AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF
APRIL 13, 2007,
among
DUNE ENERGY, INC.,
as the Borrower,
JEFFERIES FUNDING LLC
as the Administrative Agent,
AND
THE LENDERS PARTY HERETO
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS................................................................... 1
Section 1.01 Terms Defined Above................................................................. 1
Section 1.02 Certain Defined Terms............................................................... 1
Section 1.03 Terms Generally; Rules of Construction.............................................. 20
Section 1.04 Lender Determinations............................................................... 21
Section 1.05 Accounting Terms and Determinations; GAAP........................................... 21
ARTICLE II COMMITMENT 21
Section 2.01 Loans............................................................................... 21
Section 2.02 Continuations and Conversions of Existing Loans..................................... 22
Section 2.03 Use of Proceeds..................................................................... 23
Section 2.04 Fees................................................................................ 23
Section 2.05 Notes............................................................................... 23
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST................................................................. 24
Section 3.01 Repayment of Loans.................................................................. 24
Section 3.02 Interest............................................................................ 24
Section 3.03 No Reborrowing; Prepayments Without Penalty......................................... 25
Section 3.04 Voluntary Prepayments............................................................... 25
Section 3.05 Mandatory Repayments................................................................ 25
Section 3.06 Offer to Repurchase Upon Change in Control.......................................... 26
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS................................................... 27
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs......................... 27
Section 4.02 Presumption of Payment by the Borrower.............................................. 28
Section 4.03 Certain Deductions by the Administrative Agent...................................... 28
ARTICLE V INCREASED COSTS; TAXES............................................................................... 29
Section 5.01 Increased Costs..................................................................... 29
Section 5.02 Illegality.......................................................................... 30
Section 5.03 Funding Losses...................................................................... 30
Section 5.04 Taxes............................................................................... 30
Section 5.05 Alternative Rate of Interest........................................................ 31
ARTICLE VI LOCKBOX PROCEDURES; CASUALTY PROCEEDS............................................................... 31
Section 6.01 Lockbox Account..................................................................... 31
Section 6.02 Notice.............................................................................. 33
Section 6.03 Casualty Proceeds................................................................... 33
ARTICLE VII CONDITIONS PRECEDENT............................................................................... 33
Section 7.01 Funding Conditions.................................................................. 33
Section 7.02 Additional Funding Conditions....................................................... 37
Section 7.03 Concurrent Actions.................................................................. 37
Section 7.04 Conditions Precedent for the Benefit of the Lenders................................. 38
Section 7.05 No Waiver........................................................................... 38
i
ARTICLE VIII REPRESENTATIONS AND WARRANTIES.................................................................... 38
Section 8.01 Organization; Powers................................................................ 38
Section 8.02 Authority; Enforceability........................................................... 38
Section 8.03 Approvals; No Conflicts............................................................. 39
Section 8.04 Financial Condition; No Material Adverse Change..................................... 39
Section 8.05 Litigation.......................................................................... 39
Section 8.06 Environmental Matters............................................................... 40
Section 8.07 Compliance with the Laws and Agreements; No Defaults................................ 41
Section 8.08 Investment Company Act.............................................................. 41
Section 8.09 Taxes............................................................................... 41
Section 8.10 ERISA............................................................................... 41
Section 8.11 Disclosure; No Material Misstatements............................................... 42
Section 8.12 Insurance........................................................................... 43
Section 8.13 Restriction on Liens................................................................ 43
Section 8.14 Subsidiaries........................................................................ 43
Section 8.15 Location of Business and Offices.................................................... 43
Section 8.16 Properties; Titles, Etc............................................................. 43
Section 8.17 Maintenance of Properties........................................................... 44
Section 8.18 Gas Imbalances, Prepayments......................................................... 45
Section 8.19 Marketing of Production............................................................. 45
Section 8.20 Swap Agreements..................................................................... 46
Section 8.21 Use of Loans........................................................................ 46
Section 8.22 Solvency............................................................................ 46
Section 8.23 Casualty Events..................................................................... 46
Section 8.24 Material Agreements................................................................. 46
Section 8.25 Brokers............................................................................. 47
Section 8.26 Reliance............................................................................ 47
Section 8.27 Investments and Guaranties.......................................................... 47
Section 8.28 Payments by Purchasers of Production................................................ 47
Section 8.29 Existing Accounts Payable........................................................... 47
ARTICLE IX AFFIRMATIVE COVENANTS............................................................................... 48
Section 9.01 Financial Statements; Other Information............................................. 48
Section 9.02 Notices of Material Events.......................................................... 51
Section 9.03 Existence; Conduct of Business...................................................... 52
Section 9.04 Payment of Obligations.............................................................. 52
Section 9.05 Performance of Obligations under Loan Documents..................................... 52
Section 9.06 Operation and Maintenance of Properties............................................. 52
Section 9.07 Insurance........................................................................... 53
Section 9.08 Books and Records; Inspection Rights................................................ 53
Section 9.09 Compliance with Laws................................................................ 53
Section 9.10 Environmental Matters............................................................... 54
Section 9.11 Further Assurances.................................................................. 55
Section 9.12 Reserve Reports..................................................................... 55
Section 9.13 Title Information................................................................... 56
Section 9.14 Additional Collateral; Additional Guarantors........................................ 56
Section 9.15 ERISA Compliance.................................................................... 57
Section 9.16 Swap Agreements..................................................................... 58
Section 9.17 [Reserved].......................................................................... 58
Section 9.18 [Reserved].......................................................................... 58
Section 9.19 Marketing Activities................................................................ 58
ii
ARTICLE X NEGATIVE COVENANTS................................................................................... 58
Section 10.01 Financial Covenants................................................................. 58
Section 10.02 Debt................................................................................ 59
Section 10.03 Liens............................................................................... 60
Section 10.04 Restricted Payments................................................................. 60
Section 10.05 Investments, Loans and Advances..................................................... 60
Section 10.06 Subordinated Debt................................................................... 61
Section 10.07 Nature of Business; Capital Expenditures and Acquisitions........................... 61
Section 10.08 Limitation on Leases................................................................ 61
Section 10.09 Sale and Leasebacks................................................................. 62
Section 10.10 Proceeds of Notes and Effective Date Equity/Debentures.............................. 62
Section 10.11 ERISA Compliance.................................................................... 62
Section 10.12 Sale or Discount of Receivables..................................................... 63
Section 10.13 Mergers, Etc........................................................................ 63
Section 10.14 Sale of Properties.................................................................. 63
Section 10.15 Environmental Matters............................................................... 64
Section 10.16 Transactions with Related Parties................................................... 64
Section 10.17 Capital Expenditures................................................................ 64
Section 10.18 Material Agreements................................................................. 64
Section 10.19 Subsidiaries........................................................................ 64
Section 10.20 Negative Pledge Agreements; Dividend Restrictions................................... 64
Section 10.21 Gas Imbalances, Take-or-Pay or Other Prepayments.................................... 65
Section 10.22 Swap Agreements..................................................................... 65
Section 10.23 Certain Activities.................................................................. 65
Section 10.24 Net Sales........................................................................... 65
Section 10.25 G&A Costs........................................................................... 66
Section 10.26 Press Release....................................................................... 66
ARTICLE XI EVENTS OF DEFAULT; REMEDIES......................................................................... 66
Section 11.01 Events of Default................................................................... 66
Section 11.02 Remedies............................................................................ 68
Section 11.03 Disposition of Proceeds............................................................. 69
ARTICLE XII THE ADMINISTRATIVE AGENT........................................................................... 69
Section 12.01 Appointment; Powers................................................................. 69
Section 12.02 Duties and Obligations of Administrative Agent...................................... 69
Section 12.03 Action by Administrative Agent...................................................... 70
Section 12.04 Reliance by Administrative Agent.................................................... 70
Section 12.05 Subagents........................................................................... 71
Section 12.06 Resignation or Removal of Administrative Agent...................................... 71
Section 12.07 Agents as Lenders................................................................... 71
Section 12.08 No Reliance......................................................................... 72
Section 12.09 Authority of Administrative Agent to Release Collateral and Liens................... 72
iii
ARTICLE XIII MISCELLANEOUS..................................................................................... 72
Section 13.01 Notices............................................................................. 72
Section 13.02 Waivers; Amendments................................................................. 73
Section 13.03 Expenses, Indemnity; Damage Waiver.................................................. 73
Section 13.04 Successors and Assigns.............................................................. 76
Section 13.05 Survival; Revival; Reinstatement.................................................... 78
Section 13.06 Counterparts; Integration; Effectiveness............................................ 79
Section 13.07 Severability........................................................................ 79
Section 13.08 Right of Setoff..................................................................... 79
SECTION 13.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.......................... 80
Section 13.10 Headings............................................................................ 80
Section 13.11 Confidentiality..................................................................... 81
Section 13.12 Interest Rate Limitation............................................................ 81
SECTION 13.13 EXCULPATION PROVISIONS.............................................................. 82
Section 13.14 Collateral Matters; Swap Agreements................................................. 82
Section 13.15 Third Party Beneficiaries........................................................... 83
Section 13.16 Securitization...................................................................... 83
Section 13.17 USA Patriot Act Notice.............................................................. 83
iv
Annexes, Exhibits and Schedules
Annex I List of Commitments
Exhibit A Form of Note
Exhibit B-1 Form of Funding Disbursement Request
Exhibit B-2 Form of Continuation/Conversion Notice
Exhibit C Form of Direction Letter
Exhibit D Form of Compliance Certificate
Exhibit E [Reserved]
Exhibit F Security Instruments
Exhibit G Form of Assignment and Assumption
Exhibit H Form of Letter-in-Lieu
Exhibit I Development Plan
Schedule 1.02 Approved Counterparties
Schedule 8.05 Litigation
Schedule 8.06 Environmental Matters
Schedule 8.12 Insurance
Schedule 8.14 Subsidiaries and Partnerships
Schedule 8.18 Gas Imbalances
Schedule 8.19 Marketing Contracts
Schedule 8.20 Swap Agreements
Schedule 8.24 Material Agreements
Schedule 8.29 Past Due Accounts Payable
Schedule 9.02(e) Notice of Certain Events
Schedule 10.02 Debt
Schedule 10.03 Excepted Liens
Schedule 10.05 Investments
Schedule 10.08 Leases
Schedule 10.24 Net Sales Volumes
v
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 13, 2007, is
among Dune Energy, Inc., a corporation duly formed and existing under the laws
of the State of Delaware (the "Borrower"); each of the Lenders from time to time
party hereto; and Jefferies Funding LLC, a Delaware limited liability company,
as administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
R E C I T A L S
A. The Borrower, X.X. Xxxxx Special Opportunities Fund, L.P. ("Original
Agent") and the lenders described therein ("Original Lenders") are parties to
that certain Original Credit Agreement dated September 26, 2006, pursuant to
which such lenders have provided certain loans to the Borrower (as amended, the
"Original Credit Agreement").
B. The Lenders are, concurrently with the execution of this Agreement,
purchasing the loans owing to the Original Lenders under the Original Credit
Agreement.
C. The Borrowers have requested, and the Lenders have agreed, to amend and
restate the Original Credit Agreement subject to the terms and conditions of
this Agreement.
D. NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and of the loans, extensions of credit and commitments
hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any day
during any Interest Period therefor, the rate per annum equal to the sum of (a)
the Eurodollar Margin for such day plus (b) the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by Administrative Agent to
be equal to the quotient obtained by dividing (i) the Eurodollar Rate for such
Eurodollar Loan for such Interest Period by (ii) 1 minus the Reserve Requirement
for such Eurodollar Loan for such Interest Period, provided that no Adjusted
Eurodollar Rate charged by any Person shall ever exceed the Highest Lawful Rate.
The Adjusted Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Requirement changes.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
1
"Agreement" means this Amended and Restated Credit Agreement, as the same
may from time to time be amended, modified, supplemented or restated.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Applicable Percentage" means, with respect to any Lender, the percentage
set forth on Annex I, as modified pursuant to any applicable Assignments and
Assumptions.
"Applicable Rate" means, on any day, the Base Rate for such day plus the
Base Rate Margin for such day, provided that the Applicable Rate charged by any
Person shall never exceed the Highest Lawful Rate.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender,
(b) any other Person whose long term senior unsecured debt rating is A-/A3 by
S&P or Xxxxx'x (or their equivalent) or higher, or (c) with regard to Swap
Agreements in respect of commodities, and subject to the conditions set forth
therein, any other Person listed on Section 1.02.
"Approved Petroleum Engineers" means XxXxxxxx & XxxXxxxxxxx, or any other
independent petroleum engineers reasonably acceptable to the Administrative
Agent.
"Arranger" means Jefferies & Company, Inc., in its capacity as the sole
lead arranger hereunder.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 13.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit G or any other form approved by the Administrative Agent.
"Base Rate" and "Prime Rate" each means, for any period, a fluctuating
interest rate per annum as shall be in effect from time to time, which rate per
annum shall be equal at all times to the higher of (a) the rate of interest
announced publicly by Citibank, N.A. in New York, New York, from time to time,
as its base rate, and (b) 0.5% per annum plus the Federal Funds Effective Rate.
"Base Rate Loan" means a Loan that bears interest at the Applicable Rate.
"Base Rate Margin" means, during each period set out in the following
table, the per annum percentage set out in such table opposite such percentage:
Effective Date through 90th day after Effective Date 5.75%
91st day after Effective Date through 180th day after Effective Date 6.25%
181st day after Effective Date through 270th day after Effective Date 6.75%
271st day after Effective Date and thereafter 7.25%
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
2
"Borrowing" means a borrowing of Loans of a single Type (and, in the case
of Eurodollar Loans, with the same Interest Period) pursuant to Section 2.01 or
a Continuation or Conversion of existing Loans into a single Type (and, in the
case of Eurodollar Loans, with the same Interest Period) pursuant to Section
2.02.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Administrative Agent, significant transactions in dollars are
carried out in the interbank eurocurrency market.
"Capital Expenditures" means, in respect of any Person, for any period,
the aggregate (determined without duplication) of all exploration and
development expenditures and costs that should be capitalized in accordance with
GAAP and any other expenditures that are capitalized on the balance sheet of
such Person in accordance with GAAP.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder, in each case taken at the amount
thereof accounted for as indebtedness in accordance with GAAP.
"Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of any Property of the Borrower or any of its Subsidiaries,
in each case having a total loss of value to such Property in excess of
$100,000.
"Casualty Proceeds" has the meaning given such term in Section
6.01(b)(iv).
"Casualty Proceeds Account" has the meaning given such term in Section
6.03.
"Change in Control" means (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than Itera, shall become, or obtain rights
(whether by means of warrants, options, or otherwise) to become a "beneficial
owner" as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, directly
or indirectly, of more that 50% of the outstanding Equity Interests of the
Borrower on a fully diluted basis, (b) Independent Directors - that were either
(i) nominated by the Board of Directors of the Borrower or (ii) appointed by
directors so nominated - cease to hold a majority of the seats on the Board of
Directors of the Borrower, or (c) the failure of the Borrower to own all of the
issued and outstanding Equity Interests in the Guarantors, except as otherwise
permitted by this Agreement.
"Change in Control Payment" has the meaning given such term in Section
3.06.
"Change in Control Payment Date" has the meaning given such term in
Section 3.06.
"Change in Control Offer" has the meaning given such term in Section 3.06.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement by any Governmental Authority, (b) any change
in any law, rule or regulation or in the interpretation or application thereof
by any Governmental Authority after the date of this Agreement or (c) compliance
by any Lender (or, for purposes of Section 5.01(a), by any lending office of
such Lender or by such Lender's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
3
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Collateral" means any and all (a) Properties of the Borrower and its
Subsidiaries of whatsoever kind or description (whether now owned or hereafter
acquired and including, without limitation, all of their Oil and Gas
Properties), (b) of the issued and outstanding Equity Interests of any
Subsidiary of the Borrower and (c) other Properties of whatsoever kind or
description in which an interest is granted or pledged under a Security
Instrument.
"Collateral Agency Agreement" means the Collateral Agency Agreement
described in Part IV of Exhibit F, as in effect from time to time.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Loans hereunder. The amount representing each
Lender's Commitment is set forth on Annex I.
"Consolidated Interest Expense" means, for any period, total interest
expense, excluding non-cash interest expense on the Subordinated Debt and, to
the extent constituting interest under GAAP, the fees payable under Section 2.04
and Article V and any prepayment charges payable under Article III (but
including all interest that is capitalized and that which is attributable to
Capital Leases, in accordance with GAAP) of the Borrower and its Consolidated
Subsidiaries, on a consolidated basis with respect to all outstanding
indebtedness of the Borrower and its Consolidated Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to any letters of credit, amortization of debt, discount, expense,
and other deferred financing costs.
"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, after allowances for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and its Consolidated Subsidiaries, in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary; (b) the net income (but not loss)
during such period of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; (c)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (d) any
extraordinary non-cash gains or losses during such period; (e) any gains on
collections from insurance policies or settlement; and (f) any gains or losses
attributable to writeups or writedowns of assets, including ceiling test
writedowns; and provided further that if the Borrower or any Consolidated
Subsidiary shall acquire or dispose of any Property during such period, then
Consolidated Net Income shall be calculated after giving pro forma effect to
such acquisition or disposition, as if such acquisition or disposition had
occurred on the first day of such period.
4
"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.
"Continuation" means to the continuation pursuant to Section 2.02 hereof
of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the next
Interest Period.
"Continuation/Conversion Notice" means a written or telephonic request, or
a written confirmation, made by Borrower which meets the requirements of Section
2.02.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.
"Conversion" means a conversion pursuant to Section 2.02 or Article V of
one Type of Loan into another Type of Loan.
"Credit Agreement Termination Date" means the date on which the
Commitments of the Lenders have terminated and all principal, interest and all
other Indebtedness have been paid in full, and all amounts due to any Lender or
any of their Affiliates under any Swap Agreements have been paid in full.
"Cutoff Date" means, with respect to each calendar month, the last day of
such calendar month.
"Debt" means, for any Person, on a consolidated basis, the sum of the
following (without duplication): (a) all obligations of such Person for borrowed
money or evidenced by bonds, bankers' acceptances, debentures, notes or other
similar instruments; (b) all obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, surety or other bonds and similar
instruments; (c) accounts payable and accrued expenses, liabilities or other
obligations of such Person to pay the deferred purchase price of Property or
services (other than accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business that are not greater
than sixty (60) days past the date of receipt of the invoice or delinquent or
that are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP); (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others or to purchase the Debt or
Property of others; (i) obligations to deliver commodities, goods or services,
including, without limitation, Hydrocarbons, in consideration of one or more
advance payments, other than gas balancing arrangements in the ordinary course
of business; (j) obligations to pay for goods or services whether or not such
goods or services are actually received or utilized by such Person; (k) any Debt
of a partnership for which such Person is liable either by agreement, by
operation of law or by a Governmental Requirement but only to the extent of such
liability; (l) Disqualified Capital Stock of such Person; and (m) the
undischarged balance of any production payment (or term overriding royalty
interest) created by such Person or for the creation of which such Person
directly or indirectly received payment. The Debt of any Person shall include
all obligations of such Person of the character described above to the extent
such Person remains legally liable in respect thereof notwithstanding that any
such obligation is not included as a liability of such Person under GAAP.
5
"Default" means any event or condition which constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Development Plan" means the Borrower's Plan of Development for the Oil
and Gas Properties and the related Hydrocarbon Interests attached as Exhibit I,
as the same may be amended from time to time in accordance with the terms of
this Agreement.
"Development Project" means each development project for the Oil and Gas
Properties to be developed in accordance with the Development Plan.
"Direction Letters" means letters substantially in the form of Exhibit C.
"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans or other
obligations hereunder outstanding and all of the Commitments are terminated.
"Dollars" or "$" refers to lawful money of the United States of America.
"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" below its name on Annex
I, or such other office as such Lender may from time to time specify to Borrower
and Administrative Agent; and, with respect to Administrative Agent, the office,
branch, or agency through which it administers this Agreement.
6
"EBITDA" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization and other similar noncash charges, minus all noncash
items added to Consolidated Net Income.
"Effective Date" means the date on which the conditions specified in
Sections 7.01 and 7.02 are satisfied (or waived in accordance with Section
13.02).
"Effective Date Equity/Debentures" means:
(a) shares of the Borrower's common stock that are issued and sold by
the Borrower within 60 days after the Effective Date and
(b) debentures issued by American Natural Energy Corporation that are
listed on Schedule 10.05 and resold by the Borrower within 60 days
after the Effective Date (provided that the prior written consent of
the Administrative Agent is first obtained with respect to any such
sale),
for an aggregate net sales price, after costs of sale, of no more than
$15,000,000. To the extent that the Borrower issues and sells its common stock
or sells such debentures in one or more transactions within sixty days after the
Effective Date that result in an aggregate net sales price of more than such
amount, the Effective Date Equity/Debentures will be the first shares or
debentures sold until such amount is obtained.
"Engagement Letter" means the engagement letter dated March 18, 2007,
between the Borrower and the Arranger, which provides, among other things, for
the Borrower to pay the fee described in Section 2.04(a) in connection with the
arrangement of the credit facility under this Agreement.
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA and the term "oil and gas waste" shall have the
meaning specified in Section 91.1011 of the Texas Natural Resources Code
("Section 91.1011"); provided, however, that (a) in the event either OPA,
CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (b) to the extent the laws of the state or
other jurisdiction in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste," "disposal" or "oil and gas waste" which is broader than that specified
in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall
apply.
7
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with any Loan Party would be deemed to be a "single
employer" within the meaning of Section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of Section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in Section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" below its name on
Annex I (or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may from time to time specify to
Borrower and Administrative Agent.
"Eurodollar Loan" means a Loan that bears interest at the Adjusted
Eurodollar Rate.
"Eurodollar Margin" means, during each period set out in the following
table, the per annum percentage set out in such table opposite such percentage:
Effective Date through 90th day after Effective Date 7.0%
91st day after Effective Date through 180th day after Effective Date 7.5%
181st day after Effective Date through 270th day after Effective Date 8.0%
271st day after Effective Date and thereafter 8.5%
8
"Eurodollar Rate" means, for any Eurodollar Loan within a Borrowing and
with respect to the related Interest Period therefor, (a) the interest rate per
annum (carried out to the fifth decimal place) equal to the rate determined by
the Administrative Agent to be the offered rate that appears on the page of the
Telerate Screen that displays an average British Bankers Association Interest
Settlement Rate (such page currently being page number 3750) for deposits in
U.S. dollars (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period,
or (b) in the event the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall cease to be
available, the rate per annum (carried out to the fifth decimal place) equal to
the rate determined by Administrative Agent to be the offered rate on any other
page or other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in U.S. dollars (for delivery on the first
day of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, or (c) in the event the rates
referenced in the preceding subsections (a) and (b) are not available, the rate
per annum determined by the Administrative Agent as the rate of interest at
which deposits in U.S. dollars (for delivery on the first day of such Interest
Period) in same day funds in the approximate amount of the applicable Eurodollar
Loan and with a term equivalent to such Interest Period would be offered by
Citibank, N.A., Bank of America, N.A. or another major United States bank to
major banks in the offshore U.S. dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"Event of Default" has the meaning assigned such term in Section 11.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies that are not yet due or that are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP in an account controlled by Administrative
Agent; (b) Liens in connection with workers' compensation, unemployment
insurance or other social security, old age pension or public liability
obligations that are not yet due or that are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP in an account controlled by Administrative Agent; (c)
statutory landlord's liens, operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', suppliers', workers', materialmen's, construction or
other like Liens arising by operation of law in the ordinary course of business
or incident to the exploration, development, operation and maintenance of Oil
and Gas Properties each of which is in respect of obligations that have not been
outstanding for more than 60 days and provided, if such liens are being
disputed, are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP; (d) contractual
Liens which arise in the ordinary course of business under operating agreements,
joint venture agreements, oil and gas partnership agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale,
transportation or exchange of oil and natural gas, unitization and pooling
declarations and agreements, area of mutual interest agreements, overriding
royalty agreements, marketing agreements, processing agreements, net profits
agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
or other agreements that are usual and customary in the oil and gas business and
are for claims that have not been outstanding for more than 60 days and
provided, if such liens are being disputed, are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP, provided that any such Lien referred to in this clause
does not materially impair the use of the Property covered by such Lien for the
purposes for which such Property is held by the Borrower or any Subsidiary or
materially impair the value of such Property subject thereto; (e) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (f) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, statutory obligations, regulatory obligations and
other obligations of a like nature incurred in the ordinary course of business
and (g) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a creditor
depository institution; (h) judgment and attachment Liens not giving rise to an
Event of Default, provided that any appropriate legal proceedings which may have
been duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced; and (i)
Liens in existence on the Effective Date granted by Borrower pursuant to that
certain Office Building Lease, dated September 9, 2004, between the Borrower,
CRT Post Oak Limited Partnership (formerly known as Xxxxx Post Oak Limited
Partnership) provided, further that Liens described in clauses (a) through (d)
shall remain "Excepted Liens" only for so long as no action to enforce such Lien
has been commenced and no intention to subordinate the first priority Lien
granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted Liens.
9
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower or any Guarantor hereunder or under any other Loan
Document, (a) income, margin or franchise taxes imposed on (or measured by) its
net income by the United States of America or such other jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, and (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
10
"Financial Officer" means, for any Person, the president, chief financial
officer, principal accounting officer, treasurer or controller of such Person.
Unless otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries, as referred to in Section 9.01(a)
and Section 9.01(b).
"Free Cash Flow" means all Revenues earned as of each Cutoff Date less
costs, expenses and charges described in Section 6.01(b)(v) or (vii) which have
been incurred and are due or have been billed since the last Cutoff Date.
"Funding" has the meaning assigned such term in Section 2.01(a).
"Funding Disbursement Request" means a written request by the Borrower to
the Lenders for the Funding in the form of Exhibit B-1.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"General and Administrative Costs" means normal and customary expenses and
costs that are classified as general and administrative costs, including
consulting fees, salary, rent, supplies, travel and entertainment, insurance,
accounting, legal, engineering and broker related fees, required to manage the
affairs of the Borrower.
"Goldking" means Goldking Holding Corporation.
"Goldking Acquisition" means the acquisition by the Borrower of all or
substantially all of the capital stock of Goldking.
"Goldking Acquisition Agreement" means the Purchase and Sale Agreement
dated as of April 13, 2007 between the Borrower and Goldking Energy Holdings,
L.P. with respect to the Borrower's purchase of the capital stock of Goldking.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Subsidiary, or any of their Properties.
"Governmental Requirement" means, at any time, any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (whether or not having the force of law), whether now or hereinafter
in effect, including, without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls, of any Governmental
Authority.
"Guarantor" means Dune Operating Company, Vaquero Partners LLC, any other
Subsidiary of the Borrower that guarantees the Indebtedness pursuant to Section
9.14(b) and any other Person that guarantees the Indebtedness.
11
"Guaranty and Collateral Agreement" means an agreement between Borrower
and each Subsidiary on the one hand, and the Administrative Agent, on the other
hand, in form and substance satisfactory to the Administrative Agent,
unconditionally guarantying, on a joint and several basis, payment of the
Indebtedness, as the same may be amended, modified or supplemented from time to
time.
"Highest Lawful Rate" means with respect to each Lender, the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any Subsidiary or any Guarantor: (a) to the Administrative Agent, the
Arranger, or any Lender under any Loan Document; (b) to any Lender or any
Affiliate of a Lender under any Swap Agreement between the Borrower or any
Subsidiary and such Lender or Affiliate of a Lender made prior to or while such
Person (or in the case of its Affiliate, the Person affiliated therewith) is a
Lender hereunder; (c) to Administrative Agent, the Arranger, or any Affiliate of
the Administrative Agent or the Arranger under any other agreement, including
without limitation the Engagement Letter; and (d) all renewals, extensions
and/or rearrangements of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning given such term in Section 13.03(b).
"Independent Directors" means directors of the Borrower that are not
nominated or otherwise proposed by, or otherwise affiliated with, Itera or any
other Person that owns more than 50% of the outstanding Equity Interests of the
Borrower on a fully diluted basis.
"Information" has the meaning given such term in Section 13.11.
"Initial Reserve Report" means the Appraisal Report of XxXxxxxx &
XxxXxxxxxxx dated as of December 31, 2006, with respect to certain Oil and Gas
Properties of the Borrower and its Consolidated Subsidiaries.
"Insolvent" means: (a) with reference to a Person other than a
partnership, that (i) the sum of such Person's debts is greater than all of its
properties, at a fair valuation, exclusive of any properties transferred,
concealed, or removed with intent to hinder, delay, or defraud creditors or (ii)
such Person is generally not able to pay its debts as they become due, and (b)
with reference to a Person that is a partnership, that (i) such Person's
financial condition is such that the sum of its debts is greater than the
aggregate of, at a fair valuation, (A) all of such partnership's properties
exclusive of properties transferred, concealed or removed with intent to hinder,
delay or defraud creditors of the partnership, and (B) the sum of the excess of
the value of each general partner's non-partnership properties, exclusive of
properties transferred, concealed or removed with intent to hinder, delay or
defraud creditors, over such general partner's non-partnership debts or (ii)
such Person is generally not able to pay its debts as they become due.
12
"Interest Payment Date" means (a) with respect to each Base Rate Loan, the
last Business Day of each March, June, September and December, beginning June
29, 2007, and (b) with respect to each Eurodollar Loan, the last day of the
Interest Period that is applicable thereto; provided that the Monthly Payment
Date in each calendar month shall also be an Interest Payment Date for each Loan
so long as any Event of Default exists.
"Interest Period" means, with respect to each Eurodollar Loan, the period
beginning on and including the date specified in the Continuation/Conversion
Notice applicable to such Eurodollar Loan (which must be a Business Day) and
ending three months thereafter; provided that: (a) any Interest Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day; (b) any Interest Period which begins on the last
Business Day in a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day in a calendar month; and (c) notwithstanding
the foregoing, any Interest Period which would otherwise end after the original
stated Maturity Date shall end on the original stated Maturity Date.
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person, the contribution of capital to 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) or capital contribution; (b) the making of
any deposit with (other than deposits in accounts of Borrower at commercial
banks approved by the Administrative Agent), or advance, loan or other extension
of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person, but excluding any such advance, loan or
extension of credit having a term not exceeding ninety (90) days representing
the purchase price of inventory or supplies sold by such Person in the ordinary
course of business) or (c) the entering into of any guarantee of, or other
contingent obligation (including the deposit of any Equity Interests to be sold)
with respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"Itera" means Itera Holdings BV, a Netherlands company.
"Itera Directors" means directors of the Borrower that are or have been
nominated or otherwise proposed by Itera or that are otherwise (in some way
other than serving as a director of the Borrower) affiliated with Itera.
13
"Lenders" means the Persons listed on Annex I, and any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
"Letters-in-Lieu" means letters-in-lieu substantially in the form of
Exhibit H.
"Liabilities" has the meaning assigned such term in Section 13.16.
"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 (a) the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes
or (b) royalties, production payments and the like payable out of Oil and Gas
Properties. The term "Lien" shall include easements, restrictions, servitudes,
permits, conditions, covenants, encroachments, exceptions, title exceptions or
reservations. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, and all other certificates, agreements and instruments delivered in
connection herewith or therewith by any Loan Party or Itera.
"Loan Parties" means each of the Guarantors, the Borrower and each of its
Subsidiaries.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Lockbox Account" has the meaning assigned such term in Section 6.01(a).
"Lockbox Bank" has the meaning assigned such term in Section 6.01(a).
"Macquarie" means Macquarie Bank Limited.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, Properties, condition (financial or otherwise),
prospects, management or results of operations of the Borrower and the
Subsidiaries taken as a whole, (b) the ability of the Borrower, any Subsidiary
or any Guarantor to perform any of its obligations under any Loan Document, (c)
the validity or enforceability of any Loan Document or (d) the rights and
remedies of or benefits available to the Administrative Agent or any Lender
under the Credit Agreement or any Loan Document.
"Material Agreements" has the meaning assigned such term in Section 8.24.
"Material Indebtedness" means Debt (other than the Loans) or obligations
in respect of one or more Swap Agreements, in a principal amount in excess of
$500,000, of any one or more of the Borrower and its Subsidiaries. For purposes
of determining Material Indebtedness, the "principal amount" of the obligations
of the Borrower or any of its Subsidiaries in respect of any Swap Agreement at
any time shall be the Swap Termination Value.
14
"Maturity Date" means May 13, 2008, unless otherwise accelerated pursuant
to Section 11.02.
"Monthly Payment Date" means the last Business Day of each calendar month.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
"Net Present Value" means, in respect of the Total Proved Reserves, the
present value of future cash flows therefrom (discounted at 10% per annum),
calculated by the Administrative Agent in its sole and reasonable judgment
(including using a price curve determined by mutual agreement of Borrower and
Administrative Agent, provided, however, that if a mutual agreement cannot be
reached, then the price curve reasonably determined by the Administrative Agent)
after having reviewed the information from the most recent Reserve Report
delivered by the Borrower pursuant to Section 7.01(s) or Section 9.12 and taking
into account all other factors which the Administrative Agent deems material. At
any particular time, the Net Present Value shall be determined using the then
most recent Reserve Report and the price curve most recently determined as
described above.
"New Board" means a Board of Directors of Borrower, elected or appointed
no later than one Business Day after the date of the Funding, that is comprised
of at least four Independent Directors, who must constitute a majority of
members of such Board of Directors, and no more than one Itera Director.
"Notes" means the promissory notes of the Borrower described in Section
2.05 and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil xxxxx, gas xxxxx, injection xxxxx
or other xxxxx, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
15
"OPA" has the meaning given such term in the definition of Environmental
Laws.
"Operating Account" means an account designated by the Borrower from time
to time by written notice to the Administrative Agent and the Lenders.
"Operating Costs" means all costs (net to the Borrower and its
Subsidiaries) associated with the direct operation of the Borrower's and its
Subsidiaries' Oil and Gas Properties.
"Original Credit Agreement" has the meaning given such term in the
Recitals hereto.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning assigned such term in Section 13.04(c).
"Patriot Act" has the meaning assigned such term in Section 13.17.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan, as defined in Section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Post Default Rate" means at any time in question (a) with respect to any
Base Rate Loan, the rate per annum equal to two percent (2%) above the
Applicable Rate then in effect and (b) with respect to any Eurodollar Loan, the
rate per annum equal to two percent (2%) above the Adjusted Eurodollar Rate then
in effect for such Loan, provided in each case that no Post Default Rate charged
by any Person shall ever exceed the Highest Lawful Rate. The Post Default Rate
shall be applicable during the period commencing on the date of occurrence of an
Event of Default and continuing until all Events of Default are cured or waived.
16
"Previous Board" means the Board of Directors of the Borrower holding
office on March 19, 2007.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proved Developed Non-Producing Reserves" has the meaning assigned such
term in the SPE Definitions.
"Proved Developed Producing Reserves" has the meaning assigned such term
in the SPE Definitions.
"Proved Reserves" means Proved Developed Non-Producing Reserves, Proved
Developed Producing Reserves and Proved Undeveloped Reserves.
"Proved Undeveloped Reserves" has the meaning assigned such term in the
SPE Definitions.
"Rating Agencies" has the meaning assigned such term in Section 13.16.
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance (or the segregation of funds with respect to
any of the foregoing) of such Debt. "Redeem" has the correlative meaning
thereto.
"Register" has the meaning assigned such term in Section 13.04(b)(iv).
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 9.10(a).
"Reserve Report" means the Initial Reserve Report and each other report,
in form and substance satisfactory to the Lenders in their sole discretion
(including, without limitation, the use of satisfactory methodologies and risk
analyses), setting forth, the updated estimates of Proved Developed Producing
Reserves, Proved Developed Non-Producing Reserves, and Proved Undeveloped
Reserves and projected production profiles and overall economics of the Oil and
Gas Properties of the Borrower and its Subsidiaries, together with a projection
of the rate of production and future cash flows as of such date, based on the
following pricing assumptions:
(a) oil and gas prices (as adjusted by Administrative Agent for btu
content and quality) will be determined by Administrative Agent in a reasonable
manner based on then current forward product pricing as reported by NYMEX, which
prices will be adjusted to reflect location and quality differentials and
hedging arrangements then in place;
17
(b) cash flow will be determined based on the Borrower's net
production (projected production profile less royalty volumes adjusted for
working interest ownership) multiplied by above prices, less (x) the Operating
Costs and production and severance taxes and (y) capital expenditures including
any abandonment costs; and
(c) Operating Costs and production and severance taxes shall be
based on actual costs.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower acting on behalf of the
Borrower.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
"Revenues" means all revenues earned by or on behalf of the Borrower and
its Subsidiaries with respect to the following: (a) sales of Hydrocarbons from
the Oil and Gas Properties (including any other working interest owner receipts
received by Borrower or its Subsidiaries as operator of Oil and Gas Properties),
(b) cash representing operating revenue earned or to be earned by the Borrower
and its Subsidiaries, (c) any insurance proceeds received by the Borrower or its
Subsidiaries, (d) any proceeds from Swap Agreements, and (e) any other cash or
cash equivalents received by the Borrower or its Subsidiaries from whatever
source; provided that neither advances under the Loans nor proceeds from the
sale of Borrower's Equity Interests shall constitute "Revenues".
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Securitization" has the meaning assigned such term in Section 13.16.
"Securitization Parties" has the meaning assigned such term in Section
13.16.
"Security Instruments" means the Guaranty and Collateral Agreement,
mortgages, deeds of trust and other agreements, instruments or certificates
described or referred to in Exhibit F, and any and all other agreements,
guarantees, instruments or certificates now or hereafter executed and delivered
by the Borrower or any other Person (other than Swap Agreements with the Lenders
or any Affiliate of a Lender or participation or similar agreements between any
Lender and any other Lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the payment
or performance of the Indebtedness, the Notes and this Agreement, as such
agreements may be amended, modified, supplemented or restated from time to time.
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"S&P" means Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"SPE Definitions" means, with respect to any term, the definition thereof
adopted by the Board of Directors, Society for Petroleum Engineers (SPE) Inc.,
March 1997.
"Subordinated Debt" means the loans made by Itera (or one or more of its
Affiliates) pursuant to the Subordinated Debt Documents and the other
obligations owing to Itera under the Subordinated Debt Documents, including the
original loans made thereunder, interest and fees thereon, and all amounts owing
under subordinated notes issued to pay such interest.
"Subordinated Debt Documents" means that certain Term Loan Agreement,
dated as of September 26, 2006, between the Borrower and Itera, and all
Convertible Subordinated Notes issued thereunder (including without limitation
notes issued in place of cash payments of interest), in each case as amended
pursuant to the agreements described in Section 7.01(l).
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner or has the ability to appoint the general partner. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or after
the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
xxxx-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.
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"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Secured Debt" means, at any date, all Debt of the Borrower and its
Consolidated Subsidiaries (excluding accrued interest not yet due and payable)
that is secured by the Security Instruments.
"Total Proved Reserves" means all of the Proved Reserves attributable, at
the time in question, to the Oil and Gas Properties of the Borrower and its
Consolidated Subsidiaries.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof, and the grant of Liens by the Borrower on the Collateral and other
Properties pursuant to the Security Instruments and (b) each Guarantor, the
execution, delivery and performance by such Guarantor of each Loan Document to
which it is a party, its guarantee of the Indebtedness and other obligations and
its grant of Liens on Collateral and other Properties pursuant to the Security
Instruments.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or
more of the Wholly-Owned Subsidiaries.
Section 1.03 Terms Generally; Rules of Construction. The definitions
of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person's successors and assigns (subject to the restrictions
contained herein), (d) the words "herein", "hereof" and "hereunder", and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word "from" means "from and including" and
the word "to" means "to and including," (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement, and (g) any reference to this Agreement includes the Schedules,
Exhibits and Annexes. No provision of this Agreement or any other Loan Document
shall be interpreted or construed against any Person solely because such Person
or its legal representative drafted such provision.
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Section 1.04 Lender Determinations. Each determination by Administrative
Agent or a Lender of amounts to be paid under Article V or any other matters
which are to be determined hereunder by Administrative Agent or a Lender (such
as any Eurodollar Rate, Adjusted Eurodollar Rate, Business Day, Interest Period,
or Reserve Requirement) shall, in the absence of manifest error, be conclusive
and binding.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP (or, with respect to the Borrower or
its Subsidiaries, as otherwise agreed by the Borrower and the Administrative
Agent), applied on a basis consistent with the Financial Statements except for
changes in which the Borrower's independent certified public accountants concur
and that are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to the Lenders pursuant to
Section 9.01(a); provided that, unless the Borrower and the Lenders shall
otherwise agree in writing, no such change shall modify or affect the manner in
which compliance with the covenants contained herein is computed such that all
such computations shall be conducted utilizing financial information presented
consistently with prior periods.
ARTICLE II
COMMITMENT
Section 2.01 Loans.
(a) Loans. Subject to the terms and conditions of this Agreement,
the Lenders agree to purchase the loans (both principal and interest) owing
under the Original Agreement from the Original Lenders and to make additional
advances to the Borrower in an amount which, when combined with the purchase
price so paid for the loans owing under the Original Agreement, equals the
Commitment, provided that each Lender's obligation to do so is its several
obligation and that no Lender shall be obligated to advance more than its
Applicable Percentage of the Commitment. The loans (both principal and interest)
so purchased from the Original Lenders and such additional advances shall be
considered a single Borrowing of Loans hereunder and shall together constitute
the "Funding". The Funding shall be utilized only for the purposes described in
Section 2.03. The Loans constituting the Funding shall initially be made as Base
Rate Loans, subject to the Borrower's right to Convert such Loans to Eurodollar
Loans as provided herein.
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(b) Funding Procedure. The Lenders' commitment to make the Funding
shall cease at 4:00 p.m., New York time, on April 13, 2007. Prior to such time,
upon satisfaction or waiver of all conditions precedent to the Funding, the
Borrower shall deliver the Funding Disbursement Request to the Administrative
Agent, and thereupon the Lenders shall disburse funds to the Original Lenders or
the Original Agent to purchase the loans (both principal and interest) under the
Original Agreement and shall disburse the remainder of the Funding as instructed
by the Borrower. Such disbursements shall, at the option of the Administrative
Agent (and notwithstanding the assumption in the Funding Disbursement Request
that disbursements will be made by the Administrative Agent), be made directly
by the Lenders or by means of payment to the Administrative Agent who shall then
make such disbursements on behalf of the Lenders. Such disbursements shall be
made as promptly as reasonably possible, but neither the Agent nor the Lenders
shall be responsible for any delay or failure of wire transfers to be
accomplished on the same day requested by the Borrower in its Funding
Disbursement Request and the Borrower shall be responsible for any interest owed
to any Person in connection with a wire that is initiated on one Business Day
and not completed until the following Business Day.
(c) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of the
Funding that such Lender will not make available to the Administrative Agent
such Lender's share of the Funding, the Administrative Agent may assume that
such Lender has made such share available on such date and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the Funding available to
the Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at the rate of interest equal to either (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the Applicable
Rate. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender's Loan included in the Funding.
Section 2.02 Continuations and Conversions of Existing Loans. The Borrower
may make the following elections with respect to Loans already outstanding: to
convert Base Rate Loans to Eurodollar Loans, to convert Eurodollar Loans to Base
Rate Loans on the last day of the Interest Period applicable thereto, and to
continue Eurodollar Loans beyond the expiration of such Interest Period. Any
such election must apply to all Loans, so that at any time all Loans are either
Eurodollar Loans or Base Rate Loans. To make any such election, Borrower must
give to Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of any such Conversion or Continuation of existing Loans.
Each such notice constitutes a "Continuation/Conversion Notice" hereunder and
must:
(a) specify whether the Loans are to be continued or converted into
Base Rate Loans or Eurodollar Loans and the date on which such Continuation or
Conversion is to occur (which shall be the first day of the Interest Period
which is to apply to any such Eurodollar Loans); and
(c) be received by Administrative Agent not later than 10:00 a.m.,
New York, New York time, on (i) the day on which any such Continuation or
Conversion to Base Rate Loans is to occur, or (ii) the third Business Day
preceding the day on which any such Continuation or Conversion to Eurodollar
Loans is to occur.
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Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit B-2, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Continuation/Conversion Notice, Administrative Agent shall give each Lender
prompt notice of the terms thereof. Each Continuation/Conversion Notice shall be
irrevocable and binding on the Borrower. During the continuance of any Default,
Borrower may not make any election to convert existing Loans into Eurodollar
Loans or continue existing Loans as Eurodollar Loans. If (due to the existence
of a Default or for any other reason) the Borrower fails to timely and properly
give any Continuation/Conversion Notice with respect to a Borrowing of existing
Eurodollar Loans at least three days prior to the end of the Interest Period
applicable thereto, such Eurodollar Loans shall automatically be converted into
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by the Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
Section 2.03 Use of Proceeds. The proceeds of the Funding shall be used
(a) for the Lenders' purchase of the loans (both principal and interest) owing
under the Original Credit Agreement, (b) for the Borrower to make a deposit of
$15,000,000 under the Goldking Acquisition Agreement, (c) for the Borrower to
pay transaction expenses and fees in connection with this Agreement and the
Goldking Acquisition, and (d) for the Borrower to carry out the Development Plan
and for the normal working capital needs of the Borrower and its Subsidiaries in
the ordinary course of business.
Section 2.04 Fees.
(a) Fee to Arranger. The Borrower shall pay to the Arranger a fee
equal to five percent (5%) of the Commitment, such fee to be paid no later than
the date of the Funding. This is the funding fee described in Section 4(iii) of
the Engagement Letter and is not an additional fee.
(b) Administrative Fee. The Borrower shall pay to the Administrative
Agent in arrears a periodic administrative fee of $25,000. Such fee shall be
paid on the date of the Funding and on each October 1 and April 1 thereafter,
commencing October 1, 2007.
Section 2.05 Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (a) any Lender party hereto as of the date of this
Agreement, the date of this Agreement or (b) any Lender that becomes a party
hereto pursuant to an Assignment and Assumption, as of the effective date of the
Assignment and Assumption, payable to the order of such Lender in a principal
amount equal to its Commitment as in effect on such date, and otherwise duly
completed. The date, amount and interest rate of each Loan made by each Lender,
and all payments made on account of the principal thereof, shall be recorded by
such Lender on its books for its Note, and, prior to any transfer, may be
endorsed by such Lender on a schedule attached to such Note or any continuation
thereof or on any separate record maintained by such Lender. Failure to make any
such notation or to attach a schedule shall not affect any Lender's or the
Borrower's rights or obligations in respect of such Loans or affect the validity
of such transfer by any Lender of its Note. In the event that any Lender's Loan
increases or decreases for any reason (whether pursuant to Section 13.04(b) or
otherwise), upon such Lender's request, the Borrower shall deliver or cause to
be delivered on the effective date of such increase or decrease, a new Note
payable to the order of such Lender in a principal amount equal to its Loan
after giving effect to such increase or decrease, and otherwise duly completed.
The Administrative Agent shall cause each Lender to provide Borrower with
written notice of any transfer.
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ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans.
(a) Except as provided in subsections (b) of this section or in
Section 3.05, no principal payments on the Loans are required prior to the
Maturity Date.
(b) Upon the occurrence and during the continuation of any Event of
Default, on each Monthly Payment Date during such period the Borrower shall
repay principal on the Loans, together with accrued interest on such portion of
the Loans so prepaid (to Administrative Agent by payment in cash of immediately
available funds or through Administrative Agent disbursing such funds from the
Lockbox Account when and if such Lockbox Account is established), in an
aggregate amount equal to one hundred percent (100%) of Free Cash Flow
determined as of the Cutoff Date approximately 30 days prior to such Monthly
Payment Date.
(c) Notwithstanding anything herein to the contrary, if not paid
prior to the Maturity Date, the Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Lender the then unpaid
principal amount of such Lender's Loans, and the accrued and unpaid interest
thereon, on the Maturity Date.
Section 3.02 Interest.
(a) Interest Rates. Subject to subsection (b) below, each Base Rate
Loan shall bear interest on each day outstanding at the Applicable Rate in
effect on such day, and each Eurodollar Loan shall bear interest on each day
during the related Interest Period at the related Adjusted Eurodollar Rate in
effect on such day. The Borrower will pay such interest to each Lender on the
unpaid principal amount of its Loans for the period commencing on the date that
such Loan is made to but excluding the date such Loan shall be paid in full.
(b) Post Default Rate. Notwithstanding the foregoing, the Borrower
will pay to the Lenders interest at the applicable Post Default Rate on the
principal of the Loans, and (to the fullest extent permitted by law) on any fees
and other amounts payable by the Borrower hereunder, under the Notes or under
any other Loan Document, for the period commencing on the date of any Event of
Default (or any Default specified in Section 11.01(e)) until the same is paid in
full or all Events of Default are cured or waived (after as well as before
judgment).
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(c) Due Dates. On each Interest Payment Date relating to Base Rate
Loans, Borrower shall pay to the Lenders all unpaid interest which has accrued
on the Base Rate Loans to but not including such Interest Payment Date, and on
each Interest Payment Date relating to Eurodollar Loans, Borrower shall pay to
Lenders all unpaid interest which has accrued on such Eurodollar Loans to but
not including such Interest Payment Date; provided that (i) interest accrued
pursuant to Section 3.02(b) shall be payable on demand, (ii) in the event of any
voluntary or mandatory repayment or prepayment of any Loan, accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) all accrued and unpaid interest on the Loans
shall be due and payable on the Maturity Date.
(d) Interest Rate Computations. All interest hereunder and under the
other Loan Documents shall be computed on the basis of a year of 360 days,
unless such computation would exceed the Highest Lawful Rate, if any, in which
case interest shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
Section 3.03 No Reborrowing; Prepayments Without Penalty.
(a) Reborrowing Prohibited; Application of Prepayments. Any
voluntary or mandatory payments or prepayments on the Loans may not be
reborrowed.
(b) No Penalty. Except as provided in Article V, all prepayments
permitted or required under this Article III shall be without premium or
penalty.
Section 3.04 Voluntary Prepayments. The Borrower may prepay all or any
portion of the Loans upon not less than five Business Days prior notice to the
Lenders, which notice shall be irrevocable and shall specify the prepayment date
(which shall be a Business Day) and the amount of the prepayment (which shall be
at least the lesser of $5,000,000 or the remaining principal balance outstanding
on the Loans) and effective only upon receipt by each Lender, provided that (i)
interest on the principal prepaid, accrued to the prepayment date, shall be paid
on the prepayment date, and (ii) if the Borrower prepays any Eurodollar Loan on
any day other than the last day of the Interest Period applicable thereto, it
shall pay to Lenders any amounts due under Section 5.03. Each prepayment of the
Loans under this Section 3.04 or the following Section 3.05 shall be applied
ratably to all Loans then outstanding.
Section 3.05 Mandatory Repayments.
(a) Incurrence of Debt. Immediately upon the incurrence of any Debt
(other than Debt expressly described in and permitted by Section 10.02) by the
Borrower or any of its Subsidiaries, the Borrower shall prepay the Loans,
together with accrued interest on such portion of the Loans so prepaid, in an
aggregate amount equal to one hundred percent (100%) of the proceeds (net of
customary transaction costs) received from such incurrence of Debt. This
subsection applies to all incurrences of Debt, whether by means of borrowings or
the public or private sale of securities or otherwise, other than incurrences
allowed under Section 10.02, but this subsection (a) does not constitute a
waiver of the restrictions set out in Section 10.02.
(b) Sale of Equity Interests. Immediately upon the issuance, sale or
other transfer by the Borrower or any of its Subsidiaries of any Equity
Interests in the Borrower or any of its Subsidiaries (other than (i) the
Effective Date Equity/Debentures and (ii) Equity Interests in any of the
Borrower's Subsidiaries which are transferred to the Borrower or any of its
Subsidiaries), the Borrower shall prepay the Loans, together with accrued
interest on such portion of the Loans so prepaid, in an aggregate amount equal
to one hundred percent (100%) of the proceeds (net of customary transaction
costs) received from such issuance, sale or other transfer. Except as expressly
provided in clauses (i) and (ii) above, this subsection applies to all
issuances, sales or other transfers by the Borrower or any of its Subsidiaries
of any Equity Interests in the Borrower or any of its Subsidiaries, whether by
means of public or private sale of securities, mergers, consolidations, or
otherwise.
25
(c) Sale of Properties. In the event that the Borrower or its
Subsidiaries sell, assign or otherwise dispose of any of their Oil and Gas
Properties (other than asset sales permitted by Section 10.14), then the
Borrower shall prepay the Loans, together with accrued interest on such portion
of the Loans so prepaid, on the date that such sale or other disposition of the
Oil and Gas Properties occurs, in an aggregate amount equal to the proceeds of
such sale or disposition, less the actual costs and fees owing in connection
with such sale or disposition to Persons other than Affiliates of the Borrower,
provided that such costs and fees are not in excess of 4% of the proceeds from
such sale or disposition or are otherwise approved by the Lenders. In the event
that the Borrower or its Subsidiaries receive any Net Insurance and Condemnation
Proceeds, then the Borrower shall prepay the Loans, together with accrued
interest on such portion of the Loans so prepaid, on the date that such Net
Insurance and Condemnation Proceeds are received, in an aggregate amount equal
to such Net Insurance and Condemnation Proceeds. As used in this subsection,
"Net Insurance and Condemnation Proceeds" means insurance proceeds or
condemnation proceeds received by the Borrower or any of its Subsidiaries with
respect to any of their Properties, net of any amounts that the Lenders then
agree may be used to repair, restore or replace such Properties.
(d) Return of Xxxxxxx Money. If any funds deposited by the Borrower
with Goldking (or any escrow agent) in connection with the Goldking Acquisition
Agreement are returned to the Borrower for any reason, the Borrower will, on the
date such funds are so returned, prepay the Loans, together with accrued
interest on such portion of the Loans so prepaid, in an aggregate amount equal
to the amount of such returned funds.
(e) Failure to Close Goldking Acquisition. If the Goldking
Acquisition has not been consummated by July 31, 2007, the Borrower will, on
such date, pay to the Administrative Agent for the account of each Lender the
entire unpaid principal amount of such Lender's Loans and all accrued and unpaid
interest thereon.
(f) Termination of Goldking Acquisition Agreement. If the Goldking
Acquisition Agreement is terminated by the Borrower for any reason, the Borrower
will, on or before the 90th day following such termination, pay to the
Administrative Agent for the account of each Lender the entire unpaid principal
amount of such Lender's Loans and all accrued and unpaid interest thereon.
Section 3.06 Offer to Repurchase Upon Change in Control.
(a) If a Change in Control occurs, each Lender shall have the right
to require the Borrower to repurchase all (but not less than all) of that
Lender's Loans pursuant to an offer by the Borrower (a "Change in Control
Offer"). Within two Business Days following any Change in Control, the Borrower
shall give written notice to each Lender describing the transaction or
transactions that constitute the Change in Control and offering to repurchase
the Loans on the date specified in such notice (the "Change in Control Payment
Date"), which shall be no earlier than five Business Days and no later than ten
Business Days after the date such notice is given. In the Change in Control
Offer, the Borrower shall offer payment to each Lender (a "Change in Control
Payment") in cash equal to 101% of the aggregate principal amount of that
Lender's Loans, plus accrued and unpaid interest thereon to the date of
repurchase.
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(b) Each notice of a Change in Control Offer (i) must specify the
amount of the Change in Control Payment offered and the Change in Control
Payment Date; (ii) must provide that the Change in Control Offer will remain
open until the second Business Day preceding the Change in Control Payment Date
and that any acceptance of such Change in Control Offer will remain revocable by
each Lender until the second Business Day preceding the Change in Control
Payment Date; and (iii) must contain all instructions and materials necessary to
enable each Lender to tender its Loans pursuant to the Change in Control Offer.
(c) By 11:00 a.m. New York Time on the Change in Control Payment
Date, the Borrower shall (i) accept for payment all Loans tendered pursuant to
the Change in Control Offer, and (ii) deposit with the Administrative Agent an
amount equal to the Change in Control Payment in respect of all Loans so
tendered. The Administrative Agent shall promptly transfer to each Lender that
has tendered Loans the Change in Control Payment for such Loans.
(d) In the event that the Borrower fails to make a Change of Control
offer, or to consummate the repurchase of Loans pursuant to a Change of Control
Offer, in each case as provided in this Section 3.06, then, in addition to all
other Indebtedness owing under the Loan Documents, the Borrower shall be
obligated to pay liquidated damages to each Lender equal to the one percent
premium that would have been paid by the Borrower to such Lender had such Change
of Control Offer been made and consummated as required herein.
(e) Any Loans repurchased by the Borrower pursuant to this Section
3.06 shall, upon completion of such repurchase, be deemed repaid and no longer
outstanding for the purposes of the Loan Documents.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees,
amounts payable under Article V, or otherwise) prior to 12:00 noon, New York
City time, on the date when due, in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall
not be refundable unless the Administrative Agent agrees otherwise. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices specified in Section
13.01, except that payments pursuant to Section 5.01, Section 5.03, Section 5.04
and Section 13.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
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(b) Application of Insufficient Payments. If at any time, whether
before or after the Maturity of the Notes, insufficient funds are received by
and available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied to the
Indebtedness in the order set out in Section 11.02(c).
(c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this Section 4.01(c) shall apply). The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such
participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lenders with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
Section 4.03 Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.01(c) or Section4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
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ARTICLE V
INCREASED COSTS; TAXES
Section 5.01 Increased Costs.
(a) Capital Requirements. If any Lender shall be a bank or other
Person subject to any capital adequacy rules, and such Lender reasonably
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement or the Loans made by Lenders hereunder, to a level below that which
such Lender or such Lender's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender, as the case may be, such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction in rate of return suffered with respect
to the amounts advanced under the Loans.
(b) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in
by, any Lender (except any reserve requirement reflected in the Adjusted
Eurodollar Rate);
(ii) subject any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Loan made by it, or change the basis
of taxation of payments to such Lender in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 5.04 and the imposition of,
or any change in the rate of, any Excluded Tax payable by such Lender); or
(iii) impose on any Lender or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Loans
made by such Lender;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any Eurodollar Loan (or of maintaining its obligation to
make any such Loan), or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender, Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(c) Certificates. A certificate of a Lender setting forth the amount
or amounts necessary to compensate such Lender or its holding company, as the
case may be, as specified in the immediately preceding subsections (a) or (b)
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
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(d) Effect of Failure or Delay in Requesting Compensation. Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 5.01 shall not constitute a waiver of such Lender's right to demand such
compensation.
Section 5.02 Illegality . If any Change in Law shall make it unlawful for
any Lender to fund or maintain Eurodollar Loans, then, upon notice by such
Lender to the Borrower and Administrative Agent, (a) the Borrower's right to
elect Eurodollar Loans shall be suspended to the extent and for the duration of
such illegality, and (b) all Eurodollar Loans shall be converted automatically
to Base Rate Loans on the last day of the then current Interest Period with
respect to such Loans or at any earlier time required by Law. If any such
conversion of a Eurodollar Loan occurs on a day that is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 5.03.
Section 5.03 Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Lender against, and reimburse each
Lender on demand for, any loss or expense incurred or sustained by such Lender
(including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by a Lender to fund or maintain
Eurodollar Loans), as a result of (a) any payment or prepayment (whether
authorized or required hereunder or otherwise) of all or a portion of a
Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether required hereunder or
otherwise, of a Loan made after the delivery, but before the effective date, of
a Continuation/Conversion Notice requesting the continuation of outstanding
Eurodollar Loans as, or the conversion of outstanding Base Rate Loans to,
Eurodollar Loans, if such payment or prepayment prevents such Continuation/
Conversion Notice from becoming fully effective, (c) the failure of any
Continuation/Conversion Notice requesting the continuation of outstanding
Eurodollar Loans as, or the conversion of outstanding Base Rate Loans to,
Eurodollar Loans to become effective due to any condition precedent not being
satisfied or due to any other action or inaction of any Restricted Person, or
(d) any Conversion (whether authorized or required hereunder or otherwise) of
all or any portion of any Eurodollar Loan into a Base Rate Loan on a day other
than the day on which the applicable Interest Period ends. Such indemnification
shall be on an after-tax basis.
Section 5.04 Taxes
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.04), the Administrative Agent or Lenders (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or such Guarantor shall make such
deductions and (iii) the Borrower or such Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
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(c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent and each Lender within 10 days after written demand
therefore, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.04) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate of the
Administrative Agent or a Lender as to the amount of such payment or liability
under this Section 5.04 shall be delivered to the Borrower and shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable, but in any event
within 30 days after receipt of a request by the Administrative Agent of
evidence of any payment of Indemnified Taxes or Other Taxes by the Borrower or a
Guarantor to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
Section 5.05 Alternative Rate of Interest. If prior to the commencement of
any Interest Period for a Borrowing of Eurodollar Loans, Administrative Agent
determines that adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period (any such determination shall be
conclusive absent manifest error) or that the Eurodollar Rate for such Interest
Period will not adequately and fairly reflect the cost to the Lenders of making
or maintaining their Loans included in such Borrowing for such Interest Period,
then Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, any
Continuation/Conversion Notice that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Borrowing of Eurodollar Loans shall be
ineffective and shall be deemed a request to continue such Borrowing as a
Borrowing of Base Rate Loans and such Borrowing shall be made as a Borrowing of
Base Rate Loans.
ARTICLE VI
LOCKBOX PROCEDURES; CASUALTY PROCEEDS
Section 6.01 Lockbox Account.
(a) If Administrative Agent so elects, the Borrower and the
Administrative Agent shall establish within 10 days of receipt of notice of such
election, and thereafter maintain at the Borrower's expense an interest-bearing
account (the "Lockbox Account") under Administrative Agent's exclusive control
with a bank (the "Lockbox Bank") reasonably acceptable to the Lenders which has
entered into an account control agreement pursuant to which all Revenues to be
received by the Borrower or its Subsidiaries shall be deposited, and the
Borrower shall direct (and hereby agrees to direct) each payor of any Revenues
of the borrower and its Subsidiaries now and in the future to make payment to
such Lockbox Account. The Borrower hereby irrevocably appoints Administrative
Agent as its attorney-in-fact (and such appointment shall be deemed to be
coupled with an interest so long as any Loans remain outstanding) to address any
direction letter or letter-in-lieu of division order executed by the Borrower it
may hold and deliver or have delivered any such letter to any Person purchasing
Hydrocarbons from the Oil and Gas Properties that is not then directing payment
for such Hydrocarbons to the Lockbox Account.
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(b) On each Monthly Payment Date following an election by the
Administrative Agent under Section 6.01(a), the Administrative Agent (on behalf
of the Lenders) shall direct the Lockbox Bank to make the following payments
from the Lockbox Account in the following order of priority and to the extent
funds remain available:
(i) amounts to the Borrower to (A) pay royalties and
overriding royalty interests (1) with respect to existing Oil and Gas
Properties, to the extent such burdens exist at the time of the execution of
this Agreement and (2) with respect to Oil and Gas Properties that Borrower
acquires subsequent to the date of this Agreement to the extent such burdens
exist at the time that the Borrower acquires such Oil and Gas Properties and is
payable to non-Affiliated third parties, and (B) remit any revenues attributable
to the working interests of non-Affiliated third parties that were paid to or
received by the Borrower, in each case, as the Lenders determine is reasonably
accurate in its good faith discretion and any applicable severance tax or
ad-valorem tax attributable to all proceeds received by the Borrower;
(ii) payment to any third party (including Lenders or any of
their Affiliates) of any amounts due under any Swap Agreement of the Borrower
approved by the Lenders;
(iii) Operating Costs;
(iv) payment of any cash or cash equivalents representing
proceeds of insurance policies with respect to any casualty to any of the
Borrower's Property (the "Casualty Proceeds"), to the Casualty Proceeds Account
subject to and in accordance with the provisions of Section 6.03;
(v) payment of all fees owed to any of the Administrative
Agent or the Lenders then due and unpaid under Section 2.04;
(vi) payment of all interest then accrued and unpaid on the
Loans;
(vii) payment to the Administrative Agent and the Lenders of
any other amounts due (other than principal on the Loans) under this Agreement
and any of the other Loan Documents;
(viii) payment of all principal then due; and
(ix) payment of any residual amount to the Borrower.
(c) The Administrative Agent may, at its option, apply sums in the
Lockbox Account to pay directly to the ultimate payee thereof some or all of the
payments described in Section 6.01, as the Lenders elect, including advances or
prepayment to third Persons of expenditures incurred in the ordinary course of
Borrower's operation of its Properties.
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(d) Upon the Credit Agreement Termination Date, all amounts
remaining in the Lockbox Account shall be disbursed to the Borrower to the
Operating Account.
Section 6.02 Notice. Immediately following the establishment of the
Lockbox Account, the Borrower shall send Direction Letters, to all Persons that
owe or are expected to owe Cash Receipts to the Borrower or its Subsidiaries,
directing such persons to forward all such amounts directly to the Lockbox
Account. The Borrower hereby irrevocably appoints the Administrative Agent as
its attorney-in-fact (such appointment being coupled with an interest) for
sending any such notice to any Person who is or may become obligated to make any
payment of Cash Receipts to the Borrower. After the establishment of the Lockbox
Account, with respect to Cash Receipts received directly by the Borrower, the
Borrower shall within three Business Days deposit, or cause to be deposited, all
such amounts in the Lockbox Account. If the Borrower has knowledge that any
Person is in receipt of Cash Receipts that would otherwise be properly deposited
in the Lockbox Account, the Borrower shall promptly notify such Person and the
Administrative Agent in writing of such circumstance and shall direct such
Person to deposit, or cause to be deposited, all such amounts in the Lockbox
Account.
Section 6.03 Casualty Proceeds. All Casualty Proceeds (for collateral
purposes) are hereby assigned by the Borrower to the Administrative Agent, and
the Borrower shall have the right to collect any such payments, and such
payments shall be deposited by the Lenders or the Administrative Agent in an
account at the Lockbox Bank controlled by Administrative Agent (the "Casualty
Proceeds Account"). In the event of any casualty, the Borrower shall deliver
within 30 days, a written report from an engineering firm acceptable to the
Lenders describing the nature of the casualty, the nature of any restoration
required, and a good faith estimate of the cost of such restoration. If the
Lenders in their sole discretion determine that the remediation is not in their
best interests, given the cost of such restoration and the effect such
restoration would have on the amount and timing of repayment of the Loans, then
the Lenders may apply such Casualty Proceeds to the prepayment of the
outstanding principal balance and accrued interest of the Loans and the other
Indebtedness, whether or not such Indebtedness is then due and payable. If the
Lenders determine that such Casualty Proceeds shall be used for restoration,
then the proceeds shall be disbursed from the Casualty Proceeds Account for such
restoration in accordance with procedures reasonably determined by the Lenders
consistent with construction loan funding principles. Notwithstanding the
foregoing, if the Lenders determine that the Casualty Proceeds shall be used for
restoration and such Casualty Proceeds are less than $50,000, then such amount
shall be disbursed from the Casualty Proceeds Account to the Borrower and the
Borrower shall utilize such proceeds solely for restoration of such casualty.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Funding Conditions. The obligations of the Lenders to make
their Loans constituting the Funding shall not become effective until the date
on which each of the following conditions is satisfied to the satisfaction of
the Administrative Agent (or waived in accordance with Section 13.02):
(a) The Administrative Agent, the Arranger and the Lenders shall
have received (or made satisfactory arrangements to receive) all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
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(b) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower and each other Loan Party setting forth (i)
approval by the Previous Board and by the similar governing body of each other
Loan Party to execute and deliver the Goldking Acquisition Agreement and the
Loan Documents to which the Borrower or such other Loan Party is a party and to
enter into the transactions contemplated in those documents, (ii) the officers
of the Borrower or other Loan Party (y) who are authorized to sign the Loan
Documents to which the Borrower is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of such authorized officers, and
(iv) the certificate of incorporation and bylaws or similar organizational
documents, of the Borrower and each other Loan Party, certified as being true
and complete. The Administrative Agent and the Lenders may conclusively rely on
such certificate until the Administrative Agent receives notice in writing from
the Borrower or other Loan Party to the contrary.
(c) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of each of the Loan Parties.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.
(e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in an acceptable principal amount.
(g) The Lenders shall have made satisfactory arrangements to
purchase, and shall concurrently and as part of the Funding purchase, the loans
and liens under the Original Credit Agreement.
(h) The Borrower shall have delivered to the Administrative Agent
the Funding Disbursement Request.
(i) To the extent requested by Administrative Agent, the
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of
any amendments to and/or ratification and reaffirmation agreements related to
the Security Instruments, including the Security Instruments described on
Exhibit F. In connection with the execution and delivery of such documents, the
Administrative Agent shall be reasonably satisfied that the Security Instruments
create first priority, perfected Liens on the Collateral, as security for the
Indebtedness, such Liens being subject only to Excepted Liens identified in
clauses (a) through (i) of the definition thereof, but subject to the provisos
at the end of such definition.
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(j) The Administrative Agent shall have received legal opinions, in
form and substance acceptable to it, from (i) Xxxxx & Xxx Xxxxxx LLP, special
New York counsel to the Borrower, (ii) Xxxxxxx Xxxxxx L.L.P., special Texas
counsel to the Borrower, (iii) Xxxxx & Xxxxxxx, LLP, special counsel to Itera,
and (iv) Fruytier & Van Bremen, special counsel to Itera.
(k) The Administrative Agent shall have received a ratification and
acknowledgment with respect to each of the guaranties that were made under the
Original Credit Agreement.
(l) The Administrative Agent shall have received one or more
agreements from Itera (i) acknowledging and approving the Goldking Acquisition
Agreement, the Loan Documents, and the transactions contemplated therein, (ii)
confirming that the Indebtedness is senior indebtedness entitled to the benefit
of the subordination provisions of the Subordinated Debt Documents, (iii)
amending such Subordinated Debt Documents to provide that, for so long as any
Indebtedness is outstanding, Borrower will not pay or make, directly or
indirectly, any payment of any kind (whether principal or interest or otherwise)
with respect to any of the Subordinated Debt other than payments consisting
solely of the issuance of new Subordinated Debt, and (iv) agreeing that Itera
will not sell any of its Equity Interests in the Borrower until 90 days after
completion of the Goldking Acquisition and providing for an irrevocable stop
order to be given to the Borrower's transfer agent.
(m) The Administrative Agent shall have received a fully executed
and completed counterpart of the Goldking Acquisition Agreement.
(n) The Administrative Agent shall have received from Macquarie an
acceptable amendment to, or consent with respect to, the Collateral Agency
Agreement dated as of November 2, 2006, between Macquarie and the Original
Agent, which amendment or consent shall, among other things, recognize the
Administrative Agent as the collateral agent under such Collateral Agency
Agreement and contain Macquarie's acknowledgment and acceptance of this
Agreement.
(o) The Administrative Agent shall have received a certificate of
insurance coverage of each of the Loan Parties evidencing that the Loan Parties
are carrying insurance in accordance with Section 8.12.
(p) The Administrative Agent shall have received title information
as the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to the Borrower's and its
Subsidiaries' Oil and Gas Properties evaluated in the Initial Reserve Report as
of the Effective Date.
(q) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Loan Parties.
(r) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 8.03.
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(s) The Administrative Agent shall have received (i) the financial
statements referred to in Section 8.04(a), (ii) the Initial Reserve Report
accompanied by a certificate covering the matters described in Section
9.12(b)(i) through (iii), and (iii) copies of all material contracts or
agreements, including, but not limited to, all operating agreements covering the
Oil and Gas Properties, as well as all marketing, transportation, and processing
agreements related to such Oil and Gas Properties.
(t) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens (other than Excepted Liens)
encumbering the Properties of the Borrower and its Subsidiaries for each of the
following jurisdictions: Delaware, Texas and any other jurisdiction requested by
the Administrative Agent.
(u) The Administrative Agent shall be reasonably satisfied with the
Borrower's current hedging position and each Swap Agreement the Borrower or its
Subsidiaries is currently a party to.
(v) The Administrative Agent shall be reasonably satisfied that
there are no negative price deviations in the oil and gas prices since December
31, 2006 that would have a Material Adverse Effect on the value of the
Borrower's and its Subsidiaries' Oil and Gas Properties.
(w) The Administrative Agent shall be satisfied that there has been
no Material Adverse Effect to the Borrower since September 30, 2006.
(x) The Administrative Agent shall have received and reviewed, with
results satisfactory to the Lenders, an employment agreement between the
Borrower and each of its key employees (collectively, the "Employment
Agreements"), which shall include without limitation its chief executive
officer, chief operating officer and chief financial officer, which Employment
Agreements shall include employment terms that are acceptable to the
Administrative Agent.
(y) The Administrative Agent shall have received Letters-in-Lieu
executed in blank by the Borrower and any Loan Party as applicable, in such
quantity as the Administrative Agent may reasonably request.
(z) Each of the Borrower and each of its Subsidiaries shall be in
full compliance with all financial obligations under any document or agreement
enforceable against it.
(aa) The Administrative Agent shall have received Direction Letters
executed in blank by the Borrower and any Loan Party as applicable, in such
quantity as the Administrative Agent may reasonably request.
(bb) Since December 31, 2006, there shall not have been any
disruption or adverse change in the financial or capital markets.
(cc) The Borrower and the Lenders shall have agreed upon the
Development Plan.
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(dd) Completion by the Administrative Agent and the Lenders of a
satisfactory due diligence review, including, but not limited to the review of
all engineering, operations, land, title, environmental and financial data or
information.
(ee) Satisfactory due diligence review of the Borrower's material
agreements, including, but not limited to, satisfactory review of the operating
agreements governing the Oil and Gas Properties, the drilling contracts,
marketing agreements, transportation agreements and processing agreements.
(ff) The Administrative Agent shall be reasonably satisfied with the
potential plugging and abandonment liabilities associated with the Oil & Gas
Properties, including, without limitation, the bonding or collateralization
obligations of the Borrower associated therewith.
(gg) The Administrative Agent shall have received such other
documents as it or special counsel to the Administrative Agent may reasonably
request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 13.02) at or prior to 4:00 p.m., New York City time, on
April 13, 2007 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
Section 7.02 Additional Funding Conditions. The obligations of the Lenders
to make their Loans constituting the Funding are subject to the further
conditions precedent that, as of the date of the Funding and after giving effect
thereto:
(a) no Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred; and
(c) the representations and warranties made or deemed made by the
Borrower or any Affiliate in Article VIII and in the Loan Documents shall be
true and correct on and as of the date of the Funding with the same force and
effect as if made on and as of such date, except to the extent such
representations and warranties are expressly limited to an earlier date or the
Administrative Agent may expressly consent in writing to the contrary.
Section 7.03 Post-Closing Actions.
(a) The Borrower represents and warrants to the Administrative Agent
and the Lenders that, immediately following the Funding, (i) all but one of the
Itera Directors will resign from the Borrower's Board of Directors, (ii)
Independent Directors will be appointed or elected to such Board in a number
sufficient to cause the Borrower's Board of Directors to constitute a New Board,
and (iii) such New Board will ratify and confirm the resolutions of the Old
Board that are described in Section 7.01(b). Failure of any of these events to
occur within one Business Day after the date of the Funding shall constitute an
Event of Default. The appointment or election of no more than one non-voting
advisory director or observer to the Borrower's Board of Directors proposed by
Itera is permitted, and such person shall not be considered an Itera Director.
37
(b) Listed on Exhibit F is an Amended and Restated Act of Mortgage,
Collateral Assignment, Security Agreement, Fixture Filing and Financing
Statement and Notice of Reinscription of even date herewith between Dune Energy,
Inc. and the Administrative Agent concerning properties in St. Xxxxxxx Xxxxxx,
Louisiana. The Administrative Agent and the Lenders hereby agree that execution
and delivery of such instrument may be delayed until no later than April 25,
2007, and the Borrower hereby agrees to execute and deliver such instrument, in
a form acceptable to the Administrative Agent, on or before such date, and to
deliver to the Administrative Agent on or before such date a legal opinion of
Schully Xxxxxxx Xxxxxxxx & Xxxxxx, special Louisiana counsel to the Borrower, in
form and substance acceptable to the Administrative Agent.
Section 7.04 Conditions Precedent for the Benefit of the Lenders. All
conditions precedent to the obligations of the Lenders to make any advance is
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any advance in the absence of strict
compliance with such conditions precedent.
Section 7.05 No Waiver. No waiver of any condition precedent shall
preclude the Lenders from requiring such condition to be met prior to making any
subsequent advance of the Loans.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
Section 8.01 Organization; Powers. Each of the Loan Parties is duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation, has all requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals necessary, to own
its assets and to carry on its business as now conducted, and is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where failure to have such power, authority,
licenses, authorizations, consents, approvals and qualifications could not
reasonably be expected to have a Material Adverse Effect.
Section 8.02 Authority; Enforceability. The Transactions are within each
Loan Party's powers and have been duly authorized by all necessary corporate,
company or partnership (as applicable) action and, if required, shareholder,
member and/or partner action. Each Loan Document to which each Loan Party is a
party has been duly executed and delivered by such Loan Party and constitutes a
legal, valid and binding obligation of such Loan Party, as applicable,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
38
Section 8.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person (including partners of the
Borrower, members, shareholder or any class of directors, whether interested or
disinterested, of any Loan Party or any other Person), nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement and (ii) those third party approvals
or consents that, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or bylaws, limited liability company
agreements, regulations, the limited partnership agreement, certificate of
limited partnership, articles or certificate of incorporation or other
organizational or formation documents of any Loan Party or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or its
Properties, or give rise to a right thereunder to require any payment to be made
by such Loan Party and (d) will not result in the creation or imposition of any
Lien on any Property of any Loan Party (other than the Liens created by the Loan
Documents).
Section 8.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Administrative
Agent and the Arranger the audited consolidated balance sheet and audited
statements of income, owner's equity and cash flows for the Borrower and its
Consolidated Subsidiaries as of and for the fiscal year ended December 31, 2006.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such date and for such period in accordance
with GAAP.
(b) Since September 30, 2006, (i) there has been no event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect and (ii) the business of each of the Loan Parties, if
any, has been conducted only in the ordinary course consistent with past
business practices.
(c) No Loan Party has on the date hereof any material Debt
(including Disqualified Capital Stock) or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
the Financial Statements or as provided for in the Loan Documents.
Section 8.05 Litigation.
(a) Except as set forth on Schedule 8.05, there are no actions,
suits, investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting any Loan Party (i) that are not fully covered by insurance
(except for normal deductibles), or (ii) that involve any Loan Document or the
Transactions.
39
(b) Since the date of this Agreement, there has been no negative
change in the status of the matters disclosed in Schedule 8.05.
Section 8.06 Environmental Matters. Except as is set forth on Schedule
8.06:
(a) neither any Property of any Loan Party nor the operations
conducted thereon violate in any material respect any order or requirement of
any court or Governmental Authority or any Environmental Laws.
(b) no Property of any Loan Party nor the operations currently
conducted thereon or, to the knowledge of any Loan Party, by any prior owner or
operator of such Property or operation, are in violation of or subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of each Loan Party, including, without
limitation, past or present treatment, storage, disposal or release of a
hazardous substance, oil and gas waste or solid waste into the environment, have
been duly obtained or filed, and each Loan Party is in compliance in all
material respects with the terms and conditions of all such notices, permits,
licenses and similar authorizations.
(d) all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of any Loan Party have in the past been
transported, treated and disposed of in accordance with Environmental Laws and
so as not to pose an imminent and substantial endangerment to public health or
welfare or the environment, and, to the knowledge of any Loan Party, all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws.
(e) the Loan Parties have taken all steps reasonably necessary to
determine and have determined that no oil, hazardous substances, solid waste or
oil and gas waste, have been disposed of or otherwise released and there has
been no threatened release of any oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of any Loan Party except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of each Loan Party
currently satisfies in all material respects any design, operation, and
equipment requirements imposed by the OPA, and no Loan Party has any reason to
believe that such Property, to the extent subject to the OPA, will not be able
to maintain compliance with the OPA requirements during the term of this
Agreement.
(g) none of the Loan Parties has any known contingent liability or
Remedial Work in connection with any release or threatened release of any oil,
hazardous substance, solid waste or oil and gas waste into the environment.
40
(h) none of the Loan Party's oil and gas operations on its Oil and
Gas Properties will be subject to any environmental assessment requirements
under the National Environmental Policy Act or any analogous Governmental
Regulation or any other environmental review or assessment requirements in
excess of environmental review and assessment requirements required in
connection with the Loan Parties obtaining any permits or other authorization
required in completing recent xxxxx on their Properties.
Section 8.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Loan Parties is in material compliance with all
Governmental Requirements applicable to it or its Property and all agreements
and other instruments binding upon it or its Property and possesses all
licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business.
(b) None of the Loan Parties is in default nor has any event or
circumstance occurred that, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require a Loan Party to Redeem or make any offer to Redeem under any indenture,
note, credit agreement or instrument pursuant to which any Material Indebtedness
is outstanding or by which such Party or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 8.08 Investment Company Act. None of the Loan Parties nor any
Affiliate of the Loan Parties is an "investment company" or a company
"controlled" by an "investment company," within the meaning of, or subject to
regulation under, the Investment Company Act of 1940, as amended.
Section 8.09 Taxes. Each of the Loan Parties has timely filed or caused to
be filed all federal and state Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except Taxes that are being contested in good faith by appropriate
proceedings and for which the Loan Parties have set aside adequate reserves in
accordance with GAAP in a segregated account controlled by the Administrative
Agent. The charges, accruals and reserves on the books of the Loan Parties in
respect of Taxes and other governmental charges are, in the reasonable opinion
of the Loan Parties, adequate. No Tax Lien has been filed and, to the knowledge
of the Loan Parties, as applicable, no claim is being asserted with respect to
any such Tax or other such governmental charge.
Section 8.10 ERISA.
(a) The Loan Parties and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan.
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result
in imposition on the Loan Parties or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections (c),
(i) or (l) of Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
Section 409 of ERISA.
41
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums that are
not past due) by any Loan Party or any ERISA Affiliate has been or is expected
by the Borrower, any Subsidiary or any ERISA Affiliate to be incurred with
respect to any Plan. No ERISA Event with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Loan Parties or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan as of the date hereof,
and no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
Plan.
(f) The actuarial present value of the benefit liabilities under
each Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
Section 4041 of ERISA.
(g) Neither the Loan Parties nor any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by the any Loan Party or any ERISA Affiliate in its sole discretion
at any time without any material liability.
(h) Neither the Loan Parties nor any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the six-year period preceding
the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.
(i) Neither the Loan Parties nor any ERISA Affiliate is required to
provide security under Section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the Plan.
Section 8.11 Disclosure; No Material Misstatements. None of the written
information, statements, exhibits, certificates, documents or reports furnished
to either the Administrative Agent or the Lenders by the Loan Parties or any of
their Affiliates in connection with the negotiation of this Agreement and the
other Loan Documents contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statement contained
therein not materially misleading in the light of the circumstances in which
made, as of the time made, and with respect to the Borrower and its Affiliates
taken as a whole. There is no fact peculiar to any Loan Party or any of their
Affiliates which has a Material Adverse Effect or in the future is reasonably
likely to have a Material Adverse Effect and which has not been set forth in
this Agreement, the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent and the Lenders by or on behalf
of the Loan Parties or their Affiliates prior to, or on, the Effective Date in
connection with the transactions contemplated hereby. There are no statements or
conclusions in any Reserve Report taken as a whole that are based upon or
include misleading information or fail to take into account material information
regarding the matters reported therein which is (i) supplied by or on behalf of
the Borrower, or (ii) though the information is not supplied by the Borrower,
the Borrower has actual knowledge of its misleading nature.
42
Section 8.12 Insurance. Schedule 8.12 attached hereto contains an accurate
and complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance that are owned or held by or on behalf
of the Loan Parties. 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 have been paid (if due), and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all Governmental Requirements pertaining to the
business of the Borrower and all agreements to which the Loan Parties are a
party; are valid, outstanding and enforceable policies; provide adequate
insurance coverage for the assets and operations of the Loan Parties, and to the
knowledge of each Loan Party, 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; will remain in full force and effect through the respective dates set
forth in Schedule 8.12; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement and the Loan
Documents. None of the Loan Parties (nor to any Loan Parties' knowledge any
prior owner of the Oil and Gas Properties) has been refused any insurance with
respect to its assets or operations, nor has it been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
insurance or with which it has carried insurance during the last three years.
The Administrative Agent and the Lenders have been named as additional insureds
in respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to property loss insurance.
Section 8.13 Restriction on Liens. None of the Loan Parties is a party to
any material agreement or arrangement, or subject to any order, judgment, writ
or decree, that either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent and the Lenders on or in respect of their
Properties to secure the Indebtedness and the Loan Documents.
Section 8.14 Subsidiaries. Except as set forth on Schedule 8.14, the
Borrower has no Subsidiaries.
Section 8.15 Location of Business and Offices. The Borrower's jurisdiction
of formation is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of formation is Dune Energy, Inc.; and the
organizational identification number of the Borrower in its jurisdiction of
organization is 2969625 (or, in each case, as set forth in a notice delivered to
the Administrative Agent pursuant to Section 9.01(n) in accordance with Section
13.01). The Borrower's principal place of business and chief executive offices
are located at the address specified in Section 13.01 (or as set forth in a
notice delivered pursuant to Section 9.01(n) and Section 13.01(c)). Each
Subsidiary's jurisdiction of formation, name as listed in the public records of
its jurisdiction of formation, formation identification number in its
jurisdiction of formation, and the location of its principal place of business
and chief executive office is stated on Schedule 8.14 (or as set forth in a
notice delivered pursuant to Section 9.01(n)).
Section 8.16 Properties; Titles, Etc.
43
(a) After giving full effect to the Excepted Liens, each of the Loan
Parties has good and defensible title to the Oil and Gas Properties evaluated in
the most recently delivered Reserve Report and good title to all its personal
Properties. After giving full effect to the Excepted Liens, the Loan Party
specified as the owner owns the net interests in production attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such Properties shall not in any material respect
obligate such Loan Party to bear the costs and expenses relating to the
maintenance, development and operations of each such Property in an amount in
excess of the working interest of each Property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in such Loan Party's net revenue interest in such Property. All
information provided to the preparer in the most recently delivered Reserve
Report is true and correct in all material respects as of the date thereof and
to the knowledge of the Borrower, such Reserve Report provides a reasonable
estimate of the reserves of the Borrower and its Subsidiaries as of the date
such Reserve Report was prepared and based on the then available information. No
litigation or claims are currently pending, or to the best knowledge of the
Borrower, threatened which could reasonably be expected to have a material
adverse effect on any Loan Party's title to the Oil and Gas Properties.
(b) All leases and agreements referenced in the Initial Reserve
Report or the title information delivered in connection herewith or otherwise
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 Loan Parties.
(c) The Property presently owned, leased or licensed by the Loan
Parties, including, without limitation, all easements and rights of way, is all
of the Property necessary to permit the Loan Parties to conduct their business
in all material respects in the manner as would a prudent operator and Borrower
and its Subsidiaries will not be required to acquire any material assets to
continue the current operations of Borrower's and its Subsidiaries' Properties
other than the replacement of equipment in the ordinary course of business and
other acquisitions as contemplated by the Development Plan.
(d) All of the Properties of the Loan Parties which are reasonably
necessary for the operation of their businesses are in good working condition
and are maintained in accordance with prudent business standards.
(e) Each Loan Party owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by such Loan Party does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Loan Parties either own or have valid licenses or other
rights to use all databases, geological data, geophysical data, engineering
data, seismic data, maps, interpretations and other technical information used
or usable in the conduct of their businesses, subject to the limitations
contained in the agreements governing the use of the same, which limitations are
customary for companies engaged in the business of the exploration and
production of Hydrocarbons.
44
Section 8.17 Maintenance of Properties. The Oil and Gas Properties (and
Properties unitized therewith) have been maintained, operated and developed in a
good and workmanlike manner and in material conformity with all Governmental
Requirements and in material conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties.
Specifically in connection with the foregoing (a) no Oil and Gas Property is
subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (b)
none of the xxxxx comprising a part of the Oil and Gas Properties (or Properties
unitized therewith) is deviated from the vertical more than the maximum
permitted by Governmental Requirements, and such xxxxx are, in fact, bottomed
under and are producing from, and the well bores are wholly within, the Oil and
Gas Properties (or in the case of xxxxx located on Properties unitized
therewith, such unitized Properties). All pipelines, xxxxx, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Loan Parties that are necessary to conduct normal
operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing that are operated by any
Loan Party the same being maintained in a manner consistent with the Loan
Parties' past practices.
Section 8.18 Gas Imbalances, Prepayments. Except as set forth on Schedule
8.18, on a net basis there are no gas imbalances, take or pay or other
prepayments that would require any Loan Party to deliver Hydrocarbons produced
from the Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor. Except as set forth on Schedule 8.18, no
material gas imbalances exist with respect to any of the Oil and Gas Properties
of any Loan Party. Except as set forth in Schedule 8.18, none of the Oil and Gas
Properties of any Loan Party are subject to any contractual or other arrangement
whereby payment for production therefrom is to be deferred for a substantial
period of time after the month in which such production is delivered (i.e., in
the case of oil, not in excess of 60 days, and in the case of gas, not in excess
of 90 days). Except as set forth on Schedule 8.18, none of the Oil and Gas
Properties of the Borrower and its Subsidiaries is subject to a contractual or
other arrangement for the sale of oil or gas production for a fixed price which
cannot be canceled on 90 days (or less) notice or which contains commercial
terms which are not customary in the industry. None of the Oil and Gas
Properties of any Loan Party is subject at present to any regulatory refund
obligation and no facts exist which might cause the same to be imposed.
Section 8.19 Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 8.19, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report and approved by the Administrative Agent (with respect to all of
which contracts the Loan Parties represent that they or their Subsidiaries are
receiving a price for all production sold thereunder which is computed
substantially in accordance with the terms of the relevant contract and are not
having deliveries curtailed substantially below the subject Property's delivery
capacity), no material agreements exist that are not cancelable on 60 days
notice or less without penalty or detriment for the sale of Hydrocarbons
produced from any the Borrower's or its Subsidiaries' Oil and Gas Properties
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a)
pertain to the sale of production at a fixed price and (b) have a maturity or
expiry date of longer than six (6) months from the date hereof. All proceeds
from the sale of the Borrower's or its Subsidiaries' interests in Hydrocarbons
from its Oil and Gas Properties will be paid in full to the applicable party by
the purchaser thereof on a timely basis, and none of such proceeds are currently
being held in suspense by such purchaser or any other Person. Except as set
forth in Schedule 8.19, none of the Oil and Gas Properties of the Borrower or
its Subsidiaries are subject to any contractual or other arrangement whereby
payment for production therefrom is to be deferred for a substantial period of
time after the month in which such production is delivered (i.e., in the case of
oil, not in excess of 60 days, and in the case of gas, not in excess of 90
days).
45
Section 8.20 Swap Agreements. Schedule 8.20, as of the date hereof, and
after the date hereof, each report delivered by the Borrower pursuant to Section
9.01(e), sets forth a true and complete list of all Swap Agreements of the
Borrower and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
xxxx to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied) and the counterparty to each such
agreement.
Section 8.21 Use of Loans. The proceeds of the Loans shall be used for the
purposes set forth in Section 2.03. The Borrower and its Subsidiaries are not
engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation
T, U or X of the Board). No part of the proceeds of any Loans will be used for
any purpose which violates the provisions of Regulations T, U or X of the Board.
Section 8.22 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate Properties and assets (after giving
effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement), at a fair valuation, of the
Borrower and the Guarantors, taken as a whole, will exceed the aggregate
liabilities of the Borrower and the Guarantors on a consolidated basis, as the
liabilities becomes absolute and matures, (b) each of the Borrower and the
Guarantors has not incurred and does not intend to incur, and does not believe
that it will incur, liabilities beyond its ability to pay such liabilities
(after taking into account the timing and amounts of cash expected to be
received by each of the Borrower and the Guarantors and the amounts expected to
be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such liabilities become absolute and mature and (c)
each of the Loan Parties does not have (and has no reason to believe that it
will have thereafter) unreasonably small capital for the conduct of its
business.
Section 8.23 Casualty Events. Since September 30, 2006, neither the
business nor any Properties of any Loan Party have been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property or cancellation of contracts, permits or concessions by any
domestic or foreign Governmental Authority, riot, activities or armed forces or
acts of God or of any public enemy.
Section 8.24 Material Agreements. Set forth on Schedule 8.24 hereto is a
complete and correct list of all material agreements and other instruments of
the Borrower and its Subsidiaries currently in effect setting forth each
counterparty thereto (other than the Loan Documents) relating to the purchase,
transportation by pipeline, gas processing, development, marketing, sale and
supply of Hydrocarbons, farmout arrangements, joint operating agreements,
contract operating agreements, or other material contract to which the Borrower
or its Subsidiaries is a party on or after the Effective Date or by which its
Properties is bound on or after the Effective Date (collectively "Material
Agreements") and copies of such documents have been provided to the
Administrative Agent. All such agreements are in full force and effect and
neither the Borrower nor any of its Subsidiaries is in default thereunder, nor
is there any uncured default by any Affiliate predecessor in interest to such
Person or, to the Borrower's knowledge, by any predecessor in interest to such
Person (other than an Affiliate predecessor) or counterparty thereto, nor has
such Person altered any material item of such agreements since the Effective
Date without the prior written consent of the Lenders.
46
Section 8.25 Brokers. Other than the Arranger, no Person is entitled to
any brokerage fee or finders fee or similar fee or commission in connection with
arranging the Loans contemplated by this Agreement.
Section 8.26 Reliance. In connection with the negotiation of and the
entering into this Agreement, the Loan Parties acknowledge and represent that
none of the Lenders, the Administrative Agent, the Arranger, or any
representative of any of the foregoing is acting as a fiduciary or financial or
investment advisor for them; they are not relying upon any representations
(whether written or oral) of such Persons; they have consulted with their own
legal, regulatory, tax, business investment, financial and accounting advisors
to the extent they have deemed necessary, and they have made their own
investment, hedging, and trading decisions based upon their own judgment and
upon any advice from such advisors as they have deemed necessary and not upon
any view expressed by any Lender, the Administrative Agent, the Arranger, or any
representative of any of the foregoing; they have not been given by any Lender,
the Administrative Agent, the Arranger, or any representative of any of the
foregoing (directly or indirectly through any other Person) any advice, counsel,
assurance, guarantee, or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect,
consequence, or benefit (either legal, regulatory, tax, financial, accounting,
or otherwise) of this Agreement or the transactions contemplated hereby; and
they are entering into this Agreement and the other Loan Documents with a full
understanding of all of the risks hereof and thereof (economic and otherwise),
and they are capable of assuming and willing to assume (financially and
otherwise) those risks.
Section 8.27 Investments and Guaranties. The Borrower and its Subsidiaries
have not made any Investments in, advances to or guaranties of the obligations
of any Person, except as reflected in the financial statements described in
Section 8.04(a).
Section 8.28 Payments by Purchasers of Production. All proceeds from the
sale of the Borrower's and its Subsidiaries' interests in Hydrocarbons from
their Oil and Gas Properties are currently being paid in full to such Person by
the purchaser thereof on a timely basis and at prices and terms comparable to
market prices and terms generally available at the time such prices and terms
were negotiated for oil and gas production from producing areas situated near
such Oil and Gas Properties, and none of such proceeds are currently being held
in suspense by such purchaser or any other Person.
Section 8.29 Existing Accounts Payable. Set forth on Schedule 8.29 hereto
is a complete and correct list of all existing accounts payable of the Borrower
and its Subsidiaries as of the date hereof that are more than 30 days past due.
47
ARTICLE IX
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full, the Borrower
covenants and agrees with the Lenders that:
Section 9.01 Financial Statements; Other Information. The Borrower will
furnish to the Administrative Agent and the Arranger:
(a) Annual Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 90 days after
the end of each fiscal year of the Borrower, (i) the Borrower's audited
consolidated balance sheet and related statements of operations, owner's equity
and cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
independent public accountants approved by the Lenders (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) (Lenders hereby approve of Xxxxxx &
Xxxxxx, P.C. as Borrower's independent accountants) to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Loan Parties on a
consolidated basis in accordance with GAAP consistently applied and (ii) the
Borrower's unaudited consolidated balance sheet and related statements of
operations, owner's equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year.
(b) Quarterly Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Borrower, (i) the Borrower's consolidated balance sheet and related statements
of operations, capital and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, and if applicable
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by a Financial Officer of the Borrower
as presenting fairly in all material respects the financial condition and
results of operations of the Borrower on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes and (ii) if requested by the Administrative Agent, the
Borrower's consolidating balance sheet and related statements of operations,
capital and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by a Financial Officer of the
Borrower as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Subsidiaries, subject to
normal year-end audit adjustments and the absence of footnotes
(c) Certificate of Financial Officer - Compliance. Concurrently with
any delivery of financial statements under Section 9.01(a) or Section 9.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 10.01, and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the
audited financial statements referred to in Section 8.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate.
48
(d) [reserved]
(e) Certificate of Financial Officer - Swap Agreements. Concurrently
with any delivery of financial statements under Section 9.01(a) and Section
9.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx-to-market value therefore, any new credit support
agreements relating thereto not listed on Schedule 8.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.
(f) Certificate of Insurer - Insurance Coverage. Concurrently with
any delivery of financial statements under Section 9.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 9.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or the Arranger, all copies of the
applicable policies.
(g) Other Accounting Reports. Promptly upon receipt thereof, a copy
of each other report or letter submitted to any Loan Party by independent
accountants in connection with any annual, interim or special audit made by them
of the books of such Loan Party, and a copy of any response by such Loan Party
to such letter or report.
(h) Cash Flow. Within 45 days after the end of each calendar
quarter, a current twelve-month operating forecast of the Borrower and its
Subsidiaries as of the end of such calendar quarter and as of the fiscal year to
date.
(i) SEC and Other Filings; Reports to Shareholders. In the event
that Borrower or any of its Subsidiaries are required to file any statements,
reports or other material with the SEC or any other securities exchange,
promptly after the same become publicly available, copies of all periodic and
other reports, proxy statements and other materials filed by any Loan Party with
the SEC, or with any national securities exchange, or distributed by a Loan
Party to its shareholders generally, as the case may be.
(j) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
the Loan Documents and not otherwise required to be furnished to the
Administrative Agent or the Arranger pursuant to any other provision of this
Section 9.01.
(k) Lists of Purchasers. Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 9.12, a list of
all Persons purchasing Hydrocarbons from the Borrower or any Subsidiary.
(l) Notice of Sales of Oil and Gas Properties. In the event the
Borrower or any Subsidiary intends to sell, transfer, assign or otherwise
dispose of any material Oil or Gas Properties or any Equity Interests in any
Subsidiary in accordance with Section 10.14, prior written notice of such
disposition, the price thereof and the anticipated date of closing.
49
(m) Notice of Litigation/Casualty Events. Prompt written notice, and
in any event within five Business Days, of the delivery of any demand letter, or
the filing of any lawsuit or arbitration proceeding with an expected potential
liability in excess of $100,000, or the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a demand notice, lawsuit, arbitration proceeding, or Casualty Event.
(n) Information Regarding the Borrower and Guarantors. Prompt
written notice (and in any event within ten (10) days prior thereto) of any
change (i) in the Borrower's name or in any trade name used to identify such
Person in the conduct of its business or in the ownership of its Properties,
(ii) in the location of the Borrower's chief executive office or principal place
of business, (iii) in the Borrower's identity or structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) in the
Borrower's jurisdiction of formation or such Person's formation identification
number in such jurisdiction of formation, and (v) in the Borrower's federal
taxpayer identification number.
(o) Production Report and Lease Operating Statements. Within 25 days
after the end of each calendar month, (i) a report setting forth, for such
calendar month, the volume of production and sales attributable to production
(and the prices at which such sales were made and the revenues derived from such
sales) for such calendar month from the Oil and Gas Properties, and setting
forth the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for such calendar month, and (ii) a
drilling schedule for the next 180 days for all Oil and Gas Properties which the
Borrower or any Subsidiary owns or controls or in which the Borrower or any
Subsidiary participates. Each bi-weekly report shall set forth, for each day of
that period, the volume of production and sales attributable to production.
Borrower may provide estimated data to the extent that it does not have the
necessary data to provide actual data at the time such report is required. To
the extent that Borrower obtains such actual data in the future, such future
reports will incorporate such actual data.
(p) Operating Reports. The Borrower shall prepare and provide to the
Lenders and Administrative Agent the following reports:
(i) on a monthly basis by the 25th of each month, a report
through the end of the prior month setting forth as to each Development Project
(each well on an individual well by well basis), the actual vs. estimated cost
breakdown (for all activities, including dry hole and completion activities) for
such Development Project;
(ii) upon the Lockbox Account coming into effect, on a monthly
basis by the 25th of each month, a cumulative report through the end of the
prior month setting forth all amounts to be disbursed pursuant to Section 3.01
and Section 6.01(b), including a schedule identifying each category of payments
identified as clauses (i) through (iv) of Section 6.01(b), with a detailed
schedule of all items in each such clause.
(iii) such other information as the Lenders may reasonably
request with respect to drilling, operation or property status matters,
including notice of any material changes with regard to oil and gas prices
received, contracts or production expenses or any material litigation affecting
the operation of the Oil and Gas Properties of the Borrower and any
Subsidiaries.
50
(q) Notices of Certain Changes. Promptly, but in any event within
five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate of limited partnership,
certificate of formation, by-laws, limited liability company agreement, any
preferred stock designation or any other organic document of the Borrower, any
Consolidated Subsidiary or any Guarantor.
(r) [reserved]
(s) Board of Directors Materials. Promptly following any request
therefore, such materials and minutes prepared for and distributed in connection
with meetings of or actions taken by the board of directors of the Borrower
(other than any materials or information governed by a confidentiality agreement
prohibiting the sharing of such information with the Administrative Agent or the
Lenders).
(t) Other Requested Information. Promptly following any request
therefore, such other information regarding (i) the operations, business affairs
and financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or (ii) compliance with the terms of this
Agreement or any other Loan Document, in each case, as the Administrative Agent
or the Arranger may reasonably request.
Section 9.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and the Arranger prompt written notice of the following:
(a) the occurrence of any Default or the occurrence of any event
that with notice or lapse of time, or both, would constitute an Event of
Default;
(b) the filing or commencement of, or the receipt of a threat in
writing of, any action, suit, proceeding, investigation or arbitration by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Subsidiary thereof not previously disclosed in writing
(including in the Schedules hereto) to the Administrative Agent or the Arranger
or any material adverse development in any action, suit, proceeding,
investigation or arbitration previously disclosed to the Administrative Agent or
the Arranger that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;
(c) the filing or commencement of any action, suit, proceeding, or
arbitration by or on behalf of the Borrower or any of its Subsidiaries claiming
or asserting damages in favor of the Borrower or its Subsidiaries valued in
excess of $500,000;
(d) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $500,000;
(e) the occurrence of any event described in Schedule 9.02(e);
51
(f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 9.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 9.03 Existence; Conduct of Business. The Borrower will, and will
cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 10.13.
Section 9.04 Payment of Obligations. The Borrower will, and will cause
each Subsidiary to, pay its obligations (including Tax liabilities of the
Borrower and all of its Subsidiaries and any agreement material to the business
or operations of the Borrower or its Subsidiaries) before the same shall become
delinquent or in default, unless the Borrower is disputing such obligations in
good faith and has set aside an adequate reserve maintained in an account
controlled by the Administrative Agent for such unpaid obligations (except if,
notwithstanding such good faith dispute and set aside of adequate reserves, the
failure to pay could reasonably be expected to result in a Material Adverse
Effect or result in the seizure or levy of any Property of the Borrower or any
Subsidiary).
Section 9.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Loans according to the reading, tenor and effect thereof, and the
Borrower will, and will cause each Subsidiary and/or Guarantor (if any) to, do
and perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.
Section 9.06 Operation and Maintenance of Properties. The Borrower, at its
own expense, will, and will cause each Subsidiary to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a good and workmanlike manner in accordance with reasonable prudent
operator standards and the practices of the industry and in material compliance
with all applicable contracts and agreements and in material compliance with all
material Governmental Requirements, including, without limitation, applicable
proration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom.
(b) keep, preserve and maintain all Oil and Gas Properties and any
other Property material to the conduct of its business in good repair, working
order and condition, ordinary wear and tear excepted.
52
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
(d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties.
(e) to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 9.06.
(f) the Borrower will do or cause to be done such development work
as may be reasonably necessary to the prudent and economical operation of
Borrower's and any Subsidiaries' Oil and Gas Properties material to the Borrower
or such Subsidiary and such in accordance with practices of prudent operators in
the industry, including all to be done that may be appropriate to protect from
diminution the productive capacity of the Oil and Gas Properties and each
producing well thereon including, without limitation, cleaning out and
reconditioning each well from time to time, plugging and completing at a
different level each such well, drilling a substitute well to conform to changed
spacing regulations and to protect the Oil and Gas Properties material to the
Borrower and its Subsidiaries against drainage whenever and as often as is
necessary.
Section 9.07 Insurance. The Borrower will, and will cause each Subsidiary
to, maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations but in any event it will maintain at a minimum the types of
insurance and in such amounts as reflected on Schedule 8.12. The loss payable
clauses or provisions in said insurance policy or policies insuring any of the
collateral for the Loans shall be endorsed in favor of and made payable to the
Administrative Agent as its interests may appear and such policies shall name
the Administrative Agent and the Lenders as "additional insureds" and provide
that the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Administrative Agent except in the case of a cancellation
resulting from the failure to pay premiums in respect of such policy, in which
event the insurer will endeavor to give at least 10 days prior notice of such
cancellation.
Section 9.08 Books and Records; Inspection Rights. The Borrower will, and
will cause each Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or the Arranger, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, undertake
appraisals of such Properties and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested.
Section 9.09 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
53
Section 9.10 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary's Properties and
operations to comply, with all applicable Environmental Laws, the breach of
which could be reasonably expected to have a Material Adverse Effect; (ii) not
dispose of or otherwise release, and shall cause each Subsidiary not to dispose
of or otherwise release, any oil, oil and gas waste, hazardous substance, or
solid waste on, under, about or from any of the Borrower's or its Subsidiaries'
Properties or any other Property to the extent caused by the Borrower's or any
of its Subsidiaries' operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, or from any of the Borrower's or its
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to determine and assure that the
Borrower's and its Subsidiaries' obligations under this Section 9.10(a) are
timely and fully satisfied.
(b) The Borrower will promptly, but in no event later than five days
of its discovery of a triggering event, notify the Administrative Agent and the
Arranger in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any demand or threatened lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action may result in liability (whether individually or in
the aggregate) in excess of $500,000, not fully covered by insurance, subject to
normal deductibles.
(c) The Borrower will, and will cause each Subsidiary to, provide
environmental audits and assessments in accordance with American Society of
Testing Materials standards upon request by the Administrative Agent and the
Arranger in connection with any future acquisitions of Oil and Gas Properties or
other Properties. No more than once per year in the absence of any Event of
Default (or as otherwise required to be obtained by the Administrative Agent or
the Arranger by any Governmental Authority), the Borrower will, and will cause
each Subsidiary to, provide environmental audits and assessments in accordance
with American Society of Testing Materials standards upon request by the
Administrative Agent and the Arranger in connection with any Oil and Gas
Properties or other Properties then owned by the Borrower or any Subsidiary.
54
Section 9.11 Further Assurances.
(a) The Borrower at its expense will, and will cause each Subsidiary
to, promptly execute and deliver to the Administrative Agent all such other
documents, agreements and instruments reasonably requested by the Administrative
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any Subsidiary as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for the Indebtedness, or to
correct any omissions in this Agreement or the Security Instruments, or to state
more fully the obligations secured therein, or to perfect, protect or preserve
any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection herewith.
(b) The Borrower hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of the
Borrower or any other Guarantor where permitted by law, provided a copy of all
such documents shall be furnished to Borrower subsequent to filing such
documents. A carbon, photographic or other reproduction of the Security
Instruments or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
Section 9.12 Reserve Reports.
(a) On or before each February 15 and August 15 the Borrower shall
furnish to the Administrative Agent and the Arranger a Reserve Report effective
as of the previous January 1st and July 1st, as applicable. Each such Reserve
Report shall be prepared by one or more Approved Petroleum Engineers.
(b) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Arranger a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information delivered to the preparer in connection therewith is true and
correct, (ii) the Borrower or its Subsidiaries owns good and defensible title to
the Oil and Gas Properties evaluated in such Reserve Report and such Properties
are free of all Liens except for Liens permitted by Section 10.03, (iii) except
as set forth on an exhibit to the certificate, on a net basis there are no gas
imbalances, take or pay or other prepayments in excess of the volume specified
in Section 8.18 with respect to its Oil and Gas Properties evaluated in such
Reserve Report which would require the Borrower or any Subsidiary to deliver
Hydrocarbons either generally or produced from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefore,
(iv) none of their Oil and Gas Properties have been sold since the date of the
previous Reserve Report delivered except as set forth on an exhibit to the
certificate, which certificate shall list all of its Oil and Gas Properties sold
and in such detail as reasonably required by the Administrative Agent, (v)
attached to the certificate is a list of all marketing agreements entered into
subsequent to the later of the date hereof or the most recently delivered
Reserve Report which the Borrower could reasonably be expected to have been
obligated to list on Schedule 8.19 or Schedule 8.24 had such agreement been in
effect on the date hereof, (vi) all of the Oil and Gas Properties evaluated by
such Reserve Report are Collateral and (vii) to the knowledge of the Borrower,
such Reserve Report provides a reasonable estimate of the reserves of the
Borrower and its Subsidiaries as of the date such Reserve Report was prepared
and based on the then available information.
55
(c) In connection with the delivery of the Reserve Reports to be
delivered in Section 9.12(a) above, the Borrower shall also furnish to the
Administrative Agent and the Arranger a reserve report with respect to the Oil
and Gas Properties conveyed to the Lenders or their designees as part of any
ORRI Assignment provided to the Lenders or their designees under this Agreement.
Section 9.13 Title Information.
(a) On or before the delivery to the Administrative Agent and the
Arranger of each Reserve Report required by Section 9.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering the Oil and Gas Properties evaluated by such Reserve Report that
were not included in the immediately preceding Reserve Report or with respect to
which title information was not previously provided, so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, satisfactory title information on at least 90% of
the total value of the Oil and Gas Properties evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 9.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) that are not
permitted by Section 10.03 raised by such information, (ii) substitute
acceptable Collateral with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clause (f) of such definition)
having an equivalent value or (iii) deliver title information in form and
substance acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, satisfactory title information on at least 90% of
the total value of the Oil and Gas Properties evaluated by such Reserve Report.
Section 9.14 Additional Collateral; Additional Guarantors.
(a) Promptly after the end of each month, the Borrower shall review
the current Collateral to ascertain whether all Oil and Gas Properties are
Collateral. If the Collateral does not represent all such Properties, then the
Borrower shall, and shall cause its Subsidiaries (if any) to, grant to the
Administrative Agent as security for the Indebtedness a senior Lien interest
(subject only to Excepted Liens of the type described in clauses (a) to (i) of
the definition thereof, but subject to the provisos at the end of such
definition) on additional Oil and Gas Properties not already subject to a Lien
of the Security Instruments such that after giving effect thereto, the
Collateral will represent all such Properties. All such Liens will be created
and perfected by and in accordance with the provisions of deeds of trust,
security agreements and financing statements or other Security Instruments, all
in form and substance reasonably satisfactory to the Administrative Agent and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In order to comply with the foregoing, if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, then it shall become a Guarantor and comply with Section
9.14(b).
56
(b) The Borrower shall promptly cause each Subsidiary to guarantee
the Indebtedness pursuant to the Guaranty and Collateral Agreement or another
guaranty agreement in form and substance reasonably acceptable to the Lenders.
In connection with any such guaranty, the Borrower shall, or shall cause such
Subsidiary to: (i) execute and deliver such guaranty agreement, (ii) pledge all
of the Equity Interests of such Subsidiary (including, without limitation,
delivery of original stock certificates or other indicia evidencing the Equity
Interests of such Subsidiary (if any such stock certificates or other indicia
exist), together with an appropriate undated stock power for each certificate
duly executed in blank by the registered owner thereof), (iii) xxxxx x xxxx in
and to all of the Properties of such Subsidiary (including, without limitation,
the Oil and Gas Properties of such Subsidiary) pursuant to the Security
Instruments and such other deeds of trust, mortgages, agreements and
instruments, in form and substance satisfactory to the Administrative Agent, as
the Administrative Agent may request and (iv) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.
(c) The Borrower will at all times cause all of the material
Properties of the Borrower and each Subsidiary to be subject to a Lien of the
Security Instruments and will execute and deliver, and cause each Subsidiary to
execute and deliver, all Security Instruments from the time to time requested by
the Administrative Agent. Notwithstanding the foregoing, however, or any other
provisions hereof, the Borrower will have no obligation to make subject to the
Lien of the Security Interests any Hydrocarbon Interests to which no Proved
Reserves are attributed except upon the affirmative request of the
Administrative Agent.
Section 9.15 ERISA Compliance. The Borrower will promptly furnish and will
cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (a) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (b) immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in Section 406 of ERISA
or in Section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or the principal Financial
Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying
the nature thereof, what action the Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, and (c) immediately upon receipt
thereof, copies of any notice of the PBGC's intention to terminate or to have a
trustee appointed to administer any Plan. With respect to each Plan (other than
a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and
ERISA Affiliate to, (i) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of Section
412 of the Code (determined without regard to subsections (d), (e), (f) and (k)
thereof) and of Section 302 of ERISA (determined without regard to Sections 303,
304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to Sections 4006 and 4007 of ERISA.
57
Section 9.16 Swap Agreements. The Borrower shall from time to time enter
into Swap Agreements in respect of Hydrocarbons so that the notional volumes of
all Swap Agreements, in the aggregate, are at least 65% of the reasonably
anticipated projected production from Proved Developed Producing Reserves from
the Borrower's or its Subsidiaries' Oil and Gas Properties (net to the Borrower
or Subsidiary, as applicable) for each month during the term of this Agreement
for each of crude oil and natural gas, calculated separately. The Borrower shall
neither assign, terminate or unwind any such Swap Agreements nor sell any Swap
Agreements if the effect of such action (when taken together with any other Swap
Agreements executed contemporaneously with the taking of such action) would have
the effect of canceling its positions under such Swap Agreements required
hereby.
Section 9.17 [Reserved]
Section 9.18 [Reserved]
Section 9.19 Marketing Activities.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter
into any contracts related thereto other than (i) contracts for the sale of
Hydrocarbons scheduled or reasonably estimated to be produced from their proved
Oil and Gas Properties during the period of such contract, (ii) contracts for
the sale of Hydrocarbons scheduled or reasonably estimated to be produced from
proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) that have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
"position" is taken and (B) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.
(b) All Hydrocarbons produced from the Oil and Gas Properties of
Borrower and its Subsidiaries shall be marketed on an arms length basis using
one or more Persons that are not Affiliates of the Borrower.
ARTICLE X
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full, the Borrower covenants
and agrees with the Lenders that:
Section 10.01 Financial Covenants.
(a) Ratio of Total Secured Debt to EBITDA. Commencing June 30, 2007,
the Borrower will not permit the ratio of Total Secured Debt on the last day of
any fiscal quarter of the Borrower to Annualized EBITDA on such day to be
greater than the ratio set out opposite such fiscal quarter in the following
table:
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Fiscal Quarter Ratio
Second Fiscal Quarter of 2007 9.0 to 1.0
Third Fiscal Quarter of 2007 9.0 to 1.0
Fourth Fiscal Quarter of 2007 and thereafter 5.0 to 1.0
As used in this subsection (a) and in the following subsection (b), "Annualized
EBITDA" on any day means EBITDA for the period of four fiscal quarters of the
Borrower ending on such day; provided that (i) annualized EBITDA on June 30,
2006 shall be the EBITDA for the six months then ending, multiplied by 2.0, and
(ii) annualized EBITDA on September 30, 2007 shall be the EBITDA for the nine
months then ending, multiplied by 1.33.
(b) Ratio of EBITDA to Consolidated Interest Expense. Commencing
June 30, 2007, the Borrower will not permit the ratio of Annualized EBITDA on
the last day of any fiscal quarter of the Borrower to Annualized Consolidated
Interest Expense on such day to be less than the ratio set out opposite such
fiscal quarter in the following table:
Fiscal Quarter Ratio
Second Fiscal Quarter of 2007 1.0 to 1.0
Third Fiscal Quarter of 2007 1.0 to 1.0
Fourth Fiscal Quarter of 2007 and thereafter 2.0 to 1.0
As used in this subsection (b), "Annualized EBITDA" has the meaning given such
term in the preceding subsection (a), and "Annualized Consolidated Interest
Expense" on any day means Consolidated Interest Expense for the period of four
fiscal quarters of the Borrower ending on such day; provided that (i) Annualized
Consolidated Interest Expense on June 30, 2006 shall be the Consolidated
Interest Expense for the six months then ending, multiplied by 2.0, and (ii)
annualized Consolidated Interest Expense on September 30, 2007 shall be the
Consolidated Interest Expense for the nine months then ending, multiplied by
1.33.
(c) Proved Reserves to Total Secured Debt. Commencing June 30, 2007,
the Borrower will not permit the ratio of Net Present Value of the Total Proved
Reserves on the last day of any fiscal quarter to Total Secured Debt on such day
to be less than .8 to 1.0.
Section 10.02 Debt. Except as set forth on Schedule 10.02, the Borrower
will not, and will not permit any Loan Party to, incur, create, assume or suffer
to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents
or the Swap Agreements or any guaranty of or suretyship arrangement for the
Notes or other Indebtedness arising under the Loan Documents or the Swap
Agreements.
(b) Debt of the Loan Parties existing on the date hereof that is
reflected in the Financial Statements.
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(c) the Subordinated Debt existing on the date hereof.
(d) [reserved]
(e) Debt under Capital Leases not to exceed $100,000.
(f) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties.
(g) intercompany Debt between the Borrower and any Subsidiary or
between Subsidiaries to the extent permitted by Section 10.05(g); provided that
such Debt is not held, assigned, transferred, negotiated or pledged to any
Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and,
provided further, that any such Debt owed by either the Borrower or a Guarantor
shall be subordinated to the Indebtedness on terms set forth in the Guaranty and
Collateral Agreement.
Section 10.03 Liens. Except as set forth on Schedule 10.03, the Borrower
will not, and will not permit any of its Subsidiaries to, create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except (a) Liens securing the payment of any Indebtedness and (b)
Excepted Liens.
Section 10.04 Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders or make any distribution of its Property to its Equity Interest
holders, except (a) the Borrower may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock), (b) Wholly-Owned Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests and (c)
the Borrower may make Restricted Payments by means of issuing its Equity
Interests (but not by means of the payment of cash or the transfer of assets)
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and its Subsidiaries as such plans exist
on the date of the Engagement Letter or as such plans are supplemented to apply
to employees of the Borrower hired since such date.
Section 10.05 Investments, Loans and Advances. The Borrower will not, and
will not permit any Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
(a) Investments reflected in the Financial Statements or that are
disclosed to the Administrative Agent or the Arranger in Schedule 10.05.
(b) accounts receivable arising in the ordinary course of business.
(c) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof.
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or Moody's.
60
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody's, respectively.
(f) deposits in money market funds investing exclusively in
Investments described in Section 10.05(c), Section 10.05(d) or Section 10.05(e)
(g) Investments made by the Borrower or any Subsidiary in any of
their respective Subsidiaries, provided that the recipient Subsidiary of such
Investment is a Guarantor or becomes a Guarantor hereunder pursuant to Section
9.14.
(h) [reserved]
(i) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 10.06
owing to the Borrower or any Subsidiary as a result of a bankruptcy or other
insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its Subsidiaries;
provided that the Borrower shall give the Administrative Agent prompt written
notice in the event that the aggregate amount of all investments held at any one
time under this Section 10.05(i) exceeds $100,000.
Section 10.06 Subordinated Debt. The Borrower will not, and will not
permit any of its Subsidiaries to, pay or make, directly or indirectly, any
payment of any kind (whether principal or interest or otherwise) with respect to
any of the Subordinated Debt other than payments consisting solely of the
issuance of new Subordinated Debt as contemplated in the Subordinated Debt
Documents as amended to the date hereof or as hereafter amended with the consent
of the Lenders. The Borrower will not amend any provision of the Subordinated
Debt Documents without the consent of the Lenders.
Section 10.07 Nature of Business; Capital Expenditures and Acquisitions.
Neither the Borrower nor any Subsidiary will allow any material change to be
made in the character of its business as an independent oil and gas exploration
and production company. The Borrower and its Subsidiaries will not acquire, or
make any capital expenditure, in or related to any Oil and Gas Properties other
than expenditures set out in the Development Plan.
Section 10.08 Limitation on Leases. Except as set forth on Schedule 10.08,
neither the Borrower nor any Subsidiary will create, incur, assume or suffer to
exist any obligation for the payment of rent or hire of Property of any kind
whatsoever (real or personal but excluding Capital Leases and leases of
Hydrocarbon Interests), under leases or lease agreements which would cause the
aggregate amount of all payments made by the Borrower and the Subsidiaries
pursuant to all such leases or lease agreements, including, without limitation,
any residual payments at the end of any lease, to exceed $500,000 in any period
of twelve consecutive calendar months during the life of such leases without the
approval of the Lenders, which approval shall not be unreasonably withheld,
conditioned, or delayed.
61
Section 10.09 Sale and Leasebacks. 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 such
Subsidiary shall then or thereafter rent or lease such Property or any part
thereof or other Property that the Borrower intends to use for substantially the
same purpose or purposes as the Property sold or transferred.
Section 10.10 Proceeds of Notes and Effective Date Equity/Debentures. The
Borrower will not permit the proceeds of the Notes to be used for any purpose
other than those permitted by Section 2.03 and Section 8.21. The Borrower will
not permit the proceeds of the Effective Date Equity/Debentures to be used for
any purpose other than for the Borrower to carry out the Development Plan and
for the normal working capital needs of the Borrower and its Subsidiaries in the
ordinary course of business. Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulations T, U or X or any other regulation
of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or
any rule or regulation thereunder, in each case as now in effect or as the same
may hereinafter be in effect. If requested by the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.
Section 10.11 ERISA Compliance. The Borrower and the Subsidiaries will not
at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to
the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV
of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in Section 4041 of ERISA.
62
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
(g) acquire, or permit any ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any other
Plan that is subject to Title IV of ERISA under which the actuarial present
value of the benefit liabilities under such Plan exceeds the current value of
the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities.
(h) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under Sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in Section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that the Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under Section
401(a)(29) of the Code.
Section 10.12 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Subsidiary in the ordinary course of business or
the settlement of joint interest billing accounts in the ordinary course of
business or discounts granted to settle collection of accounts receivable or the
sale of defaulted accounts arising in the ordinary course of business in
connection with the compromise or collection thereof and not in connection with
any financing transaction, neither the Borrower nor any Subsidiary will discount
or sell (with or without recourse) any of its notes receivable or accounts
receivable.
Section 10.13 Mergers, Etc. The Borrower will not, and will not permit any
Subsidiary to, merge into or with or consolidate with any other Person, or sell,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its Property to any other Person (any
such transaction, a "consolidation"); provided that any Subsidiary may
participate in a consolidation with the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or any other Subsidiary and if
one of such Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person
shall be a Wholly-Owned Subsidiary.
Section 10.14 Sale of Properties. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer
(including through the sale of a production payment or overriding royalty
interest) any Property except for (a) the sale of Hydrocarbons in the ordinary
course of business (excluding any prepay or forward sale transactions); (b) the
sale or transfer of equipment that is no longer necessary for the business of
the Borrower or such Subsidiary or is replaced by equipment of at least
comparable value and use; and (c) the sale or transfer of any Property that,
taken together with the sale of any other Properties during any calendar year,
in the aggregate, has a fair market value of less than $250,000. Provided that
the Borrower first obtains the written consent of the Administrative Agent, the
Borrower may also sell for cash the debentures of American Natural Energy
Corporation that are listed on Schedule 10.05.
63
Section 10.15 Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any Environmental Laws, assuming disclosure
to the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, known to Borrower after due inquiry pertaining to such
Property where such violations or remedial obligations could reasonably be
expected to have costs associated therewith in excess of $500,000 have a
Material Adverse Effect.
Section 10.16 Transactions with Related Parties. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Related Party (other than the Borrower and
Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement (including, without limitation, Section
10.04(a)), in the ordinary course of business of the Borrower 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 10.17 Capital Expenditures. Except as provided for in the
Development Plan or as expressly approved in writing by the Lenders, the
Borrower will not, and will not permit any of its Subsidiaries to, make any
Capital Expenditures or incur costs associated with the exploration and
development of the Borrower's and its Subsidiaries' Oil and Gas Properties other
than normal lease operating expenses.
Section 10.18 Material Agreements. The Borrower will not, and will not
permit any Subsidiary to, enter into or amend or otherwise modify any Material
Agreement or any other contract or agreement that involves an individual
commitment from such Person of more than $50,000 in the aggregate in any twelve
(12) consecutive month period (except for such contracts and agreements that
relate to the projects contemplated in the Development Plan) with all such new
or modified Material Agreements related to projects contemplated in the
Development Plan to be in form and substance reasonably satisfactory to the
Administrative Agent.
Section 10.19 Subsidiaries. The Borrower will not, and will not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition
and complies with Section 9.14(b). The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in
any Subsidiary. Neither the Borrower nor any Subsidiary shall have any
Subsidiaries that are organized under the laws other than the United States of
America or any state thereof or the District of Columbia.
Section 10.20 Negative Pledge Agreements; Dividend Restrictions. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any contract, agreement or understanding (other than this
Agreement and the Security Instruments) that in any way prohibits or restricts
the granting, conveying, creation or imposition of any Lien on any of its
Property in favor of the Administrative Agent and the Lenders or restricts any
Subsidiary from paying dividends or making distributions to the Borrower or any
Guarantor, or which requires the consent of or notice to other Persons in
connection therewith.
64
Section 10.21 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not allow gas imbalances, take-or-pay or other prepayments with
respect to the Oil and Gas Properties of the Borrower or any Subsidiary that
would require the Borrower or such Subsidiary to deliver Hydrocarbons at some
future time without then or thereafter receiving full payment therefore to
exceed 100,000 mcf of gas (on an Mcfe equivalent basis) in the aggregate.
Section 10.22 Swap Agreements. The Borrower will not, and will not permit
any Subsidiary to, enter into any Swap Agreements with any Person other than (a)
Swap Agreements in respect of commodities (i) with an Approved Counterparty and
(ii) the notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes already
hedged pursuant to other Swap Agreements) are not in excess of, as of the date
such Swap Agreement is executed, 85% of the reasonably anticipated projected
production from Proved Developed Producing Reserves for each month during the
period during which such Swap Agreement is in effect for each of crude oil and
natural gas, calculated separately; and (b) Swap Agreements in respect of
interest rates with an Approved Counterparty, as follows: (i) Swap Agreements
effectively converting interest rates from fixed to floating, the notional
amounts of which (when aggregated with all other Swap Agreements of the Borrower
and its Subsidiaries then in effect effectively converting interest rates from
fixed to floating) do not exceed 65% of the then outstanding principal amount of
the Borrower's Debt for borrowed money which bears interest at a fixed rate and
(ii) Swap Agreements effectively converting interest rates from floating to
fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed 75% of the then
outstanding principal amount of the Borrower's Debt for borrowed money which
bears interest at a floating rate. Other than as to a counterparty that is a
Lender or an Affiliate of any of the Lenders, no Swap Agreement shall contain
any requirement, agreement or covenant for the Borrower or any Subsidiary to
post collateral or margin to secure their obligations under such Swap Agreement
or to cover market exposures, except as provided in the Collateral Agency
Agreement.
Section 10.23 Certain Activities. The Borrower shall not, and shall not
permit any Subsidiary to, without the written consent of each Lender, (a) take
any action not in the ordinary course of the business of the Borrower or such
Subsidiary (unless such action could not reasonably be expected to have a
Material Adverse Effect), (b) file or settle any litigation or arbitral
proceedings, or release claim, for amount in excess of $500,000 in the
aggregate, (c) either singly or jointly, directly or indirectly, commence, join
any other Person in commencing, or authorize a trustee or other Person acting on
its behalf or on behalf of others to commence, any voluntary bankruptcy,
reorganization, arrangement, insolvency, liquidation, or receivership under the
laws of the United States or any state thereof, or (d) make a general assignment
for the benefit of its creditors.
Section 10.24 Net Sales. The Borrower shall not permit the net sales
volume of Hydrocarbons from the Borrower's and its Subsidiaries' Oil and Gas
Properties for the periods indicated on Schedule 10.24 to be less than the
amount for such period as set forth in Schedule 10.24. The Borrower will provide
the Administrative Agent with evidence that the preceding is being satisfied
within 30 days after the end of each quarter.
65
Section 10.25 G&A Costs. Without the prior consent of the Lenders the
Borrower shall not incur and shall not permit any Subsidiary to incur General
and Administrative Costs (paid in cash) on a monthly consolidated basis in
excess of $400,000.
Section 10.26 Press Release. Without the prior consent of each Lender or
as required by law, the Borrower shall not issue any press release or make any
public announcement concerning this Agreement or the credit facility being
provided in connection herewith, provided, however, that the consent provisions
of this Section 10.26 shall not impede or preclude the Borrower from filing its
Current Report on Form 8-K with the Securities and Exchange Commission, not
later than the third business day following the execution hereof.
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
Section 11.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 11.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for one Business Day.
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Affiliates in or in connection with any
Loan Document or any amendment or modification of any Loan Document or waiver
under such Loan Document, or in the Engagement Letter or any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect when made or deemed made.
(d) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 9.01(n), Section 9.02, Section 9.03,
Section 9.07, Section 9.14(c) or in Article X of this Agreement, or in the
Engagement Letter, or an Event of Default specified in Section 7.03 shall occur.
(e) any Loan Party or any of their Affiliates shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in Section 11.01(a), Section 11.01(b), Section
11.01(c), or Section 11.01(d)) or any other Loan Document, and such failure
shall continue unremedied for a period of 30 days after the earlier to occur of
(i) notice thereof from the Administrative Agent to the Borrower (which notice
will be given at the request of any Lender) or (ii) a Responsible Officer of the
Borrower or such Affiliate otherwise becoming aware of such default, provided
however, for purposes of Section 3.03, payment of Post Default Rate interest
shall begin to accrue as of the date of such failure.
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(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or any event or condition requires the Borrower or any
Subsidiary to make an offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower, or any of its Subsidiaries or any of its Affiliates
or its debts, or of a substantial part of its assets, under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower, or any of its
Subsidiaries or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed and unstayed for 60 days
or an order or decree approving or ordering any of the foregoing shall be
entered.
(i) the Borrower or any of its Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 11.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any of its Affiliates or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing or any stockholder of the Borrower
shall make any request or take any action for the purpose of calling a meeting
of the stockholders of the Borrower to consider a resolution to dissolve and
wind-up the Borrower's affairs.
(j) the Borrower or any of its Subsidiaries shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due.
(k) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against the Borrower,
any Subsidiary or any combination thereof to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding or (ii) any one or more
non-monetary judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, shall be rendered
against the Borrower, any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
of its Subsidiaries to enforce any such judgment.
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(l) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower, any Subsidiary or a Guarantor party thereto or shall be
repudiated by any of them, or cease to create a valid and perfected Lien of the
priority required thereby on any of the collateral purported to be covered
thereby, except to the extent permitted by the terms of this Agreement, or the
Borrower or any Guarantor or any of their Affiliates shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding (i) $250,000 in any year, (ii)
$500,00 for all periods or (iii) result in a Material Adverse Effect.
(n) Any Governmental Authority (i) revokes or fails to renew any
material license, permit or franchise of the Borrower or any Subsidiary, (ii)
the Borrower or any Subsidiary for any reason loses any material license, permit
or franchise, (iii) the Borrower or any Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection with any
proceeding (judicial or administrative) with respect to any material license,
permit or franchise; and, in each case, (A) such revocation, failure or loss
could reasonably be expected to have a Material Adverse Effect and (B) such
Default remains unremedied for a period of 30 days after the earlier of A. the
date upon which a Responsible Officer knew or reasonably should have known of
such Default and B. the date upon which written notice thereof is given to the
Borrower by the Administrative Agent.
(o) The Borrower or any Subsidiary fails to duly observe, perform or
comply with any agreements with any Person or any term or condition of any
instrument, if such agreement or instrument is materially significant to the
Borrower or to the Borrower and its Subsidiaries on a consolidated bases, and
such failure is not remedied within the applicable grace period (if any)
provided in such agreement or instrument.
(p) a Change in Control shall occur.
Section 11.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 11.01(h), Section 11.01(i) or Section 11.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Lenders, shall, by notice to the Borrower, declare the
Notes and the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower and the Guarantors accrued hereunder
and under the Notes and the other Loan Documents, shall become due and payable
immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 11.01(h), Section 11.01(i) or Section 11.01(j), the
Notes and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and the other obligations of the Borrower and the
Guarantors accrued hereunder and under the Notes and the other Loan Documents,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.
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(b) In the case of the occurrence and continuance of an Event of
Default, the Administrative Agent is authorized to complete the Letters-in-Lieu
and/or Direction Letters and deliver same, and the Administrative Agent and the
Lenders will have all other rights and remedies available at law and equity.
(c) Except as otherwise required under the Collateral Agency
Agreement, all proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied: first, to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second, to accrued interest on the Notes; third, to fees; fourth, pro rata to
principal outstanding on the Notes and Indebtedness referred to in clause (b) of
the definition of "Indebtedness" owing to a Lender or an Affiliate of a Lender;
and fifth, to any remaining Indebtedness; and any excess shall be paid to the
Borrower or as otherwise required by any Governmental Requirement.
Section 11.03 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Collateral. The Security
Instruments further provide in general for the application of such proceeds to
the satisfaction of the Indebtedness and other obligations described therein and
secured thereby. Notwithstanding the assignment contained in such Security
Instruments, until the occurrence of an Event of Default, (a) the Administrative
Agent and the Lenders agree that they will neither notify the purchaser or
purchasers of such production nor take any other action to cause such proceeds
to be remitted to the Administrative Agent or the Lenders, but the Lenders will
instead permit such proceeds to be paid to the Borrower and its Subsidiaries and
(b) the Lenders hereby authorize the Administrative Agent to take such actions
as may be necessary to cause such proceeds to be paid to the Borrower and/or
such Subsidiaries.
ARTICLE XII
THE ADMINISTRATIVE AGENT
Section 12.01 Appointment; Powers. Each of the Lenders hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof and the other Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
Section 12.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 12.03, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the entity
serving as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in Article VII or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent or as to those conditions precedent expressly required to
be to the Administrative Agent's satisfaction, (vi) the existence, value,
perfection or priority of any collateral security or the financial or other
condition of the Borrower and its Subsidiaries or any other obligor or
guarantor, or (vii) any failure by the Borrower or any other Person (other than
itself) to perform any of its obligations hereunder or under any other Loan
Document or the performance or observance of any covenants, agreements or other
terms or conditions set forth herein or therein.
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Section 12.03 Action by Administrative Agent. The Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Lenders and in all cases the Administrative Agent
shall be fully justified in failing or refusing to act hereunder or under any
other Loan Documents unless it shall (a) receive written instructions from the
Lenders specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, then the Administrative Agent shall take
such action with respect to such Default as shall be directed by the Lenders in
the written instructions (with indemnities) described in this Section 12.03,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In no
event, however, shall the Administrative Agent be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Lenders, and otherwise the
Administrative Agent shall not be liable for any action taken or not taken by it
hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own
gross negligence or willful misconduct.
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Section 12.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower and the Lenders hereby waives the right to dispute the Administrative
Agent's record of such statement, except in the case of gross negligence or
willful misconduct by the Administrative Agent. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. The Administrative Agent may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof permitted hereunder shall
have been filed with the Administrative Agent.
Section 12.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this Article XII shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 12.06 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
in this Section 12.06, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrower, and the Administrative Agent may be
removed at any time with or without cause by all of the Lenders. Upon any such
resignation or removal, the Lenders shall have the right, in consultation with
the Borrower, to appoint a successor. If no successor shall have been so
appointed by the Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation or
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent.
Upon the acceptance of its appointment as the Administrative Agent hereunder by
a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article
XII, Section 13.03 and Section 13.09 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.
Section 12.07 Agents as Lenders. The party serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such party and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Borrower or any Consolidated Subsidiary or other Affiliate thereof as if it were
not the Administrative Agent hereunder.
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Section 12.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document, any
related agreement or any document furnished hereunder or thereunder. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, neither the Administrative Agent nor the Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates. In this regard, each Lender acknowledges that Xxxxxxxx & Xxxxxx
LLP and White & Case LLP are acting in this transaction as special counsel to
the Administrative Agent only, except to the extent otherwise expressly stated
in any legal opinion or any Loan Document. Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection
with the Loan Documents and the matters contemplated therein.
Section 12.09 Authority of Administrative Agent to Release Collateral and
Liens. Each Lender hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents. Each Lender hereby authorizes the Administrative Agent to
execute and deliver to the Borrower, at the Borrower's sole cost and expense,
any and all releases of Liens, termination statements, assignments or other
documents reasonably requested by the Borrower in connection with any sale or
other disposition of Property to the extent such sale or other disposition is
permitted by the terms of Section 10.14 or is otherwise authorized by the terms
of the Loan Documents.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 13.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at Dune Energy, Inc., 0000 Xxxx
Xxx Xxxx., Xxxxx 000, Xxxxxxx, XX 00000, Tel: 000-000-0000, Fax: 000-000-0000,
Attention: Chief Financial Officer;
(ii) if to the Administrative Agent, to it at 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Tel: 000-000-0000, Fax:
000-000-0000, Attention: General Counsel, Investment Banking;
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(iii) if to the Arranger, to it at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Tel: 000-000-0000, Fax: 000-000-0000,
Attention: General Counsel, Investment Banking;
(iv) if to any other Lender, to it at its address (or telecopy
number) set forth on its applicable signature page or, if such Lender is the
Agent or the Arranger, at the address provided above.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II, Article III, Article IV and Article V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 13.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any Lender,
or the Arranger to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Administrative
Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 13.02(b), and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lenders may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Lenders or by the Borrower and the Administrative Agent with the consent
of all of the Lenders.
Section 13.03 Expenses, Indemnity; Damage Waiver.
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(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, and the cost
of environmental audits and surveys and appraisals, in connection with the
ongoing enforcement and performance of the credit facilities provided for herein
as Administrative Agent deems appropriate, the preparation, negotiation,
execution, delivery and administration (both before and after the execution
hereof and including advice of counsel to the Administrative Agent as to the
rights and duties of the Administrative Agent and the Lenders with respect
thereto) of this Agreement and the other Loan Documents and any amendments,
modifications or waivers of or consents related to the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all costs, expenses, Taxes, assessments and other charges
incurred by the Administrative Agent or any Lender in connection with any
filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any Security Instrument or any other document
referred to therein, (iii) all out-of-pocket expenses incurred by the
Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for any the Administrative Agent or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this
Section 13.03, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans and any appraisal costs incurred by the Administrative Agent or the
Lenders.
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ARRANGER,
AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH
SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE
HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY
COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR
DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO
OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY
SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS
AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY
REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY
GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS
OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR THE USE OF
THE PROCEEDS THEREFROM, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE
OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER
AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY CONSOLIDATED SUBSIDIARY OR
ANY OF
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THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION,
STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF
DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE
BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER
OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR
ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH
OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING ANY
PERSONAL INJURY THAT OCCURS ON ANY OIL AND GAS PROPERTIES OF THE BORROWER OR ANY
OF ITS SUBSIDIARIES, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. PROVIDED, HOWEVER,
ADMINISTRATIVE AGENT WILL ENDEAVOR TO NOTIFY BORROWER OF ANY MATTER IN WHICH
ADMINISTRATIVE AGENT OR LENDERS WILL SEEK INDEMNIFICATION FOR UNDER THIS
AGREEMENT, BUT FAILURE TO NOTIFY BORROWER IN A TIMELY MANNER WILL NOT PREJUDICE
ADMINISTRATIVE AGENT'S OR ANY LENDER'S RIGHTS TO INDEMNIFICATION UNDER THIS
AGREEMENT IN ANY WAY.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under Section 13.03(a) or Section
13.03(b), each Lender severally agrees to pay to such Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against such Administrative Agent in its capacity as such.
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(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER SHALL
NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY
OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS
OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE TRANSACTIONS, ANY LOAN OR THE USE
OF THE PROCEEDS THEREOF.
(e) All amounts due under this Section 13.03 shall be payable
promptly after written demand therefor.
Section 13.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 13.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent
provided in Section 13.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section 13.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) without the prior written
consent of the Borrower.
(ii) Assignments shall be subject to the following conditions:
(A) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $100,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
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(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $10,000 payable by the assigning party; and
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent any information reasonably requested by the
Administrative Agent.
(iii) Subject to Section 13.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.03, Section 5.04, Section 13.03 and Section 13.09). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 13.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 13.04(c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the "Register"). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent, and the Lender may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice. In connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower and each Lender.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
providing any information reasonably requested by the Administrative, the
processing and recordation fee referred to in Section 13.04(b) and any written
consent to such assignment required by Section 13.04(b), the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this Section 13.04(b).
(c) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent, and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that
reduces the Indebtedness payable to such Participant. In addition such agreement
must provide that the Participant be bound by the provisions of Section 13.03.
Subject to Section 13.04(c)(ii), the Borrower agrees that each Participant shall
be entitled to the benefits of Section 5.01, Section 5.03, and Section 5.04 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 13.04(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 13.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 4.01(c)
as though it were a Lender.
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(ii) A Participant shall not be entitled to receive any
greater payment under Section 5.01, Section 5.03 or Section 5.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent.
(d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 13.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
Section 13.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Article V, Section 13.03, Section 13.09, and Article XII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, and the
Commitments or the termination of this Agreement, any other Loan Document or any
provision hereof or thereof. (b) To the extent that any payments on the
Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent's and the Lender's Liens, security
interests, rights, powers and remedies under this Agreement and each Loan
Document shall continue in full force and effect. In such event, each Loan
Document shall be automatically reinstated and the Borrower shall take such
action as may be reasonably requested by the Administrative Agent and the
Lenders to effect such reinstatement.
Section 13.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. This Agreement
and the other Loan Documents represent the final agreement among the parties
hereto and thereto and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
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(c) This Agreement shall become effective, concurrently with the
Lenders' purchase of the loans and liens under the Original Credit Agreement,
when this Agreement shall have been executed by the Administrative Agent and
when the Administrative Agent shall have received counterparts or signature
pages hereof which, when taken together, bear the signatures of each of the
other parties hereto, and thereafter this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or other electronic transmission shall be effective as
delivery of a manually executed counterpart of this Agreement.
(d) Upon the effectiveness of this Agreement, the Original Credit
Agreement shall be amended and restated in its entirety and continued (but not
novated) by this Agreement.
Section 13.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 13.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any Subsidiary against any of and all the obligations of the
Borrower or any Subsidiary owed to such Lender now or hereafter existing under
this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 13.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have.
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SECTION 13.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE NEW YORK STATE COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION
TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING
JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 13.09.
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Section 13.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 13.11 Confidentiality. Each of the Administrative Agent and the
Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 13.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 13.11 or (ii) becomes
available to the Administrative Agent or any Lender on a non-confidential basis
from a source other than the Borrower. For the purposes of this Section 13.11,
"Information" means all information received from the Borrower or any Subsidiary
relating to the Borrower or any Subsidiary and their businesses that is clearly
identified at the time of delivery as confidential, other than any such
information that is available to the Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by the Borrower or a Subsidiary. Any
Person required to maintain the confidentiality of Information as provided in
this Section 13.11 shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
Section 13.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including any laws that are mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
from time to time allowed by such applicable law. If at any time and from time
to time (i) the amount of interest payable to any Lender on any date shall be
computed at the Highest Lawful Rate applicable to such Lender pursuant to this
Section 13.12 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section 13.12.
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SECTION 13.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
Section 13.14 Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Subsidiaries on a pro rata basis in respect of
any obligations of the Borrower or any of its Subsidiaries which exist under any
such Swap Agreement while such Person or its Affiliate is a Lender, (whether
such obligations arise while such Person or Affiliate is a Lender or arose prior
to such time but continued to exist when such Person or Affiliate became a
Lender) but not to any such obligations that are created after such Person or
Affiliate ceases to be a Lender. No Lender or any Affiliate of a Lender shall
have any voting rights under any Loan Document as a result of the existence of
obligations owed to it under any such Swap Agreements.
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Section 13.15 Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans hereunder are solely
for the benefit of the Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent or any Lender for any reason whatsoever. There are no third
party beneficiaries of the rights of the Borrower. The Arranger and the
Indemnitees, however, are third party beneficiaries of the duties and
obligations owed by the Loan Parties.
Section 13.16 Securitization. The Borrower hereby acknowledges that the
Lenders and their Affiliates may sell or securitize the Loans (a
"Securitization") through the pledge of the Loans as collateral security for
loans to the Lenders or their Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the
Lenders or their Affiliates or direct or indirect interests will be rated by
Xxxxx'x, S&P or one or more other rating agencies (the "Rating Agencies"). The
Borrower shall cooperate with the Lenders and their Affiliates to effect the
Securitization including, without limitation, by (a) amending this Agreement and
the other Loan Documents, and executing such additional documents, as reasonably
requested by the Lenders in connection with the Securitization, provided that
(i) any such amendment or additional documentation does not impose material
additional costs on the Borrower and (ii) any such amendment or additional
documentation does not materially adversely affect the rights, or materially
increase the obligations, of the Borrower under the Loan Documents or change or
affect in a manner adverse to the Borrower the financial terms of the Loans, (b)
providing such information as may be reasonably requested by the Lenders in
connection with the rating of the Loans or the Securitization, and (c) providing
in connection with any rating of the Loans a certificate (i) agreeing to
indemnify the Lenders and their Affiliates, any of the Rating Agencies, or any
party providing credit support or otherwise participating in the Securitization
(collectively, the "Securitization Parties") for any losses, claims, damages or
liabilities (the "Liabilities") to which the Lenders, their Affiliates or such
Securitization Parties may become subject insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact by Borrower or any Affiliate of Borrower contained in any Loan
Document or in any writing delivered by or on behalf of the Borrower or any
Affiliate of the Borrower to the Lenders in connection with any Loan Document or
arise out of or are based upon the omission or alleged omission by Borrower or
any Affiliate of Borrower to state therein a material fact required to be stated
therein, or necessary in order to make the statements therein, in light of the
circumstances under which they were made and as of the time made not misleading,
and such indemnity shall survive any transfer by the Lenders or their successors
or assigns of the Loans and (ii) agreeing to reimburse the Lenders and their
Affiliates for any legal or other expenses reasonably incurred by such Persons
in connection with defending the Liabilities.
Section 13.17 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.
[SIGNATURES BEGIN NEXT PAGE]
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The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: DUNE ENERGY, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx, President
SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT
ADMINISTRATIVE AGENT JEFFERIES FUNDING LLC
AND SOLE LENDER:
By: /s/ Xxx Xxxxxx
---------------------------------
Name: Xxx Xxxxxx
-------------------------------
Title: Executive Vice President, CFO
------------------------------
SCHEDULE 10.24 - Page 84
