfied, to make Advances to Borrower on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (A) to preserve or protect
the Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations, or (C) to pay any other amount chargeable to
Borrower pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in SECTION 10 (any of the
----------
Advances described in this SECTION 2.3(e) shall be referred to as "AGENT
---------------
ADVANCES"). Each Agent Advance is an Advance hereunder and shall be subject to
all the terms and conditions applicable to other Advances, except that no such
Agent Advance shall be eligible to be a LIBOR Rate Loan and all payments thereon
shall be payable to Agent solely for its own account (and for the account of the
holder of any participation interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured by the
Agent's Liens granted to Agent under the Loan Documents, shall constitute
Advances and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
-31-
(f) SETTLEMENT. It is agreed that each Lender's funded portion of the
----------
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the Lenders on a
weekly basis, or on a more frequent basis if so determined by Agent, (1) on
behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect to Collections
received, as to each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"SETTLEMENT DATE"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Agent Advances
for the period since the prior Settlement Date. Subject to the terms and
conditions contained herein (including SECTION 2.3(c)(iii)): (y) if a Lender's
-------------------
balance of the Advances (including Swing Loans and Agent Advances) exceeds such
Lender's Pro Rata Share of the Advances (including Swing Loans and Agent
Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in immediately available
funds to the account of such Lender (as such Lender may designate), an amount
such that each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and
Agent Advances) and (z) if a Lender's balance of the Advances, Swing Loans, and
Agent Advances is less than such Lender's Pro Rata Share of the Advances
(including Swing Loans and Agent Advances) as of a Settlement Date, such Lender
shall no later than 12:00 p.m. (California time) on the Settlement Date transfer
in immediately available funds to the Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such
amounts made available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable Swing Loan or
Agent Advance and, together with the portion of such Swing Loan or Agent Advance
representing Swing Lender's Pro Rata Share thereof, shall constitute Advances of
such Lenders. If any such amount is not made available to Agent by any Lender
on the Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount on demand
from such Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances, Swing Loans,
and Agent Advances is less than, equal to, or greater than such Lender's Pro
Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement
Date, Agent shall, as part of the relevant Settlement, apply to such balance the
portion of payments actually received in good funds by Agent with respect
to principal, interest, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount is owed
to any such Lender after such application, such net amount shall be distributed
by Agent to that Lender as part of such next Settlement.
-32-
(iii) Between Settlement Dates, Agent, to the extent no Agent Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender's Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections received
since the then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided
for in the previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of agreements between Agent and individual
Lenders) with respect to the Advances other than Swing Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal amount of the
--------
Advances (or portion of the Term Loan, as applicable) owing to each Lender,
including the Swing Loans owing to Swing Lender, and Agent Advances owing to
Agent, and the interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and
accurate. In addition, each Lender is authorized, at such Lender's option,
to note the date and amount of each payment or prepayment of principal of such
Lender's Advances (or portion of the Term Loan, as applicable) in its books and
records, including computer records, such books and records constituting
conclusive evidence, absent manifest error, of the accuracy of the information
contained therein. There shall be no promissory notes evidencing the payment
obligations of Borrower to Lenders.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing Loans and
-----------------------------
Agent Advances) shall be made by the Lenders contemporaneously and in accordance
with their Pro Rata Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement
----------------------
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrower notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the outstanding Revolver Usage does not exceed the Borrowing Base
by more than $5,000,000.00, (ii) after giving effect to such Advances (including
a Swing Loan) the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the time of
the making of any such Advance (including a Swing Loan), Agent does not believe,
in good faith, that the Overadvance created by such Advance will be outstanding
for more than 90 days. The foregoing provisions are for the exclusive benefit
of Agent, Swing Lender, and the Lenders and are not intended to benefit Borrower
in any way. The Advances and Swing Loans, as applicable, that are made pursuant
to this SECTION 2.3(i) shall be subject to the same terms and conditions as any
--------------
other Advance or Swing Loan, as applicable, except that they shall not be
eligible for the LIBOR Option and the rate of interest applicable thereto shall
be the rate applicable to Advances that are Base Rate Loans under SECTION 2.6(c)
--------------
hereof without regard to the presence or absence of a Default or Event of
Default.
-33-
(i) In the event Agent obtains actual knowledge that the Revolver Usage exceeds
the amounts permitted by the preceding paragraph, regardless of the amount of,
or reason for, such excess, Agent shall notify Lenders as soon as practicable
(and prior to making any (or any additional) intentional Overadvances (except
for and excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders with Revolver
Commitments thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower and intended to reduce,
within a reasonable time, the outstanding principal amount of the Advances to
Borrower to an amount permitted by the preceding paragraph. In the event Agent
or any Lender disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated to settle with
Agent as provided in SECTION 2.3(f) for the amount of such Lender's Pro Rata
--------------
Share of any unintentional Overadvances by Agent reported to such Lender, any
intentional Overadvances made as permitted under this SECTION 2.3(i), and any
--------------
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
2.4 PAYMENTS.
--------
(a) PAYMENTS BY BORROWER.
----------------------
(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent's Account for the account of the Lender Group and
shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by
Agent later than 11:00 a.m. (California time), shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the date on which any
payment is due to the Lenders that Borrower will not make such payment in
full as and when required, Agent may assume that Borrower has made (or will
make) such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent Borrower does not
make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such
Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the
date repaid.
-34-
(b) APPORTIONMENT AND APPLICATION.
-------------------------------
(i) Except as otherwise provided with respect to Defaulting Lenders and except
as otherwise provided in the Loan Documents (including letter agreements
between Agent and individual Lenders), aggregate principal and interest
payments shall be apportioned ratably among the Lenders (according to the
unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type
of Commitment or Obligation to which a particular fee relates. All payments
shall be remitted to Agent and all such payments (other than payments
received while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or interest of
specific Obligations or which relate to the payment of specific fees), and
all proceeds of Accounts or other Collateral received by Agent, shall be
applied as follows:
(A) first, to pay any Lender Group Expenses then due to Agent under the
-----
Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to the Lenders under
------
the Loan Documents, on a ratable basis, until paid in full,
(C) third, to pay any fees then due to Agent (for its separate accounts,
-----
after giving effect to any letter agreements between Agent and the
individual Lenders) under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of the Lenders (after
------
giving effect to any letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable basis, until paid in
full,
(E) fifth, to pay interest due in respect of all Agent Advances, until paid
-----
in full,
(F) sixth, ratably to pay interest due in respect of the Advances (other
-----
than Agent Advances), the Swing Loans, and the Term Loan until
paid in full,
(G) seventh, to pay the principal of all Agent Advances until paid in full,
-------
(H) eighth, ratably to pay all principal amounts then due and payable
------
(other than as a result of an acceleration thereof) with respect to the
Term Loan until paid in full,
(I) ninth, to pay the principal of all Swing Loans until paid in full,
-----
(J) tenth, so long as no Event of Default has occurred and is continuing,
-----
and at Agent's election (which election Agent agrees will not be made
if an Overadvance would be created thereby), to pay amounts then due
and owing in respect of Bank Product Obligations until paid in full,
-35-
(K) eleventh, so long as no Event of Default has occurred and is
--------
continuing, to pay the principal of all Advances until paid in full,
(L) twelfth, so long as no Event of Default has occurred and is continuing,
-------
to pay any other Obligations until paid in full,
(M) thirteenth, if an Event of Default has occurred and is continuing, to
----------
pay amounts to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount
determined by Agent in its Permitted Discretion as the amount
necessary to secure the Bank Product Obligations,
(N) fourteenth, if an Event of Default has occurred and is continuing,
----------
ratably (i) to pay the principal of all Advances until paid in full,
and (ii) to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full,
(O) fifteenth, if an Event of Default has occurred and is continuing, to
---------
pay the outstanding principal balance of the Term Loan (in the inverse
order of the maturity of the installments due thereunder) until the
Term Loan is paid in full,
(P) sixteenth, if an Event of Default has occurred and is continuing, to
---------
pay any other Obligations, and
(Q) seventeenth, to Borrower (to be wired to the Designated Account) or
-----------
such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement
delay as provided in SECTION 2.3(f).
---------------
(iii) In each instance, so long as no Default or Event of Default has
occurred and is continuing, SECTION 2.4(b) shall not be deemed to
--------------
apply to any payment made by Borrower to Agent specified by Borrower
to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not any of the
foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority provisions
of this SECTION 2.4 and other provisions contained in any other Loan
------------
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to
the fullest extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be resolved
as aforesaid, the terms and provisions of this SECTION 2.4 shall
------------
control and govern.
-36-
2.5 OVERADVANCES. If at any time or for any reason, the amount of
------------
Obligations (other than Bank Product Obligations) owed by Borrower to the Agent
and the Lender Group pursuant to SECTIONS 2.1, 2.2 AND 2.12 is greater than an
--------------------------
amount equal to the lower of (a) the Maximum Loan Amount, or (b) the then
current Borrowing Base (an "OVERADVANCE"), Borrower, within five (5) Business
Days from the date of each such occurrence, shall notify the Agent that Borrower
shall take one of the following actions:
(a) execute and deliver, and/or cause the Pledging Subsidiaries or any
other Subsidiary to execute and deliver to the Agent within sixty (60) days from
and after the date of the occurrence of such Overadvance, supplemental or
additional Mortgages, in form and substance satisfactory to the Agent and its
counsel, securing payment of the Obligations and covering Oil and Gas Properties
directly owned by Borrower, the Pledging Subsidiaries or such other Subsidiary
which are not then covered by any Loan Document and which are of a type and
nature satisfactory to the Agent, and having a value (as determined by the Agent
in its sole discretion), in addition to other Oil and Gas Properties already
subject to a Mortgage, sufficient to eliminate the Overadvance, all as more
particularly described in SECTIONS 6.21(c) AND d); or
--------------------------
(b) make a payment with respect to the Obligations, in an aggregate
principal amount sufficient to eliminate such Overadvance within ten (10) days
after the date of the occurrence of such Overadvance (and the Borrower shall
make such payment within such ten-day period).
If the Borrower shall elect to execute and deliver, and/or to cause the Pledging
Subsidiaries or any other Subsidiary to execute and deliver supplemental or
additional Security Documents to the Agent pursuant to CLAUSE (A), it shall
----------
provide the Agent with descriptions of the additional assets to be mortgaged
(together with current valuations, engineering reports, Security Documents
described in CLAUSE (A) and title evidence applicable thereto and other
-----------
documents including opinions of counsel, each of which shall be in form and
substance reasonably satisfactory to the Agent) within sixty (60) days after the
date of the occurrence of such Overadvance. Such supplemental or additional
Security Documents shall be subject to the terms of SECTION 6.21. If the
------------
Borrower fails to give the required notice that it shall take any of the actions
described in this SECTION 2.5 within such five (5) Business Day period or take
-----------
the applicable action in SUBCLAUSES (A) or (B) above within such sixty (60) or
-------------- ---
ten (10) day (as applicable) period, in each case from and after the date of the
occurrence of the Overadvance, then without any necessity for notice to the
Borrower or any other person, the Borrower shall become obligated immediately to
pay Obligations in an aggregate principal amount equal to the applicable
Overadvance.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
----------------------------------------------------------------------
CALCULATIONS.
------------
(a) INTEREST RATES. Except as provided in clause (c) below, all
---------------
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows: (i) if the
relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the Applicable Margin, (ii) if the relevant Obligation is a Base
Rate Loan, at a per annum rate equal to the Base Rate plus the Applicable
Margin, and (iii) otherwise, at a per annum rate equal to the Base Rate plus the
Applicable Rate Margin for Base Rate Loans.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the ratable
-----------------------
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
-------
2.12(E)) which shall accrue at a rate equal to 2.25% per annum times the Daily
-------
Balance of the undrawn amount of all outstanding Letters of Credit.
-37-
(c) DEFAULT RATE. Upon the occurrence and during the continuation of an
-------------
Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit and Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof at a per annum rate
equal to 4 percentage points above the per annum rate otherwise applicable
hereunder, and
(ii) the Letter of Credit fee provided for above shall be increased to 4
percentage points above the per annum rate otherwise applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in SECTION 2.11 or
------- ------------
SECTION 2.13(a), interest, Letter of Credit fees, and all other fees payable
----------------
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrower hereby
authorizes Agent, from time to time, without prior notice to Borrower, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as
and when incurred), all charges, commissions, fees, and costs provided for in
SECTION 2.12(e) (as and when accrued or incurred), all fees and costs provided
----------------
for in SECTION 2.11 (as and when accrued or incurred), and all other payments as
------------
and when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loan and including any amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of
the then extant Bank Products Reserve) to Borrower's Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due
shall be compounded by being charged to Borrower's Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
-----------
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. Borrower and the
---------------------------------------------------
Lender Group hereby agree and stipulate that the only charges imposed upon
Borrower for the use of money in connection with this Agreement are and shall be
the specific interest and fees described in this Article 2 and in any other Loan
Document. Notwithstanding the foregoing, Borrower and the Lender Group further
agree and stipulate that all agency fees, syndication fees, facility fees,
underwriting fees, default charges, late charges, funding or "breakage" charges,
increased cost charges, the Applicable Prepayment Premium, "float" or
"clearance" charges, attorneys' fees and reimbursement for costs and expenses
paid by the Agent or the Lender Group to third parties or for damages incurred
by the Agent or the Lender Group are charges to compensate the Agent and the
Lender Group for underwriting and administrative services and costs or losses
performed or incurred, and to be performed and incurred, by the Agent and the
Lender Group in connection with this Agreement and the other Loan Documents. In
no event shall the amount of interest and other charges for the use of money
payable under this Agreement exceed the maximum amounts permissible under any
law that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and other
charges for the use of money and manner of payment stated within it; provided,
however, that, anything contained herein to the contrary notwithstanding, if the
amount of such interest and other charges for the use of money or manner of
payment exceeds the maximum amount allowable under applicable law, then, ipso
facto as of the date of this Agreement, Borrower is and shall be liable only for
the payment of such maximum as allowed by law, and payment received from
Borrower in excess of such legal maximum whenever received, shall be applied to
reduce the principal balance of the Obligations to the extent of such excess.
-38-
2.7 CASH MANAGEMENT.
----------------
(a) Borrower shall (i) establish and maintain cash management services of
a type and on terms satisfactory to Agent at one or more of the banks set forth
on SCHEDULE 2.7(a) (each a "CASH MANAGEMENT BANK"), and shall request in writing
---------------
and otherwise take such reasonable steps, if necessary, to ensure that all
Account Debtors of Borrower and the Pledging Subsidiaries, forward payment of
the amounts owed by them directly to such Cash Management Bank, and (ii) deposit
or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all Collections (including those
sent directly by Account Debtors to a Cash Management Bank) into a bank account
subject to a Control Agreement (a "CASH MANAGEMENT ACCOUNT") at one of the Cash
Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrower, in form and substance acceptable to
Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) upon notice from Agent under such
Cash Management Agreement, the Cash Management Bank will immediately thereafter,
until notified to the contrary in writing by the Agent, forward by daily sweep
(aa) an amount equal to seventeen and one-half percent (17.5%) (the "Borrower's
Estimated Percentage") of all amounts deposited in the applicable Cash
Management Account to the Agent's Account and (bb) an amount equal to the
remaining eighty-two and one-half percent (82.5%) of all other amounts deposited
in the applicable Cash Management Account to Eastern American's account no.
000-000-0 at Xxxxxx Bank.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend SCHEDULE 2.7(a) to add or replace a Cash
----------------
Management Bank or Cash Management Account; provided, however, that (i) such
-------- -------
prospective Cash Management Bank shall be satisfactory to Agent and Agent shall
have consented in writing in advance to the opening of such Cash Management
Account with the prospective Cash Management Bank, and (ii) prior to the time of
the opening of such Cash Management Account, Borrower and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement. Borrower shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent's reasonable judgment.
-39-
(d) The Cash Management Accounts shall be cash collateral accounts, with
Borrower's ownership interest in all cash, checks and similar items of payment
in such accounts securing payment of the Obligations, and in which Borrower is
hereby deemed to have granted a Lien to Agent.
(e) Agent shall be entitled to deliver and maintain the notice of cash
transfer ("CASH TRANSFER NOTICE") provided for in clause (iii) of SECTION 2.7(b)
--------------
at any time, in the Agent's sole and absolute discretion, that either (i)
an Event of Default has occurred and is continuing, or (ii) the Excess
Availability is Five Million Dollars ($5,000,000) or less (each such time period
a "CASH SWEEP PERIOD"). Once a Cash Sweep Period has been established by Agent
it shall remain in effect until the conditions giving rise to such Cash Sweep
Period no longer exist and Borrower has delivered to Agent a certificate to such
effect requesting a termination of such Cash Sweep Period.
(f) During any Cash Sweep Period, Borrower shall on a monthly basis
deliver to Agent a report (each a "MONTHLY FUNDS OWNERSHIP REPORT") reflecting
(i) the actual percentage of ownership by Borrower, the Pledging Subsidiaries,
the LLC and the Partnerships of all funds derived from the Borrowing Base
Properties deposited to all Cash Management Banks during the preceding monthly
time period and (ii) the aggregate amount of such deposits (i.e., the ownership
percentage of Borrower, the Pledging Subsidiaries and the Pledging Subsidiaries
in the LLC and the Partnerships for such month expressed as a decimal multiplied
by the aggregate amount of all deposits to all Cash Management Banks during
such month the "BORROWER'S MONTHLY DEPOSIT") in the Cash Management Account.
(g) In the event a Monthly Funds Ownership Report reflects that during a
Cash Sweep Period Borrower's Estimated Percentage has resulted in deposits to
the Agent's Account during the preceding month in excess of the Borrower's
Monthly Deposit for such month, Agent shall, upon request of Borrower, within
five (5) Business Days, return to Borrower's control by wire transfer to the
Designated Account an amount equal to the positive difference between the
Borrower's Monthly Deposit for such month and the aggregate deposits to the
Agent's Account during such monthly time period.
(h) In the event a Monthly Funds Ownership Report reflects that during a
Cash Sweep Period Borrower's Estimated Percentage has resulted in deposits to
the Agent's Account during the preceding month of less than the Borrower's
Monthly Deposit for such month, Agent shall promptly, in accordance with SECTION
-------
2.3(e) of this Agreement, make an Advance for the account of Borrower to be
------
credited to the Agent's Account in an amount equal to the positive excess of the
Borrower's Monthly Deposit for such month over the amount deposited to Agent's
Account for such month as a result of the Borrower's Estimated Percentage.
2.8 CREDITING PAYMENTS; COLLECTION FEE. The receipt of any payment item
------------------------------------
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrower shall be deemed not to have
made such payment and interest shall be calculated accordingly. Anything to the
contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. As
consideration for Agent's processing of all Collections, from and after the
Closing Date, Agent shall be entitled to charge Borrower a collection fee in the
amount of $1500 a month (the "COLLECTION FEE"). The Collection Fee is
acknowledged by the parties to constitute an integral aspect of the pricing of
the financing of Borrower and shall apply irrespective of whether or not there
are any outstanding monetary Obligations. The parties acknowledge and agree
that the economic benefit of the foregoing provisions of this SECTION 2.8 shall
-----------
be for the exclusive benefit of Agent.
-40-
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances, and the
------------------
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to SECTION 2.6(d). Borrower agrees to establish and maintain the
---------------
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance,
Agent Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
--------------------------------------------------------
maintain an account on its books in the name of Borrower (the "LOAN ACCOUNT") on
which Borrower will be charged with the Term Loan, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with SECTION 2.8, the Loan Account will be credited with all payments
-----------
received by Agent from Borrower or for Borrower's account, including all amounts
received in the Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and the Lender Group unless, within 30 days after
receipt thereof by Borrower, Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
----
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the term of
-----------------
this Agreement, an unused line fee in the amount equal to one-half of one
percent (0.50%) per annum times the result of (a) the Maximum Loan Amount, less
(b) the sum of (i) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (ii) the average Daily Balance of
the Term Loan that was outstanding during the immediately preceding month, plus
(iii) the average Daily Balance of the Letter of Credit Usage during the
immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the terms of the
-----------------
Fee Letter, Borrower shall pay to Agent the fees set forth in the Fee Letter,
and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate account of
----------------------------------------
Agent, audit, appraisal, and valuation fees and charges as follows, (i) a fee of
$850 per day, per auditor, plus out-of-pocket expenses for each financial
audit of Borrower performed by personnel employed by Agent, (ii) a fee of $1,500
per day per appraiser, plus out-of-pocket expenses, for each appraisal of the
Collateral performed by personnel employed by Agent, and (iii) the actual
charges paid or incurred by Agent if it elects to employ the services of one or
more third Persons to perform financial audits of Borrower, to appraise the
Collateral, or any portion thereof, or to assess Borrower's business valuation.
-41-
2.12 LETTERS OF CREDIT.
-------------------
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrower (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C UNDERTAKING") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Xxxxx Fargo) for the account of Borrower.
To request the issuance of a Letter of Credit, (or the amendment, renewal,
or extension of an outstanding Letter of Credit), Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal, or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed, or extended, the date
of issuance, amendment, renewal, or extension, the date on which such Letter of
Credit is to expire, the amount of such Letter of Credit, the name and address
of the beneficiary thereof (or of the Underlying Letter of Credit, as
applicable), and such other information as shall be necessary to prepare, amend,
renew, or extend such Letter of Credit. If requested by the Issuing Lender,
Borrower also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of a Letter of Credit.
The Issuing Lender shall have no obligation to issue a Letter of Credit if any
of the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base less the
amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $5,000,000.00 or
(iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount
less the then extant amount of outstanding Advances.
Borrower and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall have an expiry date no later than 30 days
prior to the Maturity Date and all such Letters of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to advance funds under a Letter of Credit, Borrower
immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to
Agent an amount equal to such L/C Disbursement not later than 11:00 a.m.,
California time, on the date that such L/C Disbursement is made, if Borrower
shall have received written or telephonic notice of such L/C Disbursement prior
to 10:00 a.m., California time, on such date, or, if such notice has not been
received by Borrower prior to such time on such date, then not later than 11:00
a.m., California time, on the following Business Day and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances under this Agreement. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
SECTION 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
----------------
Issuing Lender as their interest may appear.
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(b) Promptly following receipt of a notice of L/C Disbursement pursuant
to SECTION 2.12(a), each Lender with a Revolver Commitment agrees to fund its
----------------
Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection
on the same terms and conditions as if Borrower had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share of each L/C Disbursement made by
the Issuing Lender pursuant to this SECTION 2.12(b) shall be absolute and
----------------
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in SECTION 3 hereof. If any such Lender fails to make
----------
available to Agent the amount of such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender in respect of such Letter of Credit as
provided in this Section, such Lender shall be deemed to be a Defaulting Lender
and Agent (for the account of the Issuing Lender) shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection
with any Letter of Credit; provided, however, that Borrower shall not be
-------- -------
obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group. Borrower agrees to be
bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for Borrower's account, even though this
interpretation may be different from Borrower's own, and Borrower understands
and agrees that the Lender Group shall not be liable for any error, negligence,
or mistake, whether of omission or commission, in following Borrower's
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group's indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be obligated
-------- -------
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower hereby acknowledges
and agrees that neither the Lender Group nor the Issuing Lender shall be
responsible for delays, errors, or omissions resulting from the malfunction of
equipment in connection with any Letter of Credit.
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(d) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrower to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by Borrower that, as of the Closing Date, the issuance charge imposed
by the prospective Underlying Issuer is .825% per annum times the face amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender Group
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to the Base
Rate Loans hereunder. The determination by Agent of any amount due pursuant to
this Section, as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.
2.13 LIBOR OPTION.
-------------
(a) Interest and Interest Payment Dates. In lieu of having interest
---------------------------------------
charged at the rate based upon the Base Rate, Borrower shall have the option
(the "LIBOR OPTION") to have interest on all or a portion of the Advances or the
Term Loan be charged at a rate of interest based upon the LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto (provided, however, that, subject
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to the following clauses (ii) and (iii), in the case of any Interest Period
greater than 3 months in duration, interest shall be payable at 3 month
intervals after the commencement of the applicable Interest Period and on the
last day of such Interest Period), (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof have
elected to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Borrower properly has exercised
the LIBOR Option with respect thereto, the interest rate applicable to such
LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrower no longer shall have
the option to request that Advances or the Term Loan bear interest at a rate
based upon the LIBOR Rate and Agent shall have the right to convert the interest
rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.
(b) LIBOR ELECTION.
---------------
(i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR
Option by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR DEADLINE"). Notice of Borrower's election
of the LIBOR Option for a permitted portion of the Advances or the
Term Loan and an Interest Period pursuant to this Section shall be
made by delivery to Agent of a LIBOR Notice received by Agent before
the LIBOR Deadline, or by telephonic notice received by Agent before
the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time) on the
same day). Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the Lenders having a Revolver
Commitment or Term Loan Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify,
defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (a)
the payment of any principal of any LIBOR Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR Rate
Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any
LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"FUNDING LOSSES"). Funding Losses shall, with respect to Agent or any
Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate Loan had
such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case
of a failure to borrow, convert, or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount
of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Borrower setting forth
any amount or amounts that Agent or such Lender is entitled to receive
pursuant to this SECTION 2.13 shall be conclusive absent manifest
-------------
error.
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(iii) Borrower shall have not more than 7 LIBOR Rate Loans in effect at any
given time. Borrower only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $5,000,000 and integral multiples of $5,000,000 in
excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time;
-----------
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
-------- -------
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrower's and its Subsidiaries' Collections
in accordance with SECTION 2.4(b) or for any other reason, including early
--------------
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
------------------------------------------------
(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in
applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding the
Reserve Percentage, which additional or increased costs would increase
the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give Borrower and Agent notice
of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Borrower may, by notice to such
affected Lender (y) require such Lender to furnish to Borrower a
statement setting forth the basis for adjusting such LIBOR Rate and
the method for determining the amount of such adjustment, or (z) repay
the LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful
or impractical for such Lender to fund or maintain LIBOR Advances or
to continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, such Lender shall give notice of
such changed circumstances to Agent and Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of
any LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender's notice shall be deemed to be the last day
of the Interest Period of such LIBOR Rate Loans, and interest upon the
LIBOR Rate Loans of such Lender thereafter shall accrue interest at
the rate then applicable to Base Rate Loans, and (z) Borrower shall
not be entitled to elect the LIBOR Option until such Lender determines
that it would no longer be unlawful or impractical to do so.
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(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
-------------------------------------
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
---------------------
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.15) INTENTIONALLY DELETED.
----------------------
2.61 BORROWING BASE.
---------------
(a) DETERMINATION OF THE BORROWING BASE. During the period from the date
-----------------------------------
hereof to the date of the first determination of the Borrowing Base
pursuant to the further provisions of this SECTION 2.16, the initial amount of
------------
the Borrowing Base will be an amount set by the Agent on the Closing Date and
acknowledged by the Borrower (the "INITIAL BORROWING BASE").
(b) ANNUAL SCHEDULED DETERMINATIONS OF THE BORROWING BASE. Promptly
---------------------------------------------------------
after July 1 of each calendar year (commencing July 1, 2004), and in any event
prior to September 1 of each calendar year, the Borrower shall furnish to the
Agent a report in form and substance satisfactory to the Agent, prepared by an
Approved Engineer, which report shall be dated as of July 1 of such calendar
year and shall set forth the oil and gas reserves attributable to the Borrowing
Base Properties, and a projection of the rate of production and net operating
income with respect thereto, as of such date, together with additional data
concerning pricing, hedging, operating costs, quantities and purchasers of
production, and other information and engineering and geological data as the
Agent may reasonably request. Within forty-five (45) days after receipt of such
report and information and its review and approval by Agent, the Agent
shall, by written notice to the Borrower, designate the new Borrowing Base
available to the Borrower.
(c) SEMI-ANNUAL SCHEDULED DETERMINATION OF THE BORROWING BASE. In
---------------------------------------------------------------
addition, promptly after January 1 of each calendar year (commencing January 1,
2005), and in any event prior to March 1st of each calendar year, the Borrower
shall furnish to Agent a report in form and substance satisfactory to the Agent,
prepared (i) prior to the occurrence of an Event of Default or in the event
Excess Availability is greater than $25,000,000.00, by the Borrower's petroleum
engineers and (ii) after the occurrence of an Event of Default or in the event
-47-
Excess Availability is less than $25,000,000.00 by an Approved Engineer, and, in
either case, reviewed and approved by Agent, which report shall be dated as of
January 1 of such calendar year and shall set forth the oil and gas reserves
attributable to the Borrowing Base Properties, and a projection of the rate of
production and net operating income with respect thereto, as of such date,
together with additional data concerning pricing, hedging, operating costs,
quantities and purchasers of production, and other information and engineering
and geological data as the Agent may reasonably request. Within forty-five (45)
days after receipt of such report and information by Agent and its review and
approval by Agent, the Agent shall, by written notice to the Borrower, designate
the new Borrowing Base available to the Borrower.
(d DISCRETIONARY DETERMINATION OF THE BORROWING BASE. The Agent shall
--------------------------------------------------
have the right to redetermine the Borrowing Base at any time that the Agent, in
its sole discretion, believes that there has been an adverse change in the
market condition of the Energy Business or in the condition (financial or
otherwise) or operations of the Borrower and its Subsidiaries. If the Agent
shall elect to make a discretionary redetermination of the Borrowing Base
pursuant to the provisions of this SECTION 2.16(d), the Borrower shall within
---------------
thirty (30) days of receipt of a request therefor from the Agent, deliver to the
Agent such updated engineering, production, operating, and other data as the
Agent or any Lender may reasonably request. The Agent shall approve and
designate the new Borrowing Base in accordance with the procedures and standards
described in SECTION 2.16(b) AND (g).
--------------------------
(e) EXCLUSIONS. The Agent may exclude any oil and gas reserves or
----------
portion of production therefrom or any income from any other Property from the
Borrowing Base, at any time, because title information is not reasonably
satisfactory or such oil and gas reserves are not Mortgaged Properties.
(f) QUARTERLY ADJUSTMENTS. In addition to the re-determination of the
----------------------
Borrowing Base as provided above, the valuation of the oil and gas reserves set
forth in the most recent Reserve Report shall be adjusted quarterly by the
Agent, based upon the quarterly pricing report provided by the Borrower to the
Agent pursuant to SECTION 6.2, such revaluation to be made by the Agent within
-----------
five (5) Business Days of its receipt of each such report, and the Agent shall
promptly notify in writing the Borrower of the revalued Borrowing Base.
(g) GENERAL PROVISIONS WITH RESPECT TO THE BORROWING BASE. The
------------------------------------------------------------
determination of the Borrowing Base shall be made by the Agent taking into
consideration the PV-10 Value of the Eligible Proved Developed Producing
Reserves of the Pledging Subsidiaries and the Eligible Proved Developed
Producing Reserves of the Partnerships and the LLC as reflected in the most
recent Reserve Report or other report or information provided under this
Agreement, and any other relevant information obtained by or delivered to the
Agent and the Lender Group, all in accordance with the provisions of this
SECTION 2.16, together with such other credit factors (including, without
-------------
limitation, the assets, liabilities, cash flow, hedged and unhedged exposure to
price, and interest rate changes, business, properties, prospects, management,
and ownership of Borrower, its Subsidiaries, the LLC, or the Partnerships) as
Agent in its discretion deem significant.
2.17 NOTELESS AGREEMENT. No promissory notes shall evidence the payment
-------------------
obligations of any Advances or the Term Loan to Borrower. Agent shall maintain
in accordance with its usual practice an account or accounts on its books
evidencing the obligations of Borrower resulting from the Term Loan and each
Advance made by Agent from time to time, including the amounts of principal and
interest payable and paid to Lender hereunder. The entries maintained in said
accounts shall be prima facie evidence of the existence and amounts of the Term
Loan and the Advances made by Agent and the payment obligations of Borrower;
provided, however, that the failure of Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of Borrower to repay
the Advances and the Term Loan.
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3. CONDITIONS; TERMS OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation
-------------------------------------------------------
of the Lender Group (or any member thereof) to make the initial extension
of credit provided for hereunder, is subject to the fulfillment, to the
satisfaction of Agent and each Lender (the making of such initial extension of
credit by a Lender being conclusively deemed to be the satisfaction or waiver of
the following), of each of the following of the conditions precedent:
(a) the Closing Date shall occur on or before a date ninety (90) days from
the date of this Agreement, unless extended by Agent at its sole discretion, for
an additional period of time not to exceed ninety (90) days;
(b) Agent shall have received a Filing Authorization Letter, duly executed
by Borrower and each Pledging Subsidiary, together with appropriate financing
statements duly filed in such office or offices as maybe necessary or, in the
opinion of Agent, desirable to perfect the Agent's Liens in and to the
Collateral and Agent shall have received searches reflecting the filing of all
such financing statements;
(c) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:
(i) the Contribution Agreement,
(ii) the Disbursement Letter,
(iii) the Fee Letter,
(iv) the Officers' Certificate,
(v) the Partnership Pledge Agreement,
(vi) the Borrower's Security Agreement,
(vii) the LLC Pledge Agreement,
(viii) the Intercompany Notes, and
(ix) Subordination Agreements, as may be required by Agent;
(d) Agent shall have received (i) counterparts of duly executed Mortgages
encumbering Oil and Gas Properties of the Pledging Subsidiaries constituting at
least 80% of the Total Proved Developed Producing Reserves of the Pledging
Subsidiaries to which value is given in the determination of the Initial
Borrowing Base duly executed on behalf of each record owner of such Oil and Gas
Properties and evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of such Mortgage(s) as may be
necessary or, in the reasonable opinion of the Agent, desirable effectively to
create a valid, perfected first priority Lien against the Oil and Gas Properties
-49-
purported to be covered thereby, except as a result of a Permitted Lien;
and (ii) duly executed Partnership Pledge Agreements and LLC Pledge Agreement
assigning to Agent, and granting to Agent a first perfected priority security
interest in, partnership interests in Partnerships and the membership interests
in the LLC having Oil and Gas Properties constituting at least 80% the Total
Proved Developed Producing Reserves of the Partnerships to which value is given
in the determination of the Initial Borrowing Base and evidence of the
completion of all recordings and filings of such create valid, perfected first
priority Liens in such partnership interests;
(e) Agent shall have received counterparts of duly executed Mortgages
encumbering the Gathering Systems duly executed and delivered by each Subsidiary
and/or Affiliate of Borrower owning the Gathering Systems or any part thereof
and evidence of the completion (or satisfactory arrangement for the completion)
of all recordings and filings of such Mortgage(s) as may be necessary or in the
reasonable opinion of the Agent, desirable effectively to create a valid,
perfected first priority Lien on the Gathering Systems;
(f) The Borrowing Base Properties, the Gathering Systems, and the other
Collateral shall be free and clear of all Liens, except Permitted Liens. All
filings, notices, recordings and other action necessary to perfect the Liens in
the Collateral shall have been made, given or accomplished or arrangements for
the completion thereof satisfactory to the Agent and its counsel shall have been
made;
(g) Agent shall have received copies of all Governmental Approvals and third
party consents and approvals necessary or, in the sole discretion of the Agent,
advisable in connection with (i) the mortgaging and pledging of the Mortgaged
Properties, and the other Collateral, (ii) the pledging of the partnership
interests in the Partnerships, (iii) the pledging of the membership interests in
the LLC and (iv) the operations of the Borrower, its Subsidiaries, the LLC and
the Partnerships. All such Governmental Approvals and third party consents and
approvals shall be in full force and effect;
(h) Agent and Lenders shall have received certificates, dated the Closing
Date, from the Borrower's insurers certifying (i) compliance with all of the
insurance required by SECTION 6.8 hereof and by the Security Documents and (ii)
-----------
that such insurance is in full force and effect;
(i) Agent and Lenders shall have received and shall be satisfied with the
contents, results and scope of the Initial Reserve Report;
(j) Agent shall have completed and be satisfied with the results of a review
of the Borrowing Base Properties and the other Collateral and the status of the
title and the environmental condition of the Borrowing Base Properties;
(k) Borrower shall have delivered to the Agent copies of all Hedging
Agreements currently in existence to which Borrower or any of its Subsidiaries
is a party;
(l) Agent shall have received a certificate from the Secretary of Borrower
and each of its Subsidiaries: (i)attesting to the resolutions of its Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which it is a party, (ii) authorizing specific
officers of such party to execute the same, and (iii) attesting to the
incumbency and signatures of its specific officers;
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(m) Agent shall have received copies of the Governing Documents of Borrower,
each of its Subsidiaries, the LLC and the Partnerships, as amended, modified, or
supplemented to the Closing Date, certified by an appropriate officer of each
such entity;
(n) Agent shall have received a certificate of status with respect to
Borrower, each of its Subsidiaries, the LLC and the Partnerships, dated within
10 days of the Closing Date, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such entity, which certificate
shall indicate that such entity is in good standing in such jurisdiction;
(o) Agent shall have received certificates of status with respect to
Borrower, each of its Subsidiaries, the LLC and the Partnerships, each dated
within 30 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such entity) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such entity is in good standing in such jurisdictions;
(p) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by SECTION 6.8, the form and substance of
-----------
which shall be satisfactory to Agent;
(q) Agent shall have received Collateral Access Agreements with respect to
Borrower's corporate headquarters located at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000 and Eastern American's headquarters located at 000
00xx Xxxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx 00000;
(r) Agent shall have received opinions of Borrower's counsel in form and
substance satisfactory to Lender;
(s) Agent shall have received satisfactory evidence (including a certificate
of the chief financial officer of Borrower) that all tax returns required to be
filed by Borrower, each of its Subsidiaries, the LLC and the Partnerships have
been timely filed and all taxes upon Borrower, its Subsidiaries, the LLC and the
Partnerships or their respective properties, assets, income, and franchises
(including Real Property taxes, sales taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(t) Borrower shall have the Required Availability after giving effect to the
initial extensions of credit hereunder and the payment of all fees and expenses
required to be paid by Borrower on the Closing Date under this Agreement or the
other Loan Documents;
(u) Agent shall have completed its business, legal, and collateral due
diligence, including a collateral audit and review of the Books and Records of
Borrower, its Subsidiaries, the LLC and the Partnership, and verification of
Borrower's representations and warranties to the Lender Group, the results of
which shall be satisfactory to Agent;
(v) Agent shall have received completed reference checks with respect to
Borrower's senior management, the results of which are satisfactory to Agent in
its sole discretion;
(w) Lender shall have received Borrower's Closing Date Business Plan;
(x) Borrower shall pay all Lender Group Expenses incurred in connection with
the transactions evidenced by this Agreement;
-51-
(y) Borrower shall have received all licenses, approvals or evidence of
other actions required by any Person or Governmental Authority in connection
with the execution and delivery by Borrower and its Subsidiaries of this
Agreement or any other Loan Document or with the consummation of the
transactions contemplated hereby and thereby;
(z) Agent shall have received an Indenture Compliance Certificate from the
chief financial officer or president of Borrower certifying that (i) the
Advances and the Term Loan will not result in a default or event of default
under the Indenture and (ii) demonstrating, in reasonable detail, compliance by
Borrower with the Fixed Charge Coverage Ratio (as defined in the Indenture)
requirement set forth in SECTION 4.7 (i) of the Indenture, after giving effect
---------------
to the Advances and the Term Loan; and
(aa) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent and its
counsel.
3.2 INTENTIONALLY DELETED.
-----------------------
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of the
------------------------------------------------
Lender Group (or any member thereof) to make any Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof;
(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against Borrower,
Agent, any Lender, or any of their Affiliates;
(d) the requested borrowing will not result in a default or event of default
under the Indenture or the Settlement Agreement; and
(e) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution and
----
delivery hereof by Borrower, Agent and Lenders and shall continue in full force
and effect for a term ending on July 10, 2008 (the "MATURITY DATE"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
-----------------------
all Obligations (including contingent reimbursement obligations of Borrower with
respect to any outstanding Letters of Credit and including all Bank Products
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to Issuing Lender, and (b) providing cash collateral
-52-
(in an amount determined by Agent as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Agent for the benefit of the Bank
Product Providers with respect to the then extant Bank Products Obligations).
No termination of this Agreement, however, shall relieve or discharge Borrower
of its duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
--------------------------------
upon 90 days prior written notice by Borrower to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to Issuing Lender in full, and (b)
providing cash collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Agent for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations), in full, together with, in the absence of a
Non-Prepayment Premium Event, the Applicable Prepayment Premium (to be allocated
based upon letter agreements between Agent and individual Lenders). If Borrower
has sent a notice of termination pursuant to the provisions of this Section,
then the Commitments shall terminate and Borrower shall be obligated to repay
the Obligations (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender, in full,
and (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be held by
Agent for the benefit of the Bank Product Providers with respect to the then
extant Bank Products Obligations), in full, together with, in the absence of a
Non-Prepayment Premium Event, the Applicable Prepayment Premium, on the date set
forth as the date of termination of this Agreement in such notice. In the event
of the termination of this Agreement and repayment of the Obligations at any
time prior to the Maturity Date, for any other reason, including (a) termination
upon the election of the Required Lenders to terminate after the occurrence and
during the continuation of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrower shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination; provided, however, the Lender Group waives the
Applicable Prepayment Premium in the event such early termination results from a
financing provided by Xxxxx Fargo Bank, N.A., or any of its affiliates.
4. INTENTIONALLY DELETED.
-53-
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Borrower, Pledging Subsidiaries, the LLC, and the
----------------
Partnerships have good, valid and indefeasible title to its Collateral, free and
clear of Liens except for Permitted Liens, including but not limited to:
(a) the Borrowing Base Properties and the working interests and the net
revenue interests with respect thereto listed on SCHEDULE 5.1(a); and
----------------
(b) all rights under the Material Contracts listed on SCHEDULE 5.1(b).
---------------
5.2 INTENTIONALLY DELETED.
----------------------
5.3 INTENTIONALLY DELETED.
----------------------
5.4 INTENTIONALLY DELETED.
----------------------
5.5 INTENTIONALLY DELETED.
----------------------
5.6 INTENTIONALLY DELETED.
----------------------
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive office of
----------------------------------------
Borrower and its Subsidiaries is located at the address indicated in SCHEDULE
--------
5.7, and the FEIN for Borrower and each of its Subsidiaries is identified in
---
SCHEDULE 5.7.
------------
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
----------------------------------------------------
(a) Borrower and each of its Subsidiaries is duly organized and existing and
in good standing under the laws of the jurisdiction of its organization and
qualified to do business in each state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on SCHEDULE 5.8(b), is a complete and accurate description of
---------------
the authorized capital Stock of Borrower, by class, and, as of the Closing Date,
a description of the number of shares of each such class that are issued and
outstanding. Other than as described on SCHEDULE 5.8(b), there are no
----------------
subscriptions, options, warrants, or calls relating to any shares of Borrower's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
-54-
(c) Set forth on SCHEDULE 5.8(c), is a complete and accurate list of
----------------
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 5.8(c), there are no subscriptions,
---------------
options, warrants, or calls relating to any shares of Borrower's Subsidiaries'
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of any capital Stock or
any security convertible into or exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
---------------------------------
(a) The execution, delivery, and performance by Borrower of this Agreement
and by Borrower and each of its Subsidiaries of the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of Borrower and its Subsidiaries.
(b) The execution, delivery, and performance by Borrower and each of its
Subsidiaries of this Agreement and the Loan Documents to which it is a party do
not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to Borrower or any of its Subsidiaries, the Governing
Documents of Borrower or any of its Subsidiaries, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower or any
of its Subsidiaries, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of Borrower or any of its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower or any of its Subsidiaries, other than
Permitted Liens, or (iv) require any approval of interestholders of Borrower or
any of its Subsidiaries or any approval or consent of any Person under any
material contractual obligation of Borrower or any of its Subsidiaries.
(c) Other than the filing of financing statements, fixture filings, and the
recordation of the Mortgages, the execution, delivery, and performance by
Borrower and each of its Subsidiaries of this Agreement and the other Loan
Documents to which it is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which Borrower and each
of its Subsidiaries is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by Borrower and each of its Subsidiaries
will be the legally valid and binding obligations of Borrower and its
Subsidiaries, enforceable against Borrower and each such Subsidiary in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first priority
Liens, subject only to Permitted Liens.
-55-
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE 5.10, there
---------- -------------
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, any of its Subsidiaries, the LLC or any
Partnership except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrower, any of its Subsidiaries, the LLC or any
Partnership, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
-----------------------------
Borrower and its Subsidiaries that have been delivered by Borrower to Agent and
the Lenders have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and schedules and
being subject to year-end audit adjustments) and present fairly in all material
respects, the financial condition of Borrower and its Subsidiaries as of the
date thereof and results of operations for the period then ended. There has not
been a Material Adverse Change with respect to Borrower and its Subsidiaries
taken as a whole since the date of the latest financial statements submitted to
the Lender Group on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
--------------------
(a) Borrower and each of the Pledging Subsidiaries is Solvent.
(b) The value of all properties of each of Borrower and the Pledging
Subsidiaries at their present fair saleable value on a going concern basis
(i.e., the amount that may be realized within a reasonable time, considered to
be six months to one year, either through collection or sale at the regular
market value, conceiving the latter as the amount that could be obtained for
such properties within such period by a capable and diligent businessman from an
interested buyer who is willing to purchase under ordinary selling conditions),
exceeds the amount of all its debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities);
(c) Neither Borrower nor any of the Pledging Subsidiaries has unreasonably
small capital with which to conduct its business operations as heretofore
conducted;
(d) Each of Borrower and the Pledging Subsidiaries has sufficient cash flow
to enable it to pay its debts as they mature; and
(e) No transfer of property is being made by Borrower or any of the Pledging
Subsidiaries and no obligation is being incurred by Borrower or any of the
Pledging Subsidiaries in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower or any of the Pledging
Subsidiaries.
5.13 EMPLOYEE BENEFITS. Neither Borrower, nor any of its Subsidiaries, or
------------------
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 5.14, (a) to
------------------------ -------------
Borrower's knowledge, none of the properties or assets of Borrower or any of its
Subsidiaries has ever been used by Borrower or any of its Subsidiaries or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such use,
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to Borrower's
knowledge, none of the properties or assets of Borrower or any of its
Subsidiaries has ever been designated or identified in any manner pursuant to
any environmental protection statute as a Hazardous Materials disposal site, (c)
neither Borrower nor any of its Subsidiaries has received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property or Oil and Gas Properties owned or operated by Borrower or any of its
Subsidiaries, and (d) neither Borrower nor any of its Subsidiaries has received
a summons, citation, notice, or directive from the United States Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by Borrower or any of its Subsidiaries resulting in the
releasing or disposing of Hazardous Materials into the environment.
-56-
5.15 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries has
---------------
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Borrower or any of its Subsidiaries in
connection herewith.
5.16 INTELLECTUAL PROPERTY. Borrower and each of its Subsidiaries owns, or
----------------------
holds licenses in, all trademarks, trade names, copyrights, patents, patent
rights, and licenses that are necessary to the conduct of its business as
currently conducted. Attached hereto as SCHEDULE 5.16 is a true, correct, and
-------------
complete listing of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which
Borrower or any of its Subsidiaries is the owner or is an exclusive licensee.
5.17 LEASES. Borrower and its Subsidiaries enjoy peaceful and undisturbed
------
possession under all leases material to the business of Borrower and its
Subsidiaries and to which Borrower or any of its Subsidiaries is a party or
under which Borrower and its Subsidiaries are operating. All of such leases are
valid and subsisting and no material default by Borrower or any of its
Subsidiaries exists under any of them.
5.18 DDAS. Set forth on SCHEDULE 5.18 are all of the DDAs of Borrower and
---- -------------
its Subsidiaries, including, with respect to each depository (i) the name and
address of such depository, and (ii) the account numbers of the accounts
maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
--------------------
furnished by or on behalf of Borrower and its Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower and its Subsidiaries in writing to the Agent or any
Lender will be, true and accurate, in all material respects, on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. On the Closing Date, the Closing
Date Projections represent, and as of the date on which any other Projections
are delivered to Agent, such additional Projections represent Borrower's good
faith best estimate of the future performance of Borrower and its Subsidiaries
for the periods covered thereby.
5.20 PERMITTED INDEBTEDNESS. Set forth on SCHEDULE 5.20 is a true and
----------------------- --------------
complete list of all Indebtedness of Borrower and its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness and the principal terms thereof.
5.21 INVESTMENT AND HOLDING COMPANY STATUS. Neither Borrower nor any of its
-------------------------------------
Subsidiaries is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, or (b) 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" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
-57-
5.22 TAXES. Except as set forth in SCHEDULE 5.22, Borrower and each of 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 Borrower has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Change.
5.23 INSURANCE. SCHEDULE 5.23 sets forth a description of all insurance
--------- --------------
maintained by or on behalf of Borrower and its Subsidiaries as of the Closing
Date. As of the Closing Date, all premiums in respect of such insurance have
been paid.
5.24 LABOR MATTERS. As of the Closing Date, there are no strikes, lockouts
--------------
or slowdowns against Borrower and its Subsidiaries pending or, to the knowledge
of Borrower and its Subsidiaries, threatened. The hours worked by and payments
made to employees of Borrower and its Subsidiaries have not been in material
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters. All payments due from
Borrower and its Subsidiaries, or for which any claim may be made against
Borrower or any of its Subsidiaries, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of Borrower and its Subsidiaries.
5.25 CLAIMS AND LIABILITIES. Except as disclosed in SCHEDULE 5.25, neither
----------------------- -------------
Borrower nor any of its Subsidiaries nor any of the Partnerships nor the LLC has
accrued any liabilities under gas purchase contracts for gas not taken, but for
which it is liable to pay if not made up and which, if not paid, would result in
a Material Adverse Change. Except as disclosed in SCHEDULE 5.25, no claims
-------------
exist against Borrower, any of its Subsidiaries, the LLC or any of the
Partnerships for gas imbalances which claims if adversely determined could
result in a Material Adverse Change. No purchaser of product supplied by
Borrower, any of its Subsidiaries, the LLC or any of the Partnerships has any
claim against Borrower, any of its Subsidiaries, the LLC or any of the
Partnerships for product paid for, but for which delivery was not taken as and
when paid for, which claim if adversely determined could result in a Material
Adverse Change.
5.26 BORROWING BASE PROPERTIES.
---------------------------
(a) Each of the Pledging Subsidiaries, the LLC, and each of the Partnerships
has good and indefeasible title to all its Borrowing Base Properties which
are Hydrocarbon Interests and good title to all its Borrowing Base Properties
which are personal property, free and clear of Liens (other than Permitted
Liens). With respect to the Borrowing Base Properties set forth on SCHEDULE
--------
5.1(a), after giving full effect to the Permitted Liens, the net revenue
------
interest is no less than that designated for the Pledging Subsidiaries, the LLC,
and the Partnerships in and to such Borrowing Base Properties and the working
interest is no greater than as set forth for the Pledging Subsidiaries, the LLC,
and the Partnerships in and to such Borrowing Base Properties, and there are no
"back-in" or "reversionary" interests held by third parties which could reduce
the net revenue interest or increase the working interest of the Pledging
Subsidiaries, the LLC, or the Partnerships in such Borrowing Base Properties
except as expressly set forth in SCHEDULE 5.1(a). All xxxxx drilled and
----------------
Hydrocarbons produced with respect to the Borrowing Base Properties were drilled
and produced in compliance in all material respects with all applicable
Governmental Rules. All of the Borrowing Base Properties described in SCHEDULE
--------
5.1(a), are covered by the Initial Reserve Report and other reports which
------
Borrower has previously delivered to and which have been relied upon by Agent
------
and Lenders in connection with this Agreement and are covered by Mortgages or
are owned by (i) Partnerships in which the Pledging Subsidiaries have granted
security interests to Agent pursuant to a Partnership Pledge Agreement or (ii)
-38-
by LLC in which A&W has granted a security interest to Agent pursuant to the LLC
Pledge Agreement. No bills are past due and do not give rise to a Lien (other
than Liens arising in the ordinary course of business for sums which are not yet
due and payable under customary agreements or arising by operation of law) and
taxes have been paid with respect to the Borrowing Base Properties other than
those which are the subject of a bona fide dispute which is being contested in
good faith by the Pledging Subsidiaries, the LLC, or the Partnerships by
appropriate proceedings as to which a reserve is established in an amount that
is satisfactory to Agent (and if a Lien secures the same or may secure the same,
such Lien is subject to a Permitted Protest).
(b) All of the marketing arrangements of the Pledging Subsidiaries, the LLC,
and the Partnerships with respect to the Borrowing Base Properties are valid,
enforceable and in full force and effect. As of the date of this Agreement and
thereafter through the Closing Date there do not exist any cumulative imbalances
in gas production or receipt of "take or pay" payments except as disclosed as to
both existence and extent on SCHEDULE 5.26(b) attached hereto.
-----------------
(c) There has not been any Material Adverse Change in any of the Borrowing
Base Properties since the date of the most recent Reserve Report.
5.27 OPERATIONS OF BORROWING BASE PROPERTIES. A Pledging Subsidiary is the
----------------------------------------
operator of each of the Borrowing Base Properties except as set forth in
SCHEDULE 5.27.
-------
5.28 HEDGING AGREEMENT. SCHEDULE 5.28 sets forth as of the Closing Date, a
------------------ -------------
true and complete list of all Hedging Agreements (including commodity price swap
agreements, forward agreements or contracts of sale which provide for prepayment
for deferred shipment or delivery of oil, gas or other commodities) of Borrower
and its Subsidiaries, 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 counterpart to each such
agreement. Borrower has delivered true and correct copies of each of the
Hedging Agreements to Agent prior to the date of this Agreement.
5.29 OPERATING COSTS. As of the Closing Date, all costs and expenses
----------------
incurred in connection with the operation of the Borrowing Base Properties have
been fully paid and discharged by the Pledging Subsidiaries, the LLC and the
Partnerships, except (a) normal costs and expenses incurred in operating such
Borrowing Base Properties for which the Pledging Subsidiaries, the LLC and the
Partnerships have not yet been billed, (b) costs and expenses which are the
subject of a bona fide dispute which is being contested in good faith by the
Pledging Subsidiaries, the LLC or Partnerships by appropriate proceedings as to
which a reserve is established on the books of such Pledging Subsidiary, the LLC
or such Partnerships in an amount that is satisfactory to Agent (and if a Lien
secures or may secure such obligation, such Lien is subject to a Permitted
Protest).
5.30 LEASES. The oil and gas leases, farm-out agreements, and other
------
agreements associated with the Borrowing Base Properties are in full force and
effect in accordance with their respective terms and there exist no material
violations or defaults in the performance of any obligation thereunder.
Additionally, Borrower is not aware of any event that with notice or lapse of
time or both would constitute a material violation or default under any such oil
and gas leases, farm-out agreements, or other agreements.
5.31 MATERIAL CONTRACTS. Set forth on SCHEDULE 5.1(b) is a complete and
------------------- ---------------
correct list of all Material Contracts in effect or to be in effect as of the
Closing Date. Borrower has delivered to the Agent true and complete copies of
each Material Contract, as each may have been amended, that have been requested
by the Agent. Each of the Material Contracts is in full force and effect and no
default exists under the terms of any of the Material Contracts.
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5.32 INDENTURE-SENIOR DEBT. The Indenture Documents, true and complete
----------------------
copies of which have been furnished to Agent, have not been amended or otherwise
modified, and are in full force and effect. Except as disclosed in SCHEDULE
--------
5.32, there exists no event of default under any of the Indenture Documents.
----
The Obligations constitute "SENIOR DEBT" under the Indenture and Borrower has
advised Trustee under the Indenture that the Obligations constitute "SENIOR
DEBT".
5.33 COMMON ENTERPRISE. The successful operation and condition of each of
------------------
the Borrower and the Pledging Subsidiaries (the "OBLIGORS") is dependent on the
continued successful performance of the functions of the group of Obligors as a
whole and the successful operation of each of the Obligors is dependent on the
successful performance and operation of each other Obligor. Each Obligor
expects to derive benefit (and its board of directors or other governing body
has determined that it may reasonably be expected to derive benefit), directly
and indirectly, from successful operations of each of the other Obligors. Each
Obligor expects to derive benefit (and the boards of directors or other
governing body of each Obligor has determined that it may reasonably be expected
to derive benefit), directly and indirectly, from the credit extended by the
Lender Group to Borrower hereunder, both in their separate capacities and as
members of the group of companies. Each Obligor has determined that execution,
delivery, and performance of this Agreement and any other Loan Documents to be
executed by such Obligor is within its purpose, will be of direct and indirect
benefit to such Obligor, and is in its best interest.
5.34 GATHERING SYSTEMS. The Gathering Systems covered by the Mortgages
------------------
grant to Agent, for the benefit of Lenders, a perfected lien upon all
transportation facilities necessary to transport Hydrocarbons produced from the
Xxxxx included within the Mortgaged Properties to a transit point for sale or
transportation by a Person who is not an affiliate of Borrower or any of its
Subsidiaries.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower shall
do, and shall cause each of its Subsidiaries to do, all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
------------------
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall maintain a joint
interest billing and remittance system with respect to the Oil and Gas
Properties of Borrower, its Subsidiaries, the LLC and the Partnerships on which
Borrower or any of its Subsidiaries is the operator and other systems that
enable Borrower to show, among other things, the value, revenues and
profits/losses of the Oil and Gas Properties of Borrower and its Subsidiaries,
volume of production, and value of sales of Hydrocarbon production, and
positions and liability exposure of Borrower and its Subsidiaries under the
Hedging Agreements on a separate company-by-company basis, as well as on a
consolidated basis.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent, with
--------------------
copies for each Lender) with the following documents at the following times in
form satisfactory to Agent:
(a) by September 1st of each year, a Reserve Report prepared by an Approved
Engineer and reviewed and approved by Agent; and by March 1st of each year, a
Reserve Report prepared by Borrower or an Approved Engineer, as applicable, and
reviewed and approved by Agent, all in accordance with the terms of SECTION
-------
2.16;
-----
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(b) with the delivery of each Reserve Report, Borrower shall provide to
Agent, a certificate from the president or chief financial officer of Borrower
certifying that, to the best of his knowledge: (i) the information contained in
such Reserve Report and any other information delivered in connection therewith
is true and correct; (ii) each of the Pledging Subsidiaries, the LLC and the
Partnerships own good and defensible title to its Borrowing Base Properties
evaluated in such Reserve Report and are free of all Liens except for Permitted
Liens; (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 with respect
to the Borrowing Base Properties evaluated in such Reserve Report which would
require the Pledging Subsidiaries, the LLC or the Partnerships to deliver
Hydrocarbons produced from such Borrowing Base Properties at some future time
without then or thereafter receiving full payment therefor; (iv) none of the
Borrowing Base Properties has been sold since the date of the last Borrowing
Base determination; (v) if requested by Agent, attached to the certificate is a
list of all Persons disbursing proceeds to Borrower, the Pledging Subsidiaries,
the LLC or the Partnerships from the Borrowing Base Properties; and (vi) set
forth on a schedule attached to the certificate is the [PV-10 Value] Reserve
Report value of all Borrowing Base Properties together with a list of the Xxxxx
that are owned by the Partnerships and the LLC;
(c) as soon as available and in any event within 10 Business Days after the
end of each quarter-annual period, a report setting forth, in form substantially
similar to the form set forth on SCHEDULE 6.2(c), the calculation as of the last
---------------
Business Day of the quarter-annual period preceding the date of the delivery by
the Borrower of such report, of the Total Value as determined by the Reserve
Report most recently delivered by the Borrower under SECTION 6.2(a), each such
--------------
report shall be accompanied by a certificate of the president or chief financial
officer of Borrower certifying to the completeness and accuracy of the report,
including the calculation of the Total Value comprising the Borrowing Base
Properties;
(d) as soon as available and in any event within 30 days after the end of
each month, a report setting forth the amount of "funds held for future
distribution" as of the close of the month reported on as reflected in the
monthly financial statements of Borrower, together with a certificate from the
president or chief financial officer of Borrower certifying that Borrower and
the Pledging Subsidiaries have paid and are current with respect to all
royalties, overriding royalties and operating expenses relating to the Borrowing
Base Properties except for those which are subject to a Permitted Protest;
(e) upon request by Agent from time to time, copies of lease files, well
files and contract files (including production reports on each Well, marketing
contracts, and information regarding locations of and equipment located on each
Well) of each of the Pledging Subsidiaries, the LLC and the Partnerships with
respect to the Borrowing Base Properties;
(f) such other information reports, statements, materials and data as to the
xxxxx operated by the Pledging Subsidiaries, the LLC or the Partnerships or in
which the Pledging Subsidiaries, the LLC or Partnerships otherwise have an
interest and the accounting and billing procedures utilized by the Pledging
Subsidiaries in connection with such xxxxx as shall be reasonably requested by
Agent including, without limitation, relevant computer programs, disks and
tapes; and
(g) such other reports as to the Collateral or the business or financial
condition of Borrower, each of its Subsidiaries, the LLC and the Partnerships as
Agent may reasonably request from time to time.
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6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
----------------------------------------------
copies to each Lender:
(a) as soon as available, but in any event (i) prior to the occurrence of an
Event of Default, within 45 days after the end of each fiscal quarter of
each fiscal year of Borrower and (ii) after the occurrence of an Event of
Default within 30 days after the end of each calendar month:
(i) a company prepared consolidated balance sheet, income statement,
and statement of cash flow covering Borrower and its Subsidiaries'
operations during such period,
(ii) a company prepared report detailing the aggregate amount of cash
dividends made by the Borrower from July 2002 through such period,
(iii) a company prepared report detailing the aggregate amount of
common and Class A stock of Borrower repurchased by Borrower during
the immediately preceding twelve month period,
(iv) a certificate signed by the chief financial officer of Borrower
to the effect that:
A. the financial statements and reports delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of Borrower
and its Subsidiaries,
B. the representations and warranties of Borrower and its
Subsidiaries contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of
such certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date),
C. there does not exist any condition or event that constitutes a
Default or Event of Default (or, to the extent of any non-compliance,
describing such non-compliance as to which he or she may have
knowledge and what action Borrower has taken, is taking, or proposes
to take with respect thereto), and
(v) a Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable financial
covenants contained in SECTION 7.20,
-------------
(vi) a company prepared report (A) listing all of the Hedging
Agreements of Borrower, its Subsidiaries and Affiliates and (B)
detailing the aggregate amount of Hedging Obligations of Borrower, its
Subsidiaries and Affiliates under the Hedging Agreements,
(b) as soon as available, but in any event within 90 days after the end of
each of Borrower's fiscal years,
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(i) financial statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and Lenders
stating that such accountants do not have knowledge of the existence
of any Default or Event of Default under SECTION 7.20,
-------------
(c) as soon as available, but in any event within 30 days prior to the start
of each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and substance (including
as to scope and underlying assumptions) satisfactory to Agent, in its
sole discretion, for the forthcoming fiscal year, quarter by quarter,
certified by the chief financial officer of Borrower as being such
officer's good faith best estimate of the financial performance of
Borrower and its Subsidiaries during the period covered thereby,
(d) if and when filed by Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) if and when filed by Borrower and as requested by Agent, satisfactory
evidence of payment of applicable excise taxes in each jurisdictions in which
(i) Borrower or any of its Subsidiaries conducts business or is required to pay
any such excise tax, (ii) where the failure by Borrower or any of its
Subsidiaries to pay any such applicable excise tax would result in a Lien on the
properties or assets of Borrower, or (iii) where Borrower's failure to pay any
such applicable excise tax reasonably could be expected to result in a Material
Adverse Change,
(f) as soon as Borrower has knowledge of any event or condition that
constitutes a Default or an Event of Default, notice thereof and a statement of
the curative action that Borrower proposes to take with respect thereto, and
(g) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrower and its Subsidiaries.
In addition to the financial statements referred to above, Borrower agrees to
deliver financial statements prepared on both a consolidated and consolidating
basis and that no Subsidiary of Borrower (other than Eastern Capital
Corporation), will have a fiscal year different from that of Borrower. Borrower
agrees that its independent certified public accountants are authorized
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to communicate with Agent and to release to Agent whatever financial information
concerning Borrower and its Subsidiaries that Agent reasonably may request.
Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Agent pursuant to or in accordance with this Agreement,
and agrees that Agent may contact directly any such accounting firm or service
bureau in order to obtain such information.
6.4 INTENTIONALLY DELETED.
----------------------
6.5 INTENTIONALLY DELETED.
----------------------
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
--------------------------
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee, so as
to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
-----
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its Subsidiaries or any of their assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower will make, and will cause its Subsidiaries to make,
timely payment or deposit of all tax payments and withholding taxes required of
it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower and each
of its Subsidiaries has made such payments or deposits. Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which Borrower or any Subsidiary is required to pay any such excise tax.
6.8 INSURANCE.
---------
(a) At Borrower's expense, maintain insurance respecting its property and
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain, and
shall cause each of its Subsidiaries to maintain, business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss covered by such
insurance. With respect to the Mortgaged Properties, Agent shall have the
exclusive right to adjust any losses payable under any such insurance policies
in excess of $50,000, without any liability to Borrower or any of its
Subsidiaries whatsoever in respect of such adjustments. Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Borrower under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction.
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(c) Neither Borrower nor any Subsidiary shall take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this SECTION 6.8, unless Agent is included thereon as named
------------
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Borrower immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.9 HEDGING AGREEMENTS. Borrower will, and will cause each Pledging
-------------------
Subsidiary, the Partnerships and the LLC (for purpose of this Section the
Borrower, Pledging Subsidiaries, the Partnerships and the LLC are called the
"Borrowing Base Entities") to, maintain in effect at all times on a continuous
basis one or more Hedging Agreements with respect to their natural gas
production with the Bank Product Provider or other investment grade
counterparties, rated Aa3 or better by Xxxxx'x, A+ or better according to
Standard & Poor's, or the equivalent by a rating agency acceptable to Agent or
other Persons acceptable to Lender which Hedging Agreements taken together shall
at all times extend at least twelve (12) months into the future and cover
aggregate notional volumes of natural gas equal to not less than 30% and not
more than 70% of the forecasted natural gas production from Oil and Gas
Properties of the Borrowing Base Entities, classified as Proved Developed
Producing Reserves as of the date of the most recent Reserve Report. The Hedging
Agreements shall be used solely as a part of normal and prudent business
operations as a risk management strategy and/or hedge against changes resulting
from market conditions related to the Borrowing Base Entities' oil and gas
operations and not as a means to speculate for investment purposes on trends and
shifts in financial or commodities markets. Borrower shall notify Agent
immediately upon becoming aware (in any event not later than the close of
business on the same Business Day) that the production of natural gas by any of
the Borrowing Base Entities could reasonably be expected to be insufficient to
meet its obligations under any Hedging Agreements.
6.10 COMPLIANCE WITH LAWS. Comply with all Governmental Rules applicable to
--------------------
Borrower, each of its Subsidiaries, and their respective Properties.
6.11 PAYMENT OF TRADE LIABILITIES. Within sixty (60) days after the same
-------------------------------
become due pay all liabilities and debt owed by Borrower and each of its
Subsidiaries on ordinary trade terms to vendors, suppliers and other Persons
providing goods and services used by Borrower and each Subsidiary in the
ordinary course of its business.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
----------------------
finder's fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect the
---------
valid existence and good standing of Borrower and each of its Subsidiaries and
any rights and franchises material to the business of Borrower and its
Subsidiaries.
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6.14 ENVIRONMENTAL.
-------------
(a) Keep any property either owned or operated by Borrower or any of its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
Borrower or any of its Subsidiaries and take any Remedial Actions required to
xxxxx said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly provide Agent with written notice within 10
days of the receipt of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of Borrower or
any of its Subsidiaries, (ii) commencement of any Environmental Action or notice
that an Environmental Action will be filed against Borrower or any of its
Subsidiaries, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
-------------------
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to Agent or the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect of
amending or modifying this Agreement or any of the Schedules hereto.
6.16 NOTICES OF MATERIAL EVENTS. Promptly, and in any event within three
-----------------------------
(3) Business Days upon Borrower's becoming aware of the following events,
furnish to Agent and each Lender written notice of the following:
(a) the occurrence of any Default;
(b) (i) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Borrower,
any of its Subsidiaries, the LLC or any of the Partnerships or (ii) the
occurrence of any adverse development with respect to any action, suit or
proceeding previously disclosed to the Agent or the Lenders pursuant to this
Agreement, in each case if such action, suit or proceeding could reasonably be
expected to result in a Material Adverse Change;
(c) (i) any claim by any Person against Borrower or any of its Subsidiaries
of nonpayment of, or (ii) any attempt by any Person to collect upon or enforce,
any accounts payable of Borrower or any of its Subsidiaries, in the case of any
single account payable in excess of $500,000.00, or in the case of all accounts
payable in the aggregate in excess of $3,000,000.00;
(d) (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened or other environmental
claims against Borrower or any of its Subsidiaries or any of their respective
Properties pursuant to any applicable Environmental Laws which could result in a
Material Adverse Change, and (ii) any environmental or similar condition on any
real property adjoining or in the vicinity of the property of Borrower or any of
its Subsidiaries that could reasonably be anticipated to cause such property or
any part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use of such property under any Environmental Laws;
and
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(e) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Change. Each notice delivered under this
SECTION 6.16 shall be accompanied by a statement of the president or chief
-------------
financial officer of Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
6.17 INFORMATION REGARDING COLLATERAL. Promptly, and in any event within
----------------------------------
five (5) Business Days upon becoming aware of the following changes, furnish to
the Agent written notice of any change (i) in the corporate name of Borrower or
any of its Subsidiaries or in any trade name used by Borrower or any of its
Subsidiaries to identify it in the conduct of its business or in the ownership
of its properties, (ii) in the location of Borrower's or any of its
Subsidiaries' chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral or any
office or facility at which Collateral is located (including the establishment
of any such new office or facility), (iii) in Borrower's, any of its
Subsidiaries', the LLC's or any of the Partnership's identity, corporate
structure, or jurisdiction of incorporation, organization or formation, or (iv)
in Borrower's, any of its Subsidiaries', the LLC's or any Partnership's Federal
Taxpayer Identification Number. Borrower agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Agent to continue at all times following such change to have a valid, legal
and perfected liens and security interest in all the Collateral. Borrower also
agrees promptly to notify the Agent if any material portion of the Collateral is
damaged or destroyed.
6.18 PAYMENT OF INDEBTEDNESS. Pay the Indebtedness of Borrower and its
-------------------------
Subsidiaries and other obligations, including Tax liabilities of Borrower and
its Subsidiaries, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation and the enforcement
of any Lien securing such obligation and (d) the failure to make payment pending
such contest could not reasonably be expected to result in a Material Adverse
Change.
6.19 BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS.
----------------------------------------------------
(a) Keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to the business
and activities of Borrower and its Subsidiaries. Borrower will permit, and will
cause each of its Subsidiaries to permit, any representatives designated by the
Agent or any Lender to visit and inspect the properties of Borrower and its
Subsidiaries, to examine and make extracts from their books and records, and to
discuss their affairs, finances and condition with their officers and
independent accountants, all at such reasonable times and as often as reasonably
requested. Borrower shall pay any reasonable fees of such independent public
accountant incurred in connection with the Agent's or such Lender's exercise of
its rights pursuant to this Section. Furthermore, Borrower will permit the
Agent or any Lender, or its agents, at the cost and expense of the Borrower, to
enter upon the Mortgaged Properties and all parts thereof, for the purpose of
investigating and inspecting the condition and operation thereof, and shall
permit reasonable access to the field offices and other offices, including the
principal place of business, of Borrower and its Subsidiaries to inspect and
examine the Mortgaged Properties and the records of Borrower and its
Subsidiaries with respect thereto.
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(b) Without limiting the generality of SECTION 6.19(a), permit any
----------------
representatives designated by the Agent (including any consultants, accountants,
engineers, lawyers and appraisers retained by the Agent) to conduct evaluations,
inspections of the Borrowing Base Properties or of the Borrower's or any
Approved Engineer's assessment of the condition or value thereof, all at such
reasonable times and as often as reasonably requested. Borrower shall pay the
reasonable fees and expenses of any representatives retained by the Agent to
conduct any such evaluation or inspection.
6.20 USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of the Term Loan
---------------------------------------
and Advances will be used by Borrower, subject to the terms of SECTION 7.20 only
------------
for (a) the payment of all of Borrower's indebtedness, liabilities and
obligations under the Settlement Agreement and (b) the advancing of loans to the
Pledging Subsidiaries in each instance in aggregate amounts at any one time
outstanding not to exceed such Pledging Subsidiary's portion of the Borrowing
Base. The Pledging Subsidiaries may use the proceeds of such loans from the
Borrower for lawful corporate purposes of each Pledging Subsidiary. No part of
the proceeds of the Term Loan or any Advance will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the regulations
of the Board, including Regulations G, U and X. Letters of Credit will be
issued only to support normal and customary oil and gas operations undertaken by
the Pledging Subsidiaries in the ordinary course of business.
6.21 FURTHER ASSURANCES.
-------------------
(a) Execute, and cause the appropriate Subsidiaries to execute, any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Agent may request,
to effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created or intended to be created by the
Loan Documents or the validity or priority of any such Lien, all at the expense
of the Borrower. Borrower also agrees to provide to the Agent, from time to time
upon request of the Agent, information which is in the possession of the
Borrower or otherwise reasonably obtainable by it, satisfactory to the Agent as
to the ownership of the Collateral, and the perfection and priority of the Liens
created or intended to be created by the Loan Documents.
(b) Borrower hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of Borrower or any of its Subsidiaries
where permitted by law. A carbon, photographic or other reproduction of the
Loan Documents or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(c) Without limiting any other provision of this SECTION 6.21, take such
------------
actions and execute and deliver such documents and instruments as the Agent
shall require to ensure that the Agent shall, at all times, have received
currently effective, duly executed Loan Documents encumbering (i) the Gathering
Systems and (ii) Oil and Gas Properties of Borrower and its Subsidiaries
constituting 80% of the value of the Total Proved Developed Producing Reserves
as reflected in the Initial Reserve Report (with accompanying letters in lieu of
transfer orders) and satisfactory title evidence in form and substance
reasonably acceptable to the Agent in its business judgment as to ownership of
such Gathering Systems and Oil and Gas Properties.
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(d) If the Agent shall determine that, as of the date of any Borrowing Base
redetermination, Borrower shall have failed to comply with the preceding SECTION
-------
6.21(c), the Agent may notify the Borrower in writing of such failure and,
-------
within thirty (30) days from and after receipt of such written notice by the
Borrower, the Borrower shall cause the Pledging Subsidiaries or any other
Subsidiary of Borrower to, execute and deliver to the Agent for the benefit of
the Lender Group supplemental or additional Mortgages, in form and substance
satisfactory to the Agent and its counsel, securing payment of the Obligations
and covering additional Oil and Gas Properties of the Pledging Subsidiaries or
such other Subsidiary not then encumbered by any Mortgage (together with current
valuations, engineering reports, and title evidence (which title evidence shall
be consistent with customarily accepted title information in the geographical
region in which such additional Oil and Gas Properties are situated) applicable
to the additional Oil and Gas Properties to be mortgaged and such other
documents as the Agent may require, including opinions of counsel, each of which
shall be in form and substance reasonably satisfactory to the Agent) such that
the Agent shall have received currently effective duly executed Mortgages
encumbering Oil and Gas Properties of Borrower or any of its Subsidiaries
constituting at least 80% of the Total Proved Developed Producing Reserves (with
accompanying letters in lieu of transfer orders) and satisfactory title evidence
(which title evidence shall be consistent with customarily accepted title
information in the geographical region in which such additional Oil and Gas
Properties are situated) as to ownership of such additional Oil and Gas
Properties.
6.22 MAINTENANCE AND OPERATION OF BORROWING BASE PROPERTIES. Consistent
----------------------------------------------------------
with the standards of a reasonably prudent operator:
(a) maintain, develop, and operate the Borrowing Base Properties and the oil
and gas gathering assets of Borrower and its Subsidiaries in a good and
workmanlike manner, and observe and comply with all of the terms and provisions,
express or implied, of all Hydrocarbon Interests relating to the Borrowing Base
Properties so long as the Hydrocarbon Interests are capable of producing
Hydrocarbons and accompanying elements in quantities and at prices providing for
continued efficient and profitable operation of business;
(b) comply in all material respects with the Material Contracts and all
other contracts and agreements applicable to or relating to the Borrowing Base
Properties or the production and sale of Hydrocarbons and accompanying elements
therefrom;
(c) at all times, maintain, preserve, and keep all operating Equipment used
with respect to the Borrowing Base Properties, and oil and gas gathering assets
of Borrower and its Subsidiaries in proper repair, working order and condition,
and make all necessary or appropriate repairs, renewals, replacements, additions
and improvements thereto so that the efficiency of the operating Equipment shall
at all times be properly preserved and maintained; and
(d) with respect to the Borrowing Base Properties, and oil and gas gathering
assets of Borrower and its Subsidiaries which are operated by operators other
than Borrower or its Subsidiaries, seek to enforce the operators' contractual
obligations to maintain, develop, and operate such properties subject to the
applicable operating agreements.
6.23 COLLATERAL VALUE. Within sixty (60)days after a Reserve Report or
-----------------
other report or information is delivered pursuant to SECTION 6.2 that shows the
-----------
Total Value is less than $175,000,000.00, either (a) execute, and/or cause to be
executed and delivered to the Agent supplemental or additional Mortgages, in
form and substance satisfactory to the Agent and its counsel, securing payment
of the Obligations and covering other Oil and Gas Properties directly owned by
Borrower, one or more of the Pledging Subsidiaries or any other
Subsidiary of Borrower which are not then covered by any Mortgage and having a
value (as determined by Agent in its sole discretion), in addition to the other
Oil and Gas Properties already subject to a Mortgage, sufficient to cause the
Total Value to exceed $175,000,000.00, or (b) reduce the Total Usage to an
amount equal to 57% of the newly established Total Value.
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6.24 OBLIGATION TO PAY. Borrower hereby unconditionally promises to pay
-------------------
Agent for the benefit of the Lenders, in accordance with the terms and
conditions of this Credit Agreement including, without limitation, SECTION
-------
2.6(d) hereof, the Obligations, and to pay the Obligations in full on the
------
Maturity Date.
6.25 INDENTURE. Borrower shall perform and observe all the terms and
---------
provisions of each of the Indenture Documents to be performed or observed by it,
at the times and in the manner provided therein.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower will
not, and will not permit any of its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or otherwise
------------
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit;
(b) Indebtedness of Borrower and its Subsidiaries set forth on SCHEDULE
--------
5.20;
-----
(c) refinancings, renewals, or extensions of Indebtedness permitted under
clause (b) of this SECTION 7.1 (and continuance or renewal of any Permitted
------------
Liens associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in Agent's reasonable judgment,
materially impair the prospects of repayment of the Obligations by Borrower or
materially impair Borrower's creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of the
Indebtedness so refinanced, renewed, or extended or add one or more of the
Borrower's Subsidiaries or Affiliates as liable with respect thereto if such
additional Subsidiary or Affiliate were not liable with respect to the original
Indebtedness, (iii) such refinancings, renewals, or extensions do not result in
a shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions, that, taken as a
whole, are materially more burdensome or restrictive to the Borrower, and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to Agent and the Lender Group as
those that were applicable to the refinanced, renewed, or extended Indebtedness;
(d) Indebtedness of Borrower not secured by or subject to a Lien in respect
of performance, completion, guarantee, surety, or similar bonds, banker's
acceptances, bills of exchange, or letters of credit provided by Borrower in the
ordinary course of its Energy Business provided that such Indebtedness does not
exceed $2,000,000.00 in the aggregate at any one time outstanding;
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(e) accounts payable or other obligations of Borrower and its Subsidiaries
to trade creditors created in the ordinary course of its Energy Business in
connection with the obtaining of goods and services provided that all such
obligations and liabilities are paid within 60 days when due;
(f) Indebtedness of Borrower consisting of obligations in respect of
purchase price adjustments, guaranties or indemnities in connection with the
acquisition of assets or Permitted Dispositions;
(g) Nonrecourse Debt of any Unrestricted Subsidiary provided such
Nonrecourse Debt is incurred in connection with an acquisition of assets by an
Unrestricted Subsidiary permitted under SECTION 7.13;
-------------
(h) Unsecured Indebtedness of the Subsidiaries to Borrower;
(i) Hedging Obligations of the Borrower and its Subsidiaries, provided:
---------
(i) Hedging Obligations of Borrower and its Subsidiaries other than those of
the Pledging Subsidiaries, the Partnerships, and the LLC and of the
Borrower relating thereto (which are subject to the restriction under (ii)
below) shall only be under contracts entered into in the ordinary course of
business for the purpose of limiting risks that arise in the ordinary course of
business of Borrower and its Subsidiaries and not for the purpose of
speculation; and
(ii) Hedging Obligations of the Pledging Subsidiaries, the Partnerships, and
the LLC and of the Borrower relating thereto shall only be permitted to the
extent set forth in Section 6.9;
------------
(j) additional Indebtedness of Borrower not to exceed $5,000,000.00 in the
aggregate during the term of this Agreement provided that the terms and
conditions of such Indebtedness are reasonably satisfactory to Agent; and
(k) liabilities of Borrower resulting from the sale of Production Payments
with respect to oil, gas, or mineral leases or interests (other than Borrowing
Base Properties) to the extent Borrower does not transfer control of the
interest sold to the buyer, and such liabilities are recorded in accordance with
GAAP.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its assets, of any kind,
-
whether now owned or hereafter acquired, or any income or profits therefrom,
except for:
(a) Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under SECTION 7.1(e) and so long as the replacement Liens only encumber
--------------
those assets that secured the refinanced, renewed, or extended Indebtedness);
(b) any Lien on Borrowing Base Properties existing on the date of this
Agreement and set forth on SCHEDULE 7.2; provided that (i) such Lien shall not
------------
apply to any other Property or asset of Borrower or any Subsidiary, and (ii)
such Lien shall secure only those obligations which it secures on the date of
this Agreement; and
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(c) any Lien existing on any Property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary (other than Pledging Subsidiaries) or
existing on any Property or asset of any Person that becomes a Subsidiary after
the date of this Agreement prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other Property or assets of Borrower or
any Subsidiary, and (iii) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary;
(d) Liens on fixed or capital assets acquired, constructed or improved by
Borrower or any Subsidiary which do not constitute Collateral; provided that (i)
such security interests secure Indebtedness permitted by clause (j) of SECTION
-------
7.1, (ii) such security interests and the Indebtedness secured thereby are
---
incurred prior to or within 90 days after such acquisition or the completion of
such asset, (iii) the Indebtedness secured thereby does not exceed 75% of the
cost of acquiring or improving such Oil and Gas Property or fixed or capital
asset, and (iv) such Lien does not apply to any other Property or assets of the
Borrower or any of its Subsidiaries.
(e) Liens securing Non-Recourse Debt permitted by SECTION 7.1 provided the
-----------
Lien is limited to the assets acquired by the Unrestricted Subsidiary with the
proceeds of the Non-Recourse Debt.
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
--------------------------------------
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock, except to the extent permitted by the
terms of SECTION 7.11.
-------------
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
--------------------
lease, license, assign, transfer, or otherwise dispose of any of the assets of
Borrower or any of its Subsidiaries.
7.5 CHANGE NAME. Change Borrower's or any Subsidiaries' name, FEIN,
------------
corporate structure or identity, or add any new fictitious name; provided,
however, that Borrower or any of its Subsidiaries may change its name upon at
least 30 days prior written notice by Borrower to Agent of such change and so
long as, at the time of such written notification, Borrower or any such
Subsidiary provides any financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with respect
---------
to the obligations of any third Person except by endorsement of instruments or
items of payment for deposit to the account of Borrower or which are transmitted
or turned over to Agent; provided, however, that Borrower may execute guarantees
of Indebtedness of its Subsidiaries to the extent the Indebtedness of such
Subsidiary is permitted by the terms of this Agreement.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
--------------------
Borrower's or any Subsidiaries' business.
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7.8 PREPAYMENTS AND AMENDMENTS.
----------------------------
(a) Except in connection with a refinancing permitted by SECTION 7.1(c),
--------------
prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of
Borrower or any of its Subsidiaries, other than the Obligations in accordance
with this Agreement.
(b) Except in connection with a refinancing permitted by SECTION 7.1(c),
--------------
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under SECTIONS 7.1(b);
---------------
provided, however, so long as no Default or Event of Default exists, Borrower
may redeem or repurchase the Subordinated Notes.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
-------------------
any Change of Control.
7.10 INTENTIONALLY DELETED.
----------------------
7.11 DISTRIBUTIONS. Other than distributions or declaration and payment of
-------------
dividends by a Subsidiary to Borrower, make any distribution or declare or pay
any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of Borrower's Stock, of any class,
whether now or hereafter outstanding; provided, however, so long as no Default
or Event of Default has occurred and is continuing, the foregoing restrictions
shall not apply to:
(a) Borrower's paying cash dividends in an aggregate not exceeding
$12,000,000.00 during the term of this Agreement;
(b) any Subsidiary paying cash dividends to the Borrower or any other
Subsidiary at such times and in such amounts during any fiscal year, as shall be
necessary to permit Borrower to discharge its permitted liabilities;
(c) Borrower's repurchasing common and Class A stock of Borrower owned by
employees who terminate their employment or whose employment is terminated by
Borrower consistent with the existing programs between the Borrower and its
employees in an amount which when added to the amounts expended by Borrower
pursuant to SECTION 7.11(d) does not exceed $2,000,000.00 in any twelve (12)
---------------
month period; and
(d) Borrower's repurchasing common and Class A stock of Borrower owned by
officers, employees and directors of Borrower consistent with existing programs
and practices of Borrower in an amount which when added to the amounts expended
by Borrower pursuant to SECTION 7.11(c) does not exceed $2,000,000.00 in any
---------------
twelve (12) month period.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting (other
-------------------
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or
storage of the accounting records of Borrower and its Subsidiaries without said
accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or the financial condition of the Borrower and its
Subsidiaries.
7.13 INVESTMENTS. Directly or indirectly, make or acquire any Investment,
-----------
or incur any liabilities (including contingent obligations) for or in connection
with any Investment, except:
(a) Permitted Investments;
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(b) unsecured loans and advances (including loans and advances made by
Borrower to Pledging Subsidiaries with the proceeds of the Term Loan and
Advances) from Borrower to the Pledging Subsidiaries provided that (i) each
Pledging Subsidiary executes and delivers to Borrower a promissory note (the
"INTERCOMPANY NOTES") evidencing such loans and advances payable to the order of
-------------------
Borrower, all in form, scope, and content acceptable to Agent, and (ii) Borrower
pledges and assigns the Intercompany Notes to Agent as security for the payment
of the Obligations pursuant to the Borrower's Security Agreement and endorses
the Intercompany Notes to the order of Agent, all in a form and manner
satisfactory to Agent;
(c) Investments by Borrower and/or any Subsidiary made or entered into in
the ordinary course of the Energy Business; provided:
(i) immediately before and immediately after giving effect to the
Investment, Excess Availability exceeds $10,000,000.00; and
(ii) immediately before and immediately after giving effect to the
Investment, no Default or Event of Default exists;
(d) capital expenditures by Borrower and the Subsidiaries with respect to
the assets used or useful in the Energy Business conducted by Borrower and the
Subsidiaries, to the extent permitted by SECTION 7.20(b);
----------------
(e) Investments by Borrower in its Subsidiaries;
(f) Investments by an Unrestricted Subsidiary with the proceeds of
Non-Recourse Debt; and
(g) Investments of Borrower and the Subsidiaries existing as of the date of
this Agreement and reflected on SCHEDULE 7.13.
--------------
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
------------------------------
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Lender, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate; provided, however, that Borrower and its Subsidiaries may
engage in drilling program transactions with Borrower's officers, employees and
directors consistent with past practices of Borrower.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
----------
business.
7.16 INTENTIONALLY DELETED.
----------------------
7.17 USE OF PROCEEDS. Use the proceeds of the Term Loan and the Advances
-----------------
for any purpose other than (a) on the Closing Date, to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, only for the purposes set forth in SECTION 6.20.
-------------
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
-----------------------------------------------------------------------
WITH BAILEES. Relocate its chief executive office to a new location without
-------------
Borrower providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, the Borrower or applicable
Subsidiary provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location.
-74-
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
--------------------
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrower will not transfer, and will not permit any of its
Subsidiaries to transfer, assets out of any Securities Account; provided,
however, that, so long as no Event of Default has occurred and is continuing or
would result therefrom, Borrower may use such assets (and the proceeds thereof)
to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
--------------------
(a) Fail to maintain:
(i) Minimum EBITDAX. EBITDAX in an amount equal to or greater than
$30,000,000.00 at the close of each fiscal quarter of Borrower after
the date hereof. Compliance of the foregoing covenant will be tested
quarterly on a rolling four quarter basis.
(ii) Book Net Worth. Book Net Worth of at least $32,000,000 at the
close of each fiscal quarter of Borrower after the date hereof.
Compliance of the foregoing covenant will be tested quarterly.
(b) Make:
(i) Capital Expenditures. Upon Excess Availability falling below
$10,000,000.00, capital expenditures in any fiscal year of Borrower in
an amount in excess of 120% of the Projections for such fiscal year
delivered to Agent in accordance with the terms of this Agreement and
approved by Agent.
7.21 INTENTIONALLY DELETED.
----------------------
AMENDMENTS TO INDENTURE. Amend or otherwise modify the Subordinated Notes or
-------------------------
the Indenture in any respect or permit any such amendment or modification which
would (a) change any provision relating to guaranties of the Subordinated Notes,
(b) provide for any collateral to secure the Subordinated Notes, or (c) change
any provision relating to the subordination of the Subordinated Notes or any
guaranties thereof.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrower or any of its Subsidiaries fails to pay when due and payable
or when declared due and payable, all or any portion of the Obligations (whether
of principal, interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and
charges due Agent or any member of the Lender Group, reimbursement of Lender
Expenses, or other amounts constituting Obligations);
8.2 If Borrower or any of its Subsidiaries fails to perform, keep, or
observe (a) any term, provision, condition, covenant, or agreement contained in
SECTIONS 6.1, 6.2, 6.3, 6.6, 6.7, 6.10, 6.11, 6.12, 6.14, 6.15, 6.16, 6.17,
--------------------------------------------------------------------------------
6.19, 6.21, OR 6.22 of this Agreement and such failure continues for a period of
-------------------
fifteen (15) days after the date of failure; or (b) any other term, provision,
condition, covenant, or agreement in this Agreement or any of the other Loan
Documents;
-75-
8.3 If any material portion of Borrower's or any of its Subsidiaries' assets
is attached, seized, subjected to a writ or distress warrant, levied upon, or
comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower or any of its
Subsidiaries, and any of the following events occur: (a) the Borrower or any
Subsidiary consents to the institution of the Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted; provided, however, that during the pendency of such period, each
member of the Lender Group shall be relieved of its obligations to extend credit
hereunder, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
its obligation to extend credit hereunder, (d) an interim trustee is appointed
to take possession of all or any substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Borrower or
any of its Subsidiaries, or (e) an order for relief shall have been entered
therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with respect
to any Borrower's or any of its Subsidiaries' assets by the United States, or
any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether xxxxxx or
otherwise, upon Borrower's or any of its Subsidiaries' assets and the same is
not paid before such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Borrower's or any of its Subsidiaries' assets;
8.9 If there is a default in any material agreement to which Borrower or any
of its Subsidiaries is a party and such default (a) occurs at the final maturity
of the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of the
Borrower's or its Subsidiaries' obligations thereunder, to terminate such
agreement, or to refuse to renew such agreement pursuant to an automatic renewal
right therein;
8.10 If Borrower or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in any
warranty, representation, statement, or Record made to the Lender Group by
Borrower, its Subsidiaries, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries;
8.12 INTENTIONALLY DELETED;
----------------------
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8.13 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby;
8.14 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower or any of its Subsidiaries, or a proceeding shall be
commenced by Borrower or any of its Subsidiaries, or by any Governmental
Authority having jurisdiction over Borrower or any of its Subsidiaries, seeking
to establish the invalidity or unenforceability thereof, or Borrower or any of
its Subsidiaries shall deny that Borrower or such Subsidiary has any liability
or obligation purported to be created under any Loan Document; or
8.15 Any event, circumstance, or condition occurs which constitutes an event
of default under any of the Indenture Documents.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
--------------------
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable; provided,
however, that upon the occurrence of any Event of Default described in SECTION
-------
8.4 or SECTION 8.5, all Commitments shall automatically and immediately expire
-----------
and all Obligations shall automatically become immediately due and payable
without notice or demand of any kind;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between any Obligor and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit the Loan Account with only the net amounts received by Agent in
payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(e) Without notice to or demand upon Borrower, make such payments and do
such acts as Agent considers necessary or reasonable to protect its liens and
security interests in the Collateral;
(f) Without notice to Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by the Lender
Group (including any amounts received in the Cash Management Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by the Lender Group;
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(g) Hold, as cash collateral, any and all balances and deposits of Borrower
held by the Lender Group, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations;
(h) Pursue any and all remedies afforded Agent and/or the Lender Group under
the Loan Documents; and
(i) The Lender Group shall have all other rights and remedies available to
it at law or in equity pursuant to any other Loan Documents.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
--------------------
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, royalties, overriding
royalties, operating costs or expenses, assessments, insurance premiums, or, in
the case of leased properties or assets, rents or other amounts payable under
such leases) due to third Persons, or fails to make any deposits or furnish any
required proof of payment or deposit, all as required under the terms of this
Agreement, then, Agent, in its sole discretion and without prior notice to
Borrower, may do any or all of the following: (a) make payment of the same or
any part thereof, (b) set up such reserves in Borrower's Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with SECTION 6.8 hereof,
-----------
obtain and maintain insurance policies of the type described in SECTION 6.8 and
-----------
take any action with respect to such policies as Agent deems prudent. Any such
amounts paid by Agent shall constitute Lender Group Expenses and any such
payments shall not constitute an agreement by the Lender Group to make similar
payments in the future or a waiver by the Lender Group of any Event of Default
under this Agreement. Agent need not inquire as to, or contest the validity of,
any such expense, tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of protest,
----------------
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Borrower hereby agrees
-----------------------------------------------
that: (a) so long as the Lender Group complies with its obligations, if any,
under the Code, Agent shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
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11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold the
---------------
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrower's and its Subsidiaries' compliance with the terms of the
Loan Documents, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this SECTION
-------
11.3 with respect to any Indemnified Liability that a court of competent
----
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY
TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF
SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrower in care of Borrower or to
Agent, as the case may be, at its address set forth below:
If to Borrower: Energy Corporation of America
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax No. 000.000.0000
with copies to: Xxxxxxx & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxx, Esq.
Fax No. 000.000.0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
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with copies to: Xxxxx Fargo Foothill, Inc.
000 Xxxxxxxxx Xxxx Center
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Business Division Manager
Fax No. 000.000.0000
with copies to: Xxxxxx Xxxxx Xxxx & Xxxx, P.C.
0000 Xxxxxxxx Xxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
Fax No. 000.000.0000
Agent and Borrower may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this SECTION 12, other
----------
than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS
LOCATED IN THE COUNTY OF XXXXXX, STATE OF GEORGIA, PROVIDED, HOWEVER, THAT ANY
-------- -------
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
-----
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
--- ----------
ACCORDANCE WITH THIS SECTION 13(b).
--------------
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BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
--------------------------------
(a) Except as provided in SECTION 14.1(h), any Lender may, with the written
---------------
consent of Agent (provided that no written consent of Agent shall be required in
connection with any assignment and delegation by a Lender to an Eligible
Transferee), assign and delegate to one or more assignees (each an "ASSIGNEE")
all, or any ratable part of all, of the Obligations, the Commitments and the
other rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $10,000,000; provided, however, that Borrower
-------- -------
and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower and Agent
by such Lender and the Assignee, (ii) such Lender and its Assignee have
delivered to Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000. Anything contained herein to the contrary notwithstanding, the consent
of Agent shall not be required (and payment of any fees shall not be required)
if such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor Lender (with a
copy to Borrower) that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to SECTION
-------
11.3 hereof) and be released from its obligations under this Agreement (and in
----
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
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the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment under
the Assignment and Acceptance and receipt and acknowledgment by Agent of such
fully executed Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent, sell to
one or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a "PARTICIPANT") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "ORIGINATING LENDER") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
-------- -------
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
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upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrower or Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any Lender may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.
(h) Prior to the occurrence of an Event of Default, Foothill in its capacity
as Lender, shall at all times maintain at least 66 2/3% of the outstanding
Obligations.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
----------
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to SECTION 14.1 hereof and, except as expressly required pursuant to
-------------
SECTION 14.1 hereof, no consent or approval by Borrower is required in
-------------
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
----------------------
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
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(d) change the percentage of the Commitments that is required to take any
action hereunder,
(e) amend this Section or any provision of the Agreement providing for
consent or other action by all Lenders,
(f) release Collateral other than as permitted by SECTION 16.12,
--------------
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release Borrower from any obligation for the payment of money,
(j) change the definition of Borrowing Base or change SECTION 2.1(b), or
--------------
(k) amend any of the provisions of SECTION 16.
-----------
and, provided further, however, that no amendment, waiver or consent shall,
----------------- -------
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrower, shall not require consent
by or the agreement of Borrower.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by the Lender
------------------------------
Group or Agent hereunder requires the unanimous consent, authorization, or
agreement of all Lenders, and a Lender ("HOLDOUT LENDER") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "REPLACEMENT
LENDER"), and the Holdout Lender shall not have the right to refuse to be
replaced hereunder. Such notice to replace the Holdout Lender shall specify an
effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of SECTION 14.1. Until such time as
------------
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
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15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
---------------------------------
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and
each Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
----------------------------------------
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this SECTION 16. The
----------
provisions of this SECTION 16 are solely for the benefit of Agent, and the
-----------
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
----------------------
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
--------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be fully
------------------
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by Lenders against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action. Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
-----------------------------------------
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to SECTION 16.4, Agent shall take
------------
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with SECTION 9; provided, however, that
---------
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
----------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
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business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
--------------------------------------
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, fees and expenses of financial accountants, advisors, consultants,
and appraisers, costs of collection by outside collection agencies and
auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Credit Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
-------------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrower or its Affiliates and any other Person (other than the Lender Group)
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party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them.
The terms "LENDER" and "LENDERS" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the
----------------
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon
the acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent
and the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this SECTION
-------
16 shall inure to its benefit as to any actions taken or omitted to be taken by
--
it while it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
--------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 WITHHOLDING TAXES.
------------------
(a) If any Lender is a "foreign corporation, partnership or trust" within
the meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender
agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from withholding tax pursuant
to its portfolio interest exception, (a) a statement of the Lender,
signed under penalty of perjury, that it is not a (I) "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III)
controlled foreign corporation described in Section 881(c)(3)(C) of
the IRC, and (B) a properly completed IRS Form W-8BEN, before the
first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Borrower;
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(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Borrower;
(iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI before the
first payment of any interest is due under this Agreement and at any
other time reasonably requested by Agent or Borrower;
(iv) such other form or forms as may be required under the IRC or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form W-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of Borrower to such Lender, such Lender agrees to notify
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrower to such Lender. To the extent of such percentage
amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable withholding
tax, Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
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other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the net income or net profits of a Lender, or (ii) to the extent that
such tax results from a change in the circumstances of the Lender, including a
change in the residence, place of organization, or principal place of business
of the Lender, or a change in the branch or lending office of the Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "TAXES"). If any Taxes are so levied or imposed, Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any note, including any amount paid pursuant to this SECTION 16.11(e)
----------------
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Borrower shall not
-------- -------
be required to increase any such amounts payable to Agent or any Lender (i) that
is not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this SECTION 16.11, or (ii) if the
--------------
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrower will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrower.
16.12 COLLATERAL MATTERS.
-------------------
(a) The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under SECTION 7.4
-----------
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower does not own any interest at the time the security interest
was granted or at any time thereafter, or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not
execute and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially all of
the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by Agent or Borrower at any time, the Lenders will confirm in
writing Agent's authority to release any such Liens on particular types or items
of Collateral pursuant to this SECTION 16.12; provided, however, that (1) Agent
------------- -------- -------
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrower or any of its
Subsidiaries or is cared for, protected, or insured or has been encumbered, or
that the Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
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authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
--------------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to any Borrower or any deposit accounts of Borrower now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to
be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral the purpose of which is, or could be, to give
such Lender any preference or priority against the other Lenders with respect to
the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as its
----------------------
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent to
---------------------------------
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
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16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
------------------------------------------------------
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY
-----------------------------------------------------------------------
LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this Agreement,
--------------------------------------
each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
(each a "REPORT" and collectively, "REPORTS") prepared by Agent, and Agent shall
so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrower and will
rely significantly upon the Books, as well as on representations of Borrower's
personnel,
(d) agrees to keep all Reports and other material, non-public information
regarding Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner; it being
understood and agreed by Borrower that in any event such Lender may make
disclosures (a) to counsel for and other advisors, accountants, and auditors to
such Lender, (b) reasonably required by any bona fide potential or actual
Assignee or Participant in connection with any contemplated or actual assignment
or transfer by such Lender of an interest herein or any participation interest
in such Lender's rights hereunder, (c) of information that has become public by
disclosures made by Persons other than such Lender, its Affiliates, assignees,
transferees, or Participants, or (d) as required or requested by any court,
governmental or administrative agency, pursuant to any subpoena or other legal
process, or by any law, statute, regulation, or court order; provided, however,
-------- -------
that, unless prohibited by applicable law, statute, regulation, or court order,
such Lender shall notify Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and hold Agent, and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts (including,
attorneys fees and costs) incurred by Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
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In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrower, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of the
---------------------------------
Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 16.7, no member of the Lender Group shall
------------
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
16.19 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be deemed a
------------------------
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
16.20 LEGAL REPRESENTATION OF AGENT. In connection with the negotiation,
--------------------------------
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Xxxxxx Xxxxx
Xxxx & Xxxx, P.C. ("XXXXXX XXXXX") only has represented and only shall represent
Foothill in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that Xxxxxx Xxxxx does not represent it in connection with any such
matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
-------------
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
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17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
-----------------
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or ambiguity
--------------
herein shall be construed or resolved against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
----------------------------
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a writing
----------------------
in accordance with SECTION 15.1.
-------------
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
---------------------------------------
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment
-----------------------------------------
of the Obligations by Borrower or the transfer to the Lender Group of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "VOIDABLE TRANSFER"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 CONFIDENTIALITY. Agent and Lenders each individually (and not jointly
---------------
or jointly and severally) agree that material, non-public information regarding
Borrower and its Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this SECTION 17.8, (c) as may be required by statute, decision, or
------------
judicial or administrative order, rule, or regulation, (d) as may be agreed to
in advance by Borrower or its Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (e) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Agent or the Lenders), (f)
-94-
in connection with any assignment, prospective assignment, sale, prospective
sale, participation or prospective participations, or pledge or prospective
pledge of any Lender's interest under this Agreement, provided that any such
assignee, prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents. The provisions of this SECTION 17.8 shall survive for
------------
2 years after the payment in full of the Obligations.
17.9 INTEGRATION. This Agreement, together with the other Loan Documents,
-----------
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.10 LICENSE TO GATHERING SYSTEMS. In the event that the Gathering Systems
-----------------------------
are foreclosed upon pursuant to the Mortgages, Agent, on behalf of Lenders,
hereby grants to each Pledging Subsidiary a non-royalty bearing license to
transport Hydrocarbons produced from Xxxxx not included within the Mortgaged
Properties under any then existing agreement regarding transport and for the
life of such transportation agreement or in the absence of a written agreement
consistent with the past practices and customs of the parties in the industry.
17.11 AGENCY OF THE BORROWER FOR EACH PLEDGING SUBSIDIARY. Each of the
---------------------------------------------------------
Pledging Subsidiaries irrevocably appoints the Borrower as its agent for all
purposes relevant to this Agreement, including the giving and receipt of notices
and execution and delivery of all documents, instruments, and certificates
contemplated herein (including, without limitation, execution and delivery to
the Agent of Reserve Reports and all modifications hereto). Any acknowledgment,
consent, direction, certification, or other action which might otherwise be
valid or effective only if given or taken by all or any of the Borrower and the
Pledging Subsidiaries or acting singly, shall be valid and effective if given or
taken only by the Borrower, whether or not any of the Pledging Subsidiaries
joins therein, and the Agent and the Lenders shall have no duty or obligation to
make further inquiry with respect to the authority of the Borrower under this
SECTION 17.11, provided that nothing in this SECTION 17.11 shall limit the
-------------- -------------
effectiveness of, or the right of the Agent and the Lenders to rely upon, any
notice, document, instrument, certificate, acknowledgment, consent, direction,
certification, or other action delivered by any Pledging Subsidiary pursuant to
this Agreement.
17.12 DEVELOPMENT PROJECTS. Nothing contained in the Loan Documents shall
---------------------
prohibit any Pledging Subsidiary from developing any Oil and Gas Properties that
do not constitute Collateral.
17.13 RESERVE ARBITRATION. In the event of any dispute as to the amount of a
-------------------
reserve established by Agent under SECTION 2.1(b) clauses (i) through (vi)
---------------
inclusive, Agent and Borrower shall use good faith efforts to resolve any such
dispute through full and meaningful discussions, which shall include one
face-to-face meeting and a written exchange of positions. In the event this
written exchange indicates that the dispute cannot be resolved, the dispute
shall be referred to arbitration in the city of Atlanta, Georgia by one
arbitrator (selected by the American Arbitration Association but having
extensive work experience in establishing such type of reserves under oil and
gas secured credit facilities), in accordance with the provisions set forth
herein and the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The decision of the arbitrator shall establish the
amount of such reserve.
[Signature page to follow.]
-95-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ENERGY CORPORATION OF AMERICA,
a West Virginia corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
XXXXX FARGO FOOTHILL, INC.,
a California corporation,
as Agent and as a Lender
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
For purposes of acknowledging agreement to the terms, provisions, and
conditions of this Agreement (including, without limitation, the terms of
SECTION 17.11, Eastern American and A&W are executing this Agreement.
--------------
EASTERN AMERICA ENERGY CORPORATION
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ALLEGHENY & WESTERN ENERGY CORPORATION
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
EXHIBIT A-1
-----------
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("ASSIGNMENT AGREEMENT") is
---------------------
entered into as of between ("ASSIGNOR") and
-------------- ------------------- --------
("ASSIGNEE"). Reference is made to the Agreement described in ITEM 2 of ANNEX
-------- ------ -----
I annexed hereto (the "CREDIT AGREEMENT"). Capitalized terms used herein and
- ----------------
not otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
1. In accordance with the terms and conditions of SECTION 14 of the Credit
----------
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor's rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor's
portion of the Total Commitments and the Revolver Commitments, all as specified
in ITEM 4.B and ITEM 4.C of ANNEX I. After giving effect to such sale and
--------- --------- -------
assignments, the Assignee's portion of the Total Commitments and Revolver
Commitments will be as set forth in ITEM 4.B of ANNEX I. After giving effect to
such sale and assignment, the Assignor's amount and portion of the Total
Commitments and Revolver Commitments will be as set forth in ITEM 4.D and ITEM
-------- ----
4.E of ANNEX I.
--- --------
2. The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (a) confirms that it has received copies of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement; (b) agrees that it will, independently and
without reliance, as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents;
(c) confirms that it is eligible as an assignee under the terms of the Credit
Agreement; (d) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (e) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender[; and (f) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement or such other documents as are necessary to indicate that
all such payments are subject to such rates at a rate reduced by an applicable
tax treaty.]
4. Following the execution of this Assignment Agreement by the Assignor and
Assignee, it will be delivered by the Assignor to the Agent for recording by the
Agent. The effective date of this Assignment (the "SETTLEMENT DATE") shall be
the later of (a) the date of the execution hereof by the Assignor and the
Assignee, the payment by Assignor or Assignee to Agent for Agent's sole and
separate account a processing fee in the amount of $5,000, and the receipt of
any required consent of the Agent, and (b) the date specified in ITEM 5 of ANNEX
------ -----
I.
--
EXHIBIT A-1 - PAGE 1
5. Upon recording by the Agent, as of the Settlement Date (a) the Assignee
shall be a party to the Credit Agreement and, to the extent of the interest
assigned pursuant to this Assignment Agreement, have the rights and obligations
of a Lender thereunder and under the other Loan Documents, and (b) the Assignor
shall, to the extent of the interest assigned pursuant to this Assignment
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Loan Documents.
6. Upon recording by the Agent, from and after the Settlement Date, the
Agent shall make all payments under the Credit Agreement and the other Loan
Documents in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees (if
applicable) with respect thereto) to the Assignee. Upon the Settlement Date,
the Assignee shall pay to the Assignor the Assigned Share (as set forth in ITEM
----
4.B of ANNEX I) of the principal amount of any outstanding loans under the
--- --------
Credit Agreement and the other Loan Documents. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement and the
other Loan Documents for periods prior to the Settlement Date directly between
themselves on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF .
-----------------
[Remainder of page left intentionally blank.]
EXHIBIT A-1 - PAGE 2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement and ANNEX I hereto to be executed by their respective officers
--------
thereunto duly authorized, as of the first date above written.
[NAME OF ASSIGNOR]
as Assignor
By
-------------------------
Title:
--------------------
[NAME OF ASSIGNEE]
as Assignee
By
-------------------------
Title:
--------------------
ACCEPTED THIS DAY
------
OF
-----------------------
XXXXX FARGO FOOTHILL, INC.
AS AGENT
By
-------------------------
Title:
--------------------
EXHIBIT A-1 - PAGE 3
ANNEX FOR ASSIGNMENT AND ACCEPTANCE AGREEMENT
ANNEX I
1. Borrower:
2. Name and Date of Credit Agreement:
Amended and Restated Credit Agreement dated as of May __, 2004, among Borrower,
the lenders signatory thereto as the Lenders, and Xxxxx Fargo Foothill, Inc., a
California corporation, as the arranger and administrative agent for the
Lenders.
3. Date of Assignment Agreement:
---------
4. Amounts:
a. Assignor's Total Commitment $
---------
Assignor's Revolver Commitment $
---------
Assignor's Term Loan Commitment $
---------
b. Assigned Share of Total Commitment %
---------
Assigned Share of Revolver Commitment %
---------
Assigned Share of Term Loan Commitment %
---------
c. Assigned Amount of Total Commitment $
---------
Assigned Amount of Revolver Commitment $
---------
Assigned Amount of Term Loan Commitment $
---------
d. Resulting Amount of Assignor's Total Commitment after
giving effect to the sale and Assignment to Assignee $
---------
Resulting Amount of Revolver Commitment $
---------
Resulting Amount of Term Loan Commitment $
---------
e. Assignor's Resulting Share of Total Commitment after
giving effect to the Assignment to Assignee %
---------
Assignor's Resulting Share of Revolver
Commitment %
---------
Assignor's Resulting Share of Term Loan
Commitment %
---------
EXHIBIT A-1 - PAGE 4
5. Settlement Date
---------
6. Notice and Payment Instructions, etc.
Assignee: Assignor:
7. Agreed and Accepted:
[ASSIGNOR] [ASSIGNEE]
BY: By:
Title: Title:
Accepted:
XXXXX FARGO FOOTHILL, INC., as Agent
By:
Title:
EXHIBIT A-1 - PAGE 5
EXHIBIT C-1
-----------
(Form of Compliance Certificate)
[on Borrower's letterhead]
To: Xxxxx Fargo Foothill, Inc., as Agent
under the below-referenced Credit Agreement
400 Northpark Town Center
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn.: Business Finance Division Manager
Re: Compliance Certificate dated
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Credit Agreement
dated as of May , 2004 (the "CREDIT AGREEMENT") among Energy Corporation of
--- ----------------
America, a West Virginia corporation (the "BORROWER"), the lender or lenders
--------
signatory thereto (the "LENDERS"), and Xxxxx Fargo Foothill, Inc., a California
-------
corporation, as the arranger and administrative agent for the Lenders ("AGENT").
-----
Capitalized terms used in this Compliance Certificate have the meanings set
forth in the Credit Agreement unless specifically defined herein.
Pursuant to SECTION 6.3 of the Credit Agreement, the undersigned officer of the
-----------
Borrower hereby certifies that:
1. The financial information of the Borrower furnished in SCHEDULE 1
----------
attached hereto, has been prepared in accordance with GAAP (except for year end
adjustments and the lack of footnotes, in the case of financial statements
delivered under SECTION 6.3(a) of the Credit Agreement) and fairly presents in
--------------
all material respects the financial condition of the Borrower.
2. Such officer has reviewed the terms of the Credit Agreement and has made,
or caused to be made under his/her supervision, a review in reasonable detail of
the transactions and condition of the Borrower during the accounting period
covered by the financial statements delivered pursuant to SECTION 6.3 of the
-----------
Credit Agreement.
3. Such review has not disclosed the existence on and as of the date hereof,
and the undersigned does not have knowledge of the existence as of the date
hereof, of any event or condition that constitutes a Default or Event of
Default, except for such conditions or events listed on SCHEDULE 2 attached
----------
hereto, specifying the nature and period of existence thereof and what action
the Borrower has taken, is taking, or proposes to take with respect thereto.
4. The representations and warranties of the Borrower contained in the
Credit Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date of such certificate, as though made on
and as of such date (except to the extent that such representations and
EXHIBIT C-1 - PAGE 1
warranties relate solely to an earlier date). Without limiting the generality
of the foregoing, the Borrower is in compliance with the covenants contained in
SECTION 7.20 of the Credit Agreement as demonstrated on SCHEDULE 2 hereof.
------------- ----------
IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this day of , 200 .
------ --------------- ---
ENERGY CORPORATION OF AMERICA,
a West Virginia corporation,
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT C-1 - PAGE 2
SCHEDULE 1
-----------
EXHIBIT C-1 - SCHEDULE 1
SCHEDULE 2
-----------
1. MINIMUM EBITDAX. Borrower's EBITDAX (on a consolidated basis), on a
----------------
rolling four-quarter basis ending _________, ________ is $______________, which
amount [IS/IS NOT] greater than or equal to the amount set forth in SECTION
-------
7.21(A) of the Credit Agreement for the corresponding period.
---
2. BOOK NET WORTH. Borrower's Book Net Worth (on a consolidated basis), for
--------------
the quarter ending _________, ________ is $______________, which amount [IS/IS
NOT] greater than or equal to the amount required in SECTION 7.20(A) of the
---------------
Credit Agreement for the corresponding period.
3. MAXIMUM CAPITAL EXPENDITURES. If applicable under SECTION 7.20(B) of the
---------------------------- ---------------
Credit Agreement, the aggregate amount of capital expenditures made or committed
to be made to date in the current fiscal year is $________________, which amount
[IS/IS NOT] in excess of 120% of Projections set forth in SECTION 7.20(B) of the
---------------
Credit Agreement for the corresponding period.
EXHIBIT C-1 - SCHEDULE 2
EXHIBIT I-1
-----------
(Form of Indenture Compliance Certificate)
[on Borrower's letterhead]
To: Xxxxx Fargo Foothill, Inc., as Agent
under the below-referenced Credit Agreement
400 Northpark Town Center
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn.: Business Finance Division Manager
Re: Indenture Compliance Certificate dated
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Credit Agreement
dated as of May __, 2004 (the "CREDIT AGREEMENT") among Energy Corporation of
----------------
America, a West Virginia corporation (the "BORROWER"), the lender or lenders
--------
signatory thereto (the "LENDERS"), and Xxxxx Fargo Foothill, Inc., a California
-------
corporation, as the arranger and administrative agent for the Lenders ("AGENT").
-----
Capitalized terms used in this Compliance Certificate have the meanings set
forth in the Credit Agreement unless specifically defined herein.
Pursuant to SECTION 3.1 of the Credit Agreement, the undersigned officer of the
-----------
Borrower hereby certifies that:
1. Borrower has requested a Term Loan in the amount of $_________________.
2. After giving effect to the requested Term Loan the outstanding balance of
the Obligations is $__________________________.
3. After giving effect to the requested Term Loan, no Default or Event of
Default under the Indenture has occurred and is continuing.
4. The Fixed Charge Coverage Ratio (as defined in the Indenture) for
Borrower's most recently ended four full fiscal quarters is ____________, which
amount [IS/IS NOT] greater than or equal to 2.5 to 1.0.
EXHIBIT I-1 - PAGE 1
IN WITNESS WHEREOF, this Indenture Compliance Certificate is executed by
the undersigned this _____ day of _______________, 200__.
ENERGY CORPORATION OF AMERICA,
a West Virginia corporation,
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT I-1 - PAGE 2
EXHIBIT L-1
-----------
FORM OF LIBOR NOTICE
Xxxxx Fargo Foothill, Inc., as Agent
under the below referenced Credit Agreement
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention:
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Credit Agreement
dated as of May __, 2004 (the "CREDIT AGREEMENT") among Energy Corporation of
----------------
America, a West Virginia corporation (the "BORROWER"), the lender or lenders
--------
signatory thereto (the "LENDERS"), and Xxxxx Fargo Foothill, Inc., a California
-------
corporation, as the arranger and administrative agent for the Lenders ("AGENT").
-----
Capitalized terms used in this LIBOR Notice have the meanings set forth in the
Credit Agreement unless specifically defined herein.
This LIBOR Notice represents Borrower's request to elect the LIBOR Option
with respect to outstanding Advances in the amount of $ (the
"LIBOR Rate Advance")[, and is a written confirmation of the telephonic notice
----------------
of such election given to Agent].
Such LIBOR Rate Advance will have an Interest Period of 1, 3, 6 or 12
month(s) commencing on .
This LIBOR Notice further confirms Borrower's acceptance, for purposes of
determining the rate of interest based on the LIBOR Rate under the Credit
Agreement, of the LIBOR Rate as determined pursuant to the Credit Agreement.
EXHIBIT L-1 - PAGE 1
Borrower represents and warrants that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document, any
agreement, instrument, certificate, document or other writing furnished at any
time under or in connection with any Loan Document, and as of the effective date
of any advance, continuation or conversion requested above is true and correct
in all material respects (except to the extent any representation or warranty
expressly related to an earlier date), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), and (iii)
no Default or Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the request above.
Dated:
ENERGY CORPORATION OF AMERICA,
a West Virginia corporation,
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Acknowledged by:
XXXXX FARGO FOOTHILL, INC.
as Agent
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT L-1 - PAGE 2
SCHEDULE C-1
------------
COMMITMENTS
LENDER . . . . . . . . . . REVOLVER COMMITMENT TERM LOAN COMMITMENT TOTAL COMMITMENT
========================== ==================== ===================== =================
Xxxxx Fargo Foothill, Inc. $ ___________ $ ___________ $ __________
========================== ==================== ===================== =================
All Lenders. . . . . . . . $ ____________ $ __________ $ ___________
========================== ==================== ===================== =================
EXHIBIT C-1 - PAGE 1
SCHEDULE D-1
------------
DESIGNATED ACCOUNT
Account number _____ of Borrower maintained with the Designated Account Bank, or
such other deposit account of Borrower (located within the United States) that
has been designated as such, in writing by, Borrower to Agent.
"Designated Account Bank" means Xxxxxx Bank
EXHIBIT D-1 - Page Solo
SCHEDULE L-1
------------
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the account into
which Borrower shall make all payments to Agent under this Agreement and the
other Loan Documents; unless and until Agent notifies Borrower to the contrary.
Agent's Account shall be that certain deposit account bearing account number
323-266193 and maintained by Lender with JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
SCHEDULE L-1 - Page 1
SCHEDULE P-1
------------
PARTNERSHIPS
Arcadia Drilling Fund, a limited partnership
-------------------------------------------------
Arcadia Drilling Fund No. 2, a limited partnership
---------------------------------------------------------
Arcadia Drilling Fund No. 3, a limited partnership
---------------------------------------------------------
Arcadia Drilling Fund No. 4, a general partnership
---------------------------------------------------------
Arcadia Drilling Fund No. 7, a general partnership
---------------------------------------------------------
Bent Branch Project, a general partnership
-----------------------------------------------
Xxxxxx Branch Partners Ltd., a limited partnership
--------------------------------------------------------
Number II, Xxxxxx Branch, Ltd., a limited partnership
------------------------------------------------------------
Burning Fork Partners, a general partnership
-------------------------------------------------
Drift Branch Project, a joint venture
------------------------------------------
Eastern Producing Limited Partnership, a limited partnership
------------------------------------------------------------------
Feds Creek Gas Project, a joint venture
---------------------------------------------
JBC Drilling Company Number 4, a limited partnership
-----------------------------------------------------------
JBC Drill Co. #5
-------------------
Long Branch Partners, a general partnership
------------------------------------------------
Xxxx Farm Project, Ltd., a limited partnership
----------------------------------------------------
Xxxxxxxx'x Branch Partners, Ltd., a limited partnership
-------------------------------------------------------------
Shelby Creek Partners, Ltd., a limited partnership
--------------------------------------------------------
Swinge Camp General Partners, a general partnership
---------------------------------------------------------
Swinge Camp Partners, Ltd., a limited partnership
-------------------------------------------------------
Sycamore Creek Partners, a general partnership
---------------------------------------------------
VICC Mineral Project No. 8, an unincorporated joint venture
-------------------------------------------------------------------
Willow River Fund
-------------------
Wisconsin Fund Partnership No. 1
------------------------------------
SCHEDULE P-1 - Page 1
SCHEDULE 2.7(A)
---------------
CASH MANAGEMENT BANKS
Harris Bank
[Xxxxx Fargo Bank, National Association]
SCHEDULE 2.7(A) - Page 1
SCHEDULE 5.1(A)
---------------
BORROWING BASE PROPERTIES
and
SCHEDULE 5.1(a)
BORROWING BASE PROPERTIES
SCHEDULE 5.1(A) - Page 1
