Exhibit 10.18
CREDIT AGREEMENT
Among
McMoRan OIL & GAS LLC,
as Borrower,
HIBERNIA NATIONAL BANK,
as Agent,
and
THE LENDERS SIGNATORY HERETO
Dated as of July 1, 2002
Revolving Credit Facility
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Accounting Matters
1
Section 1.01 Terms Defined Above 1
Section 1.02 Certain Defined Terms 1
Section 1.03 Accounting Terms and Determinations 15
Section 1.04 Single Lender 15
ARTICLE II
Commitments
16
Section 2.01 Loans and Letters of Credit 16
Section 2.02 Borrowings, Continuations and Conversions,
Letters of Credit 17
Section 2.03 Changes of Commitments 19
Section 2.04 Fees 19
Section 2.05 Several Obligations 20
Section 2.06 Notes 20
Section 2.07 Prepayments 21
Section 2.08 Borrowing Base 22
Section 2.09 Assumption of Risks 25
Section 2.10 Obligation to Reimburse and to Prepay 26
Section 2.11 Lending Offices 27
ARTICLE III
Payments of Principal and Interest
27
Section 3.01 Repayment of Loans 27
Section 3.02 Interest 28
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
29
Section 4.01 Payments 29
Section 4.02 Pro Rata Treatment 29
Section 4.03 Computations 29
Section 4.04 Non-receipt of Funds by the Agent 30
Section 4.05 Set-off, Sharing of Payments, Etc. 30
Section 4.06 Taxes 31
Section 4.07 Disposition of Proceeds 34
Section 4.08 Revenue Clearing Account 34
ARTICLE V
Capital Adequacy
35
Section 5.01 Additional Costs 35
Section 5.02 Limitation on Eurodollar Loans 36
Section 5.03 Illegality 37
Section 5.04 Base Rate Loans Pursuant to Sections
5.01, 5.02 and 5.03 37
Section 5.05 Compensation 37
Section 5.06 Replacement Lenders. 38
ARTICLE VI
Conditions Precedent
39
Section 6.01 Initial Funding 39
Section 6.02 Initial and Subsequent Loans and Letters of
Credit 41
Section 6.03 Conditions Relating to Letters of Credit 41
ARTICLE VII
Representations and Warranties
42
Section 7.01 Existence 42
Section 7.02 Financial Condition 42
Section 7.03 Litigation 43
Section 7.04 No Breach 43
Section 7.05 Authority 43
Section 7.06 Approvals 43
Section 7.07 Use of Loans 43
Section 7.08 ERISA 44
Section 7.09 Taxes 45
Section 7.10 Titles, etc. 45
Section 7.11 No Material Misstatements 46
Section 7.12 Investment Company Act 46
Section 7.13 Public Utility Holding Company Act 46
Section 7.14 Subsidiaries 46
Section 7.15 Location of Business and Offices 46
Section 7.16 Defaults 47
Section 7.17 Environmental Matters 47
Section 7.18 Compliance with the Law 48
Section 7.19 Insurance 48
Section 7.20 Hedging Agreements 49
Section 7.21 Restriction on Liens 49
Section 7.22 Reserved 49
Section 7.23 Gas Imbalances 49
ARTICLE VIII
Affirmative Covenants
50
Section 8.01 Financial Statements 50
Section 8.02 Litigation 52
Section 8.03 Maintenance, Etc. 52
Section 8.04 Environmental Matters 53
Section 8.05 Further Assurances 54
Section 8.06 Performance of Obligations 54
Section 8.07 Engineering Reports 55
Section 8.08 Title Information 56
Section 8.09 Collateral 57
Section 8.10 ERISA Information and Compliance 57
Section 8.11 Accounts 58
ARTICLE IX
Negative Covenants
58
Section 9.01 Debt 58
Section 9.02 Liens 59
Section 9.03 Investments, Loans and Advances 60
Section 9.04 Dividends, Distributions and Redemptions 61
Section 9.05 Sales and Leasebacks 61
Section 9.06 Nature of Business 62
Section 9.07 Mergers, Etc. 62
Section 9.08 Proceeds of Notes 62
Section 9.09 ERISA Compliance 63
Section 9.10 Sale or Discount of Receivables 64
Section 9.11 Debt Service Coverage Ratio 64
Section 9.12 Reserved 64
Section 9.13 Sale of Oil and Gas Properties 64
Section 9.14 Environmental Matters 64
Section 9.15 Transactions with Affiliates 65
Section 9.16 Subsidiaries 65
Section 9.17 Negative Pledge Agreements 66
Section 9.18 Gas Imbalances, Take-or-Pay or Other
Prepayments 66
Section 9.19 Margin Calls on Hedging Agreements 66
ARTICLE X
Events of Default; Remedies
66
Section 10.01 Events of Default 66
Section 10.02 Remedies 68
ARTICLE XI
The Agent
69
Section 11.01 Appointment, Powers and Immunities 69
Section 11.02 Reliance by Agent 69
Section 11.03 Defaults 70
Section 11.04 Rights as a Lender 70
Section 11.05 indemnification 70
Section 11.06 Non-Reliance on Agent and other Lenders 70
Section 11.07 Action by Agent 71
Section 11.08 Resignation or Removal of Agent 71
ARTICLE XII
Miscellaneous
72
Section 12.01 Waiver 72
Section 12.02 Notices 72
Section 12.03 Payment of Expenses, Indemnities, etc 73
Section 12.04 Amendments, Etc. 75
Section 12.05 Successors and Assigns 75
Section 12.06 Assignments and Participations 75
Section 12.07 Invalidity 77
Section 12.08 Counterparts 77
Section 12.09 References 77
Section 12.10 Survival 77
Section 12.11 Captions 78
Section 12.12 no oral agreements 78
Section 12.13 governing law; submission to jurisdiction78
Section 12.14 Interest 79
Section 12.15 Confidentiality 80
Section 12.16 Effectiveness 81
Section 12.17 exculpation provisions 81
THIS CREDIT AGREEMENT dated as of July 1, 2002 is
among: McMoRan OIL & GAS LLC (successor by merger with McMoRan
Oil & Gas Co.), a limited liability company formed under the laws
of the State of Delaware (together with its successors and
assigns, the "Borrower"); each of the lenders that is a signatory
hereto or which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns, a
"Lender" and, collectively, the "Lenders"); and Hibernia National
Bank, a national banking association (in its individual
capacity, "Hibernia"), as agent for the Lenders (in such
capacity, together with its successors in such capacity, the
"Agent").
R E C I T A L S
A. The Borrower and Hibernia desire for Hibernia to make
available to the Borrower a revolving credit facility. For ease
of document preparation and negotiation, the parties have agreed
to use this form of instrument, which permits (but does not
require) multiple lenders to participate in such revolving credit
facility. As provided in Section 1.04, notwithstanding the
references in this Agreement to the "Agent" and to multiple
"Lenders", on the Closing Date Hibernia is the sole Lender under
this Agreement.
ARTICLE I Definitions and Accounting Matters
Section 1.01 Terms Defined Above . As used in this
Agreement, the terms "Agent," "Borrower," "Hibernia," "Lender,"
and "Lenders" shall have the meanings indicated above.
Section 1.02 Certain Defined Terms . As used in this
Credit Agreement, the following terms shall have the following
meanings (all terms defined in this Article I or in other
provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Additional Costs" shall have the meaning assigned such term
in Section 5.01(a).
"Affected Loans" shall have the meaning assigned such term
in Section 5.04.
"Affiliate" of any Person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control
with such first Person, (ii) any director or officer of such
first Person or of any Person referred to in clause (i) above and
(iii) if any Person in clause (i) above is an individual, any
member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such
member or trust. For purposes of this definition, any Person
which owns directly or indirectly 35% or more of the securities
having ordinary voting power for the election of directors or
other governing body of a corporation or 35% or more of the
partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be
deemed to "control" (including, with its correlative meanings,
"controlled by" and "under common control with") such corporation
or other Person.
"Agreement" shall mean this Credit Agreement, as the same
may from time to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the amount
calculated in accordance with Section 2.03(a) hereof. Although
the face amount of the initial Note under this Agreement is in
the amount of the Aggregate Maximum Credit Amount
($10,000,000.00), the Borrower acknowledges that the Aggregate
Commitment on the Closing Date is a lesser number equal to the
initial Borrowing Base, subject to one or more future increases
arising from any corresponding future increases in the Borrowing
Base (after further bank management approvals). So long as the
Borrowing Base is smaller than the Aggregate Maximum Credit
Amount, then each reduction of the Borrowing Base, including by
automatic reductions by the Monthly Reductions as provided in
Section 2.08(i), causes a reduction of the Aggregate Commitment
in each instance in a like amount.
"Aggregate Maximum Credit Amount" at any time shall equal
the sum of the Maximum Credit Amounts of the Lenders
($10,000,000.00), as the same may be reduced pursuant to Section
2.03(b).
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the lending office of such Lender (or an
Affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other offices of such Lender (or
of an Affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Borrower as the office by which
its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean, the applicable per annum
percentage set forth at the appropriate intersection in the table
shown below, based on the Utilization Percentage as in effect
from time to time:
Utilization Percentage Eurodollar Rate Base Rate
Less than 50% 3.25% 0.50%
50% or more 3.75% 1.00%
"Assignment" shall have the meaning assigned such term in
Section 12.06(b).
"Base Rate" shall mean, with respect to any Base Rate Loan,
for any day, the Prime Rate for such day. Each change in any
interest rate provided for herein based upon the Base Rate
resulting from a change in the Base Rate shall take effect at the
time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at
rates based upon the Base Rate.
"Borrowing Base" shall mean at any time an amount equal to
the amount determined in accordance with Section 2.08(f).
"Borrowing Base Deficiency" shall have the meaning assigned
such term in Section 2.07(c).
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in New
Orleans, Louisiana and, where such term is used in the definition
of "Quarterly Date" or if such day relates to a borrowing or
continuation of, a payment or prepayment of principal of or
interest on, or a conversion of or into, or the Interest Period
for, a Eurodollar Loan or a notice by the Borrower with respect
to any such borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on
which dealings in Dollar deposits are carried out in the London
interbank market.
"Closing Date" shall mean July 10, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute.
"Commitment" shall mean, for any Lender, its obligation to
(i) make Loans up to the lesser of such Lender's Maximum Credit
Amount or the Lender's Percentage Share of the then effective
Borrowing Base and (ii) participate in the issuance of Letters of
Credit as provided in Section 2.01(b).
"Consolidated Subsidiaries" shall mean with regard to any
entity each Subsidiary of such entity (whether now existing or
hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial
statements of such entity in accordance with GAAP.
"Debt" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including
principal, interest, fees and charges), (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar
instruments (including principal, interest, fees and charges),
(c) all obligations of such Person for the unearned balance of
any payment received under any contract outstanding for 180 days,
(d) all obligations of such Person under conditional sale or
other title retention agreements relating to Property or assets
purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of Property or
services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business so long
as the same are not 180 days overdue or, if overdue, are being
contested in good faith and by appropriate proceedings), (f) all
Debt of others secured by (or for which the holder of such Debt
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 obligations secured thereby have been assumed, (g) all
obligations of such Person, contingent or otherwise, guaranteeing
or having the economic effect of guaranteeing Debt of others, (h)
all obligations of such Person to pay rent or other amounts under
a capital lease, (i) all recourse obligations of such Person with
respect to sales of accounts receivable which would be shown
under GAAP on the balance sheet of such Person as a liability,
(j) all obligations of such Person as an account party (including
reimbursement obligations to the issuer of a letter of credit) in
respect of bankers' acceptances and letters of credit
guaranteeing Debt, (k) all noncontingent obligations of such
Person as an account party (including reimbursement obligations
to the issuer of a letter of credit) in respect of letters of
credit other than those referred to in clause (j) above, (l) all
obligations under leases which require such Person to make
payments over the term of such lease, including payments at
termination, which are substantially equal to at least eighty
percent (80%) of the purchase price of the Property subject to
such lease plus interest at an imputed rate of interest, (m) all
obligations or undertakings of such Person to maintain or cause
to be maintained the financial position or covenants of others or
to purchase the Debt or Property of others, (n) obligations
outstanding for 180 days or more to deliver goods or services
including Hydrocarbons in consideration of advance payments, (o)
obligations to pay for goods or services in the event that such
goods or services are not actually received or utilized by such
Person, (p) any capital stock of such Person in which such Person
has a mandatory obligation to redeem such stock within two (2)
years after the Termination Date (plus any extension of such
date), (q) any Debt of a Special Entity for which such Person is
liable either by agreement or because of a Governmental
Requirement, (r) the undischarged balance of any production
payment created by such Person or for the creation of which such
Person directly received payment; and (s) all obligations of such
Person under Hedging Agreements. The Debt of any person shall
exclude obligations under leases which are characterized as
operating leases.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of
Default.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBITDAX" shall mean, for any period, the sum of
consolidated net income for such period plus the following
expenses or charges to the extent deducted from consolidated net
income in such period: interest paid or accrued on the Loans to
the Borrower and on other Debt of the Borrower during such
period, taxes, depreciation, depletion, amortization and
exploration expenses. As used herein, "consolidated net income"
shall mean, for any period, the amount which, in conformity with
GAAP, would be set forth opposite the caption "net income or
loss" (or any like caption) on a consolidated income statement of
the Borrower and its Consolidated Subsidiaries (before deducting
minority interests in net income of Consolidated Subsidiaries,
but disregarding all extraordinary or unusual noncash items in
calculating such consolidated net income). The calculation of
each of the items specified above will exclude items relating to
Unrestricted Subsidiaries.
"Effective Date" shall have the meaning assigned such term
in Section 12.16.
"Engineering Reports" shall have the meaning assigned such
term in Section 2.08.
"Environmental Laws" shall mean any and all applicable
Governmental Requirements pertaining to health or the environment
in effect in jurisdictions in which the Borrower or any
Subsidiary is conducting or at any time has conducted business,
or where any Property of the Borrower or any Subsidiary is
located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act,
as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil"
shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the
meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA;
provided, however, that (i) in the event either OPA, CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (ii) to the extent the laws
of the state in which any Property of the Borrower or any
Subsidiary is located establish a meaning for "oil," "hazardous
substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such
broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor
statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower or any
Subsidiary would be deemed to be a "single employer" within the
meaning of section 4001(b)(1) of ERISA or subsections (b), (c),
(m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) with respect to any plan, as to
which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (provided that a failure to meet the
minimum funding standard of Section 412 of the Code or
Section 302 of ERISA, including, without limitation, the failure
to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued
thereunder, (ii) the withdrawal of the Borrower, any Subsidiary
or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the filing of a notice of intent to terminate a Plan
or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a Plan by the PBGC or (v) any other event or condition
which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to
administer, any Plan.
"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the
definition of "Eurodollar Rate".
"Eurodollar Rate" shall mean, with respect to any Eurodollar
Loan, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) at approximately 11:00 a.m. London time (or
as soon thereafter as practicable) two (2) Business Days prior to
the first day of the Interest Period for such Loan at which
leading banks in the London interbank market offer Dollar
deposits having a term comparable to such Interest Period and in
an amount comparable to the principal amount of the Eurodollar
Loan to be made by the Lenders for such Interest Period (as shown
on the Dow Xxxxx Telerate Matrix for British Bankers Association
Interest Settlement Rates).
"Event of Default" shall have the meaning assigned such term
in Section 10.01.
"Excepted Liens" shall mean: (i) Liens for taxes,
assessments or other governmental charges or levies not yet due
or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained; (ii) Liens
in connection with workmen's compensation, unemployment insurance
or other social security, old age pension or public liability
obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have
been maintained in accordance with GAAP; (iii) operators',
vendors', carriers', warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction or other like Liens
arising by operation of law or lien in favor of operators or co-
interest owners under contract in the ordinary course of business
or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties or statutory landlord's
liens, each of which is in respect of obligations that have not
been outstanding more than 90 days or which are being contested
in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any
Liens reserved in leases or farmout agreements for rent or
royalties and for compliance with the terms of the farmout
agreements or leases in the case of leasehold estates, to the
extent that any such Lien referred to in this clause does not
materially impair the use of the Property covered by such Lien
for the purposes for which such Property is held by the Borrower
or any Subsidiary or materially impair the value of such Property
subject thereto; (v) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of
Property or services), easements, restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any
rights of way or other Property of the Borrower or any Subsidiary
for the purpose of roads, pipelines, transmission lines, trans
portation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for
the joint or common use of real estate, rights of way, facilities
and equipment, and defects, irregularities, zoning restrictions
and deficiencies in title of any rights of way or other Property
which in the aggregate do not materially impair the use of such
rights of way or other Property for the purposes of which such
rights of way and other Property are held by the Borrower or any
Subsidiary or materially impair the value of such Property
subject thereto; (vi) deposits of cash or securities to secure
the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in
the ordinary course of business; (vii) Liens permitted by the
Security Instruments ; (viii) required margin deposits on
permitted Hedging Agreements arising in the ordinary course of
business; (ix) Liens on assets or Properties not owned as of the
Closing Date by the Borrower or any Restricted Subsidiary
securing only purchase money Debt of the Borrower or such
Restricted Subsidiary permitted by Section 9.01(e), which Liens
are limited to the specific Property the purchase of which is
financed by such Debt; (x) with the Majority Lenders' prior
written approval, Liens existing at the time of acquisition by
the Borrower or any Restricted Subsidiary of the majority of the
capital stock or other ownership interests or substantially all
of the assets of any other Person or existing at the time of the
merger of any such other Person into the Borrower or any
Restricted Subsidiary, on such capital stock or other ownership
interests or assets so acquired or on the assets of the Person so
merged into the Borrower or such Restricted Subsidiary; provided,
however, that such acquisition or merger (and the discharge of
such Liens referred to in the immediately succeeding proviso)
shall not otherwise result in an Event of Default or Default; and
provided further that all such Liens shall be discharged within
180 days after the date of the respective acquisition or merger;
(xi) Liens of lessors of Property (in such capacity) leased by
the Borrower or any Restricted Subsidiary pursuant to an
operating lease or permitted capital lease, which Lien in any
such case is limited to the Property leased thereunder; and (xii)
with the Majority Lenders' prior written approval, Liens on
equity or debt investments in Third Parties owned by the Borrower
or a Restricted Subsidiary (which Lien in any case is limited to
such pledged equity or debt investment) which secure Debt of
Third Parties or other Third Party obligations (or guaranties
thereof); provided that such pledged investments were initially
acquired in accordance with Section 9.03.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight federal
funds transactions with a member of the Federal Reserve System
arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such
rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall
be the average rate charged to Hibernia on such day on such
transactions as determined by Hibernia.
"Fee Level" at any time shall equal the portion of the
Aggregate Commitments on which the Borrower has paid the
commitment fee required by Sections 2.04(c) and (d). The initial
Fee Level on the Closing Date is the initial amount of the
Borrowing Base on the Closing Date, being $4,500,000.00. The Fee
Level may hereafter be increased (but not decreased) by increases
to the Borrowing Base (and hence to the Aggregate Commitments) as
provided in Section 2.04(d).
"Financial Statements" shall mean the financial statement or
statements of the Borrower and its Consolidated Subsidiaries
described or referred to in Section 7.02.
"Form 1001 Certification" shall have the meaning assigned
such in Section 4.06(d).
"Form 4224 Certification" shall have the meaning assigned
such in Section 4.06(d).
"GAAP" shall mean generally accepted accounting principles
in the United States of America in effect from time to time.
"Governmental Authority" shall include the country, the
state, county, parish, city and political subdivisions in which
any Person or such Person's Property is located or which
exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission,
board, bureau or instrumentality of any of them including
monetary authorities which exercises valid jurisdiction over any
such Person or such Person's Property. Unless otherwise
specified, all references to Governmental Authority herein shall
mean a Governmental Authority having jurisdiction over, where
applicable, the Borrower, the Subsidiaries or any of their
Property or the Agent, any Lender or any Applicable Lending
Office.
"Governmental Requirement" shall mean any law, statute,
code, ordinance, order, determination, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement (whether
or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety
and health standards or controls, of any Governmental Authority.
"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, cap, floor, collar, forward agreement or other
exchange or protection agreements or any option with respect to
any such transaction.
"Highest Lawful Rate" shall mean, with respect to each
Lender, the maximum nonusurious interest rate, if any, that at
any time or from time to time may be contracted for, taken,
reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are
presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow
a higher maximum nonusurious interest rate than applicable laws
now allow.
"Hydrocarbon Interests" shall mean all rights, titles,
interests and estates now or hereafter acquired in and to oil and
gas leases, oil, gas and mineral leases, or other liquid or
gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual
interests of whatever nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined or
separated therefrom.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower or any Restricted Subsidiary to the Agent
and/or Lenders in connection with the Loan Documents and the
Letter of Credit Agreements, and any Hedging Agreements now or
hereafter arising between the Borrower or any Restricted
Subsidiary and any Lender or any Affiliate of such Lender and
permitted by the terms of this Agreement and all renewals,
refinancings, extensions and/or rearrangements of any of the
above.
"Indemnified Parties" shall have the meaning assigned such
term in Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or
inquiries), claims, demands and causes of action made or
threatened against a Person and, in connection therewith, all
losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any
kind or nature whatsoever incurred by such Person whether caused
by the sole or concurrent negligence of such Person seeking
indemnification.
"Initial Funding" shall mean the funding of the initial
Loans or issuance of the initial Letters of Credit, whichever
occurs first, pursuant to Section 6.01 hereof.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date such Eurodollar Loan is
made and ending on the numerically corresponding day in the
first, second or third calendar month thereafter, as the Borrower
may select as provided in Section 2.02 (or such longer period as
may be requested by the Borrower and agreed to by the Majority
Lenders), except that each Interest Period which commences on the
last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may
commence before and end after the Termination Date; (ii) each
Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) no
Interest Period shall have a duration of less than one month and,
if the Interest Period for any Eurodollar Loans would otherwise
be for a shorter period, such Loans shall not be available
hereunder.
"LC Commitment" at any time shall mean an amount equal to
the greater of (i) $2,000,000.00 or (ii) fifty (50%) percent of
the Aggregate Commitments.
"LC Exposure" at any time shall mean the aggregate face
amount of all undrawn and uncancelled Letters of Credit and the
aggregate of all amounts drawn under all Letters of Credit and
not yet reimbursed.
"Lender Termination Date" shall have the meaning assigned
such term in Section 5.06(c).
"Letter of Credit Agreements" shall mean the written
agreements with the Agent, as issuing lender for any Letter of
Credit, executed or hereafter executed in connection with the
issuance by the Agent of the Letters of Credit, such agreements
to be on the Agent's customary form for letters of credit of
comparable amount and purpose as from time to time in effect or
as otherwise agreed to by the Borrower and the Agent.
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.01(b) and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit"
shall mean any one of the Letters of Credit and the reimbursement
obligations pertaining thereto.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner
of the Property, whether such interest is based on the common
law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (i) the
lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes or (ii)
production payments and the like payable out of Oil and Gas
Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject
to a conditional sale agreement, or leases under a financing
lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person in a
transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Notes and
the Security Instruments.
"Loans" shall mean the loans as provided for by Section
2.01(a).
"Majority Lenders" shall mean, at any time while no Loans
are outstanding, Lenders having at least two-thirds (2/3rds) of
the Aggregate Commitments and, at any time while Loans are
outstanding, Lenders holding at least two-third (2/3rds) of the
outstanding aggregate principal amount of the Loans (without
regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"Material Adverse Effect" shall mean any material and
adverse effect on (i) the assets, liabilities, financial
condition, business, operations or affairs of the Borrower and
the Restricted Subsidiaries taken as a whole or from the facts
represented or warranted in any Loan Document, or (ii) the
ability of the Borrower and the Restricted Subsidiaries taken as
a whole to carry out their business as at the Closing Date or as
proposed as of the Closing Date to be conducted or meet their
obligations under the Loan Documents on a timely basis.
"Maximum Credit Amount" shall mean, as to each Lender and
subject to the limitation set forth in Section 2.03 hereof, the
amount set forth opposite such Lender's name on Annex I under the
caption "Maximum Credit Amounts" (as the same may be reduced
pursuant to Section 2.03(b) hereof pro rata to each Lender based
on its Percentage Share) as modified from time to time to reflect
any assignments permitted by Section 12.06(b).
"Monthly Reduction" shall mean at any time an amount equal
to the amount of the automatic monthly reduction to the Borrowing
Base determined in accordance with Section 2.08(i).
"MMR" shall mean McMoRan Exploration Co., a Delaware
corporation and the sole member of the Borrower.
"Mortgaged Property" shall mean the Property owned by the
Borrower or a Restricted Subsidiary and which is subject to the
Liens existing and to exist under the terms of the Security
Instruments.
"Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
"net dividends, distributions and redemptions" (as used in
Section 9.04 hereof) shall mean the gross aggregate amount of all
dividends, distributions and redemptions under Section 9.04 from
and after the Closing Date.
"Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower provided for by Section 2.06 and in the
form of Exhibit A hereto, together with any and all renewals,
extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"Notice of Termination" shall have the meaning assigned such
term in Section 5.06(a).
"Oil and Gas Properties" shall mean 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) which may affect all or any portion of
the Hydrocarbon Interests; all operating 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, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and
other incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including
any and all Property, real or personal, now owned or hereinafter
acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal property which may be on
such premises for the purpose of drilling a well or for other
similar temporary uses) and including any and all oil xxxxx, gas
xxxxx, injection xxxxx or other xxxxx, buildings, structures,
fuel separators, liquid extraction plants, plant compressors,
pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, meters, apparatus, equipment, appliances,
tools, implements, cables, wires, towers, casing, tubing and
rods, surface leases, rights-of-way, easements and servitudes
together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"Other Taxes" shall have the meaning assigned such term in
Section 4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the
Aggregate Commitments to be provided by a Lender under this
Agreement as indicated on Annex I hereto, as modified from time
to time to reflect any Assignments permitted by Section 12.06(b).
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other
form of entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (i) is currently or
hereafter sponsored, maintained or contributed to by the
Borrower, any Subsidiary or an ERISA Affiliate or (ii) was at any
time during the preceding six calendar years sponsored,
maintained or contributed to, by the Borrower, any Subsidiary or
an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal
of any Loan or any other amount payable by the Borrower under
this Agreement or any Note, a rate per annum during the period
commencing on the date of an Event of Default until such amount
is paid in full or all Events of Default are cured or waived
equal to 2% per annum above the Base Rate as in effect from time
to time plus the Applicable Margin (if any), but in no event to
exceed the Highest Lawful Rate provided that, for a Eurodollar
Loan, the "Post-Default Rate" for such principal shall be, for
the period commencing on the date of the Event of Default and
ending on the earlier to occur of the last day of the Interest
Period therefor or the date all Events of Default are cured or
waived, 2% per annum above the interest rate for such Loan as
provided in Section 3.02(ii), but in no event to exceed the
Highest Lawful Rate.
"Prime Rate" shall mean the prime or base rate of interest,
on any particular date, as reflected in The Wall Street Journal
(or if such rate is not published or is no longer available, such
other index satisfactory to the Agent). Such rate is a general
reference rate of interest, it being understood that many of the
Agent's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate actually
charged to any customer and that the Agent may make various
commercial or other loans at rates of interest having no
relationship to such rate.
"Principal Office" shall mean the principal office of the
Agent, presently located at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxx 00000 or such other location as designated by the
Agent from time to time.
"Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Quarterly Dates" shall mean the last day of each March,
June, September and December, in each year, the first of which
shall be September 30, 2002; provided, however, that if any such
day is not a Business Day, such Quarterly Date shall be the next
succeeding Business Day.
"Redetermination Date" shall have the meaning assigned such
term in Section 2.08(a).
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as
the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the Closing Date in any Governmental Requirement
(including Regulation D) or the adoption or making after such
date of any interpretations, directives or requests applying to a
class of lenders (including such Lender or its Applicable Lending
Office) of or under any Governmental Requirement (whether or not
having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Replacement Lenders" shall have the meaning assigned such
term in Section 5.06(b).
"Required Payment" shall have the meaning assigned such term
in Section 4.04.
"Reserve Report" shall mean a report, in form and substance
satisfactory to the Agent, to be delivered prior to March 1 of
each year, setting forth as of prior year-end: (i) the oil and
gas reserves attributable to certain of the Borrower's and/or
Restricted Subsidiary's Oil and Gas Properties together with a
projection of the rate of production and future net income,
taxes, operating expenses and capital expenditures with respect
thereto as of such date, based upon the pricing assumptions
consistent with SEC reporting requirements at the time, and (ii)
such other information as the Agent may reasonably request. The
term "Reserve Report" shall also include the information to be
provided by the Borrower pursuant to Section 8.07(a) prior to
September 1 of each year, setting forth, as of July 1 of such
year, the information required in clauses (i) and (ii) of the
preceding sentence.
"Responsible Officer" shall mean, as to any Person, the
Chief Executive Officer, the President or any Vice President of
such Person and, with respect to financial matters, the term
"Responsible Officer" shall include the Chief Financial Officer
or the Treasurer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a
Responsible Officer of the Borrower.
"Restricted Subsidiary" means any direct or indirect
Subsidiary of the Borrower that is not an Unrestricted
Subsidiary.
"rolling four quarter basis" shall have the meaning assigned
such term in Section 9.11.
"Scheduled Redetermination Date" shall have the meaning
assigned such term in Section 2.08(d).
"SEC" shall mean the Securities and Exchange Commission or
any successor Governmental Authority.
"Security Instruments" shall mean the Letters of Credit, the
Letter of Credit Agreements, the Guaranty Agreement by MMR, the
agreements or instruments described or referred to in Exhibit E,
and any and all other agreements or instruments now or hereafter
executed and delivered by the Borrower or any other Person (other
than participation or similar agreements between any Lender and
any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security
for the payment or performance of the Notes or this Agreement, or
reimbursement obligations under the Letters of Credit, as such
agreements may be amended, supplemented or restated from time to
time.
"Special Entity" shall mean any joint venture, limited
liability company or partnership, general or limited partnership
or any other type of partnership or company other than a
corporation in which the Borrower or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and
owns, directly or indirectly, at least a majority of the equity
of such entity or controls such entity, but excluding any tax
partnerships that are not classified as partnerships under state
law. For purposes of this definition, any Person which owns
directly or indirectly an equity investment in another Person
which allows the first Person to manage or elect managers who
manage the normal activities of such second Person will be deemed
to "control" such second Person (e.g. a sole general partner
controls a limited partnership).
"Subsidiary" shall mean (i) any corporation of which at
least a majority of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether
or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of
its Subsidiaries or by the Borrower and one or more of its
Subsidiaries and (ii) any Special Entity. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall
mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning assigned such term in
Section 4.06(a).
"Terminated Lender" shall have the meaning assigned such
term in Section 5.06(a).
"Termination Date" shall mean, unless the Commitments are
sooner terminated pursuant to Sections 2.03(b) or 10.02 hereof,
July 9, 2003.
"Third Party" shall have the meaning assigned such term in
Section 9.03.
"Type" shall mean, with respect to any Loan, a Base Rate
Loan or a Eurodollar Loan.
"Unrestricted Subsidiary" shall mean (i) any of the
Subsidiaries listed on Schedule 7.14 hereto as an Unrestricted
Subsidiary, (ii) any Subsidiary of any Unrestricted Subsidiary,
(iii) any surviving Person (other than the Borrower or a
Restricted Subsidiary) into which any of such Persons referred to
in clause (i) or (ii) is merged or consolidated and (iv) any
Subsidiary organized after the date of this Agreement and
designated as an Unrestricted Subsidiary by the Borrower
(pursuant to Section 9.16(b) hereof). By written notice to the
Agent, the Borrower may (x) declare any Unrestricted Subsidiary
to be a Restricted Subsidiary and such former Unrestricted
Subsidiary shall thereafter be deemed to be a Restricted
Subsidiary for all purposes of this Agreement (subject to the
limitations of this Agreement and pursuant to Section 9.16
hereof) or (y) at any time other than when a Default or Event of
Default has occurred and is continuing or would exist after
giving effect to such declaration, in any fiscal year, declare
one or more Restricted Subsidiaries, to be an Unrestricted
Subsidiary, subject to the limitations contained in Section 9.03
hereof, and any such former Restricted Subsidiary shall
thereafter be deemed to be an Unrestricted Subsidiary for all
purposes of this Agreement.
"Utilization Percentage" shall mean, as of any day, the
fraction expressed as a percentage, the numerator of which is the
sum of (i) the LC Exposure, plus (ii) the aggregate principal
amount of all outstanding Loans on such day, and the denominator
of which is the Borrowing Base in effect on such day. For
purposes of this calculation, the value of the denominator shall
be limited to the Aggregate Commitments.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower,
any Subsidiary of which all of the outstanding shares of stock
having by the terms thereof ordinary voting power to elect the
board of directors of such corporation, other than directors'
qualifying shares, are owned or controlled by the Borrower or one
or more of the Wholly-Owned Subsidiaries or by the Borrower and
one or more of the Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations .
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis
consistent with the audited financial statements of MMR referred
to in Section 7.02 (except for changes concurred with by MMR's
independent public accountants).
Section 1.04 Single Lender . On the Closing Date,
Hibernia is the sole Lender under this Agreement, and the parties
contemplate that Hibernia likely may remain the sole Lender under
this Agreement through the Termination Date. Notwithstanding
this fact, this Agreement contains references to the Agent and to
multiple Lenders, but it is the intention of the parties to this
Agreement that this Agreement be read throughout with the
understanding that Hibernia is the Agent and the sole Lender
(until, and if, such time as there is an Assignment by Hibernia
to a new additional Lender). Accordingly, the Borrower and
Hibernia acknowledge and agree that until such time as there is
an Assignment, the terms "Agent", "Lenders" and "Majority
Lenders" each shall mean Hibernia in its individual capacity, and
this Agreement shall operate and be administered and performed by
the parties on the basis that Hibernia is the sole Lender and is
not acting as the Agent. One example of the foregoing intention
is that the provisions of this Agreement requiring the votes of
the Lenders, or requiring notices by the Agent to the Lenders,
shall be ignored. Without limiting the generality of the
foregoing, prior to an Assignment resulting in multiple Lenders
under this Agreement: (a) Hibernia's Percentage Share is 100%,
and all Loans to the Borrower under this Agreement will be made
by Hibernia and all Letters of Credit under this Agreement shall
be issued by Hibernia, and all fees and payments shall be paid to
Hibernia; (b) the Borrowing Base shall be determined solely by
Hibernia in accordance with Section 2.08, and the steps regarding
notice and agreement or disagreement by other Lenders shall be
ignored as surplusage; (c) the Borrower shall have no right to
terminate the Commitment of Hibernia pursuant to the provisions
of Section 2.08(b) or Section 5.06; (d) the provisions of Article
XI shall not be applicable; and (e) notwithstanding Section
12.04, any provision of this Agreement or any Security Instrument
may be amended, modified or waived with the Borrower's and
Hibernia's prior written consent.
ARTICLE II Commitments
Section 2.01 Loans and Letters of Credit .
(a) Loans. Each Lender severally agrees, on the terms
of this Agreement, to make Loans to the Borrower during the
period from and including (i) the Closing Date or (ii) such
later date that such Lender becomes a party to this
Agreement as provided in Section 12.06(b), to but excluding,
the Termination Date in an aggregate principal amount at any
one time outstanding up to but not exceeding the amount of
such Lender's Commitment as then in effect; provided,
however, that the aggregate principal amount of all Loans by
all Lenders hereunder at any one time outstanding together
with the LC Exposure shall not exceed the Aggregate
Commitments. Subject to the terms of this Agreement, during
the period from the Closing Date to but excluding the
Termination Date, the Borrower may borrow, repay and
reborrow the amount determined pursuant to this Section
2.01(a).
(b) Letters of Credit. During the period from and
including the Closing Date to but excluding the Termination
Date, the Agent, as issuing bank for the Lenders, agrees, on
the terms of this Agreement, to extend credit for the
account of the Borrower at any time and from time to time by
issuing, renewing, extending or reissuing Letters of
Credit; provided however, the LC Exposure at any one time
outstanding shall not exceed the lesser of (i) the LC
Commitment or (ii) the Aggregate Commitments, as then in
effect, minus the aggregate principal amount of all Loans
then outstanding. The Lenders shall participate in such
Letters of Credit according to their respective Percentage
Shares.
(c) Limitation on Types of Loans. Subject to the
other terms and provisions of this Agreement, at the option
of the Borrower, the Loans may be Base Rate Loans or
Eurodollar Loans; provided that, without the prior written
consent of the Majority Lenders, no more than six (6)
Eurodollar Loans may be outstanding at any time to any
Lender.
Section 2.02 Borrowings, Continuations and
Conversions, Letters of Credit .
(a) Borrowings. The Borrower shall give the Agent
(which shall promptly notify the Lenders) advance notice as
hereinafter provided of each borrowing hereunder, which
shall specify the aggregate amount of such borrowing, the
Type and the date (which shall be a Business Day) of the
Loans to be borrowed and (in the case of Eurodollar Loans)
the duration of the Interest Period therefor.
(b) Minimum Amounts. All Base Rate Loan borrowings
shall be in amounts of at least $100,000 or the remaining
balance of the Aggregate Commitments, if less, or any whole
multiple of $100,000 in excess thereof, and all Eurodollar
Loans shall be in amounts of at least $100,000 or any whole
multiple of $100,000 in excess thereof.
(c) Notices. The initial borrowing and all subsequent
borrowings, continuations and conversions shall require
advance written notice to the Agent (which shall promptly
notify the Lenders) in the form of Exhibit B hereto (or
telephonic notice promptly confirmed by such a written
notice), which in each case may be revocable or irrevocable,
from the Borrower to be received by the Agent not later than
11:00 a.m. New Orleans, Louisiana time on the date of each
Base Rate Loan borrowing and three Business Days prior to
the date of each Eurodollar Loan borrowing, continuation or
conversion. Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice, the
Agent may act without liability upon the basis of telephonic
notice believed by the Agent in good faith to be from the
Borrower prior to receipt of written confirmation. In each
such case, the Borrower hereby waives the right to dispute
the Agent's record of the terms of such telephonic notice
except in the case of gross negligence or willful misconduct
by the Agent.
(d) Continuation Options. Subject to the provisions
made in this Section 2.02(d), the Borrower may elect to
continue all or any part of any Eurodollar Loan beyond the
expiration of the then current Interest Period relating
thereto by giving advance notice as provided in Section
2.02(c) to the Agent (which shall promptly notify the
Lenders) of such election, specifying the amount of such
Loan to be continued and the Interest Period therefor. In
the absence of such a timely and proper election, the
Borrower shall be deemed to have elected to convert such
Eurodollar Loan to a Base Rate Loan pursuant to Section
2.02(e). All or any part of any Eurodollar Loan may be
continued as provided herein, provided that (i) any
continuation of any such Loan shall be (as to each Loan as
continued for an applicable Interest Period) in amounts of
at least $100,000 or any whole multiple of $100,000 in
excess thereof and (ii) no Default shall have occurred and
be continuing. If a Default shall have occurred and be
continuing, each Eurodollar Loan shall be converted to a
Base Rate Loan on the last day of the Interest Period
applicable thereto.
(e) Conversion Options. The Borrower may elect to
convert all or any part of any Eurodollar Loan on the last
day of the then current Interest Period relating thereto to
a Base Rate Loan by giving advance notice to the Agent
(which shall promptly notify the Lenders) of such election.
Subject to the provisions made in this Section 2.02(e), the
Borrower may elect to convert all or any part of any Base
Rate Loan at any time and from time to time to a Eurodollar
Loan by giving advance notice as provided in Section 2.02(c)
to the Agent (which shall promptly notify the Lenders) of
such election. All or any part of any outstanding Loan may
be converted as provided herein, provided that (i) any
conversion of any Base Rate Loan into a Eurodollar Loan
shall be (as to each such Loan into which there is a
conversion for an applicable Interest Period) in amounts of
at least $100,000 or any whole multiple of $100,000 in
excess thereof and (ii) no Default shall have occurred and
be continuing. If a Default shall have occurred and be
continuing, no Base Rate Loan may be converted into a
Eurodollar Loan.
(f) Advances. Not later than 1:00 p.m. New Orleans,
Louisiana time on the date specified for each borrowing
hereunder, each Lender shall make available the amount of
the Loan to be made by it on such date to the Agent, to an
account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The
amounts so received by the Agent shall, subject to the terms
and conditions of this Agreement, be made available to the
Borrower by depositing the same, in immediately available
funds, in an account of the Borrower, designated by the
Borrower and maintained at the Principal Office.
(g) Letters of Credit. The Borrower shall give the
Agent (which shall promptly notify the Lenders of such
request) advance revocable or irrevocable notice to be
received by the Agent not later than 11:00 a.m. New Orleans,
Louisiana time not less than three (3) Business Days prior
thereto of each request for the issuance and at least thirty
(30) Business Days prior to the date of the renewal or
extension of a Letter of Credit hereunder which request
shall specify the amount of such Letter of Credit, the date
(which shall be a Business Day) such Letter of Credit is to
be issued, renewed or extended, the duration thereof, the
name and address of the beneficiary thereof, the form of the
Letter of Credit and such other information as the Agent may
reasonably request all of which shall be reasonably
satisfactory to the Agent. Subject to the terms and
conditions of this Agreement, on the date specified for the
issuance, renewal or extension of a Letter of Credit, the
Agent shall issue such Letter of Credit to the beneficiary
thereof. No Letter of Credit shall be issued, renewed or
extended with an expiration date after the date specified in
the definition of "Termination Date".
In conjunction with the issuance of each Letter of
Credit, the Borrower shall execute a Letter of Credit
Agreement. In the event of any conflict between any
provision of a Letter of Credit Agreement and this
Agreement, the Borrower, the Agent and the Lenders hereby
agree that the provisions of this Agreement shall govern.
The Agent will send to the Borrower and each Lender,
upon issuance of any Letter of Credit, or an amendment
thereto, a true and complete copy of such Letter of Credit,
or such amendment thereto.
Section 2.03 Changes of Commitments .
(a) The Aggregate Commitments shall at all times be
equal to the lesser of (i) the Aggregate Maximum Credit
Amount after adjustments resulting from reductions pursuant
to Section 2.03(b) hereof or (ii) the Borrowing Base as
determined from time to time pursuant to Section 2.08(f)
hereof.
(b) The Borrower shall have the right to terminate or
to reduce the amount of the Aggregate Maximum Credit Amounts
at any time or from time to time upon not less than three
(3) Business Days' prior notice to the Agent (which shall
promptly notify the Lenders) of each such termination or
reduction, which notice shall specify the effective date
thereof and the amount of any such reduction (which shall
not be less than $500,000 or any whole multiple of $500,000
in excess thereof) and may be revocable or irrevocable and
effective only upon receipt by the Agent. The Aggregate
Maximum Credit Amounts once terminated or reduced pursuant
to this Section 2.03(b) may not be reinstated.
Section 2.04 Fees .
(a) The Borrower agrees to pay to the Agent, for the
account of each Lender, an unusued fee on the daily average
of the amount by which the Aggregate Commitments exceed the
sum of (A) the LC Exposure, plus (B) the aggregate principal
amount of all outstanding Loans for the period from and
including the Closing Date up to but excluding the earlier
of the date the Aggregate Commitments are terminated or the
Termination Date at a rate per annum equal to one-half of
one (0.50%) percent. All such unused fees shall be
calculated on the basis of a year of 365 (or, in a leap
year, 366) days for the actual number of days elapsed. The
accrued unused fees shall be due and payable quarterly in
arrears on each Quarterly Date and on the earlier of the
date the Aggregate Commitments are terminated or the
Termination Date.
(b) The Borrower agrees to pay the Agent, for the
account of each Lender, commissions for issuing the Letters
of Credit on the daily average outstanding of the maximum
liability of the Agent existing from time to time under such
Letter of Credit (calculated separately for each Letter of
Credit) at the applicable per annum percentage set forth at
the appropriate intersection in the table shown below,
provided that each Letter of Credit shall bear a minimum
commission of $300.00. Each Letter of Credit shall be
deemed to be outstanding up to the full face amount of the
Letter of Credit until the Agent has received the canceled
Letter of Credit or a written cancellation of the Letter of
Credit from the beneficiary of such Letter of Credit in form
and substance acceptable to the Agent, or for any reductions
in the amount of the Letter of Credit (other than from a
drawing), written notification from the beneficiary of such
Letter of Credit. Such commissions are payable quarterly in
arrears.
Utilization Percentage Letter of
Credit Fee
Less than 50% 3.25%
50% or more 3.75%
(c) The Borrower agrees to pay to the Agent, for the
account of each Lender, an upfront commitment fee in the
amount equal to two (2%) percent of the initial Aggregate
Commitments ($90,000.00, being 2% of the initial Borrowing
Base of $4,500,000.00) on the Closing Date.
(d) In connection with each future increase in the
Borrowing Base above the then applicable Fee Level, the
Borrower agrees to pay to the Agent, for the account of each
Lender, a commitment fee in an amount equal to two (2%)
percent of the amount by which the increased Borrowing Base
exceeds the then existing Fee Level. The initial Fee Level
on the Closing Date is the initial amount of the Borrowing
Base on the Closing Date, being $4,500,000.00. If the
Borrowing Base hereafter is increased to an amount higher
than such initial Fee Level, then such new higher amount
shall become the Fee Level. Thereafter, if the Borrowing
Base is increased to an amount higher than such Fee Level,
the Fee Level shall be reset to such higher number, one or
more times. All such additional commitment fees shall be
due and payable at the time the increase in the Borrowing
Base becomes effective.
(e) If the Borrower exercises its option to cause the
Lenders to redetermine the Borrowing Base pursuant to
Section 2.08(d), then for each exercise of such option, the
Borrower shall pay a fee to the Agent in the amount of
$2,000 to be shared by the Lenders pro rata in proportion to
their Percentage Share. Such fee shall be due and payable
at the time the Borrower gives notice of its election to
exercise such option.
(f) If a new Lender is added under this Agreement
pursuant to an Assignment, the Borrower and the Agent shall
enter into a letter agreement setting forth a commercially
reasonable agent fee to be paid by the Borrower to the Agent
for its own account.
Section 2.05 Several Obligations . The failure of any
Lender to make any Loan to be made by it or to provide funds for
disbursements or reimbursements under Letters of Credit on the
date specified therefor shall not relieve any other Lender of its
obligation to make its Loan or provide funds on such date, but no
Lender shall be responsible for the failure of any other Lender
to make a Loan to be made by such other Lender or to provide
funds to be provided by such other Lender.
Section 2.06 Notes . The Loans made by each Lender
shall be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A hereto, dated (i) the Closing
Date or (ii) the effective date of an Assignment pursuant to
Section 12.06(b), payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount as in effect
and otherwise duly completed and such substitute Notes as
required by Section 12.06(b). The date, amount, Type, interest
rate and Interest Period of each Loan made by each Lender, and
all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Notes, and, prior to
any transfer, may be endorsed by such Lender on a schedule
attached to such Notes or any continuation thereof or on any
separate record maintained by such Lender. Failure to make any
such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of
such Loans or affect the validity of such transfer by any Lender
of its Notes.
Section 2.07 Prepayments .
(a) The Borrower may prepay the Base Rate Loans upon
notice to the Agent (which shall promptly notify the
Lenders) not later than 11:00 a.m. New Orleans, Louisiana
time on the date of such Base Rate Loan prepayment, which
notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall
be at least $100,000 or the remaining aggregate principal
balance outstanding on the Notes) and may be revocable or
irrevocable and effective only upon receipt by the Agent.
The Borrower may prepay all or any portion of Eurodollar
Loans upon not less than three (3) Business Day's prior
notice to the Agent (which shall promptly notify the
Lenders), which notice shall specify the prepayment date
(which shall be a Business Day) and the amount of the
prepayment (which shall be at least $100,000 or the
remaining aggregate principal balance outstanding on the
Notes) and may be revocable or irrevocable and effective
only upon receipt by the Agent, provided that interest on
the principal prepaid, accrued to the prepayment date, shall
be paid on the prepayment date. In addition, prepayments of
Eurodollar Loans shall be subject to the terms of Section
5.05.
(b) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant
to Section 2.03(b), the outstanding aggregate principal
amount of the Loans plus the LC Exposure exceeds the
Aggregate Maximum Credit Amounts, the Borrower shall (i)
prepay the Loans on the date of such termination or
reduction in an aggregate principal amount equal to the
excess, together with interest on the principal amount paid
accrued to the date of such prepayment and (ii) if any
excess remains after prepaying all of the Loans, pay to the
Agent on behalf of the Lenders an amount equal to the excess
to be held as cash collateral as provided in Section 2.10(b)
hereof.
(c) Upon any adjustment or redetermination of the
amount of the Borrowing Base in accordance with Sections
2.08, 8.08(c), 9.03(j) or 9.13 or otherwise, if the adjusted
or redetermined Borrowing Base is less than the sum of the
aggregate outstanding principal amount of the Loans and the
LC Exposure (a "Borrowing Base Deficiency"), then (i) the
Borrower shall cure such Borrowing Base Deficiency by
prepaying the Loans or reducing the LC Exposure in an
aggregate principal amount equal to such excess, together
with interest on the principal amount paid which has accrued
to the date of such prepayment, within thirty (30) days of
receipt of written notice thereof. If such Borrowing Base
Deficiency is not cured by the 30th day, after the
Borrower's receipt of notice of such Borrowing Base
Deficiency, then such Borrowing Base Deficiency shall
constitute an Event of Default hereunder. The Borrower
specifically acknowledges that no additional grace period
(beyond the period stated in the preceding sentences) is
applicable under this Agreement to any failure to make such
mandatory prepayment before such failure becomes an Event of
Default hereunder. Additionally, the Borrower specifically
acknowledges that the foregoing thirty (30) day grace period
is not applicable to any failure to make such mandatory
prepayment triggered by a Borrowing Base Deficiency due to a
Monthly Reduction as provided in Section 2.07(e).
(d) Following a casualty loss to all or any part of
the Oil and Gas Properties constituting the Borrowing Base,
all insurance proceeds payable to the Borrower or a
Restricted Subsidiary, as applicable, and not used by the
Borrower or such Restricted Subsidiary to repair or replace
such Properties shall be used by the Borrower or such
Restricted Subsidiary to prepay the Loans. The Borrowing
Base shall be reduced by an amount reasonably determined at
the time by the Agent to reflect the contribution to the
Borrowing Base of such Oil and Gas Properties not repaired
or replaced and such Oil and Gas Properties shall no longer
be included in the Borrowing Base.
(e) Notwithstanding the foregoing provisions in
Section 2.07(c), the Borrower shall pay the amount of any
Borrowing Base Deficiency that results from the application
of each Monthly Reduction on the day that such Monthly
Reduction takes effect.
(f) Prepayments permitted or required under this
Section 2.07 shall be without notice, premium or penalty,
except as required under Section 5.05 for prepayment of
Eurodollar Loans. Any prepayments on the Loans may be
reborrowed subject to the then effective Aggregate
Commitments.
Section 2.08 Borrowing Base .
(a) During the period from and after the Closing Date
until the first scheduled redetermination of the Borrowing
Base (scheduled to be December 15, 2002) in accordance with
this Section 2.08, the amount of the Borrowing Base shall be
$4,500,000.00. The Borrowing Base shall be redetermined in
accordance with Sections 2.08(b), 2.08(c), 2.08(d) and
2.08(i) by the Agent with the concurrence of the Majority
Lenders. Upon any redetermination of the Borrowing Base,
such redetermination shall remain in effect until the next
successive Redetermination Date. "Redetermination Date"
shall mean the date that the redetermined Borrowing Base
becomes effective subject to the notice requirements
specified in Section 2.08(e) both for scheduled
redeterminations and unscheduled redeterminations, except
that a reduction in the Borrowing Base caused by a Monthly
Reduction shall become effective on the date thereof without
need of notice.
(b) Upon receipt of the reports required by Section
8.07 and such other reports, data and supplemental
information as may from time to time be reasonably requested
by the Agent (the "Engineering Reports"), the Agent will
redetermine the Borrowing Base. Such redetermination will
be in accordance with its normal and customary procedures
for evaluating oil and gas reserves and other related assets
and Hedging Agreements as such exist at that particular
time. The Agent, in its sole discretion, may make
adjustments to the rates, volumes and prices and other
assumptions set forth therein in accordance with its normal
and customary procedures for evaluating oil and gas reserves
and other related assets as such exist at that particular
time. The Agent shall propose to the Lenders a new
Borrowing Base within 30 days following receipt by the Agent
and the Lenders of the applicable Engineering Reports in a
timely and complete manner, with respect each scheduled
redetermination of the Borrowing Base. After having
received notice of such proposal by the Agent, each Lender
shall have 14 days to agree or disagree with such proposal.
Each Lender shall evaluate the proposal in good faith in
accordance with its normal and customary procedures for
evaluating oil and gas reserves and other related assets as
such exist at that particular time. If at the end of the
14 days, any Lender shall have not communicated its approval
or disapproval, such silence shall be deemed to be an
approval. If within such 14 day period the Majority Lenders
have approved or been deemed to approve the Agent's
proposal, then the Agent's proposal shall be the new
Borrowing Base; provided, however, an increase in the
Borrowing Base shall require the approval or deemed approval
of 100% of the Lenders before such increase shall become
effective. If however, the Majority Lenders have not
approved or been deemed to approve the Agent's proposal
within 14 days, the Majority Lenders shall, within a
reasonable period of time, agree on a new Borrowing Base.
Should any Lender refuse to approve the Agent's proposal,
the Borrower may terminate, in whole but not in part, the
Commitment of such Lender upon five (5) Business Days' prior
written notice to the Terminated Lender and the Agent. The
termination shall be governed by subsections (b), (c) and
(d) of Section 5.06, and for such purposes, the Lender whose
Commitment has been terminated shall be considered a
"Terminated Lender" and the notice given pursuant to the
prior sentence shall be considered a "Notice of
Termination". The first scheduled redetermination of the
Borrowing Base is to occur on December 15, 2002.
(c) The Agent may exclude any Oil and Gas Property or
portion of production therefrom or any income from any other
Property from the Borrowing Base, at any time, because title
information on or the status of title to such Property is
not reasonably satisfactory, such Property is not Mortgaged
Property, or such Property is subject to contractual
agreements or commitments or laws restricting the mortgaging
or assigning thereof or the grant of security interests
therein.
(d) (i) So long as any of the Commitments are in
effect and until payment in full of all Loans hereunder, on
or around the fifteenth (15th) day of each December and
June, commencing December 15, 2002 (each being a "Scheduled
Redetermination Date"), the Lenders shall redetermine the
amount of the Borrowing Base in accordance with Sections
2.08(b) and (c). (ii) In addition to the scheduled
redeterminations pursuant to clause (i) of this
Section 2.08(d), the Majority Lenders or the Borrower may
each initiate a redetermination of the Borrowing Base as
they so elect; provided, however, only one such unscheduled
redetermination may be elected between each Scheduled
Redetermination Date. If such redetermination is initiated
by the Majority Lenders, the Agent shall specify in writing
to the Borrower the date on which the Borrower is to furnish
a Reserve Report in accordance with Section 8.07(b) and the
date on which such redetermination is to occur. Each such
redetermination shall be made in accordance with
Sections 2.08(b) and (c); provided, however, the Agent shall
propose to the Lenders the redetermined Borrowing Base
within 14 days following receipt by the Agent and the
Lenders of the Engineering Reports in a timely and complete
manner. After having received notice of such proposal by
the Agent, the Majority Lenders shall have 14 days to agree
or disagree with such proposal. If at the end of the
14 days, the Majority Lenders have not communicated their
approval or disapproval, such silence shall be deemed to be
an approval and the Agent's proposal shall be the new
Borrowing Base; provided, however, an increase in the
Borrowing Base shall require the approval or deemed approval
of 100% of the Lenders before such increase shall become
effective. If however, the Majority Lenders notify Agent
within 14 days of their disapproval, the Majority Lenders
shall, within a reasonable period of time, agree on a new
Borrowing Base.
(e) The Agent shall promptly notify in writing the
Borrower and the Lenders of the new Borrowing Base. Any
redetermination of the Borrowing Base shall not be in effect
until written notice is received by the Borrower. However,
notwithstanding the preceding two sentences, a
redetermination of the Borrowing Base arising from an
automatic reduction caused by a Monthly Production shall
become effective on the date thereof without need of notice.
(f) Upon the Borrower's receipt of written notice from
the Agent of the amount of the Borrowing Base then in
effect, the Agent and the Borrower shall mutually agree on
the portion of such Borrowing Base to be accepted by the
Borrower as the Borrowing Base. During the period from and
after the Closing Date to and including the effective date
of the next designation of the Borrowing Base in accordance
with this Section 2.08(f), the amount of the Borrowing Base
shall be $4,500,000.00.
(g) In addition to the scheduled and unscheduled
redeterminations of the Borrowing Base pursuant to this
Section 2.08 (including the Monthly Reductions in accordance
with Sections 2.08(i), the Borrowing Base in effect from
time to time is subject to reductions and adjustments made
in accordance with Sections 8.08(c), 9.03(j) or 9.13.
(h) So long as any of the Commitments are in effect or
any LC Exposure or Loans are outstanding hereunder, the
Loans and Letters of Credit shall be governed by the then
effective Borrowing Base.
(i) The Borrowing Base shall be automatically reduced
by the applicable Monthly Reduction commencing on August 15,
2002, and continuing on the 15th day of each successive
month; provided that whenever the 15th day of any month
occurs on a day other than a Business Day, the applicable
Monthly Production shall take effect on the next succeeding
Business Day. Each reduction of the Borrowing Base caused
by a Monthly Reduction shall take effect automatically on
such date without need of notice to the Borrower. The
amount of the Monthly Reduction will be redetermined by the
Agent as part of and at the time of each redetermination of
the Borrowing Base in accordance with Section 2.08(b), upon
written notice to the Borrower. During the period from and
after the Closing Date until the first redetermination of
the Borrowing Base, the amount of the Monthly Reduction
shall be $500,000.00. Upon any increase in the Borrowing
Base for any reason, including without any limitation an
increase in the Borrowing Base arising from the Borrower's
Hedging Agreements then in effect, the Monthly Reduction
amount may be increased by the Agent in its sole discretion
in accordance with Section 2.08(b), upon written notice to
the Borrower. So long as the Borrowing Base is smaller than
the Aggregate Maximum Credit Amount, each Monthly Reduction
shall cause a reduction of the Aggregate Commitments in a
like amount. Each Monthly Reduction to the Borrowing Base
(and in such circumstance to the Aggregate Commitments)
shall be permanent, subject to any future increase in the
Borrowing Base pursuant to a redetermination thereof.
Notwithstanding the foregoing provisions in Section 2.07(c),
the Borrower shall pay the amount of any Borrowing Base
Deficiency that results from the application of each Monthly
Reduction on the day that such Monthly Reduction takes
effect.
Section 2.09 Assumption of Risks . The Borrower
assumes all risks of the acts or omissions of any beneficiary of
any Letter of Credit or any transferee thereof with respect to
its use of such Letter of Credit. Neither the Agent (except in
the case of willful misconduct or bad faith on the part of the
Agent or any of its employees), its correspondents nor any Lender
shall be responsible for the validity, sufficiency or genuineness
of certificates or other documents or any endorsements thereon,
even if such certificates or other documents should in fact prove
to be invalid, insufficient, fraudulent or forged; for errors,
omissions, interruptions or delays in transmissions or delivery
of any messages by mail, telex, or otherwise, whether or not they
be in code; for errors in translation or for errors in
interpretation of technical terms; the validity or sufficiency of
any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; the failure of
any beneficiary or any transferee of any Letter of Credit to
comply fully with conditions required in order to draw upon any
Letter of Credit; or for any other consequences arising from
causes beyond the Agent's control or the control of the Agent's
correspondents. In addition, neither the Agent nor any Lender
shall be responsible for any error, neglect, or default of any of
the Agent's correspondents; and none of the above shall affect,
impair or prevent the vesting of any of the Agent's or any
Lender's rights or powers hereunder or under the Letter of Credit
Agreements, all of which rights shall be cumulative. The Agent
and its correspondents may accept certificates or other documents
that appear on their face to be in order, without responsibility
for further investigation of any matter contained therein
regardless of any notice or information to the contrary. In
furtherance and not in limitation of the foregoing provisions,
the Borrower agrees that any action, inaction or omission taken
or not taken by the Agent or by any correspondent for the Agent
in good faith in connection with any Letter of Credit, or any
related drafts, certificates, documents or instruments, shall be
binding on the Borrower and shall not put the Agent or its
correspondents under any resulting liability to the Borrower.
Section 2.10 Obligation to Reimburse and to Prepay .
(a) If a disbursement by the Agent is made under any
Letter of Credit, the Borrower shall pay to the Agent within
two (2) Business Days after notice of any such disbursement
is received by the Borrower, the amount of each such
disbursement made by the Agent under the Letter of Credit
(if such payment is not sooner effected as may be required
under this Section 2.10 or under other provisions of the
Letter of Credit), together with interest on the amount
disbursed from and including the date of disbursement until
payment in full of such disbursed amount at a varying rate
per annum equal to (i) the then applicable interest rate for
Base Rate Loans through the second Business Day after notice
of such disbursement is received by the Borrower and (ii)
thereafter, the Post-Default Rate for Base Rate Loans (but
in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following
the date of notice of such disbursement to and including the
date of repayment in full of such disbursed amount. The
obligations of the Borrower under this Agreement with
respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed
strictly in accordance with the terms of this Agreement
under all circumstances whatsoever, including, without
limitation, but only to the fullest extent permitted by
applicable law, the following circumstances: (i) any lack of
validity or enforceability of this Agreement, any Letter of
Credit or any of the Security Instruments; (ii) any
amendment or waiver of (including any default), or any
consent to departure from this Agreement (except to the
extent permitted by any amendment or waiver), any Letter of
Credit or any of the Security Instruments; (iii) the
existence of any claim, set-off, defense or other rights
which the Borrower may have at any time against the
beneficiary of any Letter of Credit or any transferee of any
Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the
Agent, any Lender or any other Person, whether in connection
with this Agreement, any Letter of Credit, the Security
Instruments, the transactions contemplated hereby or any
unrelated transaction; (iv) any statement, certificate,
draft, notice or any other document presented under any
Letter of Credit proves to have been forged, fraudulent,
insufficient or invalid in any respect or any statement
therein proves to have been untrue or inaccurate in any
respect whatsoever; (v) payment by the Agent under any
Letter of Credit against presentation of a draft or
certificate which appears on its face to comply, but does
not comply, with the terms of such Letter of Credit; and
(vi) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing. The Borrower may
repay its obligations under this Subsection 2.10(a) with a
Loan subject to the other restrictions on Loans under this
Agreement.
Notwithstanding anything in this Agreement to the contrary,
the Borrower will not be liable for payment or performance
that results from the gross negligence or willful misconduct
of the Agent, except (i) where the Borrower or any
Subsidiary actually recovers the proceeds for itself or the
Agent of any payment made by the Agent in connection with
such gross negligence or willful misconduct or (ii) in cases
where the Agent makes payment to the named beneficiary of a
Letter of Credit.
(b) In the event of the occurrence of any Event of
Default, a payment or prepayment pursuant to Sections
2.07(b), (c), (d) and (e) hereof or the maturity of the
Notes, whether by acceleration or otherwise, an amount equal
to the LC Exposure (or the excess in the case of Section
2.07(b), (c), (d) or (e)) shall be deemed to be forthwith
due and owing by the Borrower to the Agent and the Lenders
as of the date of any such occurrence; and the Borrower's
obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of
any such Letter of Credit has attempted to draw down all or
a portion of such amount under the terms of a Letter of
Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a
right of set-off, counterclaim or recoupment which the
Borrower may now or hereafter have against any such
beneficiary, the Agent, the Lenders or any other Person for
any reason whatsoever. Such payments shall be held by the
Agent on behalf of the Lenders as cash collateral securing
the LC Exposure in an interest bearing account or accounts
at the Principal Office; and the Borrower hereby grants to
and by its deposit with the Agent grants to the Agent a
security interest in such cash collateral and deposit
account(s). In the event of any such payment by the
Borrower of amounts contingently owing under outstanding
Letters of Credit and in the event that thereafter drafts or
other demands for payment complying with the terms of such
Letters of Credit are not made prior to the respective
expiration dates thereof, the Agent agrees, if no Event of
Default has occurred and is continuing or if no other
amounts are outstanding under this Agreement, the Notes or
the Security Instruments, to remit to the Borrower amounts
for which the contingent obligations evidenced by the
Letters of Credit have ceased.
(c) Each Lender severally and unconditionally agrees
that it shall promptly reimburse the Agent an amount equal
to such Lender's Percentage Share of any disbursement made
by the Agent under any Letter of Credit that is not
reimbursed according to this Section 2.10.
Section 2.11 Lending Offices . The Loans of each Type
made by each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Loans of such Type.
ARTICLE III Payments of Principal and Interest
Section 3.01 Repayment of Loans . The Borrower will
pay to the Agent, for the account of each Lender, the principal
payments required by this Section 3.01. On the Termination Date
the Borrower shall repay the outstanding aggregate principal and
accrued and unpaid interest under the Notes.
Section 3.02 Interest . The Borrower will pay to the
Agent, for the account of each Lender, interest on the unpaid
principal amount of each Loan made by such Lender for the period
commencing on the date such Loan is made to but excluding the
date such Loan shall be paid in full, at the following rates per
annum:
(i) if such a Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) plus the
Applicable Margin, but in no event to exceed the
Highest Lawful Rate; and
(ii) if such a Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate
for such Loan plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the
Agent, for the account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such
Lender, and (to the fullest extent permitted by law) on any other
amount payable by the Borrower hereunder, under any Loan Document
or under any Note held by such Lender to or for account of such
Lender, for the period commencing on the date of an Event of
Default until the same is paid in full or all Events of Default
are cured or waived.
Accrued interest on Base Rate Loans shall be payable on each
Quarterly Date commencing on September 30, 2002, and accrued
interest on each Eurodollar Loan shall be payable on the last day
of the Interest Period therefor and, if such Interest Period is
longer than three months at three-month intervals following the
first day of such Interest Period, except that interest payable
at the Post-Default Rate shall be payable from time to time on
demand and interest on any Eurodollar Loan that is converted into
a Base Rate Loan (pursuant to Section 5.04) shall be payable on
the date of conversion (but only to the extent so converted).
Promptly after the determination of any interest rate
provided for herein or any change therein, the Agent shall notify
the Lenders to which such interest is payable and the Borrower
thereof. Each determination by the Agent of an interest rate or
fee hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments . Except to the extent
otherwise provided herein, all payments of principal, interest
and other amounts to be made by the Borrower under the Loan
Documents shall be made in Dollars, in immediately available
funds, to the Agent at such account as the Agent shall specify by
notice to the Borrower from time to time, not later than 11:00
a.m. New Orleans, Louisiana time on the date on which such
payments shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without
(to the fullest extent permitted by applicable law) defense, set-
off or counterclaim. Each payment received by the Agent under
this Agreement or any Note for account of a Lender shall be paid
promptly to such Lender in immediately available funds. Except
as provided in clause (iii) of the definition of "Interest
Period", if the due date of any payment under this Agreement or
any Note would otherwise fall on a day which is not a Business
Day such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended
for the period of such extension. At the time of each payment to
the Agent of any principal of or interest on any borrowing, the
Borrower shall notify the Agent of the Loans to which such
payment shall apply. In the absence of such notice the Agent may
specify the Loans to which such payment shall apply, but to the
extent possible such payment or prepayment will be applied first
to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment . Except to the
extent otherwise provided herein each Lender agrees that:
(i) each borrowing from the Lenders under Section 2.01 and each
continuation and conversion under Section 2.02 shall be made from
the Lenders pro rata in accordance with their Percentage Share,
each payment of commitment fee or other fees under
Sections 2.04(a), (b), (c), (d) and (e) shall be made for account
of the Lenders pro rata in accordance with their Percentage
Share, and each termination or reduction of the amount of the
Aggregate Maximum Credit Amounts under Section 2.03(b) shall be
applied to the Commitment of each Lender, pro rata according to
the amounts of its respective Commitment; (ii) each payment of
principal of Loans by the Borrower shall be made for account of
the Lenders pro rata in accordance with the respective unpaid
principal amount of the Loans held by the Lenders; and (iii) each
payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of
interest due and payable to the respective Lenders; and (iv) each
reimbursement by the Borrower of disbursements under Letters of
Credit shall be made for account of the Agent or, if funded by
the Lenders, pro rata for the account of the Lenders, in
accordance with the amounts of reimbursement obligations due and
payable to each respective Lender.
Section 4.03 Computations . Interest on Eurodollar
Loans shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the
last day) occurring in the period for which such interest is
payable, unless such calculation would exceed the Highest Lawful
Rate, in which case interest shall be calculated on the per annum
basis of a year of 365 or 366 days, as the case may be. Interest
on Base Rate Loans and fees shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Agent .
Unless the Agent shall have been notified by a Lender or the
Borrower prior to the date on which such notifying party is
scheduled to make payment to the Agent (in the case of a Lender)
of the proceeds of a Loan or a payment under a Letter of Credit
to be made by it hereunder or (in the case of the Borrower) a
payment to the Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that it
does not intend to make the Required Payment to the Agent, the
Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient(s) on
such date and, if such Lender or the Borrower (as the case may
be) has not in fact made the Required Payment to the Agent, the
recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such
amount was so made available by the Agent until but excluding the
date the Agent recovers such amount at a rate per annum which,
for any Lender as recipient, will be equal to the Federal Funds
Rate, and for the Borrower as recipient, will be equal to the
Base Rate plus the Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien
or counterclaim a Lender may otherwise have, each Lender
shall have the right and be entitled (after consultation
with the Agent), at its option, to offset balances held by
it or by any of its Affiliates for account of the Borrower
or any Restricted Subsidiary at any of its offices, in
Dollars or in any other currency, against any principal of
or interest on any of such Lender's Loans, or any other
amount payable to such Lender hereunder, which is not paid
when due (regardless of whether such balances are then due
to the Borrower), in which case it shall promptly notify the
Borrower and the Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity
thereof.
(b) If any Lender shall obtain payment of any
principal of or interest on any Loan made by it to the
Borrower under this Agreement (or reimbursement as to any
Letter of Credit) through the exercise of any right of set-
off, banker's lien or counterclaim or similar right or
otherwise, and, as a result of such payment, such Lender
shall have received a greater percentage of the principal or
interest (or reimbursement) then due hereunder by the
Borrower to such Lender than the percentage received by any
other Lenders, it shall promptly (i) notify the Agent and
each other Lender thereof and (ii) purchase from such other
Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans (or
participations in Letters of Credit) made by such other
Lenders (or in interest due thereon, as the case may be) in
such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders
shall share the benefit of such excess payment (net of any
expenses which may be incurred by such Lender in obtaining
or preserving such excess payment) pro rata in accordance
with the unpaid principal and/or interest on the Loans held
by each of the Lenders (or reimbursements of Letters of
Credit). To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is
rescinded or must otherwise be restored. The Borrower
agrees that any Lender so purchasing a participation (or
direct interest) in the Loans made by other Lenders (or in
interest due thereon, as the case may be) may exercise all
rights of set-off, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if
such Lender were a direct holder of Loans (or Letters of
Credit) in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation
of the Borrower. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a
secured claim in lieu of a set-off to which this
Section 4.05 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders
entitled under this Section 4.05 to share the benefits of
any recovery on such secured claim.
Section 4.06 Taxes .
(a) Payments Free and Clear. Any and all payments by
the Borrower hereunder shall be made, in accordance with
Section 4.01, free and clear of and without deduction for
any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender
and the Agent, taxes imposed on its income, and franchise or
similar taxes imposed on it, by (i) any jurisdiction (or
political subdivision thereof) of which the Agent or such
Lender, as the case may be, is a citizen or resident or in
which such Lender has an Applicable Lending Office, (ii) the
jurisdiction (or any political subdivision thereof) in which
the Agent or such Lender is organized, or (iii) any
jurisdiction (or political subdivision thereof) in which
such Lender or the Agent is presently doing business in
which taxes are imposed solely as a result of doing business
in such jurisdiction (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Lenders or the
Agent (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 4.06) such Lender or the Agent (as the
case may be) shall receive an amount equal to the sum it
would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in
accordance with applicable law.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement, any Assignment or any Security Instrument
(hereinafter referred to as "Other Taxes").
(c) indemnification. to the fullest extent permitted
by applicable law, but subject to Section 4.06(d)(ii), the
Borrower will indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, but not
limited to, any Taxes or Other Taxes imposed by any
Governmental Authority on amounts payable under this section
4.06) paid by such Lender or the Agent (on their behalf or
on behalf of any Lender), as the case may be, and any
liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted
unless the payment of such Taxes was not correctly or
legally asserted and such Lender's payment of such Taxes or
Other Taxes was the result of its gross negligence or
willful misconduct. any payment pursuant to such
indemnification shall be made within thirty (30) days after
the date any Lender or the Agent, as the case may be, makes
written demand therefor. if any Lender or the Agent
receives a refund or credit in respect of any Taxes or Other
Taxes for which such Lender or the Agent has received
payment from the Borrower it shall promptly notify the
Borrower of such refund or credit and shall, if no default
has occurred and is continuing, within thirty (30) days
after receipt of a request by the Borrower (or promptly upon
receipt, if the Borrower has requested application for such
refund or credit pursuant hereto), pay an amount equal to
such refund or credit to the Borrower without interest (but
with any interest so refunded or credited), provided that
the Borrower, upon the request of such Lender or the Agent,
agrees to return such refund or credit (plus penalties,
interest or other charges) to such Lender or the Agent in
the event such Lender or the Agent is required to repay such
refund or credit.
(d) Lender Representations.
(i) Each Lender represents that it is either
(1) a corporation or banking association organized
under the laws of the United States of America or any
state thereof or (2) it is entitled to complete
exemption from United States withholding tax imposed on
or with respect to any payments, including fees, to be
made to it pursuant to this Agreement (A) under an
applicable provision of a tax convention to which the
United States of America is a party or (B) because it
is acting through a branch, agency or office in the
United States of America and any payment to be received
by it hereunder is effectively connected with a trade
or business in the United States of America. Each
Lender that is not a corporation or banking association
organized under the laws of the United States of
America or any state thereof agrees to provide to the
Borrower and the Agent on the Closing Date, or on the
date of its delivery of the Assignment pursuant to
which it becomes a Lender, and at such other times as
required by United States law or as the Borrower or the
Agent shall reasonably request, two accurate and
complete original signed copies of either (A) Internal
Revenue Service Form 4224 (or successor form)
certifying that all payments to be made to it hereunder
will be effectively connected to a United States trade
or business (the "Form 4224 Certification") or (B)
Internal Revenue Service Form 1001 (or successor form)
certifying that it is entitled to the benefit of a
provision of a tax convention to which the United
States of America is a party which completely exempts
from United States withholding tax all payments to be
made to it hereunder (the "Form 1001 Certification").
In addition, each Lender agrees that if it previously
filed a Form 4224 Certification, it will deliver to the
Borrower and the Agent a new Form 4224 Certification
prior to the first payment date occurring in each of
its subsequent taxable years; and if it previously
filed a Form 1001 Certification, it will deliver to the
Borrower and the Agent a new certification prior to the
first payment date falling in the third year following
the previous filing of such certification. Each Lender
also agrees to deliver to the Borrower and the Agent
such other or supplemental forms as may at any time be
required as a result of changes in applicable law or
regulation in order to confirm or maintain in effect
its entitlement to exemption from United States
withholding tax on any payments hereunder, provided
that the circumstances of such Lender at the relevant
time and applicable laws permit it to do so. If a
Lender determines, as a result of any change in either
(i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or
certificate that it is obligated to submit pursuant to
this Section 4.06, or that it is required to withdraw
or cancel any such form or certificate previously
submitted, it shall promptly notify the Borrower and
the Agent of such fact. If a Lender is organized under
the laws of a jurisdiction outside the United States of
America, unless the Borrower and the Agent have
received a Form 1001 Certification or Form 4224
Certification satisfactory to them indicating that all
payments to be made to such Lender hereunder are not
subject to United States withholding tax, the Borrower
shall withhold taxes from such payments at the
applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Agent, as
applicable, from any United States taxes, penalties,
interest and other expenses, costs and losses incurred
or payable by (i) the Agent as a result of such
Lender's failure to submit any form or certificate that
it is required to provide pursuant to this Section 4.06
or (ii) the Borrower or the Agent as a result of their
reliance on any such form or certificate which such
Lender has provided to them pursuant to this Section
4.06.
(ii) For any period with respect to which a
Lender has failed to provide the Borrower with the form
required pursuant to this Section 4.06, if any, (other
than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the
date on which a form originally was required to be
provided), such Lender shall not be entitled to
indemnification under Section 4.06 with respect to
taxes imposed by the United States which taxes would
not have been imposed but for such failure to provide
such forms; provided, however, that should a Lender,
which is otherwise exempt from or subject to a reduced
rate of withholding tax becomes subject to taxes
because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender
to recover such taxes.
(iii) Any Lender claiming any additional
amounts payable pursuant to this Section 4.06 shall use
reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or
document requested by the Borrower or the Agent or to
change the jurisdiction of its Applicable Lending
Office or to contest any tax imposed if the making of
such a filing or change or contesting such tax would
avoid the need for or reduce the amount of any such
additional amounts that may thereafter accrue and would
not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender.
Section 4.07 Disposition of Proceeds . The Security
Instruments contain an assignment by the Borrower or a Restricted
Subsidiary, as the case may be, unto and in favor of the Agent
for the benefit of the Lenders of all production and all proceeds
attributable thereto which may be produced from or allocated to
the Mortgaged Property, and the Security Instruments further
provide in general for the application of such proceeds to the
satisfaction of the Indebtedness and other obligations described
therein and secured thereby. Notwithstanding the assignment
contained in such Security Instruments, until the occurrence of
an Event of Default, the Lenders agree that they will neither
notify the purchaser or purchasers of such production nor take
any other action to cause such proceeds to be remitted to the
Lenders, but the Lenders will instead permit such proceeds to be
paid to the Borrower or such Restricted Subsidiary in accordance
with Section 4.08.
Section 4.08 Revenue Clearing Account . The Borrower
shall execute such division orders, transfer orders or letters in
lieu thereof as are necessary to direct that all payments due to
the Borrower attributable to Hydrocarbons produced from or
allocated to the Mortgaged Property are paid directly at all
times into a revenue clearing account maintained by the Borrower
at the Agent. Without limiting the foregoing, the Borrower shall
cause all purchasers from or agents of the Borrower to make all
payments for oil or natural gas purchases from its Properties
(whether or not such property is a Mortgaged Property) to be paid
directly to such revenue clearing account at the Agent.
Independent of (and without limiting) the Borrower's obligation
to provide such payment instructions, the Borrower agrees to
immediately deposit in such revenue clearing account, daily, all
amounts received by the Borrower on any accounts receivable and
sales of Hydrocarbons. Further without limiting the foregoing,
the Borrower shall use its best efforts to cause all purchasers
from or agents of the Borrower which make payments for oil or
natural gas purchases by electronic transfer payments to change
such electronic payments to be made directly to the Borrower's
revenue clearing account at the Agent.
ARTICLE V Capital Adequacy
Section 5.01 Additional Costs .
(a) Eurodollar Regulations, etc. The Borrower shall
pay directly to each Lender from time to time such amounts
as such Lender may determine to be necessary to compensate
such Lender for any costs which it determines are
attributable to its making or maintaining of any Eurodollar
Loans or issuing or participating in Letters of Credit
hereunder or its obligation to make any Eurodollar Loans or
issue or participate in any Letters of Credit hereunder, or
any reduction in any amount receivable by such Lender
hereunder in respect of any of such Eurodollar Loans,
Letters of Credit or such obligation (such increases in
costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory
Change which: (i) changes the basis of taxation of any
amounts payable to such Lender under this Agreement or any
Note in respect of any of such Eurodollar Loans or Letters
of Credit (other than taxes imposed on the overall net
income of such Lender or of its Applicable Lending Office
for any of such Eurodollar Loans by the jurisdiction in
which such Lender has its principal office or Applicable
Lending Office); or (ii) imposes or modifies any reserve,
special deposit, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of such
Lender, or the Commitment or Loans of such Lender or the
Eurodollar interbank market; or (iii) imposes any other
condition affecting this Agreement or any Note (or any of
such extensions of credit or liabilities) or such Lender's
Commitment or Loans. Each Lender will notify the Agent and
the Borrower of any event occurring after the Closing Date
which will entitle such Lender to compensation pursuant to
this Section 5.01(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such
compensation, and will designate a different Applicable
Lending Office for the Loans of such Lender affected by such
event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole
opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so
designate an Applicable Lending Office located in the United
States. If any Lender requests compensation from the
Borrower under this Section 5.01(a), the Borrower may, by
notice to such Lender, suspend the obligation of such Lender
to make additional Loans of the Type with respect to which
such compensation is requested until the Regulatory Change
giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of
the provisions of Section 5.01(a), in the event that, by
reason of any Regulatory Change or any other circumstances
arising after the Closing Date affecting such Lender, the
Eurodollar interbank market or such Lender's position in
such market, any Lender either (i) incurs Additional Costs
based on or measured by the excess above a specified level
of the amount of a category of deposits or other liabilities
of such Lender which includes deposits by reference to which
the interest rate on Eurodollar Loans is determined as
provided in this Agreement or a category of extensions of
credit or other assets of such Lender which includes
Eurodollar Loans or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which
it may hold, then, if such Lender so elects by notice to the
Borrower, the obligation of such Lender to make additional
Eurodollar Loans shall be suspended until such Regulatory
Change or other circumstances ceases to be in effect (in
which case the provisions of Section 5.04 shall be
applicable).
(c) Capital Adequacy. Without limiting the effect of
the foregoing provisions of this Section 5.01 (but without
duplication), the Borrower shall pay directly to any Lender
from time to time on request such amounts as such Lender may
reasonably determine to be necessary to compensate such
Lender or its parent or holding company for any costs which
it determines are attributable to the maintenance by such
Lender or its parent or holding company (or any Applicable
Lending Office), pursuant to any Governmental Requirement
following any Regulatory Change, of capital in respect of
its Commitment, its Notes, its Loans or any interest held by
it in any Letter of Credit, such compensation to include,
without limitation, an amount equal to any reduction of the
rate of return on assets or equity of such Lender or its
parent or holding company (or any Applicable Lending Office)
to a level below that which such Lender or its parent or
holding company (or any Applicable Lending Office) could
have achieved but for such Governmental Requirement. Such
Lender will notify the Borrower that it is entitled to
compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such
compensation.
(d) Compensation Procedure. Any Lender notifying the
Borrower of the incurrence of additional costs under this
Section 5.01 shall deliver such notice to the Borrower as
soon as practicable and in any event within ninety (90) days
after the change or other event giving rise to the
incurrence of such additional costs and shall in such notice
to the Borrower and the Agent set forth in reasonable detail
the basis and amount of its request for compensation.
Determinations and allocations by each Lender for purposes
of this Section 5.01 of the effect of any Regulatory Change
pursuant to Section 5.01(a) or (b), or of the effect of
capital maintained pursuant to Section 5.01(c), on its costs
or rate of return of maintaining Loans or its obligation to
make Loans or issue Letters of Credit, or on amounts
receivable by it in respect of Loans or Letters of Credit,
and of the amounts required to compensate such Lender under
this Section 5.01, shall be conclusive and binding for all
purposes, provided that such determinations and allocations
are made on a reasonable basis. Any request for additional
compensation under this Section 5.01 shall be paid by the
Borrower within thirty (30) days of the receipt by the
Borrower of the notice described in this Section 5.01(d).
Section 5.02 Limitation on Eurodollar Loans .
Anything herein to the contrary notwithstanding, if, on or prior
to the determination of any Eurodollar Rate for any Interest
Period:
(i) the Agent determines (which determination
shall be conclusive, absent manifest error) that
quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in
Section 1.02 are not being provided in the relevant
amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as
provided herein; or
(ii) the Agent determines (which determination
shall be conclusive, absent manifest error) that the
relevant rates of interest referred to in the
definition of "Eurodollar Rate" in Section 1.02 upon
the basis of which the rate of interest for Eurodollar
Loans for such Interest Period is to be determined are
not sufficient to adequately cover the cost to the
Lenders of making or maintaining Eurodollar Loans;
then the Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans.
Section 5.03 Illegality . Notwithstanding any other
provision of this Agreement, in the event that it becomes
unlawful for any Lender or its Applicable Lending Office to honor
its obligation to make or maintain Eurodollar Loans hereunder,
then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make Eurodollar Loans shall be
suspended until such time as such Lender may again make and
maintain Eurodollar Loans (in which case the provisions of
Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections
5.01, 5.02 and 5.03 . If the obligation of any Lender to make
Eurodollar Loans shall be suspended pursuant to Sections 5.01,
5.02 or 5.03 ("Affected Loans"), all Affected Loans which would
otherwise be made by such Lender shall be made instead as Base
Rate Loans (and, if an event referred to in Section 5.01(b) or
Section 5.03 has occurred and such Lender so requests by notice
to the Borrower, all Affected Loans of such Lender then
outstanding shall be automatically converted into Base Rate Loans
on the date specified by such Lender in such notice) and, to the
extent that Affected Loans are so made as (or converted into)
Base Rate Loans, all payments of principal which would otherwise
be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans.
Section 5.05 Compensation . The Borrower shall pay to
each Lender within thirty (30) days of receipt of written request
of such Lender (which request shall set forth, in reasonable
detail, the basis for requesting such amounts and which shall be
conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or
amounts as shall compensate it for any loss, cost, expense or
liability which such Lender determines are attributable to:
(i) any payment, prepayment or conversion of a
Eurodollar Loan properly made by such Lender or the
Borrower for any reason (including, without limitation,
the acceleration of the Loans pursuant to Section
10.02) on a date other than the last day of the
Interest Period for such Loan;
(ii) any failure by the Borrower for any reason
(including but not limited to, the failure of any of
the conditions precedent specified in Article VI to be
satisfied) to borrow, continue or convert a Eurodollar
Loan from such Lender on the date for such borrowing,
continuation or conversion specified in the relevant
notice given pursuant to Section 2.02(c); or
(iii) the revocation by the Borrower of (a) a
revocable notice of borrowing delivered pursuant to
Section 2.02(c) or (b) a revocable request for the
issuance of a Letter of Credit delivered pursuant to
Section 2.02(g) or (c) a revocable notice of reduction
or termination delivered pursuant to Section 2.03(b) or
(d) a revocable notice of prepayment delivered pursuant
to Section 2.07(a).
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed
for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the
date specified for such borrowing) at the applicable rate of
interest for such Loan provided for herein over (ii) the interest
component of the amount such Lender would have bid in the London
interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities
comparable to such period (as reasonably determined by such
Lender).
Section 5.06 Replacement Lenders.
(a) If any Lender has notified the Borrower and the
Agent of its incurring additional costs under Section 5.01
hereof or has required the Borrower to make payments for
Taxes under Section 4.06 hereof, then the Borrower may,
unless such Lender has notified the Borrower and the Agent
that the circumstances giving rise to such notice no longer
apply, terminate, in whole but not in part, the Commitment
of any Lender (other than the Agent) (the "Terminated
Lender") at any time upon five (5) Business Days' prior
written notice to the Terminated Lender and the Agent (such
notice referred to herein as a "Notice of Termination").
(b) In order to effect the termination of the
Commitment of the Terminated Lender, the Borrower shall: (i)
obtain an agreement with one or more Lenders to increase
their Commitment or Commitments and/or (ii) request any one
or more other banking institutions to become parties to this
Agreement in place and instead of such Terminated Lender and
agree to accept a Commitment or Commitments; provided,
however, that such one or more other banking institutions
are reasonably acceptable to the Agent and become parties by
executing an Assignment (the Lenders or other banking
institutions that agree to accept in whole or in part the
Commitment of the Terminated Lender being referred to herein
as the "Replacement Lenders"), such that the aggregate
increased and/or accepted Commitments of the Replacement
Lenders under clauses (i) and (ii) above equal the
Commitment of the Terminated Lender.
(c) The Notice of Termination shall include the name
of the Terminated Lender, the date the termination will
occur (the "Lender Termination Date"), and the Replacement
Lender or Replacement Lenders to which the Terminated Lender
will assign its Commitment and, if there will be more than
one Replacement Lender, the portion of the Terminated
Lender's Commitment to be assigned to each Replacement
Lender.
(d) On the Lender Termination Date, (i) the Terminated
Lender shall by execution and delivery of an Assignment
assign its Commitment to the Replacement Lender or
Replacement Lenders (pro rata, if there is more than one
Replacement Lender, in proportion to the portion of the
Terminated Lender's Commitment to be assigned to each
Replacement Lender) indicated in the Notice of Termination
and shall assign to the Replacement Lender or Replacement
Lenders each of its Loans (if any) then outstanding and
participation interests in Letters of Credit (if any) then
outstanding (pro rata as aforesaid), (ii) the Terminated
Lender shall endorse its Notes, payable without recourse,
representation or warranty to the order of the Replacement
Lender or Replacement Lenders (pro rata as aforesaid), (iii)
the Replacement Lender or Replacement Lenders shall purchase
the Notes held by the Terminated Lender (pro rata as
aforesaid) at a price equal to the unpaid principal amount
thereof plus interest and facility and other fees accrued
and unpaid to the Lender Termination Date, and (iv) the
Replacement Lender or Replacement Lenders will thereupon
(pro rata as aforesaid) succeed to and be substituted in all
respects for the Terminated Lender with like effect as if
becoming a Lender pursuant to the terms of Section 12.06(b),
and the Terminated Lender will have the rights and benefits
of an assignor under Section 12.06(b). To the extent not in
conflict, the terms of Section 12.06(b) shall supplement the
provisions of this Section 5.06(d). For each assignment
made under this Section 5.06, the Replacement Lender shall
pay to the Agent the processing fee provided for in Section
12.06(b). The Borrower will be responsible for the payment
of any breakage costs associated with termination of the
Terminated Lender, as set forth in Section 5.05.
ARTICLE VI Conditions Precedent
Section 6.01 Initial Funding .
The obligation of the Lenders to make the Initial
Funding is subject to the receipt by the Agent and the Lenders of
all fees payable pursuant to Section 2.04 on or before the
Closing Date and the receipt by the Agent of the following
documents and satisfaction of the other conditions provided in
this Section 6.01, each of which shall be satisfactory to the
Agent in form and substance:
(a) A certificate of the Secretary of MMR setting
forth (i) resolutions of the board of directors of MMR, as
the sole member of the Borrower, with respect to the
authorization of the Borrower to execute and deliver the
Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the
officers of MMR and the Borrower (y) who are authorized to
sign the Loan Documents to which McMoRan and the Borrower
each is a party and (z) who will, until replaced by another
officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and
giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby,
(iii) specimen signatures of the authorized officers, (iv)
the limited liability company agreement of the Borrower, (v)
the Borrower's certificate of formation filed with the
Delaware Secretary of State, as amended, and (vi) the
Articles of Incorporation and Bylaws of MMR, all certified
as being true and complete. The Agent and the Lenders may
conclusively rely on such certificate until the Agent
receives notice in writing from MMR or the Borrower to the
contrary.
(b) Certificates of the appropriate state agencies
with respect to the existence, qualification and good
standing of the Borrower and MMR.
(c) A compliance certificate which shall be
substantially in the form of Exhibit C, duly and properly
executed by a Responsible Officer and dated as of the
Closing Date.
(d) The Notes, duly completed and executed.
(e) An opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P. counsel to the Borrower,
substantially in the form of Exhibit D hereto.
(f) A certificate of insurance coverage of the
Borrower evidencing that the Borrower is carrying insurance
in accordance with Section 7.19 hereof.
(g) Receipt by the Agent of the Guaranty Agreement by
MMR guaranteeing the Indebtedness in form and substance
satisfactory to the Agent.
(h) Receipt by the Agent of each of the Security
Instruments, including those described on Exhibit E, if any,
duly completed and executed in sufficient number of
counterparts for recording, if necessary, and otherwise in
recordable form and substance satisfactory to the Agent.
(i) Receipt by the Agent of such title information as
the Agent may require from attorneys satisfactory to the
Agent setting forth the status of title to 100% of the value
of the Hydrocarbon Interests included in the Borrowing Base.
(j) The Agent shall have been furnished with
appropriate UCC search certificates reflecting no prior
Liens other than those in favor of the Agent, Excepted Liens
and Liens permitted by Section 9.02.
(k) Receipt by the Agent of such other documents as
the Agent or any Lender or special counsel to the Agent may
reasonably request.
(l) The Borrower shall be in compliance with all
covenants and agreements contained in Article VIII and
Article IX (after giving effect to the requested Loan).
Section 6.02 Initial and Subsequent Loans and Letters
of Credit . The obligation of the Lenders to make Loans to the
Borrower upon the occasion of each borrowing hereunder and to
issue, renew, extend or reissue Letters of Credit for the account
of the Borrower (including the Initial Funding) is subject to the
further conditions precedent that, as of the date of such Loans
or Letters of Credit, as the case may be, and after giving effect
thereto: (i) no Default shall have occurred and be continuing;
(ii) no Material Adverse Effect shall have occurred; (iii) the
representations and warranties made by the Borrower in Article
VII and by the Borrower or any Restricted Subsidiary in the
Security Instruments shall be true on and as of the date of the
making of such Loans or issuance, renewal, extension or
reissuance of a Letter of Credit, as the case may be, with the
same force and effect as if made on and as of such date and
following such new borrowing or issuance, except to the extent
such representations and warranties are expressly limited to an
earlier date or the Majority Lenders may expressly consent in
writing to the contrary; and (iv) the aggregate outstanding
amount of investments, loans and advances permitted by
Section 9.03(i) and net dividends, distributions and redemptions
permitted by Section 9.04, shall not exceed $1,000,000.00. Each
request for a borrowing or issuance, renewal, extension or
reissuance of a Letter of Credit by the Borrower hereunder shall
constitute a certification by the Borrower to the effect set
forth in the preceding sentence (both as of the date of such
notice and, unless the Borrower otherwise notifies the Agent
prior to the date of and immediately following such borrowing or
issuance, renewal, extension or reissuance of a Letter of Credit,
as of the date thereof).
Section 6.03 Conditions Relating to Letters of Credit
.. In addition to the satisfaction of all other conditions
precedent set forth in this Article VI, the issuance, renewal,
extension or reissuance of the Letters of Credit referred to in
Section 2.01(b) hereof is subject to the following conditions
precedent:
(a) At least three (3) Business Days prior to the date
of the issuance and at least thirty (30) Business Days prior
to the date of the renewal, extension or reissuance of each
Letter of Credit, the Agent shall have received a written
request for a Letter of Credit, in accordance with Section
2.02(g) hereof.
(b) Each of the Letters of Credit shall (i) be issued
by the Agent, (ii) contain such terms and provisions as are
reasonably required by the Agent, (iii) be for the account
of the Borrower and (iv) expire not later than the earlier
of one (1) year from the date of issuance, renewal,
extension or reissuance or two (2) days before the
Termination Date.
(c) The Borrower shall have duly and validly executed
and delivered to the Agent a Letter of Credit Agreement
pertaining to the Letter of Credit.
ARTICLE VII Representations and Warranties
The Borrower represents and warrants to the Agent and the
Lenders that (each representation and warranty herein is given as
of the Closing Date and shall be deemed repeated and reaffirmed
on the dates of each borrowing and issuance, renewal, extension
or reissuance of a Letter of Credit as provided in Section 6.03):
Section 7.01 Existence . Each of the Borrower and
each Restricted Subsidiary: (i) is a corporation or limited
liability company duly organized, legally existing and in good
standing under the laws of the jurisdiction of its incorporation
or formation; (ii) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now
being or as proposed to be conducted; and (iii) is qualified to
do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and
where failure so to qualify would have a Material Adverse Effect.
Section 7.02 Financial Condition . The audited
consolidated financial statements of MMR and its Consolidated
Subsidiaries as at December 31, 2001, and the balance sheet of
the Borrower and its Consolidated Subsidiaries as at December 31,
2001 and the related statement of income, member's capital and
cash flow of the Borrower and its Consolidated Subsidiaries for
the fiscal year ended on said date, in each case as included in
the consolidating statements of MMR and its Consolidated
Subsidiaries as of said date with the opinion thereon of Xxxxxx
Xxxxxxxx LLP heretofore furnished to each of the Lenders and the
unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at March 31, 2002 and the related
consolidated statements of income, members capital and cash flow
of the Borrower and its Consolidated Subsidiaries for the three-
month period ended on such date heretofore furnished to the
Agent, are complete and correct and fairly present the
consolidated financial condition of the Borrower and its
Consolidated Subsidiaries as at said dates and the results of its
operations for the fiscal year and the three-month period ended
on said dates, all in accordance with GAAP, as applied on a
consistent basis (subject, in the case of the interim financial
statements, to normal year-end adjustments). Neither the
Borrower nor any Subsidiary has on the Closing Date any material
Debt, contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, in each case, that would
be required to be reserved for in the Financial Statements in
accordance with GAAP, except as referred to or reflected or
provided for in the Financial Statements or in Schedule 7.02.
Except as set forth on Schedule 7.10, since March 31, 2002, there
has been no change or event having a Material Adverse Effect.
Except as set forth on Schedule 7.10, since the date of the
Financial Statements, neither the business nor the Properties of
the Borrower or any Subsidiary have been materially and adversely
affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance,
embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority,
riot, activities of armed forces or acts of God or of any public
enemy.
Section 7.03 Litigation . Except as disclosed to the
Lenders in Schedule 7.03 hereto, at the Closing Date there is no
litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the
knowledge of the Borrower threatened against or affecting the
Borrower or any Restricted Subsidiary as to which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, could, individually or in the aggregate,
materially impair the ability of the Borrower to conduct its
business substantially as now conducted, or materially and
adversely affect the businesses, assets, operations, prospects or
condition, financial or otherwise, of the Borrower, or impair the
validity or enforceability of, or the ability of the Borrower to
perform its obligations under, this Agreement or any of the other
Loan Documents to which it is a party, in each case, taking into
account any applicable insurance.
Section 7.04 No Breach . Neither the execution and
delivery of the Loan Documents, nor compliance with the terms and
provisions hereof will conflict with or result in a breach of, or
require any consent which has not been obtained as of the Closing
Date under, the respective charter or by-laws of the Borrower or
any Restricted Subsidiary, or any Governmental Requirement or any
agreement or instrument to which the Borrower or any Restricted
Subsidiary is a party or by which it is bound or to which it or
its Properties are subject, or constitute a default under any
such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the
Borrower or any Restricted Subsidiary pursuant to the terms of
any such agreement or instrument other than the Liens created by
the Loan Documents and those permitted under Section 9.02.
Section 7.05 Authority . The Borrower and each
Restricted Subsidiary have all necessary power and authority to
execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and
performance by the Borrower and each Restricted Subsidiary of the
Loan Documents to which it is a party, have been duly authorized
by all necessary corporate action on its part; and the Loan
Documents constitute the legal, valid and binding obligations of
the Borrower and each Restricted Subsidiary, enforceable in
accordance with their terms.
Section 7.06 Approvals . No authorizations, approvals
or consents of, and no filings or registrations with, any
Governmental Authority are necessary for the execution, delivery
or performance by the Borrower or any Restricted Subsidiary of
the Loan Documents or for the validity or enforceability thereof,
except for the recording and filing of the Security Instruments
as required by this Agreement.
Section 7.07 Use of Loans . The proceeds of the Loans
shall be used and Letters of Credit shall be issued for working
capital and general corporate purposes. The Borrower is not
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation G, U or X of the Board of
Governors of the Federal Reserve System) and no part of the
proceeds of any Loan hereunder will be used to buy or carry any
margin stock.
Section 7.08 ERISA .
(a) The Borrower and each Restricted Subsidiary have
complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(b) Each Plan of the Borrower and of each Restricted
Subsidiary is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) To the knowledge of the Borrower, no act, omission
or transaction has occurred which could result in imposition
on the Borrower or on any Restricted Subsidiary (whether
directly or indirectly) of (i) either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or
a tax imposed pursuant to Chapter 43 of Subtitle D of the
Code or (ii) breach of fiduciary duty liability damages
under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan)
or any trust created under any such Plan has been terminated
since September 2, 1974. No liability to the PBGC (other
than for the payment of current premiums which are not past
due) by the Borrower, any Subsidiary or any ERISA Affiliate
has been or is expected by the Borrower, any Subsidiary or
any ERISA Affiliate to be incurred with respect to any Plan.
No ERISA Event with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts
which the Borrower, any Subsidiary or any ERISA Affiliate is
required under the terms of each Plan or applicable law to
have paid as contributions to such Plan, and no accumulated
funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with
respect to any Plan.
(f) The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of
ERISA does not, as of the end of the Borrower's most
recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of
the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) Neither the Borrower nor any Restricted Subsidiary
sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, includ
ing, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not
be terminated by the Borrower or a Restricted Subsidiary or
any ERISA Affiliate in its sole discretion at any time
without any material liability.
(h) None of the Borrower, any Subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at
any time in the preceding six calendar years, sponsored,
maintained or contributed to, any Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA
Affiliate is required to provide security under section
401(a)(29) of the Code due to a Plan amendment that results
in an increase in current liability for the Plan.
Section 7.09 Taxes . Except as set out in
Schedule 7.09, each of the Borrower and the Restricted
Subsidiaries has filed all United States Federal income tax
returns and all other tax returns which are required to be filed
by them and have paid all material taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or
any Restricted Subsidiary, other than any taxes the validity of
which the Borrower or the relevant Restricted Subsidiary is
contesting in good faith by appropriate proceedings, and with
respect to which the Borrower or such Restricted Subsidiary
shall, to the extent required by GAAP, have set aside on its
books adequate reserves. The charges, accruals and reserves on
the books of the Borrower and the Restricted Subsidiaries in
respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate. No tax lien has been filed
and, to the knowledge of the Borrower, no claim is being asserted
with respect to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in the title reports delivered
to the Agent prior to the Closing Date, each of the Borrower
and the Restricted Subsidiaries has good and defensible
title to its material (individually or in the aggregate)
Properties, free and clear of all Liens except Liens
permitted by Section 9.02. Except as set forth in
Schedules 7.10 and 9.02, after giving full effect to the
Excepted Liens, the Borrower or each Restricted Subsidiary,
as applicable, owns the net interests in production
attributable to the Hydrocarbon Interests reflected in the
most recently delivered Reserve Report and the ownership of
such Properties shall not in any material respect obligate
the Borrower or any Restricted Subsidiary to bear the costs
and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of
the working interest of each Property set forth in the most
recently delivered Reserve Report. All factual information
contained in the most recently delivered Reserve Report is
true and correct in all material respects as of the date
thereof.
(b) All leases and agreements necessary for the
conduct of the business of the Borrower and the Restricted
Subsidiaries are valid and subsisting, in full force and
effect and there exists no default or event or circumstance
which with the giving of notice or the passage of time or
both would give rise to a default under any such lease or
leases, which would affect in any material respect the
conduct of the business of the Borrower and the Restricted
Subsidiaries.
(c) The rights, Properties and other assets presently
owned, leased or licensed by the Borrower and the Restricted
Subsidiaries including, without limitation, all easements
and rights of way, include all rights, Properties and other
assets necessary to permit the Borrower and the Restricted
Subsidiaries to conduct their business in all material
respects in the same manner as its business has been
conducted prior to the Closing Date.
(d) Except as set forth on Schedule 7.10, all of the
assets and Properties of the Borrower and the Restricted
Subsidiaries which are reasonably necessary for the
operation of its business are in good working condition and
are maintained in accordance with prudent business
standards.
Section 7.11 No Material Misstatements . No written
information, statement, exhibit, certificate, document or report
furnished to the Agent and the Lenders (or any of them) by the
Borrower or any Subsidiary in connection with the negotiation of
this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make
the statement contained therein not materially misleading in the
light of the circumstances in which made and with respect to the
Borrower and the Subsidiaries taken as a whole. There is no fact
peculiar to the Borrower or any Subsidiary which has a Material
Adverse Effect or in the future is reasonably likely to have (so
far as the Borrower can now foresee) a Material Adverse Effect
and which has not been set forth in this Agreement or the other
documents, certificates and statements furnished to the Agent by
or on behalf of the Borrower or any Subsidiary prior to, or on,
the Closing Date in connection with the transactions contemplated
hereby.
Section 7.12 Investment Company Act . Neither the
Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 7.13 Public Utility Holding Company Act .
Neither the Borrower nor any Subsidiary is a "holding company,"
or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries . Except as set forth on
Schedule 7.14 which indicates all Restricted Subsidiaries and all
Unrestricted Subsidiaries, the Borrower has no Subsidiaries other
than those formed pursuant to Section 9.16 prior to the quarterly
report required by Section 8.01(i).
Section 7.15 Location of Business and Offices . The
Borrower's principal place of business and chief executive
offices are located at the address stated on the signature page
of this Agreement. The principal place of business and chief
executive office of each Subsidiary are located at the addresses
stated on Schedule 7.14. The Borrower's principal place of
business and chief executive office has been located continuously
within the State of Louisiana from and after the Borrower's
formation.
Section 7.16 Defaults . Neither the Borrower nor any
Subsidiary is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a
default under any material agreement or instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or
any Subsidiary is bound which default would have a Material
Adverse Effect. No Default hereunder has occurred and is
continuing.
Section 7.17 Environmental Matters . Except (i) as
provided in Schedule 7.17 or (ii) as would not have a Material
Adverse Effect (or with respect to (c), (d) and (e) below, where
the failure to take such actions would not have a Material
Adverse Effect):
(a) Neither any Property of the Borrower or any
Subsidiary nor the operations conducted thereon violate any
order or requirement of any court or Governmental Authority
or any applicable Environmental Laws;
(b) Without limitation of clause (a) above, no
Property of the Borrower or any Subsidiary nor the
operations currently conducted thereon or, to the best
knowledge of the Borrower, by any prior owner or operator of
such Property or operation, are in violation of or subject
to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court
or Governmental Authority or to any remedial obligations
under Environmental Laws;
(c) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in
connection with the operation or use of any and all Property
of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or
release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed, and the
Borrower and each Subsidiary are in compliance with the
terms and conditions of all such notices, permits, licenses
and similar authorizations;
(d) All hazardous substances, solid waste, and oil and
gas exploration and production wastes, if any, generated at
any and all Property of the Borrower or any Subsidiary have
in the past been transported, treated and disposed of in
accordance with Environmental Laws in effect at that time
and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment,
and, to the best knowledge of the Borrower, all such
transport carriers and treatment and disposal facilities
have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or
threatened action, investigation or inquiry by any
Governmental Authority in connection with any Environmental
Laws;
(e) The Borrower has taken all steps reasonably
necessary to determine and has determined that no hazardous
substances, solid waste, or oil and gas exploration and
production wastes, have been disposed of or otherwise
released and there has been no threatened release of any
hazardous substances on or to any Property of the Borrower
or any Subsidiary except in compliance with Environmental
Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of the
Borrower and each Subsidiary currently satisfies all design,
operation, and equipment requirements imposed by the OPA or
scheduled as of the Closing Date to be imposed by OPA during
the term of this Agreement, and the Borrower does not have
any reason to believe that such Property, to the extent
subject to OPA, will not be able to maintain compliance with
the OPA requirements during the term of this Agreement; and
(g) Neither the Borrower nor any Subsidiary has any known
contingent liability in connection with any release or
threatened release of any oil, hazardous substance or solid
waste into the environment.
Section 7.18 Compliance with the Law . Neither the
Borrower nor any Subsidiary has violated any Governmental
Requirement or failed to obtain any license, permit, franchise or
other governmental authorization necessary for the ownership of
any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or
failure were asserted by any Person through appropriate action) a
Material Adverse Effect. Except for such acts or failures to act
as would not have a Material Adverse Effect, the Oil and Gas
Properties (and properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike
manner and in conformity with all applicable laws and all rules,
regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon
Interests and other contracts and agreements forming a part of
the Oil and Gas Properties; specifically in this connection, (i)
after the Closing Date, no Oil and Gas Property is subject to
having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at
the time) prior to the Closing Date and (ii) none of the xxxxx
comprising a part of the Oil and Gas Properties (or properties
unitized therewith) are deviated from the vertical more than the
maximum permitted by applicable laws, regulations, rules and
orders, and such xxxxx are, in fact, bottomed under and are
producing from, and the producing intervals are wholly within the
Oil and Gas Properties (or in the case of xxxxx located on
properties unitized therewith, such unitized properties).
Section 7.19 Insurance . Schedule 7.19 attached
hereto contains an accurate and complete description of all
material policies of fire, liability, workmen's compensation and
other forms of insurance maintained by or on behalf of the
Borrower and each Restricted Subsidiary. All such policies are
in full force and effect, all premium payments with respect
thereto covering all periods up to and including the date of the
closing are current, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies
are sufficient for compliance with all requirements of law and of
all agreements to which the Borrower or any Restricted Subsidiary
is a party; are valid, outstanding and enforceable policies;
provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public
liability) as are usually insured against in the same general
area by companies engaged in the same or a similar business for
the assets and operations of the Borrower and each Restricted
Subsidiary; will remain in full force and effect through the
respective dates set forth in Schedule 7.19 without the payment
of additional premiums (except for adjustments); and will not in
any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 7.19
identifies all material risks, if any, which the Borrower and the
Restricted Subsidiaries and their respective board of directors
or officers have designated as being self-insured. Neither the
Borrower nor any Restricted Subsidiary has been refused any
insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by
an insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last
three years.
Section 7.20 Hedging Agreements . Schedule 7.20 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 the Borrower and each Restricted Subsidiary, the
material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net xxxx
to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens . Except as set
forth on Schedule 7.21, neither the Borrower nor any of the
Restricted Subsidiaries is a party to any agreement or
arrangement (other than this Agreement and the Security
Instruments), or subject to any order, judgment, writ or decree,
which either restricts or purports to restrict its ability to
grant Liens to other Persons on or in respect of their respective
assets or Properties.
Section 7.22 Reserved .
Section 7.23 Gas Imbalances . As of the Closing Date,
except as set forth on Schedule 7.23 or on the most recent
certificate delivered pursuant to Section 8.07(c), on a net basis
there are no gas imbalances, take or pay or other prepayments
with respect to the Borrower's or any Restricted Subsidiary's Oil
and Gas Properties which would require the Borrower or such
Restricted Subsidiary to deliver Hydrocarbons produced from the
Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor exceeding two hundred
fifty million cubic feet of gas in the aggregate.
ARTICLE VIII Affirmative Covenants
The Borrower covenants and agrees that, so long as any of
the Commitments are in effect and until payment in full of all
Indebtedness hereunder, all interest thereon and all other
amounts payable by the Borrower hereunder, without the prior
written consent of the Majority Lenders:
Section 8.01 Financial Statements . The Borrower
shall deliver, or shall cause to be delivered, to the Agent with
sufficient copies for each for the Lenders:
(a) As soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, the
statements of income, member's capital, and cash flow of the
Borrower and its Consolidated Subsidiaries for such fiscal
year, and the related balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal year,
as contained in the audited consolidated financial
statements of MMR and the related consolidating financial
statements of its Consolidated Subsidiaries as at the end of
such fiscal year, and setting forth in each case in
comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national
standing acceptable to the Agent which opinion shall state
that said financial statements fairly present the
consolidated financial condition and results of operations
of the Borrower and its Consolidated Subsidiaries as at the
end of, and for, such fiscal year and that such financial
statements have been prepared in accordance with GAAP except
for such changes in such principles with which the
independent public accountants shall have concurred and such
opinion shall not contain a "going concern" or like
qualification or exception, and a certificate of such
accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default.
(b) As soon as available and in any event within 60
days after (i) the end of each fiscal quarter period,
unaudited interim Borrower-prepared consolidated statements
of income, member's capital, and cash flow of the Borrower
and its Consolidated Subsidiaries for such period and for
the period from the beginning of the respective fiscal year
to the end of such period, and the related consolidated
balance sheets as at the end of such period, and setting
forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal
year, accompanied by the certificate of a Responsible
Officer, which certificate shall state that said financial
statements fairly present the consolidated financial
condition and results of operations of the Borrower and its
Consolidated Subsidiaries in accordance with GAAP, as at the
end of, and for, such period (subject to normal year-end
audit adjustments); and (ii) the end of each month, upon
the Agent's request therefor, unaudited interim Borrower-
prepared consolidated statements of income and cash flow of
the Borrower and its Consolidated Subsidiaries for each
month and for the period from the beginning of the
respective fiscal year to the end of such month.
(c) Promptly after the Borrower knows that any Default
or any Material Adverse Effect has occurred, a notice of
such Default or Material Adverse Effect, describing the same
in reasonable detail and the action the Borrower proposes to
take with respect thereto.
(d) Promptly upon receipt thereof, a copy of each
other report or letter submitted to MMR, the Borrower or any
Restricted Subsidiary by independent accountants in
connection with any annual, interim or special audit made by
them of the books of MMR, the Borrower and the Restricted
Subsidiaries, and a copy of any response by MMR, the
Borrower or any Restricted Subsidiary, or the board of
directors of MMR, the Borrower or any Restricted Subsidiary,
to such letter or report.
(e) Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent
by MMR to stockholders generally and each regular or
periodic report and any registration statement, prospectus
or written communication (other than transmittal letters) in
respect thereof filed by MMR with or received by MMR in
connection therewith from any securities exchange or the SEC
or any successor agency.
(f) Promptly after the furnishing thereof, copies of
any material statement, report or notice furnished by the
Borrower to any Person pursuant to the terms of any material
(i.e., over $500,000, if permitted) indenture, loan or
credit or other similar agreement, other than this Agreement
and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
(g) From time to time such other information regarding
the business, affairs or financial condition of the Borrower
or any Restricted Subsidiary (including, without limitation,
any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as any Lender
or the Agent may reasonably request.
(h) Simultaneously with the delivery of the financial
statements referred to in clauses (a) and (b) above, a
report, in form and substance satisfactory to the Agent,
setting forth as of the last Business Day of such calendar
quarter 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 the Borrower and each Restricted Subsidiary,
the material terms thereof (including the type, term,
effective date, termination date and notional amounts or
volumes), the net xxxx to market value therefor, any new
credit support agreements relating thereto not listed on
Schedule 7.20, any margin required or supplied under any
credit support document, and the counterparty to each such
agreement.
(i) Simultaneously with the delivery of the financial
statements referred to in clause (b) above, an update to
Schedule 7.14 setting forth all Subsidiaries of the Borrower
as of the last Business Day of such calendar quarter.
(j) From time to time, division orders, transfer
orders or letters in lieu thereof as required by Section
4.08.
The Borrower will furnish to the Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate substantially in the form of Exhibit C
hereto executed by a Responsible Officer (i) certifying as to the
matters set forth therein and stating that no Default has
occurred and is continuing (or, if any Default has occurred and
is continuing, describing the same in reasonable detail), and
(ii) setting forth in reasonable detail the computations
necessary to determine whether the Borrower is in compliance with
Section 9.11 as of the end of the respective fiscal quarter or
fiscal year.
Section 8.02 Litigation . The Borrower shall promptly
give to the Agent notice of all legal or arbitral proceedings,
and of all proceedings before any Governmental Authority
affecting the Borrower or any Restricted Subsidiary, except
proceedings which, if adversely determined, would not have a
Material Adverse Effect. The Borrower will, and will cause each
of the Restricted Subsidiaries to, promptly notify the Agent and
each of the Lenders of any claim, judgment, Lien or other
encumbrance affecting any Property of the Borrower or any
Restricted Subsidiary if the value of the claim, judgment, Lien,
or other encumbrance affecting such Property shall exceed
$500,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each Restricted
Subsidiary to: preserve and maintain its existence and all
of its material rights, privileges and franchises; keep
books of record and account in which full, true and correct
entries will be made of all dealings or transactions in
relation to its business and activities; comply with all
Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect; pay and
discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any
of its Property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are
being maintained; upon reasonable notice, permit
representatives of the Agent or any Lender, during normal
business hours, to examine, copy and make extracts from its
books and records, to inspect its Properties, and to discuss
its business and affairs with its officers, all to the
extent reasonably requested by such Lender or the Agent (as
the case may be); and keep, or cause to be kept, insured by
financially sound and reputable insurers all Property of a
character usually insured by Persons engaged in the same or
similar business similarly situated against loss or damage
of the kinds and in the amounts customarily insured against
by such Persons and carry such other insurance as is usually
carried by such Persons including, without limitation,
pollution insurance to the extent reasonably available.
(b) Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be
delivered for each year, the Borrower will furnish or cause
to be furnished to the Agent and the Lenders a certificate
of insurance coverage from the insurer in form and substance
satisfactory to the Agent and, if requested, will furnish
the Agent and the Lenders copies of the applicable policies.
(c) The Borrower will and will cause each Restricted
Subsidiary to operate its Properties or cause such
Properties to be operated in a good and workmanlike manner
in accordance with the standard practices of the industry
and in compliance with all applicable contracts and
agreements and in compliance in all material respects with
all Governmental Requirements.
(d) The Borrower will and will cause each Restricted
Subsidiary to, at its own expense, do or cause to be done
all things reasonably necessary to preserve and keep in good
repair, working order and efficiency all of its Oil and Gas
Properties subject to a Lien in favor of the Agent and other
material Properties including, without limitation, all
equipment, machinery and facilities, and from time to time
will make all the reasonably necessary repairs, renewals and
replacements so that at all times the state and condition of
its Oil and Gas Properties subject to a Lien in favor of the
Agent and other material Properties will be fully preserved
and maintained, except (1) for ordinary wear and tear, (2)
for equipment, machinery and facilities no longer used or
useful in the Borrower's or such Restricted Subsidiary's
business, (3) for casualty losses being handled in
accordance with Section 2.07(d), and (4) to the extent a
portion of such Properties is no longer capable of producing
Hydrocarbons in economically reasonable amounts. The
Borrower will and will cause each Restricted Subsidiary to
promptly: (i) pay and discharge, or make reasonable and
customary efforts to cause to be paid and discharged, all
delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining
to its Oil and Gas Properties subject to a Lien in favor of
the Agent, to the extent that any failure to so pay or
discharge would have a Material Adverse Effect, (ii) perform
or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the
material obligations required by each and all of the
assignments, deeds, leases, subleases, contracts and
agreements affecting its interests in its Oil and Gas
Properties subject to a Lien in favor of the Agent and other
material Properties, and (iii) do all other things necessary
to keep unimpaired, except for Liens described in Section
9.02, its rights with respect to its Oil and Gas Properties
subject to a Lien in favor of the Agent and other material
Properties and prevent any forfeiture thereof or a default
thereunder, except to the extent a portion of such
Properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts. The Borrower will and will
cause each Restricted Subsidiary to operate its Oil and Gas
Properties subject to a Lien in favor of the Agent and other
material Properties or cause or make reasonable and
customary efforts to cause such Oil and Gas Properties and
other material Properties to be operated in a good and
workmanlike manner in accordance with the standard practices
of the industry and in compliance with all applicable
contracts and agreements and in compliance in all material
respects with all Governmental Requirements.
Section 8.04 Environmental Matters .
(a) The Borrower will and will cause each Subsidiary,
to the extent not already in place, to establish and
implement such procedures as may be reasonably necessary to
continuously determine and assure that any failure of the
following does not have a Material Adverse Effect: (i) all
Property of the Borrower and the Subsidiaries and the
operations conducted thereon and other activities of the
Borrower and the Subsidiaries are in compliance with and do
not violate the requirements of any Environmental Laws,
(ii) no oil, hazardous substances or solid wastes are
disposed of or otherwise released on or to any Property
owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be
released on or to any such Property in a quantity equal to
or exceeding that quantity which requires reporting pursuant
to Section 103 of CERCLA, and (iv) no oil, oil and gas
exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an
imminent and substantial endangerment to public health or
welfare or the environment.
(b) The Borrower will promptly notify the Agent and
the Lenders in writing of any material threatened action,
investigation or inquiry by any Governmental Authority of
which the Borrower has knowledge in connection with any
Environmental Laws, excluding routine testing and corrective
action.
(c) The Borrower will and will cause each Subsidiary
to provide environmental audits and tests in accordance with
American Society for Testing and Materials standards as
reasonably requested by the Agent and the Lenders (or as
otherwise required to be obtained by the Agent or the
Lenders by any Governmental Authority) in connection with
any future acquisitions of Oil and Gas Properties or other
material Properties.
Section 8.05 Further Assurances . The Borrower will
and will cause each Restricted Subsidiary to cure promptly any
defects in the creation and issuance of the Notes and the
execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will and will cause each
Restricted Subsidiary to promptly execute and deliver to the
Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and
agreements of the Borrower or any Restricted Subsidiary, as the
case may be, in the Security Instruments and this Agreement, or
to further evidence and more fully describe the collateral
intended as security for the Notes, or to correct any omissions
in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments,
or to perfect, protect or preserve any Liens created pursuant to
any of the Security Instruments, or to make any recordings, to
file any notices or obtain any consents, all as may be necessary
or appropriate in connection therewith.
Section 8.06 Performance of Obligations . The
Borrower will pay the Notes according to the reading, tenor and
effect thereof; and the Borrower will and will cause each
Restricted Subsidiary to do and perform every act and discharge
all of the obligations to be performed and discharged by them
under the Security Instruments and this Agreement, at the time or
times and in the manner specified.
Section 8.07 Engineering Reports .
(a) Not less than 45 days prior to each Scheduled
Redetermination Date, the Borrower shall furnish to the
Agent and the Lenders a Reserve Report. The Reserve Report
to be delivered by May 1 of each year shall be prepared by
certified independent petroleum engineers or other
independent petroleum consultant(s) acceptable to the Agent
and the Reserve Report to be delivered by November 1 of each
year shall be prepared by or under the supervision of the
chief engineer of the Borrower who shall certify such
Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the
immediately preceding May 1 Reserve Report.
(b) In the event of an unscheduled redetermination,
the Borrower shall furnish to the Agent and the Lenders a
Reserve Report prepared by or under the supervision of the
chief engineer of the Borrower who shall certify such
Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the
immediately preceding Reserve Report. For any unscheduled
redetermination requested by the Majority Lenders or the
Borrower pursuant to Section 2.08(d), the Borrower shall
provide such Reserve Report with an "as of" date as required
by the Majority Lenders as soon as possible, but in any
event no later than 30 days following the receipt of the
request by the Agent on behalf of the Majority Lenders.
(c) With the delivery of each Reserve Report, the
Borrower shall provide to the Agent and the Lenders, a
certificate from a Responsible Officer certifying that, to
the best of his knowledge and in all material respects: (i)
the information contained in the Reserve Report and any
other information delivered in connection therewith is true
and correct, (ii) the Borrower or each Restricted
Subsidiary, as applicable, owns good and defensible title to
the Oil and Gas Properties evaluated in such Reserve Report
and such Properties are free of all Liens except for Liens
permitted by Section 9.02, (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 Borrower's or any Restricted Subsidiary's Oil and Gas
Properties evaluated in such Reserve Report which would
require the Borrower or such Restricted Subsidiary to
deliver Hydrocarbons produced from such Oil and Gas
Properties at some future time without then or thereafter
receiving full payment therefor, (iv) none of the Borrower's
or any Restricted Subsidiary's Oil and Gas Properties have
been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the
certificate, which certificate shall list all of such Oil
and Gas Properties sold and in such detail as reasonably
required by the Agent, (v) attached to the certificate is a
list of the Borrower's or any Restricted Subsidiary's Oil
and Gas Properties added to and deleted from the immediately
prior Reserve Report and a list showing any change in
working interest or net revenue interest in the Borrower's
or any Restricted Subsidiary's Oil and Gas Properties
occurring and the reason for such change, (vi) attached to
the certificate is a list of all Persons disbursing proceeds
to the Borrower or a Restricted Subsidiary from its Oil and
Gas Properties and (vii) Schedule B attached to such Reserve
Report is a listing of the Oil and Gas Properties to be
considered in the determination of the Borrowing Base.
(d) As soon as available and in any event within 60
days after the end of each calendar quarter, the Borrower
shall provide production reports and lease operating
summaries by lease for the Borrower's and each Restricted
Subsidiary's Oil and Gas Properties subject to a Lien in
favor of the Agent, which reports shall include quantities
or volume of production, revenue, realized product prices,
operating expenses, taxes, capital expenditures and lease
operating costs which have accrued to the Borrower's or such
Restricted Subsidiary's accounts in such period, and such
other information with respect thereto as the Agent may
reasonably require.
Section 8.08 Title Information .
(a) On or before the delivery to the Agent and the
Lenders of each Reserve Report required by Section 8.07(a),
the Borrower will deliver, or cause to be delivered, title
information in form and substance acceptable to the Agent
covering enough of the Hydrocarbon Interests included in the
Borrowing Base that were not included in the immediately
preceding Reserve Report, so that the Agent shall have
received together with title information previously
delivered to the Agent, satisfactory title information on
100% of the value of the Hydrocarbon Interests included in
the Borrowing Base.
(b) The Borrower shall cure, or cause to be cured, any
title defects or exceptions which are not Excepted Liens
raised by such information, or substitute, or cause to be
substituted, acceptable Mortgaged Properties with no title
defects or exceptions except for Excepted Liens or Liens
permitted by Section 9.02 covering Mortgaged Properties of
an equivalent value, within 30 days after a request by the
Agent or the Lenders to cure such defects or exceptions.
(c) If the Borrower is unable to cure, or cause to be
cured, any title defect requested by the Agent or the
Lenders to be cured within the 30-day period or the Borrower
does not comply with the requirements to provide acceptable
title information covering 100% of the value of the Oil and
Gas Properties included in the Borrowing Base evaluated in
the most recent Reserve Report, such default shall not be a
Default or an Event of Default, but instead the Agent and
the Lenders shall have the right to exercise the following
remedy in their sole discretion from time to time, and any
failure to so exercise this remedy at any time shall not be
a waiver as to future exercise of the remedy by the Agent or
the Lenders. To the extent that the Agent or the Lenders
are not satisfied with title to any Mortgaged Property after
the time period in Section 8.08(b) has elapsed, such
unacceptable Mortgaged Property shall not count towards the
100% requirement, and the Agent may send a notice to the
Borrower and the Lenders that the then outstanding Borrowing
Base shall be reduced by an amount as determined by the
Majority Lenders to cause the Borrower to be in compliance
with the requirement to provide, or cause to be provided,
acceptable title information on 100% of the value of the
Hydrocarbon Interests included in the Borrowing Base. This
new Borrowing Base shall become effective immediately after
receipt of such notice.
(d) On or before July 31, 2002, the Borrower will
deliver, or cause to be delivered, to the Agent supplemental
title opinions from attorneys satisfactory to the Agent
updating the status of title to 100% of the value of the
Hydrocarbon Interests included in the Borrowing Base through
the date and time of recording of the applicable Security
Instruments in favor of the Agent and confirming there are
no prior Liens of record thereon.
Section 8.09 Collateral .
(a) Acquisitions. Should the Borrower or any
Restricted Subsidiary acquire any additional Oil and Gas
Properties which will be part of the Oil and Gas Properties
included in the Borrowing Base, the Borrower or such
Restricted Subsidiary will grant to the Agent as security
for the Indebtedness a first-priority Lien interest (subject
only to Liens permitted under Section 9.02) on the
Borrower's or such Restricted Subsidiary's interest in any
such Oil and Gas Properties included in the Borrowing Base
not already subject to a Lien of the Security Instruments,
which Lien will be created and perfected by and in accor
dance with the provisions of mortgages, deeds of trust,
security agreements and financing statements, or other
Security Instruments, all in form and substance satisfactory
to the Agent in its sole discretion and in sufficient
executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.
(b) Concurrently with the granting of the Lien or
other action referred to in Section 8.09(a) above, the
Borrower will provide, or cause to be provided, to the Agent
title information in form and substance satisfactory to the
Agent in its reasonable discretion with respect to the
Borrower's or such Restricted Subsidiary's interests in such
Oil and Gas Properties.
(c) Also, promptly after the filing in any state of
each new Security Instrument delivered pursuant to Section
8.09(a), upon the reasonable request of the Agent, the
Borrower will provide, or cause to be provided, to the Agent
an opinion addressed to the Agent for the benefit of the
Lenders in form and substance satisfactory to the Agent in
its sole discretion from counsel acceptable to the Agent,
stating that such Security Instrument is valid, binding and
enforceable in accordance with its terms and in legally
sufficient form for recordation in such jurisdiction.
Section 8.10 ERISA Information and Compliance . When
requested by the Agent, the Borrower will promptly furnish and
will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to the Agent with sufficient copies to the Lenders copies
of each annual and other report with respect to each Plan or any
trust created thereunder filed with the United States Secretary
of Labor, the Internal Revenue Service or the PBGC. The Borrower
will promptly notify the Agent immediately upon becoming aware of
the occurrence of any ERISA Event or, with respect to any
Restricted Subsidiary or Plan thereof, of any "prohibited
transaction," as described in section 406 of ERISA or in section
4975 of the Code, in connection with any Plan or any trust
created thereunder, to the extent that such ERISA Event or
"prohibited transaction" results in a Material Adverse Effect, in
a written notice signed by a Responsible Officer specifying the
nature thereof, what action the Borrower, the Subsidiary or the
ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto. Immediately upon receipt thereof, the
Borrower will promptly send to the Agent, with sufficient copies
to the Lenders, copies of any notice of the PBGC's intention to
terminate or to have a trustee appointed to administer any Plan.
With respect to each Plan (other than a Multiemployer Plan), the
Borrower will, and will cause each Subsidiary and ERISA Affiliate
to, (i) satisfy in full, without giving rise to any lien, all of
the contribution and funding requirements of section 412 of the
Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without
regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or
cause to be paid, to the PBGC all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.11 Accounts . The Borrower shall maintain
its primary collection accounts at the Agent, including without
limitation as provided in Section 4.08. The Borrower hereby
grants to the Agent a continuing security interest in all of
Borrower's deposit accounts now existing or hereafter maintained
at the Agent as security for the Indebtedness and in all funds,
investment property and proceeds pertaining thereto. However,
the Borrower may continue to maintain and utilize disbursement
and other accounts at XX Xxxxxx Xxxxx Bank.
ARTICLE IX Negative Covenants
The Borrower covenants and agrees that, so long as any of
the Commitments are in effect and until payment in full of Loans
hereunder, all interest thereon and all other amounts payable by
the Borrower hereunder, without the prior written consent of the
Majority Lenders:
Section 9.01 Debt . Neither the Borrower nor any
Restricted Subsidiary will incur, create, assume or suffer to
exist any Debt, except:
(a) the Notes or other Indebtedness arising under the
Loan Documents or any guaranty of or suretyship arrangement
for the Notes or other Indebtedness arising under the Loan
Documents;
(b) Debt existing on the Closing Date which is
disclosed in Schedule 9.01, and any renewals, extensions or
refinancings (but not increases) thereof;
(c) Debt (unrelated to Unrestricted Subsidiaries and
other than for borrowed money) incurred in the ordinary
course of business in connection with Hydrocarbon
transportation, Hydrocarbon purchasing or other similar
arrangements, provided that such arrangements are disclosed
to the Agent and the costs of the financing related to such
arrangements are incorporated into the Engineering Reports
provided to the Agent;
(d) Debt under Hedging Agreements with a Lender or
another counterparty rated BBB+ by Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc., or
better (or the equivalent rating by another nationally
recognized rating service), the notional amounts of which,
with respect to commodity Hedging Agreements, do not exceed
80% of Borrower's anticipated oil and/or gas production
from producing xxxxx to be produced during the term of such
Hedging Agreements, entered into as a part of its normal
business operations as a risk management strategy and/or
hedge against changes resulting from market conditions
related to the Borrower's and its Subsidiaries' operations;
(e) So long as no Borrowing Base Deficiency has
occurred which is continuing, additional Debt (including,
without limitation, guarantees of Debt of Unrestricted
Subsidiaries) with an outstanding aggregate principal amount
not at any time in excess of $250,000;
(f) Debt approved in advance by the Majority Lenders
secured by the Liens permitted by clause (x) of the
definition of "Excepted Liens"; provided that such Debt is
discharged within 180 days of the relevant acquisition or
merger;
(g) Debt approved in advance by the Majority Lenders
secured by a pledge of investments in Unrestricted
Subsidiaries permitted by clause (xii) of the definition of
"Excepted Liens"; provided that such Debt is recourse solely
to the investment so pledged;
(h) loans and advances between the Restricted
Subsidiaries, to any Restricted Subsidiary from the Borrower
and to the Borrower from any Restricted Subsidiary; and
(i) Debt approved in advance by the Majority Lenders
which is subordinated on terms satisfactory to the Majority
Lenders to the payment of the Indebtedness (with the
Borrowing Base in effect from time to time being reduced by
an amount equal to any effect upon the Borrowing Base
occasioned by such subordinated Debt in the judgment of the
Majority Lenders).
Section 9.02 Liens . Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or permit to
exist any Lien on any of its Properties included in the Borrowing
Base (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing capital leases allowed under
Section 9.01(e) but only on the Property under lease;
(d) Liens disclosed on Schedule 9.02; and
(e) Liens on cash or securities of the Borrower
securing the Debt described in Sections 9.01(c) and (d);
provided, however, the exceptions permitted under this Section
9.02 shall not permit any contractual Liens upon the Oil and Gas
Properties which are included in the Borrowing Base superior to
any Liens in favor of the Agent as security for the Indebtedness.
Section 9.03 Investments, Loans and Advances .
Neither the Borrower nor any Restricted Subsidiary will make or
permit to remain outstanding any loans or advances to or
investments in any Person which is not the Borrower or a
Restricted Subsidiary, but which does include Unrestricted
Subsidiaries (each such Person being a "Third Party") (which
shall include any payments on behalf of any Unrestricted
Subsidiary and shall include the Borrower's investments in and
any loans and advances to any Restricted Subsidiaries that become
Unrestricted Subsidiaries in accordance with Section 9.16 and the
definition of "Unrestricted Subsidiary"), except that the
foregoing restriction shall not apply to:
(a) investments, loans or advances which are disclosed
to the Lenders in Schedule 9.03;
(b) [reserved];
(c) accounts receivable arising in the ordinary
course of business;
(d) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United
States or any agency thereof, in each case maturing within
one year from the date of creation thereof;
(e) commercial paper maturing within one year from the
date of creation thereof rated in the highest grade by
Standard & Poor's Ratings Services, a division of The XxXxxx-
Xxxx Companies, Inc., or Xxxxx'x Investors Service, Inc.;
(f) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit
issued by, any Lender or any office located in the United
States of any other bank or trust company which is organized
under the laws of the United States or any state thereof,
has capital, surplus and undivided profits aggregating at
least $100,000,000.00 (as of the date of such Lender's or
bank or trust company's most recent financial reports) and
has a short term deposit rating of no lower than A2 or P2,
as such rating is set forth from time to time, by Standard &
Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or Xxxxx'x Investors Service, Inc.,
respectively;
(g) deposits in money market funds investing
exclusively in investments described in Section 9.03(c),
9.03(d) or 9.03(e);
(h) investments in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems
related thereto;
(i) investments in Unrestricted Subsidiaries in the
form of Oil and Gas Properties which are included in the
Borrowing Base with adjustments to be made to the Borrowing
Base with respect to the elimination of such properties from
the Borrowing Base; provided, however, the prior written
approval of the Majority Lenders shall be required for such
removal of a property from the Borrowing Base; and
(j) investments, loans and advances of cash and any
other Property not included in the Borrowing Base in an
aggregate outstanding amount not at any time in excess of
(when aggregated with net dividends, distributions and
redemptions permitted under Section 9.04) $1,000,000;
provided, however, that with respect to investments of
Property, only the amount of the excess (if any) of the book
value of such Property over the consideration received by
the transferor in connection with the investment of such
Property shall count against such $1,000,000 limit; and
provided further, however, that if the Borrowing Base is
more than 50% utilized, or if the making of any such
investment, loan or advance using the proceeds of a Loan
would result in the Borrowing Base being more than 50%
utilized, then no such investment, loan or advance otherwise
permitted by this Section 9.03 may be made using the
proceeds of a Loan hereunder.
Section 9.04 Dividends, Distributions and Redemptions
.. The Borrower will not declare or pay any dividend, purchase,
redeem or otherwise acquire for value any of its membership
interests now or hereafter outstanding, return any capital to its
members or make any distribution of its assets to its members,
except that the Borrower may make dividends, distributions and
redemptions to MMR so long as the aggregate amount of net
dividends, distributions and redemptions, when aggregated with
investments, loans and advances permitted under Section 9.03(j),
do not exceed $1,000,000 in the aggregate from and after the
Closing Date; provided, however, that such dividends,
distributions and redemptions shall not be permitted hereunder if
an Event of Default has occurred and is continuing or would
result therefrom; and provided further, however, that if the
Borrowing Base is more than 50% utilized, or if the making of any
such dividend, distribution or redemption using the proceeds of a
Loan would result in the Borrowing Base being more than 50%
utilized, then no such dividend, distribution or redemption
otherwise permitted by this Section 9.04 may be made using the
proceeds of a Loan hereunder.
Section 9.05 Sales and Leasebacks . Neither the
Borrower nor any Restricted Subsidiary will enter into any
arrangement, directly or indirectly, with any Person whereby the
Borrower or any Restricted Subsidiary shall sell or transfer any
of its Property included in the Borrowing Base, whether now owned
or hereafter acquired, and whereby the Borrower or any Restricted
Subsidiary shall then or thereafter rent or lease as lessee such
Property or any part thereof or other Property which the Borrower
or any Restricted Subsidiary intends to use for substantially the
same purpose or purposes as the Property sold or transferred.
Section 9.06 Nature of Business . Neither the
Borrower nor any Restricted Subsidiary will allow any material
change to be made in the character of its business as an
independent oil and gas exploration and production company.
Section 9.07 Mergers, Etc. Neither the Borrower nor
any Restricted Subsidiary will merge into or with or consolidate
with any other Person, or sell, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all
or substantially all of its Property or assets to any other
Person, except that:
(a) the Borrower or any Restricted Subsidiary may
merge or liquidate any other Person into itself, so long as
the surviving entity will be in compliance with all of the
terms of this Agreement immediately following the merger or
liquidation;
(b) any Restricted Subsidiary may merge or liquidate
into the Borrower or another Restricted Subsidiary; and
(c) any Restricted Subsidiary may be merged into any
other Person; provided that such other Person, immediately
following such merger, shall be deemed a Restricted
Subsidiary and shall comply with the provisions of Section
9.16 hereof;
provided, however, that in the case of a merger permitted by
clauses (a) and (b) above, immediately thereafter and giving
effect thereto, the Borrower or, as the case may be, a
Restricted Subsidiary would be the surviving Person and, in
the case of a merger permitted by clause (a), (b) or (c)
above, no Default or Event of Default would, immediately
thereafter and giving effect thereto, have occurred and be
continuing. In all such instances permitted by this Section
9.07, the surviving entity shall be an entity formed under
the laws of one of the states of the United States of
America.
Section 9.08 Proceeds of Notes . The Borrower will
not permit the proceeds of the Notes to be used for any purpose
other than those permitted by Section 7.07. Neither the
Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U or X or any other regulation
of the Board of Governors of the Federal Reserve System or to
violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or
as the same may hereinafter be in effect.
Section 9.09 ERISA Compliance . The Borrower will not
at any time engage in or permit any of the following if a
Material Adverse Effect would result:
(a) Engage in, or permit any Restricted Subsidiary or
ERISA Affiliate to engage in, any transaction in connection
with which the Borrower, any Restricted Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or
a tax imposed by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in
any liability of the Borrower, any Subsidiary or any ERISA
Affiliate to the PBGC;
(c) Fail to make, or permit any Restricted Subsidiary
to fail to make, full payment of all amounts which, under
the provisions of any Plan, agreement relating thereto or
applicable law, the Borrower or a Restricted Subsidiary is
required to pay as contributions thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA
Affiliate to permit to exist, any accumulated funding
deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code, whether or not waived, with respect
to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate
to permit, the actuarial present value of the benefit liabil
ities under any Plan maintained by the Borrower, any
Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit
liabilities to the extent that such liability can not be
paid in the ordinary course. The term "actuarial present
value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA;
(f) Contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate
to contribute to or assume an obligation to contribute to,
any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA
Affiliate to acquire, an interest in any Person that causes
such Person to become an ERISA Affiliate with respect to the
Borrower, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time
in the six-year period preceding such acquisition has spon
sored, maintained, or contributed to, (1) any Multiemployer
Plan, or (2) any other Plan that is subject to Title IV of
ERISA under which the actuarial present value of the benefit
liabilities under such Plan exceeds the current value of the
assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such
benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate
to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to
contribute to, or permit any Restricted Subsidiary to
contribute to or assume an obligation to contribute to, any
employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such
entities, that may not be terminated by such entities in
their sole discretion at any time without any material
liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate
to amend, a Plan resulting in an increase in current
liability such that the Borrower, any Subsidiary or any
ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables .
Neither the Borrower nor any Restricted Subsidiary will discount
or sell (with or without recourse) any of its notes receivable or
accounts receivable other than in settlement of any past due
accounts in the ordinary course of business and in accordance
with prudent commercial practices.
Section 9.11 Debt Service Coverage Ratio . The
Borrower will not permit the ratio, as of the last date of each
fiscal quarter, of (i) EBITDAX as of the end of any fiscal
quarter of the Borrower (calculated on a rolling four quarter
basis) to (ii) interest expense of the Borrower and its
Restricted Subsidiaries, plus the portion of rent paid or payable
(without duplication) for that period under capital lease
obligations that should be treated as interest in accordance with
Financial Accounting Standards Board Statement No. 13, in each
case on a rolling four quarter basis, to be less than 2.00 to
1.00. As used in this Agreement, "rolling four quarter basis"
shall mean, as to any fiscal quarter, such quarter and the three
preceding fiscal quarters.
Section 9.12 Reserved .
Section 9.13 Sale of Oil and Gas Properties . The
Borrower will not, and will not permit any Restricted Subsidiary
to, sell, assign, farm-out, convey or otherwise transfer any Oil
and Gas Property subject to a Lien in favor of the Agent or any
interest in any Oil and Gas Property subject to a Lien in favor
of the Agent except for (i) the sale of Hydrocarbons in the
ordinary course of business, and (ii) the sale or transfer of
equipment that is no longer necessary for the business of the
Borrower or is contemporaneously replaced by equipment of at
least comparable value and use.
Section 9.14 Environmental Matters . Neither the
Borrower nor any Subsidiary will cause or permit any of its
Property to be in violation of, or do anything or permit anything
to be done which will subject any such Property to any remedial
obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property
where such violations or remedial obligations would have a
Material Adverse Effect.
Section 9.15 Transactions with Affiliates . Neither
the Borrower nor any Restricted Subsidiary will enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise
permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.16 Subsidiaries . The Borrower shall not
and shall not permit any Restricted Subsidiary to sell or to
issue any stock or ownership interest of a Restricted Subsidiary
except to the Borrower or a Restricted Subsidiary and except in
compliance with Section 9.03. The Borrower shall not create any
additional Subsidiaries or permit any Restricted Subsidiary to do
so, except:
(a) the Borrower or any Restricted Subsidiary may
create (by formation or by an acquisition otherwise
permitted by this Agreement) a Restricted Subsidiary
provided, that:
(i) each new Restricted Subsidiary shall
forthwith execute and deliver to the Agent for the
benefit of the Lenders a written instrument of
guaranty, unconditionally guaranteeing payment of all
Indebtedness of the Borrower; and
(ii) simultaneously with the delivery of the
aforementioned written instrument of guaranty, each new
Restricted Subsidiary shall deliver to the Agent a
certificate of the Secretary or Assistant Secretary of
such Restricted Subsidiary setting forth (A)
resolutions of its board of directors with respect to
the authorization of such Restricted Subsidiary to
execute and deliver such written instrument of guaranty
and to enter into the transactions contemplated
thereby, (B) the officers of such Restricted Subsidiary
(y) who are authorized to sign such written instrument
of guaranty, and (z) who will, until replaced by
another officer or officers duly authorized for that
purpose, act as its representative for the purposes of
signing documents and giving notices and other
communications in connection with such written
instrument of guaranty and the transactions
contemplated thereby, (C) specimen signatures for such
officers, and (D) the articles or certificate of
incorporation and bylaws of such Restricted Subsidiary,
certified as being true and complete. The Agent and
the Lenders may conclusively rely on such certificate
until the Agent receives notice in writing from the
Borrower or such Restricted Subsidiary to the contrary;
(b) the Borrower or a Restricted Subsidiary may create
(by formation or by an acquisition otherwise permitted by
this Agreement) additional Subsidiaries provided, that, such
Subsidiary is designated as an Unrestricted Subsidiary by a
certificate of the Borrower signed by both of the chief
financial officer (or treasurer) and the general counsel of
the Borrower, which certificate shall be delivered to the
Agent.
Section 9.17 Negative Pledge Agreements . Neither
the Borrower nor any Restricted Subsidiary will create, incur,
assume or suffer to exist any contract, agreement or
understanding (other than this Agreement and the Security
Instruments) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of
its Property included in the Borrowing Base or restricts any
Restricted Subsidiary from paying dividends to the Borrower, or
which requires the consent of or notice to other Persons in
connection therewith.
Section 9.18 Gas Imbalances, Take-or-Pay or Other
Prepayments . The Borrower will not allow gas imbalances, take-
or-pay or other prepayments with respect to the Oil and Gas
Properties of the Borrower or any Restricted Subsidiary which
would require the Borrower or such Restricted Subsidiary to
deliver Hydrocarbons produced on Oil and Gas Properties at some
future time without then or thereafter receiving full payment
therefor to exceed one billion cubic feet of gas in the aggregate
on a net basis for the Borrower and Restricted Subsidiaries.
Section 9.19 "Margin Calls" on Hedging Agreements.
With respect to Hedging Agreements, neither the Borrower nor any
Subsidiary shall post cash or any other consideration whatsoever
in response to a call on Borrower or any Subsidiary for credit
support or eligible material in an aggregate amount greater than
25% of the then current Borrowing Base.
ARTICLE XEvents of Default; Remedies
Section 10.01 Events of Default . One or more of the
following events shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or
prepayment (including, without limitation, prepayments
resulting from a Borrowing Base Deficiency, but excluding
prepayments to be made pursuant to revocable notices
delivered pursuant to Section 2.07(a) hereof) when due of
any principal of or interest on any Loan, or any
reimbursement obligation for a disbursement made under any
Letter of Credit, or any fees or other amount payable by it
hereunder or under any Security Instrument, and such
default, other than a default of a payment or prepayment of
principal (which shall have no cure period), shall continue
unremedied for a period of 3 Business Days; or
(b) the Borrower or any Restricted Subsidiary shall
default in the payment when due of any principal of or
interest on any of its other Debt aggregating $250,000 or
more, or any event specified in any note, agreement,
indenture or other document evidencing or relating to any
such Debt shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Debt
(or a trustee or agent on behalf of such holder or holders)
to cause, such Debt to become due prior to its stated
maturity; or
(c) any representation, warranty or certification made
or deemed made herein or in any Security Instrument by the
Borrower or any Restricted Subsidiary, or any certificate
furnished to any Lender or the Agent pursuant to the
provisions hereof or any Security Instrument, shall prove to
have been false or misleading as of the time made or
furnished in any material respect; or
(d) the Borrower shall default in the performance of
any of its obligations under Article IX or any other Article
of this Agreement other than under Article VIII; or the
Borrower shall default in the performance of any of its
obligations under Article VIII or the Borrower or any
Restricted Subsidiary shall default in the performance of
any of its obligations under any Security Instrument (other
than the payment of amounts due which shall be governed by
Sections 10.01(a) and 10.01(m)) and such default shall
continue unremedied for a period of thirty (30) days after
the earlier to occur of (i) notice thereof to the Borrower
by the Agent or any Lender (through the Agent), or (ii) the
Borrower otherwise becoming aware of such default; or
(e) the Borrower shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts
become due; or
(f) the Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now
or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or
composition or readjustment of debts, (v) fail to controvert
in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case
under the Federal Bankruptcy Code, or (vi) take any
corporate action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced, without
the application or consent of the Borrower, in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or
the like of the Borrower of all or any substantial part of
its assets, or (iii) similar relief in respect of the
Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 days; or (iv) an
order for relief against the Borrower shall be entered in an
involuntary case under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money
in excess of $500,000 in the aggregate shall be rendered by
a court against the Borrower or any Restricted Subsidiary
and the same shall not be discharged (or arrangements
satisfactory to the Agent shall not be made for such
discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry
thereof and the Borrower or such Restricted Subsidiary shall
not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(i) the Security Instruments after delivery thereof
shall for any reason, except to the extent permitted by the
terms thereof, cease to be in full force and effect and
valid, binding and enforceable in accordance with their
terms, or cease to create a valid and perfected Lien of the
priority required thereby on any of the collateral purported
to be covered thereby, except to the extent permitted by the
terms of this Agreement, or the Borrower shall so state in
writing; or
(j) any Letter of Credit becomes the subject matter of
any order, judgment, injunction or any other such
determination, or if the Borrower or any other Person shall
petition or apply for or obtain any order restricting
payment by the Agent under any Letter of Credit or extending
the Lenders' liability under any Letter of Credit beyond the
expiration date stated therein or otherwise agreed to by the
Agent; or
(k) the Borrower discontinues its usual business or
suffers to exist any material change in its ownership,
control or management; or
(l) any Restricted Subsidiary takes, suffers or
permits to exist any of the events or conditions referred to
in paragraphs (e), (f), (g) or (h) hereof; or
(m) a Borrowing Base Deficiency shall remain after the
applicable time period provided for in Section 2.07(c), or
shall remain after the Business Day on which the Monthly
Reduction giving rise to such Borrowing Base Deficiency took
effect.
Section 10.02 Remedies .
(a) In the case of an Event of Default other than one
referred to in clauses (e), (f) or (g) of Section 10.01 or
in clause (l) to the extent it relates to clauses (e), (f)
or (g), the Agent, upon request of the Majority Lenders,
shall, by notice to the Borrower, cancel the Commitments
and/or declare the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral
to secure the LC Exposure as provided in Section 2.10(b)
hereof) to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without
presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by the
Borrower.
(b) In the case of the occurrence of an Event of
Default referred to in clauses (e), (f) or (g) of Section
10.01 or in clause (l) to the extent it relates to clauses
(e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral
to secure the LC Exposure as provided in Section 2.10(b)
hereof) shall become automatically immediately due and
payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly
waived by the Borrower.
(c) All proceeds received after maturity of the Notes,
whether by acceleration or otherwise shall be applied first
to reimbursement of expenses and indemnities provided for in
this Agreement and the Security Instruments; second to
accrued interest on the Notes; third to fees; fourth pro
rata to principal outstanding on the Notes and other
Indebtedness; fifth to serve as cash collateral to be held
by the Agent to secure the LC Exposure; and any excess shall
be paid to the Borrower or the Restricted Subsidiaries, as
applicable, or as otherwise required by any Governmental
Requirement.
ARTICLE XI The Agent
Section 11.01 Appointment, Powers and Immunities .
Each Lender hereby irrevocably appoints and authorizes the Agent
to act as its agent hereunder and under the Security Instruments
with such powers as are specifically delegated to the Agent by
the terms of this Agreement and the Security Instruments,
together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in
Section 11.05 and the first sentence of Section 11.06 shall
include reference to its Affiliates and its and its Affiliates'
officers, directors, employees, attorneys, accountants, experts
and agents): (i) shall have no duties or responsibilities except
those expressly set forth in the Loan Documents, and shall not by
reason of the Loan Documents be a trustee or fiduciary for any
Lender; (ii) makes no representation or warranty to any Lender
and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this
Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this
Agreement, or for the value, validity, effectiveness,
genuineness, execution, legality, enforceability or sufficiency
of this Agreement, any Note or any other document referred to or
provided for herein or for any failure by the Borrower or any
other Person (other than the Agent) to perform any of its
obligations hereunder or thereunder or for the existence, value,
perfection or priority of any collateral security or the
financial or other condition of the Borrower, the Subsidiaries or
any other obligor or guarantor; (iii) except pursuant to Section
11.07 shall not be required to initiate or conduct any litigation
or collection proceedings hereunder; and (iv) shall not be
responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its
own ordinary negligence, except for its own gross negligence or
willful misconduct. The Agent may employ agents, accountants,
attorneys and experts and shall not be responsible for the
negligence or misconduct of any such agents, accountants,
attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance
with the advice of such agents, accountants, attorneys or
experts. The Agent may deem and treat the payee of any Note as
the holder thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Agent. The Agent is
authorized to release any collateral that is permitted to be sold
or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent . The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex,
telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by
the Agent.
Section 11.03 Defaults . The Agent shall not be
deemed to have knowledge of the occurrence of a Default (other
than the non-payment of principal of or interest on Loans or of
fees or failure to reimburse for Letter of Credit drawings)
unless the Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is
a "Notice of Default." In the event that the Agent receives such
a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Lenders. In the event of a payment
Default, the Agent shall give each Lender prompt notice of each
such payment Default.
Section 11.04 Rights as a Lender . With respect to
its Commitments and the Loans made by it and its participation in
the issuance of Letters of Credit, Hibernia (and any successor
acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual
capacity. Hibernia (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Borrower (and
any of its Affiliates) as if it were not acting as the Agent, and
Hibernia and its Affiliates may accept fees and other
consideration from the Borrower for services in connection with
this Agreement or otherwise without having to account for the
same to the Lenders.
Section 11.05 indemnification . the Lenders agree to
indemnify the Agent ratably in accordance with their Percentage
Shares for the Indemnity Matters as described in section 12.03 to
the extent not indemnified or reimbursed by the Borrower under
section 12.03, but without limiting the obligations of the
Borrower under said section 12.03 and for any and all other
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of: (i) this Agreement, the Security Instruments or any other
documents contemplated by or referred to herein or the
transactions contemplated hereby, but excluding, unless a Default
has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties
hereunder or (ii) the enforcement of any of the terms of this
Agreement, any Security Instrument or of any such other
documents; whether or not any of the foregoing specified in this
section 11.05 arises from the sole or concurrent negligence of
the Agent, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent.
Section 11.06 Non-Reliance on Agent and other Lenders
.. Each Lender acknowledges and agrees that it has, independently
and without reliance on the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and its decision to
enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Agent
shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement, the
Notes, the Security Instruments or any other document referred to
or provided for herein or to inspect the properties or books of
the Borrower. Except for notices, reports and other documents
and information expressly required to be furnished to the Lenders
by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or
business of the Borrower (or any of its Affiliates) which may
come into the possession of the Agent or any of its Affiliates.
In this regard, each Lender acknowledges that Xxxxxx Xxxxxx
L.L.P. is acting in this transaction as special counsel to the
Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. Each Lender will consult
with its own legal counsel to the extent that it deems necessary
in connection with the Loan Documents and the matters
contemplated therein.
Section 11.07 Action by Agent . Except for action or
other matters expressly required of the Agent hereunder, the
Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall (i) receive written
instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be
taken, and (ii) be indemnified to its satisfaction by the Lenders
against any and all liability and expenses which may be incurred
by it by reason of taking or continuing to take any such action.
The instructions of the Majority Lenders (or all of the Lenders
as expressly required by Section 12.04) and any action taken or
failure to act pursuant thereto by the Agent shall be binding on
all of the Lenders. If a Default has occurred and is continuing,
the Agent shall take such action with respect to such Default as
shall be directed by the Majority Lenders (or all of the Lenders
as required by Section 12.04) in the written instructions (with
indemnities) described in this Section 11.07, provided that,
unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default
as it shall deem advisable in the best interests of the Lenders.
In no event, however, shall the Agent be required to take any
action which exposes the Agent to personal liability or which is
contrary to this Agreement and the Security Instruments or
applicable law.
Section 11.08 Resignation or Removal of Agent .
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice
thereof to the Lenders and the Borrower, and the Agent may be
removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority
Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent. Upon the acceptance of such
appointment hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was
acting as the Agent.
ARTICLE XII Miscellaneous
Section 12.01 Waiver . No failure on the part of the
Agent or any Lender to exercise and no delay in exercising, and
no course of dealing with respect to, any right, power or
privilege under any of the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided
by law.
Section 12.02 Notices . All notices and other
communications provided for herein and in the other Loan
Documents (including, without limitation, any modifications of,
or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telecopy, personal
delivery, nationally recognized overnight courier or U.S. Mail in
writing and telecopied, mailed or delivered to the intended
recipient at the "Address for Notices" specified below its name
on the signature pages hereof or in the Loan Documents or, as to
any party, at such other address as shall be designated by such
party in a notice to each other party. Except as otherwise
provided in this Agreement or in the other Loan Documents, all
such communications shall be deemed to have been duly given when
transmitted, if transmitted before 1:00 p.m. local time on a
Business Day (otherwise on the next succeeding Business Day) by
telecopier to the extent that confirmation of receipt is
obtained, or personally delivered or, in the case of a mailed
notice, three (3) Business Days after the date deposited in the
mails, postage prepaid, or, in the case of a nationally
recognized overnight courier, one (1) day after the date
delivered to such courier with guaranteed next day delivery, in
each case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities, etc .
The Borrower agrees:
(a) whether or not the transactions hereby
contemplated are consummated, to pay all reasonable expenses
of the Agent in the administration (both before and after
the execution hereof and including advice of counsel as to
the rights and duties of the Agent and the Lenders with
respect thereto) of, and in connection with the negotiation,
syndication, investigation, preparation, execution and
delivery of, recording or filing of, preservation of rights
under, enforcement of, and refinancing, renegotiation or
restructuring of, the Loan Documents and any amendment,
waiver or consent relating thereto (including, without
limitation, travel, photocopy, mailing, courier, telephone
and other similar expenses of the Agent, the cost of
environmental audits, surveys and appraisals at reasonable
intervals, the reasonable fees and disbursements of counsel
and other outside consultants for the Agent and, in the case
of enforcement, the reasonable fees and disbursements of
counsel for the Agent and any of the Lenders); and promptly
reimburse the Agent for all amounts expended, advanced or
incurred by the Agent or the Lenders to satisfy any
obligation of the Borrower under this Agreement or any
Security Instrument, including without limitation, all costs
and expenses of foreclosure;
(b) to indemnify the Agent and each Lender and each of
their Affiliates and each of their officers, directors,
employees, representatives, agents, attorneys, accountants
and experts ("Indemnified Parties") from, hold each of them
harmless against and promptly upon demand pay or reimburse
each of them for, the Indemnity Matters which may be
incurred by or asserted against or involve any of them
(whether or not any of them is designated a party thereto)
as a result of, arising out of or in any way related to (i)
any actual or proposed use by the Borrower of the proceeds
of any of the Loans or Letters of Credit, (ii) the
execution, delivery and performance of the Loan Documents,
(iii) the operations of the business of the Borrower and the
Subsidiaries, (iv) the failure of the Borrower or any
Subsidiary to comply with the terms of any Security
Instrument or this Agreement, or with any Governmental
Requirement, (v) any inaccuracy of any representation or any
breach of any warranty of the Borrower set forth in any of
the Loan Documents, (vi) the issuance, execution and
delivery or transfer of or payment or failure to pay under
any Letter of Credit, or (vii) the payment of a drawing
under any Letter of Credit notwithstanding the non-
compliance, non-delivery or other improper presentation of
the manually executed draft(s) and certification(s), (viii)
any assertion that the Lenders were not entitled to receive
the proceeds received pursuant to the Security Instruments
or (ix) any other aspect of the Loan Documents, including,
without limitation, the reasonable fees and disbursements of
counsel and all other expenses incurred in connection with
investigating, defending or preparing to defend any such
action, suit, proceeding (including any investigations,
litigation or inquiries) or claim and including all
Indemnity Matters arising by reason of the ordinary
negligence of any Indemnified Party, but excluding all
Indemnity Matters arising solely by reason of claims between
the Lenders or any Lender and the Agent or a Lender's
shareholders against the Agent or Lender or by reason of the
gross negligence or willful misconduct on the part of the
Indemnified Party or its Affiliate; and
(c) to indemnify and hold harmless from time to time
the Indemnified Parties from and against any and all losses,
claims, cost recovery actions, administrative orders or
proceedings, damages and liabilities to which any such
Person may become subject (i) under any Environmental Law
applicable to the Borrower or any Subsidiary or any of their
Properties, including without limitation, the treatment or
disposal of hazardous substances on any of their Properties,
(ii) as a result of the breach or non-compliance by the
Borrower or any Subsidiary with any Environmental Law
applicable to the Borrower or any Subsidiary, (iii) due to
past ownership by the Borrower or any Subsidiary of any of
their Properties or past activity on any of their Properties
which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use,
release, storage, treatment or disposal of hazardous
substances on or at any of the Properties owned or operated
by the Borrower or any Subsidiary, or (v) any other
environmental, health or safety condition in connection with
the Loan Documents, provided, however, no indemnity shall be
afforded under this section 12.03(c) in respect of any
Property for any occurrence arising from the acts or
omissions of the Agent or any Lender during the period after
which such Person, its successors or assigns shall have
obtained possession of such Property (whether by foreclosure
or deed in lieu of foreclosure, as mortgagee-in-possession
or otherwise).
(d) No Indemnified Party may settle any claim to be
indemnified without the consent of the indemnitor, such
consent not to be unreasonably withheld; provided, that the
indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the
indemnitor does not have the financial ability to pay all
its obligations outstanding and asserted against the
indemnitor at that time, including the maximum potential
claims against the Indemnified Party to be indemnified
pursuant to this Section 12.03.
(e) In the case of any indemnification hereunder, the
Agent or Lender, as appropriate shall give notice to the
Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the
non-exclusive right to join in the defense against any such
claim or demand provided that if the Borrower provides a
defense, the Indemnified Party shall bear its own cost of
defense unless there is a conflict between the Borrower and
such Indemnified Party.
(f) the foregoing indemnities shall extend to the
Indemnified Parties notwithstanding the sole or concurrent
negligence of every kind or character whatsoever (other than
gross negligence), whether active or passive, whether an
affirmative act or an omission, including without
limitation, all types of negligent conduct identified in the
restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed
without fault on any one or more of the Indemnified Parties.
to the extent that an Indemnified Party is found to have
committed an act of gross negligence or willful misconduct,
this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim
that is deemed to have occurred by reason of events other
than the gross negligence or willful misconduct of the
Indemnified Party.
(g) The Borrower's obligations under this
Section 12.03 shall survive any termination of this
Agreement and the payment of the Notes and shall continue
thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this
Section 12.03 within thirty (30) days of the receipt by the
Borrower of notice of the amount due.
Section 12.04 Amendments, Etc. Any provision of this
Agreement or any Security Instrument may be amended, modified or
waived with the Borrower's and the Majority Lenders' prior
written consent; provided that (i) no amendment, modification or
waiver which extends the final maturity of the Loans, increases
the Aggregate Maximum Credit Amounts, forgives the principal
amount of any Indebtedness outstanding under this Agreement,
releases any guarantor of the Indebtedness or releases any of the
collateral, reduces the interest rate applicable to the Loans or
the fees payable to the Lenders generally, affects Sections
2.03(a) or (b), this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective
without consent of all Lenders; (ii) no amendment, modification
or waiver which increases the Maximum Credit Amount of any Lender
shall be effective without the consent of such Lender; and (iii)
no amendment, modification or waiver which modifies the rights,
duties or obligations of the Agent shall be effective without the
consent of the Agent.
Section 12.05 Successors and Assigns . This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 12.06 Assignments and Participations .
(a) The Borrower may not assign its rights or
obligations hereunder or under the Notes or any Letters of
Credit without the prior consent of all of the Lenders and
the Agent.
(b) Any Lender may assign to one or more of its
Affiliates or, upon the written consent of the Agent and the
Borrower (which consent will not be unreasonably withheld),
assign to one or more assignees who are not Affiliates of
such Lender, all or a portion of its rights and obligations
under this Agreement pursuant to an Assignment Agreement
substantially in the form of Exhibit F (an "Assignment")
provided, however, that (i) any such assignment shall be in
the amount of at least $1,000,000 or such lesser amount to
which the Borrower has consented and (ii) the assignee or
assignor shall pay to the Agent a processing and recordation
fee of $2,500 for each assignment. Any such assignment will
become effective upon the execution and delivery to the
Agent of the Assignment and the consent of the Agent.
Promptly after receipt of an executed Assignment, the Agent
shall send to the Borrower a copy of such executed
Assignment. Upon receipt of such executed Assignment, the
Borrower, will, at its own expense, execute and deliver new
Notes to the assignor and/or assignee, as appropriate, in
accordance with their respective interests as they appear.
Upon the effectiveness of any assignment pursuant to this
Section 12.06(b), the assignee will become a "Lender," if
not already a "Lender," for all purposes of this Agreement
and the Security Instruments. The assignor shall be
relieved of its obligations hereunder to the extent of such
assignment (and if the assigning Lender no longer holds any
rights or obligations under this Agreement, such assigning
Lender shall cease to be a "Lender" hereunder except that
its rights under Sections 4.06, 5.01, 5.05 and 12.03 shall
not be affected). The Agent will prepare on the last
Business Day of each month during which an assignment has
become effective pursuant to this Section 12.06(b), a new
Annex I giving effect to all such assignments effected
during such month, and will promptly provide the same to the
Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests
hereunder pursuant to this Section 12.06(c) to any Person,
provided that: (i) such Lender shall remain a "Lender" for
all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and
(ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of any of the
Loan Documents except to the extent such amendment or waiver
would (x) forgive any principal owing on any Indebtedness or
extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the
applicability of any post-default increases in interest
rates) or fees applicable to any of the Commitments or Loans
or Letters of Credit in which such participant is
participating, or postpone the payment of any thereof, or
(z) release any guarantor of the Indebtedness or release all
or substantially all of the collateral (except as provided
in the Loan Documents) supporting any of the Commitments or
Loans or Letters of Credit in which such participant is
participating. In the case of any such participation, the
participant shall not have any rights under this Agreement
or any of the Security Instruments (the participant's rights
against the granting Lender in respect of such participation
to be those set forth in the agreement with such Lender
creating such participation), and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided that such participant
shall be entitled to receive additional amounts under
Article V on the same basis as if it were a Lender and be
indemnified under Section 12.03 as if it were a Lender. In
addition, each agreement creating any participation must
include an agreement by the participant to be bound by the
provisions of Section 12.15.
(d) The Lenders may furnish any information concerning
the Borrower in the possession of the Lenders from time to
time to assignees and participants (including prospective
assignees and participants); provided that, such Persons
agree to be bound by the provisions of Section 12.15 hereof.
(e) Notwithstanding anything in this Section 12.06 to
the contrary, any Lender may assign and pledge all or any of
its Notes to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System
and/or such Federal Reserve Bank. No such assignment and/or
pledge shall release the assigning and/or pledging Lender
from its obligations hereunder.
(f) Notwithstanding any other provisions of this
Section 12.06, no transfer or assignment of the interests or
obligations of any Lender or any grant of participations
therein shall be permitted if such transfer, assignment or
grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the
"Blue Sky" laws of any state.
Section 12.07 Invalidity . In the event that any one
or more of the provisions contained in any of the Loan Documents
or the Letters of Credit, the Letter of Credit Agreements 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 the Notes, this Agreement or
any Security Instrument.
Section 12.08 Counterparts . This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of
the parties hereto may execute this Agreement by signing any such
counterpart.
Section 12.09 References . The words "herein,"
"hereof," "hereunder" and other words of similar import when used
in this Agreement refer to this Agreement as a whole, and not to
any particular article, section or subsection. Any reference
herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any
reference herein to an exhibit or schedule shall be deemed to
refer to the applicable exhibit or schedule attached hereto
unless otherwise stated herein.
Section 12.10 Survival . The obligations of the
parties under Section 4.06, Article V, and Sections 11.05 and
12.03 shall survive the repayment of the Loans and the
termination of the Commitments. To the extent that any payments
on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any
bankruptcy law, common law or equitable cause, then to such
extent, the Indebtedness so satisfied shall be revived and
continue as if such payment or proceeds had not been received and
the Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such
event, each Security Instrument shall be automatically reinstated
and the Borrower shall take such action as may be reasonably
requested by the Agent and the Lenders to effect such
reinstatement.
Section 12.11 Captions . Captions and section
headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of
any provision of this Agreement.
Section 12.12 no oral agreements . the Loan Documents
embody the entire agreement and understanding between the parties
and supersede all other agreements and understandings between
such parties relating to the subject matter hereof and thereof.
the Loan Documents represent the final agreement between the
parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.
there are no unwritten oral agreements between the parties.
Section 12.13 governing law; submission to
jurisdiction .
(a) this Agreement and the Notes shall be governed by,
and construed in accordance with, the laws of the state of
louisiana except to the extent that united states federal
law permits any Lender to charge interest at the rate
allowed by the laws of the state where such Lender is
located.
(b) any legal action or proceeding with respect to the
Loan Documents shall be brought in the courts of the state
of louisiana or of the united states of America for the
eastern district of louisiana, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for
itself and (to the extent permitted by law) in respect of
its Property, generally and unconditionally, the
jurisdiction of the aforesaid courts. the Borrower hereby
irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions. this
submission to jurisdiction is non-exclusive and does not
preclude the Agent or any Lender from obtaining jurisdiction
over the Borrower in any court otherwise having
jurisdiction.
(c) the Borrower hereby irrevocably designates c.t.
corporation located in baton rouge, louisiana, as the
designee, appointee and agent of the Borrower to receive,
for and on behalf of the Borrower, service of process in
such respective jurisdictions in any legal action or
proceeding with respect to the Loan Documents. it is under
stood that a copy of such process served on such agent will
be promptly forwarded by overnight courier to the Borrower
at its address set forth under its signature below, but the
failure of the Borrower to receive such copy shall not
affect in any way the service of such process. the Borrower
further irrevocably consents to the service of process of
any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Borrower at its said
address, such service to become effective thirty (30) days
after such mailing.
(d) nothing herein shall affect the right of the Agent
or any Lender or any holder of a Note to serve process in
any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
(e) each of the Borrower and each lender hereby (i)
irrevocably and unconditionally waive, to the fullest extent
permitted by law, trial by jury in any legal action or
proceeding relating to this Agreement or any Security
Instrument and for any counterclaim therein; (ii)
irrevocably waive, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential
damages, or damages other than, or in addition to, actual
damages; (iii) certify that no party hereto nor any
representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such
party would not, in the event of litigation, seek to enforce
the foregoing waivers, and (iv) acknowledge that it has been
induced to enter into this Agreement, the Security
Instruments and the transactions contemplated hereby and
thereby by, among other things, the mutual waivers and
certifications contained in this section 12.13.
Section 12.14 Interest . It is the intention of the
parties hereto that each Lender shall conform strictly to usury
laws applicable to it. Accordingly, if the transactions
contemplated hereby would be usurious as to any Lender under laws
applicable to it (including the laws of the United States of
America and the State of Louisiana or any other jurisdiction
whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in
that event, notwithstanding anything to the contrary in any of
the Loan Documents or any agreement entered into in connection
with or as security for the Notes, it is agreed as follows:
(i) the aggregate of all consideration which constitutes interest
under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the
Loan Documents or agreements or otherwise in connection with the
Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled
automatically and if theretofore paid shall be credited by such
Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have
been or would thereby be paid in full, refunded by such Lender to
the Borrower); and (ii) in the event that the maturity of the
Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement
or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest
under law applicable to any Lender may never include more than
the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically by such Lender as of the date of
such acceleration or prepayment and, if theretofore paid, shall
be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or
agreed to be paid to any Lender for the use, forbearance or
detention of sums due hereunder shall, to the extent permitted by
law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the
maximum amount allowed by such applicable law. If at any time
and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate
applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less
than the amount of interest payable to such Lender computed at
the Highest Lawful Rate applicable to such Lender, then the
amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender
until the total amount of interest payable to such Lender shall
equal the total amount of interest which would have been payable
to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14.
Section 12.15 Confidentiality . In the event that
the Borrower provides to the Agent or the Lenders written
confidential information belonging to the Borrower, if the
Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders shall thereafter
maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining
its own confidential information. This obligation of confidence
shall not apply to such portions of the information which (i) are
in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their
obligation of confidence to the Borrower, (iii) are previously
known by the Agent or the Lenders from some source other than the
Borrower, (iv) are hereafter developed by the Agent or the
Lenders without using the Borrower's information, (v) are
hereafter obtained by or available to the Agent or the Lenders
from a third party who owes no obligation of confidence to the
Borrower with respect to such information or through any other
means other than through disclosure by the Borrower, (vi) are
disclosed with the Borrower's consent, (vii) must be disclosed
either pursuant to any Governmental Requirement or to Persons
regulating the activities of the Agent or the Lenders, (viii) as
may be required by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding
or (ix) as may be appropriate in the enforcement or exercise of
all rights and remedies under this Agreement or any Security
Instrument. Further, the Agent or a Lender may disclose any such
information to any other Lender, any Affiliate of any Lender, any
independent petroleum engineers or consultants, any independent
certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any Security
Instrument, including without limitation, the enforcement or
exercise of all rights and remedies thereunder, or any assignee
or participant (including prospective assignees and participants)
in the Loans; provided, however, that the Agent or the Lenders
shall receive (except from its legal counsel) a confidentiality
agreement from the Person to whom such information is disclosed
such that said Person shall have the same obligation to maintain
the confidentiality of such information as is imposed upon the
Agent or the Lenders hereunder. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall
cease three (3) years from the date the information was
furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year
period, to maintain the confidentiality of such information for
an additional three year period. The Borrower waives any and all
other rights it may have to confidentiality as against the Agent
and the Lenders arising by contract, agreement, statute or law
except as expressly stated in this Section 12.15.
Section 12.16 Effectiveness . This Agreement shall be
effective on the Closing Date (the "Effective Date").
Section 12.17 exculpation provisions . each of the
parties hereto specifically agrees that it has a duty to read
this Agreement and the Security Instruments and agrees that it is
charged with notice and knowledge of the terms of this Agreement
and the Security Instruments; that it has in fact read this
Agreement and is fully informed and has full notice and knowledge
of the terms, conditions and effects of this Agreement; that it
has been represented by independent legal counsel of its choice
throughout the negotiations preceding its execution of this
Agreement and the Security Instruments; and has received the
advice of its attorney in entering into this Agreement and the
Security Instruments; and that it recognizes that certain of the
terms of this Agreement and the Security Instruments result in
one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility
for such liability. each party hereto agrees and covenants that
it will not contest the validity or enforceability of any
exculpatory provision of this Agreement and the Security
Instruments on the basis that the party had no notice or
knowledge of such provision or that the provision is not
"conspicuous."
The parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER: McMoRan OIL & GAS LLC
By: /s/ Xxxxxxxx X. Xxxxx
----------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Treasurer
with copy to:
Jones, Walker,Waechter,Poitevent,
Carrere & Xxxxxxx, L.L.P.
000 Xx. Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Relationship Partner
LENDER AND AGENT: HIBERNIA NATIONAL BANK,
Individually and as Agent
By: /s/ Xxxxxxx Xxxxxx
------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
Lending Office for Base Rate Loans and
Eurodollar Loans and Address for Notice:
Hibernia National Bank
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Energy/Maritime
with copy to:
Xxxxxx Xxxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
