[EXECUTION COPY]
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CREDIT AGREEMENT
dated as of December 29, 2003
among
NEG OPERATING LLC
as the Borrower,
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
MIZUHO CORPORATE BANK, LTD.,
as Administrative Agent for the Lenders,
BANK OF TEXAS, N.A.
and
THE BANK OF NOVA SCOTIA,
as Co-Agents for the Lenders,
and
BANK OF TEXAS, N.A.,
as Collateral Agent for the Lenders
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MIZUHO CORPORATE BANK, LTD.,
as Sole Arranger and Bookrunner
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS ............................................................. 1
SECTION 1.1. Defined Terms .................................................... 1
SECTION 1.2. Use of Defined Terms ............................................. 21
SECTION 1.3. Accounting and Financial Determinations .......................... 21
ARTICLE II THE COMMITMENTS, BORROWING PROCEDURES, NOTES, LETTERS OF CREDIT AND
BORROWING BASE .......................................................... 22
SECTION 2.1. The Commitments .................................................. 22
SECTION 2.2. Reduction of Commitments ......................................... 24
SECTION 2.3. Borrowing Procedures for Loans ................................... 24
SECTION 2.4. Continuation and Conversion Elections ............................ 25
SECTION 2.5. Funding .......................................................... 25
SECTION 2.6. Notes ............................................................ 26
SECTION 2.7. Certain Provisions Relating to the Letters of Credit ............. 26
SECTION 2.8. Borrowing Base ................................................... 29
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES .............................. 33
SECTION 3.1. Repayments and Prepayments ....................................... 33
SECTION 3.2. Interest Provisions .............................................. 34
SECTION 3.3. Fees ............................................................. 35
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS .................................. 36
SECTION 4.1. Fixed Rate Lending Unlawful ...................................... 36
SECTION 4.2. Deposits Unavailable ............................................. 36
SECTION 4.3. Increased LIBO Rate Loan Costs, etc .............................. 36
SECTION 4.4. Funding Losses ................................................... 36
SECTION 4.5. Increased Capital Costs .......................................... 37
SECTION 4.6. Taxes ............................................................ 37
SECTION 4.7. Payments, Computations, etc ...................................... 38
SECTION 4.8. Sharing of Payments .............................................. 39
SECTION 4.9. Set off .......................................................... 39
SECTION 4.10. Use of Proceeds and Letters of Credit ............................ 39
SECTION 4.11. Maximum Interest ................................................. 40
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TABLE OF CONTENTS
(continued)
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ARTICLE V CONDITIONS TO BORROWING AND ISSUANCES OF LETTERS OF CREDIT .............. 41
SECTION 5.1. Initial Borrowing and Letters of Credit .......................... 41
SECTION 5.2. All Borrowings and Letters of Credit ............................. 47
ARTICLE VI REPRESENTATIONS AND WARRANTIES .......................................... 48
SECTION 6.1. Existence, etc ................................................... 48
SECTION 6.2. Due Authorization ................................................ 48
SECTION 6.3. Non-Contravention ................................................ 48
SECTION 6.4. Government Approval, Regulation, etc ............................. 49
SECTION 6.5. Financial Information ............................................ 49
SECTION 6.6. No Material Adverse Change ....................................... 49
SECTION 6.7. Litigation, Labor Controversies, etc ............................. 49
SECTION 6.8. Subsidiaries ..................................................... 49
SECTION 6.9. Location of Business and Offices ................................. 49
SECTION 6.10. Properties, etc .................................................. 50
SECTION 6.11. Restriction on Liens ............................................. 50
SECTION 6.12. Taxes ............................................................ 51
SECTION 6.13. Insurance ........................................................ 51
SECTION 6.14. Investment Company Act ........................................... 51
SECTION 6.15. Public Utility Holding Company Act ............................... 51
SECTION 6.16. Pension and Welfare Plans ........................................ 51
SECTION 6.17. Environmental Warranties ......................................... 51
SECTION 6.18. Regulation U ..................................................... 53
SECTION 6.19. Accuracy of Information .......................................... 53
SECTION 6.20. Defaults ......................................................... 53
SECTION 6.21. Compliance with Law .............................................. 53
SECTION 6.22. Direct Benefit ................................................... 53
SECTION 6.23. Use of Proceeds .................................................. 54
SECTION 6.24. Priority; Security Matters ....................................... 54
SECTION 6.25. Material Agreements .............................................. 54
SECTION 6.26. Hedging Agreements ............................................... 54
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TABLE OF CONTENTS
(continued)
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ARTICLE VII COVENANTS ............................................................... 54
SECTION 7.1. Affirmative Covenants ............................................ 54
SECTION 7.2. Negative Covenants ............................................... 63
ARTICLE VIII EVENTS OF DEFAULT ....................................................... 70
SECTION 8.1. Listing of Events of Default ..................................... 70
SECTION 8.2. Action if Bankruptcy ............................................. 73
SECTION 8.3. Action if Other Event of Default ................................. 73
SECTION 8.4. Application of Proceeds .......................................... 73
ARTICLE IX THE AGENTS AND THE ISSUER ............................................... 74
SECTION 9.1. Actions .......................................................... 74
SECTION 9.2. Funding Reliance, etc ............................................ 75
SECTION 9.3. Exculpation ...................................................... 75
SECTION 9.4. Successors ....................................................... 76
SECTION 9.5. Extensions of Credit by the Agents and the Issuer ................ 76
SECTION 9.6. Credit Decisions ................................................. 77
SECTION 9.7. Copies, etc ...................................................... 77
ARTICLE X MISCELLANEOUS PROVISIONS ................................................ 77
SECTION 10.1. Waivers, Amendments, etc ......................................... 77
SECTION 10.2. Notices .......................................................... 78
SECTION 10.3. Payment of Costs and Expenses .................................... 78
SECTION 10.4. Indemnification .................................................. 79
SECTION 10.5. Survival ......................................................... 80
SECTION 10.6. Collateral Matters; Hedging Agreements ........................... 80
SECTION 10.7. Severability ..................................................... 80
SECTION 10.8. Headings ......................................................... 80
SECTION 10.9. Execution in Counterparts, Effectiveness, etc .................... 81
SECTION 10.10. Governing Law; Entire Agreement .................................. 81
SECTION 10.11. Successors and Assigns ........................................... 81
SECTION 10.12. Sale and Transfer of Loans and Note; Participations in Loans
and Note ......................................................... 81
SECTION 10.13. Other Transactions ............................................... 83
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TABLE OF CONTENTS
(continued)
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SECTION 10.14. Confidentiality ................................................. 83
SECTION 10.15. Non-Recourse to Officers and Directors .......................... 84
SECTION 10.16. Forum Selection and Consent to Jurisdiction ..................... 85
SECTION 10.17. Waiver of Jury Trial ............................................ 85
SECTION 10.18. No Oral Agreements .............................................. 86
SCHEDULE I - Disclosure Schedule
SCHEDULE 2.1 - Lenders' Commitments
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E - Form of Opinion of Counsel
EXHIBIT F-1 - Form of NEG Holding Guaranty
EXHIBIT F-2 - Form of Subsidiary Guaranty
EXHIBIT G - Form of Pledge Agreement and Irrevocable
Proxy
EXHIBIT H - Form of Security Agreement
EXHIBIT I - Form of Mortgage
EXHIBIT J - Form of Additional Lender Certificate
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 29, 2003, is among NEG
OPERATING LLC, a Delaware limited liability company (the "Borrower"), the
various financial institutions as are or may become parties hereto
(collectively, the "Lenders"). MIZUHO CORPORATE BANK, LTD., as administrative
agent for the Lenders (in such capacity together with any successors thereto,
the "Administrative Agent"), THE BANK OF NOVA SCOTIA and BANK OF TEXAS, N.A., as
co-agents for the Lenders (each in such capacity, a "Co-Agent" and together the
"Co-Agents," together with any successors thereto) and BANK OF TEXAS, N.A., as
collateral agent for the Lenders (in such capacity together with any successors
thereto, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make loans to the
Borrower from time to time on a revolving basis and provide other financial
accommodations as described herein, subject to the terms and conditions hereof;
and
WHEREAS, the Lenders are willing to provide such Loans and other
financial accommodations to the Borrower on the terms and conditions hereof.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings:
"Additional Lender Certificate" is defined in Section 2.1.6.
"Adjusted LIBO Rate" means, with respect to any LIBO Rate Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 9.4.
"Affiliate" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with, such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote ten percent (10%) or more of the Equity Interests (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners; or (b) to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise.
"Agents" means each of the Administrative Agent, each Co-Agent and the
Collateral Agent.
"Agreement" means this Credit Agreement, as it may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Rate most
recently determined by the Administrative Agent plus 1/2 of 1%. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective from and including the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Rate for any reason, including, without limitation, the
inability or failure of the Administrative Agent to obtain sufficient bids or
publications in accordance with the terms hereof, the Alternate Base Rate shall
be the Prime Rate until the circumstances giving rise to such inability no
longer exist.
"Applicable Margin" means, on any date, with respect to any LIBO Rate
Loans, Base Rate Loans or any Commitment Fees then outstanding or payable
hereunder, as applicable, the applicable per annum percentage set forth below
under the caption "LIBO Rate Loans," "Base Rate Loans" or "Commitment Fees," as
the case may be, based on the Borrowing Base Utilization on such date:
Borrowing Base LIBO Rate Loans Base-Rate Loans Commitment Fees
Utilization (in basis points) (in basis points) (in basis points)
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<33% 175.0 75.0 50.0
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> or = 33% and < 66% 200.0 100.0 50.0
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> or = 66% and < 85% 225.0 125.0 50.0
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> or = 85% 250.0 150.0 50.0
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For purposes of the foregoing, any change in the Applicable Margin will
occur automatically without prior notice upon any change in the Borrowing Base
Utilization. Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.
"Approved Engineer" means XxXxxxxx and MacNaughton, Netherland, Xxxxxx
& Associates, Inc. or Xxxxxx Xxxx, LLC, or such other firm of independent
petroleum engineers expert in the matters required to be performed in connection
with the preparation and delivery or auditing of a Reserve Report and
satisfactory to the Engineering Banks.
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"Arnos Credit Facility" means that certain Restated Loan Agreement
dated as of August 29, 1996, as amended, supplemented, restated or otherwise
modified from time to time, among NEG, as predecessor-in-interest to the
Borrower, NEG-OK and Boomer Marketing Corporation, as guarantors, the other
lenders and agents party thereto from time to time, and Arnos Corp., as lender
by succession-in-interest.
"Arranger" means Mizuho Corporate Bank, Ltd.
"Assignee Lender" is defined in Section 10.12.1.
"Authorized Officer" means, as to the Borrower or any other Obligor,
those of its officers whose signatures and incumbency shall have been certified
to the Administrative Agent and the Lenders pursuant to Section 5.1.2.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" is defined in the preamble.
"Borrowing" means each extension of credit made by the Lenders (or by
the Issuer in the case of Letters of Credit) by way of Letters of Credit or
Loans of the same type, having the same Interest Period made, converted or
continued by the same Lenders on the same Business Day pursuant to the same
Borrowing Request or pursuant to the same Letter of Credit.
"Borrowing Base" means the "Borrowing Base" as determined pursuant to
Section 2.8.
"Borrowing Base Deficiency" means the amount by which (a) the
outstanding aggregate principal amount of all Loans and Letter of Credit
Liabilities exceeds (b) the Borrowing Base then in effect.
"Borrowing Base Deficiency Determination" means the first date on which
the Administrative Agent delivers notice to the Borrower that a Borrowing Base
Deficiency has occurred and is continuing.
"Borrowing Base Properties" is defined in Section 2.8.2.
"Borrowing Base Utilization" means, at any time of determination, an
amount (expressed as a percentage) equal to the quotient of (a) (i) the total
principal amount of all outstanding Loans plus (ii) all Letter of Credit
Liabilities at such time (after giving effect to all Borrowings made on such
date), divided by (b) the Borrowing Base then in effect.
"Borrowing Request" means a written request by an Authorized Officer of
the Borrower for a Borrowing in accordance with Section 5.2.2, substantially in
the form of Exhibit B hereto.
"Business Day" means (a) any day that is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
New York, New York, London, England, or Houston, Texas; and (b) relative to the
making, continuing, prepaying or
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repaying of any LIBO Rate Loans, any day on which dealings in Dollars are
carried on in the New York interbank market.
"Capitalization" means the sum, for any period of determination thereof
and without duplication, of (a) Indebtedness of the Borrower and its
Subsidiaries plus (b) Stockholders' Equity.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time: (a) any evidence of
Indebtedness, maturing not more than one year after such time, issued or
guaranteed by the United States Government; (b) commercial paper, maturing not
more than nine (9) months from the date of issue, which is issued by (i) a
corporation (other than an Affiliate of the Borrower; or any other Obligor)
organized under the laws of any state of the United States or of the District of
Columbia and rated A-1 by Standard & Poor's Corporation or P-1 by Xxxxx'x
Investors Service, Inc., or (ii) any Lender (or its holding company); (c) any
certificate of deposit or bankers acceptance, maturing not more than one year
after such time, which is issued by either (i) a commercial banking institution
that is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000, or (ii) any Lender;
or (d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in clause (c)(i))
which (i) is secured by a fully perfected security interest in any obligation of
the type described in any of clauses (a) through (c); and (ii) has a market
value at the time such repurchase agreement is entered into of not less than
100% of the repurchase obligation of such Lender (or other commercial banking
institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the occurrence of any of the following events
at any time: (a) NEG Holding shall cease to own 100% of the issued and
outstanding Equity Interests of the Borrower; (b) any Person or "group" (within
the meaning of Section 13(d) or 14(d) of the Exchange Act) shall obtain the
power (whether or not exercised) to elect the Borrower's managing member; (c)
NEG Holding shall cease being the managing member of the Borrower; (d) a plan is
adopted relating to the liquidation or dissolution of any of the Borrower, Xxxxx
National, NEG Holding, NEG or Xxxxxx; (e) the Borrower shall consolidate with or
merge into any other Person or convey, transfer or lease substantially all of
its Properties to any Person, or (other than as permitted by Section 7.2.8) any
other Person shall consolidate with or merge into the Borrower; (f) NEG and
Xxxxxx together, or any Person(s) the issued and outstanding Equity
4
Interests of which are directly or indirectly 100% owned by Xxxx Xxxxx, shall
cease to own 100% of the Equity Interests of NEG Holding; (g) Xxxx Xxxxx and his
Affiliates shall cease to own all of the Equity Interests of Xxxxxx; (h) Xxxx
Xxxxx and his Affiliates shall cease to own at least forty percent (40%) of the
Equity Interests of NEG; and (i) except as permitted by Section 7.2.8, the
Borrower shall cease to own, directly or indirectly, 100% of the Equity
Interests of any Subsidiary.
"Co-Agent" and "Co-Agents" are defined in the preamble and includes
each other Person as shall have subsequently been appointed as a successor
Co-Agent pursuant to Section 9.4.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Collateral" means any and all "Collateral" or "Mortgaged Property," as
defined in any of the Security Documents.
"Collateral Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Collateral
Agent pursuant to Section 9.4.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's (x) Loans and (y) Letter of Credit Liabilities hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.2, (b)
increased from time to time pursuant to Section 2.1.6, (c) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.12, and (d) terminated pursuant to Sections 8.2 or 8.3. The initial
amount of each Lender's Commitment is set forth on Schedule 2.1, or opposite
such Lender's name on the signature page of any Lender Assignment Agreement to
which such Lender is a party. The term "Commitments" means the aggregate
Commitments of the Lenders hereunder. The initial aggregate amount of the
Commitments of the Lenders is $100,000,000.
"Commitment Letter" means that certain commitment letter dated
September 19, 2003, between the Borrower and the Administrative Agent.
"Commitment Termination Event" means (a) the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.8 with respect to the
Borrower, any of its Subsidiaries or any other Obligor; or (b) the occurrence
and continuance of any other Event of Default and either (i) the declaration of
the Loans to be due and payable pursuant to Section 8.3, or (ii) in the absence
of such declaration, the giving of notice by the Administrative Agent, acting at
the direction of the Majority Lenders, to the Borrower that the Commitments have
been terminated.
"Consolidated Current Assets" means, at any particular time, (i) all
amounts that, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
(provided, however, that current assets shall not include non-cash assets
described in, and calculated pursuant to, FASB 133, 142, 143 and 144) plus (ii)
Unused Availability.
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"Consolidated Current Liabilities" means, at any particular time, all
amounts that, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries; provided, however, that current liabilities shall not include (i)
the current portion of long-term Indebtedness under this Agreement and the other
Loan Documents and (ii) liabilities described in, and calculated pursuant to,
FASB 133, 142, 143 and 144.
"Consolidated Net Income" means with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein) the following: (i) the net income of any Person in which the Borrower
or any Consolidated Subsidiary has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
the Borrower and its Consolidated Subsidiaries in accordance with GAAP), except
to the extent of the amount of dividends or distributions actually paid in such
period by such other Person to the Borrower or to a Consolidated Subsidiary, as
the case may be, (ii) the net income (but not loss) of any Consolidated
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at
the time permitted by operation of the terms of its Organic Documents or any
agreement, instrument or Governmental Rule applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited (other than under
restrictions or prohibitions that the Borrower or a Wholly-Owned Subsidiary of
the Borrower may waive, in its sole discretion), in each case determined in
accordance with GAAP, (iii) any extraordinary gains or losses, (iv) the
cumulative effect of a change in accounting principles, (v) any gains or losses
attributable to writeups or write downs of assets; and (vi) non-cash gains and
losses, including, without limitation, FASB 133, 142, 143 and 144 non-cash gains
and losses.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP. Unless otherwise indicated,
each reference to the term "Consolidated Subsidiary" means a Subsidiary
consolidated with the Borrower.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
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"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Current Ratio" means, at any date of determination, the ratio of (a)
Consolidated Current Assets to (b) Consolidated Current Liabilities.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Administrative Agent and
the Majority Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto. A Lender may have separate Domestic Offices for purposes of
making, maintaining or continuing, as the case may be, Base Rate Loans or its
participation in Letters of Credit.
"EBITDAX" means, for any period of determination thereof, (a) the sum,
without duplication, of the amounts for such period of Consolidated Net Income
plus Total Interest Expense, plus depreciation, depletion and amortization
expense, plus federal and state income taxes, plus other non-cash charges and
expenses deducted from revenues in determining net income, minus (b) capital
expenditures (but excluding costs and expenses incurred in connection with
acquisitions and restructuring charges), all as determined on a consolidated
basis for the Borrower and its Consolidated Subsidiaries; provided that any
calculation of EBITDAX shall be adjusted to give reasonable effect to the impact
of pro forma operating results (which results shall be based on historical
performance) from acquisitions and/or divestitures that are individually valued
in excess of $2,000,000.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.9.
"Effectiveness Notice" means a notice and certificate of the Borrower
properly executed by an Authorized Officer of the Borrower addressed to the
Lenders and delivered to the Administrative Agent whereby the Borrower certifies
satisfaction or waiver of all the conditions precedent to the effectiveness
under Section 5.1.
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"Engineering Banks" means the Administrative Agent and each of the
Co-Agents.
"Environmental Laws" means all applicable federal, state or local
Governmental Rules pertaining to health or the environment in effect in any and
all jurisdictions in which the Borrower or any Subsidiary or other Obligor is
conducting or at any time has conducted business, or where any Property of the
Borrower or any Subsidiary or other Obligor is located, including, without
limitation, OPA, the Clean Air Act, as amended, CERCLA, 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, as amended
("RCRA"), 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 term "release" (or "threatened release") shall
have the meaning specified in CERCLA, and the term "disposal" (or "disposed")
shall have the meaning specified in RCRA; provided, however, that (a) 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 (b) to the extent the laws of the state in
which any Property of the Borrower or any Subsidiary or any other Obligor is
located establish a meaning for "oil," "release," or "disposal" that is broader
than that specified in either OPA, CERCLA or RCRA, such broader meaning shall
apply.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment, or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of the capital stock, partnership
interests, membership interest in a limited liability company, beneficial
interests in a trust or other equity interests in the Borrower or any Subsidiary
(unless the context requires otherwise) or any warrants, options or other rights
to acquire such interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor provision thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (a) the weighted average of
the rates on overnight federal
8
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York; or (b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Mizuho from three federal funds brokers of recognized standing
selected by it.
"Fiscal Quarter" means any calendar quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve (12) consecutive calendar
months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g. the "2003 Fiscal Year") refer to the
Fiscal Year ending on the December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Xxxxxx" means Xxxxxx Partners, a New York general partnership.
"Governmental Approval" means (a) any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, waiver, exemption, filing,
variance, claim, order, judgment or decree of, or with, (b) any required notice
to, (c) any declaration of or with, or (d) any registration by or with, any
Governmental Authority.
"Governmental Authority" means the government of the United States or
any other nation or country or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Governmental Rule" means any statute, law, regulation, ordinance,
rule, judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, requirement of, or other governmental restriction or any
similar binding form of decision of or determination by, or any binding
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.
"Guarantor" means NEG Holding and each Subsidiary of the Borrower, each
individually a Guarantor and collectively, the "Guarantors."
"Guaranty" means, collectively, (i) the NEG Holding Guaranty and (ii)
each Subsidiary Guaranty. The term "Guaranties" shall include each and every
Guaranty executed and delivered by a Guarantor hereunder.
"Hazardous Material" means (a) any "hazardous substance," as defined by
CERCLA (other than as set forth in clause (c)); (b) any "hazardous waste," as
defined by the RCRA (other
9
than as set forth in clause (c)); (c) any petroleum, petroleum products or
petroleum distillates and associated oil or natural gas exploration, production
and development wastes that are not exempted or excluded from being defined as
"hazardous substances", "hazardous materials", "hazardous wastes" and "toxic
substances" under any Environmental Laws; or (d) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material or substance within the meaning
of any other applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as amended or hereafter amended.
"Hedging Agreements" means 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.
"Hedging Obligations" means, with respect to any Person, all
liabilities (including but not limited to obligations and liabilities arising in
connection with or as a result of early or premature termination of a Hedging
Agreement, whether or not occurring as a result of a default thereunder) of such
Person under a Hedging Agreement.
"Highest Lawful Rate" is defined in Section 4.11.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now owned or hereafter acquired by the Borrower or any of its Subsidiaries in
any and all oil, gas and other liquid or gaseous hydrocarbon properties and
interests, including without limitation, mineral fee or lease interests,
production sharing agreements, concession agreements, license agreements,
service agreements, risk service agreements or similar Hydrocarbons interests
granted by an appropriate Governmental Authority, farmout, overriding royalty
and royalty interests, net profit interests, oil payments, production payment
interests and similar interests in Hydrocarbons, including any reserved or
residual interests of whatever nature.
"Hydrocarbons" means, collectively, oil, gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all products
refined, separated, settled and dehydrated therefrom and all products refined
therefrom, including, without limitation, kerosene, liquefied petroleum gas,
refined lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium,
sulfur and all other minerals.
"including" means including without limiting the generality of any
description preceding such term. For purposes of this Agreement and each other
Loan Document, the parties hereto agree that the rule of ejusdem generis shall
not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication: (a) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
obligations, contingent or otherwise, relative to the face amount of all letters
of credit, whether or not drawn, and banker's acceptances issued for the account
of such Person; (c) all obligations of such Person as lessee under leases which
have been
10
or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities; (d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be determined; (e) whether or
not so included as liabilities in accordance with GAAP, all obligations of such
Person to pay the deferred purchase price of Property or services, and
indebtedness (excluding prepaid interest thereon) secured by a Lien on Property
owned or being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;
(f) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person under any "off balance sheet" transactions, synthetic
leases or operating leases; and (g) all Contingent Liabilities of such Person
with respect to any of the foregoing. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
"Indebtedness to be Repaid" is described in Item 7.2.2(b) of the
Disclosure Schedule.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Initial Reserve Reports" means collectively (a) the XxXxxxxx and
XxxXxxxxxxx Appraisal Report signed as of October 10, 2003, with respect to the
Oil and Gas Properties of the Borrower and its Subsidiaries located in Pecos
County, Texas, as of September 1, 2003, (b) the Netherland, Xxxxxx & Associates,
Inc. reserve report dated as of February 13, 2003 with respect to the Oil and
Gas Properties of the Borrower and its Subsidiaries located in the United States
of America as of December 31, 2002, and (c) the Xxxxxx Xxxx, LLC reserve report
dated February 17, 2003 with respect to the Oil and Gas Properties of the
Borrower and its Subsidiaries located in Arkansas, Louisiana, Mississippi,
Oklahoma and Texas as of December 31, 2002, which reserve reports shall have
been audited by an Approved Engineer and a true and correct copy of each of
which have been delivered to the Engineering Banks and the Lenders.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and shall end on (but exclude) the day which numerically corresponds to such
date one, two or three months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in either case as
the Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that (a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration dates
occurring on more than five (5) different dates; (b) Interest Periods commencing
on the same date for Loans comprising part of the same Borrowing shall be of the
same duration; (c) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and (d) no
Interest Period may end later than the date set forth in clause (a) of the
definition of "Revolving Credit Termination Date".
11
"Investment" means, relative to any Person, (a) the making of any
deposit with, or advance, loan or extension of credit by such Person to any
other Person (including the purchase of Property from another Person subject to
an understanding or agreement, contingent or otherwise, to resell such Property
to such Person, but excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business); (b) any
Contingent Liability of such Person; and (c) any acquisition (whether for cash,
property, services, securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale). The
amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Issuer" means any Lender which agrees to issue Letters of Credit which
is acceptable to the Borrower and the Administrative Agent. An Issuer may, in
its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of such Issuer, in which case the term "Issuer" shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit D hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 2.1.2.
"Letter of Credit Commitment Amount" means at any time the lesser of
(a) $15,000,000, as such amount may be reduced from time to time pursuant to
Section 2.2 and (b) the Borrowing Base then in effect.
"Letter of Credit Liabilities" means, at any time, the sum of (a) the
aggregate undrawn face amount of all outstanding Letters of Credit at such time
plus (b) the aggregate unpaid amount, if any, of all obligations of the Borrower
to reimburse the Issuer and the Lenders with respect to drawings under all
Letters of Credit.
"Letter of Credit Request" means a letter of credit request and
certificate duly executed by an Authorized Officer of the Borrower in form and
substance acceptable to the Administrative Agent.
"LIBO Rate" means, as to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the offered quotations appearing on Telerate Page 3750,
or, if such Telerate Page is not available, on the LIBO page on the Reuters
Screen (or on any page that can reasonably be considered a replacement page) at
approximately 11:00 a.m. New York time (or as soon thereafter as practicable)
two (2) Business Days prior to the beginning of such Interest Period for Dollar
deposits having a term comparable to such Interest Period. If no Telerate Page
3750 or Reuters Screen LIBO page (or replacement page) is available, then the
"LIBO Rate," as to any Interest
12
Period for LIBO Rate Loans, shall be equal to the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to Mizuho's LIBOR Office in
the New York interbank market as at or about 11:00 a.m. New York time (or as
soon thereafter as practicable) two (2) Business Days prior to the beginning of
such Interest Period for delivery on the first day of such Interest Period, and
in an amount approximately equal to the amount of Mizuho's LIBO Rate Loan and
for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the Adjusted LIBO Rate.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien, charge or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment, bailment or margin account for security purposes or (ii) production
payments and the like which constitute Indebtedness, 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 that 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" is defined in Section 2.1.1.
"Loan Document" means, collectively, (a) this Agreement, each Security
Document, the Commitment Letter, each Note, each Letter of Credit, each Letter
of Credit Request, each Hedging Agreement between the Borrower or any of its
Subsidiaries and any Lender, or any Affiliate of any thereof, and each Borrowing
Request, together, in each case, with all exhibits, schedules and attachments
thereto; and (b) all other agreements, documents or instruments from time to
time executed or delivered in connection with or pursuant to any of the
foregoing.
"Majority Lenders" means the Lenders at any time holding Commitments in
the aggregate greater than or equal to sixty-six and 2/3 percent (66 2/3%) of
the Commitments under the Loan Documents, or, if the Commitments have been
terminated, an aggregate amount greater than or equal to sixty-six and 2/3
percent (66 2/3%) of the then current (a) aggregate principal amount of all
outstanding Loans and (b) all Letter of Credit Liabilities.
13
"Margin Stock" means "margin stock" within the meaning of Regulation U.
"Material Adverse Effect" means any material and adverse effect (a) on
(i) the business, condition (financial or otherwise), operations or properties
of the Borrower or the Borrower and its Subsidiaries (taken as a whole) or (ii)
the ability of the Borrower or any other Obligor to perform its obligations
under any of the Loan Documents to which it is a party or (b) that purports to
affect the legality, validity or enforceability of this Agreement, the Notes or
any other Loan Documents.
"Minimum Average Price" means, with respect to volumes of natural gas
subject to Hedging Agreements entered into by the Borrower or its Subsidiaries,
a number calculated by dividing (a) the aggregate projected natural gas revenues
in any given year (as set forth in Sections 5.1.19 and 7.1.12) under such
Hedging Agreements determined using either "NYMEX floor" or "NYMEX fixed"
natural gas prices and (b) the hedged volume of natural gas in such given year.
"Mizuho" means Mizuho Corporate Bank, Ltd.
"MMBtu" means one million British thermal units.
"Mortgage" means a Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement dated as of the Effective Date or otherwise
delivered pursuant to the Loan Documents, substantially in the form of Exhibit I
hereto, executed and delivered by the Borrower or any Obligor, as the case may
be, as amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms of this Agreement and the other Loan Documents. The
term "Mortgage" shall include each and every mortgage and mortgage supplement
after execution and delivery pursuant hereto.
"Mortgaged Property" means any Oil and Gas Property with respect to
which a Lien is granted pursuant to a Mortgage.
"NEG" means National Energy Group, Inc., a Delaware corporation.
"NEG Guaranteed Payment" means any "Guaranteed Payment" (as defined in
the NEG Holding Operating Agreement) payable to NEG by NEG Holding pursuant to
Section 6.5 of the NEG Holding Operating Agreement.
"NEG Holding" means NEG Holding LLC, a Delaware limited liability
company.
"NEG Holding Guaranty" means the Guaranty dated as of the Effective
Date, executed by NEG Holding in favor of the Administrative Agent,
substantially in the form of Exhibit F-1 attached hereto, together with any
amendments, renewals, restatements or other modifications thereof from time to
time.
"NEG Holding Operating Agreement" means that certain Operating
Agreement for NEG Holding LLC dated as of May 1, 2001, by and between NEG and
Xxxxxx.
14
"NEG Management Agreement" means that certain Management Agreement
dated as of May 1, 2001, by and between NEG and the Borrower, as amended by
that certain First Amendment to Management Agreement dated as of December 31,
2002, by and among NEG, the Borrower and Edgemont Limited Partnership, a
Delaware limited partnership.
"NEG Management Fee" means any "Fee" as defined in Section 3.1 of the
NEG Management Agreement.
"NEG Operating LLC Operating Agreement" means that certain Operating
Agreement of NEG Operating LLC dated as of May 1, 2001, executed by NEG Holding.
"Net Cash Proceeds" means, with respect to any sale or other
disposition, the cash proceeds (including cash equivalents and any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of such sale or other disposition received by the
Borrower or any of its Subsidiaries, net of all reasonable attorneys' fees,
accountants' fees, investment banking fees and other customary fees and
commissions actually incurred by the Borrower or any of its Subsidiaries and
documented in connection therewith.
"Note" means a promissory note of the Borrower payable to any Lender,
substantially in the form of Exhibit A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"Obligations" means (without duplication), at any time, the sum of (a)
all obligations (monetary or otherwise) of the Borrower and each other Obligor
arising under or in connection with this Agreement, the Notes, the Letters of
Credit and each other Loan Document plus (b) all Hedging Obligations in
connection with all Hedging Agreements between the Borrower or any of its
Subsidiaries and any Lender or any Affiliate of a Lender plus (c) all other
obligations (monetary or otherwise) of the Borrower or any Subsidiary to any
Lender or any Agent, whether or not contingent, arising under or in connection
with any of the Loan Documents.
"Obligor" means the Borrower, any Guarantor or any other Person (other
than any of the Agents, the Issuer or any Lender) obligated under any Loan
Document.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation, management and disposition of Hydrocarbon
Interests and Hydrocarbons; (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such Hydrocarbon
Interests or such other interests, including, without limitation, the marketing
of Hydrocarbons obtained from unrelated Persons; (c) any business relating to
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products produced
in association therewith; and (d) any activity that is ancillary or necessary or
desirable to facilitate the activities described in clauses (a) through (c) of
this definition.
"Oil and Gas Properties" means Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future utilization, pooling agreements and declarations of pooled
units and the units created thereby (including
15
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 Interest;
all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, the lands covered thereby and all oil
in tanks and all rents, issues, profits, proceeds, products, revenues and other
income from or attributable to the Hydrocarbon Interests: all tenements,
hereditaments, appurtenances and Property in any manner appertaining, belonging,
affixed or incidental to the Hydrocarbon Interests, Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil xxxxx, gas xxxxx, 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.
"OPA" means the Oil Pollution Act of 1990, as amended from time to
time.
"Organic Documents" means, for any Person, its articles of
incorporation, association, formation or incorporation (or comparable document),
its by-laws, certificate of formation, regulations, limited liability company
agreement, or similar governing document and all shareholder, membership,
partnership or other similar agreements, voting trusts and similar arrangements.
"Participant" is defined in Section 10.12.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as defined in section 3(2) of
ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as
defined in section 4001(a)(3) of ERISA), and to which the Borrower or any
corporation, trade or business that is, along with the Borrower, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"Percentage" means, with respect to any Lender, the percentage of the
Commitments represented by such Lender's Commitment. If the Commitments have
terminated or expired, the Percentages shall be determined based upon the most
recent Commitments, giving effect to any
16
assignments made in accordance with Section 10.12 or any increases or decreases
in Commitments made in accordance with this Agreement.
"Permitted NEG Affiliate Transactions" means transactions with
Affiliates permitted as of the Effective Date pursuant to the NEG Operating LLC
Operating Agreement, the NEG Holding Operating Agreement and the NEG Management
Agreement.
"Person" means any natural person, corporation, limited liability
company, partnership, firm, association, trust, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means any Pledge Agreement and Irrevocable Proxy
dated as of the Effective Date or otherwise delivered pursuant to the Loan
Documents, substantially in the form of Exhibit G hereto, as amended,
supplemented, restated or otherwise modified from time to time in accordance
with the Loan Documents. The term "Pledge Agreements" shall include each and
every Pledge Agreement and Irrevocable Proxy executed and delivered pursuant to
the Loan Documents.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City. Without notice to the Borrower or any other
Person, the Prime Rate shall change automatically from time to time as and in
the amount by which said prime rate shall fluctuate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Administrative Agent may make commercial
loans and other loans at rates of interest at, above or below the Prime Rate.
For purposes of this Agreement, any change in the Alternate Base Rate due to a
change in the Prime Rate shall be effective on the date such change in the Prime
Rate is announced.
"Property" means all property of any kind, name or nature, real or
personal, tangible or intangible, legal or equitable, whether now owned or
hereafter acquired.
"Proven Reserves" means collectively, "proved oil and gas reserves,"
"proved developed producing oil and gas reserves," "proved developed
non-producing oil and gas reserves" (consisting of proved developed shut-in oil
and gas reserves and proved developed behind pipe oil and gas reserves), and
"proved undeveloped oil and gas reserves," as such terms are defined by the SEC
in its standards and guidelines.
"Quarterly Payment Date" means the last day of each March, June,
September and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Recommended Borrowing Base Determination" is defined in Section 2.8.2.
"Regulation U" means any of Regulations T, U or X of the F.R.S. Board
from time to time in effect, and any successor or other regulations or official
interpretations of the F.R.S. Board or any successor Person, relating to the
extension of credit for the purpose of purchasing
17
or carrying Margin Stock and that is applicable to member banks of the Federal
Reserve System or any successor Person.
"Release" means a "release," as defined in CERCLA.
"Required Lenders" means the Lenders at any time holding Commitments in
the aggregate greater than or equal to seventy-five percent (75%) of the
Commitments under the Loan Documents, or, if the Commitments have been
terminated, an aggregate amount greater than or equal to seventy-five percent
(75%) of the then current (a) aggregate principal amount of all outstanding
Loans and (b) all Letter of Credit Liabilities.
"Reserve Report" means the Initial Reserve Reports and any other
Reserve Report(s) delivered pursuant to this Agreement, which shall be in form
and substance satisfactory to the Engineering Banks, prepared at the sole cost
and expense of the Borrower by (a) an Approved Engineer or (b) the Borrower's
chief petroleum engineer, as the case may be. Each Reserve Report delivered in
connection with (i) an annual scheduled determination of the Borrowing Base
shall be accompanied by a certificate from an Approved Engineer certifying in
writing that such Reserve Report was prepared in accordance with the normal and
customary methods and procedures used by such Approved Engineer for evaluating
oil and gas reserves; (ii) a semiannual scheduled determination of the Borrowing
Base shall be accompanied by a certificate from the Borrower's internal
engineers certifying, in writing, that such Reserve Report was prepared in
accordance with the normal and customary methods and procedures used by the
Approved Engineer for evaluating oil and gas reserves; and (iii) a discretionary
determination of the Borrowing Base pursuant to Sections 2.8.4 and 2.8.5 shall
be accompanied by a certificate from an Approved Engineer (unless the
Engineering Banks shall have previously consented in writing to a certificate
from the Borrower's internal engineers) certifying in writing that such Reserve
Report was prepared in accordance with the normal and customary methods and
procedures used by such Approved Engineer for evaluating oil and gas reserves.
Each Reserve Report shall evaluate Proven Reserves attributable to the Oil and
Gas Properties owned directly by the Borrower and its Subsidiaries as of the
immediately preceding December 31 or June 30, as the case may be, or the date
requested by the Engineering Banks as provided in Section 2.8.4. Each Reserve
Report shall set forth volumes, projections of the future rate of production,
Hydrocarbons prices, escalation rates, discount rate assumptions, and net
proceeds of production, present value of the net proceeds of production,
operating expenses and capital expenditures, in each case based upon updated
economic assumptions reasonably acceptable to the Engineering Banks.
"Revolving Credit Termination Date" means the earliest of (a) the
Stated Maturity Date; (b) the date on which the Commitments have terminated; and
(c) the date on which any Commitment Termination Event occurs. Upon the
occurrence of any event described in clause (c), the Commitments shall terminate
automatically and without further action.
"SEC" means the United States Securities and Exchange Commission and
any successor Governmental Authority.
"Security Agreement" means any Security Agreement executed and
delivered pursuant to Section 5.1.6, substantially in the form of Exhibit H
hereto, as amended, supplemented, restated
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or otherwise modified from time to time in accordance with the terms of this
Agreement and the other Loan Documents. The term "Security Agreements" shall
include each and every Security Agreement executed and delivered pursuant to the
Loan Documents.
"Security Document" means any Pledge Agreement, Guaranty, Security
Agreement or Mortgage, and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.1 or Section 7.1.7,
including without limitation (a) that certain Pledge Agreement executed and
delivered by Xxxxxx; (b) that certain Pledge Agreement executed and delivered by
NEG; (c) that certain Pledge Agreement executed and delivered by NEG Holding;
(d) that certain Pledge Agreement executed and delivered by the Borrower; (e)
that certain Guaranty executed and delivered by NEG Holding; (f) that certain
Guaranty executed and delivered by Xxxxx National; (g) that certain Security
Agreement executed and delivered by the Borrower; (h) that certain Security
Agreement executed and delivered by Xxxxx National; (i) that certain Mortgage
executed and delivered by the Borrower; and (j) any other Loan Document to
secure any of the Obligations, and all amendments, supplements, restatements or
other modifications made from time to time thereto, delivered pursuant to this
Agreement. "Security Documents" means, collectively, all of the foregoing.
"Xxxxx National" means Xxxxx National LLC, a Delaware limited liability
Company, and its successors and assigns.
"Solvent" means, with respect to any Person at any time, a condition
under which: (a) the fair saleable value of such Person's assets is, on the date
of determination, greater than the total amount of such Person's liabilities
(including contingent and unliquidated liabilities) at such time; (b) such
Person is able to pay all of its liabilities as such liabilities mature; (c)
such Person does not intend to, and does not, believe that it will, incur debts
or liabilities beyond such Person's ability to pay such debts and liabilities as
they mature; and (d) such Person does not have unreasonably small capital with
which to conduct its business. For purposes of this definition (i) the amount of
a Person's contingent or unliquidated liabilities at any time shall be that
amount which, in light of all the facts and circumstances then existing,
represents the amount which can reasonably be expected to become an actual or
matured liability; (ii) the "fair saleable value" of an asset shall be the
amount which may be realized within a reasonable time either through collection
or sale of such asset at its regular market value; and (iii) the "regular market
value" of an asset shall be the amount which a capable and diligent business
person could obtain for such asset from an interested buyer who is willing to
purchase such asset under ordinary selling conditions.
"Stated Amount" has the meaning assigned to such term in the respective
Letter of Credit.
"Stated Maturity Date" means September 1, 2006.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the F.R.S. Board to which the Administrative Agent is subject,
with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
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referred to as "Eurocurrency Liabilities" in Regulation D of the F.R.S. Board).
Such reserve percentages shall include those imposed pursuant to such Regulation
D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Stockholders' Equity" means, as of the time of any determination
thereof IS to be made, the sum of the Borrower's Equity Interests (but excluding
treasury stock) and additional paid-in capital, plus retained earnings (minus
accumulated deficit), all as shown on the consolidated balance sheet of the
Borrower and its Subsidiaries and based on GAAP.
"Subordinated Debt" means all unsecured Indebtedness of the Borrower or
its Subsidiaries after the date of this Agreement for money borrowed which is
subordinated, in such amounts, and upon terms and conditions satisfactory to,
the Administrative Agent and the Lenders, in right of payment to the payment in
full in cash of all Obligations.
"Subsidiary" means, with respect to any Person (the "parent") at any
date any corporation, limited liability company, partnership (limited or
general), association or other entity (a) of which Equity Interests representing
more than 50% or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Unless otherwise indicated
herein, each reference to the term "Subsidiary" means a Subsidiary of the
Borrower.
"Subsidiary Guaranty" means a Guaranty, dated as of the Effective Date
or otherwise delivered pursuant to the Loan Documents, executed by Xxxxx
National in favor of the Administrative Agent and substantially in the form of
Exhibit F-2 attached hereto, together with any amendments, renewals,
restatements or other modifications thereof from time to time.
"Tangible Net Worth" means, at any date, the consolidated net worth of
the Borrower and its Consolidated Subsidiaries after subtracting therefrom the
aggregate amount of treasury stock, goodwill, deferred development costs,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names and all other intangible assets of the Borrower and its
Consolidated Subsidiaries classified as such under GAAP.
"Taxes" is defined in Section 4.6.
"Total Interest Expense" means with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (i) the
aggregate amount of all interest accrued (whether or not paid) on all
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis plus
(ii) the portion of any Capitalized Lease Liabilities allocable to interest
expense in accordance with GAAP. Total Interest Expense shall be calculated
quarterly at the end of each fiscal quarter on a rolling four quarter basis.
"Transfer" is defined in Section 7.2.10.
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"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"UCC Searches" means central and local current financing statement and
Lien searches from each state in which any Collateral or a Borrowing Base
Property is located, and such other jurisdictions as the Administrative Agent
may request, covering the Borrower and each Guarantor, together with copies of
all financing statements listed in such searches.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unused Availability" means at any time an amount equal to the excess
of (i) the Commitments less (ii) the sum of (a) outstanding Loans plus (b)
Letter of Credit Liabilities.
"Welfare Plan" means a "welfare plan," as defined in section 3(1) of
ERISA.
"Wholly-Owned Subsidiary" means, as to any Person, any Subsidiary of
which all of the outstanding shares of Equity Interests on a fully-diluted
basis, are owned by such Person or one or more of its Wholly-Owned Subsidiaries
or by such Person and one or more of its Wholly-Owned Subsidiaries. Unless
otherwise indicated, each reference to the "Wholly-Owned Subsidiary" means a
Wholly-Owned Subsidiary of the Borrower.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Letter of Credit Request, Continuation/Conversion
Notice, Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document. The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, provided such successors and
assigns are permitted by the Loan Documents, (c) the words "herein," "hereof,"
"hereto," "hereunder" and similar terms contained in this Agreement or any other
Loan Document refer to this Agreement or such other Loan Document, as the case
may be, as a whole and not to any particular Section, paragraph or provision of
this Agreement or such other Loan Document, and (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
SECTION 1.3. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under
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Section 7.2.4 and Section 7.2.13) shall be made, and all financial statements
required to be delivered hereunder or thereunder shall be prepared in accordance
with GAAP.
ARTICLE II
THE COMMITMENTS, BORROWING PROCEDURES, NOTES,
LETTERS OF CREDIT AND BORROWING BASE
SECTION 2.1. The Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally agrees
to make Loans and participate in Letters of Credit, and the Issuer agrees to
issue Letters of Credit, as described in this Section 2.1.
SECTION 2.1.1. Loan Commitment. Each Lender hereby severally agrees to
make loans to the Borrower (relative to such Lender, and of any type, each a
"Loan" and collectively its "Loans") from time to time on any Business Day
occurring prior to the Revolving Credit Termination Date, equal to its
Percentage of the aggregate amount of the Borrowing requested by the Borrower to
be made on such Business Day, such Loans being in an aggregate amount never to
exceed (a) the lesser of (i) the aggregate Commitments or (ii) the then-current
Borrowing Base less (b) outstanding Letters of Credit. The commitment of each
Lender described in this Section 2.1.1 is herein referred to as its
"Commitment." On the terms and conditions hereof, the Borrower may from time to
time borrow, prepay and reborrow Loans.
SECTION 2.1.2. Commitment to Issue Letters of Credit. The Issuer agrees
to issue under the several responsibilities of the Lenders in accordance with
their respective Percentages, from time to time from and after the Effective
Date and until the Revolving Credit Termination Date, one or more standby
letters of credit (herein collectively called the "Letters of Credit" and
individually called a "Letter of Credit") for the account of the Borrower and in
the name of the Borrower and for the general corporate purposes of the Borrower.
Each Letter of Credit shall be denominated in U.S. Dollars, shall be payable
only upon presentation of sight drafts or other forms of demand together with
any other documents which may be required to be presented at the time of any
drawing thereunder (the exact wording of any such documents, if any, having been
specified in, or attached as a copy to, the relevant Letter of Credit Request),
and shall be otherwise upon such terms as the Borrower may specify in a Letter
of Credit Request delivered to the Issuer at least five (5) Business Days (or
such shorter period as may be agreed among the Issuer, the Administrative Agent
and the Borrower) before the proposed date of issuance thereof. Each Letter of
Credit must be in form and substance satisfactory to the Issuer in its sole and
absolute discretion and shall have a fixed expiration date occurring not later
than one (1) year after the date of the issuance thereof; provided, however,
that in no event shall any Letter of Credit provide for an expiration that is
later than five (5) days prior to the Revolving Credit Termination Date. It is
understood by the parties hereto that for all purposes of this Agreement, each
renewal, if applicable, of a Letter of Credit shall be considered an issuance
thereof and the Borrower shall be required to comply with all the provisions of
this Agreement with respect to any such renewal to the same extent as if a new
Letter of Credit was being issued on such renewal date. Upon fulfillment of the
applicable conditions set forth in Article V with respect to such Letter of
Credit and subject to the terms hereof, the Issuer shall issue such Letter of
Credit promptly to the requested beneficiary and give to the Lenders prompt
written notice (in
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reasonable detail) of such issuance. Promptly after the issuance of or
amendment to a Letter of Credit, the Issuer shall notify the Administrative
Agent and the Borrower, in writing, of such issuance or amendment, and such
notice shall be accompanied by a copy of such issuance or amendment. Upon
receipt of such notice, the Administrative Agent shall notify the Lenders in
writing of such issuance or amendment and, upon receipt of written request from
a Lender, shall provide such Lender with copies of such issuance or amendment.
SECTION 2.1.3. Purchase and Sale of Participations in Each Letter of
Credit. Upon the terms and subject to the conditions of this Agreement, each
Lender hereby purchases from the Issuer, and the Issuer hereby sells to such
Lender, an undivided participation in and to each Letter of Credit and the
obligations of the Borrower under this Agreement with respect thereto equal to
its respective Percentage. The Borrower agrees that each Lender purchasing a
participation from the Issuer pursuant to this Section 2.1.3 may exercise all
its rights to payment against the Borrower including the right of setoff, with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
SECTION 2.1.4. Lenders Not Permitted or Required to Make Loans.
Notwithstanding anything herein or in any other Loan Document to the contrary,
no Lender shall be permitted or required to make any Loan and the Borrower shall
not be permitted to reduce the Commitments pursuant to Section 2.2 if, after
giving effect thereto, (a) the aggregate outstanding principal amount of all
Loans of all Lenders plus the aggregate amount of all Letter of Credit
Liabilities would exceed the lesser of (i) the Commitments or (ii) the
then-current Borrowing Base, or (b) the aggregate outstanding principal amount
of all Loans plus the aggregate amount of all of the Letter of Credit
Liabilities of such Lender would exceed such Lender's Percentage of the
Commitments.
SECTION 2.1.5. Issuer Not Permitted or Required to Issue Letters of
Credit. The Issuer shall not be permitted or required to issue any Letter of
Credit, nor shall the Borrower be permitted to reduce the Letter of Credit
Commitment Amount pursuant to Section 2.2 if, after giving effect thereto, (a)
the aggregate amount of all Letter of Credit Liabilities would exceed the Letter
of Credit Commitment Amount, or (b) the aggregate amount of all outstanding
Loans plus all Letter of Credit Liabilities would exceed the lesser of (i) the
Commitments and (ii) the then-current Borrowing Base.
SECTION 2.1.6. Addition of Lenders and Increase in Commitments. During
such time as the then current Borrowing Base is in excess of $100,000,000 (but
only during such time), the Borrower shall have the right, with the prior
written consent of the Administrative Agent, to increase the Commitments,
provided that (a) the aggregate amount of all such increases shall not exceed an
amount equal to $50,000,000, (b) no Default or Event of Default shall have
occurred and be continuing at the effective date of such proposed increase and
(c) no Lender's Commitment may be increased without the consent of such Lender.
If the Borrower desires to increase the Commitments, the Borrower and the
financial institution(s) that the Borrower proposes to become a Lender
hereunder, and, if applicable, the existing Lender(s) the Borrower proposes to
increase their existing Commitments shall execute and deliver to the
Administrative Agent a certificate substantially in the form of Exhibit J hereto
(an "Additional Lender Certificate"). Upon receipt of a Additional Lender
Certificate, provided the Administrative Agent consents to the proposed increase
in the Commitments: (i) the amount of the
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Commitments shall be so increased, (ii) the Administrative Agent shall amend and
distribute to the Borrower and the Lenders a revised Schedule 2.1 adding or
amending, as applicable, the Commitment of any Lender executing the Additional
Lender Certificate and the revised Commitments of the Lenders, (iii) any such
additional Lender shall be deemed to be a party in all respects to this
Agreement as of the effective date set forth in such Additional Lender
Certificate, (iv) in the event that any Base Rate Loans are outstanding on the
effective date of such increase set forth in the Additional Lender Certificate,
then, upon such effective date, any such Lender party to the Additional Lender
Certificate shall purchase a pro rata portion of the outstanding Base Rate Loans
of each of the current Lenders (without the need to satisfy any of the
conditions set forth in Section 10.12.1) such that the Lenders (including any
additional Lender, if applicable) shall hold their pro rata share of the
outstanding Base Rate Loans as reflected in Schedule 2.1 required by this
Section 2.1.6, and (v) in the event that any LIBO Rate Loans are outstanding on
the effective date of such increase set forth in the Additional Lender
Certificate, then the Borrower shall notify the Administrative Agent in writing
that either (A) the effective date of such increase with respect to outstanding
LIBO Rate Loans shall be the last day of the Interest Period with respect to
such LIBO Rate Loans or that (B) upon the effective date set forth in such
Additional Lender Certificate, any such Lender party to the Additional Lender
Certificate shall purchase a pro rata portion of the outstanding LIBO Rate Loans
of each of the current Lenders (without the need to satisfy any of the
conditions set forth in Section 10.12.1) such that the Lenders (including any
additional Lender, if applicable) shall hold their pro rata share of the
outstanding LIBO Rate Loans as reflected in Schedule 2.1 required by this
Section 2.1.6. If the Administrative Agent does not consent to the increase in
the Commitments in accordance with this Section 2.1.6, the Commitments shall
remain unchanged.
SECTION 2.2. Reduction of Commitments. The Borrower may, from time to
time on any Business Day occurring after the time of the initial extension of
credit hereunder, voluntarily reduce the Commitments; provided, however, that
all such reductions shall require at least three (3) Business Days' prior notice
to the Administrative Agent and (except as set forth in Section 2.1.6) shall be
permanent; and provided, further, that all such reductions shall reduce each
Lender's Commitment ratably in accordance with its Percentage. Any partial
reduction of the Commitments shall be in an amount that is an integral multiple
of $1,000,000 and not less than $1,000,000.
SECTION 2.3. Borrowing Procedures for Loans. To request a Borrowing,
the Borrower shall notify the Administrative Agent of such request (a) in the
case of a LIBO Rate Borrowing, not later than 11:00 a.m., New York City time,
three (3) Business Days prior to the date such Borrowing is to be made or (b) in
the case of a Base Rate Borrowing, not later than 10:00 a.m., New York City
time, one (1) Business Day prior to the date such Borrowing is to be made. At
the commencement of each Interest Period for any LIBO Rate Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $500,000 (including any continuation or conversion of
existing Loans pursuant to Section 2.4 made in connection therewith). At the
time that each Base Rate Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $100,000 and not less than
$500,000 (including any continuation or conversion of existing Loans pursuant to
Section 2.4 made in connection therewith); provided that a Base Rate Borrowing
may be in an aggregate amount that is equal to the entire unused amount of the
Commitments, if less. The Administrative Agent at its option may accept
telephonic requests for Loans, provided that such
24
acceptance shall not constitute a waiver of the Administrative Agent's right to
delivery of a Borrowing Request in connection with subsequent Loans. Each such
telephonic Borrowing Request for a Loan by the Borrower shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request. On the terms and subject to the conditions
of this Agreement, each Borrowing comprised of Loans shall be comprised of the
type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. Borrowings of more than one type may be outstanding at the
same time; provided that there shall not at any time be more than a total of
five (5) LIBO Rate Borrowings outstanding. On or before 11:00 a.m. New York time
on such Business Day each Lender shall deposit with the Administrative Agent
same day funds in an amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the Administrative
Agent shall specify from time to time by notice to the Lenders. To the extent
funds are received from the Lenders, the Administrative Agent shall make such
funds available to the Borrower by wire transfer to the accounts the Borrower
shall have specified in its Borrowing Request. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m., New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not fewer than three (3) nor more than five (5) Business
Days' notice that all, or any portion of any Loans, subject to the requirements
of Section 2.3, be, in the case of Base Rate Loans, converted into LIBO Rate
Loans, and in the case of LIBO Rate Loans, be converted on the last day of the
then current interest period into a Base Rate Loan or continued as a LIBO Rate
Loan (in the absence of delivery of a Continuation/Conversion Notice with
respect to any LIBO Rate Loan at least three (3) Business Days before the last
day of the then current Interest Period with respect thereto, such LIBO Rate
Loan shall, on such last day, automatically convert to a Base Rate Loan);
provided, however, that (i) each such conversion or continuation shall be pro
rated among the applicable outstanding Loans of all Lenders to the Borrower, and
(ii) no portion of the outstanding principal amount of any Loans may be so
continued as, or be so converted into, LIBO Rate Loans when any Event of Default
has occurred and is continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing a
domestic or foreign branch or an Affiliate (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligations of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans and Letter of Credit
Liabilities under its Commitment shall be evidenced by a Note payable to the
order of such Lender in a maximum
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principal amount equal to such Lender's Percentage of the Commitments. The
Borrower hereby irrevocably authorizes each Lender to make (or cause to be made)
appropriate notations on the grid attached to such Lender's Note (or on any
continuation of such grid or otherwise in its records), which notations, if
made, shall evidence, inter alia, the date of, the outstanding principal of, and
the interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower or
any other Obligor.
SECTION 2.7. Certain Provisions Relating to the Letters of Credit.
SECTION 2.7.1. Borrower's Agreement to Repay Letter of Credit Drawings.
The Borrower hereby agrees to reimburse the Issuer promptly for each payment or
disbursement made by the Issuer to settle its obligations under any draft drawn
under any Letter of Credit, with interest on the amount so paid or disbursed by
the Issuer from and including the date of payment or disbursement to but not
including the date the Issuer is reimbursed therefor, at a rate per annum
(computed on the basis of a year consisting of 365, or where appropriate 366,
days) equal to the rate set forth in Section 3.2.1(a). In the event the Issuer
is not reimbursed by the Borrower on the disbursement date, or if the Issuer
must for any reason return or disgorge such reimbursement, the Lenders shall, on
the terms and subject to the conditions of this Agreement, fund the
reimbursement obligation therefor by making, on the next Business Day, Base Rate
Loans as provided in Section 2.1.1 to the Borrower (the Borrower being deemed to
have given a timely Borrowing Request therefor for such amount) by the Lenders
making payment to the Issuer's account; provided, however, for the purpose of
determining the availability of the Commitments to make Loans immediately prior
to giving effect to the application of the proceeds of such Loans, such
reimbursement obligation shall be deemed not to be outstanding at such time. The
Issuer agrees to provide to the Borrower prompt notice of any such payment or
disbursement made by the Issuer or Loans made by the Lenders; provided that the
Issuer's failure to provide such prompt notice shall not limit or impair in any
way the Borrower's obligations hereunder. The Borrower's obligation to reimburse
the Issuer promptly under this Section 2.7.1 for payments and disbursements made
by the Issuer under any Letter of Credit shall be absolute and unconditional
under any and all circumstances and irrespective of any set off, counterclaim or
defense to payment which the Borrower may have or have had against the Issuer,
including, without limitation, any defense based on the failure of the demand
for payment under such Letter of Credit to conform to the terms of such Letter
of Credit, or the legality, validity, regularity or enforceability of such
Letter of Credit; provided, however, the Borrower shall not be obligated to
reimburse the Issuer for any wrongful payment or disbursement made by the Issuer
under any Letter of Credit which payment occurs as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of the Issuer or
any of its officers, employees or agents determined by a court of competent
jurisdiction in a final non-appealable judgment.
SECTION 2.7.2. Reimbursement Obligations of the Lenders under the
Letters of Credit. If the Borrower shall fail pursuant to the terms of Section
2.7.1 hereof promptly to reimburse the Issuer for each payment or disbursement
made by the Issuer to settle its obligations under any draft drawn under any
Letter of Credit, and the Lenders shall not have made a Loan as provided in
Section 2.7.1 to fund such reimbursement obligation, then upon
26
demand by the Issuer each Lender shall promptly make available to the Issuer at
its office indicated on its signature page hereto (or at such other address
designated by the Issuer to the Administrative Agent) immediately available
funds in an amount equal to such Lender's pro rata share (according to its
respective Percentage) of the amount so paid or disbursed by the Issuer. Each
Lender shall jointly and severally indemnify and hold harmless the Issuer from
and against any and all losses, liabilities (including, without limitation,
liabilities for penalties), actions, suits, judgments, demands, damages, costs
and expenses (including, without limitation, attorneys' fees and expenses)
resulting from any failure on the part of such Lender to provide, or from any
delay in providing, the Issuer with such Lender's share of the amount of any
payment or disbursement made by the Issuer to settle its obligations under any
draft drawn under any Letter of Credit in accordance with the provisions of the
preceding sentence.
The obligation of each Lender to provide the Issuer with such Lender's
pro rata share of the amount of any payment or disbursement made by the Issuer
to settle its obligations under any draft drawn under any Letter of Credit in
accordance with the provisions of the preceding paragraph shall be absolute and
unconditional under any and all circumstances and irrespective of any set off,
withholding, abatement, reduction, counterclaim or defense to payment which such
Lender may have or have had against the Issuer, including, without limitation,
any defense based upon the occurrence of any Default, any draft, demand or
certificate or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient, the failure of the demand for
payment under such Letter of Credit to conform to the terms of such Letter of
Credit or the legality, validity, regularity or enforceability of such Letter
of Credit or any failure of any disbursement to conform to the terms of the
applicable Letter of Credit (if, in the Issuer's good faith opinion, such
disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such disbursement;
provided, however, that no Lender shall be obligated to reimburse the Issuer
pursuant to the preceding provisions of this Section 2.7.2 for any wrongful
payment or disbursement made by the Issuer under any Letter of Credit as a
result of acts or omissions constituting gross negligence or willful misconduct
on the part of the Issuer or any of its officers, employees or agents determined
by a court of competent jurisdiction in a final non-appealable judgment.
SECTION 2.7.3. Action Upon Occurrence of Default. Upon the occurrence
of a Default or an Event of Default, an amount equal to the amount of the then
contingent liability of the Issuer (and the other Lenders) under each
outstanding Letter of Credit shall, at the option of the Issuer and without
demand upon or notice to the Borrower, be deemed (as between the Borrower and
the Issuer) to have been paid or disbursed by the Issuer under each such Letter
of Credit (notwithstanding that such amount may not in fact have been so paid or
disbursed), and the Borrower shall be obligated (i) promptly to reimburse the
Issuer for the amount deemed to have been so paid or disbursed by the Issuer,
and (ii) if the Issuer, in its discretion, so demands, to pay to the Issuer
promptly on demand such additional amounts as may be required so that the
aggregate of all amounts previously paid by the Borrower to the Issuer under
this Section 2.7.3 and Section 3.1 with respect to such Letters of Credit and
not theretofore applied to the payment of amounts payable by the Borrower to the
Issuer with respect to such Letters of Credit shall equal the amount of the then
contingent liability of the Issuer (and the other Lenders) under such Letters of
Credit.
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SECTION 2.7.4. Cash Collateral Procedures. Any amounts so received by
the Administrative Agent pursuant to the provisions of Section 2.7.3 or Section
3.1 shall be held as collateral security first for the repayment of all
Obligations in connection with Letters of Credit and second for the repayment of
all other Obligations. All amounts being held pursuant to this Section 2.7.4
shall, until their application to any Obligations or their return to the
Borrower, as the case may be, at the written request of an Authorized Officer of
the Borrower, be invested in Cash Equivalent Investments designated by the
Borrower and acceptable to the Administrative Agent in its sole discretion but
under the sole dominion and control of the Collateral Agent. Such amounts and
such Cash Equivalent Investments shall be held by the Collateral Agent as
additional collateral security for, and the Borrower hereby grants to the
Collateral Agent and its bailees for the benefit of the Agents, the Issuer and
the Lenders a security interest in such amounts and such Cash Equivalent
Investments (including all interest thereon and all proceeds thereof) to secure,
the repayment of the Obligations under and in connection with Letters of Credit
and all other Obligations. Any losses, net of earnings, and reasonable fees and
expenses of such Cash Equivalent Investments shall be charged against the
principal amount invested. None of the Agents, the Issuer nor any of the Lenders
shall be liable for any loss resulting from any Cash Equivalent Investment made
by the Collateral Agent, whether at the Borrower's request or otherwise. The
Collateral Agent is not obligated hereby, or by any other Loan Documents, to
make or maintain any Cash Equivalent Investment, except upon timely written
request by an Authorized Officer of the Borrower. If and to the extent that (a)
all Obligations have been fully and indefeasibly paid and satisfied, and (b) the
commitments and obligations of the Issuer and the Lenders under Letters of
Credit and this Agreement have terminated, the Collateral Agent shall return to
the Borrower, upon the Borrower's request therefor all amounts previously paid
to the Administrative Agent by the Borrower pursuant to Section 2.7.3 or Section
3.1 together with interest thereon, if any, and not theretofore applied to
reduce amounts payable by the Borrower to the Administrative Agent, the Issuer
or any Lenders under this Agreement or any other Loan Document.
SECTION 2.7.5. Nature of Reimbursement Obligations. The Borrower shall
assume and, to the extent set forth in Section 2.7.2, each Lender shall
severally assume its pro rata share of all risks of the acts, omissions, or
misuse of any Letter of Credit by the beneficiary thereof. The Issuer (except to
the extent of its own gross negligence or willful misconduct or that of any of
its officers, employees or agents as determined by a court of competent
jurisdiction in a final non-appealable judgment) shall not be responsible for
(a) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any Letter of Credit or any document submitted by any party in connection with
the application for and issuance of a Letter of Credit, even if it should in
fact prove to be in any respect invalid, insufficient, inaccurate, fraudulent,
ineffective or forged; (b) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any instrument transferring or assigning or
purporting to transfer or assign a 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; (c) failure of the beneficiary to comply
fully with conditions required in order to demand payment under a Letter of
Credit, including failure of any documents to bear adequate reference to such
Letter of Credit; (d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise; (e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a payment or disbursement under a
Letter of Credit or of the proceeds thereof; (f) the use which may be made of
any Letter of Credit or of any acts of any
28
beneficiary or transferee in connection therewith; (g) any error, neglect,
default, suspension or insolvency, of any of the Issuer's correspondents; (h)
errors in translation or for errors in interpretation of technical terms; or (i)
any other circumstance whatsoever in making or failing to make payment under a
Letter of Credit. None of the foregoing shall affect, impair, or prevent the
vesting of any of the rights or powers granted the Issuer or any Lender
hereunder. In furtherance and extension, and not in limitation or derogation, of
any of the foregoing, any action taken or omitted to be taken by the Issuer in
connection with a Letter of Credit in good faith (and not constituting gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final non-appealable judgment) shall be binding upon the
Borrower, each other Obligor and each Lender and shall not put such Issuer under
any resulting liability to the Borrower, any other Obligor or any Lender, as the
case may be.
SECTION 2.8. Borrowing Base.
SECTION 2.8.1. Initial Borrowing Base. During the period from the
Effective Date to the date of the first redetermination of the Borrowing Base
pursuant to the provisions of this Section 2.8, the initial amount of the
Borrowing Base has been determined by the Engineering Banks and acknowledged by
the Borrower and agreed to by the Lenders to be $100.000,000; provided, however,
that, notwithstanding the foregoing, the Borrowing Base shall be limited to
$60,000,000 until the satisfaction of all of the following (i) the
Administrative Agent has received acceptable evidence, in its reasonable
discretion, that the Mortgages delivered by the Borrower pursuant to Section
5.1.7 have been filed in the appropriate real property records; (ii) the
Administrative Agent has received acceptable evidence, in its reasonable
discretion, that the Hedging Agreements required by Section 7.1.11 have been
entered into with acceptable counterparties, and (iii) the date that is the
later of (A) fifteen (15) days from the Effective Date, within which time the
Administrative Agent shall have delivered to the Borrower a written request for
further title information and curative work, and (B) such later date as is
necessary, in the Administrative Agent's reasonable determination, to resolve to
its reasonable satisfaction any and all unresolved title issues relating to the
Oil and Gas Properties. The value of the Borrowing Base Properties has been
determined by the Engineering Banks and acknowledged by the Borrower and agreed
to by the Lenders.
SECTION 2.8.2. Annual Scheduled Determinations of the Borrowing Base.
Promptly after December 31 of each calendar year, commencing December 31, 2003,
and in any event prior to March 1 of the subsequent calendar year, the Borrower
shall furnish to the Engineering Banks and the Lenders a Reserve Report prepared
by an Approved Engineer, which shall (a) be dated as of December 31 of the
previous calendar year; (b) be accompanied by a certificate of an Authorized
Officer of the Borrower certifying as to matters described in Section
7.1.1(m)(iv); and (c) set forth the Proven Reserves attributable to the Oil and
Gas Properties owned directly by the Borrower and its Subsidiaries which the
Borrower wishes to include in the Borrowing Base, subject to the approval of the
Engineering Banks (the "Borrowing Base Properties"), along with (to the extent
not included in such Reserve Report) a projection of the rate of production and
net operating income with respect thereto, as of such date, together with
additional data concerning pricing, hedging, operating costs, quantities and
purchasers of production, and other information and engineering and geological
data as the Engineering Banks, the Issuer or any Lender may reasonably request.
Within thirty (30) days after receipt of such report and information, the
Engineering Banks shall make a recommended
29
determination of the amount of credit to be made available to the Borrower
hereunder (any such recommended determination of the Borrowing Base from time to
time, the "Recommended Borrowing Base Determination"), and upon such Recommended
Borrowing Base Determination shall notify the Administrative Agent, who shall
promptly notify the Lenders in writing, on behalf of the Engineering Banks, of
the Engineering Banks' Recommended Borrowing Base Determination. Such
Recommended Borrowing Base Determination made by the Engineering Banks shall be
so made by the Engineering Banks in the exercise of their respective sole
discretion in accordance with each such Engineering Bank's customary practices
and standards for oil and gas loans. If all of the Engineering Banks fail to
agree upon the Recommended Borrowing Base Determination in such thirty-Business
Day period, then the Administrative Agent shall poll the Engineering Banks and
the Recommended Borrowing Base Determination shall be set at the highest amount
on which all of the Engineering Banks (if such number would result in a proposed
increase in the then current Borrowing Base pursuant to the terms of this
Section 2.8, or otherwise, two of the Engineering Banks) can agree, it being
understood that an Engineering Bank is deemed to have agreed to a Recommended
Borrowing Base Determination that is lower than the amount actually determined
by such Engineering Bank to be the appropriate Recommended Borrowing Base
Determination. Each Lender shall approve or reject the Engineering Banks'
Recommended Borrowing Base Determination by written notice to the Administrative
Agent within ten (10) Business Days of the Administrative Agent's notification
of the Engineering Banks' new Recommended Borrowing Base Determination. For any
redetermination of the Borrowing Base that would, if approved, result in an
increase of the then-effective Borrowing Base, the approval of all of the
Lenders shall be required. For any other redetermination of the Borrowing Base,
the approval of the Required Lenders shall be required. If all of the Lenders or
the Required Lenders, as the case may be, fail to approve any such determination
of the Borrowing Base made by the Engineering Banks hereunder in such
ten-Business Day period, then the Administrative Agent shall poll the Lenders
and the Borrowing Base shall be set at the highest amount on which all of the
Lenders (if such number would result in an increase in the Borrowing Base or
otherwise, the Required Lenders) can agree, it being understood that a Lender is
deemed to have agreed to any and all amounts that are lower than the amount
actually determined by such Lender to be the appropriate value of the Borrowing
Base. Upon approval or deemed approval by all of the Lenders or the Required
Lenders, as the case may be, of the amount of credit to be made available to the
Borrower hereunder, the Administrative Agent shall, by written notice to the
Borrower and the Lenders, designate the new Borrowing Base available to the
Borrower, and such Borrowing Base shall be effective as of April 1 of such
calendar year. Notwithstanding anything herein contained to the contrary, no
Lender shall be obligated to increase its Commitment without its consent. Except
as provided in Section 2.1.6, the Lenders shall at no time have any commitment
or obligation whatsoever to increase the Borrowing Base to any amount in excess
of $100,000,000.
SECTION 2.8.3. Semi-Annual Scheduled Determination of the Borrowing
Base. In addition, promptly after June 30 of each calendar year, commencing June
30, 2004, and in any event prior to September 1 of the same calendar year, the
Borrower shall furnish to the Engineering Banks and the other Lenders a Reserve
Report prepared by the Borrower's internal petroleum engineers, which report (a)
shall be dated as of June 30 of such calendar year; (b) be accompanied by a
certificate of an Authorized Officer of the Borrower certifying as to matters
described in Section 7.1.1(m)(iv); and (c) set forth the Proven Reserves
attributable to the Oil and Gas Properties, along with (to the extent not
included in such Reserve Report) a projection
30
of the rate of production and net operating income with respect thereto, as of
such date, together with additional data concerning pricing, hedging, operating
costs, quantities and purchasers of production, and other information and
engineering and geological data as the Engineering Banks, the Issuer or any
Lender may reasonably request. Within thirty (30) days after receipt of such
report and information, the Engineering Banks shall make a Recommended Borrowing
Base Determination as to the new Borrowing Base as of the preceding June 30.
Such Recommended Borrowing Base Determination shall be made in the same manner
and be subject to the same approvals as prescribed above with respect to the
annual review, and likewise the Administrative Agent shall communicate the
results of such Recommended Borrowing Base Determination to the Lenders on
behalf of the Engineering Banks. Each Lender shall approve or reject the
Engineering Banks' redetermination of the Borrowing Base by written notice to
the Administrative Agent within ten (10) Business Days of the Administrative
Agent's notification of the Engineering Banks' redetermination of the Borrowing
Base. For any redetermination of the Borrowing Base that would, if approved,
result in an increase of the then-effective Borrowing Base, the approval of all
of the Lenders shall be required. For any other redetermination of the Borrowing
Base, the approval of the Required Lenders shall be required. If all of the
Lenders or the Required Lenders, as the case may be, fail to approve any such
redetermination of the Borrowing Base made by the Engineering Banks hereunder in
such ten-Business Day period, then the Administrative Agent shall poll the
Lenders and the Borrowing Base shall be set at the highest amount on which all
of the Lenders (if such number would result in an increase in the Borrowing Base
or otherwise, the Required Lenders) can agree, it being understood that a Lender
is deemed to have agreed to any and all amounts that are lower than the amount
actually determined by such Lender to be the appropriate value of the Borrowing
Base. Upon approval or deemed approval by all of the Lenders or the Required
Lenders, as the case may be, of the amount of credit to be made available to the
Borrower hereunder, the Administrative Agent shall, by written notice to the
Borrower and the Lenders, designate the new Borrowing Base available to the
Borrower and such new Borrowing Base shall be effective as of October 1 of such
calendar year. Notwithstanding anything herein contained to the contrary, no
Lender shall be obligated to increase its Commitment without its consent. Except
as provided in Section 2.1.6, the Lenders shall at no time have any commitment
or obligation whatsoever to increase the Borrowing Base to any amount in excess
of $100,000,000.
SECTION 2.8.4. Discretionary Determination of the Borrowing Base by the
Lenders. In addition to the foregoing scheduled annual and semi-annual
determinations of the Borrowing Base, the Majority Lenders shall have the right
to request a redetermination of the Borrowing Base at their sole discretion at
any time and from time to time but not more often than two (2) times during any
Fiscal Year. If the Majority Lenders shall elect to request a discretionary
redetermination of the Borrowing Base pursuant to the provisions of this Section
2.8.4, the Borrower shall, within thirty (30) days of receipt of a request
therefor from the Administrative Agent on behalf of the Engineering Banks,
deliver to the Engineering Banks and the Lenders (a) a Reserve Report dated as
of the date requested in such request or such other date as required by the
Engineering Banks, and prepared by an Approved Engineer (unless the Engineering
Banks shall have previously consented in writing to a certificate from the
Borrower's internal engineers as to that Reserve Report), 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, along with
(b) such updated engineering, production, operating and other data as the
Engineering Banks, the Issuer or any Lender may reasonably
31
request thereafter; provided, however, that nothing contained in this Section
2.8.4. shall obviate the commitments of the Lenders to make Loans pursuant to
the terms and conditions of this Agreement prior to a final redetermination of
the Borrowing Base pursuant to this Section 2.8.4. The Engineering Banks shall
have thirty (30) days following receipt of such Reserve Report to make an
initial redetermination of the Borrowing Base, and the Engineering Banks and the
Lenders shall approve and designate the new Borrowing Base in accordance with
the procedures and standards described in Section 2.8.2. Notwithstanding
anything herein contained to the contrary, no Lender shall be obligated to
increase its Commitment without its consent. Except as provided in Section
2.1.6, the Lenders shall at no time have any commitment or obligation whatsoever
to increase the Borrowing Base to any amount in excess of $100,000,000.
SECTION 2.8.5. Discretionary Determination of the Borrowing Base by the
Borrower. In addition to the foregoing determinations of the Borrowing Base, the
Borrower may request a redetermination of the Borrowing Base at any time and
from time to time but not more often than two (2) times during any consecutive
twelve-month period. The Borrower shall, within thirty (30) days of receipt of
such request, deliver to the Engineering Banks and the Lenders a Reserve Report
dated as of the date requested in such request or such other date as required by
the Engineering Banks, and prepared by an Approved Engineer, along with such
updated engineering, production, operating and other data as the Engineering
Banks, the Issuer or any Lender may reasonably request thereafter. Each such
discretionary redetermination of the Borrowing Base shall be made in the same
manner and in accordance with the procedures and standards set forth above by
adjusting the Borrowing Base then in effect. The Engineering Banks shall have
thirty (30) days following receipt of such requested information to make an
initial redetermination of the Borrowing Base, and the Engineering Banks and the
Lenders shall approve and designate the new Borrowing Base in accordance with
the procedures and standards described in Section 2.8.2. Notwithstanding
anything herein contained to the contrary, no Lender shall be obligated to
increase its Commitment without its consent. Except as provided in Section
2.1.6, the Lenders shall at no time have any commitment or obligation whatsoever
to increase the Borrowing Base to any amount in excess of $100,000,000.
SECTION 2.8.6. Mandatory Action When Loans and Letter of Credit
Liabilities Exceed the Borrowing Base. Except as set forth in Section 3.1(c), in
the event the sum of the aggregate unpaid principal amount of the Loans plus the
aggregate amount of the Letter of Credit Liabilities shall, upon any
determination or redetermination of the Borrowing Base, be in excess of the
Borrowing Base at such time, the Administrative Agent shall so notify the
Borrower in the report of such determination by the Administrative Agent to the
Borrower, and the Borrower shall immediately make mandatory prepayments of
principal on account of the Notes together with accrued interest thereon,
deposit cash collateral to secure the Obligations, or both, in the amounts and
on the dates set forth in Section 3.1.
SECTION 2.8.7. General Provisions With Respect to the Borrowing Base.
For the purposes of this Agreement, the Borrowing Base to be certified by the
Engineering Banks, the Issuer and the Lenders from time to time shall be the
lesser of (x) the sum of the aggregate principal amount of the Loans and the
aggregate face amount of the Letters of Credit that the Agents, the Issuer and
the Lenders (or the Required Lender, as applicable) are willing to have
outstanding to the Borrower, and (y) the amount requested by the Borrower. The
determination of the Borrowing Base shall be made by the Engineering Banks, the
Issuer and the Lenders (or
32
the Required Lenders, if applicable) in accordance with the other provisions of
Section 2.8 in the exercise of their sole and absolute discretion in accordance
with their customary practices for oil and gas loans and letters of credit as in
effect from time to time. The Engineering Banks, in their respective sole
discretion, may make adjustments to the rates, volumes, prices and other
assumptions set forth therein. The Engineering Banks may exclude any Oil and Gas
Properties or portion of production therefrom or any income from any other
Property from the calculated Borrowing Base, at any time, because title
information is not reasonably satisfactory to the Engineering Banks in their
respective sole discretion or because such Property is not assignable.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Revolving Credit
Termination Date. Prior thereto, the Borrower:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans; provided, however, that (i) any such prepayment
shall be made pro rata among Loans of the same type and, if applicable,
having the same Interest Period, of all Lenders; (ii) if the Borrower
makes such prepayment of any LIBO Rate Loan on any day other than the
last day of the Interest Period for such Loan then the Borrower shall
be responsible for the increased cost to the Lenders as provided more
fully in Section 4.4; (iii) all such voluntary prepayments shall
require at least three (3) but no more than five (5) Business Days'
prior written notice to the Administrative Agent; and (iv) all such
voluntary partial prepayments shall be in an aggregate minimum amount
of $1,000,000 and in $1,000,000 increments in excess thereof;
(b) shall, on each date when (i) any reduction in or
termination of the Commitments shall become effective (including
pursuant to Section 2.2) (ii) a Borrowing Base Deficiency shall occur
(except a Borrowing Base Deficiency resulting from a redetermination
pursuant to Sections 2.8.2, 2.8.3 and 2.8.4), or (iii) the outstanding
aggregate principal amount of all Loans and Letter of Credit
Liabilities exceeds the Commitments, first, make a mandatory prepayment
in an amount at least equal to the aggregate, outstanding principal
amount of all Loans in excess of the Commitments as reduced or
terminated, and, if such mandatory prepayment was not sufficient to
reduce the unpaid principal balance of the Loans to an amount that,
when added to Letter of Credit Liabilities, does not exceed the
Commitments as reduced or terminated, then second, deposit cash
collateral with the Collateral Agent as security for the Obligations,
such prepayments and cash deposits to be in an amount equal to the
excess, if any, of the aggregate, outstanding principal amount of all
Loans and Letter of Credit Liabilities over the Commitments as so
reduced or terminated;
(c) shall, within 45 days of a Borrowing Base Deficiency
Determination resulting from a redetermination of the Borrowing Base
pursuant to Section 2.8, make a mandatory prepayment of an amount
sufficient to reduce by at least fifty percent (50%)
33
the total Borrowing Base Deficiency on the date of such Borrowing Base
Deficiency Determination, with the entirety of the amount equal to such
Borrowing Base Deficiency being due and payable within 90 days of such
Borrowing Base Deficiency Determination (provided in both cases, that,
if such day is not a Business Day, then on the immediately succeeding
Business Day), such that, upon the conclusion of such mandatory
prepayments, no Borrowing Base Deficiency exists; and
(d) shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 8.2 or Section
8.3, repay all Loans and deposit cash collateral with the
Administrative Agent as security for the Letter of Credit Liabilities,
unless, pursuant to Section 8.3, only a portion of all Loans and
Letters of Credit is so accelerated.
Each prepayment of any Loan made pursuant to this Section 3.1 shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitments.
All amounts paid pursuant to this Section 3.1 shall be applied first as
prepayments on the Loans; provided, that, to the extent all Loans are repaid,
any excess amount shall be transferred to the Collateral Agent to be held as
cash collateral for the Obligations and applied thereto pursuant to Section
2.7.4.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable by the Borrower in accordance with
this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum: (a) on that portion
maintained from time to time as a Base Rate Loan, equal to the sum of the
Alternate Base Rate from time to time in effect plus the Applicable Margin with
respect to Base Rate Loans; (b) on that portion maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to the sum of the Adjusted
LIBO Rate for such Interest Period plus the Applicable Margin with respect to
LIBO Rate Loans.
All LIBO Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such LIBO
Rate Loan.
SECTION 3.2.2. Post-Default Rates. After the date (after giving effect
to any grace period) any principal amount of any Loan is due and payable
(whether on the Stated Maturity Date, upon acceleration or otherwise), or after
any other monetary Obligation of the Borrower shall have become due and payable
(including drawn and unpaid Letters of Credit), or after the occurrence of any
other Event of Default the Borrower shall pay, but only to the extent permitted
by Governmental Rule, interest (after as well as before judgment) at a rate per
annum equal to the sum of (x) the Alternate Base Rate plus (y) 2% plus (z) the
Applicable Margin from time to time in effect for Base Rate Loans.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication by the Borrower: (a) on the Stated Maturity Date
therefor; (b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan; (c) with
34
respect to Base Rate Loans, in arrears on the last Business Day of each calendar
month occurring after the Effective Date; (d) with respect to LIBO Rate Loans,
in arrears on the last day of each applicable Interest Period; (e) with respect
to any Base Rate Loans converted into LIBO Rate Loans on a day when interest
would not otherwise have been payable pursuant to clause (c), on the date of
such conversion; and (f) on that portion of any Loans, the Stated Maturity Date
of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
such acceleration. Interest accrued on Loans or other monetary Obligations
arising under this Agreement or any other Loan Document after the date such
amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) or after the occurrence shall be payable by the
Borrower upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, for the period (including
any portion thereof when its Commitment is suspended by reason of the Borrower's
inability to satisfy any condition of Article V) commencing on the date hereof
and continuing through the later of (i) the Revolving Credit Termination Date
and (ii) the date on which all Obligations shall have been paid in full and all
Letters of Credit have expired or terminated, a commitment fee which shall
accrue at the Applicable Margin on the daily amount equal to such Lender's
Percentage of the sum of the average daily unused portion of the Commitments.
Such commitment fees shall be payable by the Borrower in arrears on each
Quarterly Payment Date and on the later of (i) the Revolving Credit Termination
Date and (ii) the date on which all Obligations shall have been paid in full and
all Letters of Credit have expired or terminated, commencing on the first such
date to occur after the Effective Date. All Commitment Fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 3.3.2. Fees Pursuant to Commitment Letter. The Borrower agrees
to pay to the Administrative Agent, the Collateral Agent and the Arranger for
their own respective accounts as provided in the Commitment Letter, all fees set
forth in the Commitment Letter (including all arrangement fees, upfront fees,
facility fees and annual agency fees therein described) on the dates and in the
amounts set forth in the Commitment Letter.
SECTION 3.3.3. Letter of Credit Standby Fee Payable to Lenders. The
Borrower agrees to pay a fee to the Administrative Agent for the account of the
Lenders (including the Issuer), to be distributed ratably (in accordance with
their respective Percentages), for each Letter of Credit for the period from and
including the date of the issuance of such Letter of Credit to (and including)
the date upon which such Letter of Credit expires or terminates in accordance
with its terms, at a per annum rate equal to the Applicable Margin from time to
time in effect with respect to LIBO Rate Loans on the average daily undrawn face
amount of such Letter of Credit. Such fee shall be payable in arrears on each
Quarterly Payment Date, with the first such payment to be made on the first
Quarterly Payment Date following the issuance of such Letter of Credit.
35
SECTION 3.3.4. Letter of Credit Fronting Fee Payable to Issuer. The
Borrower agrees to pay to the Issuer for its own account a fronting fee for each
Letter of Credit at a per annum rate equal to one-eighth of one percent (1/8 of
1%) of the average daily undrawn face amount of such Letter of Credit. Such fee
shall be payable in arrears on each Quarterly Payment Date, with the first such
payment to be made on the first Quarterly Payment Date following the issuance of
such Letter of Credit. In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuer for such normal and customary costs and expenses as are
incurred by the Issuer in issuing, effecting payment under, transferring,
amending or otherwise administering any Letter of Credit.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. Fixed Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into, a
LIBO Rate Loan of a certain type, the obligations of such Lenders to make,
continue, maintain or convert any such Loans shall, upon such determination,
promptly be suspended until such Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and all such
Lenders LIBO Rate Loans shall automatically convert into Base Rate Loans at the
end of the then-current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall
have determined that (a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent in the
Administrative Agent's relevant market; or (b) by reason of circumstances
affecting the interbank dollar market generally adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO Rate Loans of such
type, then, upon notice from the Administrative Agent to the Borrower and the
Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to
make or continue any Loans as, or to convert any Loans into, LIBO Rate Loans of
such type shall promptly be suspended until the Administrative Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist; and (c) all LIBO Rate Loans shall automatically
convert into Base Rate Loans at the end of the then current Interest Periods
with respect thereto.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees
to reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender with respect to,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Lender within five (5) days of its receipt of
36
such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on the Borrower. The Borrower will not be responsible for
paying any amounts pursuant to this Section 4.3 accruing more than one hundred
eighty (180) days prior to the receipt by the Borrower of the notice referred to
in the preceding sentence.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of (a) any conversion or repayment or prepayment of the
principal amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to Section 3.1
or otherwise; (b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or (c) any Loans not being continued as, or
converted into, LIBO Rate Loans in accordance with the Continuation/Conversion
Notice therefor, then, upon the written notice of such Lender to the Borrower
(with a copy to the Administrative Agent), the Borrower shall, within five (5)
days of its receipt thereof, pay directly to such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for such loss
or expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or Issuer or any Person
controlling such Lender or Issuer, and such Lender or Issuer determines (in its
sole and absolute discretion) that the rate of return on its or such controlling
Person's capital as a consequence of its Commitment, its issuance of a Letter of
Credit or its participation in a Letter of Credit, or the Loans made by such
Lender or Issuer is reduced to a level below that which such Lender or Issuer or
such controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Lender or the Issuer to the Borrower, the Borrower shall immediately pay
directly to such Lender or the Issuer additional amounts sufficient to
compensate such Lender, the Issuer or such controlling Person for such reduction
in rate of return. A statement of such Lender or the Issuer as to any such
additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, such Lender or the Issuer may use any
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans, reimbursement of Letter of Credit Liabilities and all
other amounts payable hereunder and under any other Loan Document shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's or
the Issuer's net income or receipts (such non-excluded items being called
"Taxes"). In the event that any
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withholding or deduction from any payment to be made by the Borrower hereunder
is required with respect to any Taxes pursuant to any applicable Governmental
Rule, then the Borrower will (a) pay directly to the relevant authority the full
amount required to be so withheld or deducted; (b) promptly forward to the
Administrative Agent an official receipt or other documentation satisfactory to
the Administrative Agent evidencing such payment to such authority; and (c) pay
to the Administrative Agent for the account of the Administrative Agent or such
Lender or the Issuer such additional amount or amounts as is necessary to ensure
that the net amount actually received by the Administrative Agent or such Lender
or the Issuer will equal the full amount the Administrative Agent or such Lender
or Issuer would have received had no such withholding or deduction been
required. Moreover, if any Taxes are directly asserted against the
Administrative Agent or any Lender or the Issuer with respect to any payment
received by the Administrative Agent or such Lender or Issuer hereunder, the
Administrative Agent or such Lender or Issuer may pay such Taxes and the
Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such Person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such Person would have received had
such Taxes not been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the Administrative Agent, or any Lender or the Issuer, the required receipts
or other required documentary evidence, the Borrower shall indemnify the
Administrative Agent, or such Lender or the Issuer for any incremental Taxes,
interest or penalties that may become payable by the Administrative Agent or
such Lender or the Issuer as a result of any such failure. For purposes of this
Section 4.6, a distribution hereunder by the Administrative Agent or any Lender
or the Issuer to or for the account of the Administrative Agent or any Lender or
the Issuer shall be deemed a payment by the Borrower.
Each Lender which is organized under the laws of a jurisdiction outside
the United States shall, (i) on the day of the initial borrowing from each such
Lender hereunder and (ii) from time to time thereafter if requested by the
Borrower or the Administrative Agent, provide the Administrative Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the United
States certifying as to such Lender's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Lender hereunder and under the other Loan Documents or other
documents satisfactory to such Lender, the Borrower and the Administrative Agent
and indicating that all payments to be made to such Lender hereunder and under
the other Loan Documents are not subject to United States withholding tax.
Unless the Borrower and the Administrative Agent shall have received such forms
or such documents indicating that payments to such Lender hereunder and under
the other Loan Documents are not subject to United States withholding tax, the
Borrower and the Administrative Agent shall be entitled to withhold United
States withholding taxes from such payments at the applicable statutory rate.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Administrative
Agent for the pro rata account of the Lenders and the Issuer entitled to receive
such payment. All such payments required to be made to the Administrative Agent
shall be made, without set off, deduction or counterclaim, not
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later than 11:00 a.m., New York time, on the date due, in same day or
immediately available funds, to such account as the Administrative Agent shall
specify from time to time by notice to the Borrower. Funds received after that
time shall be deemed to have been received by the Administrative Agent on the
next succeeding Business Day. The Administrative Agent shall promptly remit in
same day funds to each Lender and the Issuer its share, if any, of such payments
received by the Administrative Agent for the account of such Lender or Issuer.
All interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 360
days (or, in the case of interest on a Base Rate Loan, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 4.8. Sharing of Payments. (a) If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of set
off or otherwise) on account of any Loan or any Letter of Credit Liability
(other than pursuant to the terms of Sections 4.3, 4.4, 4.5 and 4.6) in excess
of its pro rata share of payments then or therewith obtained by all Lenders,
such Lender shall purchase from the other Lenders such participations in Loans
made by them and Letter of Credit Liabilities held by them as shall be necessary
to cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of (a)
the amount of such selling Lender's required repayment to the purchasing Lender
to (b) the total amount so recovered from the purchasing Lender) of any interest
or other amount paid or payable by the purchasing Lender with respect to the
total amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 4.8 may, to the
fullest extent permitted by Governmental Rule, exercise all its rights of
payment (including pursuant to Section 4.9) with respect to such participation
as fully as if such Lender were the direct creditor of the Borrower in the
amount of such participation. If under any applicable bankruptcy, insolvency or
other similar Governmental Rule, any Lender receives a secured claim in lieu of
a set off to which this Section 4.8 applies, such Lender shall, to the extent
practicable, exercise its rights with respect to such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.8 to
share in the benefits of any recovery on such secured claim.
SECTION 4.9. Set off. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 8.1.8 with respect to
the Borrower or any-Subsidiary or any other Obligor or, with the consent of the
Majority Lenders, upon the occurrence of any other Event of Default, have the
right to appropriate and apply to the payment of the Obligations owing to it
(whether or not then due) any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter maintained with such Lender; provided,
however, that any such appropriation and application shall be subject to the
provisions of Section 4.8. Each Lender agrees promptly to notify the Borrower
and the Administrative Agent after any
39
such set off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set off and
application. The rights of each Lender under this Section 4.9 are in addition to
other rights and remedies (including other rights of set off under applicable
Governmental Rule or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds and Letters of Credit. The Borrower will,
and will cause each Subsidiary to, use the proceeds of the Loans (a) to
refinance existing Indebtedness of the Borrower and its Subsidiaries; (b) to
reimburse the Issuer for disbursements of Letters of Credit in accordance with
this Agreement; and (c) for the Borrower's and its Subsidiaries' general limited
liability company, partnership or corporate purposes, including, without
limitation, working capital. No part of the proceeds of any Loan will be used,
whether directly or indirectly, to acquire any equity security of a class that
is registered pursuant to Section 12 of the Exchange Act or any Margin Stock, in
violation of Regulation U. Letters of Credit will be issued only to support
normal and customary oil and gas operations undertaken by the Borrower or any of
its Subsidiaries in the ordinary course of its business.
SECTION 4.11. Maximum Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Lender and the
Issuer under this Agreement shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt thereof would be
contrary to provisions of law applicable to such Lender or the Issuer limiting
rates of interest which may be charged or collected by such Lender or the
Issuer. Accordingly, if the transactions contemplated hereby would be usurious
under applicable law (including the Federal and state laws of the United States
of America, or of any other jurisdiction whose laws may be mandatorily
applicable) with respect to a Lender or the Issuer then, in that event,
notwithstanding anything to the contrary in this Agreement, it is agreed as
follows:
(a) the provisions of this Section 4.11 shall govern and
control;
(b) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for, charged or
received under this Agreement, or under any of the other aforesaid
agreements or otherwise in connection with this Agreement by such
Lender or the Issuer shall under no circumstances exceed the maximum
amount of interest allowed by applicable law (such maximum lawful
interest rate, if any, with respect to such Lender or the Issuer herein
called the "Highest Lawful Rate"), and any excess shall be credited to
the Borrower by such Lender or the Issuer (or, if such consideration
shall have been paid in full, such excess promptly refunded to the
Borrower);
(c) all sums paid, or agreed to be paid, to such Lender
or the Issuer for the use, forbearance and detention of the
indebtedness of the Borrower to such Lender or the Issuer hereunder
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest
is uniform throughout the full term thereof; and
(d) if at any time the interest provided pursuant to
Section 3.2 together with any other fees payable pursuant to this
Agreement and deemed interest under applicable
40
law, exceeds that amount which would have accrued at the Highest Lawful
Rate, the amount of interest and any such fees to accrue to such Lender
or the Issuer pursuant to this Agreement shall be limited,
notwithstanding anything to the contrary in this Agreement to that
amount which would have accrued at the Highest Lawful Rate, but any
subsequent reductions, as applicable, shall not reduce the interest to
accrue to such Lender or the Issuer pursuant to this Agreement below
the Highest Lawful Rate until the total amount of interest accrued
pursuant to this Agreement and such fees deemed to be interest equals
the amount of interest which would have accrued to such Lender or the
Issuer if a varying rate per annum equal to the interest provided
pursuant to Section 3.2 had at all times been in effect, plus the
amount of fees which would have been received but for the effect of
this Section 4.11.
ARTICLE V
CONDITIONS TO BORROWING AND ISSUANCES OF LETTERS OF CREDIT
SECTION 5.1. Initial Borrowing and Letters of Credit. The obligations
of the Lenders to fund the initial Borrowing and the obligation of the Issuer to
issue the initial Letter of Credit shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. Agreement and Notes. The Administrative Agent (or its
counsel) shall have received (a) from each party hereto, a counterpart of this
Agreement, signed on behalf of such party and (b) a Note for the account of each
Lender, duly executed and delivered by the Borrower.
SECTION 5.1.2. Organic Documents, Resolutions, etc. The Administrative
Agent shall have received from the Borrower and each other Obligor a certificate
from an Authorized Officer of such Obligor dated as of the Effective Date and
certifying:
(a) that attached to each such certificate are (i) a true
and complete copy of all Organic Documents of such Obligor, as in
effect on the date of such certificate and (ii) a true and complete
copy of a certificate from the Governmental Authority of the state of
such Obligor's organization certifying that such Obligor is duly
organized and validly existing in such jurisdiction;
(b) that attached to such certificate is a true and
complete copy of resolutions then in full force and effect, adopted by
the board of directors or other governing body of such Obligor,
authorizing the execution, delivery and performance of this Agreement,
the Notes and each other Loan Document to be executed by it;
(c) that attached thereto is a true and complete copy of
a certificate from the appropriate Governmental Authority of the state
of organization or formation, as the case may be, of such Obligor as to
the existence and good standing of such Obligor, each dated within
thirty (30) days prior to the date of delivery pursuant hereto, and
that such certificate of incorporation or certificate of formation, as
the case may be, has not been amended since the date of such certified
copy; and a true and complete copy of a
41
certificate from the appropriate Governmental Authority of each state
(without duplication) as to the good standing of and payment of
franchise taxes by the Borrower or each such Obligor, if applicable,
dated within thirty (30) days prior to the date of delivery pursuant
hereto; and
(d) as to the incumbency and signatures of those of its
officers authorized to act with respect to each Loan Document executed
by it,
upon which certificate each Lender may conclusively rely until it shall
have received a further certificate of the Secretary of the Borrower or such
other Obligor canceling or amending such prior certificate.
SECTION 5.1.3. Arnos Credit Facility. The Administrative Agent shall
have received a certificate signed by an Authorized Officer of Arnos, stating
that the Borrower has repaid in full all obligations under the Arnos Credit
Facility and terminated such facility contemporaneously with the initial Loans
hereunder. The Administrative Agent shall have received evidence satisfactory to
it that all Liens associated with the Arnos Credit Facility have been released
or terminated contemporaneously with the making of such payments and that
arrangements satisfactory to the Administrative Agent have been made for
recording and filing such releases.
SECTION 5.1.4. Guaranties. The Administrative Agent shall have received
a Guaranty duly executed and delivered by each Guarantor.
SECTION 5.1.5. Pledge Agreements; Certificates and Blank Powers.
(a) The Administrative Agent shall have received
counterparts of a Pledge Agreement duly executed and delivered by NEG
Holding, together with the following:
(i) certificates evidencing 100% of the
issued and outstanding Equity Interests of the Borrower, which
certificates shall in each case be accompanied by undated
stock powers or other similar powers duly executed in blank;
or, if such Equity Interests are uncertificated securities,
confirmation and evidence satisfactory to the Administrative
Agent or the Collateral Agent that the security interest in
such uncertificated securities has been transferred to and
perfected by the Administrative Agent for the benefit of the
Lenders by control in accordance with the Uniform Commercial
Code, as in effect in the State of New York; and
(ii) all documents and instruments,
including Uniform Commercial Code Financing Statements (Form
UCC-1), required by Governmental Rule or reasonably requested
by the Administrative Agent or the Collateral Agent, to be
filed, registered or recorded to create or perfect the Liens
intended to be created under the Pledge Agreement.
(b) The Administrative Agent shall have received
counterparts of Pledge Agreements duly executed and delivered by each
of NEG and Xxxxxx, together with the following:
42
(i) certificates evidencing, as to each
of NEG and Xxxxxx, ownership of fifty percent (50%) of the
issued and outstanding Equity Interests of NEG Holding, which
certificates shall in each case be accompanied by undated
stock powers or other similar powers duly executed in blank;
or, if such Equity Interests are uncertificated securities,
confirmation and evidence satisfactory to the Administrative
Agent or the Collateral Agent that the security interest in
such uncertificated securities has been transferred to and
perfected by the Administrative Agent for the benefit of the
Lenders by control in accordance with the Uniform Commercial
Code, as in effect in the State of New York; and
(ii) all documents and instruments,
including Uniform Commercial Code Financing Statements (Form
UCC-1), required by Governmental Rule or reasonably requested
by the Administrative Agent or the Collateral Agent, to be
filed, registered or recorded to create or perfect the Liens
intended to be created under the Pledge Agreement.
(c) The Administrative Agent shall have received
counterparts of a Pledge Agreement duly executed and delivered by the
Borrower, together with the following:
(i) certificates evidencing 100% of the
issued and outstanding Equity Interests of Xxxxx National,
which certificates shall in each case be accompanied by
undated stock powers or other similar powers duly executed in
blank; or, if such Equity Interests are uncertificated
securities, confirmation and evidence satisfactory to the
Administrative Agent or the Collateral Agent that the security
interest in such uncertificated securities has been
transferred to and perfected by the Administrative Agent for
the benefit of the Lenders by control in accordance with the
Uniform Commercial Code, as in effect in the State of New
York; and
(ii) all documents and instruments,
including Uniform Commercial Code Financing Statements (Form
UCC-1), required by Governmental Rule or reasonably requested
by the Administrative Agent or the Collateral Agent, to be
filed, registered or recorded to create or perfect the Liens
intended to be created under the Pledge Agreement.
SECTION 5.1.6. Security Agreements and UCC Filings. The Administrative
Agent shall have received duly executed counterparts of a Security Agreement,
duly executed by the Borrower and Xxxxx National, together with the following:
(a) executed or authorized Uniform Commercial Code
Financing Statements (Form UCC-1) and such evidence of filing or
arrangements for filing as may be acceptable to the Administrative
Agent or the Collateral Agent, naming the Borrower, and Xxxxx National,
as applicable, as the debtor and the Collateral Agent as the secured
party, or other similar instruments or documents, filed or to be under
the Uniform Commercial Code of all jurisdictions as may be necessary
or, in the opinion of the Administrative Agent or the Collateral Agent,
desirable to perfect the security interest of the Collateral Agent
pursuant to such Security Agreement; and
43
(b) executed or authorized copies of proper Uniform
Commercial Code Form UCC-3 termination statements, if any, necessary to
release all Liens and other rights of any Person in any Collateral
described in the Security Agreement previously granted by any Person,
and together with such other Uniform Commercial Code Form UCC-3
termination statements as the Administrative Agent or the Collateral
Agent may reasonably request.
SECTION 5.1.7. Mortgages. The Administrative Agent shall have received
counterparts of duly executed Mortgages encumbering various Oil and Gas
Properties which, along with the Oil and Gas Properties encumbered by the other
Security Documents, constitute at least ninety percent (90%) of the aggregate
net present value attributed to the Oil and Gas Properties as determined by the
Administrative Agent in its calculation of the initial Borrowing Base, duly
executed by the Borrower, and any other record owner of such Mortgaged Property.
SECTION 5.1.8. Opinions of Counsel.
(a) The Administrative Agent shall have received
opinions, dated as of the Effective Date, addressed to the
Administrative Agent, the Collateral Agent, the Issuer and all Lenders,
from (i) Xxxxxx X. Xxxxxx, general counsel to the Borrower and the
other Obligors and (ii) Xxxxxxxxx Traurig LLP, special New York counsel
to the Borrower and the other Obligors, each in substantially the form
attached hereto as Exhibit E or as otherwise acceptable to the Agent
and its counsel.
(b) The Administrative Agent shall have received
favorable opinions, dated as of the Effective Date, addressed to the
Administrative Agent, the Collateral Agent, the Issuer and all Lenders
from Xxxxxxxxx Xxxxxxx LLP, local counsel to the Obligors in the States
of Texas and Oklahoma, in form and substance reasonably satisfactory to
the Administrative Agent and its counsel, which shall include an
opinion that the Mortgages are effective to create a valid, perfected
Lien in favor of the Collateral Agent on the Mortgaged Properties
located in the States of Texas and Oklahoma, respectively, and are in
proper form for recordation in such state.
SECTION 5.1.9. Title. The Administrative Agent shall have received
favorable title opinions and other title information all in form and substance
satisfactory to the Administrative Agent in its sole and absolute discretion.
SECTION 5.1.10. Priority; Security Interest. The Collateral and
Borrowing Base Properties shall be free and clear of all Liens, except Liens
permitted by Section 7.2.3. All filings, notices, recordings and other action
necessary to perfect the Liens in the Collateral and Borrowing Base Properties
shall have been made, given or accomplished or arrangements for the completion
thereof satisfactory to the Administrative Agent and its counsel shall have been
made and all filing fees and other expenses related to such actions either have
been paid in full or arrangements have been made for their payment in full which
are satisfactory to the Administrative Agent.
SECTION 5.1.11. Environmental Matters.
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(a) Environmental Review. The Administrative Agent shall
have received, and shall have been satisfied with the contents, results
and scope of, the environmental reports, opinions and other
environmental information that have been, or may be, requested by the
Administrative Agent, all in form and substance satisfactory to the
Administrative Agent and the Collateral Agent in their sole and
absolute discretion.
(b) Environmental Warranties. The Borrower shall have
adopted and implemented procedures and guidelines as the Borrower has
determined are reasonably appropriate to continuously assure compliance
with applicable Environmental Laws and to identify and evaluate events
or conditions which would result in any Environmental Liability. On the
basis of these procedures and guidelines, the Administrative Agent
shall have received a certificate, signed by an Authorized Officer of
the Borrower, stating that after such review the Borrower has
reasonably concluded that, except as could not reasonably be expected
to have a Material Adverse Effect, no Environmental Liabilities exist
or violations of Environmental Laws have occurred.
SECTION 5.1.12. No Material Adverse Change; Litigation. The
Administrative Agent shall have received a certificate, signed by an Authorized
Officer of the Borrower, stating that (i) no event or condition has occurred
since December 31, 2002, that could reasonably be expected to have a Material
Adverse Effect and (ii) no litigation, arbitration, governmental proceeding,
claim for Taxes, dispute or administrative or other proceeding shall be pending
or, to the knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.
SECTION 5.1.13. UCC and Lien Searches. The Administrative Agent shall
have received (i) the UCC Searches, all dated reasonably close to the Effective
Date, in the discretion of the Administrative Agent and in form and substance
satisfactory to the Administrative Agent and (ii) evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by the
financing statements in such UCC Searches are permitted by Section 7.2.3 or have
been released.
SECTION 5.1.14. Insurance. The Administrative Agent shall have received
a certificate of the Borrower and NEG in form and substance satisfactory to the
Administrative Agent, certified by an Authorized Officer of the Borrower and
NEG, respectively, as true and correct in all material respects and describing
in detail all liability insurance maintained by each of the Borrower and its
Subsidiaries, or NEG and its Subsidiaries, respectively, as of the Effective
Date and certifying that (i) such insurance satisfies the requirements of
Section 7.1.4 and the Security Documents and (ii) such insurance is in full
force and effect.
SECTION 5.1.15. Fees. Expenses, etc. The Administrative Agent shall
have received for its own account, the account of the Issuer, or for the account
of each Lender, as the case may be, all fees, costs and expenses due and payable
pursuant to Sections 3.3 and 10.3, if then invoiced.
SECTION 5.1.16. Initial Reserve Reports. The Engineering Banks and the
other Lenders shall have received and shall be satisfied with the contents,
results and scope of the Initial Reserve Reports.
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SECTION 5.1.17. Approvals and Consents. The Administrative Agent shall
have received copies of:
(a) all Governmental Approvals from any applicable
Governmental Authority or regulatory body or other Person in connection
with the execution and performance of the Loan Documents, and all
applicable waiting periods and appeal periods shall have expired,
without the imposition of any burdensome conditions, and
(b) any third party consents and approvals necessary or
advisable, in connection with the execution and performance of the Loan
Documents, and all applicable waiting periods and appeal periods shall
have expired, without the imposition of any burdensome conditions.
There shall be no actual government or judicial action restraining,
preventing or imposing burdensome conditions on the execution and
performance of the Loan Documents.
SECTION 5.1.18. Financial Statements. The Administrative Agent shall
have received the financial statements described in Section 6.5. and such
financial statements shall be consistent in all material respects with the
forecasts and other information previously provided to the Lenders.
SECTION 5.1.19. Hedging Agreements. The Administrative Agent shall have
received a list of any Hedging Agreements currently in existence with respect to
the Borrower or any of its Subsidiaries.
SECTION 5.1.20. NEG Documents. The Administrative Agent and the Lenders
shall have received:
(a) fully-executed executed copies of (i) the NEG Holding
Operating Agreement and (ii) the NEG Operating LLC Operating Agreement,
(b) a fully-executed copy of an amendment to the NEG
Management Agreement, in form and substance satisfactory to the
Administrative Agent, which amendment shall (i) reflect the restriction
set forth in Section 7.2.13 with respect to the NEG Management Fee,
(ii) provide that, until all Commitments have been terminated and all
Obligations have been paid and performed in full under the Loan
Documents, no further amendment to the NEG Management Agreement shall
occur without the prior written consent of the Administrative Agent and
the Required Lenders, (iii) provide for immediate termination of the
NEG Management Agreement in the event of (A) NEG's insolvency or
general failure to pay, or admission of its inability or unwillingness
to pay, debts as they become due, (B) NEG's general assignment for the
benefit of creditors; (C) any default by NEG of the NEG Management
Agreement (after giving effect to any applicable grace period), (D) the
occurrence and continuation of an Event of Default hereunder by the
Borrower and (iii) include any other provisions as the Administrative
Agent may have reasonably requested; and
(c) a certificate dated as of the Effective Date and duly
executed by an Authorized Officer of the Borrower certifying that all
such copies delivered pursuant to this Section 5.1.20 are true, correct
and complete.
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SECTION 5.1.21. Effectiveness Notice. The Administrative Agent shall
have received the Effectiveness Notice.
SECTION 5.1.22. Satisfactory Review and Legal Form. All legal matters
in connection with this Agreement and the consummation of the transaction
contemplated hereby and by the other Loan Documents shall be approved by the
Administrative Agent and its legal counsel, and there shall have been furnished
to the Administrative Agent by the Borrower, at the Borrower's expense, such
agreements, opinions of counsel, title opinions, and other records and
information, in form, substance, scope and methodology satisfactory to the
Administrative Agent in its sole discretion, as it may reasonably have requested
for that purpose.
SECTION 5.1.23. Other Documents. The Administrative Agent shall have
received such other legal opinions, instruments and documents as any of the
Agents or their counsel may have reasonably requested.
The Administrative Agent shall notify the Borrower, the Collateral Agent, the
Issuer and the Lenders of the Effective Date, and such notice shall be
conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuer to issue Letters of Credit hereunder
shall not become effective unless each of the foregoing conditions is satisfied
(or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New York City
time, on January 30, 2004 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).
SECTION 5.2. All Borrowings and Letters of Credit. The obligation of
each Lender to fund any Loan on the occasion of any Borrowing (including the
initial Borrowing) and the obligations of the Issuer to issue any Letter of
Credit (including the initial Letter of Credit) and of the Lenders to
participate therein shall be subject to the satisfaction of each of the
conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Representations and Warranties. No Default. Both before
and after giving effect to any Borrowing or the issuance, amendment, renewal or
extension of any Letter of Credit, as applicable (but, if any Default of the
nature referred to in Section 8.1.4 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof), the following statements shall be true and
correct:
(a) the representations and warranties of the Borrower
and each other Obligor set forth in the Loan Documents shall be true
and correct with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date); and
(b) no Default shall have occurred and be continuing and
the Borrower shall be in compliance with the financial covenants set
forth in Section 7.2.4 and Section 7.2.13.
SECTION 5.2.2. Borrowing Request. The Administrative Agent shall have
received a Borrowing Request for such Borrowing or a Letter of Credit Request
for such Letter of Credit. The delivery of a Borrowing Request or a Letter of
Credit Request and the acceptance by the Borrower of the proceeds of such
Borrowing or the issuance of such Letter of Credit, as
47
applicable, shall constitute a representation and warranty by the Borrower that,
on the date of such Borrowing or the date of issuance of such Letter of Credit
(both immediately before and after giving effect to such Borrowing and the
issuance of such Letter of Credit and the application of the proceeds thereof),
all representations and warranties of the Borrower and each other Obligor set
forth in the Loan Documents are true and correct with the same effect as if then
made (unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date).
SECTION 5.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Obligor shall be satisfactory
in form and substance to the Administrative Agent and its counsel, and the
Administrative Agent and its counsel shall have received all information,
approvals, opinions, title opinions, documents or instruments as the
Administrative Agent or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, the Collateral Agent, the
Issuer and the Lenders to enter into this Agreement and to make Loans and issue
Letters of Credit hereunder, the Borrower represents and warrants unto the
Administrative Agent, the other Agents, the Issuer and the Lenders as set forth
in this Article VI.
SECTION 6.1. Existence, etc. Each Obligor is a corporation, partnership
or limited liability company validly organized and existing and in good standing
under the laws of the State of its organization, incorporation or formation.
Each Obligor is duly qualified to do business and is in good standing as a
foreign entity in each jurisdiction where the nature of its business requires
such qualification. Each Obligor has full power and authority, and holds all
requisite governmental licenses, permits and other approvals, (i) to enter into
and perform its Obligations under this Agreement, the Notes and each other Loan
Document to which it is a party, and (ii) to own and hold under lease its
property and to conduct its business substantially as currently conducted by it.
SECTION 6.2. Due Authorization. Each Obligor has 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
each Obligor of the Loan Documents to which it is a party, have been duly
authorized by all necessary action on its part; and the Loan Documents
constitute the legal, valid and binding obligations of each Obligor thereto,
enforceable in accordance with their terms, except to the extent that
enforcement may be subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors' rights.
SECTION 6.3. Non-Contravention. 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 Effective Date under, the respective Organic Documents
of any Obligor, or any Governmental Rule or any material agreement or instrument
to which any Obligor is a party or by which it is bound or to
48
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 any Obligor pursuant to the terms of any
such agreement or instrument other than the Liens created by the Loan Documents.
SECTION 6.4. Government Approval, Regulation, etc. Except for filings
necessary to perfect Liens created under the Loan Documents, no Governmental
Approvals or third party consents are necessary for the execution, delivery or
performance by any Obligor of the Loan Documents or for the validity or
enforceability thereof.
SECTION 6.5. Financial Information. The Borrower has delivered to the
Administrative Agent (a) audited consolidated financial statements of NEG
Holding, the Borrower and its Consolidated Subsidiaries as at and for the fiscal
year ended December 31, 2002, and unaudited consolidated financial statements of
NEG Holding, the Borrower and its Consolidated Subsidiaries as at and for each
of the Fiscal Quarters ended March 31, 2003, June 30, 2003 and September 30,
2003. Such financial statements have been prepared in accordance with GAAP as
applied on a consistent basis, and fairly and accurately present, on a
consolidated basis, the financial condition of the Borrower and its Subsidiaries
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein. Neither NEG Holding, the Borrower nor
any of its Consolidated Subsidiaries has on the Effective Date any material
Indebtedness, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments except as scheduled or referred to or reflected in such financial
statements.
SECTION 6.6. No Material Adverse Change. Since December 31, 2002,
(a) there has been no change or event which could
reasonably be expected to have a Material Adverse Effect, nor
(b) have the business or the Property of the Borrower,
any Subsidiary or any other Obligor 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 6.7. Litigation, Labor Controversies, etc. There is no pending
or, to the Borrower's knowledge, threatened litigation, action, proceeding, or
labor controversy affecting the Borrower or any Subsidiary, or any of their
respective properties, businesses, assets or revenues, which could reasonably be
expected to have a Material Adverse Effect, except as disclosed in Item 6.7
("Litigation") of the Disclosure Schedule. There are no outstanding judgments
against the Borrower or any Subsidiary.
SECTION 6.8. Subsidiaries. Neither the Borrower nor any other Obligor
has any Subsidiaries except those Subsidiaries identified in Item 6.8
("Subsidiaries") of the Disclosure Schedule.
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SECTION 6.9. Location of Business and Offices. The Borrower's state of
organization, state identification number, principal place of business and chief
executive offices are located at the address stated on the signature page of
this Agreement or as otherwise disclosed in writing to the Administrative Agent
and its Federal Taxpayer Identification Number is 00-0000000. The state of
organization, organizational number, principal place of business, chief
executive office and Federal Tax Payer Identification Number of each Subsidiary
are described in Item 6.8 ("Subsidiaries") of the Disclosure Schedule or as
otherwise disclosed in writing to the Administrative Agent.
SECTION 6.10. Properties, etc.
(a) Each of the Borrower and its Subsidiaries has good
and defensible title to, or valid leasehold interests in, its Mortgaged
Properties and its other material (individually or in the aggregate)
Properties, free and clear of all Liens, and free and clear of all
limitations and restrictions on, and consent requirements for,
disposition or transfer, except as permitted pursuant to Section 7.2.3.
The interests and properties described in Item 6.10 ("Properties") of
the Disclosure Schedule constitute all the Hydrocarbon Interests owned
by the Borrower and the other Obligors as of the date of this
Agreement. Other than those Subsidiaries of the Borrower that are
executing a Mortgage pursuant to this Agreement, no Subsidiary of the
Borrower owns any real property. Except as set forth in Item 6.10 of
the Disclosure Schedule, after giving full effect to the Permitted
Liens, the Borrower 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 obligate
the Borrower 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 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 its 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 its Subsidiaries.
(c) The rights, Mortgaged Properties and other assets
currently owned, leased or licensed by the Borrower and its
Subsidiaries, including, without limitation, all easements and rights
of way, include all rights, Properties and other assets necessary to
permit the Borrower and its Subsidiaries to conduct their business in
all material respects in the same manner as its business has been
conducted prior to the Effective Date.
(d) All of the assets and Properties of the Borrower and
its Subsidiaries that are reasonably necessary for the operation of its
business are in good working condition and are maintained in accordance
with prudent business standards.
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SECTION 6.11. Restriction on Liens. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement), or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to the
Administrative Agent, the Collateral Agent, the Issuer and the Lenders on or in
respect of their respective Properties.
SECTION 6.12. Taxes. The Borrower and each of its Subsidiaries has
filed all tax returns and reports required by Governmental Rule to have been
filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books. The Borrower knows
of no pending investigation of the Borrower or any Subsidiary by any taxing
authority or of any pending but unassessed tax liability of the Borrower or any
Subsidiary.
SECTION 6.13. Insurance. Item 6.13 ("Insurance") of the Disclosure
Schedule contains an accurate and complete description of all material policies
of fire, liability, workmen's compensation and other forms of insurance owned or
held by the Borrower and each Subsidiary. All such policies are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the date of the closing and through the respective dates set forth in
Item 6.13 of the Disclosure Schedule have been paid, 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
Governmental Rule and of all agreements to which the Borrower or any 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 Subsidiary.
SECTION 6.14. Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of and subject to
regulation under the Investment Company Act of 1940, as amended.
SECTION 6.15. 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 6.16. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date hereof and prior to the date
of any Borrowing hereunder, no steps have been taken to terminate any Pension
Plan under Section 4041(c) of ERISA, and no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Borrower
or any member of the Controlled Group of any liability, fine or penalty. Except
as disclosed in Item 6.16 ("Employee Benefit Plans") of the Disclosure Schedule,
neither the Borrower nor any member of the Controlled Group has any contingent
liability with respect to any post-retirement benefit under a
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Welfare Plan, other than liability for continuation coverage described in Part 6
of Title I of ERISA.
SECTION 6.17. Environmental Warranties.
(a) The Borrower and each Subsidiary and all of their
respective Properties and operations are in compliance in all respects
with all Environmental Laws, except as could not reasonably be expected
to have a Material Adverse Effect; neither the Borrower nor any
Subsidiary is aware of, and none of the Borrower or any of its
Subsidiaries has received notice of, any past, present or future
conditions, events, activities, practices or incidents which may
interfere with or prevent the compliance or continued compliance of any
of them with all Environmental Laws;
(b) there have been no past, and there are no pending or,
to the knowledge of the Borrower, threatened, (i) claims or complaints,
notices or requests for information received by the Borrower or any of
its Subsidiaries with respect to any alleged violation of any
Environmental Law by the Borrower or any of its Affiliates, or (ii)
complaints, notices or inquiries to the Borrower or any of its
Affiliates regarding potential liability under any Environmental Law;
(c) Except as could not reasonably be expected to have a
Material Adverse Effect, there have been no Releases of Hazardous
Materials at, on or under any Property now or previously owned or
leased by the Borrower or any of its Subsidiaries;
(d) Except where the failure to take such actions would
not have a Material Adverse Effect: (i) 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 Material
into the environment, have been duly obtained or filed, and (ii) the
Borrower and each Subsidiary are in compliance with the terms and
conditions of all such notices, permits, licenses and similar
authorizations;
(e) no Property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or proposed for listing
(with respect to owned Property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any Property
now or previously owned or leased by the Borrower or any of its
Subsidiaries;
(g) neither the Borrower nor any Subsidiary of the
Borrower has directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List pursuant
to CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to claims against the Borrower or such
Subsidiary thereof for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA;
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(h) Except as could not reasonably be expected to have a
Material Adverse Effect, there are no polychlorinated biphenyls or
friable asbestos present at any Property now or previously owned or
leased by the Borrower or any Subsidiary of the Borrower: and
(i) Except as could not reasonably be expected to have a
Material Adverse Effect, to the knowledge of the Borrower, no
conditions exist at, on or under any Property now or previously owned
or leased by the Borrower which, with the passage of time, or the
giving of notice or both, would give rise to liability under any
Environmental Law.
SECTION 6.18. Regulation U. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying Margin Stock, and
no proceeds of any Loans will be used for a purpose that violates, or would be
inconsistent with, Regulation U.
SECTION 6.19. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
other Obligor in writing to the Administrative Agent, the Collateral Agent, any
Lender or the Issuer for purposes of or in connection with this Agreement, any
Loan Document or any transaction contemplated hereby or thereby is, and all
other such factual information hereafter furnished by or on behalf of any
Obligor to the Administrative Agent, the Collateral Agent, the Issuer or any
Lender will be, true and accurate in every material respect on the date as of
which such information is dated or certified and as of the date of execution and
delivery of this Agreement by to the Administrative Agent, the Collateral Agent,
the Issuer or such Lender, and such information is not, or shall not be, as the
case may be, incomplete by omitting to state any material fact necessary to make
such information not misleading. There is no fact existing with respect to the
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect arid which has not been set forth in this Agreement or the other
documents, certificates and statements furnished to the Administrative Agent by
or on behalf of the Borrower or any Subsidiary prior to, or on, the Effective
Date in connection with the transactions contemplated hereby.
SECTION 6.20. 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. No Default hereunder has occurred and is continuing.
SECTION 6.20.1. Solvency. Each Obligor is Solvent.
SECTION 6.21. Compliance with Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Rule or failed to obtain any
Governmental Approval necessary for the ownership of any of its Properties or
the conduct of its business. 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 Governmental Rules of
all Governmental 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.
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SECTION 6.22. Direct Benefit. The initial Borrowings and Letters of
Credit hereunder and all additional Borrowings and Letters of Credit hereunder
are or will be, as applicable, for the direct benefit of the Borrower, or in the
case of any initial or additional Letters of Credit, one or more of the
Obligors. The Borrower and each of the Guarantors are engaged as an integrated
group in the business of oil and gas exploration and related fields, and any
benefits to any such Obligor is a benefit to all of them, both directly or
indirectly, inasmuch as the successful operation and condition of any such
Obligor is dependent upon the continued successful performance of the functions
of the integrated group as a whole.
SECTION 6.23. Use of Proceeds. The proceeds of the Loans and the
Letters of Credit shall be used in accordance with the purposes set forth in
Section 4.10.
SECTION 6.24. Priority; Security Matters. The Obligations are and shall
be at all times secured by Liens in all Collateral to the extent perfection has
or will occur by the filing of a UCC financing statement in the States of Texas
and Oklahoma, if applicable, the filing of a Mortgage in real property records
of the parish or county in which such real property or fixtures are located (or
adjacent in the case of properties located on the Outer Continental Shelf), or
by possession, and, except for Liens permitted by Section 7.2.3, all such Liens
shall be first priority Liens.
SECTION 6.25. Material Agreements. Item 6.25 ("Material Agreements") of
the Disclosure Schedule sets forth a complete and correct list of (a) all
indentures, obligations in respect of letters of credit, guarantees and (b) in
addition to and not in limitation of clause (a), all agreements, leases,
purchase agreements, joint venture agreements, and other instruments in effect
or to be in effect as of the Effective Date (other than Hedging Agreements) a
default with respect to which, or acceleration or termination of which, could
reasonably be expected to have a Material Adverse Effect.
SECTION 6.26. Hedging Agreements. Item 6.26 ("Hedging Agreements") of
the Disclosure Schedule sets forth, as of the Effective Date, a true and
complete list of all Hedging Agreements (including commodity price swap
agreements and all 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 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.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with
Administrative Agent, the Co-Agents, the Collateral Agent, the Issuer and the
Lenders that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrower will, and will cause its
Subsidiaries to, perform the obligations set forth in this Section 7.1.
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SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to the Administrative
Agent (or, in the case of Section 7.1.1(m), to the Engineering Banks) for
distribution to the Lenders copies (in sufficient number to provide at least one
copy to each Lender) of the following financial statements, reports, notices and
information:
(a) Annual Financial Statements. As soon as available and
in any event within ninety (90) days after the end of each Fiscal Year
of the Borrower, a copy of an audited annual report for such Fiscal
Year for NEG Holding, the Borrower and its Consolidated Subsidiaries,
including therein consolidated (and, if required by GAAP or by any
Governmental Authority, consolidating) financial statements of NEC
Holding, the Borrower and its Consolidated Subsidiaries as of the end
of such Fiscal Year and certified (without any "going concern" or like
qualification or exception) by independent certified public accountants
of nationally recognized standing acceptable to the Administrative
Agent and the Majority Lenders to the effect that such consolidated
financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with
GAAP as applied on a consistent basis.
(b) Quarterly Financial Statements. As soon as available
and in any event within forty-five (45) days after the end of each of
the first three Fiscal Quarters of each Fiscal Year of the Borrower,
consolidated balance sheets of NEG Holding, the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of earnings and cash flow of NEG Holding, the
Borrower and its Consolidated Subsidiaries for such Fiscal Quarter and
for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter, and setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding Fiscal Year, accompanied by a
certificate of an Authorized Officer of the Borrower stating that such
financial statements fairly present, in all material respects, the
consolidated financial condition and results of operations of NEG
Holding, the Borrower and its Consolidated Subsidiaries in accordance
with GAAP as applied on a consistent basis, as at the end of, and for,
such period.
(c) Monthly Financial Statements. As soon as available
and in any event within twenty-five (25) days after the end of each of
calendar month, monthly financial statements in substantially the form
historically provided to the Administrative Agent, including without
limitation, consolidated balance sheets of NEG Holding, the Borrower
and its Consolidated Subsidiaries as of the end of such calendar month
and consolidated statements of earnings and cash flow of NEG Holding,
the Borrower and its Consolidated Subsidiaries for such calendar month
and for the period commencing at the end of the previous Fiscal Year
and ending with the end of such calendar month, and setting forth in
each case in comparative form the corresponding figures for the
corresponding month in the preceding Fiscal Year, accompanied by a
certificate of an Authorized Officer of the Borrower stating that (x)
such financial statements fairly present, in all material respects, the
consolidated financial condition and results of operations of NEG
Holding, the Borrower and its Consolidated Subsidiaries in accordance
with GAAP as applied on a consistent basis, as at the end of, and for,
such month and that (y) the information
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described in the immediately succeeding sentence of this clause (c) is
true, correct and complete in all material respects. Concurrently with
the delivery of the foregoing pursuant to this clause (c), the Borrower
shall also deliver, with respect to the preceding calendar month, (i)
an oil and gas revenue and expense summary, (ii) an oil and gas
production volume analysis; (iii) a summary of capital costs, (iv) a
summary of general and administrative costs, (v) a detailed comparison
of projected and actual costs and expenses and (vi) a lease operating
summary.
(d) Financial Covenants Compliance; No Default.
Concurrently with any delivery of financial statements pursuant to
clauses (a) or (b) above, a certificate executed by an Authorized
Officer of the Borrower and showing (in reasonable detail and with
appropriate calculations and computations in all respects satisfactory
to the Administrative Agent) compliance with the financial covenants
set forth in Section 7.2.4. and Section 7.2.13, together with a
statement, if applicable, to the effect that the Borrower has not
become aware of any Default or Event of Default that has occurred or is
continuing.
(e) Production Statement. Concurrently with the delivery
of the certificate described in clause (d) above, (i) a production
statement that identifies the most recent information available
relating to the gross volumes of Hydrocarbons produced in the aggregate
from the Hydrocarbon Interests included in the Borrowing Base, (ii) a
statement of revenues and expenses attributable to the Hydrocarbon
Interests included in the Borrowing Base for such Fiscal Quarter ended,
and (iii) an operating report that identifies the most recent
information available relating to the aggregate Hydrocarbons throughput
of any gas gathering systems of the Borrower and its Subsidiaries,
revenues and expenses and operating reports each attributable to such
gas gathering systems for such Fiscal Quarter then ended, such
production report and statement of revenues and expenses and operating
reports each to be in a form and substance reasonably satisfactory to
the Administrative Agent and the Lenders.
(f) Other Accounting Reports. Promptly upon receipt
thereof, a copy of each other report or letter submitted to the
Borrower or any Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the books of
the Borrower and its Subsidiaries, and a copy of any response by the
Borrower or any Subsidiary of the Borrower, or the board of directors
or other managing body of the Borrower or any Subsidiary of the
Borrower, to such letter or report.
(g) Default; Borrowing Base Deficiency, etc. Immediately
upon the Borrower learning of the occurrence of any Default. Borrowing
Base Deficiency or anything that could reasonably be expected to have a
Material Adverse Effect, a statement of an Authorized Officer of the
Borrower setting forth details of such Default, Borrowing Base
Deficiency or Material Adverse Effect and the action that the Borrower
or such other Obligor has taken and proposes to take with respect
thereto.
(h) Litigation. Promptly upon the Borrower learning of
(x) the occurrence of any adverse development with respect to any
litigation, action, proceeding, or labor controversy described in
Section 6.7 or (y) the commencement of any labor controversy,
56
litigation, action, proceeding of the type described in Section 6.7,
notice thereof and copies of all documentation relating thereto.
(i) SEC Filings. Etc. Promptly after the sending or
filing thereof, copies of all reports that NEG sends to its
stockholders generally, and all reports on form 00-X, 00-X, 0-X, all
definitive proxy statements, and effective registration statements
(other than registration statements on Form S-8 or successor forms for
sales of securities under Plans) which NEG files with the SEC or any
national securities exchange.
(j) ERISA Matters. Immediately upon becoming aware of the
institution of any steps by the Borrower or any Affiliate of the
Borrower to terminate any Pension Plan, or the failure to make a
required contribution to any Pension Plan if such failure is sufficient
to give rise to a Lien under section 302(f) of ERISA, or the taking of
any action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect
to any Pension Plan which could result in the incurrence by the
Borrower of any liability, fine or penalty, or any material increase in
the contingent liability of the Borrower with respect to any
post-retirement Welfare Plan benefit, notice thereof and copies of all
documentation relating thereto.
(k) Hedging Agreements. Promptly upon the Borrower
learning of any default under one or more Hedging Agreements within a
one month period that results in an obligation of the Borrower or any
of its Subsidiaries to make one or more payments in an aggregate amount
in excess of $1,000,000, written notice thereof and copies of all
documentation relating thereto.
(1) Margin Accounts. Promptly upon the aggregate value of
all margin accounts established by the Borrower or any of its
Subsidiaries with respect to Hedging Obligations exceeding $1,000,000,
written notice of the aggregate value of all such margin accounts.
(m) Reserve Reports.
(i) On or before March 1 of each
calendar year, commencing March 1, 2004, a Reserve Report
prepared by an Approved Engineer, dated as of December 31 of
the preceding year;
(ii) On or before September 1 of each
calendar year, commencing September 1, 2004, a Reserve Report
prepared by the Borrower, dated as of June 30 of such year;
(iii) In the event of a discretionary
redetermination by the Lenders pursuant to Section 2.8.4, (A)
a Reserve Report with an "as of date as required by the
Engineering Banks and prepared by an Approved Engineer (unless
the Engineering Banks shall have previously consented in
writing to a certificate from the Borrower's internal
engineers), 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,
along with (B)
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such updated engineering, production, operating and other data
as the Engineering Banks, the Issuer or any Lender may
reasonably request thereafter. The Borrower shall provide such
Reserve Reports required by this Section 7.1.1(m)(iii) as soon
as possible, but in any event no later than thirty (30) days
following the receipt of the request by the Administrative
Agent on behalf of the Engineering Banks; and
(iv) With the delivery of each Reserve
Report, a certificate from an Authorized Officer of the
Borrower certifying that: (i) the information contained in the
Reserve Report and any other information delivered in
connection therewith is true and correct, (ii) the Borrower
and its Subsidiaries owns good and defensible title to the Oil
and Gas Properties evaluated in such Reserve Report and such
Oil and Gas Properties are free of all Liens except for Liens
permitted by Section 7.2.3 and (iii) the report, in form and
substance satisfactory to the Administrative Agent, attached
as an exhibit to the certificate, sets forth on a net basis
all gas imbalances, take or pay or other prepayments with
respect to the Borrower's and any Subsidiaries' Oil and Gas
Properties evaluated in such Reserve Report which would
require the Borrower or any Subsidiary to deliver Hydrocarbons
produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor.
(n) Notices Under Other Loan Agreements. Promptly after
the furnishing thereof, copies of any statement, report or notice
furnished to any Person pursuant to the terms of any 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 7.1.1.
(o) Gas Imbalances. Concurrently with the delivery of the
financial statements pursuant to clause (a) or (b) above, a report in
form and substance satisfactory to the Administrative Agent setting
forth, on a net basis, all gas imbalances, take or pay or other
prepayments with respect to the Borrower's and any Subsidiaries' Oil
and Gas Properties which would require the Borrower or any Subsidiary
to deliver Hydrocarbons produced from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment
therefor.
(p) Notice of Dispositions of Properties. Promptly upon
the disposition of any Oil and Gas Properties or Equity Interests
pursuant to Section 7.2.10 or otherwise, and in any event within five
(5) Business Days of such disposition, the Borrower shall provide the
Administrative Agent with written notice of such disposition, setting
forth a description of the Oil and Gas Properties or Equity Interests
so disposed of and the proceeds received in connection with such
disposition.
(q) Notice of Material Adverse Change. As soon as
possible and in any event within five (5) days after the occurrence
thereof, written notice of any matter that could reasonably be expected
to have a Material Adverse Effect.
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(r) Other. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
of its Subsidiaries as any Agent, the Issuer or any Lender may from
time to time reasonably request.
SECTION 7.1.2. Compliance with Laws. Maintenance of Existence, etc. The
Borrower will and will cause each of its Subsidiaries to:
(a) comply in all material respects with all applicable
laws, rules, regulations and orders;
(b) do all things necessary and proper to maintain and
preserve its respective corporate or other existence and franchises and
privileges in the jurisdiction of its formation and qualify and remain
qualified as a foreign entity authorized to do business in each
jurisdiction in which it conducts business; and
(c) pay, before the same become delinquent, all taxes,
assessments and governmental charges imposed upon it or upon its
Property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books. The
Borrower will conduct, and will cause each Subsidiary to conduct, its
business in an orderly and efficient manner in accordance with good
business practices.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its and
their respective Properties in good repair, working order and condition, and
make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times and otherwise do all other things necessary to keep unimpaired, except for
Liens permitted in Section 7.2.3, its rights with respect to its Oil and Gas
Properties and prevent any forfeiture thereof or a default thereunder, except to
the extent a portion of such Oil and Gas Properties is no longer capable of
producing Hydrocarbons in economically reasonable amounts and except for
dispositions of Property permitted by Section 7.2.10. The Borrower Will, and
will cause each of its Subsidiaries to, operate its and their respective Oil and
Gas Properties or cause or make reasonable efforts to cause such Oil and Gas
Properties to be operated in a reasonable and efficient manner in accordance
with the practices of the industry and in compliance with all applicable
contracts and agreements and in compliance in all material respects with all
applicable laws, rules, regulations and orders of any applicable Governmental
Authority.
SECTION 7.1.4. Insurance.
(a) The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its and its Subsidiaries'
Properties and business (including business interruption insurance)
against such casualties and contingencies and of such types and in such
amounts as is customary in the case of similar businesses and will,
upon request of the Administrative Agent, furnish to each Lender at
reasonable intervals a certificate of an Authorized Officer of the
Borrower setting forth the nature and extent of all insurance
maintained by the Borrower and its Subsidiaries in accordance with this
Section 7.1.4(a). Each
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insurance policy covering Collateral shall provide that such policy
will not be canceled or reduced without thirty (30) days' prior written
notice to the Administrative Agent. In the event an Event of Default
occurs and continues for a period of thirty (30) consecutive days, the
Borrower will cause, within five (5) days, each insurance policy
covering Collateral to name the Collateral Agent as additional insured
and loss payee for the benefit of itself, the Agents, the Lenders and
the Issuer.
(b) NEG will maintain or cause to be maintained with
responsible insurance companies insurance with respect to its and its
Subsidiaries' Properties and business (including business interruption
insurance) relating to the Borrower against such casualties and
contingencies and of such types and in such amounts as is customary in
the case of similar businesses and will, upon request of the
Administrative Agent, furnish to each Lender at reasonable intervals a
certificate of an Authorized Officer of NEG setting forth the nature
and extent of all insurance maintained by NEG and its Subsidiaries in
accordance with this Section 7.1.4(b).
SECTION 7.1.5. Books and Records. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect all
of its business affairs and transactions and permit the Administrative Agent,
the Collateral Agent, the Issuer and each Lender or any of their respective
representatives, at reasonable times and intervals, to visit all of its offices,
to discuss its financial matters with its officers and independent public
accountant (and the Borrower hereby authorizes such independent public
accountant to discuss the Borrower's and its Subsidiaries financial matters with
each Lender or its representatives whether or not any representative of the
Borrower is present) and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate or organizational
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the Administrative Agent's, the Collateral Agents,
the Issuer's or any Lender's exercise of its rights pursuant to this Section
7.1.5.
SECTION 7.1.6. Environmental Matters. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Administrative Agent and
provide copies upon receipt of all written claims, complaints, notices
or inquiries relating to the condition of its facilities and properties
or compliance with Environmental Laws, and promptly cure and have
dismissed with prejudice to the satisfaction of the Administrative
Agent any actions and proceedings relating to compliance with
Environmental Laws; and
(c) provide such information and certifications that the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section 7.1.6.
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SECTION 7.1.7. Delivery of Security Documents: Perfection and
Protection of Security Interests and Liens; Additional Subsidiaries.
(a) The Borrower agrees to deliver and to cause its
Subsidiaries to deliver, to further secure the Obligations whenever
requested by the Collateral Agent or the Administrative Agent, any
Security Documents, financing statements, continuation statements,
extension agreements and other similar agreements or instruments (in
addition to those required to be delivered under Article V) in form
and substance satisfactory to the Collateral Agent or the
Administrative Agent for the purpose of granting, confirming and
perfecting first and prior liens or security interests in any real or
personal Property which is at such time Collateral or that was intended
to be Collateral pursuant to any Loan Document previously executed and
not then released by the Collateral Agent; or Equity Interests in each
Subsidiary of the Borrower; provided, however, that the Borrower and
its Subsidiaries shall at all times maintain in effect in favor of the
Collateral Agent such Mortgages as are necessary to grant, confirm and
perfect first and prior liens or security interests in at least ninety
percent (90%) of the net present value of the Oil and Gas Properties of
the Borrower and its Subsidiaries; and further provided, however, that
in the event that the Hydrocarbon Interests on which the Collateral
Agent has a first priority perfected Lien shall constitute less than
ninety percent (90%) of the net present value of the Oil and Gas
Properties of the Borrower and its Subsidiaries, the Borrower shall
promptly notify the Administrative Agent and the Collateral Agent and
execute or cause to be executed additional Mortgages necessary to
increase such percentage to at least ninety percent (90%) Oil and Gas
Properties of the Borrower and its Subsidiaries, as determined by the
Administrative Agent in its reasonable discretion. The Borrower also
agrees to deliver, and to cause its Subsidiaries to deliver, whenever
requested by the Administrative Agent, favorable title opinions (in
addition to those required to be delivered under Article V) from legal
counsel acceptable to the Administrative Agent, or favorable title
insurance policies from insurers acceptable to the Administrative Agent
with respect to any Collateral as to which the Administrative Agent
believes that the record ownership of such Collateral, or the status of
Liens securing Obligations, is in question, based upon abstract or
record examinations to date acceptable to the Administrative Agent, and
(i) stating that the Borrower has good and marketable title to such
properties and interest, free and clear of all Liens except for Liens
permitted pursuant to Section 7.2.3; (ii) confirming that such
properties and interest are subject to Security Documents securing
Obligations that constitute and create legal, valid and duly perfected
Liens to such properties and interests and the proceeds thereof, and
(iii) covering such other matters as the Administrative Agent may
request.
(b) The Borrower will and will cause its Subsidiaries to
from time to time deliver or cause to be delivered to the Collateral
Agent any financing statements, continuation statements, extension
agreements and other documents, properly completed and executed (and
acknowledged when required) by the relevant Person, in form and
substance satisfactory to the Administrative Agent and the Collateral
Agent, which the Administrative Agent or the Collateral Agent requests
for the purpose of perfecting, confirming or protecting any Liens or
other rights in Collateral.
61
(c) The Borrower hereby authorizes the Administrative
Agent and the Lenders to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of the Borrower or any other Obligor
where permitted by law. A carbon, photographic or other reproduction of
the Security Documents or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. The Administrative Agent will send
the Borrower any financing or continuation statements it files without
the signature of the Borrower or any other Obligor and the
Administrative Agent will send Borrower the filing or recordation
information with respect thereto.
(d) The Borrower will furnish to the Administrative Agent
promptly, and in any event within thirty (30) days upon becoming aware
of the following changes, written notice of any change (i) in any
Subsidiary's corporate name or in any trade name used to identify such
Subsidiary in the conduct of its business or in the ownership of its
Properties, (ii) in the location of any Subsidiary's chief executive
office or its principal place of business, (iii) in any Subsidiary's
identity or corporate structure, and (iv) in any Obligor's Federal
Taxpayer Identification Number, including, without limitation,
information regarding the time of such relocation, the items being
relocated and the intended new locality of such items. Borrower also
agrees to provide to the Administrative Agent, from time to time upon
reasonable request of the Administrative Agent, information which is in
the possession of the Borrower or its Subsidiaries or otherwise
reasonably obtainable by any of them, reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens
created or intended to be created by the Security Documents. The
Security Documents shall remain in effect at all times unless otherwise
released pursuant to the terms of this Agreement.
(e) If any additional Subsidiary of the Borrower is
formed or acquired after the Effective Date, the Borrower will notify
the Administrative Agent and the Lenders thereof. The Borrower will (i)
cause any Subsidiary to execute a Guaranty within 30 days after such
Subsidiary is formed or acquired and (ii) pledge, or cause any
Subsidiary to pledge, all Equity Interests in such newly determined
Subsidiary pursuant to a Pledge Agreement.
SECTION 7.1.8. Compliance with Other Contractual Obligations. The
Borrower will, and will cause its Subsidiaries, to perform and observe in all
material respects all of the covenants and agreements contained in each contract
or agreement to which it is a party that are provided to be performed and
observed on the part of such Person, taking into account any grace period, and
shall in the reasonable business judgment of the Borrower diligently and in good
faith enforce, using appropriate procedures and proceedings, all of its and its
Subsidiaries' material rights and remedies under (including taking all diligent
actions required to collect amounts owed to such Person by any other parties
thereunder) each such contract or agreement.
SECTION 7.1.9. Performance of Obligations. The Borrower will and will
cause each other Obligor to do and perform every act and discharge all of the
Obligations at the time or times and in the manner specified.
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SECTION 7.1.10. Use of Proceeds. The Borrower and its Subsidiaries will
use the proceeds of the Loans and the Letters of Credit only in accordance with
the purposes set forth in Section 4.10.
SECTION 7.1.11. Hedging Agreements. Promptly, and in any event not more
than ten (10) Business Days after the Effective Date, the Borrower shall deliver
to the Administrative Agent evidence satisfactory to the Administrative Agent to
the effect that the Borrower has entered into Hedging Agreements, in form and
substance acceptable to the Administrative Agent and with counterparties
acceptable to the Administrative Agent, relating to natural gas Hydrocarbon
production from the "proved developed producing oil and gas reserves" (as
defined in the standards and guidelines of the SEC) which are attributable to
the Hydrocarbon Interests of the Borrower and its Subsidiaries as set forth in
the most recently delivered Reserve Report, at the minimum MMBtu and Minimum
Average Prices as set forth below:
MINIMUM HEDGED VOLUME MINIMUM AVERAGE PRICE
CALENDAR YEAR (MMBTU) (PER MMBTU)
----------------------------------------------------------------------------------
2004 8,400,000 $3.92
2005 7,200,000 $3.78
2006 6,000,000 $4.30
SECTION 7.1.12. Title to Oil and Gas Properties. The Borrower shall,
and shall cause each Subsidiary to, maintain good and defensible title to its
material (individually or in the aggregate) Oil and Gas Properties, including,
the Mortgaged Properties, if any, and to do all things reasonably necessary to
cure any material title defects that are not Liens permitted by Section 7.2.3 of
which the Borrower or any Subsidiary has knowledge or has been provided notice.
SECTION 7.2. Negative Covenants. The Borrower agrees with the
Administrative Agent, the Issuer and each Lender that, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower will, and will cause its Subsidiaries to, perform the obligations set
forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not, and will
not permit any of its Subsidiaries to, engage in any business activity except
the Oil and Gas Business.
SECTION 7.2.2. Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable with respect to any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness with respect to the Loans and other
Obligations;
(b) until the date of the initial Borrowing, Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Repaid") of the
Disclosure Schedule;
63
(c) Indebtedness in an aggregate principal amount not to
exceed $5,000,000.00 at any time outstanding which is incurred by the
Borrower or any of its Subsidiaries to a vendor of any assets to
finance the acquisition of such assets;
(d) unsecured accounts payable by the Borrower incurred
in the ordinary course of business (including open accounts extended by
suppliers on normal trade terms in connection with purchases of goods
and services, but excluding Indebtedness incurred through the borrowing
of money or Contingent Liabilities) which are not more than 90 days
past due;
(e) Indebtedness with respect to Capitalized Lease
Liabilities in an aggregate principal amount not to exceed
$5,000,000.00 at any time outstanding;
(f) Indebtedness of the Borrower and its Subsidiaries
with respect to Hedging Obligations; provided, that (i) such Hedging
Obligations with respect to commodities (including oil and gas) do not
exceed volumes with respect to any year in excess of eighty percent
(80%) of the projected production attributable to the Borrower's then
proved developed producing Oil and Gas Properties with respect to such
year, and are not with respect to forward sales of production, and are
included to protect the Borrower against price fluctuations and are not
entered into for the purpose of speculative investments; (ii) any
Hedging Obligations with respect to interest rates, are entered into
with the purpose and effect of fixing and capping interest rates on a
principal amount of indebtedness of the Borrower that is accruing
interest at a variable rate; provided that (A) the floating rate index
of each such contract generally matches the index used to determine the
floating rates of interest on the corresponding indebtedness of the
Borrower to be hedged by such contract; and (B) the Borrower shall not
establish or maintain any margin accounts with respect to such
contracts; and (iii) in each case, the underlying contracts are with
any counterparty (or the parent entity thereof) who at the time the
contract is made has long-term obligations rated BBB+ or better by
Standard & Poor's Ratings Group or Baal or better by Xxxxx'x Investors
Services, Inc.; and
(g) Subordinated Debt of the Borrower;
provided, however, that no Indebtedness otherwise permitted by clauses (c), (d),
(e), (f) or (g) shall be permitted if, after giving effect to the incurrence
thereof, any Default or Borrowing Base Deficiency shall have occurred and be
continuing.
SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its Property or revenues, except:
(a) Liens securing payment of the Obligations and any
Hedging Obligations owed to a Lender (including the Administrative
Agent or the Issuer), granted pursuant to any Loan Document;
(b) Liens securing payment of Indebtedness of the type
permitted and described in clause (b) of Section 7.2.2;
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(c) Liens granted to secure payment of Indebtedness of
the type permitted and described in clause (c) of Section 7.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
(d) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable
without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(g) Judgment Liens in existence fewer than fifteen (15)
days after the entry thereof or with respect to which execution has
been stayed or the payment of which is covered in full (subject to a
customary deductible) by insurance maintained with responsible
insurance companies; and
(h) Liens of operators under joint operating agreements
or similar contractual arrangements with respect to the Borrower's or
such Subsidiary's proportionate share of the expense of exploration,
development and operation of oil, gas and mineral leasehold or fee
interests owned jointly with others, to the extent that same relate to
sums not yet due or that are being contested in good faith by
appropriate action promptly initiated and diligently conducted and in
such manner as not to jeopardize the Administrative Agent's, the
Collateral Agent's, the Issuer's or any Lender's rights in and to any
Collateral, if cash reserves shall have been provided therefor.
SECTION 7.2.4. Financial Covenants.
(a) EBITDAX to Interest Expense Ratio. The Borrower will
not permit its ratio of EBITDAX to Total Interest Expense (calculated
quarterly at the end of each Fiscal Quarter on a rolling four quarter
basis) to be less than 2.5 to 1.0 at any time;
(b) Indebtedness to Capitalization Ratio. The Borrower
will not permit its ratio of Indebtedness to Capitalization as of the
end of any Fiscal Quarter (calculated quarterly at the end of each
Fiscal Quarter on a rolling four quarter basis) to be more than 0.45 to
1.0 at any time;
(c) Tangible Net Worth. The Borrower will not permit its
Tangible Net Worth at any time to be less than the sum of (1)
$139,943,849.40 plus (2) fifty percent (50%) of the Net Cash Proceeds
from the sale of any Equity Interests of the Borrower
65
after the Effective Date; provided, however, that non-cash gains and
losses, including. without limitation, FASB 133, 142, 143 and 144
non-cash gains and losses shall be excluded from the foregoing
calculation (to the extent otherwise included therein); and
(d) Current Ratio. The Borrower will not permit its
Current Ratio to be less than 1.0 to 1.0 at any time.
SECTION 7.2.5. Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Effective Date and
identified in Item 7.2.5 ("Ongoing Investments") of the Disclosure
Schedule;
(b) without duplication, Investments permitted as
Indebtedness pursuant to Section 7.2.2;
(c) Investments in the ordinary course of business to
support the normal and customary oil and gas operations undertaken by
the Borrower through joint ventures or partnerships engaged in the Oil
and Gas Business in an aggregate amount at any time not to exceed
$12,000,000; and
(d) with the approval of the Required Lenders,
Investments in Equity Interests of other Persons engaged in the Oil and
Gas Business which are not Affiliates of the Borrower or any other
Obligor in an aggregate amount at any time not to exceed $5,000,000;
provided, however, that the purchase price with respect to acquisitions
permitted by and effected pursuant to Section 7.2.8(b) shall reduce
dollar per dollar the $12,000,000 Investment limitation set forth in
clause (c) above; provided further, that no Investment otherwise
permitted by clauses (c) and (d) above shall be permitted to be made
if, immediately before or after giving effect thereto, any Default or
Borrowing Base Deficiency shall have occurred and be continuing; and
provided further that any such Investment shall only be permitted if
the Borrower gives the Administrative Agent written notice of such
investment within five (5) Business days of the making of such
Investment; and provided, further, that the Borrower may, in the
ordinary course of business, acquire or make investments in the Oil and
Gas Properties of another Person.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after the
Effective Date,
(a) except as set forth below, the Borrower will not
declare and will not permit any Subsidiary to pay or make any dividend
or distribution (in cash, property or obligations) on any shares (or
other securities) of any class of the Borrower's Equity Interests (now
or hereafter outstanding) or on any warrants, options or other rights
with respect to any shares (or other securities) of any class of Equity
Interests (now or hereafter outstanding) or apply, or permit any of its
Subsidiaries to apply, any of its funds or Property to the purchase,
redemption, sinking fund or other retirement of, or agree or
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permit any of its Subsidiaries to purchase or redeem, any shares (or
other securities) of any class of the Borrower's Equity Interests (now
or hereafter outstanding), or warrants, options or other rights with
respect to any shares (or other securities) of any class of the
Borrower's Equity Interests (now or hereafter outstanding);
(b) except as set forth below, (i) the Borrower will not,
and will not permit any Subsidiary to, pay any portion of the
Management Fee to NEG and (ii) the Borrower will not, and will not
permit NEG Holding to, pay any Guaranteed Payments to NEG;
(c) the Borrower will not, and will not permit any of its
Subsidiaries to (i) make any payment or prepayment of principal of, or
make any payment of interest on, any Subordinated Debt on any day other
than the stated, scheduled date for such payment or prepayment set
forth in the documents and instruments memorializing such Subordinated
Debt, or which would violate the subordination provisions of such
Subordinated Debt; or (ii) redeem, purchase or defease, any
Subordinated Debt; and
(d) the Borrower will not, and will not permit any
Subsidiary to, make any deposit for any of the foregoing purposes;
provided, however, that the Borrower and its Subsidiaries shall be allowed to
effect a dividend or distribution otherwise restricted by clauses (a) and (b)
above (subject at all times, however, with respect to any payment of a
Management Fee, to the limitations set forth in Section 7.2.13) if and only if,
(A) immediately after giving effect to such dividend or distribution, the sum of
the Borrower's (x) cash on hand at such time plus (y) Unused Availability
hereunder at such time equals or exceeds ten percent (10%) of the then-current
Borrowing Base and (B) prior to payment of the proposed dividend or
distribution, the Borrower delivers to the Administrative Agent a compliance
certificate executed by an Authorized Officer of the Borrower (I) showing (in
reasonable detail and with appropriate calculations and computations in all
respects satisfactory to the Administrative Agent) compliance with clause (A)
above and, both immediately before and after giving effect to such dividend or
distribution, with the financial covenants set forth in Section 7.2.4. and
Section 7.2.13, and (II) containing a statement to the effect that the Borrower
has not become aware of any Default or Event of Default that has occurred or is
continuing and that no Borrowing Base Deficiency exists or can be expected to
exist.
SECTION 7.2.7. Take or Pay Contracts. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other Property or services
if such arrangement by its express terms requires that payment be made by the
Borrower or such Subsidiary regardless of whether such materials, supplies,
other Property or services are delivered or furnished to it.
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other Person, or purchase or sell, lease or
otherwise dispose of (whether in one transaction or a series of transactions)
all or substantially all of its Property or assets to any other Person except
that:
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(a) (i) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower or any Wholly-Owned Subsidiary,
and the Property or Equity Interests of any Subsidiary may be purchased
or otherwise acquired by the Borrower or any Wholly-Owned Subsidiary;
provided that in any such transaction involving the Borrower or any
Wholly-Owned Subsidiary, the Borrower or such Wholly-Owned Subsidiary
shall be the surviving or continuing entity, and (ii) any Subsidiary
may sell, lease transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly-Owned Subsidiary; and
(b) so long as (i) permitted by Section 7.2.5 and (ii)
no Default has occurred and is continuing or would occur after giving
effect thereto, the Borrower or any of its Subsidiaries may purchase
all or substantially all of the assets of any Person, or acquire such
Person by merger that, in the discretion of the Administrative Agent,
is engaged in the Oil and Gas Business; provided that in any merger
involving the Borrower or any Wholly-Owned Subsidiary, the Borrower or
such Wholly-Owned Subsidiary shall be the surviving or continuing
entity.
SECTION 7.2.9. Sale or Discount of Receivables. Neither the Borrower
nor any Subsidiary will discount or sell (with or without recourse) any of its
notes receivable or accounts receivable.
SECTION 7.2.10. Asset Dispositions, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, assign, farm-out, transfer,
lease, contribute, convey or otherwise transfer, or grant options, warrants or
other rights to any Person (each a "Transfer") any of its Property (including,
without limitation, accounts receivable, Equity Interests of Subsidiaries and
the Oil and Gas Properties), except for:
(a) the sale of Hydrocarbons in the ordinary course of
business;
(b) the sale or transfer of equipment that is obsolete,
worn out, depleted or uneconomic and disposed of in the ordinary course
of business;
(c) the sale, transfer or other disposition in one or
more transactions of Properties of the Borrower and its Subsidiaries;
provided that, without the prior written consent of the Administrative
Agent and the Lenders, the aggregate proceeds received by the Borrower
or any of its Subsidiaries from the sale, transfer or disposal of such
Properties during the period since the most recent redetermination of
the Borrowing Base shall not exceed four percent (4%) of the amount of
the then current Borrowing Base;
(d) sales of Equity Interests in the Borrower to NEG
Holding; and
(e) dispositions permitted by Section 7.2.8;
provided, however, that no Transfer shall be permitted pursuant to clause (c) if
a Default or an Event of Default shall have occurred or be continuing or result
therefrom.
SECTION 7.2.11. Modification of Certain Agreements. The Borrower will
not consent to any amendment, supplement or other modification of any of the
terms or provisions
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contained in, or applicable to any document or instrument evidencing or
applicable to any Subordinated Debt, other than any amendment, supplement or
other modification which extends the date or reduces the amount of any required
repayment or redemption. Furthermore, the Borrower will not consent to any
amendment, supplement or other modification of the NEG Management Agreement,
unless previously consented to in writing by the Administrative Agent.
SECTION 7.2.12. Transactions with Affiliates. Except for Permitted NEG
Affiliate Transactions, neither the Borrower nor any 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 7.2.13. Payment of Management Fee. The Borrower will not, and
will not permit any of its Subsidiaries to, pay to NEG any portion of the NEG
Management Fee (i) during any Fiscal Quarter, to the extent that such NEG
Management Fee exceeds ten percent (10%) of the quarterly gross revenues for the
Borrower and its Consolidated Subsidiaries, calculated in accordance with the
financial statements delivered pursuant to Section 7.1.1. and (ii) during any
Fiscal Year, to the extent that such NEG Management Fee exceeds ten percent
(10%) of the annual gross revenues for the Borrower and its Consolidated
Subsidiaries, calculated in accordance with the financial statements delivered
pursuant to Section 7.1.1.
SECTION 7.2.14. Negative Pledges, Restrictive Agreements, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document and any
agreement governing any Indebtedness permitted either by clause (b) of Section
7.2.2 as in effect on the Effective Date and, with respect to clause (a) below,
by clause (c) of Section 7.2.2 solely as to the assets financed with the
proceeds of such Indebtedness) prohibiting
(a) the creation or assumption of any Lien upon its Oil
and Gas Properties or other Property, whether now owned or hereafter
acquired; or
(b) the ability of the Borrower or any other Obligor to
amend or otherwise modify this Agreement or any other Loan Document; or
(c) the ability of any Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
SECTION 7.2.15. Creation of Subsidiaries. The Borrower will not, and
will not permit any of its Subsidiaries to, create or allow to be created any
Subsidiary not already existent and listed on Item 6.8 of the Disclosure
Schedule, without the prior written consent of the Administrative Agent and the
Majority Lenders; provided, however, that, in the event that the
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Borrower deems it necessary or desirable to effect a corporate restructuring
requiring the formation of Subsidiaries, the Agent agrees on behalf of itself
and the Lenders to reasonably consider and discuss the feasibility of such
restructuring.
SECTION 7.2.16. Leases. The Borrower will not, and will not permit any
of its Subsidiaries to create, incur, assume or permit to exist any obligation
for the payment of rent or hire of Property of any kind whatsoever (real or
personal, but excluding leases of Hydrocarbon Interests, oil and gas operating
agreements and Capitalized Lease Liabilities), under leases or lease agreements
that would cause the aggregate amount of all payments made by the Borrower and
its Subsidiaries pursuant to all such leases or lease agreements to exceed
$500,000 in any period of twelve consecutive calendar months during the life of
such leases.
SECTION 7.2.17. Sale and Leaseback Transactions. Neither the Borrower
nor any Subsidiary will enter into any arrangement, directly or indirectly, with
any Person whereby the Borrower or any Subsidiary shall sell or transfer any of
its Property, whether now owned or hereafter acquired, and whereby the Borrower
or any Subsidiary shall then or thereafter rent or lease as lessee such Property
or any part thereof or other Property that the Borrower or any Subsidiary
intends to use for substantially the same purpose or purposes as the Property
sold or transferred.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. Any Obligor shall default in
the payment or prepayment when due of any principal of or interest on any Loan,
or of any reimbursement obligation for a disbursement made under any Letter of
Credit; or of any fees or any other obligation hereunder or under any other Loan
Document, 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 three (3) days.
SECTION 8.1.2. Breach of Representation or Warranty. Any representation
or warranty of any Obligor made or deemed to be made hereunder or in any other
Loan Document executed by it or any other writing or certificate furnished by or
on behalf of any Obligor to the Administrative Agent, the Arranger, the Issuer
or any Lender for the purposes of or in connection with this Agreement or any
such other Loan Document (including any certificates delivered pursuant to
Article V) is or shall be false or in any material respect incorrect when made
or deemed made.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
(a) The Borrower shall default in the due performance and
observance of any of its obligations under Section 7.2 or Section
7.1.11; or
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(b) The Borrower shall default in the due performance and
observance of any of its obligations under any other Section of this
Agreement, or any Obligor shall default in the performance of its
obligations under any other Loan Document (other than the payment of
amounts due which shall be governed by Section 8.1.1) 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
Administrative Agent or any Lender (through the Administrative Agent),
or (ii) the Borrower otherwise becoming aware of such default.
SECTION 8.1.4. Default on Other Indebtedness. (a) A default shall
occur in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries, or any
other Obligor, having a principal amount, individually or in the aggregate, in
excess of $500,000, (b) a default shall occur With respect to any Hedging
Obligation to any Lender or any Affiliate of a Lender, such default being,
individually or in the aggregate, in excess of $500,000, or (c) a default shall
occur in the performance or observance of any obligation or condition with
respect to such Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue unremedied for
any applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to: cause such
Indebtedness to become or be declared due and payable prior to its expressed
maturity.
SECTION 8.1.5. Judgments. Any judgment or order for the payment of
money in excess of $500,000 shall be rendered against the Borrower or any of its
Subsidiaries, or any other Obligor, and either
(a) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order; or
(b) there shall be any period of ten (10) consecutive
days during Which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
SECTION 8.1.6. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan:
(a) the institution of any steps by the Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or any
such member could be required to make a contribution to such Pension
Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $500,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA.
SECTION 8.1.7. Change of Control. Any Change in Control shall occur.
SECTION 8.1.8. Bankruptcy, Insolvency, etc. The Borrower, any of its
Subsidiaries, or any other Obligor, shall
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(a) be liquidated or become insolvent or generally fail
to pay, or admit in writing its inability or unwillingness to pay,
debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for
the Borrower or any of its Subsidiaries, or any other Obligor, or any
Property of any thereof, or make a general assignment for the benefit
of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Subsidiaries, or any other Obligor, or for a substantial part of
the Property of any thereof, and such trustee, receiver, sequestrator
or other custodian shall not be discharged within sixty (60) days,
provided that the Borrower, its Subsidiaries, and the other Obligors
hereby expressly authorizes the Administrative Agent and each Lender to
appear in any court conducting any relevant proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, liquidation, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, with respect to the
Borrower or any of its Subsidiaries, or any other Obligor, and, if any
such case or proceeding is not commenced by the Borrower or such
Subsidiary or such other Obligor, such case or proceeding or winding up
shall be consented to or acquiesced in by the Borrower or such
Subsidiary or such other Obligor or shall result in the entry of an
order for relief or shall remain for sixty (60) days undismissed,
provided that each Obligor and each Subsidiary hereby expressly
authorizes the Administrative Agent and each Lender to appear in any
court conducting any such case or proceeding! during such 60-day period
to preserve, protect and defend their rights under the Loan Documents;
or
(e) take any action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.9. Impairment of Security, etc. Any Loan Document or any
Lien granted thereunder shall (except in accordance with its terms), in whole or
in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; any Obligor or
any other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien securing
any Obligation shall, in whole or in part, cease to be a perfected first
priority Lien, subject only to those exceptions expressly permitted by such Loan
Document.
SECTION 8.1.10. NEG Management Agreement. The NEG Management Agreement
is terminated, cancelled or otherwise deemed unenforceable.
SECTION 8.1.11. Attachment, etc. The Borrower or any of its
Subsidiaries, or any other Obligor, shall fail to discharge within a period of
thirty (30) days after the commencement thereof any attachment, sequestration,
or similar proceeding or proceedings involving an aggregate amount in excess of
$500,000 against any of its assets or properties unless such
72
Obligor or such Subsidiary is in good faith contesting such action and taking
affirmative steps to discharge the same, and adequate reserves have been set
aside in accordance with GAAP.
SECTION 8.1.12. Seizure, etc. The Borrower or any of its Subsidiaries,
or any other Obligor, or any of their properties, revenues, or assets
aggregating $500,000 on greater, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the
same shall not have been discharged (or provisions shall not be made for such
discharge) within thirty (30) days from the date of entry thereof.
SECTION 8.1.13. Environmental Laws. The existence of any condition on
or under Property now or previously owned or leased by the Borrower which, with
the passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Law in excess of $500,000.00.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.8 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand and the Borrower shall be obligated to deliver cash collateral pursuant
to Section 2.7.4.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.8 with respect to the Borrower or any Subsidiary or any other Obligor) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent, upon the direction of the Majority Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable without further
notice, demand or presentment, and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans and
other Obligations which shall be so declared due and payable shall be and become
immediately due and payable, and the Borrower shall be obligated to deliver cash
collateral pursuant to Section 2.7.4 without further notice, demand or
presentment, and/or, as the case may be, the Commitments shall terminate.
SECTION 8.4. Application of Proceeds. Notwithstanding any provision of
this Credit Agreement or the Security Documents to the contrary, in the case of
any sale of any Collateral, whether voluntary sale or foreclosure under any
Security Documents, the proceeds and all other proceeds that then may be held or
recovered by the Administrative Agent or the Collateral Agent for the benefit of
Lenders, shall be applied in the following order:
(a) First, to the payment of the costs and expenses of
the sale and of the collection or enforcement of the Collateral, and
reasonable compensation to Administrative Agent and Collateral Agent,
their agents and attorneys, and of all expenses and liabilities
incurred and advances made by Administrative Agent and Collateral Agent
in connection therewith;
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(b) Second, to the payment of all expenses of Lenders (or
Affiliates of Lenders) which the Borrower is obligated to pay pursuant
to this Credit Agreement or any other Loan Document;
(c) Third, to the payment ratably of the sum of (i)
amounts due for principal and interest on all Loans then outstanding,
(ii) amounts due with respect to the Letters of Credit, and (iii)
amounts owed as the Hedging Obligations to any Lender or any Affiliate
of a Lender, without preference or priority of the indebtedness owing
to one Lender (or Affiliate) over another, or of Loans or Letters of
Credit over Hedging Obligations, or of principal over interest; and
(d) Fourth, after payment in full in cash of all of the
Obligations, and the termination of all Commitments and all other
commitments by all Lenders to the Borrower and the other Obligors, and
the termination or expiration of all Letters of Credit, to the payment
of the surplus of such cash or cash proceeds, if any, to the Borrower,
or to whomsoever may be lawfully entitled to receive the same, or as a
court of competent jurisdiction may direct.
ARTICLE IX
THE AGENTS AND THE ISSUER
SECTION 9.1. Actions. Each of the Lenders, the Issuer and the Agents
hereby irrevocably appoints Mizuho Corporate Bank, Ltd. as its Administrative
Agent, The Bank of Nova Scotia and Bank of Texas, N.A. as its Co-Agents, and
Bank of Texas, N.A. as its Collateral Agent under and for purposes of this
Agreement, the Notes and each other Loan Document. Each Lender authorizes each
such Agent to act on behalf of such Lender under this Agreement, the Notes and
each other Loan Document and, in the absence of other written instructions from
the Majority Lenders received from time to time by the Administrative Agent, the
Co-Agents or the Collateral Agent (with respect to which each of the
Administrative Agent, the Co-Agents and the Collateral Agent agrees that it will
comply, except as otherwise provided in this Section 9.1 or as otherwise advised
by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of such Agents by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. Each
Lender hereby indemnifies (which indemnity shall survive any termination of this
Agreement) the Administrative Agent, each Co-Agent, the Collateral Agent and the
Issuer pro rata according to such Lender's Percentage, whether or not related to
any singular, joint or concurrent negligence of the Administrative Agent, the
Co-Agents, the Collateral Agent and the Issuer, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Administrative Agent, any Co-Agent, the Collateral Agent
or the Issuer in any way relating to or arising out of this Agreement, the Notes
and any other Loan Document, including reasonable attorneys' fees, and as to
which the Administrative Agent, any Co-Agent, the Collateral Agent or the
Issuer, as the case may be, is not reimbursed by the Borrower; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, claims, costs or expenses which are
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Administrative Agent's, a Co-Agent's, the
74
Collateral Agent's or the Issuer's gross negligence or willful misconduct.
Neither the Administrative Agent, any Co-Agent, the Collateral Agent nor the
Issuer shall be required to take any action hereunder, under the Notes or under
any other Loan Document, or to prosecute or defend any suit with respect to this
Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Administrative
Agent, a Co-Agent, the Collateral Agent or the Issuer shall be or become
inadequate, in the Administrative Agent's, such Co-Agent's, the Collateral
Agent's or the Issuer's determination, as the case may be, the Administrative
Agent, such Co-Agent, the Collateral Agent or the Issuer may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, neither the Administrative Agent, any Co-Agent, the Collateral
Agent nor the Issuer shall have any duties or responsibilities, except as
expressly set forth herein, nor shall the Administrative Agent, any Co-Agent,
the Collateral Agent or the Issuer have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any the
Administrative Agent, any Co-Agent, the Collateral Agent or the Issuer.
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York time, on the day prior to a Borrowing that such Lender will
not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent immediately on demand such
corresponding amount together with interest thereon, for each day from the date
the Administrative Agent made such amount available to the Borrower to the date
such amount is repaid to the Administrative Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Administrative Agent, the
Co-Agents, the Collateral Agent nor the Issuer, nor any of their respective
directors, officers, employees or agents, shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own willful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower of its obligations hereunder or under any other
Loan Document. Any such inquiry that may be made by the Administrative Agent,
the Co-Agents, the Collateral Agent or the Issuer shall not obligate it to make
any further inquiry or to take any action. Each of the Administrative Agent, the
Co-Agents, the Collateral Agent and the Issuer shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Administrative Agent, the Co-Agents,
the Collateral Agent or the Issuer believes to be genuine and to have been
presented by a proper Person.
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SECTION 9.4. Successors.
(a) Subject to the appointment of a successor as provided
below, the Administrative Agent, each of the Co-Agents, the Issuer or
the Collateral Agent may resign as such at any time upon at least
thirty (30) days' prior notice to the Borrower and all Lenders. If the
Administrative Agent, any of the Co-Agents, the Issuer or the
Collateral Agent at any time shall resign, the Majority Lenders may
appoint another Lender as a successor Administrative Agent, Co-Agent,
Issuer or Collateral Agent, as the case may be, which shall thereupon
become the Administrative Agent, a Co-Agent, Issuer or Collateral
Agent, respectively, hereunder. If a successor Administrative Agent,
Co-Agent, Issuer or Collateral Agent shall have been so appointed by
the Majority Lenders as the successor Administrative Agent, a Co-Agent,
Issuer or Collateral Agent, as the case may be, but shall not have
accepted such appointment, within thirty (30) days after notice of
resignation of the retiring Administrative Agent, Co-Agent, Issuer or
Collateral Agent, as the case may be, then the retiring Administrative
Agent, Co-Agent, Issuer or Collateral Agent, as the case may be, may,
on behalf of the Lenders, appoint a successor Administrative Agent,
Co-Agent, Issuer or Collateral Agent, respectively, which shall be one
of the Lenders or a commercial banking institution organized under the
laws of the U.S. (or any State thereof) or a U.S. branch or agency of a
commercial banking institution, and having a combined capital and
surplus of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent, Co-Agent, Issuer or Collateral
Agent hereunder by a successor Administrative Agent, Co-Agent, Issuer
or Collateral Agent, respectively, such successor Administrative Agent,
Co-Agent, Issuer or Collateral Agent shall be entitled to receive from
the retiring Administrative Agent, Co-Agent, Issuer or Collateral Agent
such documents of transfer and assignment as such successor
Administrative Agent, Co-Agent, Issuer or Collateral Agent may
reasonably request, and shall thereupon succeed to and become vested
with all rights, powers, privileges and duties of the retiring
Administrative Agent, Co-Agent, Issuer or Collateral Agent, and the
retiring Administrative Agent, Co-Agent, Issuer or Collateral Agent
shall be discharged from its duties and obligations under this
Agreement. After any retiring Administrative Agent's, Co-Agent,
Issuer's or Collateral Agent's resignation hereunder as the
Administrative Agent, Co-Agent, Issuer or Collateral Agent,
respectively, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it
was the Administrative Agent, Co-Agent, Issuer or Collateral Agent
under this Agreement; and Section 10.3 and Section 10.4 shall continue
to inure to its benefit.
SECTION 9.5. Extensions of Credit by the Agents and the Issuer. Each of
the Agents and the Issuer shall have the same rights and powers with respect to
(x) the Loans made by it or any of its Affiliates, and (y) the Notes held by it
or any of its Affiliates or any interest in any Letter of Credit issued by it as
any other Lender and may exercise the same as if it were not an Agent, the
Arranger or the Issuer, as the case may be. Each of the Agents and the Issuer
and their respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if it were not an Agent or the Issuer hereunder, as
the case may be.
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SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agents, the Arranger, the Issuer and each other Lender, and
based on such Lender's review of the financial information and reserve based
information of the Borrower and its Subsidiaries, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigations as such Lender has
deemed appropriate, made its own credit decision to extend its Commitment. Each
Lender also acknowledges that it will, independently of the Agents, the
Arranger, the Issuer and each other Lender, and based on such other documents,
information and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this Agreement
or any other Loan Document.
SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt
notice to the Collateral Agent, the Issuer and each Lender of each notice or
request required or permitted to be given to the Administrative Agent by the
Borrower pursuant to the terms of this Agreement (unless concurrently delivered
to the Issuer or the Lenders by the Borrower). The Administrative Agent will
distribute to the Collateral Agent, the Issuer and each Lender each document or
instrument received for its account and copies of all other communications
received by the Administrative Agent from the Borrower for distribution to the
Collateral Agent, the Issuer and the Lenders in accordance with the terms of
this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Majority Lenders; provided, however, that
no such amendment, modification or waiver that would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders, the Required Lenders or by the
Majority Lenders shall be effective unless consented to by each Lender;
(b) modify this Section 10.1 or Section 2.8; change the
definition of "Required Lenders", "Majority Lenders" or "Borrowing
Base"; increase the Commitment or the Percentage of any Lender; reduce
any fees described in Article III, release any Collateral from the
Liens of the Security Documents release any Obligor from its Guaranty
or reduce the amount or change the scope of any Guaranty or change the
identity of any Guarantor except as otherwise expressly provided in the
relevant Loan Document, provided, that the Collateral Agent may release
Collateral without the consent of any Lender to the extent such
Collateral is disposed of pursuant to, and as permitted by, Section
7.2.10 of this Agreement), or extend the Revolving Credit Termination
Date shall be made without the consent of each Lender, the Issuer and
each holder of a Note;
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(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan or any other obligation (or reduce the principal amount of or rate
of interest on any Loan) shall be made without the consent of each
Lender;
(d) affect adversely the interests, rights or obligations
of the Administrative Agent qua the Administrative Agent or the
Collateral Agent qua the Collateral Agent or the Issuer qua the Issuer
(including any change with respect to the obligations of the Borrower
or the Lenders with respect to the Letter of Credit Liabilities) shall
be made without consent of the Administrative Agent, the Collateral
Agent or the Issuer, as the case may be, or
(e) modify Section 10.4 without the consent of the
Issuer, the Agents, the Arranger and each Lender. No failure or delay
on the part of any Agent, any Lender, the Issuer or the holder of any
Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to
any notice or demand in similar or other circumstances. No waiver or
approval by any Agent, any Lender, the Issuer or the holder of any Note
under this Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require
any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted and a receipt, demonstrating successful transmission, is received by
the Sender. Delivery by telecopier of an executed counterpart of any amendment
or waiver of any provision of this Agreement or any other Loan Document shall be
effective as delivery of an original executed counterpart hereof.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all expenses of the Administrative Agent, the Collateral Agent, the
Issuer and the Arranger (including the reasonable fees and out-of-pocket
expenses of Mayer, Brown, Xxxx & Maw LLP and of local counsel, if any, who may
be retained by said counsel) in connection with
(a) the negotiation, preparation, execution and delivery
of this Agreement and of each other Loan Document, including schedules
and exhibits, and any amendments, waivers, consents, supplements or
other modifications to this Agreement or any other Loan Document as may
from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated;
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(b) the filing, recording, refiling or rerecording of
each of the Security Documents and/or any Uniform Commercial Code
financing statements relating thereto and all amendments, supplements
and modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Security Documents;
and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document. Each Lender agrees to reimburse the Administrative Agent, the
Collateral Agent, the Issuer and the Lenders on demand for such
Lender's pro rata share (based upon its respective Percentage) of any
such costs or expenses not paid by the Borrower. The Borrower further
agrees to pay, and to save the Administrative Agent, the Collateral
Agent, the Issuer and the Lenders harmless from all liability for, any
stamp or other taxes which may be payable in connection with the
execution or delivery of this Agreement, the Borrowings hereunder, or
the issuance of the Notes or any other Loan Documents. The Borrower
also agrees to reimburse the Administrative Agent, the Collateral
Agent, the Issuer and the Lenders upon demand for all out-of-pocket
expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Administrative Agent, the Collateral Agent, the Issuer
or such Lender in connection with (x) the negotiation of any
restructuring or "work-out," whether or not consummated, of any
Obligations and (y) the enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by the Administrative Agent, the Collateral Agent,
the Issuer and each Lender, and the extension of the Commitments, and the
arrangement of the facility represented by this Agreement by the Arranger, the
Borrower hereby indemnifies, exonerates and holds the Administrative Agent, the
Collateral Agent, the Issuer and each Lender and each of their respective
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of or relating to
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Borrowing
or any Letter of Credit;
(b) the entering into and performance of this Agreement
and any other Loan Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Borrower as the
result of any determination by the Majority Lenders pursuant to Article
V not to fund any Borrowing or any draw under a Letter of Credit);
(c) any investigation, litigation or proceeding related
to any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the Release by the
Borrower or any of its Subsidiaries or any Obligor of any Hazardous
Material;
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(d) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by the Borrower or any of its
Subsidiaries or by any other Obligor of any Hazardous Material
(including any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under any Environmental Law); or
(e) any misrepresentation or inaccuracy or breach of
Section 6.17 without giving effect to any knowledge qualification
therein contained, regardless of whether caused by, or within the
control of, the Borrower or such Obligor or such Subsidiary; in each
case except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the relevant
Indemnified Party's gross negligence or willful misconduct, as
determined by a court of competent jurisdiction in a final
non-appealable judgment, or such Indemnified Party's own unexcused
breach of any provision of any Loan Document (as determined by the
final non-appealable judgment of a court of competent jurisdiction),
PROVIDED THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT THE
INDEMNIFIED PARTIES BE INDEMNIFIED IN THE CASE OF THEIR OWN NEGLIGENCE,
REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE
OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 9.3, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower and each other Obligor in
this Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 10.6. Collateral Matters; Hedging Agreements. The benefit of
the Security Documents and of the provisions of this Agreement relating to the
Collateral shall also extend to and be available to (i) those Lenders or their
Affiliates that are counterparties to the Hedging Agreements on a pro rata basis
with respect to any Hedging Obligations of the Borrower or any of its
Subsidiaries that are in effect at such time as such Person (or its Affiliate)
is a Lender, but only while such Person or its Affiliate is a Lender.
SECTION 10.7. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.8. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
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SECTION 10.9. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Administrative Agent) shall have been
received by the Administrative Agent and notice thereof shall have been given by
the Administrative Agent to the Borrower and each Lender.
SECTION 10.10. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICT OF LAW, EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
This Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.11. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the
Administrative Agent, the Issuer and all Lenders, provided, however,
that for purposes of this Section 10.11 if the survivor of a merger is
obligated with respect to all obligations of the Borrower hereunder and
under all other Loan Documents, a merger permitted pursuant to Section
7.2.8 hereof shall not be an assignment or transfer of the Borrower's
rights or obligations hereunder; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to Section 10.11.
SECTION 10.12. Sale and Transfer of Loans and Note; Participations in
Loans and Note. Each Lender may assign, or sell participations in, its Loans and
Commitment to one or more other Persons in accordance with this Section 10.12.
SECTION 10.12.1. Assignments. Any Lender,
(a) with the written consent of the Administrative Agent,
the Issuer and, so long as no Event of Default shall have occurred and
be continuing, the Borrower (which consents shall not be unreasonably
delayed or withheld) may at any time assign and delegate to one or
more commercial banks or other financial institutions, and
(b) with notice to the Borrower, the Administrative Agent
and the Issuer, but without the consent of the Borrower, the
Administrative Agent or the Issuer, may assign and delegate to any of
its Affiliates or to any other Lender (each Person described in either
of the foregoing clauses as being the Person to whom such assignment
and delegation is to be made, being hereinafter referred to as an
"Assignee Lender"), all or
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any fraction of such Lender's total Loans, participations in Letters of
Credit and Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's
Loans and Commitment) in a minimum aggregate amount of $1,000,000;
provided, however, that any such Assignee Lender will comply, if
applicable, with the provisions contained in the penultimate sentence
of Section 4.6 and further, provided, however, that the Borrower, each
other Obligor and the Agents and the Issuer shall be entitled to
continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee Lender
until
(i) written notice of such assignment and delegation,
together with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower and the
Agents and the Issuer by such Lender and such Assignee Lender.
(ii) such Assignee Lender shall have executed and
delivered to the Borrower, the Issuer and the Agents a Lender Assignment
Agreement, accepted to the Administrative Agent and the Issuer, and
(iii) the processing fees described below shall have been
paid.
From and after the date that the Administrative Agent accepts such
Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five (5) Business Days after its receipt of notice that
the Administrative Agent has received an executed Lender Assignment Agreement,
the Borrower shall consent to such assignment, if applicable, and execute and
deliver to the Administrative Agent (for delivery to the relevant Assignee
Lender) a new Note evidencing such Assignee Lender's assigned Loans and
Commitment and, if the assignor Lender has retained Loans and a Commitment
hereunder, a replacement Note in the principal amount of the Loans and
Commitment retained by the assignor Lender hereunder (such Note to be in
exchange for, but not in payment of, that Note then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Note. The
assignor Lender shall xxxx the predecessor Note "exchanged" and deliver it to
the Borrower. Accrued interest on that part of the predecessor Note evidenced by
the new Note, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Note
evidenced by the replacement Note shall be paid to the assignor Lender. Accrued
interest and accrued fees shall be paid at the same time or times provided in
the predecessor Note and in this Agreement. Such assignor Lender or such
Assignee Lender must also pay a processing fee to the Administrative Agent upon
delivery of any Lender Assignment Agreement in the amount of $3,500, it being
understood that the Borrower shall not be obligated to reimburse such assignor
Lender or Assignee Lender for such processing fee. Any attempted assignment and
delegation not made in accordance with this Section 10.12.1 shall be null and
void. The foregoing
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provisions shall not apply to, or restrict, or require the consent of or notice
of any Person to effect the pledge or assignment by any Lender of its rights
under this Agreement and its Notes and the other Loan Documents (i) if an Event
of Default has occurred and is continuing, or (ii) to any Federal Reserve Bank.
SECTION 10.12.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons, in either case other than commercial
banks or other Persons that are Affiliates of the Borrower or of any other
Obligor (each of such commercial banks and other Persons being herein called a
"Participant") participating interests in any of the Loans, its participation in
Letters of Credit, its Commitment, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 10.12.2
shall relieve such Lender from its Commitment or its other obligations
hereunder or under any other Loan Document.
(b) such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations,
(c) the Borrower, the Administrative Agent and the Issuer
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action hereunder
or under any other Loan Document, except that such Lender may agree
with any Participant that such Lender will not, without such
Participant's consent, take any actions of the type described in clause
(b) or (c) of Section 10.1, and
(e) the Borrower shall not be required to pay any amount
under Section 4.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold. The
Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be
considered a Lender.
SECTION 10.13. Other Transactions. Nothing contained herein shall
preclude the Administrative Agent, the Collateral Agent, the Issuer, the
Arranger or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 10.14. Confidentiality. In the event that the Borrower provides
to the Administrative Agent or the Lenders confidential information belonging to
the Borrower or any of the other Obligors, then the Administrative 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 that (a) are in the public domain, (b)
hereafter become part of the public domain without the Administrative Agent or
the Lenders breaching their
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obligation of confidence hereunder, (c) are previously known by the
Administrative Agent or the Lenders from some source other than the Borrower,
(d) are hereafter developed by the Administrative Agent or the Lenders without
using the Borrower's information, (e) are hereafter obtained by or available to
the Administrative 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, (f) are
disclosed with the Borrower's consent, (g) must be disclosed either pursuant to
any Governmental Rule or to Persons regulating the activities of the
Administrative Agent or the Lenders, or (h) as may be required by law or
regulation or order of any Governmental Authority in any judicial, arbitration
or governmental proceeding. Furthermore, the Administrative Agent or a Lender
may disclose any such information to any other Lender, any independent petroleum
engineers or consultants, any independent certified public or chartered
accountants, any legal counsel employed by such Person in connection with this
Agreement or any other Loan Document, 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 Administrative Agent or the Lenders shall receive 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 Administrative Agent
or the Lenders hereunder. Furthermore, this obligation of confidence shall not
apply to, and each of the Agents and the Lenders (and each Person employed or
retained by such Agents or Lenders who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans) may disclose to
any Person, without limitation of any kind, the "tax treatment" and "tax
structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the Loan transactions contemplated by this Agreement and the other
Loan Documents, and all materials of any kind (including opinions or other tax
analyses) related thereto that are or have been provided to such Agent or Lender
relating to such tax treatment or tax structure; provided that with respect to
any document or similar item that in either case contains confidential
information concerning such tax treatment or tax structure of the Loan
transactions contemplated by this Agreement and the other Loan Documents as well
as other information, this sentence shall only apply to such portions of the
documents or similar item that relate to such tax treatment or tax structure.
Notwithstanding anything to the contrary provided herein, this obligation of
confidence shall cease one (1) year from the Effective Date, 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 Administrative Agent and the Lenders
arising by contract, agreement, statute or law except as expressly stated in
this Section 10.14.
SECTION 10.15. Non-Recourse to Officers and Directors. This Agreement
and the Obligations are fully recourse to Borrower and the other Obligors.
Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, no recourse under or upon any Obligation, representation,
warranty or covenant shall be had against any of the officers, directors,
employees, agents or representatives of the Borrower or any other Obligor;
provided, however, that nothing in this Section 10.15 shall be deemed to
constitute a waiver of any Obligation evidenced or secured by, or contained in,
this Agreement or any other Loan Document, or affect in any way the validity or
enforceability of this Agreement or any other Loan Document.
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SECTION 10.16. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, THE COLLATERAL AGENT, THE ISSUER, THE ARRANGER, THE LENDERS OR THE
BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT,
THE ISSUER, THE ARRANGER, THE LENDERS AND THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE ISSUER, THE
ARRANGER, THE LENDERS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT, THE ISSUER, THE ARRANGER, THE LENDERS AND THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY WITH RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
SECTION 10.17. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
85
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 10.18. No Oral Agreements. THIS AGREEMENT AND THE OTHER 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 AMONG THE PARTIES.
[Signature Pages Follow]
86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NEG OPERATING LLC
By: NEG Holding LLC, sole member
By: Xxxxxx Partners, managing member
By: Cigas Corp., managing general
partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Attorney-in-Fact
1400 One Energy Square
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxxxxx@xxxx.xxx
S-1
MIZUHO CORPORATE BANK, LTD., as
Administrative Agent and as a Lender
By: /s/ Xxxxxxxxx Xxx
-------------------------
Name: Xxxxxxxxx Xxx
Title: Senior Vice President
Address:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxx.xxxxx@xxxxxxxxxx.xxx
Attention: Ms. Xxxxxx He
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxxxx.xx@xxxxxxxxxx.xxx
S-2
BANK OF TEXAS, N.A., as Co-Agent,
Collateral as a Lender
By: /s/ Xxxxxxx Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxx Xxxxxxx
Title: Senior Vice President
Address:
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xx. Xxx Xxxxxxx
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxxxxxx@xxxx.xxxx.xxx
X-0
XXX XXXX XX XXXX XXXXXX, as Co-Agent
and as a Lender
By : /s/ X. Xxxxx
-------------
Name: X. Xxxxx
Title: Comptroller
Address:
000 Xxxxxxxxx Xx. XX, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxxx_xxxxxxx@xxxxxxxxxxxxx.xxx
S-4
FIRST AMERICAN BANK, SSB, as a Lender
By: /s/ Xxxxxx XxXxxxxxx
---------------------------
Name: Xxxxxx XxXxxxxxx
Title: Vice President
Address:
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxxxxx XxXxxxxxx
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
E-Mail: xxxxxxxxxx@xxxxxxxx.xxx
S-5
