CONSENT AGREEMENT
EXHIBIT 10.11
This CONSENT AGREEMENT (“Agreement”) made effective as of February 21, 2008 (“Effective Date”) is among Xxxx Petroleum, Inc., a Delaware corporation (“Borrower”), the Guarantors (as defined below), the Lenders (as defined below), and Union Bank of California, N.A., as administrative agent for such Lenders (in such capacity, the “Administrative Agent”) and as issuing lender (in such capacity, the “Issuing Lender”).
RECITALS
A. The Borrower is party to that certain Credit Agreement dated as of November 29, 2005, as heretofore amended (as so amended, the “Credit Agreement”; the defined terms of which are used herein unless otherwise defined herein) among the Borrower, the lenders party thereto from time to time (the “Lenders”), the Administrative Agent, and the Issuing Lender.
B. The Borrower proposes to enter into Hydrocarbon Hedge Agreements with Union Bank of California, N.A. as the swap counterparty which would cover notional volumes in excess of 80% of the anticipated production volumes attributable to Proven Reserves of the Borrower and its Subsidiaries during the period such hedge arrangements would be in effect (“Excess Xxxxxx”).
C. Section 6.14 of the Credit Agreement requires that the Borrower not enter into any hedging arrangements which would cover notional volumes in excess of 80% of the anticipated production volumes attributable to the Borrower’s and its Subsidiaries’ Proven Reserves.
D. Subject to the terms and conditions set forth herein, the Lenders wish to consent to the Borrower and its Subsidiaries entering into such Excess Xxxxxx.
THEREFORE, the Borrower, the Guarantors, the Lenders, and the Administrative Agent hereby agree as follows:
Section 1. Defined Terms. As used in this Agreement, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein. Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary.
Section 2. Other Definitional Provisions. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is
agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.
Section 3. Consent. The Lenders hereby consent to the Borrower and its Subsidiares entering into the Excess Xxxxxx; provided that, such Excess Xxxxxx shall not cover notional volumes in excess of 85% of the anticipated production volumes attributable to the Borrower’s and its Subsidiaries’ Proven Reserves. The consent by the Lenders described in this Section 3 is limited to the extent described above and shall not be construed to be a consent to or a permanent waiver of the Section 6.14 of the Credit Agreement or any other terms, provisions, covenants, warranties or agreements contained in any Loan Document. Other than as consented to hereby, the Borrower hereby agrees and acknowledges that the Lenders require and will require strict performance by the Borrower of all of its obligations, agreements and covenants contained in the Credit Agreement and the other Loan Documents, and no inaction or action regarding any Default or Event of Default is intended to be or shall be a waiver thereof.
Section 4. Borrower Representations and Warranties. The Borrower represents and warrants that: (a) after giving effect to this Agreement, the representations and warranties contained in the Credit Agreement and the representations and warranties contained in the other Loan Documents are true and correct in all material respects on and as of the Effective Date as if made on as and as of such date except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case such representation or warranty is true and correct in all material respects as of such earlier date; (b) after giving effect to this Agreement, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Agreement are within the corporate power and authority of the Borrower and have been duly authorized by appropriate corporate and governing action and proceedings; (d) this Agreement constitutes the legal, valid, and binding obligation of the Borrower enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Agreement; and (f) the Liens under the Security Instruments are valid and subsisting and secure Borrower’s obligations under the Loan Documents.
Section 5. Guarantors Representations and Warranties. Each Guarantor represents and warrants that: (a) after giving effect to this Agreement, the representations and warranties contained in the Guaranty and the representations and warranties contained in the other Loan Documents are true and correct in all material respects on and as of the Effective Date as if made on as and as of such date except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case such representation or warranty is true and correct in all material respects as of such earlier date; (b) after giving effect to this Agreement, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Agreement are within the corporate, limited liability company, or partnership power and authority of such Guarantor and have been duly authorized by appropriate corporate, limited liability company, or partnership action and proceedings; (d) this Agreement constitutes the legal, valid, and binding obligation of such Guarantor enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there
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are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Agreement; (f) it has no defenses to the enforcement of the Guaranty; and (g) the Liens under the Security Instruments are valid and subsisting and secure such Guarantor’s and the Borrower’s obligations under the Loan Documents.
Section 6. Conditions to Effectiveness. This Agreement and the amendments to the Credit Agreement provided herein shall become effective on the Effective Date and enforceable against the parties hereto upon the occurrence of the following conditions precedent:
(a) The Administrative Agent shall have received multiple original counterparts, as requested by the Administrative Agent, of this Agreement duly and validly executed and delivered by duly authorized officers of the Borrower, the Guarantors, the Administrative Agent, and the Lenders.
(b) No Default shall have occurred and be continuing as of the Effective Date.
(c) The representations and warranties in this Agreement shall be true and correct in all material respects.
(d) The Borrower shall have paid all fees and expenses of the Administrative Agent’s outside legal counsel and other consultants pursuant to all invoices presented for payment on or prior to the Effective Date.
Section 7. Acknowledgments and Agreements.
(a) The Borrower acknowledges that on the date hereof all Obligations are payable without defense, offset, counterclaim or recoupment.
(b) The Administrative Agent and the Lenders hereby expressly reserve all of their rights, remedies, and claims under the Loan Documents. Nothing in this Agreement shall constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, (ii) any of the agreements, terms or conditions contained in any of the Loan Documents, (iii) any rights or remedies of the Administrative Agent or any Lender with respect to the Loan Documents, or (iv) the rights of the Administrative Agent or any Lender to collect the full amounts owing to them under the Loan Documents.
(c) Each of the Borrower, the Guarantors, Administrative Agent, and Lenders does hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledges and agrees that the Credit Agreement, as amended hereby, is and remains in full force and effect, and the Borrower and the Guarantors acknowledge and agree that their respective liabilities and obligations under the Credit Agreement, as amended hereby, and the Guaranty, are not impaired in any respect by this Agreement.
(d) From and after the Effective Date, all references to the Credit Agreement and the Loan Documents shall mean such Credit Agreement and such Loan Documents as amended by this Agreement.
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(e) This Agreement is a Loan Document for the purposes of the provisions of the other Loan Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Credit Agreement.
Section 8. Reaffirmation of the Guaranty. Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, all of the Guaranteed Obligations (as defined in the Guaranty), as such Guaranteed Obligations may have been amended by this Agreement, and its execution and delivery of this Agreement does not indicate or establish an approval or consent requirement by such Guarantor under the Guaranty in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement, the Notes or any of the other Loan Documents.
Section 9. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, constitute a single instrument. This Agreement may be executed by facsimile signature and all such signatures shall be effective as originals.
Section 10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.
Section 11. Invalidity. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.
Section 12. Governing Law. This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of Texas.
Section 13. Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[SIGNATURES BEGIN ON NEXT PAGE]
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EXECUTED effective as of the date first above written.
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BORROWER: |
XXXX PETROLEUM, INC. |
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By: |
/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, |
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Senior Vice President and |
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Chief Financial Officer |
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GUARANTORS: |
SQUARE ONE ENERGY, INC. |
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LADDER COMPANIES, INC. |
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W.O. ENERGY OF NEVADA, INC. |
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WO ENERGY, INC. |
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PANTWIST, LLC |
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XXXX XXXXX OF NEW MEXICO, INC. |
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Each by: |
/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, |
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Vice President and |
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Chief Financial Officer |
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W.O. OPERATING COMPANY, LTD. |
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By: WO Energy, Inc., its general partner |
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By: |
/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, |
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Vice President and |
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Chief Financial Officer |
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W.O. PRODUCTION COMPANY, LTD. |
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By: WO Energy, Inc., its general partner |
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By: |
/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, |
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Vice President and |
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Chief Financial Officer |
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Signature Page to Consent Agreement
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ADMINISTRATIVE AGENT/ |
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ISSUING LENDER/LENDER: |
UNION BANK OF CALIFORNIA, N.A., |
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By: |
/s/ Xxxxxxx Xxxxxxxxx |
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Xxxxxxx Xxxxxxxxx |
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Senior Vice President |
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Signature Page to Consent Agreement
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NATIXIS, as a Lender |
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By: |
/s/ Xxxxxxx X. Xxxxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxxx |
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Title: |
Managing Director |
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By: |
/s/ Liana Tchernysheva |
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Name: |
Liana Tchernysheva |
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Title: |
Director |
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Signature Page to Consent Agreement
